Key facts
- Business startup costs in India exceed those in China and Vietnam
- Regulatory burdens and compliance costs are key factors
- India is competing to attract manufacturers relocating from China
- Ease-of-doing-business reforms have not fully closed the cost gap
Starting a business in India costs more than doing so in China or Vietnam, according to an analysis published by NDTV — a finding that cuts against India's ambitions to become the world's preferred alternative manufacturing destination in the post-China diversification wave.
The cost disadvantage stems from multiple factors: a regulatory environment that, despite significant reforms in recent years, still imposes compliance costs and procedural hurdles on new businesses; land acquisition complexities; and infrastructure gaps that raise logistics expenses. Together, these frictions make the initial outlay for entrepreneurs and foreign investors higher in India than in some of its key competitors for global capital.
The comparison with China and Vietnam is particularly pointed. Vietnam has emerged as a nimble rival, attracting electronics and apparel manufacturers relocating from China, partly because of its streamlined business setup processes and lower input costs. China, despite its own regulatory complexities, benefits from decades of infrastructure investment and deep supply-chain ecosystems.
India's government has made ease of doing business a stated priority and has climbed in global rankings over the past decade. However, analysts argue that ranking improvements have not always translated into meaningfully lower real costs for businesses on the ground. Bridging this gap — through further regulatory simplification, faster approvals, and infrastructure investment — will be critical if India is to capitalise on the global supply chain realignment now underway.