This is the World Bank’s annual ranking, based on a survey about the complexity of regulation. So, I wondered, how has that changed? Had its rank improved further?

Um, no. India ranked 134 in 2011, right behind Malawi, (but ahead of Indonesia). It’s up one rank from 2010′s 135.  China, by the way, is 79. (I’m not sure this makes sense; all the anecdotal stuff I hear is that India is tough, but China is tougher.)

Singapore and Hong Kong come in at #1 and #2. New Zealand’s 3rd, the UK 4th and the US is 5th.

India’s 2009 and 2011 ranks aren’t strictly comparable. The World Bank now evaluates 183 countries, not 178. Also, an indicator on which India performed better than average in 2008 — Employing Workers — has been suspended in the 2011 rankings (it’s being reviewed for methodology).

But still — these rankings are no way an improvement.

WHAT ARE THESE RANKINGS, ANYWAY?

Each year, the World Bank looks at countries across the globe, ranking them on how far they regulate 9 areas of business. The numbers indicate India’s 2011 rank out of 183 countries. A rank of 91 would be above the median, and 92 would be below it. Clearly, India ranks above the median only on two counts, though it’s close on Registering property

• Starting a Business  (173)
• Dealing with Construction Permits (157)
• Registering Property (94)
• Getting Credit (32)
• Protecting Investors (44)
• Paying Taxes (164)
• Trading Across Borders (100)
• Enforcing Contracts (182)
• Closing a Business (134)

The World Bank notes the limitations of this ranking in a note:

The ease of doing business index is limited in scope. It does not account for an economy’s proximity to large markets, the quality of its infrastructure services (other than services related to trading across borders), the strength of its financial system, the security of property from theft and looting, its macroeconomic conditions or the strength of underlying institutions. There remains a large unfinished agenda for research into what regulation constitutes binding constraints, what package of reforms is most effective and how these issues are shaped by the context in an economy. The Doing Business indicators provide a new empirical data set that may improve understanding of these issues.

WHO DOES IT TALK TO?

Unlike many surveys that talk only to a limited audience (e.g. executives of large multinationals) the World Bank’s Doing Business surveys a wide range of people:

Surveys are administered through more than 8,200 local experts, including lawyers, business consultants, accountants, freight forwarders, government officials and other professionals routinely administering or advising on legal and regulatory requirements.

So they’re averaging 40-50 people surveyed per country, though I’m sure the actual number in each place varies quite a lot.

THE BOTTOM LINE?

India’s still an attractive place for companies. But as with people — attractive shouldn’t be confused with easy.

A lot has changed since I researched it in 2008. A lot more is likely to keep changing in India and the world. I’m looking forward to the massive task of updating this book, then republishing it in a format more suited to continual updating.

I’m open to suggestions about what needs changing, and how it could be better. Email me or leave comments!

Now, the Indian Rupee has a shiny new symbol, which I can’t type because it’s not on the keyboard. I like it,  though I can’t tell how practical it’s going to be or whether it will in fact get used. [ETA in Feb 2011: It does seem to have caught on; I saw it  everywhere when I visited India.]

Some while ago, India’s Finance Ministry decided that the rupee deserved a symbol of its own, the way the UK pound has, or the Euro; and in February 2009, it held a design competition.  It wanted a symbol that would represent the “historical and cultural ethos of the country.”  This is the winner, from D. Udaya Kumar.  He’s a post-grad student from Indian Institute of Technology (IIT) in Delhi, now going to teach at IIT Guwahati.

The new symbol comes with a lot of design analysis, presumably to demonstrate that historical and cultural ethos. Given that it’s India, we also have a controversy. (As I said in my book, India Business Checklists, controversies can blindside people doing business there. This time, no companies were involved in the making of this dispute.)  But first, the design.

DESIGN FEATURES

It’s based on the Devanagari symbol for the “ra” sound (shown in the second square in the picture.) Devanagari is the name of the script in which India’s official language, Hindi, is written. Hindi can actually be represented in other scripts as well, but this is the official one. (Quite incidentally, this is also how my name Rupa, written in Devanagari, starts. Rupa and Rupee are both derived from the word for silver.)

It also incorporates the letter R of the Roman alphabet.

And then there are the more fanciful explanations: That the two parallel lines at the top recall the Indian flag. That they also resemble the “equals” sign, representing balance in the economy.

CONTROVERSY

According to www.saveindianrupeesymbol.org/ the winning candidate broke the rules, submitting four designs when the rules specified two. There was also something about being applicable to a standard keyboard in the Indian National Language script. And there’s been some buzz about an inadequate selection process.

It’s also true that the design doesn’t closely resemble any of the Government’s finalists.

The Rupee-symbol Finalists?

But I have to say I like the final one better than any of those. The process may have been broken, but the result seems okay. May be better than the other way around?

Here’s a clipping of the interview (click twice to view it larger), and here’s a link to the article in India Abroad.

(One little correction – my first job was in Mumbai – then Bombay – not Kolkata. I haven’t ever actually worked in Kolkata!)

Edited to add: Quite separately, a friend told me she’d seen my picture in the Indian Express, and saved me a copy. It turned out to be a good article on the IIM USA meeting, with a lot of Carol Sands’ wisdom reported. It’s at the bottom of the post “Making Things Happen.“

When researching my book, India Business Checklists, I met people in just this situation. Some find it more difficult to adjust that do non-Indian Americans who’ve never lived there. Returnees look Indian, may still speak Indian languages. But India’s so different from the West, they have a hard time doing business there, or even dealing with the million small hassles of daily life. Others, even if frustrated, are better at dealing with India than Western people who don’t have third-world experience.

Me, I love visiting India and feel right at home there. A line in the article resonated with me: “Leaving India makes you love it, too. Hustle. Innovation. Growth. Golgappas.“

But researching my book was frustrating. Traffic was a major problem. I could barely manage 1-2 interviews a day in person: I had to allow an hour or two of transit time each way because of unpredictable traffic jams. Unlike before – and unlike many Asian cities – the business centers are now dispersed, so interviewees might be anywhere. (On the other hand, people were very helpful, giving me information and introductions.)

People who have projects in India find it harder yet. Here’s the experience of one manager, who responded on the newsgroup. (If the language is unguarded, it wasn’t meant for publication until I asked permission to put it here. Anonymously.)

——

“Having worked in India for over six years after [graduating from an Indian Institute of Management], then moving to the US for 20+ years, I think I have an idea of both sides – yes, current India too, to an extent, since I go there at least two or three times a year for work.

“The biggest issue is corruption – totally rampant. You nearly need to pay someone money to scratch your butt (I’ve personally done the cash-in-briefcase-to-govt-official thing).

“Second, the idea of infinite time – commitments mean little.

“Third, the endless hustling to get anything done.

“On the plus side is the refreshingly aggressive, can-do attitude that the current kids have – I would really like to see them land a succession of powerful kicks on the backsides of slothful babus whose main role seems to be to gum up the works.

“Bigger picture, I don’t think Mother India is mentally ready for the responsibility that a democracy entails. Autocratically run businesses – most of them – do well; democratically managed enterprises – government operations, for example, are mired in self-generated goo.

“Yes, there is always the issue that the government subsidized my education [note: Higher education in India is tax-payer-subsidized] and I need to repay it, that I am a gaddar who got my MBA on some poor guy’s khoon-pasina [blood and sweat] etc.

“True. I tried to repay, but they want it in a plain, unmarked brown envelope, small denominations.”

It was a sad reminder of another labor-related murder that I noted in India Business Checklists: In September 08, Lalit Kishore Chaudhury, the Indian CEO of an Italian-affiliated auto parts company in NOIDA (near Delhi) was also killed by angry workers. (For IIT alums reading this blog – he was IIT/K, I believe 1986.)

But managers aren’t the only ones getting killed; in October 09, Ajit Yadav, a 26-year-old worker was killed during a labor dispute at Rico Auto Industries in Gurgaon. Rico is also an auto components manufacturer.

——–

Quite aside from the human tragedy involved, this leads to the obvious question: Is India’s labor environment deteriorating? The data from the government’s Labor Bureau don’t appear to indicate that.

Industrial disputes in India, 1999-2007

This shows a decline in the number of disputes. The Labor Bureau hasn’t yet published any full-year stats after 2007, but the graph below is based on comparing the provisional or estimated Jan-Sept figures for 2007, 2008, and 2009. (I’ve adjusted the 2009 figures to make them roughly comparable.) That, too, seems to indicate things are getting better, not worse.

India Labor Trouble: Jan-Sept 07, 08, 09

——–

Yet anecdotal evidence suggest that the number of industrial disputes have risen sharply, particularly in new industrial areas. Some have linked this to national Unions attempting to gain traction with the workers, and companies resisting unionization, trying to substitute in-house unions instead.

Do the data tell the story? They are based on voluntary reporting, and companies may choose not to bother. Also, the estimated data for 2009 may be the least accurate of all; I’ve adjusted 5-month data into 9-month data, but may have underestimated it. The summer of 2009 was reportedly one of the worst periods. When the final numbers come out, in about 2 years, it may show an upsurge in labor trouble.

In this case, the anecdotal evidence is probably the more reliable. The combination of rapid economic growth, critical mass for unionization in some geographic areas, and a sudden slowing of growth in some sectors is a potent combination. Companies situated in new industrial areas need to be particularly cautious.

——–

Edited to Add:

I received this thoughtful comment from a reader:

” …You need to draw a distinction between legitimate industrial disputes (legal and necessary in any industrialized nation), unauthorized disputes and strikes and lastly, violence in the work place.

“Murder/ physical assault of management and/or workers falls in the last category and should be categorized as crimes – no different from violence resulting fom mob frenzy fomented by political or religious strife.

“So, the number of disputes and violent crimes are not necessaily correlated.”

Good point. The deaths may be more correlated with general levels of violence and and anger in society, rather than the number or severity of labor disputes.

Well, Transparency International recently released their 2009 report on Corruption Perceptions across 180 countries. When I saw India’s rank – 84th – I went Ouch! In 2007  this organization ranked India at 72 (on par with China and Mexico). In 2009, India ranks with El Salvador, Guatemala, Panama and Thailand. Serbia is ahead (83), as is Burkina Faso (79).  China also slipped in the rankings, but only to 79th.

Lighter is better

…

When I looked at the actual score, though, I found the situation somewhat less dire. Transparency International scores countries on a ten-point scale, where 10 is the best, and 1 the worst. In 2009, top-ranked New Zealand made 9.4 , and Somalia 1.1 at the bottom.

India came up with 3.4, which is of course not great, but also not that far behind China’s 3.6 score. In fact, if you look at ten year’s worth of surveys – as I did in the graph- you find India’s score (green line) has actually been rising, while its rank (red line) has been bouncing around between 69 and 90.

India: Corruption Indicators from Yr 2000-09

…

So what’s the takeaway? By this measure, Indian corruption seems to be improving gradually – but perhaps not as fast as in other places. A rank of 84 is still a problem. On a global scale, “acceptable” levels of corruption are going to be set by nations such as the US (graph below) and Japan (Rank this year 17th, score 7.7).

USA: Corruption Indicators over Ten Years

ETA: Just as a coda, I came across this amusing story in my friend R. Balakrishnan’s weblog. Comic, but serious.

Export.gov’s profile on India suggests a number of sectors as presenting opportunities for US firms:

1. Civil Nuclear Energy
2. Renewable Energy Aerospace and Defense
3. Mining and Coal
4. Safety and Security industry
5. Healthcare
6. Retail: Beauty and Personal Care
7. Franchising
8. Automotive

And, fortuitously, lists these upcoming events :

• October 29-31, 2009 – IFSEC India 2009 – Security & Fire Technology Trade Show

(The registration deadline was Aug 09)

• Oct-Nov, 2009 – Focus Franchising: U.S. Wellness, Beauty & Healthcare Franchise Concepts
• November 7-13, 2009 – Aerospace Trade Mission to India
• November 16-20, 2009 – Energy Efficiency Mission to India
• February 14 -19, 2010 – 2nd Solar Energy Trade Mission to India
• March 3-7, 2010 – U.S. Pavilion at India Aviation 2010, Hyderabad
• March 8-13, 2010 – Medical Trade Mission to India 2010

It’s all good. India’s made up of opportunities.

Well, not quite. The attractiveness of the market is undeniable; India and China are unsaturated markets, and currently, oases of positive growth. But India shouldn’t be perceived as a short-term opportunity by any company; that way madness lies.

Companies need to tread carefully. Promotional pieces like this one, which can encourage unprepared companies to rush in (“The world’s business is coming to India, are YOU?“) were one reason I figured a really pragmatic book of checklists was needed. Take a look; it’s here on Amazon, which has finally at long last added the “Look Inside” and “Surprise Me” functions. If you have a business interest in India, this may be a good starting point. India, like the universe, is not only more complex than most companies imagine, it’s more complex than they can imagine.

As I noted when I wrote India Business Checklists, it’s the kind of market that needs a practical approach to dealing with the the good, the bad and the very complicated.

When I read the press release from Nielsen’s survey of Upper Middle-class and Rich (UMAR) households in India, I thought they’d made a mistake… maybe lost a decimal point or so. They figured India had 2.5 million Upper middle-class households, defined as those that both owned a car and a computer. I thought it must be understated; after all, India is reportedly making 2.8 million cars each year. (Income is considered to be widely under-reported in India, so surrogate indicators are used in surveys like this one.)

Nope. I checked with Nielsen, and they stand by their survey, which covered the 35 largest cities in India.

India has perhaps 220 million households in total; 65 million in urban areas; of which these 35 cities have about 26 million households. Around 10% of the households of these 35 cities are affluent.

Nielsen note that India has a stock of 14.5 million cars on the road, and 7 million computers on people’s desks. The intersection of those two sets, they estimate, is 2.5 million.

From this 2.5 million, they break out two further segments:

• The 200 thousand households of the Upper Upper middle class, which not only own a car and a computer, but also an LCD television; and
• the 100 thousand Rich families, which own all those things and have taken at least one holiday overseas.

For companies seeking to attack India’s luxury goods markets, this is a reality check. While the magic of large numbers – the 1.2 billion population – certainly exists, for many international consumer goods companies, their markets will be here: In the top 35 (or even just the top 5) cities; with consumers numbering in the hundreds of thousands rather than in the millions.

According to the survey, the top ten cities were: Delhi, Bangalore, Mumbai (Bombay), Chennai (Madras), Hyderabad, Kolkata (Calcutta), Kochi (Cochin), Pune (Poona), Jaipur and Ahmedabad.

Companies undecided about entering India might want to watch the motor-cycle manufacturer.

Two years ago, when I was researching India Business Checklists, Harley Davidson was in an dilemma.

India had changed its emission standards, so now its bikes were legal in India. Earlier, there was no question of selling their bikes in India because they didn’t comply with the standards. But import duties of 60% and other taxes that added another 30% or so priced it out of the market.

Or maybe not. Because the news now is that Harley Davidson has decided not to wait any longer. True, duties might fall, but meanwhile, other automotive companies are establishing market share. They think India’s rapid growth is generating enough of a market for them to gain some traction in the leisure riding market. In a country where the main use for two-wheelers is as family transportation, the leisure-rider is a luxury consumer. This may be among the fastest-growing market segments in India, albeit on a tiny base.