India's economic reforms drive 25-rank improvement in global competitiveness index

Livemint - Economy · 3 Aug 2026 · 2 min read
Prelims · Economy Mains · GS3 Economy High relevance

India climbed 25 places in Competere Foundation's Market Distortions Performance Index (57th in 2023 from 82nd in 2010) due to structural reforms like GST and IBC, reducing projected GDP per capita losses by 11 percentage points over five years.

Key points

Market Distortions Performance Index by Competere Foundation ranks economies based on anti-competitive market distortions, with India showing the most significant improvement among studied economies.

GST implementation unified India's indirect tax system, reducing internal fiscal fragmentation and contributing substantially to the improved ranking.

Insolvency and Bankruptcy Code (IBC) strengthened insolvency resolution mechanisms, improving productive asset reallocation and investor confidence.

[GS3-Economy] The reforms are estimated to have reduced India's projected five-year GDP per capita loss by 11 percentage points, translating to ~1% annual GDP per capita gain.

Trade facilitation measures like SWIFT, ICEGATE, and risk-based customs systems reduced transaction costs, connecting to GS3's trade infrastructure topics.

Foreign investment restrictions remain the largest distortion, costing $127.2 billion over five years (4.2% of GDP), particularly in retail and e-commerce sectors.

[GS2-Governance] The report highlights regulatory barriers in digital markets as emerging challenges, requiring evidence-based competition policy to balance innovation and consumer protection.

India faces new external challenges from stringent EU sanitary/phytosanitary standards that could undermine FTA benefits, connecting to GS2's international trade negotiations.

The study was released at CTIL-IIFT, emphasizing the need for next-generation reforms in foreign investment, competition policy, and external trade barriers.

Way Forward: India should (1) rationalize foreign investment caps in retail/e-commerce, (2) develop science-based standards for export competitiveness, and (3) establish a digital competition framework balancing innovation with consumer protection.

Key terms

Market Distortions Performance Index

An analytical framework by Competere Foundation measuring anti-competitive regulations and practices that hinder economic efficiency. For UPSC, it's significant as it quantitatively assesses reform impacts on India's economic governance and global standing.

Goods and Services Tax (GST)

India's comprehensive indirect tax introduced in 2017 under 101st Constitutional Amendment, subsuming multiple central/state taxes. Its UPSC relevance lies in fiscal federalism, ease of doing business, and economic integration of India's common market.

Insolvency and Bankruptcy Code (IBC)

The 2016 legislation creating a time-bound resolution process for distressed assets. Constitutionally significant under Entry 9 of Union List, it's crucial for UPSC's banking reforms, investor protection, and financial stability topics.

Single Window Interface for Facilitating Trade (SWIFT)

India's trade facilitation platform integrating 26 regulatory agencies to reduce cargo clearance time. Relevant for UPSC's logistics infrastructure, ease of doing business, and EXIM policy discussions in GS3.