99370 COUNTRY HIGHLIGHTS INDIA 2014 The World Bank interviewed a representative sample of the private sector in India. The sample consisted of 9281 business establishments surveyed from June 2013 and December 2014. The Enterprise Survey covers several aspects of the business environment as well as performance measures for each firm. Below are the main highlights from the survey. Firms are performing relatively well in terms of employment growth despite poor annual sales growth growthelatively low sales and employment growth Between 2011 and 2013, the private sector in India 16 experienced negative annual sales growth (-3.2%) 14 as opposed to the positive performance in China 12 (13%) and in lower middle income countries (6%). 10 However, during the same time period, Indian firms 8 Percentage performed relatively well in terms of employment 6 growth. The annual employment growth for Indian 4 firms was at 5.2% which is comparable to the average 2 2014 INDIA ENTERPRISE SURVEY for similar income-level countries but still below 0 China (9%). The top four business sectors in terms -2 Real annual sales growth (%) Annual employment growth (%) of employment growth were IT (7.0%), retail and -4 wholesale (6.3%), and construction (6.2%). India2014 Lower middle income SAR China2012 The quality of electricity provision varies widely across states and territories The power supply in India is more reliable than in Average total time of power outages in a month 90 90 other lower middle income countries. Across all of 80 India, the average total time without power in a month 85 70 was 29 hours as compared to an average of 34 hours 60 for lower middle income countries and 76 hours for 80 Hours 50 South Asia. The states which are most affected, in Percentage Hours 40 Percentage terms of total time without power, include Arunachal 75 30 Pradesh (85 hours), Assam (81 hours), and Jammu & 20 70 Kashmir (76 hours) while Gujarat (0.1 hours), 10 Maharashtra (3 hours), and Chhattisgarh and Delhi 0 65 (both at 4 hours) are among the states/territories least India2014 Lower SAR Arunachal Assam Jammu & Tamil Nadu middle Pradesh Et Kashmir affected. income Al Corruption levels vary significantly across locations in India Across India, 23% of firms experience at least one Bribery incidence 26 100 bribe request across six regulatory and utility 90 transactions (i.e.“Bribery incidence”). This is similar 25 80 to the average for lower middle income countries 70 24 (22%). Within India, there is wide variation across Percentage 60 Percentage Percentage Days states with some of the lower income states having 23 50 much higher incidence: Jharkhand (87%), Rajasthan 40 22 30 (54%) vs. Gujarat (7%) Karnataka (4%). Corruption 20 seems to be particularly pervasive in some type of 21 10 transactions. Half of all firms report being solicited 20 0 for a bribe when obtaining an electricity connection; India2014 Lower SAR Jharkhand Rajasthan Gujarat Karnataka middle across countries with ES data, India is in the top all text] [Type income 10% for severity of this type of corruption. Indian firms outperform comparator countries in the use of technology but lag behind China and Turkey More Indian firms have their own website and use e- 80 mails to communicate with their clients and suppliers 70 compared to firms in South Asia and in lower middle 60 income countries. Despite this outperformance, Indian 50 firms lag behind peers such as China and Turkey. On Percentage average, around two-thirds of Chinese and Turkish firms 40 have websites compared to India’s 49%. More than one- 30 fourth of Indian firms have an internationally recognized 20 quality certification, the highest in the region. However, 10 32% of Turkish firms and 53% of Chinese firms have an 0 ISO-type certification. Increased production standards as Percent of firms having its own website Percent of firms with internationally- recognized quality certification revealed by certifications may be needed for India to increase competitiveness in international markets. India2014 SAR China2012 Turkey2013 2014 INDIA ENTERPRISE SURVEY Half of Indian firms report competing against unregistered or informal firms The development of private formal (registered) firms may 90 Foreign* be unduly and unfairly affected by competition from 80 informal (unregistered) firms as the informal firms do 70 Lower middle not have to observe various rules and regulations nor do 60 income Services India2014 Domestic Percentage they pay taxes. Half of firms in India report competing 50 SAR Manufacturing with unregistered businesses, which is similar to the 40 average for lower middle income countries (55%). 30 Services firms (vs. manufacturing) are more likely to 20 experience such competition (54% vs. 44%). More 10 striking is the difference between domestically owned 0 Percent of firms competing against unregistered or informal firms firms and firms with 10% or more foreign ownership *10% or more foreign ownership (50% vs. 80%). The Indian private sector considers corruption and electricity as their biggest obstacles The difficulties due to dealing with corruption and with Corruption inadequate provision of electricity are consistent with Electricity Tax rates firms’ perceptions of the business environment. Among Informal competitors the list of 15 potential business environment obstacles, Access to finance Labor regulations where respondents are asked to choose the biggest Access to land obstacle to their day-to-day operations, 20% of firms Tax administration Political instability choose corruption. Electricity comes in 2nd place (15%) Poorly educated workers and tax rates is 3rd (13%). Wide variation across regions Licensing and permits Transport within India, in the severity of corruption and inadequate Courts electricity, provides an opportunity for underperforming Customs & trade regulations Crime, theft and disorder states to learn from the experiences of the better 0% 5% 10% 15% 20% 25% performing regions. Percentage of firms The Enterprise Analysis Unit is a joint World Bank and IFC team of economists and survey experts specialized in private sector development. Surveys implemented by the team reveal what businesses and firms experience across the world by interviewing representative samples of the formal, non-agricultural, non-extractive, private sector with 5 employees or more. The resulting globally comparable firm-level data is used to construct business environment indicators and measure firm performance. The findings and recommendations help policy makers identify, prioritize, and implement policy reforms that support efficient private economic activity. For more information on the survey visit http://www.enterprisesurveys.org Generated using Enterprise Survey data as of June.26.2015