Impact of Political environment on doing business in India As in any part of the world, political influence is highly essential to start a business in India. Especially if you are planning to start a multi billion business, some sort of political patronage is an absolute necessity. Not only for safeguarding the interest of the company but even to begin the process of getting the required sanctions, one requires hold in the high echelons of politics and administrative circles. Indian society is highly plural. It is the biggest democracy in the world with multi party political system.
In population, India is second to China, with nearly 1200 million people. This is the most important consumer market in the world. It is a fast developing world. India is the third largest economy in the world and second fast growing economy in Asia. It has the tremendous potential of development with huge intellectual human force. With all these advantages and the huge market potential, world super entrepreneurs are looking for business establishments in India. With the overcrowded population and the millions of hard working and qualified personals, India offers a very cheap work force to the world.
Many have realized the business potential in India, started exploring the unique opportunities of investments. During the last couple of decades, India has opened its market to world. It has absolutely become an open global market. Banking sector, Insurance sector and all fields of industrial and business are now open for multi national investment. Of course there are many obstructions to cross. And mostly all issues can overcome and establish business if you have the political patronage. India has a plural political system.
With numerous political parties, national level and state level, it is very difficult to get a consensus among all parties for starting any business. Also these political parties have patronage of many factors, caste, creed and ideologies. There are political parties with left centric communist ideologies; they are totally against direct foreign investments. But other parties, who are main ruling coalition partners, have right centric ideologies and open for foreign investments. In most of the states, mostly local political parties are ruling. Political parties require financial patronage from big business establishments.
Many constituent states have realized the need for foreign investments in their state for a growth oriented economic situation. Hence the climate has changed a lot in India. So many privileges are offered to entrepreneurs to start business. With all these facilities, still political patronage is a must to start a business in India. Even after establishing the business, for a proper running of the business, political help is essential. It is mainly to sort out issues related to local taxes, labor problems and many such issues affecting the normal working of the companies.
