India is most over-regulated country in the world: Survey

Last Updated 26 January 2011, 07:56 IST

The survey used responses from American executives about regulatory conditions in the United States to provide a benchmark against which to assess the Asian scores. India was rated worst in terms of over-regulation, scoring 9.16 points out of 10, followed by China with 9.04 points, Japan in third position with 3.28 points and the US at fourth with 1.51 points.

Hong Kong received the best score in the survey of 0.98 point, while Singapore was second with 1.08 points, according to the survey done in the last quarter of 2010, based on responses from 1,370 executives. In general, regulations were complex and non-transparent, while standards and certifications procedures were onerous in India, according to the PERC survey findings.

Foreign exchange, capital transactions and some credit operations were subject to approvals, restrictions and additional requirements that went far beyond what most other countries require, concluded the survey.

Even procedures for something as simple as getting a tourist visa were more cumbersome in India than was typical elsewhere, it pointed out. It also cited specific examples from the World Bank's Doing Business Survey of why India's regulatory system deserves to be graded as poorly as it was. It can take a month-and-a-half to register property, almost 200 days to obtain a construction permit, over 1,400 days to enforce a contract and seven years to close a business.

"Documentation requirements for both exports and imports are onerous," the PERC survey pointed out. "Labor requirements are strict and companies lack flexibility on hiring and firing workers," it concluded.

Regulations in the country were frequently not enforced, which raised the question of why they were on the books at all, noted the survey. "In a recent scandal involving the telecommunications ministry's mishandling of a landmark allocation of mobile telephone spectrum, as many as 85 of 122 new licences which were bundled with the bandwidth allocation were issued to companies that did not have the required capital to seek bandwidth," the survey pointed out.

These companies "suppressed facts, disclosed incomplete information and submitted fictitious documents", according to the survey. "Of course they could not have done so without the complicity of bureaucrats at the ministry, who overlooked qualification shortcomings and arbitrarily moved forward the cut-off date for applying by one week to favor some companies that had applied earlier, while leaving others out," it said.

A few Indian states were trying to differentiate themselves from others by stressing how they were more efficient and pro-business. The states of Gujarat and Tamil Nadu, for example, were trying to market themselves as being pro-business and efficient, said the survey.

Their actual situation was not as good as the states' marketing rhetoric. Nevertheless, the civil services of the both states were given credit by some investors for approving land purchases and environmental permits more quickly than was the case in other states. "In the case of Gujarat, it has set up a web portal that lets foreign investors track their government requests and complain about delays," said the survey.

(Published 26 January 2011, 07:56 IST)

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