Bharat......... “The Development Dilemma” ( India Challenge Series - 15 ) Business Hitches: Braking Indian Economic Growth https://youtu.be/HUqDRos1VnU https://youtu.be/1nYQDCOYbHw Author :  CA  A. K. Jain India’s economic promise is undeniable, but its growth is consistently dragged by a set of entrenched business frictions. The article maps four primary bottlenecks-bureaucratic red tape, inadequate access to finance, infrastructure gaps, and skill shortages-and then surveys government reforms targeting each. It also argues that corporate failures, both domestic and foreign, reflect systemic weaknesses that demand a more proactive, coordinated policy response. The core message: reforms have moved the needle, but sustained execution on simplification, infrastructure, credit, and skills remains essential to unlock India’s full potential. Core business frictions • Bureaucratic red tape: Entrepreneurs face multi-layered approvals, opaque guidelines, and overlapping authorities. Delays and discretion fuel corruption, while accountability remains thin. Historically, India’s “License Raj” throttled entrepreneurship; today, the pain points persist in land acquisition, environmental clearances, FDI approvals, and slow tax refunds. The outcome is higher costs, slower project starts, and, at times, a push toward informality. • Access to finance: SMEs and startups struggle most. Banks see them as high-risk, demanding collateral and charging higher rates. Long, document-heavy processes deter borrowers, while uneven financial literacy limits entrepreneurs’ ability to navigate products or compare costs. Even well-intended schemes can falter due to delayed disbursals or complex eligibility. The net effect includes stalled capex for mid-sized firms, delayed infrastructure projects for larger players, and early mortality for startups. • Infrastructure deficiencies: Weak logistics and connectivity inflate costs and erode competitiveness. Poor roads, congested railways, and slow port clearances disrupt supply chains; unreliable and pricey power hurts manufacturing; patchy broadband in smaller towns constrains digital businesses; limited industrial parks and warehousing raise storage losses. These frictions scale differently across firm sizes but collectively suppress productivity and market reach. • Skill shortages and mismatch: Industry often can’t find job-ready talent. Curricula lag market needs; vocational pathways are underpowered; skilled workers concentrate in metros and churn frequently. SMEs in particular lose out to larger companies in wages and brand pull. The consequence is missed deadlines, quality issues, slower innovation, and rising training costs-especially acute in tech, manufacturing, and emerging fields like EVs and AI. Government responses and their impact The article notes a broad suite of reforms aimed at lowering transaction costs, speeding up projects, and building capacity. Ease of Doing Business (EoDB) reforms: • GST simplified indirect taxation, created a unified market, and reduced compliance fragmentation. • IBC introduced time-bound insolvency resolution, improving credit recovery and exit processes. • Labor law consolidation into four codes promises simpler compliance (subject to effective implementation). • Trade facilitation via Customs EDI and export infrastructure upgrades shortened clearance times. • Digital moves-single-window systems, MCA21-cut paperwork and improved transparency. Digitalization: • UPI transformed payments, lowering cash handling and enabling even micro-merchants to transact digitally. • GeM opened government procurement to SMEs with transparent, online bidding. • GSTN standardized tax compliance and reduced filing complexity; e-Way Bills sped interstate logistics. • Recommended next steps include boosting digital literacy, hardening cyber security, expanding rural broadband, and integrating platforms (UPI, GSTN, GeM) for a seamless user journey. Infrastructure development: • Bharatmala (roads), Sagarmala (ports), and Dedicated Freight Corridors (DFCs) target logistics costs and speed-to-market. Industrial corridors (e.g., DMIC) and Smart Cities aim to create high-quality industrial and urban ecosystems. • Impact: faster freight movement, improved port capacity, better last-mile connectivity, and more attractive investment locations. Execution pace and regional disparities remain concerns; public–private partnerships are highlighted as critical to scale and sustain. Financial support and incentives: PMMY offers loans up to Rs. 10 lakh for micro and small businesses; CGTMSE provides collateral-free guarantees, de-risking lenders. PLI incentivizes incremental production across strategic sectors, catalyzing capex and import substitution. Startup India lowers barriers through tax breaks, faster IP processing, and funding support. Emergency credit lines (e.g., ECLGS) helped MSMEs survive shocks. The challenge is closing last-mile gaps-speed, awareness, and simplified eligibility-so beneficiaries, especially in rural/semi-urban India, can access funds. Skill development: PMKVY, NAPS, SANKALP, Udaan, and AIM (through ATLs and incubation) attack the employability gap via short-term training, apprenticeships, institutional capacity building, and exposure to new technologies. These programs have widened the pool of trained workers and apprentices but need deeper industry linkage, outcome tracking, and continuous curriculum refresh to keep pace with tech and market shifts. Policy clarity and investment promotion: GST, IBC, Make in India, and PLI aim to anchor a predictable regime. Liberalized FDI and Invest India’s facilitation efforts seek to position India as a top destination. The National Infrastructure Pipeline signals long-term intent and project pipelines to crowd in private capital. Lessons from corporate exits and failures The article lists MNC exits (retail, auto, telecom, manufacturing) and a long roster of domestic failures, notably in aviation. While reasons vary-mismanagement, market misreads, funding constraints, regulatory friction-the author argues a more proactive, early-warning posture by regulators, lenders, and policymakers could have salvaged many. The suggestion: establish monitoring frameworks that flag stress, coordinate responses, and provide time-bound relief or restructuring support where viable-cognizant of moral hazard but geared to preserve jobs, assets, and supply chains. What still needs to improve The reform arc is positive, but four priorities recur: Streamline and de-risk compliance: • Institutionalize single-window systems with statutory time limits and deemed approvals where appropriate. • Rationalize inspections, expand faceless assessments, and publish service-level dashboards for accountability. • Stabilize policy with transparent consultations and predictable roadmaps to reduce regulatory uncertainty. Deepen and democratize finance: • Expand collateral-free credit and blended finance for SMEs and startups; simplify documentation; accelerate disbursals. • Promote fintech-led credit scoring, supply-chain finance, and invoice discounting to unlock working capital. • Scale financial literacy and advisory support to help entrepreneurs choose the right instruments. Accelerate hard and digital infrastructure: • Close regional gaps through last-mile connectivity, reliable industrial power, quality warehousing, and logistics parks. • Invest aggressively in high-speed internet for Tier-2/3 cities and rural hubs to enable digital commerce and remote services. • Use PPPs and standardized contracts to crowd in private capital and improve execution discipline. Close the skills loop: • Co-create curricula with industry, embed apprenticeships, and scale outcome-based funding tied to placements. • Incentivize continuous skilling in fast-changing domains (AI, EVs, electronics, pharmaceuticals). • Support SME consortia for shared training, and encourage mobility of skilled labor beyond metros. Bottom line India has tackled many structural impediments with notable reforms: tax simplification, insolvency resolution, digitized compliance and payments, major infrastructure buildouts, and targeted incentives for manufacturing and startups. These moves have reduced friction, widened access, and boosted competitiveness in parts of the economy. Yet the everyday experience of entrepreneurs-especially SMEs and first-time founders-still features slow approvals, credit frictions, infrastructure bottlenecks, and talent gaps that sap productivity and resilience. The path forward is not a wholesale redesign but relentless execution: fewer forms and touch points, faster and more predictable decisions, integrated digital rails, broad-based credit access at reasonable cost, skill pathways tied to real jobs, and infrastructure that performs end to end. Coupled with early-warning systems for distressed but viable firms, such a program can reduce business failures and maximize economic spillovers-jobs, taxes, and exports. The article’s final provocation is telling: even halving avoidable business failures could have materially altered India’s growth trajectory. With the reform scaffolding largely in place, India’s next leap depends on turning policy intent into consistent, on-the-ground ease for businesses of every size and sector. Continuous regulatory simplification, smarter finance, faster infrastructure, and market-ready skills are the levers to convert potential into sustained, inclusive growth. ---------------------------------------------------- About The Article This article is the extract of one of the chapter of the best-selling book on Indian Macro-Economics, titled.... Bharat........” The Development Dilemma" authored by CA Anil Kumar Jain. “This book is a must-read for every aware and enlightened citizen. It presents an in-depth analysis of the challenges faced by an emerging India and offers innovative suggestions and practical solutions to overcome them, paving the way for our nation to attain the esteemed position of Vishwaguru in the near future.” The book is available at Amazon, Flipkart, Google Play Books and Ahimsa Foundation (WhatsApp Your Request - 9810046108).