In India, it's easier to buy guns, than starting new business: Survey

Delhi Police ask for 45 documents for opening a restaurant, only 19 for a gun: Survey

Delhi Police ask for as many as 45 documents before giving its clearance for opening an eatery in the national capital as against only 19 to buy a gun, the Economic Survey said on Friday while making a case for doing away with unnecessary controls.

According to the National Restaurants Association of India (NRAI), a total of 36 approvals are required to open a restaurant in Bengaluru, 26 in Delhi and 22 in Mumbai.

In contrast, China and Singapore require only four licences to open a restaurant.

"Delhi requires a 'Police Eating House Licence' from Delhi Police that asks for 45 documents compared to just 19 needed to buy a gun. The scope for streamlining is clear," according to the Economic Survey 2019-20 tabled in Parliament.

Delhi and Kolkata require a 'Police Eating House Licence', it said adding the number of documents needed to obtain this licence from Delhi Police is 45 - far more than the number of documents required for a license to procure new arms and major fireworks, 19 and 12, respectively.

It also said that large scope for improvement is in the four parameters, where India lags behind -- Starting Business Registering Property, Paying Taxes, and Enforcing Contracts.

The World Bank ranks 190 countries on doing business index based on ten parameters.

India has moved 14 places to be 63rd among 190 nations in the last World Bank's ease of doing business ranking.

It has significantly improved its performance in remaining six parameters - resolving insolvency, registering property, construction permits, getting electricity connection, getting credit, and trading across borders.

"Although, India has significantly reduced the time and cost of starting a business, a lot more needs to be done," it said.

Further, the survey said that a major challenge most companies face is the complex architecture of the Indian governance framework including the density of legislation and statutory compliance requirements.

"Manufacturing units have to conform with 6,796 compliance items, which is a tedious and time consuming task," it said.

However, it said that this is not a comprehensive list and not every rule applies to every manufacturer.

"It is just an illustration of the bewilderingly wide range of rules that the (manufacturing) sector faces," the Survey said.

Citing certain figures, the survey document said it takes roughly 58 days and costs on an average 7.8 per cent of a property's value to register it, and 1,445 days for a company to resolve a commercial dispute through a local first-instance court.

"These figures are longer in time and often greater in cost than OECD high-income economies, and therefore, impede wealth creation," it said.

The Survey has compared India's performance with its peers - China, Brazil and Indonesia as well as the best-in class economy - New Zealand.

It said that the comparisons demonstrate the gap that India needs to travel to achieve the best international standards.

"Enforcing contracts is one parameter in which India's performance has been very poor over the years," it said adding while India takes 1,445 days to resolve an average dispute, New Zealand takes about one-seventh of it - 216 days.

Further, it said that when compared to the performance of India's peer nations, namely China, Brazil, and Indonesia, on the same parameters, it can be seen that China fares much better than India on virtually all parameters.

"An entrepreneur has to go through 10 procedures to set up a business in India taking 17-18 days to do so. On the other hand, Indonesia and Brazil require one extra process than India to open a business," it said.

Photograph: Ralph D Freso/Reuters