Improving the ease of doing business is critically important to attract investors. According this high priority, the Central and state governments have introduced a slew of reforms across various areas. Consequently, India’s ranking in the World Bank’s Doing Business Report has been climbing – it was 142nd (out of 190 economies) in 2014 and stands at 63 as per the latest report.
To ensure that the reform momentum is maintained, the Confederation of Indian Industry (CII) has recommendations, for the short and the medium-term, which will help India emerge as one of the top investments destinations.
Key CII Recommendations
1. Online Single Window System
An online Single Window System (SWS) for clearances/approvals/NOCs/renewals is the first step towards strengthening the ease of doing business. This will lead to simplification of the process for seeking approvals and reduce the physical interface between business and government authorities.
To improve the working of SWS, CII recommends regular monitoring to assess the effectiveness of the on-ground implementation of SWS by the Chief Secretary of a state. Additionally, SWS should be implemented in all states. Once the application is in the SWS, submission of forms and physical visits to authorities should not be required.
All the relevant government departments should be brought on the SWS platform. For a business entity, SWS should be the only point of interface.
2. Simplifying Property Registration and Acquisition of Land
Registration of property for industrial purposes and acquisition of land should be a simple process.
Industries should be permitted to buy land directly from farmers, with deemed approval after 30 days. Stamp duty must be rationalised across states. The authorities can look at digitisation and integration of the mutation process with the registration process.
3. Reducing Labour Compliances
The regulatory burden of labour compliances on the industry must be reduced. State authorities may consider exemption of industry from select labour laws for three years. The threshold limit for Industrial Disputes Act, 1947; Factories Act, 1948; and the Contract Labour Act, 1970 must be raised by all states.
A single Labour Authority that deals with all aspects of labour-related compliances should be set up in every state.
4. Improving Trading Across Borders
Trading across borders should be on par with the best in the world. The Single Window Interface for Facilitating Trade (SWIFT) system needs to onboard all relevant Partner Group Agencies (PGAs).
Digitisation, automation, and technological upgradation of ports must be taken up with renewed focus. The Risk Management System (RMS) should have uniform guidelines across India and the Port Community System (PCS), and Authorized Economic Operators (AEOs) must be strengthened and popularised.
Direct port delivery must be promoted across all ports.
5. Strengthening the Dispute Resolution Mechanism
The dispute resolution mechanism in India has to be strengthened. Virtual court proceedings, e-filing and work from home to speed up court deliberations are some of the digital reforms that should be considered by the government. These advancements will ensure that important commercial court cases are heard.
The adjournments in commercial courts must be capped and limited to unforeseen circumstances. The Centre should consider developing model contract templates for key sectors.
The Alternative Dispute Resolution (ADR) institutions can be expanded by setting up parallel ADR institutions in all major parts of the country. Over the medium term, judicial coverage and effectiveness must be enhanced by improving the coverage of specialised commercial courts at High Courts and District Courts.
6. Rationalising the Inspection Mechanism
Rationalise the inspection mechanism to overcome operational delays. The practice of synchronised joint inspections, computerised risk-based inspections, and uploading of inspection reports within 48 hours of inspection should be introduced across states.
Industries should be categorised on a risk-based profile. Self-certification should be offered for low-risk industries under laws such as labour, boilers, environment, etc. Self-certification can be allowed, as done in Telangana, for companies in the medium-risk category also, provided they have a satisfactory track-record.
A medium-term measure should be the development of an online Central Inspection System for fire, lifts, boilers, electricity, etc. by bringing on board all relevant departments.
7. Simplifying Doing Business for MSMEs
Simplification of the doing business environment for MSMEs, considered the backbone of the Indian economy, is very important. A new enterprise should be exempted from approvals and inspections under all state laws for three years. Existing MSMEs with a good track record should be allowed to seek renewal/approval based on self-certification.
8. Rationalising Logistics Cost
The cost of logistics is typically higher in India. The ratio of logistics cost to GDP is about 13-14% in India compared to lower ratios in countries such as Germany (8%) and the US (9-10%). Medium-term measures such as increasing the share of railways and waterways in the overall transport system, improving the first mile and last-mile connectivity, and reducing dwell time must be implemented.
While India is taking significant steps in the direction of improving the business environment, it needs to ensure that this reform momentum is sustained.