INDIAN INSTITUTE OF SOCIAL WELFARE & BUSINESS MANAGEMENT

Name: SAUMYAJIT SABUI

Roll Number: 20220230081
Session: 2022 – 2024
Course: MBA-PS
Discipline: TRANSPORTATION AND LOGISTICS MANAGEMENT
Paper: BUSINESS AND GOVERMENT
Paper Code: MBA-PS-105

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  As a common citizen of India, you had been instructed to find out the major issues
which are posing as challenges to the Business community and what are the enabling
factors, facilitation, policy matters that you want from the government and reforms,
you expect from the government, so the business growth runs at a faster pace.
Ans: -
Challenges: -
Starting a Business
The cost of starting a business in India is astronomical, and the procedures involved can be
daunting without local knowledge. There are 12 procedures to complete in the initial set up
of a business costing 49.8% of income per capita. It takes almost a month (27 days) to
complete the tasks on average, which is well above the OECD average of 12 days.
Dealing with Construction Permits
Construction permits are also a costly pursuit, involving 34 procedures and taking 196 days.
Obtaining Intimation of Disapproval from the Building Proposal Office and paying fees takes
around a month, and NOCs must be sought from the Tree Authority, the Storm Water and
Drain Department, the Sewerage Department, the Electric Department, the Environmental
Department, the Traffic & Coordination Department, and the CFO.
Getting Electricity
The cost of getting electricity is relatively cheap in comparison to the rest of South Asia, but
the number of procedures involved can be rather daunting. What’s more, each procedure is
in itself quite time constraining, taking around eight days to receive an external site
inspection and three weeks to get externally connected, have a meter installed and conduct
a test installation.
Registering Property
Registering a property requires quite a bit of legwork and can also incur substantial charges.
Stamp duty of 5% of the property and a 1% charge on the market value of the property
incurred at the Sub-Registrar of Assurances are the two fees to look out for, although the
lawyer charges and fees at the Land & Survey Office can also pinch.
Protecting Investors and enforcing contracts
The concept of investor protection is one that has garnered a lot of attention of late, and
new bodies such as the Securities and Exchange Board of India (SEBI) have been set up to
that effect. Enforcing contracts will also be an area that must be looked at; India ranks as
one of the worst countries in the world for the ability to enforce a contract, taking an
average of 1,420 days.
Paying Taxes
Businesses operating in India are required to make 33 tax payments a year, taking 243
hours’ worth of attention. The headline corporation tax rate stands at 30%, but companies
can also incur charges in the form of a central sales tax, dividend tax, property tax, fuel tax,
vehicle tax, and excise duty.

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Resolving Insolvency
It takes 4.3 years to resolve insolvency in India, far longer than the South Asian and OECD
average. The laborious court system can often slow business relations.
Exports and imports challenges
Despite government legislation to improve international trade, there are still various hurdles
to importing and exporting goods. Exporters and investors face non-transparent and often
unpredictable regulatory and tariff regimes. Several layers of bureaucracy make it
challenging to move goods efficiently, and companies must file a long list of documents
before moving products across borders.
Skill gap in India
Accessing the right skills is a challenge. Further, employment laws in India are complex. At
present, there is a huge variety of laws which need to be consolidated.
Culture
India is a cultural hotbed, and business is more about building relations than presenting
figures and sums. The polychronic culture can be difficult to adapt to for outsiders, and due
diligence into the destination is important before travelling.
Reforms: -
The seven factors for a favourable environment for business and investment are: -
(i) enforcement of contracts; (ii) land acquisition; (iii) protection of IP and personal data;
(iv) access to credit and equity capital; (v) availability of electricity and labour; (vi) timely
resolution of bankruptcy and insolvency issues; and (vii) elimination of financial
corruption.

 What are the Treaties, Trade Agreements, Trading Blocs that are causing problems as
far as the international flow of business is concerned. Similarly, what are the good
points that you find out of the above that are positively impacting upon the
international business community. Indicate the roles played by the various countries
to curb the business growth of China including Russia and some other countries.
Ans: -
International Treaties, Trade Agreements, Trading Blocs: -

 Regional trade agreements include the North American Free Trade Agreement
(NAFTA), Central American-Dominican Republic Free Trade Agreement (CAFTA-DR),
the European Union (EU) and Asia-Pacific Economic Cooperation (APEC).
 Free Trade Agreement between ASEAN and Japan, which entered into force for the
parties between 2008 and 2010.
 Free Trade Agreement between ASEAN and the Republic of Korea, which entered
into force on 1 January 2010.
 Free Trade Agreement between Hong Kong, China and Georgia, parties to the
Agreement, which entered into force on 13 February 2019.

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 Treaties, Trade Agreements, Trading Blocs involving India: -

India has signed 13 Free Trade Agreements (FTAs) with its trading partners, including the 3
agreements, namely India-Mauritius Comprehensive Economic Cooperation and Partnership
Agreement (CECPA), India-UAE Comprehensive Partnership Agreement (CEPA) and India-
Australia Economic Cooperation and Trade Agreement (IndAus ECTA) signed during the last
five years. The list of FTAs signed by India is as under:

 India-Sri Lanka Free Trade Agreement (FTA)

 Agreement on South Asian Free Trade Area (SAFTA) (India, Pakistan, Nepal, Sri Lanka,
Bangladesh, Bhutan, the Maldives, and Afghanistan)
 India-Nepal Treaty of Trade
 India-Bhutan Agreement on Trade, Commerce and Transit
 India-Thailand FTA - Early Harvest Scheme (EHS)
 India-Singapore Comprehensive Economic Cooperation Agreement (CECA)
 India-ASEAN CECA - Trade in Goods, Services, and Investment Agreement (Brunei,
Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand,
and Vietnam)
 India-South Korea Comprehensive Economic Partnership Agreement (CEPA)
 India-Japan CEPA
 India-Malaysia CECA
 India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement
(CECPA)
 India-UAE CEPA (Signed, but yet to be implemented)
 India-Australia Economic Cooperation and Trade Agreement (ECTA) (Signed, but yet
to be implemented)

India has signed the following 6 limited coverage Preferential Trade Agreements (PTAs):

 Asia Pacific Trade Agreement (APTA)

 Global System of Trade Preferences (GSTP)
 SAARC Preferential Trading Agreement (SAPTA)
 India-Afghanistan PTA
 India-MERCOSUR PTA
 India-Chile PTA

Disadvantages of Trade Agreements: -

 Increased Job Outsourcing.

 Theft of Intellectual Property
Many developing countries don't have laws to protect patents, inventions, and new
processes. The laws they do have aren't always strictly enforced. As a result,
corporations often have their ideas stolen. They must then compete with lower-
priced domestic knockoffs.
 Crowding Out Domestic Industries.

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  Poor Working Conditions
Multinational companies may outsource jobs to emerging market countries without
adequate labour protections.
 Reduced Tax Revenue
Many smaller countries struggle to replace revenue lost from import tariffs and fees.
 Degradation of Natural Resources
Emerging market countries often don't have many environmental protections. Free
trade leads to the depletion of timber, minerals, and other natural resources.
Deforestation and strip mining reduce their jungles and fields to wastelands.
 In addition to threatening environmental resources, free trade agreements threaten
native populations as well. As development moves into isolated areas, indigenous
cultures can be destroyed. Local peoples are uprooted. Many suffer disease and
death when their resources are polluted.

Advantages of Trade Agreements: -

 Increased Economic Growth

 More Dynamic Business Climate
Without free trade agreements, countries often protected their domestic industries
and businesses. This protection often made them stagnant and non-competitive on
the global market. With the protection removed, they became motivated to become
true global competitors.
 Free trade agreements also contribute to foreign investment. Investors will flock to
the country. This adds capital to expand local industries and boost domestic
businesses. It also brings in U.S. dollars to many formerly isolated countries.
 Lower Government Spending
Many governments subsidize local industries. After the trade agreement removes
subsidies, those funds can be put to better use.
 Industry Expertise
Global companies have more expertise than domestic companies to develop local
resources. That's especially true in mining, oil drilling, and manufacturing. Free trade
agreements allow global firms access to these business opportunities.
 Technology Transfer
Local companies also receive access to the latest technologies from their
multinational partners. As local economies grow, so do job opportunities.
Multinational companies provide job training to local employees.
Roles played by the various countries to curb the business growth of China including
Russia and some other countries: -
China: -

 In 2017, the Trump Administration launched a Section 301 investigation of China’s

innovation and intellectual property policies deemed harmful to U.S. economic
interests. It subsequently raised tariffs by 25% on $250 billion worth of imports from
China, while China increased tariffs (ranging from 5% to 25%) on $110 billion worth

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 of imports from the United States. Such measures have sharply decreased bilateral
trade in 2019. On May 10, 2019, President Trump announced he was considering
raising tariffs on nearly all remaining products from China. A protracted and
escalating trade conflict between the United States and China could have negative
consequences for the Chinese economy. China’s growing global economic influence
and the economic and trade policies it maintains have significant implications for the
United States and hence are of major interest to Congress. While China is a large and
growing market for U.S. firms, its incomplete transition to a free-market economy
has resulted in economic policies deemed harmful to U.S. economic interests, such
as industrial policies and theft of U.S. intellectual property.

 The White House released a report arguing that growing Chinese power “harms vital
American interests and undermines the sovereignty and dignity of countries and
individuals around the world.”
 The EU has labelled China a “systemic rival” and “economic competitor,” reflecting
hardening attitudes toward Beijing across Europe. Chinese practices of limited
market access for foreign firms, industrial policies that explicitly displace
international competitors, and preferential treatment for state-owned enterprises
have pushed European countries like Germany and France to proactively prioritize
their own development. In January 2020, the EU unveiled a recommended strategy
for its member states aimed at preventing Beijing from dominating 5G markets and
exploiting security vulnerabilities. Due to security concerns, the Czech Republic,
Estonia, Latvia, Poland, and Romania have all signed agreements with the United
States on 5G security that would limit the role of Huawei in their markets. Even the
UK, which decided in January to allow Huawei a partial role in building out its 5G
infrastructure, recently reversed course and is likely to pass legislation requiring
Huawei to have no role in the country’s 5G networks by 2023. Instead, Britain has
proposed forming a so-called “D10 club of democratic partners,” which would
include the G7 countries—Canada, France, Germany, Italy, Japan, the UK, and the
United States—plus Australia, India, and South Korea. The collective goal would be
“to create alternative suppliers of 5G equipment and other technologies to avoid
relying on China.”
 Australia, the first country to ban the 5G technology of Huawei and fellow Chinese
firm ZTE, China faces growing scrutiny after Canberra uncovered worrisome Chinese
meddling in its domestic politics.
 In Asia, where strong economic ties with China are critical to development, Beijing
has still managed to drum up resentment for its unyielding position on territorial
claims in the South China Sea. Last year, Vietnam issued its first defence white paper
in ten years in which it rejected Beijing’s claims and criticized China’s maritime
tactics, citing “unilateral actions, power-based coercion, violation of international
law, militarization, change in the status quo, and infringement upon Vietnam’s
sovereignty, sovereign rights, and jurisdiction as provided in international law.”
Other claimants, including Malaysia and the Philippines, are building up their
militaries and strengthening outposts that would help push back against Chinese
expansion.
 Numerous other developed countries have pushed back against China’s trade and
investment practices. Australia has been the second-largest recipient of investment

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 from China since 2007, after the United States. Australia’s oversight of Chinese
investment has intensified since 2016, when Canberra rejected Chinese bids to buy
Australian agribusiness and electricity grid operators.
 Germany is another important case, as its high-tech manufacturing economy has
made it China’s top investment destination in Europe. Chinese involvement in
German industrial giants, including Daimler, which is developing new battery
technologies, and Kuka, the country’s largest robotics producer, has raised alarms
and led Berlin to call for a European Union–wide investment review body. France,
too, has increased restrictions on foreign investment to stop what it calls “looting” of
sensitive technologies. However, many smaller European countries, such as Greece
and Portugal, worry that restricting outside capital could hamper their economic
growth.
 At the EU level, leaders have long complained about Chinese subsidies that distort
the global economy, as well as restricted market access for European firms and the
lack of protection for their intellectual property. The EU has filed complaints against
China at the WTO and imposed anti-dumping measures on many products.
Russia: -
As attacks continue in Ukraine and Russian forces press their advance on the capital
Kyiv, President Volodymyr Zelenskyy has pleaded for help from the international
community.
Canada, the European Union, Japan, New Zealand, Taiwan, the United Kingdom, and
the United States unveiled a series of sanctions against Russia targeting banks, oil
refineries, and military exports.
 United States
The US took aim at Russia’s oil refining sector with new export curbs.
The sanctions announced by the White House ban the export of specific refining
technologies, making it harder for Russia to modernise its oil refineries. Washington
and its allies also barred some of Russia’s banks from the SWIFT international
payments system, a list officials said was still being finalised with EU partners. The
White House released a statement saying measures will also include “wide
restrictions on semiconductors, telecommunication, encryption security, lasers,
sensors, navigation, avionics and maritime technologies”. It also targeted military
end-users, including the Russian defence ministry.
 The European Union
The 27-country EU on Wednesday also imposed several packages of sanctions on
Russia, including a ban on the export of specific refining technologies to Russia from
Europe. The group said it was planning close its airspace to Russian aircraft, including
the private jets of Russian oligarchs.
The bloc also banned Russian state-owned television network Russia Today and
news agency Sputnik. For Russian ally Belarus, the EU imposed a ban on imports of
products from mineral fuels to tobacco, wood and timber, cement, iron, and steel.
The EU also decided to freeze any European assets of Russian President Vladimir
Putin and his foreign minister Sergey Lavrov.
 Switzerland
Switzerland will adopt all the sanctions that the European Union imposed on Russian
people and companies and freeze their assets, the government said in a sharp
deviation from the country’s traditional neutrality.

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 Japan
Japan said it will strengthen sanctions against Russia to include financial institutions
and military equipment exports, Prime Minister Fumio Kishida said, adding that an
impact on his resource-poor nation’s energy supply is unlikely.
 South Korea
South Korea decided to tighten export controls against Russia, by banning exports of
strategic items, and join Western countries’ moves to block some Russian banks
from the SWIFT international payments system, Seoul’s foreign ministry said. The
Korean government also decided to promote the additional release of strategic oil
reserves for stabilisation of the international energy market and to further review
other measures such as the resale of LNG to Europe, the ministry said in a
statement.
 United Kingdom
The UK said it will lock Russia’s Sberbank out of the sterling clearing and slap
sanctions on three other banks. Foreign Secretary Liz Truss also said there will be a
full asset freeze on Russian lenders within days. Prime Minister Boris Johnson
unveiled the UK’s largest-ever package of sanctions against Russia targeting banks,
members of Putin’s closest circle, and wealthy Russians who enjoy high-rolling
London lifestyles. In the 10-point sanctions package, the British government said it
would impose an asset freeze on major Russian banks, including state-owned VTB,
its second-biggest bank, and stop major Russian companies from raising finance in
the UK. Britain will also ban Russia’s flagship airline Aeroflot from landing in the UK,
suspend dual export licences to Russia, and ban exports of some high-tech exports
and parts of the extractive industry.
 Canada
Canada announced more sanctions against Russia targeting 62 individuals and
entities, including members of the elite and major banks, and cancelled all export
permits.
 Czech Republic
The Czech Republic banned Russian airlines from flying to the central European
country and is considering further steps against Russia.
 Taiwan
Taiwan will impose sanctions on Russia, the government said, with the world’s
largest contract chipmaker saying it would comply with all export-control rules.
 Australia
Australia imposed more sanctions on Russia targeting several of its elite citizens and
lawmakers, and said it was “unacceptable” that China was easing trade restrictions
with Moscow at a time when it invaded Ukraine. Australia is also working with the
United States to align sanctions on key Belarusian individuals and entities who
helped Russia.
 New Zealand
New Zealand imposed targeted travel bans on Russia and prohibited trade to its
military and security forces.
 France
The French finance minister Bruno Le Maire said Monday that the country will go
after luxury goods owned by Russians targeted by sanctions, following a defence
council meeting called by French President Emmanuel Macron.