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Last Updated: Monday, 22 May 2006, 23:02 GMT 00:02 UK
What might hold back India?

By Karishma Vaswani
BBC Mumbai business correspondent

On any given day, at the Registrar of Companies in Mumbai, at least 50 men carrying stacks of documents brave the unforgiving Indian sun.

Queue outside the Registrar of Companies in Mumbai
Getting the papers stamped can take a long time

They queue for hours to push through the necessary paperwork to open a business in India.

Many of them will have to come back repeatedly, if the countless forms they have been given by the comfortable officials in air conditioned offices have not been properly filled out. But it is a necessary evil.

You cannot open a business in Mumbai without getting the right papers stamped, marked and approved at this office.

"It's crazy," says one businessman, wary about revealing his identity in print.

"We have to stand here in the sweltering heat, back and forth with these papers, and there are only certain hours in the day when you can come here to get your work done. The office closes at 3.30 in the afternoon."

Many of the small business owners cheer us on while we film.

They want us to show the inefficiency of the administrative officials who handle their paperwork.

"Go on, show the world how long we have to wait to open up a business here," someone shouts from the snaking long queue.

"Tell them it is not India's businesses that are slow, it is India's bureacracy."

Easier elsewhere

Hundreds of new businesses come to the Registrar of Companies offices in Mumbai on a daily basis.

When they arrive, they face long hours of waiting, tons of paperwork and red tape.

According to the World Bank, India is one of the most difficult places in the world to start a business.

On average, it can take up to two months, compared with half that time in China.

The winner is Australia, where you can start your business in just a few days.

It took two months for German hardware firm Hafele to set up its operations in Mumbai.

Stephen Green, senior economist with Standard Chartered Bank
The government has realised that they need to spend a little bit more money and a little bit more time sorting out the 'soft' infrastructure, paying for healthcare, education and pensions
Stephen Green
Senior economist
Standard Chartered Bank

Now, the company is building a swanky new showroom on the outskirts of the city.

The firm makes finishings for bathrooms and hotel rooms and has seen strong demand as more hotels pop up in India, and as more people are keen to refurbish their homes.

Hafele's managing director in India, Jurgen Wolf, says his initial experience was relatively hassle free, but only because he had an Indian partner to guide him through the pitfalls of doing business here.

"It is difficult to do come here by yourself," Mr Wolf says.

"You are confused by the multitude of tax laws here, there are so many documents to fill out, its complicated.

"Coming from Europe, you are not used to this culture of waiting in long queues and talking to officials to make things happen.

"Things are relatively transparent in Europe, but you must remember as well that India is at the beginning of this cycle. It will take time for things to become more efficient here."

Take advice

Which is where European consultancy firm Oban comes in.

Hafele's  managing director in India, Jurgen Wolf,
Mr Wolf is keen to stress that newcomers should take advice

Combing through India's intricate tax laws, Oban does the groundwork for Western firms looking to invest in India.

"Tax laws here change every year, sometimes even more often than that," muses Burkhard Weigert, the consultancy's managing director.

"And if you don't know which side of the law you're on, you could spend hours working out your administration, your taxes and filing documents.

"You won't even begin selling your products to the Indian market, and months will go by. Back in Europe, your superiors won't understand the delays, they don't know how long it takes to make things run here.

"So its best if you don't do this by yourself."

Potential customers

Granted, Mr Weigert has a vested interest. He gets fees from advising western clients on how to invest in India.

Burkhard Weigert of Oban
Mr Weigert says time is money

And there is a lot of interest from foreign investors.

In the last year, enquires about investing in India from his foreign clients have doubled.

At the opening of the Atria Mall in Mumbai, one of the hundreds that have opened in the country in the last year, you can see why foreign brands are keen to sell their products to Indian consumers.

The mall boasts Spanish clothes brand Mango, a Sony store filled with digital gagdets, and even South Asia's first ever Rolls Royce showroom.

Hundreds of curious and hungry Indian shoppers flocked to the opening to spend their growing incomes on foreign goods.

With a potential market of one billion people, foreign companies are likely to keep coming back to India's shores - despite the red tape.


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