India third worst in resolving commercial feuds: Report

Written by Press Trust of India | Washington | Updated: Oct 31 2013, 08:32am hrs
It takes nearly four years on an average to resolve a commercial dispute in India, making the country the worlds third worst nation on this front.

In comparison, it takes just about five months to resolve a commercial dispute in Singapore, the world's best place to do business as per a latest global report on the ease of doing business.

Providing details about the ease of doing business in India, a separate report said that it takes 1,420 days for resolving commercial disputes in the country, placing it at the 186th spot in terms of enforcing contract, among 189 economies.

The report released by the World Bank and International Finance Corporation ranks countries on the basis of 10 factors, including enforcing contracts that look at how efficiently commercial disputes are resolved through courts.

Of the 1,420 days for resolving a dispute, the time to file and serve the case is 20 days, trial and judgement 1,095 days and enforcement of judgement 305 days.

Moreover, an entity has to follow a total of 46 procedures to resolve a business dispute in India compared to only 21 procedures required in Singapore, the best performer on the parameter, the study said.

According to the report on India, "courts are essential for entrepreneurs because they interpret the rules of the market and protect economic rights".

"Efficient and transparent courts encourage new business relationships because businesses know they can rely on the courts if a new customer fails to pay," the report said.

"Further, speedy trials are essential for small enterprises, which may lack the resources to stay in business while awaiting the outcome of a long court dispute," it added.

Meanwhile, costs related to enforcing a contract are estimated at 39.6% of the total claims. Out of that expense, about 30.6% is spent on attorney costs, it said.

"The ease of doing business report does not give much value (in terms of improving business climate). Merely making comparisons is not enough," Planning Commission member Arun Maira had said Tuesday.

PHD Chamber of Commerce and Industry's president Suman Jyoti Khaitan said: "We realise how difficult it is doing business in India."

"I am not discounting the efforts that have been made, like online filing of returns which is a positive step. However, there are too many day-to-day problems and several approvals are required at different levels," he said.