It’s tough to be an entrepreneur anywhere, but India presents special obstacles—byzantine bureaucracy, moldering roads and power grids, cultural pressures that penalize risk-taking, and corruption….
India ranks among the world’s worst countries at encouraging entrepreneurs. For ease of starting a business, India is 166th out of 183 countries, just ahead of Angola, according to World Bank figures released recently. Only one country, Timor-Leste, is worse at enforcing contracts….
The World Bank reckons that it’s easiest to start a business in English countries such as New Zealand (1), Australia (2), Canada (3), USA (13), and the UK (19), and is much harder in Spanish countries such as Chile (27), Spain (133), Argentina (146), Panama (29), and Mexico (75).
Enforcing contracts is easiest in northern Europe and descendents such as France (6), USA (7), Germany (8), Australia (17), and the UK (21), and, again, much harder in Spanish countries such as Chile (67), Spain (54), Argentina (45), Panama (119), and Mexico (81).
Veerappa Moily, India’s minister of corporate affairs, acknowledges Indian regulations are geared toward conglomerates. “There is a tendency that we address only the problem of the big people,” Mr. Moily says, adding that he intends to reduce red tape by making it easier to register new businesses.
Currently it can take weeks simply to get a new company’s name approved, in part because authorities must certify that the name has something to do with the product. In one case this year, a mobile-gaming company wishing to call itself Kratos, after the Greek god of strength, was rejected because its product had nothing to do with ancient mythology, according to an executive at the firm. The next naming choice was Arkanea, a riff on a “Star Wars” planet. This time the government said yes….
Entrepreneurs face social obstacles as well in a society that tends to discourage risk-taking. Sidhartha Bhimania, a 28-year-old who founded EnNatura, a start-up outside New Delhi that makes environmentally friendly inks, has been searching for a bride for months via a traditional arranged marriage. He says prospective fathers-in-law are put off by his career.
Commentator Wayne Stargardt summarizes my thoughts:
This is a compelling illustration of how far India is from being a major economy, and how far India is from being a global economic competitor to the United States. Just having a population in the billions is not enough to achieve economic success. India lacks the cultural “infrastructure” to create a modern economy and the prosperity (i.e., high GDP per capita) that results. Entrepreneurs are just the canaries in the mineshaft of the Indian economy. What is that cultural “infrastructure”? This article illustrates several of the missing elements — property rights, sanctity of contracts, rule of law, and individual freedom. The article also illustrates that the Indian government does not perform some of its basic functions — protection of citizens from physical threat and violence, and enforcement of contracts.