Why Doing Business in India is So Difficult: Challenges and Solutions

India could be a great place to do business, but businessmen in India have to deal with a lot of problems. We’ll talk about why it’s hard to do business in India and what can be done to make things better.

Struggles of Starting a Business

Everyone in India has a hard time starting and running a business, from small shop owners who make ₹1000 a day to entrepreneurs who make ₹1 lakh a day. As an example,

getting all the licenses you need to open a restaurant can take six to nine months in India. In Singapore, it only takes one to two months. Many business owners get turned off by the long wait times.

Endless Red Tape and Bureaucracy

India’s complicated rules make things hard in many ways. You may need to wait up to two months to get a license from the Food Safety and Standards Authority of India (FSSAI). Inputting information for GST is easier, but it still takes a long time. Different forms, late packages, and never-ending legal requirements can be hard for businesses.

Corruption: The Unseen Enemy

In India, there is a lot of corruption. The rules are too hard to understand and are out of date, so people often have to pay bribes to get things moved along. This makes it simple for government officials to demand money to cover up mistakes. We need to fix these bad rules if we want businesses to grow.

Payment and Credit Issues

Late payments are a common issue. Many shops display signs saying “Credit is not allowed here” because people don’t pay on time. Small and medium-sized businesses (MSMEs) owe more than ₹10.7 lakh crores to big businesses. Although rules state that small businesses should be paid within 45 days, this is rarely followed.

Labor Shortages and Skill Gaps

It’s hard to find skilled workers, even when unemployment is high. The production business doesn’t have enough trained people. The government says that unemployment is high, but businesses are having a hard time finding good workers. This is a big problem for business owners.

Lack of Family Support

The middle class in India has a lot of people who would rather have safe 9-to-5 jobs than take risks with their own businesses. If a business doesn’t bring in money right away, families might not back it. People with this attitude don’t start their own businesses, even though they want to. As Indian leader Nitin Gadkari rightly said, “India is a rich country with a poor population facing problems like starvation and unemployment.” Many families are struggling to make ends meet, so people are hesitant to support new businesses.

High Costs and Taxes

It costs a lot to run a business in India. It can cost up to ₹33,000 plus GST per month to rent a co-working place. Indian companies pay 25% in taxes and 40% for foreign companies, while in Singapore and the UAE, the rates are 17% and 9%, respectively. High taxes also make it harder for businesses to make money.

The Fear Factor

In India, business owners are always afraid of compliance checks, income tax letters, and other actions by the government. Many people don’t want to grow their businesses because they’re afraid of making mistakes and getting in trouble with the law.

Family Security

When gangsters call businesses in some Indian states, they threaten to kill them or kidnap their kids and family members. After struggling so hard to get permission from the government to start a business, every businessman would like to make sure their families are safe when they are at work. But they start getting threats as soon as their profit crosses 7 figures. This makes it hard for states like Bihar, Uttar Pradesh, and Punjab to grow.

Learning from Hong Kong

SME Fund 

In comparison, Hong Kong has a lot of programs like the Small and Medium Enterprises Funds (SME) that help businesses a lot. Businesses can grow more easily with the help of the SME Fund, which gives back half of the money spent on new business growth.

BUD Fund 

The BUD Fund (Branding, Upgrading and Domestic sales) in Hong Kong supports entrepreneurs with innovation and expansion, providing significant financial help. These programs are simple to apply for and provide substantial financial assistance, which promotes company growth and development.

Hope for Change

Despite these challenges, many entrepreneurs remain hopeful. They believe that a transparent government, reduced corruption, and supportive policies can make a difference. A similar support system in India, like the SME and BUD funding in Hong Kong, could greatly improve the business climate.

Conclusion: A Call for Encouragement

India can reach its full potential if the government makes rules easier to understand, cuts the level of cheating, and helps businesses more. India can become an economy that does very well by pushing people to be business owners, making facilities better, and lowering taxes. India can be even better if the right changes are made. The road ahead is tough, but it is possible. We admire any businessperson who works hard and doesn’t give up. What do you believe are the most difficult parts of doing business in India? How can they be fixed? Write what you think in the reply box below.