Ease of Doing Business Reforms to improve India’s Doing Business Rankings

Ease of Doing Business (EoDB) refers to an environment that is conducive for the efficient running of a business enterprise and facilitates simple, transparent and time bound procedures and compliances. India has come a long way in improving its EoDB measures, especially in terms of simplification of rules and procedures for the smooth flow of administrative processes and improving transparency.

The World Bank ranks countries on EoDB on the basis of 10 indicators such as starting a business, getting electricity, registering property, paying taxes, trading across borders, dealing with construction permits etc. India leapfrogged 30 spots and joined the top 100 club in the World Bank’s Doing Business rankings in 2017, primarily on account of improvements in paying taxes, resolving insolvency and protecting minority investors.

India now aspires to be among the top 50 attractive destinations for doing business and the Government has been undertaking a series of reforms in recent times to improve the overall regulatory environment and the business climate of the country. Led by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, the EODB effort represents a mission-mode approach involving all ministries and departments as well as state governments.

The overall mission includes measures such as greater digitisation, single applications, introduction of SPICe forms, segregation of outdated laws and regulations and simplification of processes, among many others that are contributing to making business procedures faster and simpler.

Trading across borders has been a major focus in the last few years, which occupied a low rank of 146 in the World Bank rankings. Single Window Interface for Facilitating Trade (SWIFT), reduction in paperwork and a shift to a paperless compliance system, improved customs clearances under the integrated Risk Management system, boosting Direct Port Delivery and building an effective Port Community System are some of the recent initiatives that have been undertaken in this area. Additionally, India has actioned the WTO Trade Facilitation Agreement (TFA) which has further encouraged reforms. These measures would help to bring down the transaction costs involved in exports and imports and are expected to reflect a better ranking next year.

Registering property in India takes 8 procedures and 53 days compared to only 2 days in New Zealand. The Government has proactively taken up several reforms, especially at the state level to remove procedural delays and speed up processes in this area. Defining clear timelines for processing applications for land allotment, a model sale deed format for registration of property, improving efficiency of land banks and digitization of land records are some of the initiatives that have been undertaken in recent times. Delhi and Maharashtra, along with many other states are introducing Geographical Information Systems (GIS) which would help in greatly accelerating the process.

The lack of a well-defined system for dispute resolution had created many bottlenecks in the area of enforcing contracts. Recent reforms such as the National Judicial Data Grid – a monitoring tool to identify, manage and reduce pending cases, introduced by the central government; establishment of dedicated Commercial Courts at the district level by several states for facilitating speedy resolution of commercial disputes as well as implementation of e-courts, e-payments, e-filings, e-summons etc. would greatly increase the efficiency of enforcing contracts.

Significant improvements have been brought about in Paying Taxes as well with reforms such as electronic payment of tax and easing of compliances with corporate income taxes playing a major role in the latest improved rankings. With the introduction of the transformational Goods and Services Tax (GST), the rankings are expected to improve further with GST placing all taxpayers and authorities on a single online platform.

Resolving insolvency has also seen many improvements with the simplification of insolvency proceedings and fast tracking of processes after the implementation of the landmark Insolvency and Bankruptcy Code (IBC), 2016. The issue of bad loans and Non- Performing Assets (NPAs) have also been effectively addressed since IBC’s implementation.

The process of Dealing with Construction, currently ranked 181, also witnessed positive developments wherein states have directed efforts to reduce time and cost for obtaining permits and have also introduced the provision of deemed approval. Inspections are being integrated and are risk-based to expedite the approval process.

While India’s remarkable performance in the Doing Business Rankings is an outcome of these rigorous infrastructural, legislative and administrative reforms undertaken by the Central Government, it is important to note that the states have also proactively undertaken measures to improve their business climate.

Going beyond Delhi and Mumbai, the Indian Government under the Business Reforms Action Plan (BRAP) has included all Indian states in the EoDB mission. Currently, there are 7 states, namely Haryana, Chhattisgarh, Madhya Pradesh, Andhra Pradesh, West Bengal, Jharkhand and Telangana that have achieved 100% success. As many as 18 states have achieved over 90% success in addressing the procedures identified by the DIPP.

The efforts of both the central and state Governments in improving the business climate in the country are indeed commendable and it can be expected to gain further momentum going forward.

CII Initiatives in EoDB

CII works closely with DIPP on matters relating to EODB with a special CII Task Force on EoDB.

A detailed study was conducted by CII in 2016 for improving EoDB in 8 states namely, Andhra Pradesh, Haryana, Karnataka, Kerala, Maharashtra, Madhya Pradesh, Rajasthan and West Bengal. Boosting the efficiency of the Single Window System, increasing efficiency of land banks, conducting labour inspections were some important CII recommendations to these states.

A detailed study on Trading across Borders was also carried out by CII against the backdrop of WTO’s multilateral TFA. Some key CII recommendations in this area include the discretionary powers of custom officials, need for a strong regulator for shipping lines and removal of practices like charging nomination fees and facilitation fees, reducing the time and charges on account of Container Freight Stations, among others. Many of these have been actioned.

CII is also actively working with the Governments of Maharashtra, Jharkhand and West Bengal for implementation of various reforms and identifying reforms in new areas.

CII’s inputs were taken into consideration for various reform initiatives such as GST, launch of Customs Electronic Commerce Interchange Gateway Portal (ICEGATE), and Single Window System for fast approvals and clearances related to central, state and local governments at one office, among others.

CII has undertaken several initiatives for improving EoDB in the country over the last few years and continues to work with the Government for fulfilling its endeavour of pushing India among top 50 most attractive destinations of doing business.

 

 

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