How India’s business dreams are facing a reality check

India’s aspirations to establish itself as a global manufacturing hub face a significant challenge: the daunting reality of doing business within its borders. While the country leaped from 134th in 2014 to 63rd in the World Bank’s now-discontinued Doing Business report, the reality on the ground tells a different story. High costs, lengthy procedures, and pervasive corruption undermine India’s entrepreneurial ambitions and industrial competitiveness, particularly when compared to East Asian economies, believe experts.

Despite Prime Minister Narendra Modi's "Make in India" initiative, which aimed to position India as a global manufacturing leader, the manufacturing sector's share of the economy has declined to its lowest since 1960. Experts highlight that the ease of doing business, long supported by the government, has ironically transformed into an “unease of doing business.”

According to information, an industrial machinery entrepreneur with experience in both Thailand and India provides a stark comparison. Setting up a similar-sized factory in Maharashtra—one of India’s most industrialized states—involved significantly higher costs and bureaucratic hurdles compared to Thailand.

Industrial land in India is significantly more expensive(about 25%)  than in Thailand, with additional burdens of higher stamp duties and prevalent bribery. The registration process for industrial properties can cost up to $50,000 more in India due to legal and “extra-legal” expenses.

2.Construction Constraints:

While India benefits from low-cost labor, this advantage is undercut by an 18% GST on construction — much higher than Thailand’s 7% levy, which is VAT-adjustable. Land-use regulations in India also restrict productive area utilization to 55% of the plot, compared to 65% in Thailand.

Factory owners in India face labyrinthine approval processes, from building permits to water and electricity connections. These hurdles often require additional payments to expedite approvals, adding nearly 19% to project costs for governance-related inefficiencies.

The entrepreneur reportedly noted that in Thailand, government- related hassles were minimal and predictable, while in India, bureaucratic hurdles create ongoing financial and operational challenges.

From an expert's perspective, corruption continues to be a significant barrier to business growth in India. According to a recent Local Circles survey, 68% of businesses reported paying bribes for property registration, while 62% faced demands for unofficial payments from GST officials. These “extras” are often viewed by entrepreneurs as inevitable, contributing substantially to operational costs. In one particularly concerning case, a factory owner in India was unexpectedly required to settle unpaid utility bills from the previous landowner—an issue virtually unheard of in Thailand. Such unpredictable financial burdens undermine investor confidence, ultimately hindering the country’s competitiveness in the global market.

According to information,the Congress party has accused the Modi government of converting “ease of doing business” into “unease in doing business” through retrograde policies. Congress General Secretary Jairam Ramesh recently outlined several factors undermining India’s business environment:

Ramesh criticized the GST regime, which features up to 100 different rates, including cesses, fostering evasion worth Rs 2.01 trillion in FY24.

Despite government rhetoric, India’s trade deficit with China reached $85 billion in 2023-24, severely impacting domestic manufacturing.

Real wages for agricultural laborers declined annually by 1.3% under the Modi government, compared to 6.8% growth during the UPA era, weakening consumption growth and investment sentiment.

The Congress also reportedly highlighted the decline in private domestic investment from 25–30% of GDP during Manmohan Singh's tenure to 20–25% under the Modi government, coupled with an exodus of high-net-worth individuals.

The opposition ,according to information, has urged the government to adopt radical measures in the upcoming Union Budget to reverse the damage:

1. Eliminate “raid raj” and tax terrorism to rebuild investor confidence.

2. Simplify the GST structure and ensure greater transparency in tax administration.

3. Protect Indian manufacturing jobs by curbing dependence on Chinese imports.

4. Boost wages and purchasing power to revitalize consumption and incentivize private investment.

The unease of doing business in India is a significant drag on the nation’s competitiveness and economic growth. Addressing overregulation, bureaucratic inefficiencies, and punitive tax policies must be central to any reform agenda. Without decisive action, India risks losing its edge in the global race for investment and industrial growth,stated experts.The opposition and industry experts have emphasized, restoring confidence among entrepreneurs and fostering a conducive business environment will require bold,transformative changes starting with the Union Budget. Anything less will leave India’s ambitious manufacturing dreams trapped in the labyrinth of its own making.