You have to be either naive or mad to start a business in India, I believe—and if you are the first of those, you may soon become the second. Check out this piece by Sandeep Kohli on the difficulty of doing business in India: “The License Raj Is Dead. Long Live the License Raj.”
Honestly, Kohli’s piece makes it appear that he had it easy. I have friends who run businesses in India who have been driven to the verge of nervous breakdowns by local authorities out to fleece them. In most places in the world, a business is successful when it fulfills the needs of its customers; in India, you first have to fulfill the needs of a thousand assorted babus—only then do you reach your customers, with your costs already so high that you can’t give your customers anywhere near as good a deal as you otherwise would be able to.
Check out The Corruption Rant for an example of what a businessman in India has to go through. Also consider the fate of the Four Seasons hotel in Mumbai, the opening of which “was delayed by at least two years” because “the hotel needed 165 government permits – including a special licence for the vegetable weighing scale in the kitchen and one for each of the bathroom scales put in guest rooms.” 165 government permits. Licenses for weighing scales. What kind of crazy country are we living in?
Also read: India’s Far From Free Markets.