Ease of doing business is a powerful phenomenon

I. Introduction

The concept of “Ease of Doing Business” (EoDB) has emerged as a critical measure for assessing the economic environment of a country. It reflects how conducive the regulatory and administrative framework is for starting, operating, and expanding a business. Often seen as an abstract or cosmetic metric, EoDB is in fact a vital determinant of investment inflows, entrepreneurial growth, and sustainable economic development.

II. Defining Ease of Doing Business

Ease of Doing Business refers to the simplicity and transparency of regulatory and bureaucratic processes that affect business activities in a nation. It involves a range of factors such as starting a business, getting construction permits, obtaining credit, enforcing contracts, and resolving insolvency. A high EoDB ranking signals an efficient, business-friendly environment, whereas a lower ranking often implies cumbersome red tape and policy bottlenecks.

III. Global index: The World Bank’s Role

The most widely recognized measurement tool for EoDB was the World Bank’s Ease of Doing Business Index (WB-EoDBI), which ranked countries based on ten regulatory indicators across the business lifecycle. Although the World Bank discontinued this index in 2021 due to data irregularities, it served as a valuable benchmark for many years.

According to the 2020 report, New Zealand, Singapore, and Hong Kong topped the WB-EoDBI. These countries featured consistent and investor-friendly legal and regulatory frameworks, minimal corruption, and digitized procedures that significantly reduced transaction time and costs.

IV. India’s journey and position

India made significant strides in improving its EoDB ranking over the past decade. From 142nd in 2014, India climbed to 63rd in the 2020 WB-EoDBI. This was a result of focused reforms such as the implementation of the Goods and Services Tax (GST), Insolvency and Bankruptcy Code (IBC), digitization of company registration, and easier access to credit.

Despite this progress, several ground realities dilute the perceived improvement. Challenges remain in enforcing contracts (ranked 163rd), dealing with construction permits, and property registration. These procedural lags often disillusion entrepreneurs, particularly in Tier 2 and Tier 3 cities.

V. Key parameters of EoDB

The EoDB index traditionally evaluated countries based on the following ten parameters:

  1. Starting a business
  2. Dealing with construction permits
  3. Getting electricity
  4. Registering property
  5. Getting credit
  6. Protecting minority investors
  7. Paying taxes
  8. Trading across borders
  9. Enforcing contracts
  10. Resolving insolvency

Each parameter reflects a crucial stage in the business journey. For example, delays in contract enforcement deter foreign direct investment (FDI), while cumbersome taxation processes hamper small and medium enterprises (SMEs).

VI. Role of Bureaucracy

Bureaucracy remains a double-edged sword in the EoDB narrative. While a professional, responsive, and digitalized bureaucracy facilitates business operations, a rigid and hierarchical administrative setup hinders progress. In India, overlapping jurisdiction among agencies and regulatory ambiguity often frustrate investors.

Although initiatives like the Digital India Mission (DIM) and single-window clearance systems have improved bureaucratic efficiency, ground-level implementation varies widely across states. Bureaucratic red tape remains a concern, especially for startups and new entrants unfamiliar with the complex system.

VII. Political setup and vested interests

The political will to reform is a critical driver of EoDB improvements. However, political setups often grapple with vested interests—be it local lobbies, powerful unions, or entrenched industrial groups—that resist regulatory changes perceived as disruptive. For instance, labor law reforms aimed at improving industrial productivity face opposition from political factions aligned with labor unions.

Moreover, politicization of bureaucratic appointments and frequent policy reversals can lead to uncertainty, discouraging long-term investment planning. A stable and reform-oriented political framework is essential for meaningful and sustained improvements in business climate.

VIII. Public perception and business sentiment

Public perception significantly affects the EoDB ecosystem. While national reforms are highlighted in global rankings, entrepreneurs at the grassroots often report persistent obstacles. Licensing delays, corruption, and opaque regulations undermine trust in the system.

Surveys conducted by NASSCOM and FICCI have revealed that while digital registration and tax filing have become easier, issues like land acquisition, municipal approvals, and legal enforcement continue to hamper operations. This gap between perception and reality underscores the need for reform at sub-national and district levels.

IX. Digitalization and technology-driven solutions

One of the most effective levers in improving EoDB is technology. Platforms such as Goods and Services Tax Network (GSTN), MCA21, and Udyam Registration Portal have automated several processes. Additionally, online grievance redressal systems, digital KYC (Know Your Customer), and e-courts have streamlined compliance and dispute resolution.

However, challenges like digital illiteracy, poor internet penetration in rural areas, and cyber vulnerabilities pose new risks. The Ministry of Electronics and Information Technology (MeitY) must continually upgrade systems and ensure inclusive digital growth.

X. Comparison with global peers

India’s reforms in EoDB must also be viewed in the context of global competition. While Vietnam, Indonesia, and Bangladesh are rapidly improving their business climates to attract global supply chains diversifying from China, India needs to accelerate labor and land reforms, modernize infrastructure, and ensure policy predictability to stay competitive.

XI. Way forward

  1. Strengthen Contract Enforcement: Increase judicial capacity, introduce commercial benches, and promote arbitration.
  2. Uniformity Across States: Promote best practices via competitive federalism.
  3. Transparent Policy Environment: Eliminate sudden regulatory changes that affect investor confidence.
  4. Digitize All Regulatory Interfaces: Extend single-window clearance to all states and integrate local bodies.
  5. Empower Local Entrepreneurs: Reduce compliance burden for MSMEs and startups.

XII. Conclusion

Ease of Doing Business is not a superfluous or decorative ranking—it is a core indicator of economic dynamism and governance quality. While India’s improved ranking demonstrates its reformist intent, the actual experience of entrepreneurs on the ground remains a mixed bag. To make EoDB a true engine of growth, India must bridge the gap between policy and practice, center reforms around transparency, and create an environment where businesses of all sizes can flourish. Ease of doing business can become powerful contributor to economic growth, if properly framed and implanted.

Abbreviations

  • DIM – Digital India Mission
  • EoDB – Ease of Doing Business
  • FDI – Foreign Direct Investment
  • FICCI – Federation of Indian Chambers of Commerce and Industry
  • GST – Goods and Services Tax
  • GSTN – Goods and Services Tax Network
  • IBC – Insolvency and Bankruptcy Code
  • MCA21 – Ministry of Corporate Affairs Online Platform (launched in 2021-22)
  • MSME – Micro, Small, and Medium Enterprises
  • NASSCOM – National Association of Software and Service Companies
  • SME – Small and Medium Enterprises
  • Udyam – Unified Digital Platform for MSME Registration

WB-EoDBI – World Bank’s Ease of Doing Business Index

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