Top 13 Features of Indian Business Environment

Here we detail about the thirteen significant features of Indian business environment.

1. Co-Existence of Public and Private Sector:

Indian business environment is characterized by the co-existence of both public and private sector in respect of its participation in various economic activities in the country. Accordingly, the various economic policies of the country can promote the development of both the sectors in different spheres of activities.

2. Low Income Level:

Another features of Indian business environment is that it has to face low income level of the people in general as an important economic parameter for determining its economic activities.

3. Poor Rate of Capital Formation:

Capital deficiency is one of the important features of the Indian business environment. Both the amount of capital available per head and the present rate of capital formation in India is very low. Moreover, this low level of capital formation in India is also due to weakness of the inducement to invest and also due to low propensity and capacity to save. Thus under this present feature, the business environment of the country never faces adequate incentive towards faster development of the country.

4. Low Level of Technology:

Prevalence of low level of technology is another important feature of Indian business environment. The business environment of the country is thus suffering from technological backwardness. Obsolete techniques of production are largely being applied in both agriculture and industrial sector of the country.

Sophisticated modern technology is being applied in production units at a very limited scale as it is very much expensive. Moreover, the huge unskilled and untrained labour force is also an important impediment towards technological modernization of the country.

5. Under-Utilization of Capacity:

Under-utilization of productive capacity of Indian industries is another important feature of Indian business environment. As a result of this under utilization, the industries in India are suffering from higher unit costs and low profitability syndrome.

6. Lack of Diversification:

The business environment of the country is also subjected to the problem of lack of diversification in its industry, trade and other related activities.

7. Financial Market:

Indian business environment is also supported by under developed financial market. Financial market is suffering from lack of buoyancy and there is also the problem of lack of adequate and free uninterrupted flow of institutional credit towards industrial and other business units.

8. Industrial Dispute and Slow Pace of Labour Reforms:

Another important feature of business environment is the growing industrial dispute leading to strikes and lock-outs in growing number of units as a result of irrational trade union activities. Moreover, the slow pace of labour reforms introduced by the Government has affected the business environment of the country.

9. Government Interference:

Business environment in the country is also affected by unwanted government interference in various spheres of business and industrial activities. There is lack of single window clearance and lack of administration efficiency in respect of industrial licensing. Thus the business enterprises have to face the problem of red-tapism, harassment, corruption, undue delay etc. which ultimately interrupts the promotion of smooth business environment in the country.

10. Extent of Market:

Another feature of business environment of India is the poor extent of market in the after math of globalization and international competition faced by the country. The business enterprises of the country is also suffering from lack of diversification of its export market.

However, considering the natural advantage available in the country, the country would be able to diversify its export market particularly in respect of its agro-processed industries, services sector, information technology sectors etc.

11. Transportation Bottle Neck:

Another important feature of business, environment of the country is that it is subjected to frequent transport bottle-neck. Although the country has developed a wide network of transportation system throughout the country but its frequent interruption as a result of natural calamities like flood, landslides etc. and insurgency has been resulting a serious blow to the business environment of the country.

12. Trady Flow of Foreign Investment:

Promotion of business environment also depends on the smooth flow of foreign investment in various sectors. But the country is suffering from trady flow of foreign investment, which goes against the promotion of business environment in the country.

13. Disturbed Law and Order Conditions:

Another important feature of business environment in India is its disturbed law and order conditions in some particular regions leading unbalanced growth where smooth flow of business is interrupted. Thus the business environment in a vast country like India is subjected to its diversified features.

Submitted by : Dr. Hayden, Category : Business Environment