The International Finance Corporation (IFC), in the first city-specific study of its kind, has said Ludhiana, the industrial hub in Punjab, is the easiest location to do business in India.
Meanwhile, Patna, capital of Bihar, emerged as the least expensive to start a business, and financial capital Mumbai was ranked as the city that was the fastest location to start a new business.
The ranking was given in the order of:
Overall, however, India's ranking has dropped six places to 122 among 181 countries studied in IFC's annual 'Doing Business in India' report, which the World Bank's commercial lending arm conducted in collaboration with the Commerce ministry and Confederation of Indian Industry (CII).
Despite the drop in rankings, the study says the ease of starting and operating a green-field project in India has improved owing to significant business reforms in the policy domain over the last three years.
Business-environment reforms cited by the report include the computerisation of the Customs and excise gateway, introduction of online filing by the Ministry of Corporate Affairs and of value added tax.
India is ranked the top regional reformers in South Asia, whereas China topped the ranking in East Asia and the Pacific in terms of 'Doing business reformers' since 2004.
The report is based on various parameters on setting up industrial and commercial activity such as permits, notifications and inspections. These include dealing with construction permits, registering property and the contentious issue of taxing. The research for India covered 17 cities, including the large cities of Delhi, Kolkata, Chennai and Mumbai.
Ludhiana, which is often called Manchester of India, was given top ranking mainly because of the ease of paying taxes and ease of closing a business.
Patna, meanwhile, scores over other cities like Mumbai or Chennai in terms of low expenses in enforcing a contract and less procedural hassles in starting a business.
'The timing of this study is just right — it comes even as the government is working on e-governance to facilitate growth in business,' said Ajay Shanker, Secretary, Department of Industrial Policy and Promotion (DIPP) under the Commerce ministry.
Shanker maintained that the report will help increase competitiveness among states together with improvements in processes and best practices for businesses.
In terms of bottlenecks, IFC cited the prohibitive cost of building a warehouse and obtaining utility connections like telephone, together with lengthy bureaucratic processes like inspections and occupancy permits acting as an impediment to attracting investments in India.