Since 2014, Narendra Modi has been looking to transform India’s image as a shambolic country in which to do business and instead emulate China by becoming a global manufacturing hub. However, for the past three years, the improvements have been nominal.
In September that year, Modi unveiled “Make in India” as a flagship initiative which would have an “unprecedented overhaul of out-dated processes and policies” at its core.
The government has attempted to entice investors by promising to simplify the tax structure and liberalise rules on foreign direct investment (FDI).
But in the World Bank’s most recent chart ranking countries for their ease of doing business, India came 130th out of 190. India ranked 131 last year.
While much of the focus has been on the problems of foreign firms, local entrepreneurs who should now be the poster boys of Indian manufacturing are also struggling.
Red tape-ism and a corrupt administration are one of the greatest barriers to success for small to medium business owners as bribes and unnecessary delays empty their bank balances more than the market.
While India’s big business houses are among Modi’s loudest cheerleaders, economist Sunil Sinha said making things at home remains a fraught process for smaller firms.
“It’s one thing to say we want to focus on manufacturing and that’s why we have liberalised FDI and that’s why we’re trying to improve the ease of doing business,” Sinha, principal economist at Fitch India, told AFP.
“But the crucial component is what’s happening at the state level, at the local level.
“Anyone setting up a factory or business needs water and electricity connections and various permissions and annual regulatory filings to different government watchdogs. Those are the major stumbling blocks and there are no significant changes at that level.
“Many of the large companies … have special access to the corridors of powers, but for the small guy no one will even answer his call so he has to strike a deal with whoever is the hurdle.”