Labour, as a comprehensive entity, is not much of a problem, with India ranked at 85. But hiding among the parameters there lies a crucial limitation: the difficulty and expense involved in dismissing a redundant worker. On this count and expressed as ‘difficulty of firing index’, India at 70, is way below China’s and Russia’s 40.

But what I find a little intriguing is the contradiction between this report and country- and firm-level investment behaviour. It gives an impression that while creating and disseminating such reports would be, and often is, a rather profitable and publicity-positive activity for its creators and sponsoring organisations, global investors aren’t taking them too seriously. Only yesterday, management consulting firm A.T. Kearney noted in its latest FDI Confidence Index that India ranks No 2 among 25 investment destinations, which include developed and emerging economies. In fact, all four BRIC nations are among the top 10 — China at No 1, Brazil at 6 and Russia at 9. Barring China which is ranked 83 in Doing Business, the other three countries are ranked in the bottom half of the list — Russia at 106 and Brazil at 122.

The paradox gets even more curious when you place this report next to UNCTAD’s World Investment Report 2007, which shows that while FDI inflows across the world grew at 33 per cent per annum between 2004 and 2006 (the latest data), with most of that growth in developed economies (43 per cent), growth in FDI inflows to India, at 71 per cent, is more than double — and given the huge inflows this year’s will only rise. Which forces me to reach two conclusions. One, while doing business in India may be difficult, the opportunity in India is greater than all such costs. Two, smart money knows this.

... contd.