India’s investment climate is a curious mixture of red carpets and red tape. While the dreaded licence raj has been abolished, the inspector raj flourishes. That is why India features somewhere at the bottom of the World Bank’s annual rankings on the ease of doing business in various nations.
But India is a country of vast diversity. The ease with which you can start a new company, or the amount of taxes you pay, or the time needed to get certain regulatory clearances, differs widely across different parts of the country. A new follow-up report by the World Bank ranks 12 major cities based on their investment climate.
Hyderabad leads, followed by Bangalore and Jaipur. Mumbai and Kolkata are the stragglers. Some states have been more successful in cutting red tape. Investors will hopefully gravitate towards these states, thus putting pressure on the laggards. That’s the great advantage of competition among states for new investment.