India has once again recorded an impressive improvement in the global Doing Business ranking of the World Bank. Doing Business Report 2020, released on 24 October 2019, showed the country jumping by 14 spots to 63rd position (out of 190 economies), which is the 5th successive improvement from a position of 142 rank in 2015. Now, we are within reach of joining the league of top 50 nations by next year, realizing the dream of the Hon’ble Prime Minister, Mr. Narendra Modi.
Continuing improvement in the business environment should aid in boosting GDP growth and investment. It, along with fiscal and monetary measures, is an important tool to provide impetus to business sentiments in the country. Not surprisingly, the government has been unveiling a series of initiatives for further reducing the regulatory cost, time and compliances.
One of the major reforms under implementation is the Codification of nearly 44 Central Labour Acts into 4 Codes viz; Wages; Occupational Safety, Health & Working Conditions; Industrial Relations; and Social Security & Welfare, which promises to reduce the compliance burden for the industry in a big way. As of now, the Code on ‘Wages’ has been notified as an Act whereas the Code on ‘Occupational Safety, Health & Working Conditions’ has been placed under the consideration of the Parliament.
With a view to facilitate larger participation of foreign companies in India, the government has recently allowed 100% FDI in coal mining and contract manufacturing, eased the sourcing norms for single brand retailers and approved 26% overseas investment in digital media. Considering our recommendations positively, the government has reversed its decision to decriminalize the violation in Corporate Social Responsibility (CSR) by the corporates.
Further, the government has announced replacing the Merchandise Exports from India Scheme (MEIS) with the scheme for Remission of Duties or Taxes on export Product (RoDTEP) from January 2020 to incentivize exporters. Other new announcements to boost exports include emphasis on electronic refund module for quick and automated refund of Input Tax Credit to exporters, allowing banks for higher insurance for working capital loans to exporters, and RBI modifying the priority sector norms to increase the credit to exporters.
In a historic move to reduce the cost of doing business, the government has slashed the corporate tax rate to 22% from 30% for existing companies, and to 15% from 25% for new manufacturing companies (excluding surcharges).
Moving from the successful implementation of Business Reform Action Plan (BRAP), which entails annual assessment and ranking of states / UTs on numerous areas of Ease of Doing Business (EoDB), the government of India (DPIIT) is now extending the exercise to the District level. This again is a landmark initiative to enthuse the spirit of competitiveness among the districts to improve the business environment.
Going forward, we expect the continuation of EoDB reforms covering a wide range of areas, including Enforcing Contracts, Registering Property, and Starting a Business, where we still rank low at 163, 154 and 136, respectively. We also need to be working on ensuring that the business reforms introduced by the state governments deliver the maximum intended benefits to the industry. CII has adopted a two-pronged approach to support the government in implementation of business reforms. First, it creates awareness among industry members across length and breadth of the country about the business reforms being introduced by the government through various ways such as emails, publications, meetings and conferences. Second, it invites feedback from stakeholders on the effectiveness of the reforms being introduced and what should be done further. This periodical aims to achieve both these objectives.