To realise the Prime Minister’s vision of positioning India among the top 50 countries globally for ease of doing business in next two years, CII has submitted an Action Plan to the Government based on a milestone oriented approach and clear roadmap to help catapult India’s ranking on the parameters measured by the World Bank’s Doing Business Report.
According to the recently released World Bank’s ‘Doing Business 2015’ report, India is ranked low at 142 out of 189 countries in the overall ease of doing business. CII accepts the report as an indicative report of progress of World economies including India and is not overly perturbed about the decrease in ranking as the data used is current as of 30 May, 2014 whereas the wave of new policy reforms have cascaded post the date.
CII has shared with the Government 3 Reports dealing with the existing best practices at the States, An Action Plan for the Central Government on ease of doing business in India, and Recommendations to improve investment attractiveness which will result in catapulting India’s ranking on all the parameters measured by the World Bank’s Doing Business Report.
One of the reports – the CII – KPMG Report on “Vibrant India: Best Place for Doing Business – An Action Plan” outlines a focused roadmap for the Government and recommends rationalization of taxation regime, facilitative land acquisition process, streamlining investment approval and provisions of utilities, creating appropriate labour development and skill development ecosystem, efficient and effective enforcement of laws, facilitation of greater cross border transactions, creation of clear exit guidelines, and technology enablement across all government departments.
“With Government’s reformative drive and resolve, scalable improvement in ease of doing business through the proposed Action Plan will enhance investment attractiveness of the Indian economy and help attain higher GDP growth and spur job creation in a sustainable manner”, said Mr Chandrajit Banerjee, Director General, CII.
The key recommendations in the report for improving ease of doing business in India include:
Rationalization of taxation regime: India needs to adopt policies that mitigate tax disputes, improve tax administration and establish stability and international competitiveness of tax regime.
Facilitating land acquisition process: First priority is to simplify the land acquisition process. There is an urgent need to rationalize the new Act (Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013).
Streamlining investment approval and provision of utilities: Significant time is taken in obtaining basic utilities like water, sewerage and power connections. Projects suffer significant handicap due to poor infrastructure. CII recommends implementing effective single window mechanisms, implementing legislations that ensure time bound government service delivery, and ensuring industrial parks get prior environment and other clearances.
Creating appropriate Labour Development ecosystem: There are 44 labour laws enacted by the Central Government – many which are old and outdated with marginal changes carried out over the years. Due to these, there is heavy compliance burden. There is an urgent need to realign labour laws to new economic needs.
Creating appropriate Skill Development ecosystem: Implementation of National Skills Qualification Framework and National Occupational Standards, Expedite establishing and defining Sector Skill Councils for all sectors, Expansion of apprentice system and modernize apprentice model, and Empower nodal body to define National Skill qualification framework.
Efficient and Effective Enforcement of Laws: E-enablement would facilitate making dispute resolutions quicker and more efficient. Make greater use of technology and e-enable all courts. Enforcing anti-corruption and anti-bribery including protection of Whistle Blowers
Facilitation of greater cross-border transactions: Work towards effective utilization of FTA benefits by helping domestic manufacturing sector to grow and become more competitive, Craft FTA’s such that Indian economy is not disadvantaged, Deepen trade relations with Africa and the Commonwealth of Independent States (CIS) which are the two fastest growing import markets, Deepen Look East policy, Ease export -import related regulations, Resolve port related issues in facilitating trade
Creation of clear Exit guidelines: Exit procedures in India involves multiple and time consuming formalities under various legislations such as Corporate Law, Tax Law, Labour Laws etc. Undertaking the above formalities entails significant compliance costs for the units, and at the same time entails locking of funds and capital assets in non-viable businesses that may be productively employed in other ventures. For easing exit regulations, we are looking at UK Liquidation Process and US Bankruptcy Law.
Technology Enablement across Government: Significant improvement in efficiency, transparency and governance can be brought in by large scale adoption of technology in government. Suggestions include appointing a Chief Technology Officer at the level of Joint Secretary who could be made responsible for technology adoption.
Mr Banerjee said “CII believes that the technology aspect is one of the greatest enabler for Ease of Doing Business as multiple processes can be merged with a click of the mouse. Once all the processes are identified and rationalized/ simplified by removing redundancy and duplicacy, these can be put on an IT based system which will connect various Government departments (Centre and State) and approvals and checks can be accomplished without jeopardizing quality, time and cost aspects. This single factor will help improve India’s position on all the parameters identified by World Bank for the Doing Business report. CII can assist the Government in this endeavour so that the replacement of the current process on to IT based platform can be conducted seamlessly”.
Today, for India to emerge as an investment-friendly destination for business and sustain rapid and inclusive growth, vast improvements are required in the ease of doing business. One of the foremost demands of the industry across the country is to effect simplification and rationalization of the existing rules and approvals, facilitate fast-track and transparent system of approvals to minimize processing delays and ensure timely disposal of issues.
Against this background, CII has recently prepared a paper on “Improving Investment Attractiveness: Simplifying Procedures” which analyses the various parameters of the World Bank’s Doing Business report and accordingly makes suggestions to ramp up India’s ranking to within the top 50 in the next 2-3 years. The suggested Action Plan includes what needs to be done, steps to be taken, drivers and timelines, the proposed action Plan has been segregated as immediate (3-6 months), short term (6-12 months), Medium term (12-18 months) and long term (18-36 months).
“CII is pleased to note that many of the recommendations have been acted upon by the Government recently and some have been announced to be implemented in due course of time. With effective implementation of the recommendations in the Reports, we are confident that India could see significant jump in World Bank’s Ease of Doing Business ranking,” added Mr Banerjee.
“CII firmly believes that the Government is extremely serious about improving the prevailing conditions to help business to thrive. In all the actions taken by the Government in the last 6 months there is a clear pro-development pattern emerging which will indeed make India an attractive business destination for the global players” iterated Mr Banerjee. Some of the steps taken by the Government to help remove critical impediments to business (as also recommended by CII) include simplification of labour related processes, setting up of a separate skills Ministry, streamlining investment approval and clearance mechanisms, etc. CII is positive that all the rigourous actions being taken by the Government will result in favourable fallout and will definitely reflect in India’s ranking next year.