Doing Business Getting Easier in India

With the growing global attention towards ease of doing business, the government of India is working towards simplifying the intricate administrative processes aimed at promoting investment, generating employment opportunities and aiding overall economic development. A series of facilitative reforms have been introduced, mandating digitization of procedures, revising obsolete policies and promoting e-governance. These measures have enthused the business sentiment in the country by inducing greater transparency and lowering transaction costs. India is, therefore, gaining prominence as one of the world’s most attractive investment destinations.

While India has been successful in entering the league of top economies for doing business, there is still a long way to go. The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, is spearheading this mission of further improving the business climate in the country. As a part of this initiative, DIPP in partnership with the World Bank carries out an annual exercise of ranking states/UTs based on the implementation of the Business Reform Action Plan (BRAP). This reform exercise aims to improve delivery of various Central Government regulatory functions and services in an efficient, effective and transparent manner.

The recently released BRAP 2017 rankings are based on a set of 372 recommendations cutting across various sectors such as labour, environmental clearances, single window system, construction permits, contract enforcement, registering property and inspections. To assess the ground level implementation of business reforms more effectively, this year a survey of businesses and professionals was conducted to get an objective feedback across 78 reform points from actual users.

The assessment reveals an increase in the number of reforms implemented from 6,069 in 2016 to 7,758 in 2017. Further, the national average implementation rate stands at 60% which was 11% higher than the previous year reflecting an overall improvement in the efficiency and competitiveness of doing business.

A parameter centric analysis shows that 21 states/UTs have established an Online Single Window System and 18 States/UTs have introduced a Central Inspection Framework covering compliance inspections conducted by labour, factories and pollution control departments.

The remarkable achievement of 15 states attaining over 90% total score in the designated parameters indicates the fast-paced progress on improving the business climate. While the majority of states have performed exceedingly well, the states of Andhra Pradesh, Telangana and Haryana have emerged as top achievers.

The rapid climb in the rankings by the states of Assam, Goa, J&K, and Himachal Pradesh is particularly encouraging as it is important to create a beneficial investment ecosystem in all states for ensuring equitable growth. However, the North-Eastern states like Tripura, Nagaland, Mizoram, Manipur, Sikkim and Meghalaya, which have recorded extremely low implementation scores, offer scope for improvement.

BRAP, which encourages competitive federalism, has proved to be successful in its objective of taking business facilitation to greater heights. Under this reform exercise, information technology is being deployed to make the approval process quicker, transparent and cost effective. This innovative partnership between the Central and State Governments has, therefore, rationalized the business processes.

Maintaining the momentum of the business reforms, the Government of India has introduced a slew of legislative, infrastructural and administrative reforms. These measures are aimed at eliminating physical interface with government officials, reducing discretionary processes and encouraging time-bound processes.

One of the indicators where several reforms are being introduced is ‘Dealing with Construction Permits’. The government has strengthened the liability and insurance regime index for any defects in buildings on plots exceeding 750 square meters. Other measures include joint site inspections and Online Building Permission System (OBPS) to reduce the cost and time of attaining construction permits.

‘Starting a Business’ is another important area witnessing rapid pace of reforms, simplifying the process of entering into business. The introduction of the ‘Simplified Proforma for Incorporating Companies electronically’ (SPICe), which has now interlinked 5 services – Director Identification Number (DIN), Company incorporation certificate, Name reservation, Integration of PAN and TAN registration forms – has greatly eased the regulatory burden for upcoming entrepreneurs.

In addition, the government has rationalized the procedure for the Employees’ Provident Fund Organization (EPFO) and Employees’ State Insurance Corporation (ESIC) registration through a common registration facility on the Shram Suvidha Portal. Fees associated with incorporation of companies have been eliminated. These steps add up to faster and cost-competitive processes for new business enterprises.

‘Trading across Borders’ has also received high priority from the government. Various significant reforms like Risk Management System, e-SANCHIT, e-Sealing, Direct Port Delivery and Authorized Economic Operator (AEO) Programme have been effectively implemented. Traders now experience lesser on-border compliance, paperless trade operations and overall lower transaction costs.

In case of ‘Paying Taxes’, India is set to see massive improvement due to the implementation of the Goods & Services Tax (GST), which has subsumed 12 indirect taxes. The reform will reduce the time and cost of filing returns as several components of the tax are paid through a single challan. The continued efforts by the government are expected to provide an impetus to the creation of a stronger investment climate for establishing India as a global leader in terms of ease of doing  business.

 

Written by:

Mr Sumit Mazumder
Past President and Chairman, Task Force on Ease of Doing Business, CII and
Chairman & Managing Director, TIL Limited

 

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