The answer must evaluate the atmosphere in the country that is made available to the entrepreneurs.
Discuss the importance of entrepreneurs for the economy in general.
The answer should mainly talk about the factors of ease of doing business in India. To what extent India has a conducive atmosphere for entrepreneurs.
Throw light on the case of CCD, what must have gone wrong, what are the possible corrections government can take to prevent such incidences.
Conclude by suggesting way forward.
India recently raised to 77th position in the World Bank’s Ease of Doing Business report rankings. However, the ground reality remains different with a lot of unease for doing business. CCD is a big brand and Siddhartha’s untimely demise reflects poorly on the prevailing business atmosphere, replete with “pressures” mentioned in a letter to the board of CCD and its employees.
State of India’s business atmosphere:
Foreign investors, Indian entrepreneurs and corporations still find themselves stuck in archaic laws and regulatory red tape.
Clarity is lacking and piecemeal amendments made to laws haven’t helped.
Major legislative reforms have taken place, led by the goods and services tax (GST) and the new insolvency law, but these, too, have struggled to make a difference due to problems in their implementation.
Important concepts for Merger and acquisition deals remain shrouded in legalese-driven ambiguities. This pushes Indian entrepreneurs and companies back, despite India jumping 30 places last year in the World Bank’s ease of doing business rankings.
As per the World Bank, the enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court (competent court), and the quality of judicial processes index, evaluating whether the country has adopted a series of good practices that promote quality and efficiency in the court system. India ranks very low in this.
India’s ranking in the ‘enforcement of contract’ component is 164 .The report says that it takes an average of 1,445 days (or nearly four years) to enforce a contract in India. In this, the distance to frontier (DTF) ranking score is 40.76. The all-told cost to a litigant to recover amounts legitimately due to him is 31% of the value of the claim.
The judiciary in India is already plagued with pendency of cases and case disposal is slow due to multiple factors like: More appeals; Low judges to cases ratio; Lack of modernisation of courts
Plenty of grey areas exist, especially on tax matters. Guilt in many cases is a matter of legal interpretation. Such nuances tend to be lost on the public at large, all the more so after the past few years’ uproar over black money and unpaid corporate loans.
Society should change the way it treats entrepreneurs and they should not be called thieves, etc. without proof or substantiation.
There is a broad anxiety over the vilification and worse that faltering firms and their promoters are often put to by an insensitive financial system.
Government is taking measures like Parliament even passed the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act.
Labour laws should foster an enabling environment so far as employment practices are concerned.
Faster reforms in the power sectors, facilitation of entry and exit of firms, level playing field for small and large firms, improvement in access to finance will lead to improvements in ease of doing business norms.
To secure changes in the remaining areas will require not just new laws and online systems but deepening the ongoing investment in the capacity of states and their institutions to implement change and transform the framework of incentives and regulation facing the private sector. India’s focus on ‘doing business’ at the state level may well be the platform that sustains the country’s reform trajectory for the future.
For attracting new investment, both foreign and domestic, several macroeconomic issues have to be addressed. These include political and economic stability, law and order maintenance, quality physical infrastructure, and buoyancy in financial markets.
For the tax regime to be effective, India would do well to follow the due, and fair, process of law, especially when the offender is an entrepreneur. Our law enforcers and society will also have to re-examine their attitudes towards business.
India is at crossroads where it now has to cater to the aspirations of a billion people. Existing frameworks can prove to be inadequate and there is a great need to leverage a billion minds and become a global power. Startups and entrepreneurship is the best way forward in becoming a knowledge superpower.