15+ Pros and Cons of Doing Business in India (Explained)

The Republic of India, popularly known as India is a country located in South Asia. It is the largest democracy in the world. It is the 2nd most crowded country in the world and stands in 7th position as one of the largest countries by land area. 

Furthermore, India is the 5th largest economy in the world by market exchange rates and is the 3rd largest purchasing power parity, having around $11 trillion. With an increase in the annual GDP growth rate since 2012, the number of foreign traders and direct investment inflows, also have been constantly on the move. 

Benefits of Doing Business in IndiaThe Drawbacks of Doing Business in India
Young and growing populationLong setting procedures
The tax system is inclusiveCredit achievement
The Indian financial system is quite regulatedDelay in solving insolvencies
High international trade networksNo guarantee of initial fundings
Reasonable cost for labors, infrastructure, and more.Intellectual property issues

Advantages of Doing Business in India

  • Ease in Business bills and laws: 

Many important and useful bills have been passed by the Indian government for the industrial sector. The Indian government has efficiently increased the Goods and Services Tax bill for the movement of products across India. Also, the direct tax code bill now has a cleanup tax law. 

But, among all the most important laws was the introduction of the Land Acquisition Bill. The Companies Bill which was updated by the Indian Corporate law for the 21st century was also updated for good. These cooperative and friendly laws, therefore make it easier for foreign companies to invest and enter the Indian market. 

  • Minimal issue of language being a barrier: 

India has developed itself in nearly every field and has access to a high level of English. Over the years, it has a strong population, speaking English with a slightly different verbal accent and with a slight difference in vocabulary.  

Although still, the majority of the country is uneducated, in the urban areas, people are well-versed with the English language. Thus, the language barrier will also not be a problem for foreign entrepreneurs among skilled workers.

there is no language barrier in india
  • Strong working principles: 

Indians are usually known for their strong morals and principles all over the world. Their hardworking nature and attitude are quite appreciated in many foreign industries. The keenness to learn any new thing with utmost determination is what makes the Indian people different from the other South Asians. 

  • Every Age-Group provide the best service

The working-age group of people in India is from 20-65 providing you an age group of youth learners as well as professionals with years of service. This dedication will increase your company’s opportunity to gain success as productivity will be high. 

  • Government’s initiatives and movements: 

The government of India has tried to attract many foreign investors by announcing many schemes and policies over the years. The different ministries have made a number of attempts by launching many movements also.

One such famous and successful movement started by the Indian government was the ‘Startup India Movement’. 

The government of India tried to create certain reforms to get Foreign Direct Investment and foster business partnerships, trying to make them invest in the Indian market. These reforms under Startup India Movement were also associated with the specification of the World Bank’s ‘Ease of doing business’ index, helping to improve the ranking of India. 

does India have a lot of government initiatives movements to promote business
  • Strong economic growth and ranking: 

India’s economic growth has constantly increased over the years. Because of the powerful democracy, private consumption, ket structural reforms, and also rise in governmental investments, India has persistently achieved a high macroeconomic stability ranking in the World Economic Forum’s Global Competitiveness Index over the years. 

India was ranked at 41st position out of 141 economies in the world, with a score of 90 out of 100. 

  • Innovative use of technology: 

From the past few years, India has become a powerhouse of technology. Several high-tech companies are available in India in nearly every sector, be it in textiles, engineering, information technology, telecommunications, pharmaceuticals, and more. 

All these sectors are using the new age technology and also molding it in a much better form that the innovations are becoming prestigious to even international counterparts. India is thus now recognized as a powerful global technological force next to China and the United States. 

Disadvantages of Doing Business in India

  • Registration and electricity issues: 

Registering of any property in India requires a considerable amount and can take up to several days which is very exhausting. The initial key fees charged by the Sub-registrar of Assurances will be the stamp duty of 5% of the property and a 1% charge on the market value of the property are very important. 

After these 2 charges, the charges incurred for hiring a lawyer and also by the fees at the land and survey offices are also a matter of concern. 

Secondly, the cost of electricity is quite cheaper in India in comparison to the rest of the South Asian countries, but the procedural work involved is very exhausting and can take months to complete. 

Each procedure step can take up to at least 8 days with the need for external site inspection, installment of a meter, conducting a test installment, and much more. 

  • Costly construction permits: 

The procedure to get a construction permit can be costly as well and can take up to 196 days, as it has almost 34 steps. You first need to get the Intimation of Disapproval from the Building Proposal Office and need to pay the fees which can take a month or two. 

Your NOCs from the Tree Authority also should be assembled properly. Other major concerns can be from the Storm Water and Drain Department, the Electric Department, the Sewage Department, the Traffic and Coordination Department, the Environment Department, and lastly from the CFO.

Getting clearance from all these organizations is quite a daunting process. 

is acquiring construction permit difficult in india
  • Concept of investor protection: 

The concept of investor protection has gained a lot of attention lately.  Certain new bodies such as the Securities and Exchange Board of India are the ones setting up these new laws and effects. Enforcing contracts is also an important area which is a matter of concern for foreign investors. 

As India is termed one of the worst countries in the world having the faculty to enforce a contract which takes up around 1,420 days which is quite daunting. 

  • Lack of infrastructure: 

India has made its mark in nearly every sector around the world but, its infrastructure power is still on hold. Being the construction of railroads, airports, roads, seaports, telecommunications, power grids, and more are delivering a huge challenge to the economic status of the country when it comes to delivering the best ability to their public. 

India is the world’s largest democracy with an enormous population. With growing urbanization and a rise in incomes, the government is functioning under huge pressure to improve the country’s infrastructure. 

Does India lack proper infrastructure

Similar Posts:

Was this article helpful?

Did you like this article? Why not share it: