The World Bank (which calculates the annual EoDB rankings has acknowledged that in India, "on the ground" experiences of entrepreneurs differ from what their index shows. As a result they are incorporating survey data/inputs from entrepreneurs who try to do business in India. I think it might be worth trying to contact them.

The Indian gov't is typically reactive. However, EoBB is a huge priority for the current administration. The Department for Industrial Policy and Promotion (DIPP) [renamed to Department of Promotion for Industry and Internal Trade] is overseeing the EODB project.

Your mileage may be limited now because the party in power in Maharashtra is no longer the same as the party in power at the Centre... There is limited pressure they can apply.

You are right. I see that the central government is fully committed to EoDB.

Also they have done wonderful work in Gujarat by making this process completely online.

And land is a stage subject.

Therefore, this write-up is not targeted at the current central government but at the wrong doings of past 70 years and why India still lags.

This is something that’s hard for someone like me to know (living outside India and no experience in setting up a business in India)

Does it make a difference if same party is in power in center and state?

The general consensus I see is that it doesn’t make such a big difference (everyone compares to Gujarat which is reaping the benefits of good admin over last 20 years). Current states have a lot of rot to remove and any EoDB efforts won’t be apparent. Is this a correct understanding of the situation?

I'm not too familiar with India either, but I figured that if the same party were in power in Maharasthra, then they would be able to apply pressure to the civil servants who were witholding their signatures (perhaps in exchange for non traceable Electoral Bond purchases)

Also, India has a unique federal structure where states can override central laws.

Override union laws ? Do you have examples of that ? You mean ignore them ? Ignoring laws , orders has happened and either the union government has not sued the state for various reasons or cases are still sitting in court.

There are some powers in the shared list , where the state can specify its own rules etc.

Over time it’s trending towards union control for example removing VAT and replacing with GST etc

No no no. Electoral bond purchase won't get you you anywhere.

Before the electoral bonds, all political funding happened through cash. Which was more non traceable than the current electoral bonds.

But yes the ideology of the party matters.

Central government is pro business and they have proved it in Gujarat by making it a lot easier to NA land in Gujarat.

State Government (esp. INC) is communist and anti-free-market anti-business party which seeks to create as many hurdles as possible.

Not too much difference on a transaction level, policy level perhaps , there may be contradictory rules etc.

Delhi has notably had lot of challenges because of different governments , but Delhi administration is not typical state government, it is like Washington DC , there are special provisions as it is the capital region

Thats heartening to hear. I'm fascinated by the business climate in India and I was wondering about the efficacy of the reforms implemented by the central and state governments. I have an uncle who runs a small manufacturing plant in a Mumbai industrial estate. I bombard him with questions about the manufacturing landscape in India all the time lol.

Some questions:

- How much would you expect to spend if you were to pay all the bribes? Are you unable to afford them, or is this more of a moral issue?

- Is there any reason why you are effectively purchasing agricultural land and rezoning it to industrial land, rather than buying existing industrial land? What is your plan if you cannot obtain all the necessary NOCs?

- Is there any utility/road/rail access to your land? If not, have you looked into how much it will cost to build the necessary infrastructure?

- Is the area at risk for natural disasters (especially flooding)?

Not paying bribe because of moral issues as well as the fact that I could buy 10 MacBook Pro's with that much money.

There are agents who provide the "NA service". They quoted me 10,00,000 (10 Lakh or 1 Million Rupees) excluding all the legal payments to government.

All land is Agricultural Land by default. Industrial land banks (created by MIDC are few and far and our land is near a MIDC industrial land bank which is out of stock, meaning completely bought out)

Yes there is road access.

No. the land is almost barren land. Far away from flooding. So no problem with natural disasters.

The article mentions that he wants India to become more business friendly. Giving in to the corruption will only make the problem worse I guess.

Your article seems to imply that the process is inordinately difficult in India, but I'd challenge you to locate a country/jurisdiction that wouldn't put you through a rigorous process to convert a plot of agriculturally zoned land into a factory.

Maybe Shenzhen? But that's hardly agricultural anymore from what I've heard. I imagine you'll find few, and I suspect the infrastructure will be very poor in those places.

If you want no red tape, you need to go somewhere desperate for your investment enough to waive environmental, social and health protections, like parts of Sub Saharan Africa.

And in fact this is what many Indian and Chinese companies do. Just be ready to line the pocket of the local strongman.

I got the impression that the complaint was more about the bribes and all than the regulations meant to protect the land

I agree that the bribes are horrendous. But they're also what you get from a system that incentivizes corruption. You can't expect Indian bureaucracy to be like German bureaucracy, because the incentives are so different for the players at ground level.

The alternative is to pay public servants well and charge a very large fee for the permits to finance that. Then, deal corruption on top of that without impunity.

However, the culture itself has to support that. The culture of demanding bribes for documents shows that there's a parallel market in play to which the bureaucratic system has been subverted.

Public servants are paid well(if they get paid in time, some incompetent departments are failing their employees) along with amenities. So Bribery in india is mostly a cultural problem.

> Public servants are paid well > So Bribery in india is mostly a cultural problem.

Apparently not well enough. When it's a few here and there you can argue that it's a character issue. When it's pervasive, there's a problem with the incentive structure.

I also wouldn't be so quick to condemn the culture, and I'm not so sure you can disentangle the cultural from the economic anyway.

Hello Rohan, I'm investigating product development opportunities targeted to companies/individuals investing in the Indian market. Targeted specifically to people like you. I would love to have a virtual coffee chat with you over Google meet or zoom and discuss some of the problems in this space.

I've found your twitter and I can share my contact with you that way (I don't think HN has private messages). Otherwise, my email is my HN [email protected]

How do you think the process would have gone if you agreed to pay bribes?

One thing to note to, is that any American citizen would be unable to set up manufacturing this way because it is explicitly illegal for U.S. citizens to pay bribes to foreign governments. [Foreign Corrupt Practices Act - FCPA]

https://www.investopedia.com/terms/f/foreign-corrupt-practic...

(Although given this account from presumably an Indian citizen, I can't imagine in any way recommending a non-local attempting this)

Paying bribes is illegal; but facilitation payments are legal.

If you have an official who is refusing to perform their job, or taking inordinately long about doing it, then it's legal to pay them to do it. As long as you're not influencing their actual decision making process, i.e. causing them to overlook actual legal deficiencies in your paperwork, then it is legal.

It's called the facilitation payment exception to FCPA. Obviously one intending to make such a payment would be well advised to discuss with their lawyer to make sure it is indeed within the scope of the exception.

>Obviously one intending to make such a payment would be well advised to discuss with their lawyer to make sure it is indeed within the scope of the exception.

Come on. It's obvious that the "lawyer" (or agent as mentioned in the article) is paying the fees and you aren't even aware of the process unless go to the department directly and notice the lack of willingness to process your permit.

eh... you make it sound as if it's not explicitly illegal for Indian citizens to bribe other Indians.

If I paid the amounts they wanted ~ 10,00,000 (10 lakh or 1 million) Rupees each, it would be done in 7-8 months.

And I assume the agent's cut is on top of that?

Thanks for laying all of this out. Hopefully some politicians will take notice.

It sounds like it's basically impossible to run a business without paying bribes. I imagine even if you got through the NA certificate process, they would come around later for "inspections."

I'm confused by why you wouldn't just pay. If I'm not misunderstanding google, we're talking $60 USD. Which is a pittance.

1,000,000 rupees comes out to $13k according to google. Since you need to bribe multiple entities (I'm guessing all the ones listed in the article) that probably comes out to $150+k total.

Sorry I misquoted.

It would require a total of ~15,000$ USD

1. Its not a small amount in India. Lot of families live on $ 100 per month 2. SOme people worry about how their goal is achieved than achieving in anyway possible

Just wanted to say kudos for all the patience you've exhibited DIY'ing this.

I agree that this process should in be a lot simpler but I wonder what the outcome would've been if you were willing to hire a broker and pay some bribes to get it done. Of course for you the actual manufacturing might be a secondary goal with the primary one being changing the process itself, but if someone just wants to start doing business, do you know how much it'd cost in terms of broker fees, bribes etc. to get everything setup?

Glad you're going through this as an exercise, but my understanding has always been that even for something as simple as getting your name changed, you should just get an "agent" to do all the work for you. As you noted, almost every paper you needed is essentially unnecessary, and all you need to do is make sure that someone in the chain can ignore many of the useless requirements. This also means you probably have to pay the bribes as part of some "package" I suppose.

Is your goal to open a factory, or is it reform? I'm glad if someone's trying to reform all these useless ideas and everything, but it doesn't exactly make sense that you couple basically two fundamentally different problems though. If you honestly want to get into manufacturing in India with any real practical timelines, you better get used to paying bribes as cost of doing business. If your idea cannot work with the extra cost of 10 MBP level bribes, better don't bother at all right?

An anecdote I have of relevance: I used to draft letters for my father in the 90s for his company. Once I mistyped 1997 as 1979 in a letter. The licensing authority fined his company Rs. 3,00,000 for that mistake. That was 10% of his annual revenue back then. That's because he had negotiated with the person a month back to not increase his bribe. And hence the agency used this as leverage to get a higher bribe.

Point is, you are trying to fight such a fundamental force and way of life in India, I will not bet money that you will succeed in this route, though I sincerely wish you would. Even if you do everything right, they will invent a problem because now you've hurt their ego on top of their pocket. Hell, if you actually start succeeding you should probably start worrying about personal safety as well (I would if I were you), because I doubt India is actually developed enough to ignore the worst case scenarios you can imagine in a corrupt society like this.

Thanks for the write up. It’s an interesting look into the difference between official federal government rhetoric and the reality on the ground.

I’m curious if India has special zones created the way China did for Shenzhen, for example, and if so the process of applying there would be any easier/more efficient?

Land is a state subject.

And as far I can see the central government is really committed to making a difference on the ground as they have done in states administered by them.

There are special zones in India but lot lot less than China or the USA. And all the land in that land bank is sold out where I want to start the unit. (Sangli Niraj Kupwad MIDC)

What can I do to help? Whatever I possibly can do, I will try, I am in Jaipur btw.

I am not trying to offend you but..

this is the problem in india. Should one know someone influential to get things done honestly and ethically?

I'm sure u/eklavya is aware that this is the problem in India. This is why entrepreneurs with low political influence participate in low capital businesses (ie import export). They move into more capital intensive businesses (ie oil refineries) only when they have bought political influence.

It makes sense right? Why invest capital when you risk losing the value of your investment due to arbitrary bureaucratic hurdles like the ones faced by OP? This is the strategy Relience used in the past.

Ummm, how did you arrive at the conclusion that I am offering influence political or monetary or whatever? I am embarrassed now since I can't offer any of that :P

Haha. Probably I misunderstood

My point was that an individual should be able to conduct his business without someone handholding ( who is not stakeholder or partner or employee )

Thanks for offering your help. Currently nothing much can be done by even myself.

Will let you know.

hi Rohan, I am Jitendra Shah from Surat. yes there are same practice in all the part of india in government's NA approving authority. But I still think you are fortunate enough to own an agriculture land. let me tell my situation, My parents were born in Rajasthan and they do hold the agriculture land in Rajasthan hence they are de-facto farmers of India. Any farmer in India can buy agriculture land in all the states of India that is a rule. But due to corruption in Gujarat the higher authority refuse to allow out-side states' farmers from owning agriculture land. I had even filed multiple petitions which of most were just redirected to local state office to be never answered. I was born and spent all my life in Gujarat and its the karmabhoomi for me and am proud to call my self gujarati marvadi. I am waiting for the day when I can legally own the agriculture land in Gujarat as a proud Gujarati.

I wish you best of luck for your endeavor, and following you on twitter.

Have you considered contacting a local newspaper and going onto social media about this? It seems like the only ways to move this forward would be ("easiest" to most difficult):

- forcing their hand with public shaming

- forcing their hand with legal measures (looks like you're doing that)

- changing things by getting officials into office that _want_ to change things

P.S respect for hanging there this long already!

I have thought about it many times.

But the problem is everyone knows about this and majority of people think of this is good because they have been brainwashed by communistic ideology and they think that business people are bad and evil and hence they should be controlled and suppressed by all possible means.

That mindset seems to be pretty common across the developing world, unfortunately.

It may not be a good idea considering that those seeking bribes could be connected to goons. There have bee attacks on whistleblowers in rural Maharashtra in the past.

Have you seen John Stossel's attempts to start a business in India as compared to USA and HK? My condolences to you, friend

No I hadn't heard of it. Will check it out now.

Hi Rohan, I'm a podcast producer for BillionTwenty Media an upstart podcasting company working on a story about the ease of doing business in India. I would love to interview you about your experience. I'm following you on Twitter as well, but your DMs are closed. Can you please email me at [email protected]?

Thanks for the write up. I enjoyed it a lot. I'm following you on Twitter now and I hope to hear about the developments. Wishing you all the best!

Can you bring media with you when they ask for bribes? Perhaps local news would be interested in publishing it.

I don't think Sudhir Chaudhary or his news channel will count as local news sources in this context.

Thats about as newsworthy as a story reporting that humans breathe air - it's very common knowledge in India

That’s a great write up. Thanks

Did you think of setting up the same in Gujarat since you had to runaround so much in Sangli?

If you were to to open a plant in China instead, which tariff would customers have to pay on your product?

It would depend on the product that is being manufactured/imported.

But the whole point of me starting this unit is because I "want" to make it happen in India and not import from China. There is a lot of unemployment in India and hopefully, I want to help a bit.