India’s has displayed one the most strengthened performances by attaining the 100th position on World Bank’s Ease of Doing Business Index. Over the past four years, India’s ranking has jumped from 142nd in 2015 to 100th in 2018 on the back of implementation of robust reform measures by our present government under the dynamic leadership of prime minister, Narendra Modi.
I believe that our government has walked its talk and has made business much easier to do in India. The 30 rank improvements at World Bank’s Ease of Doing Business Ranking 2018 definitely put a stamp of approval on the government’s credibility and its efforts. However, at ground level the picture is somewhat different. India is ranked 156th out of 190 countries in the matter of starting a business; on enforcement of business contracts we are at 164th; on obtaining construction permits we languish at 181st; and on registering property India figures at number 154th.
Although the pace of reforms undertaken by the government are time-bound and fast such as easing out multiple authority clearances; case-wise deemed approvals; establishing dedicated relationship managers; online monitoring of application status; updation of information in 30 minutes and registering in 15 minutes, and various others have improved the ease of doing business to an extent, at the micro level issues are still persistent.
Ease of doing business at the factory level is stringent and it’s not easy to open a factory. There are plethoras of clearances that our businesses have to comply like Centre level clearances, state level clearances, statutory clearances, sector specific clearances, environmental clearances, among others. Factories are facing a tough environment as demand is decelerating and costs of doing business are still high.
In India, various clearances are required to setup a new factory. In addition, there are various sector specific clearances. The clearances are from Central government, state government and local bodies. To establish a factory in India, many central level approvals are required like registration certificate from Registrar of Companies under the Companies Act 1956; Environment clearance from Ministry of Environment, Forest and Climate Change under The Environment (Protection) Act 1986; Pollution Clearance from State Pollution Control Board (SPCB)/Central Pollution Control Board (CPCB) among various others.
Apart from that, the operational mechanism for running a factory or industry has become stringent and cumbersome. The universal minimum wages to ensure a constant flow of labour may not be a pragmatic approach for low cost production in the country.
Going ahead, India’s ease of doing business environment holds plethora of opportunities as well as complementarities for domestic and international businesses. All we need are a new set of reforms designed to be implemented over a period of time in consonance with the needs of our industries.
Ease of doing business aspects should be adopted and put into actual practice in the field. It is particularly difficult for small business to comply with excessive increasing formalities under various laws. Industries should not be diverted to unproductive unrewarding compliances but be left to concentrate on the business of doing business. The excessive compliances and filings are increasing various statutes and leading to inefficiencies in operations and thereby, increasing the costs of doing business. It has particularly become very difficult for small business to comply with excessive formalities under various laws.
Moreover, to improve the business facilitation, the single window needs to be advanced and strengthened. The single window system veils plethora of multiple windows behind a single window platform, which indirectly mounts the similar degree of problems as earlier. Despite various development schemes being undertaken by the Government to boost the industrial sector, our Industry is presently growing under an atmosphere of fear and uncertainty, which is hindering private investments.
We need to focus on Ease of Doing Business for MSMEs and startups to implement reform measures at the ground level. State level government organizations should enable a facilitating environment by addressing the concerns of MSMEs in an effective and efficient manner.
The startups from India should be pushed ahead in their contribution towards the GDP growth through eased business environment. I believe that the Startup India initiative has inculcated a higher degree of confidence in the entrepreneurial spirit of India. However, the pace has remained slow at the ground level. It can be further improved by embracing advancements in technology and innovation, development of technical and digital infrastructure. To bolster the effectiveness of Startup India, consistent monitoring and upgradation of incubators and accelerators should be done on a regular basis.
Furthermore, focus should be on more reforms in getting the electricity connections and registering property. In addition to the ongoing reform agenda, a common application form for all administrative clearances, an investment based priority clearances model and 15-minute fast-track incorporation time of a company to further mitigate the problems faced by many factories and companies in India.
To visualise a striking shift in the ease of doing business ranking, a nexus should be established in connection with government, businesses and consumers. A well designed regulatory environment works in favour of both businesses and consumers. This helps in raising the overall standards of the industry and inspires assurance in the minds of businesses across the world.
Of late, our government is already pursuing robust reform implementation regime to help break India into top 50 of the Ease of Doing Business Rankings. In the next few years, it will become imperative that the nation focuses on improving infrastructure, quick disposable of cases, doing away with some old laws, making the collection of taxes a much user-friendly procedure and persuades the municipal corporation to speed up and ease up their functioning. With all the above efforts in the right direction, India is definitely poised to break into the top 50 rankings, or even top 30 rankings in the next few years.
(The writer is president, PHDCCI,)