India is a fast-growing economy with immense business opportunities. The government of India has also taken various steps to promote ease of doing business in India and also to attract foreign investments in various sectors. However, there are a number of challenges that a person needs to face to do business in India. Some of them are discussed below:

Infrastructure- Though progress has been made, India’s infrastructure of roads, railroads, airports, seaports, power grids, and telecommunications infrastructure present challenges to its growing economic status and ability to deliver public services. Massive population growth, growing urbanization, and rising incomes put pressure on the government to improve the country’s infrastructure.

Safeguarding intellectual property- It's important to understand intellectual property issues within India. Although local laws are thorough and generally compatible with EU and U.S. IP laws, there is some concern about the enforcement of these laws.

Regulatory approvals and licenses- An entity requires a large number of regulatory approvals and government licenses for doing business in India. Based on the type, an entity needs to get registered under the specific Act governing that entity. 

A vast and fragmented market- The sheer size and fragmented nature of the Indian market can also present a challenge for investors and businesses. Indian states are often compared to individual nations, given their size and diversity in language, culture, talent, and infrastructure. This creates a considerable variance in business landscapes.

Different law structures of states- The governmental framework in India is imposing hurdles in the way of effective business due to different law structures in different states. 

Ease of doing business- Though progress has been made, India still lags behind many larger nations in critical metrics such as starting a business, enforcing contracts, registering property, and getting electricity. 

Taxation systems in India- India’s tax structure is highly complex taking on average 214 hours a year to prepare and pay taxes according to the World Bank.  Laws, rules, and practices can be confusing, and foreign companies who don’t seek specialized help may overpay some taxes and underpay others. 

Trading Across Borders- Despite India opening its borders to international trade, there are still several hurdles to overcome when importing and exporting goods. 

Recruitment in India- Accessing the right skills, staff retention, and high levels of employee turnover can be a challenge in India. Employment laws in India are complex.

Risk of bribery and corruption- Companies operating or planning to invest in India face high corruption risks. India slipped from 79th to 81st position in the most recent Transparency International’s Global Corruption Perception Index.    

Dispute Resolution System- The dispute resolution system of India leads to the drainage of ample time and money and also causes mental harassment to the parties involved in the dispute.

Investment Climate of India

With regard to the foreign investments in doing business in India, investors can now invest directly in India without prior approval of the Indian Government in most sectors, but there are few sectors where prior approval is still required. Convincing the government about the usefulness of the project is still a big hurdle in foreign investments.So, What is Instade Alogs is all about? It is an audio learning and discussion forum enriching our listeners to get all the valuable insights related to the professional world. You can connect with us on Linkedin | Twitter | Facebook | Instagram

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