“There are great concerns about doing business in India. Companies face so much red tape that they are uncompetitive to begin with,” the Bloomberg Opinion article argues.
“A little more than three years ago, the World Bank abolished its annual ‘Doing Business’ report following allegations that top officials were pressuring staff to improve China’s scores,” the report said. , India was ranked 63rd, which is a low ranking of 134th out of 189 countries. Still, starting a business is still a nightmare. Even the bravest entrepreneurs are overwhelmed.”
“Prime Minister Narendra Modi’s ‘Make in India’ campaign has also gotten lost somewhere in this bureaucratic maze,” he added. Despite a 10-year-old program billing itself as “the single largest manufacturing effort undertaken by a nation in recent history,” manufacturing’s share of the economy has shrunk to its lowest point since 1960. are. There is great anxiety in doing business. This will hinder India’s competitiveness. ”
In a social media post about X, the author also shared a table comparing the cost of setting up a small factory in Maharashtra with the cost of setting up a small factory near Bangkok. For example, land that costs $777,000 in Thailand costs $971,200 in India. Registration costs are $15,500 in Thailand and $58,300 in India.
But industry experts say the costs of setting up and operating a factory, such as land and building costs and obtaining permits, aren’t the only considerations for manufacturers.
“There are also labor costs, the availability of relevant skills through appropriate local technical institutions, the customer base for the products manufactured, and the local and central government incentives and tax breaks offered to manufacturers. Making apples-to-apples comparisons is not as easy as one might think, given the Make in India program and all the associated schemes and benefits that attract various global manufacturers to India.” Vice Chairman Santosh Kumar said. .
Real estate consultants say India’s infrastructure development story is closely tied to economic growth and recent government initiatives have significantly improved state, national and highway connectivity. Enhanced logistics and dedicated cargo corridors have reduced travel times and streamlined the transportation of goods. This not only boosted e-commerce and manufacturing but also laid the foundation for 24-hour delivery across 600-700 km, a game-changer for India’s logistics industry.
However, “this surge in connectivity has had mixed effects on real estate, particularly in industrial areas. In some areas, improved road and freight connections have led to higher land prices and the establishment of industrial parks For small and medium-sized enterprises, land acquisition costs are a barrier to entry and hinder the financial viability of new projects,” said Pradeep Mishra, CMD, ORAM Developments. Masu.
To address these challenges, the government has actively focused on developing industrial parks and special economic zones (SEZs). The authorities aim to make land prices more competitive and attract industry by acquiring land from farmers and allocating it at affordable prices. The introduction of SEZs, which offer tax-free benefits for a limited time, further encouraged investment in manufacturing. These initiatives are essential to boost industrial growth and align with the government’s ‘Make in India’ vision.
Manufacturing performance is already showing results, with the Index of Industrial Production (IIP) registering 5.2% growth in November 2024, the highest in six months. Manufacturing alone grew 5.8%, supported by 1.9% growth in mining and 4.4% growth in electricity. These statistics highlight the sector’s potential and the importance of well-structured infrastructure policies in maintaining this momentum.
However, “one key issue remains: disparities in real estate costs caused by differences in state-level taxes and fees. In addition, unregulated costs and corruption in some areas are driving industrial and housing Hindering affordability. Such inefficiencies have a direct impact on the government’s flagship ‘Housing for All’ initiative and discourage long-term investment in industrial real estate,” Mishra added.
For investors and businesses, navigating these complexities requires a strategic approach. Understanding local tax structures, taking advantage of government schemes, and investing in emerging special economic zones and industrial parks can reduce costs and increase profitability. Infrastructure growth is a key driver of India’s economy, but curbing land price inflation and eliminating inefficiencies in the system is essential to ensure equitable growth across sectors.
A focus on ease of doing business and ensuring competitive costs will help India position itself as a global manufacturing hub. The goal is clear. To make ‘Make in India’ synonymous with efficiency, affordability and innovation. This transformation will pave the way for a more inclusive and resilient economy.
