CEO Insights team, 0
But according to a new report by TMF Group, Global Business Complexity Index (GBCI), India is the 18th most complex country for multinationals to do business globally, and the seventh most complex in Asia. The report also highlights that India is one of the countries most focused on attracting international investment. GBCI also analyses 250 different criteria including key areas of business administration and compliance across 77 jurisdictions – from the time it takes to incorporate, to changes in tax legislation, policies around wages and benefits, through to the challenges of opening a bank account.
The report claims that in Asia, only Indonesia, China, Malaysia, Turkey, Taiwan and Korea represented a larger challenge for multinational firms looking to establish and operate local businesses. The one factor that makes India’s environment more complex is that the country does not align with some of the key international standards for legislation and practices – a verdict that was trust of just 18 percent of jurisdictions. For instance, India is one of the 16 percent of jurisdictions that does not comply with the International Financial Reporting Standards, a common set of rules and regulations around financial statements that are readily understandable to businesses operating globally.
GBCI also highlights that in India, tradition is often values
over more modern practices, which adds a localized barrier for international businesses to navigate through. But with several policy changes and rules revised or new rules in place, India is already on the mission to address most of these challenges. Hence even GBCI report shows that India is seen as ‘forward looking’ (57 percent) and among the jurisdictions (23 percent) making the most ‘concerned effort’ in terms of attracting FDI.
With various measures to ease business incorporation, India has indeed made it simple for domestic and global players to level their playing field. Businesses now need to go through only one body to incorporate in India, as opposed to three in Japan, Korea and Singapore, while more than seven in Indonesia. India has also done away with the requirement of all companies to have their accounts audited – a change which particularly benefits smaller firms.
Shagun Kumar, TMF Group’s Managing Director for India, says, “India offers a wealth of opportunities for international businesses, and there is clearly an appetite to attract more investment into the country. In recent years, we have seen large and small reforms in areas such as corporate taxation as well as tweaks to economic and labour laws, as part of that drive to make India a more attractive place to do business. While these were well-meaning and have certainly moved the country forward, the result has been an avalanche of changes that firms have had to tackle. Once these are bedded in, just like the GST changes, we can expect the country’s business complexity to demolish”.
But if you think that every aspect of India’s business environment is negatively painted, it is not so. The country has recently moved away from requiring individuals to submit cumbersome documents to avail personal tax deductions and instead offers a lower tax rate without any deductions.
GBCI also names other complex places to do business worldwide, and Indonesia tops the chart. Six of the ten most complex jurisdictions are in South America, with Brazil, Argentina and Bolivia ranked 2nd, 3rd, and 4th. Greece surprised us as it moves to rank 5th most complex this year, while it occupied top spot last year. The ten least complex jurisdictions to set up or operate in are Curacao leading the way, followed by US, Jamaica, Denmark and the British Virgin Islands.
With various measures to ease business incorporation, India has indeed made it simple for domestic and global players to level their playing field. Businesses now need to go through only one body to incorporate in India, as opposed to three in Japan, Korea and Singapore, while more than seven in Indonesia. India has also done away with the requirement of all companies to have their accounts audited – a change which particularly benefits smaller firms.
Shagun Kumar, TMF Group’s Managing Director for India, says, “India offers a wealth of opportunities for international businesses, and there is clearly an appetite to attract more investment into the country. In recent years, we have seen large and small reforms in areas such as corporate taxation as well as tweaks to economic and labour laws, as part of that drive to make India a more attractive place to do business. While these were well-meaning and have certainly moved the country forward, the result has been an avalanche of changes that firms have had to tackle. Once these are bedded in, just like the GST changes, we can expect the country’s business complexity to demolish”.
But if you think that every aspect of India’s business environment is negatively painted, it is not so. The country has recently moved away from requiring individuals to submit cumbersome documents to avail personal tax deductions and instead offers a lower tax rate without any deductions.
GBCI also names other complex places to do business worldwide, and Indonesia tops the chart. Six of the ten most complex jurisdictions are in South America, with Brazil, Argentina and Bolivia ranked 2nd, 3rd, and 4th. Greece surprised us as it moves to rank 5th most complex this year, while it occupied top spot last year. The ten least complex jurisdictions to set up or operate in are Curacao leading the way, followed by US, Jamaica, Denmark and the British Virgin Islands.