Best state to start a business in india

Finding the Best Location to Start Your Business in India

India’s expanding economy presents numerous opportunities for new companies. Yet, the ideal state in which to start your business can differ significantly. This article examines important considerations such as government support, taxation, infrastructure, and others to guide you in your decision. We will also list some of the most business-friendly states.

What Constitutes a “Business-Friendly” State?

A business-friendly state facilitates the easier start-up and expansion of businesses. This is through:

• Easy Start-Up: Simple and fast procedures to establish a business.
• Low Regulation: Minimal rules and easy compliance.
• Good Infrastructure: Efficient roads, power, internet, and transportation.
• Financial Help: Subsidies, grants, and other government assistance.
• Supportive Government: Officials and policies that comprehend and support businesses.
• Skilled Workers: Access to competent labor.
• Industry Advantages: Unique advantages for some forms of businesses.

How We Ranked the States

We considered several key areas to rank the states:

• Tax Benefits: Corporate tax rates, GST effect, and special tax relief.
• Infrastructure: Road quality, railways, ports, airports, power availability, and internet.
• Grants and Subsidies: Government funds for new and expanding businesses, particularly startups and small businesses.
• Government Policies: How simple it is to operate with the state government and comply with regulations.  
• Skilled Workforce: Presence of skilled employees.  
• Industry Advantages: Specific advantages or fixed bases for particular industries.  
• Ease of Starting a Business: As per reports and feedback.
• Remember that India’s business environment is continuously evolving, and states are continuously striving to induce investment. Although the World Bank’s Doing Business Report is not being issued anymore, the Department for Promotion of Industry and Internal Trade (DPIIT)’s Business Reform Action Plan (BRAP) has become a major indicator of how easy it is to conduct business in various states.

State-by-State Breakdown

Here’s a glance at some of the best states to start a business:

Andhra Pradesh

• Why it’s good: Provides numerous incentives, particularly for new sectors such as electronics and semiconductors. Access to good ports and evolving infrastructure.
• Key Benefits: Subsidies on investment, tax incentives, and IT startup support.
• Infrastructure Highlights: Extensive coastline, major ports, and expanding digital network.
• Business Environment: Active government with an investment attraction focus.
• Key Industries: Electronics, pharmaceuticals, food processing, and renewable energy.

Gujarat

• Why it’s good: Reputed for its robust industrial base and encouraging policies. Great infrastructure, particularly ports and power availability.
• Key Benefits: Subsidy on interest, refund of tax, and exemption from duty on electricity.
• Infrastructure Highlights: Well-developed roads, big ports that account for a major proportion of India’s cargo, and regular power surplus
• Business Environment: Traditional image of being pro-business.
• Key Industries: Chemicals, petrochemicals, pharmaceuticals, and textiles.

Haryana

• Why it’s good: Favorable location close to Delhi NCR and good industrial policies. Excellent connectivity and excess power.
• Key Benefits: Refund of tax, subsidy on employment, and exemption from duty on electricity and stamp duty.
• Infrastructure Highlights: Good rural roads, good railway connectivity, and stable power.
• Business Environment: Process streamlining and actively evolving industrial infrastructure.
• Key Industries: IT (Bengaluru), textiles, and automobile manufacturing.

Karnataka

• Why it’s good: Technological and innovation leader, particularly in IT. Fast track on evolving infrastructure and skilled manpower.
• Key Benefits: Incentives and R&D-related subsidy options with more women employees in companies.
• Infrastructure Highlights: Strong network of national highways, port access, and international airports.
• Business Environment: Dedicated to making it easy for investors with digital platforms.
• Key Industries: Information technology (Bengaluru), biotechnology, and aerospace.

Kerala

• Why it’s good: Ranked as one of the best states in ease of doing business. Good social infrastructure and a developing IT sector.
• Key Advantages: Low-interest small business loans, capital subsidies, and tax rebates.
• Infrastructure Highlights: Good road connectivity, several international airports, and key seaports.
• Business Environment: Efficient processes and good support for start-ups.
• Key Industries: Tourism and IT/ITeS.

Punjab

• Why it’s good: Provides good incentives and has a robust agro-industrial base. Decent power infrastructure and road network.
• Key Advantages: Refund of SGST, tax exemptions, and interest concessions.
• Infrastructure Highlights: Excess power and a large road network.
• Business Environment: The Government aimed at developing a business-friendly environment with a one-stop clearance facility.
• Key Industries: Agriculture, food processing, and textiles (Ludhiana)

Telangana

• Why it’s good: Reputed for its forward-thinking and investor-supportive policies, particularly TS-iPASS for rapid approvals. Fast-growing infrastructure.
• Key Benefits: Subsidy on capital investment, refund of stamp duty and power charges, and tax concessions.
• Infrastructure Highlights: Hyderabad’s Outer Ring Road, enhancing power capacity, and a high-speed internet project.
• Business Environment: Ranked consistently high on ease of doing business and boasts a robust startup ecosystem.
• Key Industries: Information technology (Hyderabad), pharmaceuticals, and manufacturing

Tamil Nadu

• Why it’s good: Provides strategic policies and robust infrastructure. Power surplus state with emphasis on industrial development.
• Key Benefits: Liberal capital subsidies and targeted incentives for major sectors such as automobiles and IT.
• Infrastructure Highlights: Comprehensive road network, numerous seaports, and robust air connectivity.
• Business Environment: Known as a top investment destination with a skilled workforce.
• Key Industries: Automobiles, electronics, and information technology.

Advantages for Specific Industries

Various states are good in various sectors:

• Manufacturing: Gujarat, Tamil Nadu, Haryana, Andhra Pradesh, Telangana, Punjab.
• IT/ITeS: Karnataka, Telangana, Tamil Nadu, Haryana, Kerala.
• Agriculture Processing: Punjab, Andhra Pradesh, Haryana, Tamil Nadu, Telangana.
• Tourism: Kerala.
• Pharmaceuticals: Gujarat, Telangana.
• Renewable Energy: Karnataka, Gujarat.
• Electronics: Andhra Pradesh, Tamil Nadu.

Ranking the Most Business-Friendly States

Based on our analysis, the following is a list of the most business-friendly states in India:

1. Gujarat
2. Telangana
3. Karnatak
4. Tamil Nadu
5. Andhra Pradesh
6. KeralaHaryana
7. Punjab
8. Hariyana

Conclusion: Choosing the Right State

The best state to start your business in India depends on your specific needs. Gujarat and Telangana consistently perform well overall. Karnataka is great for tech companies. Tamil Nadu has a strong manufacturing base. Andhra Pradesh is working hard to attract new industries. Kerala is becoming a top choice for ease of doing business. Haryana offers a strategic location, and Punjab has a strong agricultural sector.

Before making a decision, research the specific advantages of each state for your industry and consider visiting to get a firsthand understanding of the business environment. The efforts being made by states across India to improve their business climates mean there are many promising options for entrepreneurs.