If there are qualms it is mostly a ubiquitous one about the “doing business” ecosystem in India. It is worth noting that even before the Trump tariff attacks, India’s merchandise exports had performed below par for at least the past decade and a half. India accounts for just 1.8 per cent of global merchandise trade, from less than one per cent at the start of the nineties. That was roughly the same as China at the time; today, the Middle Kingdom is the world’s largest goods trading nation. Low productivity and cost competitiveness and the sheer challenge of following multiple compliances and variable policymaking at federal and state levels have been cited as the usual suspects for India’s underwhelming performance in global markets.
Unexpectedly, though, businesses scouring the fast-growing Asia Pacific landscape for potential investment opportunities will find that India is not necessarily the most complex place to do business. According to the Netherlands-based consultancy TMF Group’s 2025 Global Business Complexity Index, the nearest proxy for a Doing Business index that the World Bank jettisoned in 2021, that distinction goes to Mainland China.
The TMF index, which tracks business complexity chiefly in terms of the number and complexity of compliances in accounting and tax, global entity management and HR and payroll, works in reverse. The most complex jurisdiction is placed at No 1 (Greece, in this case) and the best at No 79, which happens to be tax and money laundering haven Cayman Islands. China stands at 10, down from 14 in 2023. Chinese laws, the report says, are frequently updated and often implemented swiftly and without extended consultation periods, requiring companies to “constantly align their compliance efforts with new requirements”.
India by contrast weighs in at 18, which doesn’t look half bad given that Indonesia is ranked worse at 14. But the point of concern is that India’s latest ranking is a considerable drop from 33 in 2024. The report admits that India has introduced “a series of compliance reforms focusing on transparency and governance”. But it suggests that these reforms, though potentially beneficial in the long term, have made the compliance regime more stringent and complex for companies to track. It also refers to a pet peeve of corporate India: Deficiencies in the education system that make it difficult to find adequately skilled labour.
The report makes no reference to the difficulties in obtaining critical mass of land for large projects or the unpredictability of policy, arbitrary notifications and unexpected court interpretations of economic law that have played their part in discouraging investors, domestic and foreign. Though policymakers cite the decriminalisation of many statutes and the codification and relaxation of labour laws as a key enabler, India Inc seems less enamoured of them.
But policy complexity and fickleness need not be absolute deterrents to investment if the opportunity for global investors to extract value is compelling enough. For instance, for all the emerging complexities of doing business in Xi Jinping’s China, the country still figures at rank six in A T Kearney’s 2025 FDI Confidence Index (though that’s a drop from three in 2024). India ranks at 24, a sharp slip from 18 in 2024, mirroring the outlook of the TMF business complexity index. But the picture changes when you narrow the lens to foreign direct investment (FDI) in IT and services. India’s FDI inflows for the year surged 73 per cent, the bulk of it flooding into global capability centres and data centres, leveraging the country’s traditional competitive advantage.
Though analysts of a certain persuasion read in these numbers signs of India’s impending economic greatness, the fact is that no nation has bootstrapped its way out of underdevelopment without establishing a robust manufacturing basis. Neighbouring Bangladesh is a case in point. In any case, India’s notoriously poor record in delivering quality education at scale militates against the hoped for IT-driven economic revolution. It is impractical to expect India to churn out at short notice the critical mass of coders and specialists needed to miraculously transform the country into an IT powerhouse.
The US and the European Union trade deals, whenever they are signed, sealed and delivered, certainly offer the potential for India to re-open for business. But creating the groundwork for shovel-ready investment would require sustained hard work from the ground up to reverse all of India’s deep-seated problems — from providing people with better access to health and education to sustaining a vibrant multicultural society, unwinding red tape and diminishing the power of the bureaucrat and populist politician to hold entrepreneurs hostage to the whims of the state.
