The Future Group is having quiet an eventful year in making itself a debt- free company; it sold Future Capital Holdings to Warburg Pincus for a majority stake, it also made a similar deal with the Aditya Birla Group when it sold its ‘Pantaloon’ lifestyle property and also managed a private placement with an investor. It managed to take off Rs 6,300 crore of debt, leaving Rs 1,400 crore of debt on the books of its listed entity Pantaloon Retail India Limited. In order to make the business debt-free, the group has demerged five fashion businesses from PRIL. Also the group demerged five fashion businesses and three fashion investments which were part of another listed entity, Future Ventures India Ltd. By doing so, a debt of Rs 1,200 crore was taken away from PRIL and moved to the unlisted entity. Kishore Biyani had earlier suggested that he would make Future Group a zero-debt company by the end of the year. The demerged entities will now be part of a new entity called Future Fashion, which will be listed in the exchanges in the future to unlock value. As part of the demerger, the shareholders will get one share of Future Fashion for every three shares held in Pantaloon by them and the share holders of FVIL will get one share in Future Fashion for every 31 shares held by them.“This consolidation will help create the base for the next phase of growth of the Future Group in modern retail. We grew multiple formats in the early stages of our growth, and now as each one of them has become sizeable, we are giving them independence to propel their growth,” says Kishore Biyani, Chairman of the Future Group in a press release He added that this was in continuation with the business realignment exercise that the group embarked on last year. “We have already exited our financial services business, and unlocked shareholder value through the demerger and partnership of our Pantaloons format,” he said. He added that this consolidation will now further unlock value for our shareholders and give them shares in independent attractive businesses”. Further, FVIL will acquire businesses of some of its subsidiaries by way of merger and demerger and will emerge as an operating company. It will cease to be an NBFC. As a consequence of the demerger of the fashion business, it will also reorganise its share capital to change the face value of its shares from Rs 10 to Rs 6. FVIL will be a company focused on the Food & FMCG sector with a portfolio of FMCG brands, its own rural distribution chain, Aadhar and convenience store chains, KB’s Fairprice & Big Apple.Future Fashion will house brands such as Central and Brand Factory, both of which generate close to Rs 2,300 crore of revenues. Kishore Biyani is bullish on Central and expects it to generate more than Rs 3,000 crore revenue in the financial year 2012-13. Biyani now plans to open smaller formats of Central that will compete directly with Shoppers Stop, Westside, Lifestyle and the like. Vishnu Prasad, who is the CEO of Brand Factory and Central had earlier told BW that these two formats were the fastest growing formats in the retail industry. “We have data of over 5 million customers that come to Central every year and it has helped us target them better,” says Vishnu Prasad. Biyani’s other businesses such as Indus League, which he acquired in 2005, has grown to over 100 stores. Its CEO Rachna Agarwal has plans to expand 9 brands within the portfolio in to smaller towns such as Madurai, Jhansi, Kota and Cuttack. “We are planning to expand on the franchise route in the coming years,” says Rachna Agarwal. These formats make Future Fashion a formidable lifestyle player with close to 200 stores directly under the control of the Future Group and indirectly its brands would reach 150 odd stores of other retailers.The original entity, PRIL, will not be a lame duck. It will have the largest businesses, Big Bazaar and Food Bazaar which contributed half of its Rs 14000 crore revenue last financial year. Two years ago Kishore Biyani had told BW that he was looking at various accounting options to reduce the debt. By focusing on retail he has announced his comeback.
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It is tempting to write about the pros and cons of FDI in retail. But enough has been said about it. With every step like this, many people benefit but some lose out. Among those who lose out are those who just could not withstand competition. But the larger good of the economy and society outweighs the interest of a few. In this piece I am keen not to talk about FDI but about how every change is opposed, accepted and then embraced. Surprisingly, it is often by the same people who did not want the change. Decades ago when computerisation began in the country, there were many sniggers. How could a country without adequate power and literacy ever succeed with computers. Government departments bought computers since budgets had been allocated, but most officials chose to ignore them. They computers were installed in their offices or those of their assistants. Mostly they were used as adornment or paper weights. Slowly but surely, the adoption increased and improved. Now it is a rare officer who doesn't use a computer. Similarly, telecom reforms were announced, there was country-wide concern about the misdirected priorities of the government. Why would a poor country want mobile phones. This was a toy of the rich and the poor would never benefit. As always the socialists and leftists were among the most vocal protestors. There were security concerns about foreign investment in the so called sensitive sector like telecom. The labour unions of government run telecom utilities were up in arms. They fretted about potential job losses. Mobile phones today empower more than 600 million, with half of them in rural areas. What we take for granted today was seen as a national sellout at one time. When the government encouraged private banks in India, the socialists and leftist again protested government run bank unions went of strike. They still do. But private banks used technology in a way that government banks never imagined. The smart government banks reinvented themselves. Few people can say that private banks have not helped the citizens. Financial inclusion for all is still a while away, but it is real possibility. Even the entry of foreign insurance companies in India had met with stiff resistance from trade unions and political parties. Today, the country is the better for it. Everybody who is opposing FDI retail today will accept it a few months later and even benefit from it. In any change the important issue is to support those who will suffer from it. Some of the concerns around FDI in retail are valid. The debate should be about how to help the kirana store evolve. The debate should be to ensure that farmers don't get squeezed by big buyers. A few years later, when another reform is being debated, we might just quote the example of how FDI in retail came through a huge storm. If only we could skip the initial protest and go straight to constructive debate. (Pranjal Sharma is a senior business writer. He can be contacted at pranjalx@gmail.com)
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It’s official. Despite the month-long lock out at Maruti Udyog’s Manesar plant, rivals could not step into the vacuum created by the country’s largest auto-maker; it just led to a fall in overall passenger car sales.According to figures released by the Society of Indian Automobile Manufacturers, auto sales in August fell by 19 per cent to 1,18,142 units from 1,45,066 units a year ago. And the occupant of the pole-position, Maruti which has a 40 per cent market share, turned out to be the worst hit. Its sales in August fell much higher than the industry -- by 40.8 per cent to 54,154 units. Takers for its DZire fell by 61 per cent to 3,085 units and SX4 by 76.4 per cent to 447 units. In the compact passenger-car segment, combined sales of the Estillo, Ritz and Swift fell by 62.2 per cent to 6,059 units. “Owing to the lock out at the Manesar plant (21st July to 20th August 2012), the supply of Swift, Dzire, SX4 and A-star models was impacted,” the company said in a statement.No Dent YetThe Manesar lock-out came as a god-send for rivals to step into Maruti’s turf; some unleashed a barrage of discounts and special offers ranged between Rs 20,000 and Rs 60,000 on petrol and diesel variants; plus bells and whistles by way of offers on car accessories, insurance schemes and help-with loans. A New Delhi-based car dealer says Maruti’s competition did not ratchet production. Firm interest rates and lack of demand have proved to be dampeners for the industry. But interest rose for the Figo and Liva. “There has been an increase in inquiries, especially given the fact that they offer diesel variants in the same category as the Swift, a current favourite,” says Kapil Arora, partner-automotive practice, Ernst & Young.It seems to be a mixed bag of fortunes for Tata Motors which appears to have gained a bit from Maruti’s travails. There was a spurt in bookings by 33 per cent to 22,311 units led by the Tata Nano which sold 6,507 units. Swift competitor’s in the hatchback space, the Indica series saw a jump of five per cent to 7,591. But at entry sedan level where Maruti’s Dzire holds sway, the Tata Indigo series was unable to make a dent and sales fell by 29 per cent to 3,629 units. You can expect Maruti to make up for the blip due to Manesar. “The overwhelming response to new Swift Dzire, healthy bookings for Ertiga and good demand for new Swift will drive Maruti Suzuki’s volume going forward”, points out Mitul Shah, auto-analyst at Karvy Stock Broking.In terms of market share, the extent of the damage would be figured out only after the September numbers were out, Kandaswami further said. At present Maruti commands about 40 per cent of the passenger vehicle segment, followed by Hyundai which stakes claim to 20 per cent of the market.Car makers hope the upcoming festive season will bring in some cheer when sales typically pick up by up to 30 per cent. More than 25 car new car and updated models are slotted for launch over the next couple of months. “Our recent dealer checks indicate high inventory levels across segments. We expect demand to remain weak till the festive season”, says Chirag Shah, vice-president-Automobiles at Enam Research. But it will take some effort to get buyers to walk into dealerships. “It (festive season) is traditionally the time of purchases in India; It leads to a spurt in sales. However, this year, most manufacturers will have to do something special to woo the buyer,” said Kumar Kandaswami, Leader Manufacturing Industry for Deloitte (India).It’s a hard drive ahead.
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Multi-brand retailing is finally going to take centrestage in India as the government cleared the FDI policy to accommodate 51 per cent foreign ownership in Indian retail. Now valuations will play a key role in determining partnerships. Valuing Indian retail companies, their debt, their lease agreements and the current liabilities on the books will be a cumbersome task. However, partnerships will bloom, the Bharti-Walmart JV will get even more sophisticated, the Max Hypermarkets-Auchan deal will morph in to something more than a royalty agreement and it will give Aditya Birla's More teeth to compete with Biyani's Big Bazaar and Reliance. Even Kishore Biyani could find a global partner to take on Reliance Retail. But amidst the joy, many Indian retail companies who think their suffering is over, may get a rude awakening because due diligence will show that most do not have any strong process, either at the back or the front end, to attract investments. Retailers like Provogue, Brandhouse Retail and Total will have to tweak their models to find partners.“It will take some time before FDI flows in because the whole valuation process will begin and a lot of structures have to be figured out,” says Pinakiranjan Mishra, partner and national leader of Consumer Markets in consulting firm E&Y. Once the debt structures are sorted, these foreign companies will get the best valuations in the Indian market. “Companies that think they have just opened 100 stores will probably not get good valuations because you need a good back-of-house operations, productivity per square feet must be high and finally you need to have paid some of your creditors,” says a mall manager in Delhi.Businessworld’s analysis of 150 retail companies in India showed that the total debt was close to Rs 21,353 crore and current liabilities close to Rs 9,000 crore, with bills payable extending to more than 70 days, suggesting a stretch in day to day operations. Only 20 companies were generating cash from operations. A large chunk of organised retailing has burnt cash since 2006; there have been stories where businessmen could not raise money on time to pay off their creditors. Subiksha’s Rs 800 crore and Vishal Retail’s Rs 700-crore defaults were case in points to why Indian retail was a bit stretched over the last couple of years.Read: Govt Has Its Big Bang MomentRead: Mamata Sets 72-Hour Deadline On Retail FDIRead: Govt Allows 49% FDI In Aviation SectorRead: Broadcast Sector Reform: FDI Up To 74% To Be AllowedRead: India Eyes $2.6 Bn From DisinvestmentRead: Govt Bites The Bullet, Hikes Diesel Price By Rs 5 These retailers apart, the opportunities for thousands of mid-sized organised retailers, who want to pursue their goal of being large retailers, are close at hand. Online companies, which created backend companies to infuse cash from funds of foreign origin, can restructure their operations now that the FDI policy is through. This will also enable Indian pharmacies, jewelry stores and other specialist retail outfits to tie up with foreign retailers. “Remember the tax structures should be very clear, most Indian retailers do not pay service taxes and neither do they create a contingent liability reserve in the balance sheet,” says a source who was consulting a large Indian retailer. As of today the best deal that could have happened is Aditya Birla snatching away Future Group’s pet Pantaloon stores. But that deal itself has taken longer than usual and is being renegotiated. Investments will also be allowed in Indian malls where foreign funds could so far only invest in constructing a mall and not in its retail operations. Again the valuation of income and yield is very low as the business models of retail stores located in malls is driven more towards operations rather than productivity per square feet. It will be sometime before foreign funds take India seriously because of the 250 odd malls, only 10-15 malls in the country are making money.However, all is not doom and gloom. According to AC Nielsen, the penetration of organised retailing in India is very small, there are 6 organised retail stores for every 1,000 disorganised stores, there are about 100 in China to every 1,000. Hopefully, FDI will change the balance, but India will have a unique model where bigger stores will coexist with the smaller ones.“There will be increased investment in supply chain; cold storage infrastructure will help in reducing the wastage percentages of 30 percent to 40 percent of food produce from farm to fork,” says Akash Gupt, Executive Director at PwC.Analysts add that technology transfer to Indian companies will enable best practices in crop management, food safety and hygiene, therefore improving the quality of food products across the board. This together with the back end infrastructure development will help the farmers maximize their earnings and value. “The Indian retail players are today bleeding and they will have access to overseas funds which will allow the Indian players to harvest their value and be a partner in the retail growth story,” says Gupt.
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The World Economic Forum on India saw delegates deliberate the prospects of an India that had promised a lot but failed to deliver. A refreshing aspect of the sessions was the focus on ground realities. Be it investment, transparency, governance, gender equality and foreign relations.All debates had little or no hype. This Summit was about realism. While there is much to be negative about in India, most discussions focused on the way ahead. Constructive ideas dominated negativism.The frankness and candour was seen when delegates criticized even the media for not being able to meet the demands of a growing country. Some felt that media would have to invest more in ground level reporting to do justice to an open democratic society.The lack of consensus on economic growth in India was much the focus. The need to raise the level and capability of governance was seen as a critical need for India. There was a thought that the industry leaders would have to engage the social leaders for improving governance. “Any change much be done through the political system,” said Kris Gopalakrishnan, CEO of Infosys.This also underlined the industry’s concern about disruptive forces that are creating chaos, but are not being constructive. While corruption and crony capitalism were seen as a problem, independent autonomous institutions were seen as the key solution. The independence of constitutional bodies had to be protected. Comptroller and Auditor General Vinod Rai said, “The era of taking brazen decision making behind closed doors is passing. Now government officials have to live with more openness.” Basic issues of gender equality, internet freedom and even road safety were on the agenda.So far the sessions were on the growth of the auto industry. But this Summit debated the fate of people on the road who perish in accidents. There is an accident every minute and a death every three minutes in India. Industry and policy makers held a workshop to seek solutions. A key issue was design. “Indian cars may have become better, but the roads are designed to kill,” said Dinesh Mohan of IIT Delhi.India still does not have a national road regulator. The central, state and local governments have created a mix of laws that lead to ill-designed roads and urban habitat. Some industry leaders sought government mandate to ensure that safety features are included in passenger and commercial vehicles.The much hyped issues of allowing FDI in retail did not impress the delegates. Most felt that India needs thousand small reforms in governance and policy to return to its high growth path. One or two policy changes will not increase domestic growth.The largely corporate event ended up discussing social issues more than investment issues. Perhaps the realisation has dawned that industry cannot progress without substantial investment in social infrastructure like health, education and gender equality.(Pranjal Sharma is a senior business writer. He can be contacted at pranjalx@gmail.com)
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Since liberalising, Indian companies have gone on a buying spree, thus fueling our country’s growth. Just in the first six months of 2012, India targeted and outbound M&A deal value hit $25.5 billion and $2.7 billion, respectively.And we’re not done yet. Despite gloomy global markets, Indian companies are not letting up and have turned their focus on undervalued Eurozone companies. These companies have the markets, know-how and brand that we need to quick-start our global ambitions. For instance, last year, luxury jeweller Gitanjali Group, picked up a handful of high-end Italian brands, including 140-year-old Stefan Hafner.Yet, M&As are inherently risky, as we have witnessed in the on-going Indian Airlines saga. Hay Group’s studies have shown that nearly 60 per cent of deals transacted between 1992 and 2006 left the buyers with eroded shareholder value. Clearly, the long-term value of M&As is not guaranteed.This happens because most buyers focus on only financial and legal due diligence but ignore the vital “third pillar” of intangible capital, that is, the non-monetary assets that drive deal profitability, which accounts for up to 75 per cent of a company’s value.In a typical dash-to-the-finish M&A transaction, it is easy to overlook the intangibles. With intangible capital, what you see isn’t often what you get. There are a lot of assets that look good on paper, but how do you mitigate the risks of ending up purchasing an empty shell? How can you ensure the most favourable outcome for your M&A?Now You See It, Now You Don’tThe common mistake is assuming that intangible capital retains its value throughout the course of M&A integration. Our research has shown otherwise: intangible capital is in a constant state of flux, oscillating back and forth from an “active” to “inert” state. Furthermore, intangible capital is able to create value only when it is in an active mode. In short, it is the state and not the valuation of intangible capital that drives a successful M&A outcome.In the multitude of tasks to be done during an M&A transaction, what are the most important drivers of intangible capital we need to focus on? Our research has identified four core drivers that are responsible for keeping intangible capital in its value-creating state: Open & honest communication Courageous follow-through Similar risk profiles Compatible responseOpen & Honest CommunicationIn 2005, an impending merger between Gillette India and Procter & Gamble was leaked through the media one day before the official announcement. The information sent shockwaves through the minds of employees, who feared a massive layoff as the stock price of Gillette became adversely affected.Fortunately, the CEOs of both companies took personal charge of the situation swiftly. They engaged employees through open communication by allowing people to voice and clarify their doubts. This mitigated the apprehensions and restored employees’ trust, which helped to smooth the integration process. More importantly, the management was perceived to be approachable and accessible, and the people felt confident that the merged entity would continue to keep employees’ best interest in mind.By relaying information to employees – even if it means revealing negative but truthful details about the prospects of the merger and addressing immediate challenges that need to be overcome – intangible capital is activated through the assurance that comes from managing with openness.This way, employees develop a greater sense of trust towards management, and are more disposed to aligning their motivation with that of the executive team’s.What does this mean for us in India? In India, people enjoy discussions. Hence management should take advantage of this and initiate frank and open dialogues as soon as possible. To not do so would also play to our love of discussions – employees will quickly fill the void with rumours, often damaging to morale and business value.Courageous Follow-throughOn the other hand, the merger of Air India and Indian Airlines was a disaster. In the three post-merger years, the losses have escalated and it now survives on government “dole”. In the short span of six years, the merged entity had a rotating door of four chairmen with no one biting the bullet on tough decisions like cutting employee-aircraft ratio, standardization of HR policies, or even the type of aircraft to fly.Certainly, complexities and conflict are part of M&As. Leaders from merging entities must close ranks and not retreat from making tough decisions that inevitably crop up in the course of the transaction. Managers need to display flexibility in accommodating changes, a strong ability for rallying employees to face challenges, and resilience against favouring one party’s service line over the other. They must demonstrate perseverance in adapting to new circumstances, adopting a common fighting stance towards overcoming obstacles, and never taking “no” for an answer.What does this mean for companies in India? Fortunately, employees in India are more accustomed to a top-down approach. As long as a difficult decision is sanctioned by top management, employees will usually fall in line. But this does not mean that leaders should just issue edicts and ram changes through. Some selling and explaining will still be necessary for the long-term success.Similar Risk ProfilesIn 2007, the merger between Tata Steel and Corus took the steel industry by surprise. Tata wasn’t just acquiring a competitor four times its own size, it was taking a huge risk by forking out more than $1 billion for a cross-border M&A – the first Indian company to do so. The deal made history by remaining the second largest M&A in the steel industry.Thankfully, the marriage turned out extremely well for Tata, propelling it from the 56th to the 6th largest steel producer in the world. Among others, culture and a shared risk preference were key success factors. After all, risk-taking wasn’t new to Tata. They have participated in several bold takeovers in the years leading to the acquisition of Corus. On their part, Corus braced themselves by making radical changes to the company culture, helping risk-averse employees to cope with uncertainties when faced with new challenges.Both parties are taking calculated risks in an M&A situation. Clearly, risk appetite differs between companies and individuals – some being more aggressive and others less so. As long as both entities share similar proclivities towards calculated risks, and are prepared to commit themselves fully, it would smoothen the transition process and accelerate M&A success.Given that an increasing number of Indian companies are moving into Western markets through acquisitions, how can knowing the risk appetite profiles help both buyers and target?One way is to use Geert Hofstede’s Uncertainty Avoidance Index (UAI), a tool to measuring a nation’s or a group’s appetite for risk. In Hofstede’s study, UAI scores can range from 0 (pure risk takers) to 100 (pure risk avoiders). India scores 40 on this dimension and thus has a medium-low preference for avoiding uncertainty. Hence, in the market screening process, it would be best to sift out parties that prefer to “wing it”. The implication for Indian companies is this: in any deal, especially one that crosses multiple borders, the closer everyone’s UAI, the better the outcome.Compatible ResponseBy compatible response, we mean that both parties ought to have a similar time-frame for decision-making and execution. It is acceptable if both parties are quick in action, or agree to be methodical when deliberating their options. It is to see how conflicts can flare up rapidly when a bureaucratic decision-making process holds one party back, frustrating the other side, which has a flat organizational structure.What does this mean for companies in India? Unfortunately, we have a tendency to delay making decisions in order to gather more or better information. If this decision-making style is not shared by the other party, then it will be perceived as hesitation and ultimately, backfire on the deal.Marriage Made In HeavenDespite the global economic slowdown, there are good deals to be made to help companies in India achieve new growth. Armed with the right insights to make the best deal – a clear understanding of what you are buying and how it ‘fits’ with your existing company though intangible capital driver analysis – M&A can be a winning strategy for driving long-term growth for the future.Hence, for your next M&A transaction, don’t focus your resources on the valuation of intangible capital. Instead look at the drivers so that intangible capital (already factored into the selling price) remains active and value-generating; never leave a successful outcome to chance.(Dr Andreas Raharso is Director, Hay Group Global Research Centre on Strategy Execution &Gaurav Lahiri is MD, Hay Group India)
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Short passes and constant movement of the ball – that’s Tiki Taka for you, a style of play associated with Spanish football giant FC Barcelona.Now, Finnish cell phone giant Nokia is making its own football moves with its new Tiki Taka campaign that rides on the Spanish football club’s game strategy. With this, Nokia has become the first brand to enter into a sponsoring alliance with FC Barcelona in India.The campaign was launched in India this week by D. Shivkumar, senior V-P for Nokia India Middle East and Africa and Antoni Rossich, CEO of FC Barcelona. The campaign will see Nokia engaging football fans online through social media, augmented reality, and on ground through retail activities and contests. Following this, 11 lucky winners will get the opportunity to fly off to the historical grounds of Camp Nou in Spain. That will be in May 2013, towards the end of La Liga.Nokia is also working on an app for FC Barcelona supporters that will be available on its Lumia phones exclusively.Even as Nokia’s tech moves have come in for some questioning, its sporting associations have paid off for the brand, albeit a bit slowly. Five years ago, it became the official founding sponsor of Kolkata Knight Riders during the inception of the IPL. Despite the dream combination of a prestigious brand, superstar owners, and top notch players, the team struggled to make a mark in the IPL. However, last season’s win changed things. “In terms of the IPL brand rating, Nokia figures in the top 3, so this partnership has done very well for us,” says Shivkumar. He describes a campaign by Nokia that got a million fans to wish the team luck. “It has helped build brand Nokia, by reaching out to the passionate cricket supporters in the country,” says Shivkumar, adding that “Passion in its purest form is found in sports.” This explains why Nokia is betting on football now. Shivkumar claims that in terms of viewership, football comes second only after cricket. However, the football viewership is primarily focused on international football. “Unlike cricket, football will grow from top to bottom,” says Shivkumar. In a country where football is not developed from grassroots level, this seems like an alternative way to promote the sport.For FC Barcelona, which is looking to expand its footprint into India, the association with Nokia paves the way for an easier entry as the campaign will create brand awareness for the club. Nokia will be the official mobile device for FC Barcelona in India and all the marketing promotions for the Spanish club in the country will be done jointly with Nokia.Antoni Rossich, CEO of Barcelona FC, believes that India has immense sporting potential and is optimistic of the future of football within the country. “Twenty years ago there was no interest in football in this country but now things have changed. People recognise clubs like Barcelona FC here, now. ” The Spanish club is here to prove its motto of “mes que un club” (more than a club). The club has announced its plans to set up a football school in the capital, following the footsteps of other football bigwigs like Liverpool FC and Manchester United. The FC Barcelona football school would serve the dual purpose of promoting the club in India, while giving young Indian footballers the opportunity to be associated with a globally recognised brand. Although the Tiki Taka campaign is only for six months, Shivkumar says that like all Nokia’s associations, the one with the Spanish club is long term. Will its new tango act pay off?
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Reforms don’t have to be big bang. Change doesn’t mean one loud proclamation. True change is a result of thousand small reforms. But successive governments in India still have not realised the virtue of small changes.The government keeps struggling to push through that one big reform. It tries to create a political consensus. It tries to weigh the electoral gains or losses of the change. It manipulates and strategises to pass the law in Parliament. All the while the change being planned is diluted to please or neutralise opponents. And finally when it does manage to implement the change, it collapses into exhilarated exhaustion. Unable to move till the next big move.The recent ranking of the ease of doing business shows once again that big reforms are less important than lots of small changes that will make the life of an entrepreneur and citizen easier.The ranking done by the World Bank group assesses countries based on six basic parameters. Dealing with construction permits, registering property, paying taxes, trading across borders, enforcing contracts, resolving insolvency.India has been ranked 132 out of 185 countries. So the grand emerging economy is at the bottom of the heap in ease of doing business. Its ranking is the worst among BRICS countries as well. Large democracies like Brazil and South Africa are ranked better.Many Indians tend to look down upon African countries. But this false sense of superiority should be punctured by the fact that about 15 countries from Africa are ranked much higher than India in ease of doing business.This ranking also embeds parameters that are important for citizens. Issues like registering property, paying taxes and enforcing contracts are as important to citizens as to corporations.Much of these reforms involve judicial and labour reforms. Life can be much easier if there is speedy justice. If contracts can be enforced the rule of law will be stronger. Many people will allow their property to be released in the market without worrying about losing it to tenants.All these changes require a constant effort that centre and state governments are loathe to apply. Many of these changes are also governance and capability issues.The national e-governance programme of the government has been trying to tackle some of these issues by creating efficient technology platforms. But technology alone will not be able to make it easier to do business. Some of the process created by the government only to maintain influence and control will have to be removed.India can move up this ranking once the government recognizes this as a key target. The Prime Minister’s Office or the Planning Commission should set target for the country and start working on each of the parameters. Many cities are also ranked by their ease of doing business. State governments can also resolve to use these ranking to work on improving the atmosphere.The biggest benefit for the government will be improved revenues from increased economic activity. Political parties can benefit from the new jobs that such activity will surely create.It is time now for governments to tackle the many small changes that are needed instead of gettingstuck on one or two big reforms.(Pranjal Sharma is a senior business writer. He can be contacted at pranjalx@gmail.com)
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