A fresh look at the Indian business climate: Findings from a survey of Indian entrepreneurs

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Article Highlights

  • Corruption, inadequate infrastructure, and taxes are top concerns for Indian entrepreneurs.

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  • Fifty-four percent of surveyed Indian respondents said labor costs were too high.

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  • An overwhelming 60 percent of entrepreneurs reported that the National Democratic Alliance would best represent their interests at the center.

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Executive Summary

This study focuses on the needs and aspirations of Indian entrepreneurs. Conducted as a joint collaboration between the American Enterprise Institute (AEI) and YouGov, an online polling agency, this survey of 594 Indian business leaders was administered in June 2013 to gauge the factors and business conditions that enable businesses to conduct their day-to-day operations. These factors and conditions include, for example, infrastructure, government corruption, and taxes. The study is meant to inform politicians, policymakers, and the people of India about what works and what does not work in the Indian business environment.

Major findings are:

  • Most entrepreneurs consider business “good” or “extremely good”—72 percent reported so. Only 10 percent reported that business conditions in their state were “extremely poor” or “poor.”
  • Corruption, inadequate infrastructure, and taxes are top concerns. Approximately 50 percent of entrepreneurs reported these factors to be somewhat or extremely problematic.
  • Labor laws are another universal issue. Fifty-four percent of respondents said labor costs were too high, 47 percent reported difficulties in hiring workers, and 46 percent reported problems firing workers. Another 46 percent reported that unionization was a problem for them in their business.
  • An overwhelming 60 percent of entrepreneurs reported that the Bharatiya Janata Party (or the National Democratic Alliance) would best represent their interests at the center.

In general, the survey suggests that although India may have improved its business environment significantly since liberalization, challenges still remain along several fronts. This survey aims to identify the problem areas by talking to the entrepreneurs themselves and highlighting their struggles. If policymakers heed these concerns and undertake reforms to address these problems, the returns to that investment of time and effort could be tremendous.

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About the Author

 

Aparna
Mathur
  • Aparna Mathur is an economist who writes about taxes and wages. She has been a consultant to the World Bank and has taught economics at the University of Maryland. Her work ranges from research on carbon taxes and the impact of state health insurance mandates on small firms to labor market outcomes. Her research on corporate taxation includes the widely discussed coauthored 2006 "Wages and Taxes" paper, which explored the link between corporate taxes and manufacturing wages.
  • Phone: 202-828-6026
    Email: amathur@aei.org
  • Assistant Info

    Name: Hao Fu
    Phone: 202-862-5214
    Email: hao.fu@aei.org

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