92042 Doing Business 2015 India Economy Profile 2015 India Doing Business 2015 India 2 © 2014 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org All rights reserved. 1 2 3 4 17 16 15 14 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Doing Business 2015 India 3 CONTENTS Introduction .................................................................................................................................. 4 The business environment .......................................................................................................... 6 Starting a business ..................................................................................................................... 16 Dealing with construction permits ........................................................................................... 36 Getting electricity ....................................................................................................................... 55 Registering property .................................................................................................................. 66 Getting credit .............................................................................................................................. 73 Protecting minority investors ................................................................................................... 79 Paying taxes ................................................................................................................................ 89 Trading across borders .............................................................................................................. 96 Enforcing contracts .................................................................................................................. 100 Resolving insolvency ................................................................................................................ 108 Labor market regulation ......................................................................................................... 113 Distance to frontier and ease of doing business ranking .................................................... 119 Resources on the Doing Business website ............................................................................ 122 Doing Business 2015 India 4 INTRODUCTION Doing Business sheds light on how easy or difficult it is 1, 2014 (except for the paying taxes indicators, which for a local entrepreneur to open and run a small to cover the period January–December 2013). medium-size business when complying with relevant The Doing Business methodology has limitations. Other regulations. It measures and tracks changes in areas important to business—such as an economy’s regulations affecting 11 areas in the life cycle of a proximity to large markets, the quality of its business: starting a business, dealing with construction infrastructure services (other than those related to permits, getting electricity, registering property, getting trading across borders and getting electricity), the credit, protecting minority investors, paying taxes, security of property from theft and looting, the trading across borders, enforcing contracts, resolving transparency of government procurement, insolvency and labor market regulation. macroeconomic conditions or the underlying strength of In a series of annual reports Doing Business presents institutions—are not directly studied by Doing Business. quantitative indicators on business regulations and the The indicators refer to a specific type of business, protection of property rights that can be compared generally a local limited liability company operating in across 189 economies, from Afghanistan to Zimbabwe, the largest business city. Because standard assumptions over time. The data set covers 47 economies in Sub- are used in the data collection, comparisons and Saharan Africa, 32 in Latin America and the Caribbean, 25 benchmarks are valid across economies. The data not in East Asia and the Pacific, 26 in Eastern Europe and only highlight the extent of obstacles to doing business; Central Asia, 20 in the Middle East and North Africa and they also help identify the source of those obstacles, 8 in South Asia, as well as 31 OECD high-income supporting policy makers in designing regulatory reform. economies. The indicators are used to analyze economic More information is available in the full report. Doing outcomes and identify what reforms have worked, where Business 2015 presents the indicators, analyzes their and why. relationship with economic outcomes and presents This economy profile presents the Doing Business business regulatory reforms. The data, along with indicators for India. To allow useful comparison, it also information on ordering Doing Business 2015, are provides data for other selected economies (comparator available on the Doing Business website at economies) for each indicator. The data in this report are http://www.doingbusiness.org. current as of June Doing Business 2015 India 5 CHANGES IN DOING BUSINESS 2015 As part of a 2-year update in methodology, Doing Finally, the name of the employing workers indicator set Business 2015 incorporates 7 important changes. First, has been changed to labor market regulation, and the the ease of doing business ranking as well as all topic- scope of this indicator set has also been changed. The level rankings are now computed on the basis of indicators now focus on labor market regulation distance to frontier scores (see the chapter on the applying to the retail sector rather than the distance to frontier and ease of doing business ranking). manufacturing sector, and their coverage has been Second, for the 11 economies with a population of more expanded to include regulations on labor disputes and than 100 million, data for a second city have been added on benefits provided to workers. The labor market to the data set and the ranking calculation. These regulation indicators continue to be excluded from the economies are Bangladesh, Brazil, China, India, aggregate distance to frontier score and ranking on the Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian ease of doing business. Federation and the United States. Third, for getting Beyond these changes there are 3 other updates in credit, the methodology has been revised for both the methodology. For paying taxes, the financial statement strength of legal rights index and the depth of credit variables have been updated to be proportional to 2012 information index. The number of points has been income per capita; previously they were proportional to increased in both indices, from 10 to 12 for the strength 2005 income per capita. For enforcing contracts, the of legal rights index and from 6 to 8 for the depth of value of the claim is now set at twice the income per credit information index. In addition, only credit bureaus capita or $5,000, whichever is greater. For dealing with and registries that cover at least 5% of the adult construction permits, the cost of construction is now set population can receive a score on the depth of credit at 50 times income per capita (before, the cost was information index. assessed by the Doing Business respondents). In addition, Fourth, the name of the protecting investors indicator set this indicator set no longer includes the procedures for has been changed to protecting minority investors to obtaining a landline telephone connection. better reflect its scope—and the scope of the indicator For more details on the changes, see the “What is set has been expanded to include shareholders’ rights in changing in Doing Business?” chapter starting on page corporate governance beyond related-party transactions. 24 of the Doing Business 2015 report. For more details Fifth, the resolving insolvency indicator set has been on the data and methodology, please see the “Data expanded to include an index measuring the strength of Notes” chapter starting on page 114 of the Doing the legal framework for insolvency. Sixth, the calculation Business 2015 report. For more details on the distance to of the distance to frontier score for paying taxes has frontier metric, please see the “Distance to frontier and been changed. The total tax rate component now enters ease of doing business ranking” chapter in this profile. the score in a nonlinear fashion, in an approach different from that used for all other indicators (see the chapter on the distance to frontier and ease of doing business ranking). Doing Business 2015 India 6 THE BUSINESS ENVIRONMENT For policy makers trying to improve their economy’s regulatory environment for business, a good place to start ECONOMY OVERVIEW is to find out how it compares with the regulatory environment in other economies. Doing Business provides an aggregate ranking on the ease of doing business Region: South Asia based on indicator sets that measure and benchmark regulations applying to domestic small to medium-size Income category: Lower middle income businesses through their life cycle. Economies are ranked from 1 to 189 by the ease of doing business ranking. This Population: 1,252,139,596 year's report presents results for 2 aggregate measures: the distance to frontier score and the ease of doing GNI per capita (US$): 1,570 business ranking. The ranking of economies is determined by sorting the aggregate distance to frontier (DTF) scores. DB2015 rank: 142 The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute DB2014 rank: 140* distance to the best performance in each Doing Business Change in rank: -2 indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the DB 2015 DTF: 54 worst performance and 100 the frontier. (See the chapter on the distance to frontier and ease of doing business). DB 2014 DTF: 52.8 The 10 topics included in the ranking in Doing Business 2015: starting a business, dealing with construction Change in DTF: 1.2 permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading * DB2014 ranking shown is not last year’s published across borders, enforcing contracts and resolving ranking but a comparable ranking for DB2014 that insolvency. The labor market regulation indicators captures the effects of such factors as data (formerly employing workers) are not included in this corrections and the changes in methodology. See year’s aggregate ease of doing business ranking, but the the data notes starting on page 114 of the Doing data are presented in this year’s economy profile. Business 2015 report for sources and definitions. The aggregate ranking on the ease of doing business benchmarks each economy’s performance on the indicators against that of all other economies in the Doing Business sample (figure 1.1). While this ranking tells much about the business environment in an economy, it does not tell the whole story. The ranking on the ease of doing business, and the underlying indicators, do not measure all aspects of the business environment that matter to firms and investors or that affect the competitiveness of the economy. Still, a high ranking does mean that the government has created a regulatory environment conducive to operating a business. Doing Business 2015 India THE BUSINESS ENVIRONMENT Figure 1.1 Where economies stand in the global ranking on the ease of doing business Source: Doing Business database. Doing Business 2015 India THE BUSINESS ENVIRONMENT For policy makers, knowing where their economy regional average (figure 1.2). The economy’s rankings stands in the aggregate ranking on the ease of doing (figure 1.3) and distance to frontier scores (figure 1.4) business is useful. Also useful is to know how it ranks on the topics included in the ease of doing business relative to comparator economies and relative to the ranking provide another perspective. Figure 1.2 How India and comparator economies rank on the ease of doing business Note: The rankings are benchmarked to June 2014 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. Source: Doing Business database. Doing Business 2015 India 9 THE BUSINESS ENVIRONMENT Figure 1.3 Rankings on Doing Business topics - India (Scale: Rank 189 center, Rank 1 outer edge) Figure 1.4 Distance to frontier scores on Doing Business topics - India (Scale: Score 0 center, Score 100 outer edge) Note: The rankings are benchmarked to June 2014 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. Source: Doing Business database. Doing Business 2015 India 10 THE BUSINESS ENVIRONMENT Just as the overall ranking on the ease of doing business tells Doing Business introduced the distance to frontier score. This only part of the story, so do changes in that ranking. Yearly measure shows how far on average an economy is from the movements in rankings can provide some indication of best performance achieved by any economy on each Doing changes in an economy’s regulatory environment for firms, Business indicator. but they are always relative. Comparing the measure for an economy at 2 points in time Moreover, year-to-year changes in the overall rankings do allows users to assess how much the economy’s regulatory not reflect how the business regulatory environment in an environment as measured by Doing Business has changed economy has changed over time—or how it has changed in over time—how far it has moved toward (or away from) the different areas. To aid in assessing such changes, most efficient practices and strongest regulations in areas covered by Doing Business (figure 1.5). Figure 1.5 How far has India come in the areas measured by Doing Business? Note: The distance to frontier score shows how far on average an economy is from the best performance achieved by any economy on each Doing Business indicator since 2010, except for getting credit, paying taxes, protecting minority investors and resolving insolvency which had methodology changes in 2014 and thus are only comparable to 2013. The measure is normalized to range between 0 and 100, with 100 representing the best performance (the frontier). See the data notes starting on page 114 of the Doing Business 2015 report for more details on the distance to frontier score. Source: Doing Business database. Doing Business 2015 India 11 THE BUSINESS ENVIRONMENT The absolute values of the indicators tell another part of regulation—such as a regulatory process that can be the story (table 1.1). The indicators, on their own or in completed with a small number of procedures in a few comparison with the indicators of a good practice days and at a low cost. Comparison of the economy’s economy or those of comparator economies in the indicators today with those in the previous year may region, may reveal bottlenecks reflected in large numbers show where substantial bottlenecks persist—and where of procedures, long delays or high costs. Or they may they are diminishing. reveal unexpected strengths in an area of business Table 1.1 Summary of Doing Business indicators for India Best performer globally Bangladesh DB2015 Russian Federation Mumbai DB2015 Mexico DB2015 Indicator China DB2015 Delhi DB2015 India DB2015 India DB2014 DB2015 DB2015 Starting a Business 158 156 -- -- 115 128 67 34 New Zealand (1) (rank) Starting a Business (DTF 68.42 65.54 65.95 70.61 81.36 77.43 88.85 92.17 New Zealand (99.96) Score) Procedures (number) 11.9 11.5 13.0 11.0 9.0 11.0 6.0 4.4 New Zealand (1.0)* Time (days) 28.4 26.1 30.0 27.0 19.5 31.4 6.3 11.2 New Zealand (0.5) Cost (% of income per 12.2 38.9 16.3 8.6 16.8 0.9 18.6 1.2 Slovenia (0.0) capita) Paid-in min. capital (% 111.2 124.4 111.2 111.2 0.0 0.0 0.0 0.0 112 Economies (0.0)* of income per capita) Dealing with Hong Kong SAR, Construction Permits 184 183 -- -- 144 179 108 156 China (1) (rank) Dealing with Hong Kong SAR, Construction Permits 30.89 29.70 24.27 36.76 61.90 43.75 68.43 56.70 China (95.53) (DTF Score) Doing Business 2015 India 12 Best performer globally Bangladesh DB2015 Russian Federation Mumbai DB2015 Mexico DB2015 Indicator China DB2015 Delhi DB2015 India DB2015 India DB2014 DB2015 DB2015 Hong Kong SAR, Procedures (number) 25.4 25.4 27.0 24.0 13.4 22.0 11.3 19.8 China (5.0) Time (days) 185.9 185.9 162.0 207.0 269.2 244.3 87.6 238.4 Singapore (26.0) Cost (% of warehouse 28.2 31.3 46.1 12.3 2.1 7.6 10.3 1.9 Qatar (0.0)* value) Getting Electricity 137 134 -- -- 188 124 116 143 Korea, Rep. (1) (rank) Getting Electricity (DTF 63.06 62.55 70.33 56.62 17.32 66.35 68.47 60.89 Korea, Rep. (99.83) Score) Procedures (number) 7.0 7.0 7.0 7.0 9.0 5.5 6.8 5.6 12 Economies (3.0)* Time (days) 105.7 105.7 67.0 140.0 428.9 143.2 78.9 179.1 Korea, Rep. (18.0)* Cost (% of income per 487.7 611.6 84.0 845.7 3,890.1 459.4 346.1 321.0 Japan (0.0) capita) Registering Property 121 115 -- -- 184 37 110 12 Georgia (1) (rank) Registering Property 60.40 60.40 60.40 60.39 31.34 80.67 62.45 91.27 Georgia (99.88) (DTF Score) Procedures (number) 7.0 7.0 7.0 7.0 8.0 4.0 6.8 3.0 4 Economies (1.0)* Time (days) 47.0 47.0 47.0 47.0 244.0 19.4 63.6 19.0 3 Economies (1.0)* Cost (% of property 7.0 7.0 7.0 7.0 7.2 3.6 5.1 0.1 4 Economies (0.0)* value) Getting Credit (rank) 36 30 -- -- 131 71 12 61 New Zealand (1) Getting Credit (DTF 65.00 65.00 65.00 65.00 30.00 50.00 80.00 55.00 New Zealand (100) Score) Strength of legal rights 6 6 6 6 6 4 8 4 3 Economies (12)* index (0-12) Doing Business 2015 India 13 Best performer globally Bangladesh DB2015 Russian Federation Mumbai DB2015 Mexico DB2015 Indicator China DB2015 Delhi DB2015 India DB2015 India DB2014 DB2015 DB2015 Depth of credit 7 7 7 7 0 6 8 7 23 Economies (8)* information index (0-8) Credit registry coverage 0.0 0.0 0.0 0.0 0.9 33.2 0.0 0.0 Portugal (100.0) (% of adults) Credit bureau coverage 22.4 19.8 22.4 22.4 0.0 0.0 100.0 64.6 23 Economies (100.0)* (% of adults) Protecting Minority 7 21 -- -- 43 132 62 100 New Zealand (1) Investors (rank) Protecting Minority 72.50 65.83 72.50 72.50 60.83 45.00 57.50 50.83 New Zealand (81.67) Investors (DTF Score) Extent of conflict of interest regulation 6.7 5.7 6.7 6.7 6.3 5.0 6.0 5.0 Singapore (9.3)* index (0-10) Extent of shareholder governance index (0- 7.8 7.5 7.8 7.8 5.8 4.0 5.5 5.2 France (7.8)* 10) Strength of minority investor protection 7.3 6.6 7.3 7.3 6.1 4.5 5.8 5.1 New Zealand (8.2) index (0-10) United Arab Emirates Paying Taxes (rank) 156 154 -- -- 83 120 105 49 (1)* Paying Taxes (DTF United Arab Emirates 55.53 55.64 55.53 55.53 73.98 67.44 71.17 80.63 Score) (99.44)* Payments (number per Hong Kong SAR, 33.0 33.0 33.0 33.0 21.0 7.0 6.0 7.0 year) China (3.0)* Time (hours per year) 243.0 243.0 243.0 243.0 302.0 261.0 334.0 168.0 Luxembourg (55.0) Trading Across Borders 126 122 -- -- 140 98 44 155 Singapore (1) (rank) Trading Across Borders 65.47 64.89 67.52 63.66 61.36 71.68 81.26 53.58 Singapore (96.47) Doing Business 2015 India 14 Best performer globally Bangladesh DB2015 Russian Federation Mumbai DB2015 Mexico DB2015 Indicator China DB2015 Delhi DB2015 India DB2015 India DB2014 DB2015 DB2015 (DTF Score) Documents to export 7 7 7 7 6 8 4 9 Ireland (2)* (number) Time to export (days) 17.1 17.1 16.0 18.0 28.3 21.0 12.0 21.1 5 Economies (6.0)* Cost to export (US$ per 1,332.0 1,332.0 1,120.0 1,520.0 1,281.0 823.0 1,499.3 2,400.5 Timor-Leste (410.0) container) Cost to export (deflated 1,332.0 1,416.3 1,120.0 1,520.0 1,281.0 823.0 1,499.3 2,400.5 US$ per container) Documents to import 10 10 10 10 9 5 4 10 Ireland (2)* (number) Time to import (days) 21.1 21.1 20.0 22.0 33.6 24.0 11.2 19.4 Singapore (4.0) Cost to import (US$ per 1,462.0 1,462.0 1,250.0 1,650.0 1,515.0 800.0 1,887.6 2,594.5 Singapore (440.0) container) Cost to import (deflated 1,462.0 1,554.5 1,250.0 1,650.0 1,515.0 800.0 1,887.6 2,594.5 US$ per container) Enforcing Contracts 186 186 -- -- 188 35 57 14 Singapore (1) (rank) Enforcing Contracts 25.81 25.81 25.81 25.81 20.82 68.21 64.61 75.85 Singapore (89.54) (DTF Score) Time (days) 1,420.0 1,420.0 1,420.0 1,420.0 1,442.0 452.8 388.9 267.0 Singapore (150.0) Cost (% of claim) 39.6 39.6 39.6 39.6 66.8 16.2 30.9 14.9 Iceland (9.0) Procedures (number) 46.0 46.0 46.0 46.0 41.0 37.0 36.8 35.0 Singapore (21.0)* Resolving Insolvency 137 135 -- -- 147 53 27 65 Finland (1) (rank) Resolving Insolvency 32.60 32.43 32.60 32.60 29.49 55.31 72.59 49.69 Finland (93.85) (DTF Score) Doing Business 2015 India 15 Best performer globally Bangladesh DB2015 Russian Federation Mumbai DB2015 Mexico DB2015 Indicator China DB2015 Delhi DB2015 India DB2015 India DB2014 DB2015 DB2015 Time (years) 4.3 4.3 4.3 4.3 4.0 1.7 1.8 2.0 Ireland (0.4) Cost (% of estate) 9.0 9.0 9.0 9.0 8.0 22.0 18.0 9.0 Norway (1.0) Outcome (0 as piecemeal sale and 1 as 0 0 0 0 0 0 1 0 going concern) Recovery rate (cents on 25.7 25.4 25.7 25.7 25.8 36.0 68.1 43.0 Japan (92.9) the dollar) Strength of insolvency 6.0 6.0 6.0 6.0 5.0 11.5 11.5 8.5 5 Economies (15.0)* framework index (0-16) Note: DB2014 rankings shown are not last year’s published rankings but comparable rankings for DB2014 that capture the effects of s uch factors as data corrections and changes to the methodology. Trading across borders deflated and non-deflated values are identical in DB2015 because it is defined as the base year for the deflator. The best performer on time for paying taxes is defined as the lowest time recorded among all economies in the DB2015 sample that levy the 3 major taxes: profit tax, labor taxes and mandatory contributions, and VAT or sales tax. If an economy has no laws or regulations covering a specific area—for example, insolvency—it receives a “no practice” mark. Similarly, an economy receives a “no practice” or “not possible” mark if regulation exists but is never used in practice or if a competing regulation prohibits such practice. Either way, a “no practice” mark puts the economy at the bottom of the ranking on the relevant indicator. * Two or more economies share the top ranking on this indicator. A number shown in place of an economy’s name indicates the number of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business website (http://www.doingbusiness.org). Source: Doing Business database. Doing Business 2015 India 16 STARTING A BUSINESS Formal registration of companies has many WHAT THE STARTING A BUSINESS immediate benefits for the companies and for business owners and employees. Legal entities can INDICATORS MEASURE outlive their founders. Resources are pooled as several shareholders join forces to start a company. Procedures to legally start and operate a Formally registered companies have access to company (number) services and institutions from courts to banks as well Preregistration (for example, name as to new markets. And their employees can benefit verification or reservation, notarization) from protections provided by the law. An additional benefit comes with limited liability companies. These Registration in the economy’s largest limit the financial liability of company owners to their business city 1 investments, so personal assets of the owners are not Postregistration (for example, social security put at risk. Where governments make registration registration, company seal) easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and Time required to complete each procedure generating more revenue for the government. (calendar days) What do the indicators cover? Does not include time spent gathering information Doing Business measures the ease of starting a business in an economy by recording all procedures Each procedure starts on a separate day (2 officially required or commonly done in practice by procedures cannot start on the same day). an entrepreneur to start up and formally operate an Procedures that can be fully completed industrial or commercial business—as well as the online are recorded as ½ day. time and cost required to complete these procedures. Procedure completed once final document is It also records the paid-in minimum capital that received companies must deposit before registration (or within 3 months). The ranking of economies on the No prior contact with officials ease of starting a business is determined by sorting Cost required to complete each procedure their distance to frontier scores for starting a (% of income per capita) business. These scores are the simple average of the distance to frontier scores for each of the component Official costs only, no bribes indicators. No professional fees unless services required To make the data comparable across economies, by law Doing Business uses several assumptions about the Paid-in minimum capital (% of income business and the procedures. It assumes that all per capita) information is readily available to the entrepreneur and that there has been no prior contact with Deposited in a bank or with a notary before officials. It also assumes that the entrepreneur will registration (or within 3 months) pay no bribes. And it assumes that the business:  Is a limited liability company, located in the  Has a start-up capital of 10 times income per largest business city and is 100% domestically capita. owned . 1  Has a turnover of at least 100 times income per  Has between 10 and 50 employees. capita.  Conducts general commercial or industrial  Does not qualify for any special benefits. activities.  Does not own real estate. 1 For the 11 economies with a population of more than 100 million, data for a second city have been added. Doing Business 2015 India 17 STARTING A BUSINESS Where does the economy stand today? What does it take to start a business in India? According largest business city of an economy, except for 11 to data collected by Doing Business, starting a business economies for which the data are a population-weighted there requires 11.9 procedures, takes 28.4 days, costs average of the 2 largest business cities. See the chapter 12.2% of income per capita and requires paid-in on distance to frontier and ease of doing business minimum capital of 111.2% of income per capita (figure ranking at the end of this profile for more details. 2.1). Most indicator sets refer to a case scenario in the Figure 2.1 What it takes to start a business in India - Mumbai Paid-in minimum capital (% of income per capita): 111.2 Doing Business 2015 India 18 What it takes to start a business in India - Delhi Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the starting a business indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2015 India 19 STARTING A BUSINESS Globally, India stands at 158 in the ranking of 189 average ranking provide other useful information for economies on the ease of starting a business (figure 2.2). assessing how easy it is for an entrepreneur in India to The rankings for comparator economies and the regional start a business. Figure 2.2 How India and comparator economies rank on the ease of starting a business Source: Doing Business database. Doing Business 2015 India 20 STARTING A BUSINESS Economies around the world have taken steps making it they often are part of a larger regulatory reform easier to start a business—streamlining procedures by program. Among the benefits have been greater firm setting up a one-stop shop, making procedures simpler satisfaction and savings and more registered businesses, or faster by introducing technology and reducing or financial resources and job opportunities. eliminating minimum capital requirements. Many have What business registration reforms has Doing Business undertaken business registration reforms in stages—and recorded in India (table 2.1)? Table 2.1 How has India made starting a business easier—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform India eased business start-up by establishing an online VAT DB2011 registration system and replacing the physical stamp previously required with an online version. India made starting a business easier by considerably reducing the registration fees, but also made it more difficult by DB2015 introducing a requirement to file a declaration before the commencement of business operations. These changes apply to both Delhi and Mumbai. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2015 India 21 STARTING A BUSINESS What are the details? Underlying the indicators shown in this chapter for STANDARDIZED COMPANY India is a set of specific procedures—the bureaucratic and legal steps that an entrepreneur must complete to incorporate and register a new firm. These are Legal form: Private Limited Company identified by Doing Business through collaboration with relevant local professionals and the study of Paid in minimum capital requirement: INR laws, regulations and publicly available information 100,000 on business entry in that economy. Following is a City: Mumbai, Delhi detailed summary of those procedures, along with the associated time and cost. These procedures are Start-up Capital: 10 times GNI per capita those that apply to a company matching the standard assumptions (the “standardized company”) used by Doing Business in collecting the data (see the section in this chapter on what the indicators measure). Table 2.2 Summary of time, cost and procedures for starting a business in India - Mumbai Time to No. Procedure Cost to complete complete Obtain director identification number (DIN) online By a notification dated 27 March, 2011, the Ministry of Corporate Affairs (MCA) has revised the process for obtaining a Director Identification Number (DIN). The process for obtaining DIN is as follows: 1) Downloading and completing e-Form DIN-1. This form has to be submitted along with a photograph of the applicant and a scanned copy of supporting documents. 2) Scanning the supporting documents. These include an Affidavit containing the applicant's name, middle name and date of birth. In addition, proof of address (not older than 2 months from the date of filing of form DIN-1) and proof of identify (a copy of the applicant's Income Tax Permanent Account Number (PAN) Card and passport) must be filed. The Affidavit has to be executed on non-judicial stamp 1 paper and must be duly notarized. 1 day INR 100 3) The e-Form must be digitally signed by a practicing professional (i.e. Chartered Accountant/ Company Secretary/Cost and Works Accountant) or the Company Secretary in full time employment of the company. By doing so, the practicing professional verifies the particulars of the applicant as mentioned in the application form. 4) After the certification of a practicing professional, the applicant submits the completed application to the MCA website and obtains a DIN-1 number. Legal Basis: Notification No. G.S.R 427(E) dated 2nd June, 2011 [Companies Director Identification Number (Second Amendment) Rules, 2011] Agency: Ministry of Corporate Affairs (Federal) Doing Business 2015 India 22 Time to No. Procedure Cost to complete complete Obtain a digital signature certificate To use the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate from a certification agency authorized by the Controller of Certification Agencies. These include private agencies like NIC, E-Mudhra, MTNL Trust line, to which company directors submit the prescribed application form along with notarized proof of identity and address. A Class-II Digital Signature Certificate can be obtained for either a period of 1 year or a period of 2 years, and then needs to be renewed for another 1 or 2 years upon payment of renewal fees. Each agency INR 400 to INR 2 has its own fee structure, ranging from INR 400 to INR 2650. The cost 1 day 2,650 will vary in accordance with the duration of the Digital Signature Certificate. Once the Digital Signature Certificate is obtained, the authorized personnel (directors/manager/secretary) are required to register the same with MCA for statutory e-filing. This process is to be done online with MCA after the DIN has been obtained. (http://www.mca.gov.in/MCA21/Rolecheck.html) Agency: Authorized private agency (Federal) Reserve the company name with the Registrar of Companies (ROC) online The guidelines briefly list out the conditions and norms that must be fulfilled while a name is selected for a company. Names that are offensive or are similar to already existing names would not be registered. The Name Availability Guidelines prescribe a time period of one to two days for registering the name of a company, however, due to the large number of applications received, typically this process takes up to 3 days, and is as follows: 3 1. Check availability of the proposed name by checking on the MCA21 2 days INR 1,000 portal for other companies or LLPs having similar names. Alternatively, engage a professional (practicing chartered accountant, company secretary or cost accountant) to perform the check on the MCA 21 portal and provide a search report which can be attached to the application. 2. Prepare the application in eForm 1A with all relevant details and declarations. If a professional has been engaged to check availability of name, have the professional certify and digitally sign the eForm 1A. 3. Upload the eForm 1A to the MCA 21 portal and pay fees of INR 1000 electronically (net banking or credit card). 4. If the e-Form 1A has been certified by a professional (as described Doing Business 2015 India 23 Time to No. Procedure Cost to complete complete above), the proposed name shall be approved by the Registrar of Companies on a priority basis via the Straight Through Process ("STP"), provided the name is not similar to any existing trademark, any of the words proposed in the company's name does not exactly match any existing company's name and the name does not consist of a single word (other than private limited). 5. The name, if made available to the applicant, will be reserved for the applicant to use for 60 days from the date of approval. If the proposed company is not incorporated during this 60 day period, the approval will lapse and the name will be available to other applicants. This is in accordance with the Name Availability Guidelines 2011, General Circular No. 7/2012 dated 25th April 2012 issued by Ministry of Corporate Affairs, Government of India. Agency: Registrar of Companies, Ministry of Corporate Affairs (Federal) Pay stamp duties online, file all incorporation forms and documents online and obtain the certificate of incorporation As of January 1, 2010 it has been made compulsory to pay all stamp duties on incorporation documents online through the Ministry of Corporate Affairs (MCA) website. As a result of these reforms, the mode of payment of stamp duty through affixation of adhesive stamps on Articles of Association and Memorandum of Association has been replaced by the e-payment of applicable stamp duty on Articles and Memorandum of association through MCA portal. The reforms also provide that the documents on which e-stamping has been done, need not to be filed physically: electronic filing of the same would be sufficient. For registration, e-forms 1, 18 and 32 are required to be electronically 4 filed on the website of the Ministry of Company Affairs. In addition, 5 days on average see comments scanned copies of the signed Memorandum and Articles of Association, must be attached to e-Form 1. Proof of location Registered Office in the Form of Lease Deed must be attached to e-Form 18. The 3 forms as well as the memorandum and articles of association must be certified by a practicing professional for accuracy of the information/declarations. The certificate of incorporation is immediately issued by the Registrar of Companies, signed digitally and sent via email to the Company. Fee schedule for a small company of paid-up share capital between INR 500,000 and INR 1,000,000: - Filing of the Memorandum of Association: INR 2,000 - Filing fee for filing the Articles of association: INR 400 - Filing fee for Form INC-7: INR 400 - Filing fee for Form INC-22: INR 400 - Filing fee for Form DIR-12: INR 400 - Stamp duty for Articles of Association: IINR 2,000 (INR 1,000 on every Doing Business 2015 India 24 Time to No. Procedure Cost to complete complete INR 5 Lakhs of authorized capital or part thereof subject to a maximum of 50 Lakhs of Stamp Duty) - Stamp duty for Memorandum of Association: INR 200 Agency: Registrar of Companies, Ministry of Corporate Affairs (Federal) Request and obtain Certificate to Commence Operation Under Companies Act 2013 even a Private Company cannot commence its business or make any borrowings unless it files with Registrar of Companies a statement that the subscription money and minimum paid-up capital has been brought in. (Section 11) According to Section 11 Sub-section (1), a company having a share capital shall not commence any business or exercise any borrowing powers unless: a) Declaration is filed by a director with the Registrar that every INR 400 for a subscriber to the memorandum has paid the value of the shares agreed company with 5 to be taken by him; and 5 days capital between INR b) The company has filed with the Registrar a verification of its 500,000-2,499,999 registered office. The company must file eForm INC-21: Declaration Prior to the Commencement of Business or Exercising Borrowing Powers. This form is required to be filed pursuant to Section 11 (1) (a) of the Companies Act, 2013 and Rule 24 of the Companies (Incorporation and Incidental) Rules, 2014. Agency: Registrar of Companies * Make a seal Under the Companies Act, 1956, all companies are required to have a common seal. Under Section 22 of the Companies Act, 2013, only a 1 day person authorized by the company, in writing under common seal, is (simultaneous with 6 INR 350-500 empowered to execute deeds on behalf of the company. previous procedure) Agency: Authorized vendor (Private) Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) or Unit Trust of India (UTI) Under the Income Tax Act, 1961, each person must quote his or her permanent account number (PAN) for tax payment purposes and the 7 tax deduction and collection account number (TAN) for depositing tax 7 days INR 93 deducted at source. The Central Board of Direct Taxes (CBDT) has instructed banks not to accept any form for tax payment (Chalan) without the PAN or TAN, as applicable. The PAN is a 10-digit alphanumeric number issued on a laminated card by an assessing officer of the Income Tax Department. In order to improve PAN related services, the Income Tax department (effective Doing Business 2015 India 25 Time to No. Procedure Cost to complete complete July 2003) outsourced their operations pertaining to allotment of PAN and issue of PAN cards to UTI Investor Services Ltd, which was authorized to set up and manage IT PAN Service Centers in all cities where there is an Income Tax office. The National Securities Depository Limited (NSDL) has also launched PAN operations effective June 2004, setting up TIN Facilitation Centers. The applicant completes Form 49A (statutory form for applying for PAN), pays the due fees of INR 93 (plus applicable taxes currently at 12.36%) either online or otherwise and submits the application form together with proof of identity, proof of address and 2 recent photographs to the authorized agent/designated service centers for verification. After obtaining PAN from the Income Tax department, UTIISL or NSDL as the case may be, will print the PAN card and deliver it to the applicant. Agency: Private agencies authorized by UTI or NSDL, as outsourced by the Income Tax Department (Federal) * Register with Employees' Provident Fund Organization The Employees Provident Funds & Miscellaneous Provisions Act, 1952 applies to an establishment, employing 20 or more persons and engaged in any of the 183 Industries and Classes of business establishments, throughout India excluding the State of Jammu and Kashmir. The Provident Fund registration focuses on delinquent reporting, underreporting, or non-reporting of workforce size. Provident Fund registration is optional if workforce size is not more than 20. As of April 2012, all employers must register online with the EPFO 12 days, online portal in order to generate challans for making any remittances simultaneous with 8 (www.epfindia.gov.in). Filing of Electronic Challan cum Return (ECR) and no charge previous deposit of contributions are also done online through the same procedure website. Along with the information regarding the employees to be provided by the employer for registration, it has been made mandatory to submit the AADHAAR (unique identification) details of employees. All eligible employees are required to become members of the Fund and individual account number is allotted by the employer in prescribed manner. Agency: Employees Provident Fund Organization (Federal) * Register for VAT online 10 days, INR 500 simultaneous with (Registration Fee) + VAT online registration was introduced by the Commissioner of Sales 9 INR 25 (Stamp Tax, Maharashtra State, Mumbai, Trade Circular No. 4T of 2009, dated previous January 23, 2009. According to Notification No. VAT/AMD-1009/ procedure Duty) for IB/Adm-6, dated 26th August 2009, application for registration of VAT compulsory VAT Doing Business 2015 India 26 Time to No. Procedure Cost to complete complete by the founders who are required to obtain registration or those who registration voluntarily desire to get registration can be, as of 1st October 2009, filed electronically on the website www.mahavat.gov.in. After the completed application form is submitted online, an acknowledgment containing the date and time for attending before the registering authority along with code/designation and address of registering authority is generated. The company should print a copy of the completed e-application and submit it along with the acknowledgement to the registration authority for verification and photo attestation on a given date and time along with relevant documents. If the application is correct and complete in all respect along with relevant documents then the registering authority will generate TIN after verification of the documents. Registration certificate will be printed and issued to the company on the appointed date. Usually, the appointment date is scheduled in the next 10 days. Other accompanying documentation includes: - Certified true copy of the memorandum and articles of association of the company. - Proof of permanent residential address. At least 2 of the following documents must be submitted: copy of passport, copy of driving license, copy of election photo identity card, copy of property card or latest receipt of property tax of Municipal Corporation, copy of latest paid electricity bill in the name of the applicant. - Proof of place of business (for an owner, the case of Doing Business): Proof of ownership of premises or lease agreement or any other relevant documents - One recent passport size photograph of the applicant - Copy of Income Tax Assessment Order having PAN or copy of PAN card - Chalan in Form No. 210 (original) showing payment of registration fee at INR 5000/in case of voluntary RC and INR 500/in other cases Agency: Department of Sales Tax * Register for medical insurance (ESIC) Registration is the process by which every employer/factory and every employee employed for wages are identified for the purpose of the medical insurance scheme and their individual records are set up for 9 days, them. simultaneous with 10 no charge previous As per the Employees' State Insurance (General), Form 01 is the form procedure required to be submitted by Employer for registration. It takes 3 days to a week for the Employer Code Number to be issued. The "intimation letter" containing the Code Number is sent by post to the employer and that takes an additional couple of days. Doing Business 2015 India 27 Time to No. Procedure Cost to complete complete The Employee’s individual insurance is a separate process and occurs after Employer’s registration. The Employer is responsible for submitting the required Declaration Form and employees are responsible for providing correct information to the employer. The employee temporary cards (ESI Cards) are issued on the spot by the local offices in many places. The temporary cards are valid for 13 weeks from the date of appointment of the employees. It takes about 4 to 5 weeks to get a permanent ESI card. In order to insure that all the insured persons receive their identity cards to enable them to receive cash and medical benefit, the identity cards will be delivered to the insured persons directly by the ESI Corporation rather than through the employers. The ESI Act applies to all establishments employing 20 or more persons. The ESI Act provides for sickness benefits, medical relief, maternity benefits for women workers, compensation for fatal and other employment injuries, etc. Every employee who receives wages up to INR 25,000 per month is covered by this Act. Employers can now submit application online for registration under ESI Act on the ESIC website (www.esic.in). Agency: Employees' State Insurance Corporation (Federal) * Obtain a tax account number for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department The tax deduction and collection account number (TAN) is a 10-digit alphanumeric number required by all persons responsible for deducting or collecting tax. The provisions of Section 203A of the Income Tax Act require that all persons who deduct or collect tax at the source must apply for a TAN. The section also makes it mandatory for the TAN to be quoted in all tax-deducted-at-source (TDS) and tax-collected-at-source (TCS) returns, all TDS/TCS payment Chalans, and all TDS/TCS certificates issued. Failure to apply for a TAN or to comply with any of the other provisions of the section is subject to a penalty of INR 10,000/- . 7 days, simultaneous with INR 55 application 11 The application for allotment of a TAN must be filed using Form 49B previous fee and submitted at any TIN Facilitation Center authorized to receive e- procedure TDS returns. Locations of TIN Facilitation Centers are at www.incometaxindia.gov.in and tin.nsdl.com. The processing fee for both applications (a new TAN or a change request) is INR 55 (plus applicable taxes - currently at 12.36%). After verification of application, the same is sent to Income Tax Department and upon satisfaction the department issues the TAN to the applicant. The national government levies the income tax. Since outsourcing, any authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) can accept and process the TAN application. The application for TAN can be made either online TAN can be through Doing Business 2015 India 28 Time to No. Procedure Cost to complete complete the NSDL website www.tin-nsdl.com or offline. However, after the payment of the fee by credit card, the hard copy of the application must be physically filed with NSDL. Agency: Private agencies authorized by NSDL, as outsourced by the Income Tax Department (Federal) Register with Office of Inspector, Mumbai Shops and Establishment Act A statement containing the employer’s and manager’s name and the establishment’s name (if any), postal address, and category must be sent to the local shop inspector with the applicable fees. According to Section 7 of the Bombay Shops and Establishments Act, 1948, the establishment must be registered as follows: - Under Section 7(4), the employer must register the establishment in the prescribed manner within 30 days of the date on which the establishment commences its work. - Under Section 7(1), the establishment must submit to the local shop inspector Form A and the prescribed fees for registering the establishment. Supporting documents must be attached, including a certified true copy of the company's PAN Card, TAN Allotment Letter, Certificate of Incorporation, Memorandum and Articles of Association, a list of company directors, their particulars and copies of their PAN Cards. - Under Section 7(2), after the statement in Form A and the prescribed INR 1,200 fees are received and the correctness of the statement is satisfactorily (registration fee) + audited, the certificate for the registration of the establishment is issued 3 times registration 12 2 days in Form D, according to the provisions of Rule 6 of the Maharashtra fee for Trade Shops and Establishments Rules of 1961. Refuse Charges (INR 3,600) Since the amendments in the Maharashtra Shops & Establishment (Amendment) Rules, 2010, the Schedule for fees for registration & renewal of registration (as per Rule 5) is as follows: 0 employees: INR 120 1 to 5 employees: INR 360 6 to 10 employees: INR 720 11 to 20 employees: INR 1,200 21 to 50 employees: INR 2,400 51 to 100 employees: INR 4,200 101 or more: INR 5,400. In addition, an annual fee (three times the registration and renewal fees) is charged as trade refuse charges (TRC), under the Mumbai Municipal Corporation Act, 1888. Agency: Municipal Corporation of Greater Mumbai Doing Business 2015 India 29 Time to No. Procedure Cost to complete complete * Register for profession tax According to section 5 of the Profession Tax Act, every employer (not being an officer of the government) is liable to pay tax and shall obtain a certificate of registration from the prescribed authority. Profession Tax online registration was introduced by the Commissioner of Sales Tax (Profession Tax), Maharashtra State, Mumbai vide Notification No. PFT2012/NTF 15/Adm-20, dated 19 March 2012. As of April 2012, all applications for registration (i.e. for obtaining a Profession Tax Registration Certificate) are required to be made online on the website of www.mahavat.gov.in, in 'Form I'. In addition, the 2 days, employer must obtain a certificate of enrolment under section 5(2) of simultaneous with 13 the Profession tax Act; thus, the company is required to submit Form II. no charge previous Upon electronic submission of forms I and II, an acknowledgement procedure containing the date and time for attending before the Tax Registration Authority is generated. The director or Authorised Signatory then submits this acknowledgement together with supporting documents (proof of address, company deed, registration number and certificate) on a given date and time to the Professions Tax Registration Authority and obtains the TIN (Registration/Enrolment Certificate Number under the Profession Tax Act) as per Trade Circular No. 5T of 2012 (profession tax) dated 31st March, 2012. Agency: Commissioner of Profession Tax, Department of Sales Tax * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database. Summary of time, cost and procedures for starting a business in India - Delhi Time to No. Procedure Cost to complete complete Obtain director identification number (DIN) online from the Ministry of Corporate Affairs portal The concept of a Director Identification Number (DIN) has been introduced for the first time with the insertion of Sections 266A to 266G of Companies (Amendment) Act 2006. As such, all the existing and intending Directors have to obtain DIN within the prescribed time- frame as notified. As per the revised procedure for DIN Allotment, any person intending to apply for DIN shall have to make an application in 1 day INR 100 1 eForm DIN-1 and should follow the following procedure: 1. eForm DIN- 1 has to follow the offline eFiling process. 2. Attach the photograph and scanned copy of supporting documents i.e. proof of identity, and proof of residence as per the guidelines. Physical documents are not required to submit at DIN cell. 3. Along with the supporting documents, verification by the applicant for applying for allotment of Director Identification Number (DIN) shall also be attached. This shall contain the name, father’s name, date of birth and text of declaration and physical signature of the applicant. 4. The eForm shall have to be Doing Business 2015 India 30 Time to No. Procedure Cost to complete complete digitally signed and shall be uploaded on MCA21 portal. 5. Upon upload, Pay the fees for eForm DIN-1. Only electronic payment of the fees shall be allowed (i.e. Netbanking/Credit Card). 6. Upon upload and successful payment: In case eForm DIN-1 is signed by an applicant or by the Managing Director/existing Director of the company in which the applicant is a Director or the Company Secretary in full time employment of the company, or details have been identified as a potential duplicate, Provisional DIN shall be generated. 7. Intimate approved DIN to your Companies: On approval of DIN, intimate your DIN to all the company(ies) (within a period of 30 days from the date of approval) in which you are a Director, in form DIN-2. 8. Company to intimate your DIN to ROC: After the Director has intimated the DIN allotted to the company(ies). The Company(ies) is/are then required to intimate the DINs of its Directors to the ROC in eForm DIN-3 within a period of seven days of receiving eForm DIN-2. (Filing of DIN-3 is applicable only in cases, where the date of appointment of Director(s) in such company(ies), is prior to September 1, 2007) Agency: Ministry of Corporate Affairs Obtain digital signature certificate online from private agency authorized by the Ministry of Corporate Affairs (National) To use the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate from a certification agency authorized by the Controller of Certification Agencies. These include private agencies like NIC, E-Mudhra, MTNL Trust line, to which company directors submit the prescribed application form along with notarized proof of identity and address. A Class-II Digital Signature Certificate can be obtained for either a period of 1 year or a period of 2 years, and then needs to be renewed for another 1 or 2 years upon 2 payment of renewal fees. Each agency has its own fee structure, 1 day INR 400-1,800 starting from INR 400. The cost will vary in accordance with the duration of the Digital Signature Certificate. Once the Digital Signature Certificate is obtained, the authorized personnel (directors/manager/secretary) are required to register the same with MCA for statutory e-filing. This process is to be done online with MCA after the DIN has been obtained. (http://www.mca.gov.in/MCA21/Rolecheck.html) Agency: Certified private agencies Reserve the company name online with the Registrar of Companies (ROC) The Name Availability Guidelines prescribe a time period of one to two 3 days for registering the name of a company, however, due to the large 2 days INR 1,000 number of applications received, typically this process takes up to 3 days, and is as follows: 1. Check availability of the proposed name by checking on the MCA21 portal for other companies or LLPs having similar names. Alternatively, engage a professional (practicing chartered Doing Business 2015 India 31 Time to No. Procedure Cost to complete complete accountant, company secretary or cost accountant) to perform the check on the MCA 21 portal and provide a search report which can be attached to the application. 2. Prepare the application in eForm INC-1: Application for Reservation of Name with all relevant details and declarations. If a professional has been engaged to check availability of name, have the professional certify and digitally sign the eForm INC-1. 3. Upload the eForm INC-1 to the MCA21 portal and pay fees of Rs. 1000 electronically (net banking or credit card). 4. If the e-Form INC-1 has been certified by a professional (as described above), the proposed name will be made available to the applicant online, without any backend processing, provided the name is not similar to any existing trademark, any of the words proposed in the company's name does not exactly match any existing company's name and the name does not consist of a single word (other than private limited). If the e-Form INC-1 is not certified by a professional or if any of these provisos are not satisfied, the proposed name will be processed by the Registrar of Companies and availability or non-availability of name will be communicated to the applicant. 5. The name, if made available to the applicant, will be reserved for the applicant to use for 60 days from the date of approval. If the proposed company is not incorporated during this 60 day period, the approval will lapse and the name will be available to other applicants. This is in accordance with the Name Availability Guidelines 2011, General Circular No. 7/2012 dated 25th April 2012 issued by Ministry of Corporate Affairs, Government of India. The fee for registering the name of a company is INR 1,000. Agency: Registrar of Companies (ROC) Pay stamp duties online, file all incorporation forms and documents online and obtain the Certificate of Incorporation As of January 1, 2010 it has been made compulsory to pay all stamp duties on incorporation documents online through the Ministry of Corporate Affairs (MCA) website. As a result of these reforms, the mode of payment of stamp duty through affixation of adhesive stamps on Articles of Association and Memorandum of Association has been replaced by the e-payment of applicable stamp duty on Articles and Memorandum of Association through MCA portal. The reforms also provide that the documents on which e-stamping has been done, need not to be filed physically: electronic filing of the same would be 5 days on average see comments 4 sufficient. For registration, the following forms are required to be electronically filed on the website of the Ministry of Company Affairs: (a) e-Form INC-7 (Application for Incorporation of Company (Old Form 1)); (b) e-Form INC-22 (Notice of Situation or Change of Situation of Registered Office (Old Form 18)); (c) e-Form DIR-12 (Particulars of Appointment of Directors and the Key Managerial Personnel and the Changes among Them (Old Form 32)) Along with these documents, scanned copies of the signed and the Memorandum and Articles of Association, must be attached to eForm INC-7. Proof of location Registered Office in the Form of Lease Deed or NOC from the Owner must be attached to Form INC-22. The 3 forms as well as the Memorandum and Articles of association must be certified by a Doing Business 2015 India 32 Time to No. Procedure Cost to complete complete practicing professional regarding the correctness of the information/declarations. - The fees for registering a company can be paid online using a credit card or by payment in cash at certain authorized banks. - The Certificate of Incorporation is immediately issued by the Registrar of Companies, signed digitally and sent via email to the Company. Fee schedule for a small company of paid-up share capital between INR 500,000 and INR 1,000,000: - Filing of the Memorandum of Association: INR 2,000 - Filing fee for filing the Articles of association: INR 400 - Filing fee for Form INC-7: INR 400 - Filing fee for Form INC-22: INR 400 - Filing fee for Form DIR-12: INR 400 - Stamp duty for Articles of Association: INR 150 - Stamp duty for Memorandum of Association: INR 200 Agency: Registrar of Companies (ROC) Request and obtain Certificate to Commence Operation Under Companies Act 2013 even a Private Company cannot commence its business or make any borrowings unless it files with Registrar of Companies a statement that the subscription money and minimum paid-up capital has been brought in. (Section 11) According to Section 11 Sub-section (1), a company having a share capital shall not commence any business or exercise any borrowing powers unless: a) Declaration is filed by a director with the Registrar that every subscriber INR 400 for a to the memorandum has paid the value of the shares agreed to be company with 5 5 days on average taken by him; and b) The company has filed with the Registrar a capital between INR verification of its registered office. The company must file eForm INC- 500,000-2,499,999 21: Declaration Prior to the Commencement of Business or Exercising Borrowing Powers. This form is required to be filed pursuant to Section 11 (1) (a) of the Companies Act, 2013 and Rule 24 of the Companies (Incorporation and Incidental) Rules, 2014. Agency: Registrar of Companies * Make a seal Under the Companies Act, 1956, all companies are required to have a common seal. Under Section 22 of the Companies Act, 2013, only a 1 day person authorized by the company, in writing under common seal, is (simultaneous with 6 INR 500-1,000 empowered to execute deeds on behalf of the company. previous procedure) Agency: Authorized vendor (Private) Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL) or the Unit Trust of India (UTI) Investors Services Ltd., 7 as outsourced by the Income Tax Department 7 days INR 93 Under the Income Tax Act, 1961, each person must quote his or her permanent account number (PAN) for tax payment purposes and the Doing Business 2015 India 33 Time to No. Procedure Cost to complete complete tax deduction and collection account number (TAN) for depositing tax deducted at source. The Central Board of Direct Taxes (CBDT) has instructed banks not to accept any form for tax payment (Chalan) without the PAN or TAN, as applicable. The PAN is a 10-digit alphanumeric number issued on a laminated card by an assessing officer of the Income Tax Department. In order to improve PAN related services, the Income Tax department (effective July 2003) outsourced their operations pertaining to allotment of PAN and issue of PAN cards to UTI Investor Services Ltd, which was authorized to set up and manage IT PAN Service Centers in all cities where there is an Income Tax office. The National Securities Depository Limited (NSDL) has also launched PAN operations effective June 2004, setting up TIN Facilitation Centers. The PAN application is made through the above mentioned service centers on Form 49A, with a certified copy of the certificate of registration, issued by the Registrar of Companies, along with proof of company address and personal identity. A fee of INR 93 (plus applicable taxes currently at 12.36%) applies for processing the PAN application. IT PAN Service Centers or TIN Facilitation Centers will supply PAN application forms (Form 49A), assist the applicant in filling up the form, collect filled form and issue acknowledgement slip. After obtaining PAN from the Income Tax department, UTIISL or NSDL as the case may be, will print the PAN card and deliver it to the applicant. The application for PAN can also be made online but the documents still need to be physically dropped off for verification with the authorized agent. For more details (www.incometaxindia.gov.in , www.utiisl.co.in , www.tin- nsdl.com) Agency: Private agencies authorized by UTI or NSDL, as outsourced by the Income Tax Department (Federal) * Register with the Employees' Provident Fund Organization The Employees Provident Fund Organization (EPFO) is a statutory organization under the Ministry of Labor and Employment. The Provident Fund registration focuses on delinquent reporting, underreporting, or non-reporting of workforce size. If a company has more than 20 employees, then it is mandatory to register with the EPFO and a code number will be allotted to the company. Once the employer 12 days on is registered with the EPFO, it will register his employees with the office average 8 and open Provident Fund accounts in the name of each employee. (simultaneous with no charge More information is available at www.epfindia.gov.in. As per an internal previous circular, the code number is to be allotted within 3 days of the date of procedure) submission, if the application is complete in all respects. However, in many cases applicants have received the intimation letter with the code number later: in 12 to 15 days. Agency: Employees Provident Fund Organization (Federal) Doing Business 2015 India 34 Time to No. Procedure Cost to complete complete * Register for medical insurance at the regional office of the Employees' State Insurance Corporation Registration is the process by which every employer and every paid employee is identified for health-insurance purposes. The Employees' State Insurance (ESI) Act (1948) provides for a fund administered by the ESI corporation in which contribution is made both by the employer and the employee at the rates prescribed by the National Government. The Employer should register within 15 days after the Act becomes applicable. For this purpose, the employer should submit Form 01: Employees’ Registration Form to the ESI regional office. Upon receipt of the registration form, the office shall allot an employer's code number 10 days and shall inform the employer of that number through an "intimation (simultaneous with 9 letter" sent by post. An employee's individual insurance involves a no charge previous separate process, one which is initiated after employer's registration. procedure) The employer should fill out declaration forms for all coverable employees and submit the same, along with Form 3: Return of Declaration Forms, to the appropriate regional office within 10 days of the employee's appointment date. The employees' temporary cards (ESI Cards) are issued on the spot. It takes about 4 to 5 weeks to get a permanent ESI card. More information is available at http://www.esic.nic.in. Agency: Employees' State Insurance Corporation, Ministry of Labor and Employment * Register for Value-Added Tax (VAT) at the Department of Trade and Taxes, Government of NCT of Delhi (State) Form DVAT 04: Application for Registration under Delhi Value Added Tax Act, 2004 needs to be filed with Department of Trade and Taxes, Government of NCT of Delhi. Mandatory Supporting Documents are: (1) Parts A, B, C & D of the Form duly filled in; (2) Proof of incorporation of the applicant dealer i.e. copy of deed of constitution (partnership deed, if any, certificate of registration under the Societies Act, Trust deed, Memorandum and Articles of Association etc.) duly certified by the authorized signatory; (3) Proof of identity of authorized signatory INR 500 registration signing the Registration Application Form; (4) Two self-addressed 9 days on average fee + INR 25 stamp envelopes (Without stamps); (5) In case of a dealer applying for (simultaneous with 10 duty for registration and simultaneously opting for payment of tax under previous compulsory VAT composition scheme, please attach application in Form DVAT 01 along procedure) registration with this application; (6) Proof of Security along with duly filled Form DVAT-12 Optional Supporting Documents (For reduction in Security Amount) are: (1) Proof of ownership of principal place of business; (2) Proof of ownership of residential property by proprietor/ managing partner; (3) Copy of passport of proprietor/ managing partner; (4) Copy of Permanent Account Number in the name of the business allotted by the Income Tax Department (5) Copy of last electricity bill (The bill should be in the name of the business and for the address specified as the main place of business in the registration form) (6) Copy of last telephone bill (The bill should be in the name of the business and for the address specified as the main place of business in Doing Business 2015 India 35 Time to No. Procedure Cost to complete complete the registration form) Agency: Department of Trade and Taxes, Government of NCT of Delhi * Obtain a Tax Account Number (TAN) for income taxes deducted at the source from an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL), as outsourced by the Income Tax Department The tax deduction and collection account number (TAN) is a 10-digit alphanumeric number required by all persons responsible for deducting or collecting tax. The provisions of Section 203A of the Income Tax Act require that all persons who deduct or collect tax at the source must apply for a TAN. The section also makes it mandatory for the TAN to be quoted in all tax-deducted-at-source (TDS) and tax-collected-at-source (TCS) returns, all TDS/TCS payment Chalans, and all TDS/TCS certificates issued. Failure to apply for a TAN or to comply with any of the other provisions of the section is subject to a penalty of INR 10,000/- . The application for allotment of a TAN must be filed using Form 49B and submitted at any TIN Facilitation Center authorized to receive e- 7 days TDS returns. Locations of TIN Facilitation Centers are at (simultaneous with INR 55 application 11 www.incometaxindia.gov.in and tin.nsdl.com. The processing fee for previous fee both applications (a new TAN or a change request) is INR 55 (plus procedure) applicable taxes currently at 12.36%). After verification of application, the same is sent to Income Tax Department and upon satisfaction the department issues the TAN to the applicant. The national government levies the income tax. Since outsourcing, any authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) can accept and process the TAN application. The application for TAN can be made either online TAN can be through the NSDL website www.tin-nsdl.com or offline. However, after the payment of the fee by credit card, the hard copy of the application must be physically filed with NSDL. Agency: Private agencies authorized by UTI or NSDL, as outsourced by the Income Tax Department (Federal) * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database. Doing Business 2015 India 36 DEALING WITH CONSTRUCTION PERMITS Regulation of construction is critical to protect the WHAT THE DEALING WITH CONSTRUCTION public. But it needs to be efficient, to avoid excessive PERMITS INDICATORS MEASURE constraints on a sector that plays an important part in every economy. Where complying with building regulations is excessively costly in time and money, Procedures to legally build a warehouse many builders opt out. They may pay bribes to pass (number) inspections or simply build illegally, leading to Submitting all relevant documents and hazardous construction that puts public safety at risk. obtaining all necessary clearances, licenses, Where compliance is simple, straightforward and permits and certificates inexpensive, everyone is better off. Submitting all required notifications and What do the indicators cover? receiving all necessary inspections Doing Business records the procedures, time and cost Obtaining utility connections for water and for a business in the construction industry to obtain sewerage all the necessary approvals to build a warehouse in Registering the warehouse after its the economy’s largest business city, connect it to completion (if required for use as collateral or basic utilities and register the warehouse so that it for transfer of the warehouse) can be used as collateral or transferred to another Time required to complete each procedure entity. (calendar days) The ranking of economies on the ease of dealing with Does not include time spent gathering construction permits is determined by sorting their information distance to frontier scores for dealing with Each procedure starts on a separate day. construction permits. These scores are the simple Procedures that can be fully completed online average of the distance to frontier scores for each of are recorded as ½ day. the component indicators. Procedure considered completed once final To make the data comparable across economies, document is received Doing Business uses several assumptions about the business and the warehouse, including the utility No prior contact with officials connections. Cost required to complete each procedure (% The business: of warehouse value) Official costs only, no bribes  Is a limited liability company operating in the construction business and located in  Will have complete architectural and the largest business city. For the 11 technical plans prepared by a licensed economies with a population of more than architect or engineer. 100 million, data for a second city have  Will be connected to water and sewerage been added. Is domestically owned and (sewage system, septic tank or their operated. equivalent). The connection to each utility  Has 60 builders and other employees. network will be 150 meters (492 feet) long. The warehouse:  Will be used for general storage, such as of books or stationery (not for goods requiring  Is valued at 50 times income per capita. special conditions).  Is a new construction (there was no  Will take 30 weeks to construct (excluding all previous construction on the land). delays due to administrative and regulatory requirements). Doing Business 2015 India 37 DEALING WITH CONSTRUCTION PERMITS Where does the economy stand today? What does it take to comply with the formalities to build business city of an economy, except for 11 economies for a warehouse in India? According to data collected by which the data are a population-weighted average of the Doing Business, dealing with construction permits there 2 largest business cities. See the chapter on distance to requires 25.4 procedures, takes 185.9 days and costs frontier and ease of doing business ranking at the end of 28.2% of the warehouse value (figure 3.1). Most this profile for more details. indicator sets refer to a case scenario in the largest Figure 3.1 What it takes to comply with formalities to build a warehouse in India - Mumbai Doing Business 2015 India 38 What it takes to comply with formalities to build a warehouse in India - Delhi Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the dealing with construction permits indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2015 India 39 DEALING WITH CONSTRUCTION PERMITS Globally, India stands at 184 in the ranking of 189 economies and the regional average ranking provide economies on the ease of dealing with construction other useful information for assessing how easy it is for permits (figure 3.2). The rankings for comparator an entrepreneur in India to legally build a warehouse. Figure 3.2 How India and comparator economies rank on the ease of dealing with construction permits Source: Doing Business database. Doing Business 2015 India 40 DEALING WITH CONSTRUCTION PERMITS Smart regulation ensures that standards are met while an effort to ensure building safety while keeping making compliance easy and accessible to all. Coherent compliance costs reasonable, governments around the and transparent rules, efficient processes and adequate world have worked on consolidating permitting allocation of resources are especially important in sectors requirements. What construction permitting reforms has where safety is at stake. Construction is one of them. In Doing Business recorded in India (table 3.1)? Table 3.1 How has India made dealing with construction permits easier—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform India reduced the time required to obtain a building permit by DB2013 establishing strict time limits for preconstruction approvals. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2015 India 41 DEALING WITH CONSTRUCTION PERMITS What are the details? The indicators reported here for India are based on a BUILDING A WAREHOUSE set of specific procedures—the steps that a company must complete to legally build a warehouse— identified by Doing Business through information Estimated cost of collected from experts in construction licensing, INR 4,496,273 construction : including architects, civil engineers, construction lawyers, construction firms, utility service providers City : Mumbai, Delhi and public officials who deal with building regulations. These procedures are those that apply The procedures, along with the associated time and cost, to a company and structure matching the standard are summarized below. assumptions used by Doing Business in collecting the data (see the section in this chapter on what the indicators cover). Table 3.2 Summary of time, cost and procedures for dealing with construction permits in India - Mumbai Time to No. Procedure Cost to complete complete Submit application and design plans and pay scrutiny fee BuildCo submits application form with plans and all required documents, as prescribed by Section 337 of the BMC Act, at the Andhuri Building Proposal Office of the BMC. If all documents are in order and the file is complete, BuildCo can proceed to pay the scrutiny fees in the same building by cash or bank draft. Once the fees have been paid, the application file is forwarded to the concerned officer in the Building Proposal Office. Then the file is forwarded to the Survey Office, which will remark on the application file and check the remarks from the Development Plan Office (obtained 1 during the design stage of the project). If the Survey Office is satisfied 1 day INR 85,840 with their review, they will send back the application file to the Building Proposal Office within one week. The cost for this procedure is INR 66 per sq. m. for commercial projects and INR 33 per sq. m. of the built up area or the plot area, whichever is larger, for residential projects. Agency: Building Proposal Office, Municipal Corporation of Greater Mumbai Receive site inspection from Building Proposal Office A sub-engineer from the Building Proposal Office will conduct a site inspection within 3 -- 4 days of receiving the file from the survey office. The date and time of the site inspection are arranged by BuildCo’s 1 day no charge 2 architect. BuildCo must be on-site when the inspection takes place. Agency: Building Proposal Office, Municipal Corporation of Greater Mumbai Doing Business 2015 India 42 Time to No. Procedure Cost to complete complete Obtain Intimation of Disapproval and pay fees After the site inspection, the application file returns to the Building Proposal Office to receive an intimation of disapproval (authorization). The concerned Sub Engineer reviews the proposal and forwards the report to the Assistant Engineer and Executive Engineer. The proposal is approved at the Executive Engineer’s level if no concessions are involved. There are 3 executive engineers in the main Municipal Corporation of Greater Mumbai (MCGM) office and 2 in the Andhuri office (the latter is the office considered for the purposes of this study). Complete applications that do not require concessions (i.e. claiming of areas free of FSI as per provision in DCR 1991, deficiency in open spaces etc.) can be approved within a week. However, the majority of applications require some concessions and further scrutiny so they must be forwarded to the competent authorities. This latter process may take 30 -- 90 days to complete. The intimation of disapproval is issued with a list of NOC’s which the applicant must obtain separately from various departments and government authorities. Final clearance to build will only be given once BuildCo obtains all NOC’s. The NOC’s assigned to the intimation of disapproval are case specific. For the purpose of this study, Doing 3 Business has determined 7 basic NOC’s that are required of almost all 29 days INR 996,260 projects: • Tree Authority • Storm Water and Drain Department • Sewerage Department • Hydraulic Department • Environmental Department (concerned with debris management) • Traffic and Coordination Department • CFO (fire clearance) BuildCo’s architect must take the Intimation of Disapproval and the design plans to each clearance office separately. NOCs can be applied for simultaneously, but NOC offices are spread out so the submission for these 7 NOC’s is likely to take some time. The cost for this procedure is INR 66 per square meter for commercial buildings + development charges of INR 700 per square meter for commercial buildings Agency: Building Proposal Office, Municipal Corporation of Greater Mumbai Doing Business 2015 India 43 Time to No. Procedure Cost to complete complete Submit structural plans approved by a structural engineer The Intimation of Disapproval (IOD) is only an approval of the civil plans. Review of the structural plans is done in parallel with the NOC process. No approval to this plan is required from the Municipal Corporation but copies are required to be submitted. Time required for submitting these structural plans is one day. 1 day no charge 4 Agency: Building Proposal Office, Municipal Corporation of Greater Mumbai * Apply for no-objection certificate (NOC) from Tree Authority Due to stringent environmental regulations, BuildCo must receive clearance from the Tree Authority (set up under the Maharashtra (urban areas) Preservation of Trees Act, 1975). The Tree Authority commission only meets once a month. The Tree Authority must ascertain what trees 5 (if any) will be cut down as a result of construction. If trees are to be cut 1 day no charge down, BuildCo will have to plant trees to replace them. Agency: Tree Authority, Municipal Corporation of Greater Mumbai Receive inspection from Tree Authority Inspectors from the Tree Authority visit the site to check if there are any trees located on the premises. 1 day no charge 6 Agency: Tree Authority, Municipal Corporation of Greater Mumbai Obtain NOC from Tree Authority Upon receipt of application for NOC, the Tree Authority will send a Tree Officer to personally inspect the trees on the premise. The Tree Officer then submits a report to the Tree Authority within a period of 30 days 7 from the receipt of the application. 30 days INR 4,500 Agency: Tree Authority, Municipal Corporation of Greater Mumbai * Request and obtain NOC from Storm Water and Drain Department 8 7 days no charge Agency: Storm Water and Drain Department, Municipal Corporation of Greater Mumbai Doing Business 2015 India 44 Time to No. Procedure Cost to complete complete * Request and obtain NOC from Sewerage Department 9 7 days INR 77,306 Agency: Sewerage Department, Municipal Corporation of Greater Mumbai * Request and obtain NOC from Electric Department BuildCo has to inform Brihanmumbai Electric Supply and Transport (BEST) of the project's power requirements along with a copy of the application submitted for building plan approval. BEST will assess 10 whether an electrical substation upgrade is required at this stage. 7 days no charge Agency: Brihanmumbai Electric Supply and Transport (BEST) * Request and obtain NOC from Traffic & Coordination Department 11 7 days no charge Agency: Traffic & Coordination Department, Municipal Corporation of Greater Mumbai * Request and obtain NOC from Chief Fire Office All commercial structures require a fire safety clearance. 12 7 days INR 13,006 Agency: Chief Fire Office, Municipal Corporation of Greater Mumbai Obtain commencement certificate and pay development charges Upon submission of all required NOCs mentioned in the IOD and on compliance of the IOD conditions, the applicant may submit a request for the Commencement Certificate. The documents and NOC submitted by the applicants are verified by the staff and the necessary Commencement Certificate is approved. After payment of development charges and other applicable premium the Commencement Certificate is issued within 7 to 15 days. 13 The commencement certificate is valid for four years in the aggregate, 10 days INR 836,100 but must be renewed before the expiry of one year from the date it was issued if the work has not yet commenced. Such renewal shall be for three consecutive terms of one year each, after which the proposal would need to obtain development permission afresh. The cost for the CC is INR 200.00 per sq. m. of land + INR 500.00 per sq. m. of building area. Agency: Building Proposal Office, Municipal Corporation of Greater Doing Business 2015 India 45 Time to No. Procedure Cost to complete complete Mumbai Request and receive inspection of plinth 14 1 day no charge Agency: Building Proposal Office, Municipal Corporation of Greater Mumbai Submit letter stating completion of building works to obtain an occupancy certificate and certificate of completion BuildCo's architect must submit a formal letter stating that construction has been completed according to the standards set forth in the IOD 1 day no charge 15 and CC. Agency: Tree Authority, Municipal Corporation of Greater Mumbai * Request and obtain completion NOC from Tree Authority 16 3 days no charge Agency: Tree Authority, Municipal Corporation of Greater Mumbai * Request and obtain completion NOC from Storm Water and Drain Department 17 3 days no charge Agency: Storm Water and Drain Department, Municipal Corporation of Greater Mumbai * Request and obtain completion NOC from Sewerage Department 18 3 days no charge Agency: Sewerage Department, Municipal Corporation of Greater Mumbai * Request and obtain completion NOC from Electric Department 19 3 days no charge Agency: Electric Department, Municipal Corporation of Greater Mumbai Doing Business 2015 India 46 Time to No. Procedure Cost to complete complete * Request and obtain completion NOC from Traffic & Coordination Department 20 3 days no charge Agency: Traffic & Coordination Department, Municipal Corporation of Greater Mumbai * Request and obtain completion NOC from Chief Fire Office All commercial structures require fire safety clearance according to fire and safety rules and regulations stipulated in Development Control Rules 1991 and the National Building Code. The fee for low-rise commercial buildings is INR 5.00 per sq. m. 21 This NOC may be requested and obtained online, but it still takes 3 days INR 6,503 several days to receive. Agency: Chief Fire Office, Municipal Corporation of Greater Mumbai * Apply for permanent water and sewer connection BuildCo must visit the ward office and submit a written request for a water and sewerage connection. The connection request must be submitted along with a copy of the building plans. 1 day no charge 22 Agency: Municipal Corporation of Greater Mumbai Receive on-site inspection for connection to water and sewer The Assistant Engineer of the Municipal Corporation makes the inspection. There are two inspections: one before the connections are completed and another after completion. The inspection would not 23 take more than a day. An officer of the Municipal Corporation inspects 1 day no charge the premises and prepares a report on the connection. Agency: Municipal Corporation of Greater Mumbai Request and receive completion inspection from Building Proposal Office 24 1 day no charge Agency: Building Proposal Office, Municipal Corporation of Greater Mumbai Doing Business 2015 India 47 Time to No. Procedure Cost to complete complete Obtain completion certificate The owner, through a licensed plumber, shall furnish a drainage completion certificate to the Commissioner. The licensed surveyor, engineer, or architect who has supervised the construction shall furnish a building completion certificate to the Commissioner. This shall be accompanied by three sets of plans of the completed development. The 25 Commissioner shall inspect the work, and after satisfying himself that 30 days no charge there is no deviation from the approved plans, issue a certificate of acceptance of the completion of the work. Agency: Building Proposal Office, Municipal Corporation of Greater Mumbai Obtain occupancy certificate On receipt of the acceptance of completion certificate, the owner, through the licensed surveyor, engineer, or architect, shall submit to the Commissioner a development completion certificate with three copies of the completion plan, one of which shall be cloth mounted for record. The Commissioner may inspect the work and after satisfying himself that there is no deviation from the sanctioned plans, issue an 26 occupancy certificate, or refuse to sanction the occupancy certificate 1 day no charge within 21 days from the date of receipt of the said completion certificate. Agency: Building Proposal Office, Municipal Corporation of Greater Mumbai Obtain permanent water and sewer connection Fees for water connection include: • Water connection charges: INR 1,060.00 • Water meter: INR 150.00 • Refundable security deposit towards water charges bills at INR 25.00 per 1,000 liter + 60% of sewerage charges for the requirement of the 45 days INR 51,210 27 building Sewer fees are INR 50,000 Agency: Municipal Corporation of Greater Mumbai * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database. Summary of time, cost and procedures for dealing with construction permits in India - Delhi Time to No. Procedure Cost to complete complete Doing Business 2015 India 48 Time to No. Procedure Cost to complete complete Obtain No Objection Certificate regarding land use per the zoning plan 1 10 days no charge Agency: Town Planning Department of Municipal Corporation of Delhi * Obtain Certificate of No Tax Due Starting July 2012, property tax can be paid online at www.mcdonline.gov.in. With the property tax receipt, the building company must obtain an up-to-date Certificate of No Tax Due from the 2 Property Tax Department of Municipal Corporation of Delhi and submit 2 days no charge it when applying for the Building Permit. Agency: Property Tax Department of Municipal Corporation of Delhi * Notarize the affidavit/undertaking The building company must submit an Affidavit/Undertaking on non judicial paper of INR 10, duly attested by the Oath Commissioner when applying for the Building Permit. In the affidavit, the building company 3 acknowledges that during the course of construction, no building 1 day INR 100 material will be stacked on public land. Agency: Private Sector Request and obtain building permit The building company applies for the Building Permit by giving a notice in writing in the prescribed Form No. I along with the following documents: 1. Six copies of building plans and statements 2. Proof of ownership 3. Specifications of the proposed construction 4. Supervision certificate signed by the licensed architect/engineer, supervisor and plumber; 5. Structural-stability Certificate signed by the licensed architect/engineer along with a copy of registration certificate (annexure A) 60 days INR 57,969 4 6. Rain Water-Harvesting Certificate in case of plot size more than 100 square meters signed by the licensed architect and owner (annexure B) 7. No Nuisance/Construction Debris Certificate signed by the owner (annexure C) 8. Declarations in the Form of Affidavits (annexure E-I) 9. Certificate of No Tax Due from the Property Tax Department All the plans must be signed by the licensed architect/engineer and owner registered with the Council of Architects/Institution of Engineers and shall indicate their names, addresses, license and enrollment numbers. Upon receiving the application of industrial, institutional, and multi- Doing Business 2015 India 49 Time to No. Procedure Cost to complete complete storey buildings, the Municipal Corporation of Delhi will forwards 2 copies of the building plans and 2 copies of the layout plans to the Fire Service Department of Government NCT of Delhi. The Fire Service Department reviews the drawings and checks the fire and safety arrangement on the plans against the National Building Code of India 2005. It takes 3 weeks to issue a Provisional No Objection Certificate (no site inspection at the time of sanctioning the building plans). The drawings can only be approved by Municipal Corporation of Delhi and Building Permit issued after receiving the Provisional No Objection Certificate. The building company must pay INR 10 per sq. meter of built-up area for the Building Permit application as well as cess charges of 1% of cost of the construction. Cess charges are paid to the Municipal Corporation of Delhi, who will transfer the charges to the Labor Wellfare Department of Government of NCT Delhi. The Municipal Corporation of Delhi santions building plans without site inspection but randomly selects about 20% of the buildings and inspects them after the issuance of Building Permits. A single window concept has been introduced for approval of building- plan applications. Online approval is available for residential plots and sanction is generally given within 1 week if all documents are complete. The Engineering Department of the Municipal Corporation of Delhi has also issued a detailed guide, "Build Your House With a Valid Building Permit" which is available online (MCD website at no charge) or in print (INR 200). As of December 2013, the cost for building permits are INR 5 per square meter for buildings less than 50 square meters, and INR 10 per square meter for buildings greater than 50 square meters. Agency: Municipal Corporation of Delhi * Request and obtain Consent to Establish from Delhi Pollution Control Committee Delhi Pollution Control Committee, delegated by Central Pollution Control Board of statutory powers and functions, regulates water and air pollution. By regulation, the Delhi Pollution Control Committee has 5 3 months to approve an application but in practice, a committee meets 30 days INR 1,000 monthly to discuss application received and the Consent to Establish is generally issued within 1 month. Agency: Delhi Pollution Control Committee * Request and obtain approval of the water and sewer connection plans 6 30 days INR 35,253 A complete water and sewer supply schemes must be submitted, including: • Six sets of layout plans, one should be cloth mounted Doing Business 2015 India 50 Time to No. Procedure Cost to complete complete • Hydraulic calculations • Key plan • Proposed water lines showing position of UGR/sluice valves • Calculation of water demand • Capacity of UGR This is submitted to DJB in the Executive Engineering and Planning office through the developing agency (Department of Development or Muncipal Corporation of Delhi). A feasibility report is developed. If the water can be spared for the project then a connection and ferrule size is designed by the planning office as per the feasibility report. If there is not enough water, then plans will be approved through other sources of water such as through a tube well. The plans are then approved by the DJB. Once the fees for the Infrastructure Fund are paid, the DDA may begin construction on the water and sewer lines. The fees for the Infrastructure Fund are only paid by large agencies, group housing, hospitals, schools, and commercial complexes and institutions. Agency: Delhi Ja Board * Request and obtain No Objection Certificate from District Forest Office When the building company applies for the Building Permit, the building plans and Land Ownership Permit are sent to the District Forest Office from Forest Department of Government NCT of Delhi. Permission to fell trees is regulated under provisions of Delhi Tree Preservation Act 1994, which stipulates that 10 trees must be replanted 7 for every 1 tree cut. The Act gives the District Forest Office 60 days to 7 days no charge issue the No Objection Certificate but it is generally cleared in 1 week. Assuming the building company does not have to cut trees, it will not require the No Objection Certificate from District Forest Office after construction. Agency: District Forest Office * Request and obtain No Objection Certificate from Traffic Department 8 1 day no charge Agency: Licensing Branch of the Delhi Police * Receive inspection from the Fire Department 9 1 day no charge Agency: Fire Department Doing Business 2015 India 51 Time to No. Procedure Cost to complete complete Receive No Objection Certificate from Fire Department 10 1 day no charge Agency: Fire Department Submit commencement notice BuildCo must notify the MCD 7 days before beginning construction. 11 1 day no charge Agency: Municipal Corporation of Delhi Request and receive inspection at the plinth level BuildCo must notify the MCD of the completion of the plinth level, including a copy of a valid certificate of the building plans. MCD inspects the construction and submits any objections, if necessary. Mandatory inspections are carried out at two stages: at plinth level and 12 at completion. Routine inspections may be carried in between and the 1 day INR 15 Municipal Corporation of Delhi reserves the right to inspect the premises before, during and after the construction. Agency: Municipal Corporation of Delhi Request water and sewer connection approval The building company must submit water and sewer connection application forms. Documents to be attached: (1) Proof of identity document: photocopy of voter ID card, ration card, PAN card, driving license or post card (2) Property ownership document: photocopy of GPA, allotment letter, government allotment letter, sale deed or NOC from landlord (3) Proof of residence: photocopy of driving license, passport, election I card 13 (4) Sanction of Water Supply Scheme 1 day INR 5,800 It is compulsory to provide the document number of the attached documents. Delhi Ja Board has integrated the process of obtaining an Excavation Permit from Municipal Corporation of Delhi by charging a road restoration charges for water and sewer connections on behalf of MCD. Agency: Delhi Ja Board Receive on-site inspection for water and sewer connection and receive approval An inspection of the site will be performed by a Survey Officer. 34 days no charge 14 Agency: Delhi Ja Board Doing Business 2015 India 52 Time to No. Procedure Cost to complete complete Submit notice of completion and request occupancy permit The building company must submit a notice of completion in the pro forma given in the Building Bylaws (1983) along with a completion application and fee of INR 1 per square meter of built-up area. It has to submit the notice of completion through the licensed architect/engineer or supervisor who has supervised the construction accompanied by the following documents: 1. Copy of lease-deed/sale deed 2. Three copies of the completion plan 3. Three copies of photographs taken from different angles so as to show the overall view of the building 4. Original sanctioned building plan (to be returned to the building company along with the Occupancy Certificate) 5. Copy of Water Connection Sanction and Sewerage Connection Sanction from Delhi Jal Board 1 day INR 1,301 15 6. Structural-stability Certificate signed by the licensed architect/engineer along with the structural drawings 7. Certificate of licensed architect/engineer or supervisor 8. Extension of time from the lessor if required 9. Rain Water-Harvesting Certificate in case of plot size more than 100 square meters signed by the licensed architect and owner 10. Affidavit/Undertaking of licensed architect/engineer or supervisor (as the case may be) 11. Affidavit of owner 12. A statement indicating deviations that are carried out and compounding fee payable Agency: Municipal Corporation of Delhi Receive final inspection of the construction In practice this can take up to one week. 16 1 day no charge Agency: Municipal Corporation of Delhi * Request final No Objection Certificate from the Fire Department The Municipal Corporation of Delhi will forward 2 copies of the completion plans to the Fire Service Department of Government NCT of Delhi for the Final No Objection Certificate, or the owners will visit the Fire Service Department in person to with the notice/guideline that it 17 provided at the time of issuance of the Provisional No Objection 1 day no charge Certificate and request the Fire Service Department to verify the compliance with the guidelines. Agency: Fire Department Doing Business 2015 India 53 Time to No. Procedure Cost to complete complete Receive site inspection from the Fire Department In practice this can take up to 15 days. 18 1 day no charge Agency: Fire Department Receive final No Objection Certificate from the Fire Department 19 10 days no charge Agency: Fire Department * Request consent to operate from the Delhi Pollution Control Board 20 1 day INR 2,000 Agency: Delhi Pollution Control Committee Receive site inspection from the Delhi Pollution Control Board Delhi Pollution Control Committee carries out mandatory routine inspections. In practice this can take as much as 30 days. 1 day no charge 21 Agency: Delhi Pollution Control Committee Obtain consent to operate from the Delhi Pollution Control Board The Water (Prevention and Control of Pollution) Act 1974 and the Air (Prevention and Control of Pollution) Act 1981 give the Delhi Pollution Control Committee 3 months to dispose an application. In practice, a committee meets monthly to discuss application received and the 22 Consent to Establish is generally issued within 1 month. Depending on 15 days no charge when BuildCo receives the inspection, it may take as little as a day, or as long as one month. Agency: Delhi Pollution Control Committee Receive occupancy permit By regulation, Municipal Council of Delhi must grant or refuse the Occupancy Permit within 30 days of receiving the completion notice along with all mandatory documents. In practice, this takes anywhere 49 days no charge 23 from six to eight weeks. Agency: Municipal Corporation of Delhi Doing Business 2015 India 54 Time to No. Procedure Cost to complete complete Obtain permanent water and sewer connection Delhi Ja Board contracts the work out to local licensed plumbers. 24 20 days INR 450,000 Agency: Delhi Ja Board * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database. Doing Business 2015 India 55 GETTING ELECTRICITY Access to reliable and affordable electricity is vital for WHAT THE GETTING ELECTRICITY businesses. To counter weak electricity supply, many firms in developing economies have to rely on self- INDICATORS MEASURE supply, often at a prohibitively high cost. Whether electricity is reliably available or not, the first step for Procedures to obtain an electricity a customer is always to gain access by obtaining a connection (number) connection. Submitting all relevant documents and What do the indicators cover? obtaining all necessary clearances and permits Doing Business records all procedures required for a Completing all required notifications and local business to obtain a permanent electricity receiving all necessary inspections connection and supply for a standardized warehouse, as well as the time and cost to complete them. These Obtaining external installation works and procedures include applications and contracts with possibly purchasing material for these works electricity utilities, clearances from other agencies Concluding any necessary supply contract and and the external and final connection works. The obtaining final supply ranking of economies on the ease of getting electricity is determined by sorting their distance to Time required to complete each procedure frontier scores for getting electricity. These scores are (calendar days) the simple average of the distance to frontier scores Is at least 1 calendar day for each of the component indicators. To make the data comparable across economies, several Each procedure starts on a separate day assumptions are used. Does not include time spent gathering The warehouse: information  Is owned by a local entrepreneur, located Reflects the time spent in practice, with little in the economy’s largest business city, in follow-up and no prior contact with officials an area where other warehouses are Cost required to complete each procedure located. For the 11 economies with a (% of income per capita) population of more than 100 million, data Official costs only, no bribes for a second city have been added. Excludes value added tax  Is not in a special economic zone where the connection would be eligible for subsidization or faster service.  Is to either the low-voltage or the medium- voltage distribution network and either  Is located in an area with no physical overhead or underground, whichever is more constraints (ie. property not near a railway). common in the area where the warehouse is  Is a new construction being connected to located. Included only negligible length in the electricity for the first time. customer’s private domain.  Is 2 stories, both above ground, with a total  Requires crossing of a 10-meter road but all surface of about 1,300.6 square meters the works are carried out in a public land, so (14,000 square feet), is built on a plot of there is no crossing into other people's 929 square meters (10,000 square feet), is private property. used for storage of refrigerated goods  Involves installing one electricity meter. The The electricity connection: monthly electricity consumption will be 26880 kilowatt hour (kWh). The internal  Is 150 meters long and is a 3-phase, 4-wire electrical wiring has been completed. Y, 140-kilovolt-ampere (kVA) (subscribed capacity) connection. Doing Business 2015 India 56 GETTING ELECTRICITY Where does the economy stand today? What does it take to obtain a new electricity connection Most indicator sets refer to a case scenario in the largest in India? According to data collected by Doing Business, business city of an economy, except for 11 economies for getting electricity there requires 7.0 procedures, takes which the data are a population-weighted average of the 105.7 days and costs 487.7% of income per capita (figure 2 largest business cities. See the chapter on distance to 4.1). frontier and ease of doing business ranking at the end of this profile for more details. Figure 4.1 What it takes to obtain an electricity connection in India - Mumbai What it takes to obtain an electricity connection in India - Delhi Doing Business 2015 India 57 Note: Time shown in the figure above may not reflect simultaneity of procedures. For more information on the methodology of the getting electricity indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2015 India 58 GETTING ELECTRICITY Globally, India stands at 137 in the ranking of 189 average ranking provide another perspective in assessing economies on the ease of getting electricity (figure 4.2). how easy it is for an entrepreneur in India to connect a The rankings for comparator economies and the regional warehouse to electricity. Figure 4.2 How India and comparator economies rank on the ease of getting electricity Source: Doing Business database. Doing Business 2015 India 59 GETTING ELECTRICITY Obtaining an electricity connection is essential to enable ensure safety in the connection process while keeping a business to conduct its most basic operations. In many connection costs reasonable, governments around the economies the connection process is complicated by the world have worked to consolidate requirements for multiple laws and regulations involved—covering service obtaining an electricity connection. What reforms in quality, general safety, technical standards, procurement getting electricity has Doing Business recorded in India practices and internal wiring installations. In an effort to (table 4.1)? Table 4.1 How has India made getting electricity easier—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform In India the utility in Mumbai made getting electricity less DB2015 costly by reducing the security deposit for a new connection. Source: Doing Business database. Doing Business 2015 India 60 GETTING ELECTRICITY What are the details? The indicators reported here for India are based on a set OBTAINING AN ELECTRICITY CONNECTION of specific procedures—the steps that an entrepreneur must complete to get a warehouse connected to electricity by the local distribution utility—identified by Name of utility - TATA Power Delhi Doing Business. Data are collected from the distribution Delhi: Distribution Limited utility, then completed and verified by electricity regulatory agencies and independent professionals such Name of utility - Bhrihan Mumbai as electrical engineers, electrical contractors and Mumbai: Electricity & Transport construction companies. The electricity distribution utility Undertaking surveyed is the one serving the area (or areas) in which warehouses are located. If there is a choice of City: Mumbai, Delhi distribution utilities, the one serving the largest number The procedures are those that apply to a warehouse and of customers is selected. electricity connection matching the standard assumptions used by Doing Business in collecting the data (see the section in this chapter on what the indicators cover). The procedures, along with the associated time and cost, are summarized below. Table 4.2 Summary of time, cost and procedures for getting electricity in India - Mumbai Time to No. Procedure Cost to complete complete Submit application to Brihan Mumbai Electricity Supply and Transport Undertaking (BEST) and await site inspection An application for supply, addition or reduction in supply of electrical energy, shifting of service, extension of service, change of name or restoration of supply shall be made to BEST, copies of which are obtainable from the relevant ward offices or relevant consumer center of the Undertaking as well as downloadable from BEST’s website. The application duly filled in and signed by the owner or occupier of the premises in respect of which the supply or additional supply is required shall be accepted after preliminary scrutiny at the relevant Ward Office 7 calendar days INR 75 1 on payment of processing fee in accordance with Annex 1 of Schedule of Charges approved by the Commission. Documents needed to be submitted – completed application form; proof of occupancy; details of load requirement; purpose for which electric connection is required. Site inspection includes confirmation of premises, identification of location of terminating service cable, and position of meter cabin. Agency: Brihan Mumbai Electricity Supply and Transport Undertaking (BEST) Doing Business 2015 India 61 Time to No. Procedure Cost to complete complete Receive external site inspection from BEST and await estimate Appointment can be made over the phone giving reference of application no; electrical contractor should be licensed, registration with BEST of electrician not necessary. The Authorized Representative of the Undertaking on receipt of the application, with prior intimation, shall inspect the premises to confirm its eligibility and study the technical requirements of giving supply to the consumer and fix the position of main cut outs or circuit breakers and meters and sanction the load for the premises in consultation with the consumer and/or his Licensed 8 calendar days INR 0 2 Electrical contractor. Subsequently, BEST shall intimate the applicant of the details of any works that are required to be undertaken, the charges to be borne by the applicant thereon in accordance with Annex 2 of Schedule of Charges approved by the Maharashtra Electricity Regulatory Commission. Agency: Brihan Mumbai Electricity Supply and Transport Undertaking (BEST) Electrical contractor conducts external connection works Consumers supplied with low and medium voltage electrical energy shall provide and maintain an enclosure with a dry masonry wall not less than 250 millimeters thick or such other structure as may be approved by the Utility on which the utility's meter boards and service cutouts shall be supported and shall provide and maintain adequate protection for the 7 calendar days INR 8,000 3 meter board from ingress of water, tampering and mechanical damage. The consumer's mains shall in all cases, be brought to the Utility's point of supply. Agency: Customer Submit electrical contractor's wiring and test report and estimated amount to BEST The connection cost is standard for connections between 100 KW - 150 KW. As required by Rule 45 of the Indian Electricity Rules, 1956, no electrical installation work (including additions, alterations, repairs and adjustment to existing installation) except such replacements of lamps, fans, fuses, switches and other component parts of the installation, as in 4 no way alters the capacity and character of the installation, shall be 1 calendar day INR 60,000 carried out upon the premises on behalf of any consumer or owner for the purposes of supply of energy to such consumer or owner, except by an Electrical Contractor Licensed by Government in this behalf and under the direct supervision of a person holding a certificate of competency, issued by Government. As soon as the consumer's installation is completed in all respects and tested by the consumer’s contractor, the consumer must submit to BEST a wiring contractor's work Terms & Conditions of Supply completion and test report. Doing Business 2015 India 62 Time to No. Procedure Cost to complete complete Agency: Brihan Mumbai Electricity Supply and Transport Undertaking (BEST) BEST inspects wiring and installs meter Upon receipt of the test report, the Authorized representative of the distribution company, with prior intimation, shall inspect the equipments / apparatus / wiring to confirm compliance as per the test report given. Upon successful verification of the test report the distribution company shall proceed with the fixing of meters and coupling them with the consumer's installation preparatory to the inspection and testing of the 7 calendar days INR 0 5 installation and connection of supply. The consumer's wiring contractor should ensure that each installation is properly identified by a tag or otherwise, at the point of supply. Agency: Brihan Mumbai Electricity Supply and Transport Undertaking (BEST) BEST inspects and tests installation After the meters have been coupled to the installation the undertaking will notify the consumer's Licensed Electrical Contractor the time and the day when the undertaking's representative proposes to inspect and test the installation. It will then be the duty of the Licensed Electrical Contractor to arrange for his supervisor to be present, at the inspection 7 calendar days INR 0 6 to give the Undertaking or its representative any information or assistance required concerning the installation. Agency: Brihan Mumbai Electricity Supply and Transport Undertaking (BEST) Submit meter security deposit, receive external connection and electricity starts flowing Security deposit - A consumer with a consumption of electricity of not less than one lac (1,00,000) kilo-watt hours per month and with no undisputed sums payable to the Undertaking may, at the option of such consumer, deposit security, by way of cash (including cheque and 7 demand draft), irrevocable letter of credit or unconditional bank 30 calendar days INR 7,498.61 guarantee issued by a scheduled commercial bank. In case a consumer who has deposited security subsequently opts to receive supply through a prepaid meter, the amount of such security deposit shall, after deduction of all monies owing from such consumer, be either refunded to such consumer or treated as a part of the value of the prepaid credit to the account of such consumer, from which the value of his future consumption is to be deducted. The Undertaking shall apply any security Doing Business 2015 India 63 Time to No. Procedure Cost to complete complete so deposited, towards satisfaction of any amount which is due or owing from the consumer. Agency: Brihan Mumbai Electricity Supply and Transport Undertaking (BEST) * Takes place simultaneously with another procedure. Source: Doing Business database. Summary of time, cost and procedures for getting electricity in India - Delhi Time to No. Procedure Cost to complete complete Submit application to Tata Power Delhi Distribution Ltd. and await site inspection To apply for a new connection, customer must fill in the basic details in the Form at http://www.ndpl.com to generate a New Connection Request Notification Number. After customer fills the form and submits it, customer will receive a call from Sampark Kendra within 48 hour, who will provide customer the details of the documents to be submitted and information regarding nearest location for submission of documents. The list of documents is as follows: (1) Inland Revenue: Permanent Account No. of Income Tax; (2) Registrar of Companies: Certificate of Incorporation; (3) Municipal Authority: Trade License; (4) Electrical Inspector from Office of Electrical Inspectorate of Delhi: 1 Firefighting/Lift Safety Certificate, where applicable; 3 calendar days INR 10,000 (5) Produced by customer themselves: a Certificate by the Electrical Contractor for Internal Wiring (6) Proof of Ownership or Occupancy. Customer can also call TPDDL on the 24 hour Sampark Kendra 66404040, for initiating the new connection process. However, customers are mandated to visit one Document Submission Centers along with the necessary documents to initiate the new connection process. New Connection Request Notification will be cancelled if the documents are not submitted within 3 working days. Agency: Tata Power Delhi Distribution Ltd. Receive external site inspection from Tata Power and await estimate Customer makes appointment over the phone by providing application 7 calendar days INR 0 2 number as reference. TPDDL contacts the customer through e-mail, SMS or phone to make an inspection appointment at customer’s convenience. Representative of TPDDL will inspect the premises to confirm its Doing Business 2015 India 64 Time to No. Procedure Cost to complete complete eligibility and study the technical requirements of giving supply to the consumer and fix the position of main cut outs or circuit breakers and meters and sanction the load for the premises in consultation with the consumer and/or his Licensed Electrical Contractor. Customer and/or his Licensed Electrical Contractor must be present during external site inspection. Agency: Tata Power Delhi Distribution Ltd. Electrical contractor conducts external connection works Consumers supplied with low and medium voltage electrical energy shall provide and maintain an enclosure with a dry masonry wall not less than 250 millimeters thick or such other structure as may be approved by TPDDL on which TPDDL’s meter boards and service cutouts shall be supported and shall provide and maintain adequate protection for the 7 calendar days INR 400,000 3 meter board from ingress of water, tampering and mechanical damage. The consumer's mains shall in all cases, be brought to TPDDL's point of supply. Agency: Customer's contractor Utility conducts internal wiring inspection As required by Rule 45 of the Indian Electricity Rules, 1956, no electrical installation work (including additions, alterations, repairs and adjustment to existing installation) except such replacements of lamps, fans, fuses, switches and other component parts of the installation, as in no way alters the capacity and character of the installation, shall be carried out upon the premises on behalf of any consumer or owner for the purposes 1 calendar day INR 0 4 of supply of energy to such consumer or owner, except by an Electrical Contractor Licensed by Government on this behalf and under the direct supervision of a person holding a certificate of competency, issued by Government. Agency: Tata Power Delhi Distribution Ltd. Utility conducts external connection and meter installation TPDDL will conduct external connection works, including the fixing of meters and coupling them with the customer’s installation preparatory to the inspection and testing of the installation and connection of supply. 5 105 calendar days INR 347,728.44 Agency: Tata Power Delhi Distribution Ltd. Doing Business 2015 India 65 Time to No. Procedure Cost to complete complete Office of Electrical Inspectorate conducts internal wiring inspection Electrical Inspector from Office of Electrical Inspectorate comes to inspect the internal and external wiring to certify equipment installed is in compliance with Central Electrical Authority (CEA) Regulatory 6 Standards. Clearance is issued on paper and given to customer and 14 calendar days INR 2,750 TPDDL typically on the 2nd day for electricity to flow. Agency: Office of Electrical Inspectorate Utility turns on electricity Electricity starts flowing upon approval of the Electrical Inspector. 7 3 calendar days INR 0 Agency: Tata Power Delhi Distribution Ltd. * Takes place simultaneously with another procedure. Source: Doing Business database. Doing Business 2015 India 66 REGISTERING PROPERTY Ensuring formal property rights is fundamental. WHAT THE REGISTERING PROPERTY Effective administration of land is part of that. If INDICATORS MEASURE formal property transfer is too costly or complicated, formal titles might go informal again. And where property is informal or poorly Procedures to legally transfer title on administered, it has little chance of being accepted immovable property (number) as collateral for loans—limiting access to finance. Preregistration (for example, checking for liens, notarizing sales agreement, paying property What do the indicators cover? transfer taxes) Doing Business records the full sequence of Registration in the economy’s largest business procedures necessary for a business to purchase city 2 property from another business and transfer the property title to the buyer’s name. The transaction is Postregistration (for example, filing title with the municipality) considered complete when it is opposable to third parties and when the buyer can use the property, Time required to complete each procedure use it as collateral for a bank loan or resell it. The (calendar days) ranking of economies on the ease of registering Does not include time spent gathering property is determined by sorting their distance to information frontier scores for registering property. These scores are the simple average of the distance to frontier Each procedure starts on a separate day. scores for each of the component indicators. To Procedures that can be fully completed online are recorded as ½ day. make the data comparable across economies, several assumptions about the parties to the Procedure considered completed once final transaction, the property and the procedures are document is received used. No prior contact with officials The parties (buyer and seller): Cost required to complete each procedure  Are limited liability companies, 100% (% of property value) domestically and privately owned and Official costs only, no bribes perform general commercial activities. No value added or capital gains taxes included  Are located in the economy’s largest business city . 2  Is located in a periurban commercial zone, and no rezoning is required.  Have 50 employees each, all of whom are nationals.  Has no mortgages attached, has been under the same ownership for the past 10 years. The property (fully owned by the seller):  Consists of 557.4 square meters (6,000 square  Has a value of 50 times income per capita. feet) of land and a 10-year-old, 2-story The sale price equals the value. warehouse of 929 square meters (10,000  Is registered in the land registry or cada- square feet). The warehouse is in good stre, or both, and is free of title disputes. condition and complies with all safety standards, building codes and legal  Property will be transferred in its entirety. requirements. There is no heating system. 2 For the 11 economies with a population of more than 100 million, data for a second city have been added. Doing Business 2015 India 67 REGISTERING PROPERTY Where does the economy stand today? What does it take to complete a property transfer in Most indicator sets refer to a case scenario in the largest India? According to data collected by Doing Business, business city of an economy, except for 11 economies for registering property there requires 7.0 procedures, takes which the data are a population-weighted average of the 47.0 days and costs 7.0% of the property value (figure 2 largest business cities. See the chapter on distance to 5.1). frontier and ease of doing business ranking at the end of this profile for more details. Figure 5.1 What it takes to register property in India - Mumbai What it takes to register property in India - Delhi Doing Business 2015 India 68 Note: Time shown in the figure above may not reflect simultaneity of procedures. Online procedures account for 0.5 days in the total time calculation. For more information on the methodology of the registering property indicators, see the Doing Business website (http://www.doingbusiness.org). For details on the procedures reflected here, see the summary at the end of this chapter. Source: Doing Business database. Doing Business 2015 India 69 REGISTERING PROPERTY Globally, India stands at 121 in the ranking of 189 regional average ranking provide other useful economies on the ease of registering property (figure information for assessing how easy it is for an 5.2). The rankings for comparator economies and the entrepreneur in India to transfer property. Figure 5.2 How India and comparator economies rank on the ease of registering property Source: Doing Business database. Doing Business 2015 India 70 REGISTERING PROPERTY What are the details? The indicators reported here are based on a set of STANDARD PROPERTY TRANSFER specific procedures—the steps that a buyer and seller must complete to transfer the property to the buyer’s name—identified by Doing Business through information collected from local property lawyers, Property value: INR 4,496,273 notaries and property registries. These procedures are those that apply to a transaction matching the City: Mumbai, Delhi standard assumptions used by Doing Business in collecting the data (see the section in this chapter on The procedures, along with the associated time and what the indicators cover). cost, are summarized below. Table 5.2 Summary of time, cost and procedures for registering property in India Time to No. Procedure Cost to complete complete Obtain non-encumbrance certificate The purchaser should conduct a search of the property in the Registry office, noting the location details of the property and the time period to be checked. While investigating the title it should be verified (1) that the legal ownership document is in the name of the owner, issued by the Revenue Record Department under the seal of the Tahsildar, (2) that on the date of purchase the title of the owner for the preceding 40 years (preferably) shows no mortgage or other encumbrance as still existing 7 days INR 15000 1 on the date of purchase, (3) the property is transferable and heritable, (4) the transferor is competent and/or authorized to transfer the property, (5) the transferee is qualified to be a transferee, (6) the object or consideration for the transfer is lawful, (7) the transfer has been made and completed in the manner prescribed by law. Agency: Sub-Registrar Office * Ensure that property is clear of all local tax dues Request all records regarding payment of local property taxes and any other possible municipal dues, for pick-up a week later, to ensure that the owner of the property is in good standing with municipal authorities 2 7 days INR 200 Agency: North Delhi Municipal Corporation, South Delhi Municipal Corporation, East Delhi Municipal Corporation (depending on the location of the property) Doing Business 2015 India 71 Time to No. Procedure Cost to complete complete * Conduct charges search at the Registrar of Companies If the seller is a Company incorporated under the provisions of the Companies Act, 2013, the purchaser should conduct a search in the office of the Registrar of Companies to verify whether there is any charge (mortgage, encumbrance, etc.) on the property registered under Section 125 of the Companies Act, 2013. Note that if the Seller is not able to 1-2 days INR 100 3 produce title deed, then Buyer must also check any potential creditors for mortgages by deposit of title deed, which are not recorded anywhere. Agency: Registrar of Companies Preparation of the final sale deed by the purchaser’s lawyer The lawyer prepares the final sale deed and then engrosses the document on green paper leaving the date and place blank. This 1% of the property document is then submitted for stamping. The fee for the lawyer varies 7 days value (About INR 4 from transaction to transaction. 45,000) Agency: Lawyer Payment of Stamp Duty on the final Sale Deed through franking at the designated bank. 5% of property 5 1 day value Agency: Bank Execute final sale deed and submit documents to the local office of the Sub-Registrar of Assurances The documents are submitted to the office of the Sub-Registrar within whose jurisdiction the property is located. The authorized signatories of 1% of market the seller and purchaser are required to be present along with two witnesses. Once the document is registered, a distinct document number value of the is assigned to that document. The record of registration is kept in the property office of sub registrar of assurance. The documents are presented (Maximum INR 6 before the Sub-Registrar in accordance with Section 32 of the 1 day 30,000) + INR 20 Registration Act, 1908. Normally, the Seller hands over the peaceful per page of final vacant and physical possession of the property to the buyer sale deed for simultaneous to the deed being presented for registration. Upon scanning charges payment of the required registration fees and computer service charges (paid in cash) in cash, as per the receipt, the document is returned within 30 minutes of getting the receipt. The documentation shall include: (1) Document required to be registered (in duplicate) (2) Two passport-size photographs of the authorized signatories of both parties. (3) Photo identification of each party and witnesses i.e. voters' identity card, Doing Business 2015 India 72 Time to No. Procedure Cost to complete complete passport, identity card issued by Govt. of India, Semi Govt. and Autonomous bodies or identification by a Gazette Officer. (4) Certified true copies of certificate of incorporation of both seller and purchaser. (5) Copy of the latest property register card (to be obtained from the City Survey Department) to indicate that the property does not belong to the government (6) Copy of the Municipal Tax bill to indicate the year in which the building was constructed (7) Copy of PAN Card of Income Tax of the Seller and the Buyer annexed along with the Sale Deed. Agency: Sub-Registrar of Assurances Apply to the Land & Survey Office for mutation of the tile of the property INR 450 An application for mutation of the title of the property will have to be (Application fee of made to the Sub-Registrar office office for seeking mutation of the title of the property in the name of the purchaser. The authorised signatory INR 100; stamp has to submit the duly signed application along with the affidavit, duty on the indemnity bond and a notarised copy of the registered Sale Deed. After Indemnity Bond of 7 the assessment of the request for mutation, the Sub-Registrar office 30 days INR 200, stamp decides the value of the tax on the property and issues a letter of duty of INR 100 on mutation in favour of the purchaser. Cost included application fee of INR the Affidavit in the 100; stamp duty on the Indemnity Bond of INR 200, stamp duty of INR prescribed form 100 on the Affidavit in the prescribed form and notary fees of INR 50. and notary fees of INR 50) Agency: Land & Survey Office * Takes place simultaneously with another procedure. Note: Online procedures account for 0.5 days in the total time calculation. Source: Doing Business database. Doing Business 2015 India 73 GETTING CREDIT Two types of frameworks can facilitate access to WHAT THE GETTING CREDIT INDICATORS credit and improve its allocation: credit information MEASURE systems and borrowers and lenders in collateral and bankruptcy laws. Credit information systems enable Strength of legal rights index (0–12) 3 lenders’ rights to view a potential borrower’s financial history (positive or negative)—valuable information to Rights of borrowers and lenders through consider when assessing risk. And they permit collateral laws borrowers to establish a good credit history that will Protection of secured creditors’ rights through allow easier access to credit. Sound collateral laws bankruptcy laws enable businesses to use their assets, especially Depth of credit information index (0–8) 4 movable property, as security to generate capital— while strong creditors’ rights have been associated Scope and accessibility of credit information with higher ratios of private sector credit to GDP. distributed by credit bureaus and credit registries What do the indicators cover? Credit bureau coverage (% of adults) Doing Business assesses the sharing of credit information and the legal rights of borrowers and Number of individuals and firms listed in lenders with respect to secured transactions through largest credit bureau as percentage of adult 2 sets of indicators. The depth of credit information population index measures rules and practices affecting the Credit registry coverage (% of adults) coverage, scope and accessibility of credit Number of individuals and firms listed in information available through a credit registry or a credit registry as percentage of adult credit bureau. The strength of legal rights index population measures whether certain features that facilitate lending exist within the applicable collateral and bankruptcy laws. Doing Business uses two case scenarios, Case A and Case B, to determine the scope of the secured transactions system, involving a  Has up to 50 employees. secured borrower and a secured lender and  Is 100% domestically owned, as is the lender. examining legal restrictions on the use of movable collateral (for more details on each case, see the Data The ranking of economies on the ease of getting Notes section of the Doing Business 2015 report). credit is determined by sorting their distance to These scenarios assume that the borrower: frontier scores for getting credit. These scores are the distance to frontier score for the strength of legal  Is a private limited liability company. rights index and the depth of credit information  Has its headquarters and only base of index. operations in the largest business city. For the 11 economies with a population of more than 100 million, data for a second city have been added. 3 For the legal rights index, 2 new points are added in Doing Business 2015 for new data collected to assess the overall legal framework for secured transactions and the functioning of the collateral registry. 4 For the credit information index, 2 new points are added in Doing Business 2015 for new data collected on accessing borrowers’ credit information online and availability of credit scores. Doing Business 2015 India 74 GETTING CREDIT Where does the economy stand today? How well do the credit information system and collateral Globally, India stands at 36 in the ranking of 189 and bankruptcy laws in India facilitate access to credit? economies on the ease of getting credit (figure 6.1). The The economy has a score of 7 on the depth of credit rankings for comparator economies and the regional information index and a score of 6 on the strength of average ranking provide other useful information for legal rights index (see the summary of scoring at the end assessing how well regulations and institutions in India of this chapter for details). Higher scores indicate more support lending and borrowing. credit information and stronger legal rights for borrowers and lenders. Figure 6.1 How India and comparator economies rank on the ease of getting credit Source: Doing Business database. Doing Business 2015 India 75 GETTING CREDIT One way to put an economy’s score on the getting credit rights index for India and shows the scores for indicators into context is to see where the economy comparator economies as well as the regional average stands in the distribution of scores across economies. score. Figure 6.3 shows the same for the depth of credit Figure 6.2 highlights the score on the strength of legal information index. Figure 6.2 How strong are legal rights for borrowers Figure 6.3 How much credit information is shared — and lenders? and how widely? Economy scores on strength of legal rights index Economy scores on depth of credit information index Note: Higher scores indicate that collateral and bankruptcy Note: Higher scores indicate the availability of more credit laws are better designed to facilitate access to credit. information, from either a credit registry or a credit bureau, Source: Doing Business database. to facilitate lending decisions. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Source: Doing Business database. Doing Business 2015 India 76 GETTING CREDIT What are the details? The getting credit indicators reported here for India are The data on the legal rights of borrowers and lenders are based on detailed information collected in that economy. gathered through a survey of financial lawyers and The data on credit information sharing are collected verified through analysis of laws and regulations as well through a survey of a credit registry and/or credit bureau as public sources of information on collateral and (if one exists). To construct the depth of credit bankruptcy laws. For the strength of legal rights index, a information index, a score of 1 is assigned for each of 8 score of 1 is assigned for each of 10 aspects related to features of the credit registry or credit bureau (see legal rights in collateral law and 2 aspects in bankruptcy summary of scoring below). law. Mumbai Delhi Strength of legal rights index (0–12) Index score: 6 Index score: 6 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional No No equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description Yes Yes of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of Yes Yes collateral? May a security right extend to future or after-acquired assets, and may it extend automatically to the products, proceeds or replacements of the Yes Yes original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between Yes Yes parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non- incorporated entities, that is unified geographically and by asset type, with No No an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional No No equivalents can be registered? Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any Yes Yes interested third party? Are secured creditors paid first (i.e. before tax claims and employee No No claims) when a debtor defaults outside an insolvency procedure? Doing Business 2015 India 77 Mumbai Delhi Strength of legal rights index (0–12) Index score: 6 Index score: 6 Are secured creditors paid first (i.e. before tax claims and employee No No claims) when a business is liquidated? Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No No protect secured creditors’ rights by providing clear grounds for relief from the stay and/or sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor Yes Yes to sell the collateral through public auction and private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Depth of credit information index (0–8) Credit bureau Credit registry Index score: 7 By law, do borrowers have the right to access their Yes No 1 data in the credit bureau or credit registry? Can banks and financial institutions access borrowers’ credit information online (for example, through an Yes No 1 online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value- added service to help banks and financial institutions Yes No 1 assess the creditworthiness of borrowers? Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and financial institutions - No No 0 distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more than 10 years of negative data or erase data on Yes No 1 defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per Yes No 1 capita distributed? Note: Prior to Doing Business 2015, the depth of credit information index covered only the first 6 features listed above. An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Doing Business 2015 India 78 Credit bureau Credit registry Coverage (% of adults) (% of adults) Number of firms 7,224,478 0 Number of individuals 176,859,706 0 Percent of total 22.4 0.0 Source: Doing Business database. Doing Business 2015 India 79 PROTECTING MINORITY INVESTORS Protecting minority investors matters for the ability of companies to raise the capital they need to grow, WHAT THE PROTECTING MINORITY innovate, diversify and compete. Effective regulations INVESTORS INDICATORS MEASURE define related-party transactions precisely, promote clear and efficient disclosure requirements, require shareholder participation in major decisions of the Extent of disclosure index (0–10) company and set detailed standards of accountability Review and approval requirements for related-party for company insiders. transactions ; Disclosure requirements for related-party transactions What do the indicators cover? Doing Business measures the protection of minority Extent of director liability index (0–10) investors from conflicts of interest through one set of Ability of minority shareholders to sue and hold interested indicators and shareholders’ rights in corporate directors liable for prejudicial related-party transactions; governance through another. The ranking of economies Available legal remedies (damages, disgorgement of on the strength of minority investor protections is profits, fines, imprisonment, rescission of the transaction) determined by sorting their distance to frontier scores Ease of shareholder suits index (0–10) for protecting minority investors. These scores are the Access to internal corporate documents; Evidence simple average of the distance to frontier scores for the obtainable during trial and allocation of legal expenses extent of conflict of interest regulation index and the extent of shareholder governance index. To make the Extent of conflict of interest regulation index data comparable across economies, a case study uses (0–10) several assumptions about the business and the Sum of the extent of disclosure, extent of director liability transaction. and ease of shareholder indices, divided by 3 The business (Buyer): Extent of shareholder rights index (0-10.5)  Is a publicly traded corporation listed on the Shareholders’ rights and role in major corporate decisions economy’s most important stock exchange (or at least a large private company with Strength of governance structure index (0- multiple shareholders). 10.5) Governance safeguards protecting shareholders from  Has a board of directors and a chief executive undue board control and entrenchment officer (CEO) who may legally act on behalf of Buyer where permitted, even if this is not Extent of corporate transparency index (0-9) specifically required by law. Corporate transparency on ownership stakes, The transaction involves the following details: compensation, audits and financial prospects  Mr. James, a director and the majority Extent of shareholder governance index shareholder of the company, proposes that (0–10) the company purchase used trucks from Sum of the extent of shareholders rights, strength of another company he owns. governance structure and extent of corporate transparency indices, divided by 3  The price is higher than the going price for used trucks, but the transaction goes forward. Strength of investor protection index (0–10)  All required approvals are obtained, and all Simple average of the extent of conflict of interest required disclosures made, though the regulation and extent of shareholder governance indices transaction is prejudicial to Buyer.  Shareholders sue the interested parties and the members of the board of directors. Doing Business 2015 India 80 PROTECTING MINORITY INVESTORS Where does the economy stand today? How strong are minority investor protections against protection index (figure 7.1). While the indicator does self-dealing in India? The economy has a score of 7.3 on not measure all aspects related to the protection of the strength of minority investor protection index, with a minority investors, a higher ranking does indicate that an higher score indicating stronger protections. economy’s regulations offer stronger minority investor protections against self-dealing in the areas measured. Globally, India stands at 7 in the ranking of 189 economies on the strength of minority investor Figure 7.1 How India and comparator economies perform on the strength of minority investor protection index Source: Doing Business database. Doing Business 2015 India 81 PROTECTING MINORITY INVESTORS One way to put an economy’s scores on the protecting indices for India in 2014. A summary of scoring for the minority investors indicators into context is to see where protecting minority investors indicators at the end of this the economy stands in the distribution of scores across chapter provides details on how the indices were comparator economies. Figures 7.2 through 7.7 highlight calculated. the scores on the various minority investor protection Figure 7.2 How extensive are disclosure Figure 7.3 How extensive is the liability regime for directors? requirements? Extent of director liability index (0-10) Extent of disclosure index (0-10) Note: Higher scores indicate greater liability of directors. Note: Higher scores indicate greater disclosure. Source: Doing Business database. Source: Doing Business database. Doing Business 2015 India 82 PROTECTING MINORITY INVESTORS Figure 7.4 How easy is accessing internal corporate documents? Ease of shareholder suits index (0-10) Note: Higher scores indicate greater minority shareholder access to evidence before and during trial. Source: Doing Business database. Doing Business 2015 India 83 PROTECTING MINORITY INVESTORS Figure 7.5 How extensive are shareholder rights? Extent of shareholder rights index (0-10.5) Note: The higher the score, the stronger the protections. Source: Doing Business database. Figure 7.6 How strong is the governance structure? Strength of governance structure index (0-10.5) Note: Higher scores indicate more stringent governance structure requirements. Source: Doing Business database. Doing Business 2015 India 84 Figure 7.7 How extensive is corporate transparency? Extent of corporate transparency index (0-9) Note: Higher scores indicate greater transparency. Source: Doing Business database. Doing Business 2015 India 85 PROTECTING MINORITY INVESTORS Economies with the strongest protections of minority result, reforms to strengthen minority investor investors from self-dealing require detailed disclosure protections may move ahead on different fronts—such and define clear duties for directors. They also have well- as through new or amended company laws, securities functioning courts and up-to-date procedural rules that regulations or civil procedure rules. What minority give minority shareholders the means to prove their case investor protection reforms has Doing Business recorded and obtain a judgment within a reasonable time. As a in India (table 7.1)? Table 7.1 How has India strengthened minority investor protections—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform India strengthened minority investor protections by requiring greater disclosure of conflicts of interest by board members, increasing the remedies available in case of prejudicial related- DB2015 party transactions and introducing additional safeguards for shareholders of privately held companies. This reform applies to both Delhi and Mumbai. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2015 India 86 PROTECTING MINORITY INVESTORS What are the details? The protecting minority investors indicators reported to disclosure, director liability, shareholder suits, here for India are based on detailed information shareholder rights, governance structure and corporate collected through a survey of corporate and securities transparency in a standard case study (for more details, lawyers about securities regulations, company laws and see the Data Notes section of the Doing Business 2015 court rules of evidence and procedure. To construct the report). The summary below shows the details underlying six indicators on minority investor protection, scores are the scores for India. assigned to each based on a range of conditions relating Table 7.2 Summary of scoring for the protecting minority investors indicators in India Answer Score Answer Score (Delhi) (Mumbai) (Mumbai) (Delhi) Extent of disclosure index (0-10) 7.0 7.0 Board of Board of directors directors Which corporate body can provide legally sufficient approval excluding 2 excluding 2 for the Buyer-Seller transaction? (0-3) interested interested members members Full disclosure Is disclosure by the interested director to the board of Full disclosure of 2 of all material 2 directors required? (0-2) all material facts facts Disclosure on Disclosure on the the transaction Is disclosure of the transaction in published periodic filings transaction and 2 and on the 2 (annual reports) required? (0-2) on the conflict of conflict of interest interest Is immediate disclosure of the transaction to the public No disclosure No disclosure 0 0 and/or shareholders required? (0-2) obligation obligation Must an external body review the terms of the transaction Yes 1 Yes 1 before it takes place? (0-1) Extent of director liability index (0-10) 6.0 6.0 Can shareholders sue directly or derivatively for the damage Yes 1 Yes 1 caused by the Buyer-Seller transaction to the company? (0-1) Can shareholders hold the interested director liable for the Not liable 0 Not liable 0 damage caused by the transaction to the company? (0-2) Can shareholders hold members of the approving body Liable if unfair or Liable if unfair liable for the damage cause by the transaction to the 2 2 prejudicial or prejudicial company? (0-2) Must the interested director pay damages for the harm caused to the company upon a successful claim by a Yes 1 Yes 1 shareholder plaintiff? (0-1) Must the interested director repay profits made from the transaction upon a successful claim by a shareholder Yes 1 Yes 1 plaintiff? (0-1) Can both fines and imprisonment be applied against the No 0 No 0 interested indrector? (0-1) Doing Business 2015 India 87 Voidable if Voidable if Can a court void the transaction upon a successful claim by a negligently 1 negligently 1 shareholder plaintiff? (0-2) concluded concluded Ease of shareholder suits index (0-10) 7.0 7.0 Before filing suit, can shareholders owning 10% of the company’s share capital inspect the transaction documents? Yes 1 Yes 1 (0-1) Can the plaintiff obtain any documents from the defendant No 3 No 3 and witnesses during trial? (0-3) Can the plaintiff request categories of documents from the No 0 No 0 defendant without identifying specific ones? (0-1) Can the plaintiff directly question the defendant and Yes 2 Yes 2 witnesses during trial? (0-2) Is the level of proof required for civil suits lower than that of Yes 1 Yes 1 criminal cases? (0-1) At the Can shareholder plaintiffs recover their legal expenses from At the discretion 0 discretion of 0 the company? (0-2) of the court the court Strength of minority investor protection index (0-10) 7.3 7.3 Extent of conflict of interest regulation index (0-10) 6.7 6.7 Extent of shareholder rights index (0-10.5) 9.0 9.0 Can shareholders amend company bylaws or statutes with a Yes 1.5 Yes 1.5 simple majority? Can shareholders owning 10% of the company's share Yes 1.5 Yes 1.5 capital call for an extraordinary meeting of shareholders? Can shareholders remove members of the board of directors Yes 1.5 Yes 1.5 before the end of their term. Must a company obtain its shareholders’ approval every time Yes 1.5 Yes 1.5 it issues new shares? Are shareholders automatically granted subscription rights Yes 1.5 Yes 1.5 on new shares? Must shareholders approve the election and dismissal of the Yes 1.5 Yes 1.5 external auditor? Can shareholders freely trade shares prior to a major No 0 No 0 corporate action or meeting of shareholders? Strength of governance structure index (0-10.5) 6.0 6.0 Is the CEO barred from also serving as chair of the board of Yes 1.5 Yes 1.5 directors? Must the board of directors include independent board Yes for listed Yes for listed 1 1 members? companies companies Yes for listed Yes for listed Must a company have a separate audit committee? 1 1 companies companies Must changes to the voting rights of a series or class of shares be approved only by the holders of the affected Yes 1.5 Yes 1.5 shares? Must a potential acquirer make a tender offer to all Yes for listed Yes for listed 1 1 shareholders upon acquiring 50% of a company? companies companies Is cross-shareholding between 2 independent companies No 0 No 0 limited to 10% of outstanding shares? Is a subsidiary barred from acquiring shares issued by its No 0 No 0 parent company? Extent of corporate transparency index (0-9) 8.5 8.5 Doing Business 2015 India 88 Yes for listed Yes for listed Must ownership stakes representing 10% be disclosed? 1 1 companies companies Must information about board members’ other directorships as well as basic information on their primary employment be Yes 1.5 Yes 1.5 disclosed? Must the compensation of individual managers be disclosed? Yes 1.5 Yes 1.5 Must financial statements contain explanatory notes on significant accounting policies, trends, risks, uncertainties Yes 1.5 Yes 1.5 and other factors influencing the reporting? Must annual financial statements be audited by an external Yes 1.5 Yes 1.5 auditor? Must audit reports be disclosed to the public? Yes 1.5 Yes 1.5 Extent of shareholder governance index (0-10) 7.8 7.8 Source: Doing Business database. Doing Business 2015 India PAYING TAXES Taxes are essential. The level of tax rates needs to be carefully chosen—and needless complexity in tax WHAT THE PAYING TAXES INDICATORS rules avoided. Firms in economies that rank better MEASURE on the ease of paying taxes in the Doing Business study tend to perceive both tax rates and tax Tax payments for a manufacturing company administration as less of an obstacle to business in 2013 (number per year adjusted for according to the World Bank Enterprise Survey electronic and joint filing and payment) research. Total number of taxes and contributions paid, What do the indicators cover? including consumption taxes (value added tax, sales tax or goods and service tax) Using a case scenario, Doing Business measures the taxes and mandatory contributions that a medium- Method and frequency of filing and payment size company must pay in a given year as well as the Time required to comply with 3 major taxes administrative burden of paying taxes and (hours per year) contributions. This case scenario uses a set of financial statements and assumptions about Collecting information and computing the tax payable transactions made over the year. Information is also compiled on the frequency of filing and payments as Completing tax return forms, filing with well as time taken to comply with tax laws. The proper agencies ranking of economies on the ease of paying taxes is Arranging payment or withholding determined by sorting their distance to frontier scores on the ease of paying taxes. These scores are Preparing separate tax accounting books, if required the simple average of the distance to frontier scores for each of the component indicators, with a Total tax rate (% of profit before all taxes) threshold and a nonlinear transformation applied to Profit or corporate income tax one of the component indicators, the total tax rate . 5 The financial statement variables have been updated Social contributions and labor taxes paid by to be proportional to 2012 income per capita; the employer previously they were proportional to 2005 income Property and property transfer taxes per capita. To make the data comparable across Dividend, capital gains and financial economies, several assumptions are used. transactions taxes  TaxpayerCo is a medium-size business that Waste collection, vehicle, road and other taxes started operations on January 1, 2012.  Taxes and mandatory contributions include  The business starts from the same financial corporate income tax, turnover tax and all position in each economy. All the taxes labor taxes and contributions paid by the and mandatory contributions paid during company. the second year of operation are recorded.  A range of standard deductions and  Taxes and mandatory contributions are exemptions are also recorded. measured at all levels of government. 5 The nonlinear distance to frontier for the total tax rate is equal to the distance to frontier for the total tax rate to the power of 0.8. The threshold is defined as the total tax rate at the 15th percentile of the overall distribution for all years included in the analysis. It is calculated and adjusted on a yearly basis. The threshold is not based on any economic theory of an “optimal tax rate” that minimizes distortions or maximizes efficiency in the tax system of an economy overall. Instead, it is mainly empirical in nature, set at the lower end of the distribution of tax rates levied on medium-size enterprises in the manufacturing sector as observed through the paying taxes indicators. This reduces the bias in the indicators toward economies that do not need to levy significant taxes on companies like the Doing Business standardized case study company because they raise public revenue in other ways—for example, through taxes on foreign companies, through taxes on sectors other than manufacturing or from natural resources (all of which are outside the scope of the methodology). This year’s threshold is 26.1%. Doing Business 2015 India 90 PAYING TAXES Where does the economy stand today? What is the administrative burden of complying with 2 largest business cities. See the chapter on distance to taxes in India—and how much do firms pay in taxes? On frontier and ease of doing business ranking at the end of average, firms make 33.0 tax payments a year, spend this profile for more details. 243.0 hours a year filing, preparing and paying taxes and Globally, India stands at 156 in the ranking of 189 pay total taxes amounting to 61.7% of profit (see the economies on the ease of paying taxes (figure 8.1). The summary at the end of this chapter for details). Most rankings for comparator economies and the regional indicator sets refer to a case scenario in the largest average ranking provide other useful information for business city of an economy, except for 11 economies for assessing the tax compliance burden for businesses in which the data are a population-weighted average of the India. Figure 8.1 How India and comparator economies rank on the ease of paying taxes Source: Doing Business database. Doing Business 2015 India 91 PAYING TAXES Economies around the world have made paying taxes concrete results. Some economies simplifying tax faster and easier for businesses—such as by payment and reducing rates have seen tax revenue rise. consolidating filings, reducing the frequency of What tax reforms has Doing Business recorded in India payments or offering electronic filing and payment. (table 8.1)? Many have lowered tax rates. Changes have brought Table 8.1 How has India made paying taxes easier—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform India reduced the administrative burden of paying taxes by DB2011 abolishing the fringe benefit tax and improving electronic payment. India eased the administrative burden of paying taxes for firms DB2012 by introducing mandatory electronic filing and payment for value added tax. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2015 India 92 PAYING TAXES What are the details? The indicators reported here for India are based on LOCATION OF STANDARDIZED COMPANY the taxes and contributions that would be paid by a standardized case study company used by Doing Business in collecting the data (see the section in this City: Mumbai, Delhi chapter on what the indicators cover). Tax practitioners are asked to review a set of financial statements as well as a standardized list of assumptions and transactions that the company The taxes and contributions paid are listed in the completed during its 2nd year of operation. summary below, along with the associated number of Respondents are asked how much taxes and payments, time and tax rate. mandatory contributions the business must pay and how these taxes are filed and paid. Table 8.2 Summary of tax rates and administration Total tax Notes on Mumbai: Tax or mandatory Payments Notes on Time Statutory Tax base rate (% of total tax contribution (number) payments (hours) tax rate profit) rate taxable Corporate income tax 1 online filing 45 30% 21.2 profit gross Social security contributions 12 93 13.61% 15.4 salaries purchase Central Sales Tax 1 online filing 105 2% 14.1 price Employee's state insurance gross 12 0 4.75% 5.4 contribution salaries dividend Dividend tax 1 0 16.995% distributio 4 ns assessed Property tax 1 0 10% 1.3 value Doing Business 2015 India 93 Total tax Notes on Mumbai: Tax or mandatory Payments Notes on Time Statutory Tax base rate (% of total tax contribution (number) payments (hours) tax rate profit) rate 12% * (1+ 2% Education cess + 1% insurance Tax on insurance contracts 1 0 0.3 Secondary premium & High education cess) fixed fee Vehicle tax (pollution tax) 1 0 INR 200 0 per vehicle interest included in Tax on interest 0 withheld 0 10% 0 income other taxes fuel small Fuel tax 1 0 consumpti 0 amount on value not State VAT 1 online filing 0 12.5% 0 added included 12% * (1+ 2% Education cess + 1% value not CENVAT (Excise Duty) 1 online filing 0 0 Secondary added included & High education cess) on applicable included in Income surcharge 0 paid jointly 0 10% 0 federal other taxes taxes all federal taxes included in Education cess 0 paid jointly 0 2% including 0 other taxes the surcharge all federal taxes Secondary & Higher included in 0 paid jointly 0 1% including 0 education cess other taxes the surcharge Employee paid - Social 12% + gross 0 paid jointly 0 0 withheld security contributions 1.75% salaries Doing Business 2015 India 94 Total tax Notes on Mumbai: Tax or mandatory Payments Notes on Time Statutory Tax base rate (% of total tax contribution (number) payments (hours) tax rate profit) rate Totals 33.0 243.0 61.7 Total tax Notes on Delhi: Tax or mandatory Payments Notes on Time Statutory Tax base rate (% of total tax contribution (number) payments (hours) tax rate profit) rate taxable Corporate income tax 1 online filing 45 30% 21.2 profit gross Social security contributions 12 93 13.61% 15.4 salaries purchase Central Sales Tax 1 online filing 105 2% 14.1 price Employee's state insurance gross 12 0 4.75% 5.4 contribution salaries dividend Dividend tax 1 0 16.995% distributio 4 ns assessed Property tax 1 0 10% 1.3 value 12% * (1+ 2% Education cess + 1% insurance Tax on insurance contracts 1 0 0.3 Secondary premium & High education cess) INR 100 fixed fee Vehicle tax (pollution tax) 1 0 0 quarterly per vehicle interest included in Tax on interest 0 withheld 0 10% 0 income other taxes fuel small Fuel tax 1 0 consumpti 0 amount on value not State VAT 1 online filing 0 12.5% 0 added included Doing Business 2015 India 95 Total tax Notes on Delhi: Tax or mandatory Payments Notes on Time Statutory Tax base rate (% of total tax contribution (number) payments (hours) tax rate profit) rate 12% * (1+ 2% Education cess + 1% value not CENVAT (Excise Duty) 1 online filing 0 0 Secondary added included & High education cess) on applicable included in Income surcharge 0 paid jointly 0 10% 0 federal other taxes taxes all federal taxes included in Education cess 0 paid jointly 0 2% including 0 other taxes the surcharge all federal taxes Secondary & Higher included in 0 paid jointly 0 1% including 0 education cess other taxes the surcharge Employee paid - Social 12% + gross 0 paid jointly 0 0 withheld security contributions 1.75% salaries Totals 33.0 243.0 61.7 Source: Doing Business database. Doing Business 2015 India 96 TRADING ACROSS BORDERS In today’s globalized world, making trade between WHAT THE TRADING ACROSS BORDERS economies easier is increasingly important for INDICATORS MEASURE business. Excessive document requirements, burdensome customs procedures, inefficient port operations and inadequate infrastructure all lead to Documents required to export and import extra costs and delays for exporters and importers, (number) stifling trade potential. Research shows that Bank documents exporters in developing countries gain more from a Customs clearance documents 10% drop in their trading costs than from a similar reduction in the tariffs applied to their products in Port and terminal handling documents global markets. Transport documents What do the indicators cover? Time required to export and import (days) Doing Business measures the time and cost Obtaining, filling out and submitting all the (excluding tariffs and the time and cost for sea documents transport) associated with exporting and importing a Inland transport and handling standard shipment of goods by sea transport, and the number of documents necessary to complete the Customs clearance and inspections transaction. The indicators cover predefined stages Port and terminal handling such as documentation requirements and procedures Does not include sea transport time at customs and other regulatory agencies as well as at the port. They also cover trade logistics, including Cost required to export and import (US$ per the time and cost of inland transport to the largest container) business city. The ranking of economies on the ease All documentation of trading across borders is determined by sorting their distance to frontier scores for trading across Inland transport and handling borders. These scores are the simple average of the Customs clearance and inspections distance to frontier scores for each of the component Port and terminal handling indicators. To make the data comparable across economies, Doing Business uses several assumptions Official costs only, no bribes about the business and the traded goods. The business:  Is located in the economy’s largest The traded product: business city. For the 11 economies with a population of more than 100 million, data  Is not hazardous nor includes military items. for a second city have been added.  Does not require refrigeration or any other  Is a private, limited liability company, special environment. domestically owned and does not operate  Do not require any special phytosanitary or with special export or import privileges. environmental safety standards other than  Conducts export and import activities, but accepted international standards. does not have any special accreditation  Is one of the economy’s leading export or such as an authorized economic operator import products. status.  Is transported in a dry-cargo, 20-foot full container load. Doing Business 2015 India 97 TRADING ACROSS BORDERS Where does the economy stand today? What does it take to export or import in India? According 2 largest business cities. See the chapter on distance to to data collected by Doing Business, exporting a standard frontier and ease of doing business ranking at the end of container of goods requires 7 documents, takes 17.1 this profile for more details. days and costs $1332.0. Importing the same container of Globally, India stands at 126 in the ranking of 189 goods requires 10 documents, takes 21.1 days and costs economies on the ease of trading across borders (figure $1462.0 (see the summary of four predefined stages and 9.1). The rankings for comparator economies and the documents at the end of this chapter for details). Most regional average ranking provide other useful indicator sets refer to a case scenario in the largest information for assessing how easy it is for a business in business city of an economy, except for 11 economies for India to export and import goods. which the data are a population-weighted average of the Figure 9.1 How India and comparator economies rank on the ease of trading across borders Source: Doing Business database. Doing Business 2015 India 98 TRADING ACROSS BORDERS What are the details? The indicators reported here for India are based on a LOCATION OF STANDARDIZED COMPANY set of specific predefined stages for trading a standard shipment of goods by ocean transport (see the section in this chapter on what the indicators Port Name - Delhi: Mumbai (Nhava Sheva) cover). Information on the required documents and the time and cost to complete export and import is Port Name - Mumbai: Mumbai (Nhava Sheva) collected from local freight forwarders, shipping lines, customs brokers, port officials and banks. City: Mumbai, Delhi The predefined stages, and the associated time and cost, for exporting and importing a standard shipment of goods are listed in the summary below, along with the required documents. Mumbai Delhi Stages to export Time (days) Cost (US$) Time (days) Cost (US$) Customs clearance and inspections 2 130 2 130 Documents preparation 8 365 8 365 Inland transportation and handling 3 400 5 800 Ports and terminal handling 3 225 3 225 Totals 16 1,120 18 1,520 Mumbai Delhi Stages to import Time (days) Cost (US$) Time (days) Cost (US$) Customs clearance and inspections 4 200 4 200 Documents preparation 8 400 8 400 Inland transportation and handling 3 400 5 800 Ports and terminal handling 5 250 5 250 Totals 20 1,250 22 1,650 Doing Business 2015 India 99 Documents to export Bill of Lading Commercial invoice Foreign currency exchange form Packing list Shipping Bill (customs export declaration) Technical standard certificate Terminal handling receipts Documents to import Bill of Entry (customs import declaration) Bill of lading Cargo release order Certified engineer's report (No objection certificate) Commercial invoice Inspection report Packing list Product manual Technical standard certificate / No objection certificate Terminal handling receipts Source: Doing Business database. Doing Business 2015 India 100 ENFORCING CONTRACTS Effective commercial dispute resolution has many WHAT THE ENFORCING CONTRACTS benefits. Courts are essential for entrepreneurs INDICATORS MEASURE because they interpret the rules of the market and protect economic rights. Efficient and transparent courts encourage new business relationships because Procedures to enforce a contract through businesses know they can rely on the courts if a new the courts (number) customer fails to pay. Speedy trials are essential for Steps to file and serve the case small enterprises, which may lack the resources to Steps for trial and judgment stay in business while awaiting the outcome of a long court dispute. Steps to enforce the judgment What do the indicators cover? Time required to complete procedures (calendar days) Doing Business measures the efficiency of the judicial system in resolving a commercial dispute before Time to file and serve the case local courts. Following the step-by-step evolution of Time for trial and obtaining judgment a standardized case study, it collects data relating to Time to enforce the judgment the time, cost and procedural complexity of resolving a commercial lawsuit. The ranking on the ease of Cost required to complete procedures (% of enforcing contracts is the simple average of the claim) percentile rankings on its component indicators: Average attorney fees procedures, time and cost. Court costs The dispute in the case study involves the breach of a sales contract between 2 domestic businesses. The Enforcement costs case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. To make the data comparable across economies, Doing Business uses several assumptions about the case:  The seller and buyer are located in the economy’s largest business city. For the 11 economies with a population of more than  The seller requests a pretrial attachment to 100 million, data for a second city have secure the claim. been added.  The dispute on the quality of the goods  The buyer orders custom-made goods, requires an expert opinion. then fails to pay.  The judge decides in favor of the seller; there  The seller sues the buyer before a is no appeal. competent court.  The seller enforces the judgment through a  The value of the claim is 200% of the public sale of the buyer’s movable assets. income per capita or the equivalent in local currency of USD 5,000, whichever is greater. Doing Business 2015 India 101 ENFORCING CONTRACTS Where does the economy stand today? How efficient is the process of resolving a commercial cities. See the chapter on distance to frontier and ease of dispute through the courts in India? According to data doing business ranking at the end of this profile for more collected by Doing Business, contract enforcement takes details. 1420.0 days, costs 39.6% of the value of the claim and Globally, India stands at 186 in the ranking of 189 requires 46.0 procedures (see the summary at the end of economies on the ease of enforcing contracts (figure this chapter for details). Most indicator sets refer to a 10.1). The rankings for comparator economies and the case scenario in the largest business city of an economy, regional average ranking provide other useful except for 11 economies for which the data are a benchmarks for assessing the efficiency of contract population-weighted average of the 2 largest business enforcement in India. Figure 10.1 How India and comparator economies rank on the ease of enforcing contracts Source: Doing Business database. Doing Business 2015 India 102 ENFORCING CONTRACTS What are the details? The indicators reported here for India are based on a COURT NAME set of specific procedural steps required to resolve a standardized commercial dispute through the courts (see the section in this chapter on what the Claim value - Delhi: INR 262,601 indicators cover). These procedures, and the time and cost of completing them, are identified through Claim value - study of the codes of civil procedure and other court INR 262,601 Mumbai: regulations, as well as through questionnaires completed by local litigation lawyers (and, in a Court name - Delhi: Delhi District Court quarter of the economies covered by Doing Business, by judges as well). Court name - Bombay City Civil Court Mumbai: City: Mumbai, Delhi Table 10.2 Summary of time, cost and procedures for enforcing a contract in India South Asia Indicator Mumbai Delhi average Time (days) 1420 1420 1,077 Filing and service 20 20 Trial and judgment 1095 1095 Enforcement of judgment 305 305 Cost (% of claim) 39.6 39.6 30.4 Attorney cost (% of claim) 30.6 30.6 Court cost (% of claim) 8.5 8.5 Enforcement Cost (% of claim) 0.5 0.5 Procedures (number) 46 46 43 Number of procedures (without bonus points) 46 46 Total number of procedures (including bonus points) 46 46 Doing Business 2015 India 103 No. Mumbai Procedures Filing and service: Plaintiff requests payment: Plaintiff or his lawyer asks Defendant orally or in writing to comply with the 1 contract. 2 Plaintiff hires a lawyer: Plaintiff hires a lawyer. Plaintiff files a summons and complaint: Plaintiff files a summons and complaint with the court (orally or * in writing). Plaintiff pays court fees: Plaintiff pays court fees (e.g. court duties, stamp duties, or any other type of court * fees). Answer ‘yes’ even if Plaintiff recovers these costs. Registration of court case: Registration of court case by the court administration (this can include 3 assigning a reference number to the case). Assignment of court case to a judge: Assignment of court case to a judge (through a random procedure, * automated system, ruling of an administrative judge, court officer, etc). Judicial scrutiny of summons and complaint: Judge examines Plaintiff's summons and complaint for 4 formal requirements as a matter of law or standard practice. Judge admits summons and complaint: Judge admits summons and complaint (after verifying the formal * requirements). 5 Court order for service: Upon Plaintiff’s request, judge orders process be served on Defendant. Delivery of summons and complaint to person authorized to perform service of process on Defendant: 6 The judge or a court officer delivers the summons to a summoning office, officer, or authorized person (including Plaintiff), for service of process on Defendant. Arrangements for physical delivery of summons and complaint: Plaintiff takes the necessary steps to * arrange for physical service of process on Defendant (e.g. instructing a court officer or a private bailiff). Mailing of summons and complaint: Court or process server, including (private) bailiff, mails summons * and complaint to Defendant. Attempt at physical delivery: An attempt to physically deliver summons and complaint to Defendant is 7 made. Second attempt at physical delivery: If a first attempt is not ordinarily successful, a second attempt to 8 physically deliver the summons and complaint to Defendant is required by law or standard practice. (Check ‘yes’ only if a first attempt at physical delivery is not ordinarily successful) * Proof of service: Plaintiff submits proof of service to court, as required by law or standard practice. Application for pre-judgment attachment: Plaintiff submits an application in writing for the attachment of * Defendant's property prior to judgment. Decision on pre-judgment attachment: Judge decides whether to grant Plaintiff’s request for pre- * judgment attachment of Defendant’s property and notifies Plaintiff and Defen dant of the decision. Doing Business 2015 India 104 No. Mumbai Procedures Pre-judgment attachment order: Defendant's property is attached prior to judgment. Attachment order 9 either involves physical attachment, or is achieved by freezing, registering, marking, or otherwise separating and restricting Defendant’s movement of specific moveable assets. Custody of assets attached prior to judgment: If physical attachment is ordered, Defendant's attached 10 assets are placed in the custody or control of an enforcement officer or private bailiff. Hearing on pre-judgment attachment: A hearing takes place as a matter of law or standard practice to 11 resolve the question of whether Defendant’s assets can be attached prior to judgment. This process may include the submission of separate summons and petitions. Trial and judgment: Defendant files preliminary objections.: Defendant presents preliminary objections to the court. * (Preliminary exemptions differ from answers on the merits. Examples of preliminary motions are motions to dismiss on the basis of the statute of limitations or jurisdictional objections, etc.) Checke Plaintiff’s answer to preliminary motions: Plaintiff responds to preliminary motions raised by Defendant. * Checked as ‘yes’ if preliminary motions are commonly raised (step 30) and if Plainti ff responds to them immediately. Judge’s resolution on preliminary objections: Judge decides on preliminary objections separately from the 12 merits of the case. Checked as ‘yes’ if preliminary objections are commonly made (step 30) and if judge resolves the question before rendering his decision. Defendant files an answer to Plaintiff’s claim: Defendant files a written pleading which includes his answer 13 or defense on the merits of the case (see assumption 4). Deadline for Plaintiff to reply to Defendant's defense or answer: Judge sets a deadline for Plaintiff’s 14 submission of a reply to the Defendant's defense or answer. Plaintiff’s written reply to Defendant's answer: Plaintiff responds to Defendant’s answer with a written 15 pleading, which may or may not include witness statements or expert (witness) statements. Filing of written submissions: Plaintiff and Defendant file written pleadings and submissions with the court 16 and transmit copies of the written pleadings or submissions to one another. The pleadings may or may not include witness statements or expert (witness) statements. Adjournments: Court procedure is delayed because one or both parties request and obtain an 17 adjournment to submit written pleadings. Check as ‘yes’ if this common ly happens. Framing of issues: Plaintiff and Defendant assist the court in framing issues on which evidence is to be 18 presented. Court appointment of independent expert: Judge appoints, either at the parties' request or at his own * initiative, an independent expert to decide whether the quality of the goods Plaintiff delivered to Defendant is adequate. (see assumption 5-b). Notification of court-appointment of independent expert: The court notifies both parties that the court is 19 appointing an independent expert (see assumption 5-b). Delivery of expert report by court-appointed expert: The independent expert, appointed by the court, * delivers his or her expert report to the court (see assumption 5-b). Doing Business 2015 India 105 No. Mumbai Procedures Discovery requests: Plaintiff and Defendant make requests for the disclosure of documents, attempting to * force the other party to reveal potentially detrimental documents. Check as ‘yes’ if discovery requests usually entail disputes. * Setting of date(s) for oral hearing or trial: Judge sets the date(s) for the oral hearing or trial. * List of (expert) witnesses: The parties file a list of (expert) witnesses with the court (see assumption 5-a). Summoning of (expert) witnesses: The court summons (expert) witnesses to appear in court for the oral 20 hearing or trial (see assumption 5-a). Adjournments: Court proceedings are delayed because one or both parties request and obtain an 21 adjournment to prepare for the oral hearing or trial as a matter of common practice. Oral hearing (prevalent in civil law): The parties argue the merits of the case at an oral hearing before the 22 judge. Witnesses and a court-appointed independent expert may be heard and questioned at the oral hearing. Adjournments: Court proceedings are delayed because one or both parties request and obtain an 23 adjournment during the oral hearing or trial, resulting in an additional or later trial or hearing date. Request for closing of the evidence period: Plaintiff or Defendant requests the judge to close the evidence * period. 24 Closing of the evidence period: The court makes the formal decision to close the evidence period. Order for submission of final arguments: The judge sets a deadline for the submission of final factual and 25 legal arguments. Final arguments: The parties present their final factual and legal arguments to the court either by oral * presentation or by a written submission. 26 Judgment date: The judge sets a date for delivery of the judgment. 27 Notification of judgment in court: The parties are notified of the judgment at a court hearing. 28 Writing of judgment: The judge produces a written copy of the judgment. Registration of judgment: The court office registers the judgment after receiving a written copy of the 29 judgment. Plaintiff receives a copy of the judgment: Plaintiff receives a copy of the written judgment which is 100% 30 in favor of Plaintiff (see assumption 6). Appeal period: By law Defendant has the opportunity to appeal the judgment during a specified period. 31 Defendant decides not to appeal. Seller decides to start enforcing the judgment when the appeal period ends (see assumption 8). Order for reimbursement by Defendant of Plaintiff's court fees: The judgment orders Defendant to 32 reimburse Plaintiff for the court fees Plaintiff has advanced, because Defendant has lost the case. Enforcement of judgment: Plaintiff hires a lawyer: Plaintiff hires a lawyer to enforce the judgment or continues to be represented by * a lawyer during the enforcement of judgment phase. Doing Business 2015 India 106 No. Mumbai Procedures Plaintiff retains an enforcement agent to enforce the judgment.: Plaintiff retains the services of a court 33 enforcement officer such as a court bailiff or sheriff, or a private bailiff. Plaintiff requests an enforcement order: Plaintiff applies to the court to obtain the enforcement order * ('seal' on judgment). 34 Plaintiff advances enforcement fees: Plaintiff pays the fees related to the enforcement of the judgment. Delivery of enforcement order: The court's enforcement order is delivered to a court enforcement officer * or a private bailiff. Plaintiff’s request for physical enforcement: As Plaintiff commonly fears that Defendant might physically * resist the taking into custody of its previously attached movable assets, Plaintiff requests the judge or the police authorities to obtain police assistance during the physical enforcement of the Judge's order for physical enforcement: Judge orders the police to assist with the physical enforcement of 35 the attachment of Defendant's movable assets. Check as “yes” only if the pretrial order of attachment for Defendant’s moveable assets does not ordinarily involve physical seizure of the as Identification of Defendant's assets by court official or Defendant for purposes of enforcement: The judge, 36 a court enforcement officer, a private bailiff or the Defendant himself identifies Defendant's movable assets for the purposes of enforcing the judgment through a sale of Defendant’s assets. 37 Plaintiff identifies Defendant's assets for attachment: Plaintiff identifies Defendant's assets for attachment. Creditor notification of intent to attach: A court enforcement officer or private bailiff notifies other 38 creditors of the intent to attach Defendant's goods. Attachment: Defendant’s movable goods are attached (physically or by registering, marking or separating 39 assets). Report on execution of attachment: A court enforcement officer or private bailiff delivers a report on the 40 attachment of Defendant's movable goods to the judge. Valuation or appraisal of attached movable goods: The court or court-appointed valuation expert 41 evaluates the attached goods. Enforcement disputes before court: The enforcement of the judgment is delayed because Defendant 42 opposes aspects of the enforcement process before the judge. Call for public auction: Judge calls a public auction by, for example, advertising or publication in the 43 newspapers. 44 Sale through public auction: The Defendant’s movable property is sold at public auction. Reimbursement of Plaintiff’s enforcement fees: Defendant reimburses Plaintiff's enforcement fees which 45 Plaintiff had advanced previously. 46 Payment: Court orders that the proceeds of the public auction or the direct sale be delivered to Plaintiff. No. Delhi Procedures Doing Business 2015 India 107 No. Delhi Procedures Filing and service: * Not counted in the total number of procedures. Source: Doing Business database. Doing Business 2015 India 108 RESOLVING INSOLVENCY A robust bankruptcy system functions as a filter, WHAT THE RESOLVING INSOLVENCY ensuring the survival of economically efficient INDICATORS MEASURE companies and reallocating the resources of inefficient ones. Fast and cheap insolvency proceedings result in the speedy return of businesses Time required to recover debt (years) to normal operation and increase returns to Measured in calendar years creditors. By improving the expectations of creditors Appeals and requests for extension are and debtors about the outcome of insolvency included proceedings, well-functioning insolvency systems can facilitate access to finance, save more viable Cost required to recover debt (% of debtor’s businesses and thereby improve growth and estate) sustainability in the economy overall. Measured as percentage of estate value What do the indicators cover? Court fees Doing Business studies the time, cost and outcome of Fees of insolvency administrators insolvency proceedings involving domestic legal Lawyers’ fees entities. These variables are used to calculate the recovery rate, which is recorded as cents on the Assessors’ and auctioneers’ fees dollar recouped by secured creditors through Other related fees reorganization, liquidation or debt enforcement (foreclosure) proceedings. To determine the present Outcome value of the amount recovered by creditors, Doing Whether business continues operating as a Business uses the lending rates from the International going concern or business assets are sold Monetary Fund, supplemented with data from piecemeal central banks and the Economist Intelligence Unit. Recovery rate for creditors In addition, Doing Business evaluates the adequacy Measures the cents on the dollar recovered and integrity of the existing legal framework by secured creditors applicable to liquidation and reorganization proceedings through the strength of insolvency Outcome for the business (survival or not) determines the maximum value that can be framework index. The index tests whether economies recovered adopted internationally accepted good practices in four areas: commencement of proceedings, Official costs of the insolvency proceedings management of debtor’s assets, reorganization are deducted proceedings and creditor participation. Depreciation of furniture is taken into The ranking of the Resolving Insolvency indicator is account based on the recovery rate and the total score of the Present value of debt recovered strength of insolvency framework index. The Strength of insolvency framework index (0- Resolving Insolvency indicator does not measure 16) insolvency proceedings of individuals and financial institutions. The data are derived from survey Sum of the scores of four component indices: responses by local insolvency practitioners and Commencement of proceedings index (0-3) verified through a study of laws and regulations as well as public information on bankruptcy systems. Management of debtor’s assets index (0-6) Reorganization proceedings index (0-3) Creditor participation index (0-4) Doing Business 2015 India 109 RESOLVING INSOLVENCY Where does the economy stand today? Combination of quality regulations and efficient practice According to data collected by Doing Business, India characterize the top-performing economies. How scores 2.0 out of 3 points on the commencement of efficient are insolvency proceedings in India? According proceedings index, 3.0 out of 6 points on the to data collected by Doing Business, resolving insolvency management of debtor’s assets index, 0.0 out of 3 points takes 4.3 years on average and costs 9.0% of the debtor’s on the reorganization proceedings index, and 1.0 out of estate, with the most likely outcome being that the 4 points on the creditor participation index. India’s total company will be sold as piecemeal sale. The average score on the strength of insolvency framework index is recovery rate is 25.7 cents on the dollar. Most indicator 6.0 out of 16. sets refer to a case scenario in the largest business city of Globally, India stands at 137 in the ranking of 189 an economy, except for 11 economies for which the data economies on the ease of resolving insolvency (figure are a population-weighted average of the 2 largest 11.1). The rankings for comparator economies and the business cities. See the chapter on distance to frontier regional average ranking provide other useful and ease of doing business ranking at the end of this benchmarks for assessing the efficiency of insolvency profile for more details. proceedings in India. Figure 11.1 How India and comparator economies rank on the ease of resolving insolvency Doing Business 2015 India 110 Source: Doing Business database. Doing Business 2015 India 111 Figure 11.2 Recovery Rate (0-100) - India Source: Doing Business database. Figure 11.3 Strength of insolvency framework index (0-16) - India Source: Doing Business database. Doing Business 2015 India 112 RESOLVING INSOLVENCY A well-balanced bankruptcy system distinguishes change. Many recent reforms of bankruptcy laws have companies that are financially distressed but been aimed at helping more of the viable businesses economically viable from inefficient companies that survive. What insolvency reforms has Doing Business should be liquidated. But in some insolvency systems recorded in India (table 11.1)? even viable businesses are liquidated. This is starting to Table 11.1 How has India made resolving insolvency easier—or not? By Doing Business report year from DB2010 to DB2015 DB year Reform India made resolving insolvency easier by increasing the DB2010 effectiveness of processes and thereby reducing the time required. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2015 India 113 LABOR MARKET REGULATION Doing Business measures flexibility in the regulation of Doing Business 2015 presents the data for the labor employment, specifically as it affects the hiring and market regulation indicators in an annex. The report redundancy of workers and the rigidity of working hours. does not present rankings of economies on these This year, for the first time, the indicators measuring indicators nor include the topic in the aggregate distance flexibility in labor market regulations focus on those to frontier score or ranking on the ease of doing affecting the food retail industry, using a standardized business. Detailed data collected on labor market case study of a cashier in a supermarket. Also new is that regulations are available on the Doing Business website Doing Business collects data on regulations applying to (http://www.doingbusiness.org). The data on labor employees hired through temporary-work agencies as market regulations are based on a detailed survey of well as on those applying to permanent employees or employment regulations that is completed by local employees hired on fixed-term contracts. The indicators lawyers and public officials. Employment laws and also cover additional areas of labor market regulation, regulations as well as secondary sources are reviewed to including social protection schemes and benefits as well ensure accuracy. To make the data comparable across as labor disputes. economies, several assumptions about the worker and the business are used. Over the period from 2007 to 2011 improvements were made to align the methodology for the labor market The worker: regulation indicators (formerly the employing workers  Is a cashier in a supermarket or a grocery store indicators) with the letter and spirit of the International  Is a full-time employee Labour Organization (ILO) conventions. Only 6 of the 188  Is not a member of the labor union, unless ILO conventions cover areas measured by Doing membership is mandatory Business: employee termination, weekend work, holiday The business: with pay, night work, protection against unemployment  Is a limited liability company (or the equivalent and medical care and sickness benefits. The Doing in the economy) with 60 employees. Business methodology is fully consistent with these 6  Operates a supermarket or grocery store in the conventions. The ILO conventions covering areas related economy’s largest business city. For 11 to the labor market regulation indicators do not include economies the data are also collected for the the ILO core labor standards—8 conventions covering second largest business city. the right to collective bargaining, the elimination of  Is subject to collective bargaining agreements if forced labor, the abolition of child labor and equitable such agreements cover more than 50% of the treatment in employment practices. food retail sector and they apply even to firms that are not party to them. Between 2009 and 2011 the World Bank Group worked  Abides by every law and regulation but does not with a consultative group—including labor lawyers, grant workers more benefits than those employer and employee representatives, and experts mandated by law, regulation or (if applicable) from the ILO, the Organisation for Economic Co- collective bargaining agreements. operation and Development (OECD), civil society and the private sector—to review the methodology for the labor market regulation indicators and explore future areas of research. A full report with the conclusions of the consultative group is available at: http://www.doingbusiness.org/methodology/employing-workers. Doing Business 2015 India LABOR MARKET REGULATION What are the details? The data reported here for India are based on a detailed regulations as well as secondary sources are reviewed to survey of labor market regulation that is completed by ensure accuracy. local lawyers and public officials. Employment laws and Difficulty of hiring index Difficulty of hiring covers 4 areas: (i) whether fixed-term wage to the average value added per worker. The contracts are prohibited for permanent tasks; (ii) the average value added per worker is the ratio of an maximum cumulative duration of fixed-term contracts; economy’s GNI per capita to the working-age population (iii) the minimum wage for a cashier, age 19, with 1 year as a percentage of the total population. of work experience; and (iv) the ratio of the minimum Mumbai Delhi Difficulty of hiring index Data Data Fixed-term contracts prohibited for permanent tasks? No No Maximum length of a single fixed-term contract (months) No limit No limit Maximum length of fixed-term contracts, including renewals (months) No limit No limit Minimum wage applicable to the worker assumed in the case study 125.37 134.82 (US$/month) Ratio of minimum wage to value added per worker 0.63 0.68 Source: Doing Business database. Doing Business 2015 India 115 LABOR MARKET REGULATION Rigidity of hours index Rigidity of hours covers 7 areas: (i) whether the premium for work on a weekly rest day (as a percentage workweek can extend to 50 hours or more (including of hourly pay); (v) whether there are restrictions on night overtime) for 2 months in a year to respond to a work; (vi) whether there are restrictions on weekly seasonal increase in workload; (ii) the maximum number holiday work; and (vii) the average paid annual leave for of days allowed in the workweek; (iii) the premium for workers with 1 year of tenure, 5 years of tenure and 10 night work (as a percentage of hourly pay); (iv) the years of tenure. Mumbai Delhi Rigidity of hours index Data Data 50-hour workweek allowed for 2 months a year in case of a seasonal Yes Yes increase in workload? Maximum working days per week 6.0 6.0 Premium for night work (% of hourly pay) 0% 0% Premium for work on weekly rest day (% of hourly pay) 0% 0% Major restrictions on night work? Yes Yes Major restrictions on weekly holiday? Yes No Paid annual leave for a worker with 1 year of tenure (in working days) 21.0 15.0 Paid annual leave for a worker with 5 years of tenure (in working days) 21.0 15.0 Paid annual leave for a worker with 10 years of tenure (in working 21.0 15.0 days) Paid annual leave (average for workers with 1, 5 and 10 years of tenure, 21.0 15.0 in working days) Source: Doing Business database. Doing Business 2015 India 116 LABOR MARKET REGULATION Difficulty of redundancy index Difficulty of redundancy index looks at 9 questions: (i) whether the employer needs approval from a third party what the length is in months of the maximum to terminate 1 redundant worker; (vi) whether the probationary period; (ii) whether redundancy is employer needs approval from a third party to terminate disallowed as a basis for terminating workers; (iii) a group of 9 redundant workers; (vii) whether the law whether the employer needs to notify a third party (such requires the employer to reassign or retrain a worker as a government agency) to terminate 1 redundant before making the worker redundant; (viii) whether worker; (iv) whether the employer needs to notify a third priority rules apply for redundancies; and (ix) whether party to terminate a group of 9 redundant workers; (v) priority rules apply for reemployment. Mumbai Delhi Difficulty of redundancy index Data Data Maximum length of probationary period (months) 3.0 3.0 Dismissal due to redundancy allowed by law? Yes Yes Third-party notification if 1 worker is dismissed? Yes Yes Third-party approval if 1 worker is dismissed? No No Third-party notification if 9 workers are dismissed? Yes Yes Third-party approval if 9 workers are dismissed? No No Retraining or reassignment obligation before redundancy? No No Priority rules for redundancies? Yes Yes Priority rules for reemployment? Yes Yes Source: Doing Business database. Doing Business 2015 India 117 LABOR MARKET REGULATION Redundancy cost Redundancy cost measures the cost of advance notice requirements and severance payments applicable to a requirements, severance payments and penalties due worker with 1 year of tenure, a worker with 5 years and when terminating a redundant worker, expressed in a worker with 10 years is considered. One month is weeks of salary. The average value of notice recorded as 4 and 1/3 weeks. Mumbai Delhi Redundancy cost indicator (in salary weeks) Data Data Notice period for redundancy dismissal for a worker with 1 year of 4.3 4.3 tenure Notice period for redundancy dismissal for a worker with 5 years of 4.3 4.3 tenure Notice period for redundancy dismissal for a worker with 10 years of 4.3 4.3 tenure Notice period for redundancy dismissal (average for workers with 1, 5 4.3 4.3 and 10 years of tenure) Severance pay for redundancy dismissal for a worker with 1 year of 2.1 2.1 tenure Severance pay for redundancy dismissal for a worker with 5 years of 10.7 10.7 tenure Severance pay for redundancy dismissal for a worker with 10 years of 21.4 21.4 tenure Severance pay for redundancy dismissal (average for workers with 1, 5 11.4 11.4 and 10 years of tenure) Source: Doing Business database. Social protection schemes and benefits & Labor disputes Doing Business collects data on the existence of unemployment protection schemes as well as data on whether employers are legally required to provide health insurance for employees with permanent contracts. Doing Business also assesses the mechanisms available to resolve labor disputes. More specifically, it collects data on what courts would be competent to hear labor disputes and whether the competent court is specialized in resolving labor disputes. Doing Business 2015 India 118 Mumbai Delhi Social protection schemes and benefits & Labor disputes indicator Data Data Availability of unemployment protection scheme? No No Health insurance existing for permanent employees? Yes Yes Availability of courts or court sections specializing in labor disputes? Yes Yes Source: Doing Business database. Doing Business 2015 India 119 DISTANCE TO FRONTIER AND EASE OF DOING BUSINESS RANKING This year’s report presents results for 2 aggregate defined as the total tax rate at the 15th percentile of the measures: the distance to frontier score and the ease of overall distribution for all years included in the analysis. doing business ranking, which for the first time this year For the time to pay taxes the frontier is defined as the is based on the distance to frontier score. The ease of lowest time recorded among all economies that levy the doing business ranking compares economies with one 3 major taxes: profit tax, labor taxes and mandatory another; the distance to frontier score benchmarks contributions, and value added tax (VAT) or sales tax. In economies with respect to regulatory best practice, addition, the cost to export and cost to import for each showing the absolute distance to the best performance year are divided by the GDP deflator, to take the general on each Doing Business indicator. When compared price level into account when benchmarking these across years, the distance to frontier score shows how absolute-cost indicators across economies with different much the regulatory environment for local entrepreneurs inflation trends. The base year for the deflator is 2013 for in an economy has changed over time in absolute terms, all economies. while the ease of doing business ranking can show only In the same formulation, to mitigate the effects of how much the regulatory environment has changed extreme outliers in the distributions of the rescaled data relative to that in other economies. for most component indicators (very few economies Distance to Frontier need 700 days to complete the procedures to start a business, but many need 9 days), the worst performance The distance to frontier score captures the gap between is calculated after the removal of outliers. The definition an economy’s performance and a measure of best of outliers is based on the distribution for each practice across the entire sample of 31 indicators for 10 component indicator. To simplify the process, 2 rules Doing Business topics (the labor market regulation were defined: the 95th percentile is used for the indicators are excluded). For starting a business, for indicators with the most dispersed distributions example, Canada and New Zealand have the smallest (including time, cost, minimum capital and number of number of procedures required (1), and New Zealand the payments to pay taxes), and the 99th percentile is used shortest time to fulfill them (0.5 days). Slovenia has the for number of procedures and number of documents to lowest cost (0.0), and Australia, Colombia and 110 other trade. No outlier was removed for component indicators economies have no paid-in minimum capital bound by definition or construction, including legal requirement (table 15.1 in the Doing Business 2015 index scores (such as the depth of credit information report). index, extent of conflict of interest regulation index and strength of insolvency framework index) and the Calculation of the distance to frontier score recovery rate (figure 15.1 in the Doing Business 2015 Calculating the distance to frontier score for each report). economy involves 2 main steps. First, individual Second, for each economy the scores obtained for component indicators are normalized to a common unit individual indicators are aggregated through simple where each of the 31 component indicators y (except for averaging into one distance to frontier score, first for the total tax rate) is rescaled using the linear each topic and then across all 10 topics: starting a transformation (worst − y)/(worst − frontier). In this business, dealing with construction permits, getting formulation the frontier represents the best performance electricity, registering property, getting credit, protecting on the indicator across all economies since 2005 or the minority investors, paying taxes, trading across borders, third year after data for the indicator were collected for enforcing contracts and resolving insolvency. More the first time. For legal indicators such as those on complex aggregation methods—such as principal getting credit or protecting minority investors, the components and unobserved components —yield a frontier is set at the highest possible value. For the total ranking nearly identical to the simple average used by tax rate, consistent with the use of a threshold in Doing Business . Thus Doing Business uses the simplest 6 calculating the rankings on this indicator, the frontier is 6 See Djankov, Manraj and others (2005). Principal components and unobserved components methods yield a ranking nearly identical to Doing Business 2015 India 120 method: weighting all topics equally and, within each overall tax system. Instead, it is mainly empirical in topic, giving equal weight to each of the topic nature. The nonlinear transformation along with the components . threshold reduces the bias in the indicator toward 7 economies that do not need to levy significant taxes on An economy’s distance to frontier score is indicated on a companies like the Doing Business standardized case scale from 0 to 100, where 0 represents the worst study company because they raise public revenue in performance and 100 the frontier. All distance to frontier other ways—for example, through taxes on foreign calculations are based on a maximum of 5 decimals. companies, through taxes on sectors other than However, indicator ranking calculations and the ease of manufacturing or from natural resources (all of which are doing business ranking calculations are based on 2 outside the scope of the methodology). In addition, it decimals. The difference between an economy’s distance acknowledges the need of economies to collect taxes to frontier score in any previous year and its score in from firms. 2014 illustrates the extent to which the economy has closed the gap to the regulatory frontier over time. And Calculation of scores for economies with 2 cities in any given year the score measures how far an covered economy is from the best performance at that time. For each of the 11 economies for which a second city Treatment of the total tax rate was added in this year’s report, the distance to frontier score is calculated as the population-weighted average This year, for the first time, the total tax rate component of the distance to frontier scores for the 2 cities covered of the paying taxes indicator set enters the distance to (table 12.1). This is done for the aggregate score, the frontier calculation in a different way than any other scores for each topic and the scores for all the indicator. The distance to frontier score obtained for the component indicators for each topic. total tax rate is transformed in a nonlinear fashion before it enters the distance to frontier score for paying taxes. Table 12.1 Weights used in calculating the distance to As a result of the nonlinear transformation, an increase in frontier scores for economies with 2 cities covered the total tax rate has a smaller impact on the distance to Economy City Weight (%) frontier score for the total tax rate—and therefore on the Dhaka 78 distance to frontier score for paying taxes—for Bangladesh Chittagong 22 economies with a below-average total tax rate than it São Paulo 61 would have in the calculation done in previous years (line Brazil Rio de Janeiro 39 B is smaller than line A in figure 15.2 of the Doing Shanghai 55 China Business 2015 report). And for economies with an Beijing 45 extreme total tax rate (a rate that is very high relative to Mumbai 47 India the average), an increase has a greater impact on both Delhi 53 these distance to frontier scores than before (line D is Jakarta 78 Indonesia bigger than line C in figure 15.2 of the Doing Business Surabaya 22 Tokyo 65 2015 report). Japan Osaka 35 The nonlinear transformation is not based on any Mexico City 83 Mexico economic theory of an “optimal tax rate” that minimizes Monterrey 17 distortions or maximizes efficiency in an economy’s Lagos 77 Nigeria Kano 23 Karachi 65 Pakistan that from the simple average method because both these methods Lahore 35 assign roughly equal weights to the topics, since the pairwise Moscow 70 Russian Federation correlations among indicators do not differ much. An alternative to the St. Petersburg 30 simple average method is to give different weights to the topics, New York 60 depending on which are considered of more or less importance in the United States Los Angeles 40 context of a specific economy. Source: United Nations, Department of Economic and Social 7 For getting credit, indicators are weighted proportionally, according to their contribution to the total score, with a weight of 60% assigned Affairs, Population Division, World Urbanization Prospects, to the strength of legal rights index and 40% to the depth of credit 2014 Revision. http://esa.un.org/unpd/wup/CD- information index. Indicators for all other topics are assigned equal ROM/Default.aspx. weights Doing Business 2015 India 121 Economies that improved the most across 3 or more Selecting the economies that implemented regulatory Doing Business topics in 2013/14 reforms in at least 3 topics and had the biggest improvements in their distance to frontier scores is Doing Business 2015 uses a simple method to calculate intended to highlight economies with ongoing, broad- which economies improved the ease of doing business based reform programs. The improvement in the the most. First, it selects the economies that in 2013/14 distance to frontier score is used to identify the top implemented regulatory reforms making it easier to do improvers because this allows a focus on the absolute business in 3 or more of the 10 topics included in this improvement—in contrast with the relative improvement year’s aggregate distance to frontier score. Twenty-one shown by a change in rankings—that economies have economies meet this criterion: Azerbaijan; Benin; the made in their regulatory environment for business. Democratic Republic of Congo; Côte d’Ivoire; the Czech Republic; Greece; India; Ireland; Kazakhstan; Lithuania; the former Yugoslav Republic of Macedonia; Poland; Ease of Doing Business ranking Senegal; the Seychelles; Spain; Switzerland; Taiwan, China; Tajikistan; Togo; Trinidad and Tobago; and the The ease of doing business ranking ranges from 1 to 189. United Arab Emirates. Second, Doing Business sorts these The ranking of economies is determined by sorting the economies on the increase in their distance to frontier aggregate distance to frontier scores, rounded to 2 score from the previous year using comparable data. decimals. Doing Business 2015 India 122 RESOURCES ON THE DOING BUSINESS WEBSITE Current features Law library News on the Doing Business project Online collection of business laws and regulations http://www.doingbusiness.org relating to business http://www.doingbusiness.org/law-library Rankings How economies rank—from 1 to 189 Contributors http://www.doingbusiness.org/rankings More than 10,700 specialists in 189 economies who participate in Doing Business Data http://www.doingbusiness.org/contributors/doing- All the data for 189 economies—topic rankings, business indicator values, lists of regulatory procedures and details underlying indicators Entrepreneurship data http://www.doingbusiness.org/data Data on business density (number of newly registered companies per 1,000 working-age Reports people) for 139 economies Access to Doing Business reports as well as http://www.doingbusiness.org/data/exploretopics/ent subnational and regional reports, reform case repreneurship studies and customized economy and regional profiles Distance to frontier http://www.doingbusiness.org/reports Data benchmarking 189 economies to the frontier in regulatory practice Methodology http://www.doingbusiness.org/data/distance-to- The methodologies and research papers underlying frontier Doing Business http://www.doingbusiness.org/methodology Information on good practices Showing where the many good practices identified Research by Doing Business have been adopted Abstracts of papers on Doing Business topics and http://www.doingbusiness.org/data/good-practice related policy issues http://www.doingbusiness.org/research Doing Business iPhone App Doing Business at a Glance—presenting the full Doing Business reforms report, rankings and highlights for each topic for Short summaries of DB2015 business regulation the iPhone, iPad and iPod touch reforms, lists of reforms since DB2008 and a ranking http://www.doingbusiness.org/specialfeatures/ simulation tool iphone http://www.doingbusiness.org/reforms Historical data Customized data sets since DB2004 http://www.doingbusiness.org/custom-query Doing Business 2015 India 123