According to the recent data shared by the World Bank titled, “The Ease of doing Business 2015” India ranks at #142 among 189 countries with regard to ease of starting a business in the country. The position has fallen down further from #134 as of June 1st last year. India always has had a reputation of being a very difficult country to do business in. Looking at the current rankings, it seems Modi’s vision of making India’s ranking among the top 50, is not coming along too well.
Until now there were primarily Indian companies which suffered due to the complex structures and processes of doing business in the country, but now global players, which have launched their operations in India, have also started crying wary of these hurdles, as they too have started facing problems in the country in regard to operating their business in India.
Recently Amazon, in its filing with the US Securities and Exchange Commission, mentioned that it’s business in India involves unique risks as there are “uncertainties over the country’s laws and regulations.” and thus could impact its business in the country.
“In addition, our Chinese and Indian businesses and operations may be unable to continue to operate if we or our affiliates are unable to access sufficient funding or in China enforce contractual relationships with respect to management and control of such businesses.. If our international activities were found to be in violation of any existing or future PRC (the People’s Republic of China), Indian or other laws or regulations or if interpretations of those laws and regulations were to change, our businesses in those countries could be subject to fines and other financial penalties, have licences revoked, or be forced to shut down entirely.”
Earlier, Amazon which operates on a marketplace model in the country, had received notices from the Karnataka’s tax department that barred Amazon India from selling products from its warehouse in the state by cancelling the licenses of more than 100 third-party merchants that work with the local unit of the company.
The issue in Karnataka revolves around the fact that Amazon stores certain products owned by third-party merchants at its warehouse even before a customer has ordered them; whereas in other cases Amazon just simply picks up products from merchants after a customer has placed an order on its site. As it operates on a marketplace model, Amazon keeps a cut and passes on the remaining proceeds to its merchants, who then pay VAT to the state government.