Forget startups, just ask established business houses how difficult it is to do business in India. And Modi isn’t doing much to change that

One of the main agendas of the Narendra Modi government, that would complete one year in office tomorrow, was to create conducive environment in India for doing business. But tiresome legal process is still one of the top hurdles to do business in India.

The Modi government's focus on ease of doing business might help India receive some significant points when the new rankings are released. But the government needs to do more as enforcing contracts is one area where it seems to have run up against legal hurdles.

It is shameful that India ranked as low as at 186th position among 189 countries when it comes to enforcing contracts with only Angola, Bangladesh and Timor-Leste placed lower.

According to officials, attitudes have a major role to play but experts reckon that the Indian legal process is long and cumbersome.
World Bank arm International Finance Corp's Doing Business report measures the efficiency of the judicial system in resolving commercial disputes based on the time taken, the procedures involved and the cost incurred.

On an average, it costs almost 40% of the claim, involves some 46 procedures and takes almost four years, 1,420 days to be precise, in Mumbai or Delhi. Moreover, the Doing Business report has not recorded a single reform move in India for the last eight years.

As a result, when the government prepared a detailed blueprint for all parameters, eight steps were planned, beginning with commercial courts in Delhi and Mumbai - two centres which are studied by IFC team.

But apart from the commercial courts and the recent Supreme Court order paving the way for the establishment of the National Company Law Tribunal, things have moved rather slowly. The moves to be initiated include enabling district courts to completely switch over to e-management of commercial cases, which includes e- filing of complaints, e- service of summons and availability of digitally signed judgments on the web.

The plan also included sensitizing district courts about exploring mediation, arbitration and conciliation under section 89 of the Code of Civil Procedure.

Moreover, there should be a limited number of adjournments so that cases are decided in a shorter span of time.

According to government sources, there has been little progress on several of the proposals that have been discussed during the past one year to improve India's ranking on enforcing contracts. And, it is unlikely that the IFC team misses that, making it tougher for India to make significant gains in the Ease of Doing Business Rankings, sources acknowledged.

(Image: Indiatimes)