The Modi government has set itself a stiff target of making India the top 50th destination for doing business by the year 2017. Considering that at present India ranks at a dismal 142 of 189 nations, in the World Bank ‘Doing Business’ report, the government has clearly set itself a monumental goal. While a nearly 100-notch jump may be too ambitious, the government has set in motion a three-pronged strategy to improve India’s ease of doing business rank.
- Introduction of risk-based inspection in export-import
The Government has ordered the introduction of risk-based inspection in export-import, inspired by what Prime Minister Modi had witnessed in Shenzhen during his visit to China.
- Central & State Governments to work in sync
The Centre alone cannot achieve making India a business hub; the State governments have to play a pivotal role too. The Department of Industrial Policy and Promotion (DIPP), the nodal agency coordinating the ease of doing business exercise, has sent a detailed "to-do" list to the Central & State ministries. In addition, a deadline has been given for the accomplishment of each task.
The Judicial processes to be simplified
India's ranking on ease of doing business can't improve unless the judicial process is also simplified.
In the indicator called 'enforcing contracts', India is ranked 186 out of 189 where only three countries, Angola, Bangladesh and Timor-Leste, are worse off.The government has proposed measures such as appointment of more judges, fixing accountability for delays and encouraging arbitration to resolve contractual obligations
CII and KPMG have submitted a report to the government titled, "Vibrant India: Best Place for Doing Business - An Action Plan" that captures the industry’s suggestions to improve ease of doing business in India.
The key recommendations of the report are:
- Rationalisation of taxation regime
Adopt policies that mitigate tax disputes, improve tax administration and establish stability and international competitiveness of tax regime.
- Facilitating land acquisition process
Simplify the land acquisition process. There is an urgent need to rationalise the new Act (Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013).
- Streamlining investment approval and provision of utilities
Too much time is taken in obtaining basic utilities like water, sewerage and power connections. Projects suffer due to poor infrastructure. Report recommends implementing effective single window mechanisms, implementing legislations that ensure time bound government service delivery, and ensuring industrial parks get prior environment and other clearances.
- Creating appropriate Labour Development ecosystem
There are 44 labour laws enacted by the Central Government - many which are old and outdated. Due to these, there is heavy compliance burden. There is an urgent need to realign labour laws to new economic needs.
- Creating appropriate Skill Development ecosystem
Implementation of National Skills Qualification Framework and National Occupational Standards, Expedite establishing and defining Sector Skill Councils for all sectors, Expansion of apprentice system and modernize apprentice model, and Empower nodal body to define National Skill qualification framework.
- Efficient and Effective Enforcement of Laws
E-enablement would facilitate making dispute resolutions quicker and more efficient. Make greater use of technology and e-enable all courts. Enforcing anti-corruption and anti-bribery, including protection of Whistle Blowers.
- Facilitation of greater cross-border transactions
Work towards effective utilisation of FTA benefits by helping domestic manufacturing sector to grow and become more competitive. Deepen trade relations with Africa and the Commonwealth of Independent States (CIS) which are the two fastest growing import markets. Deepen Look East policy, Ease export -import related regulations. Resolve port related issues in facilitating trade
- Creation of clear exit guidelines
Exit procedures in India involves multiple and time consuming formalities under various legislations such as Corporate Law, Tax Law, Labour Laws etc. Undertaking the above formalities entails significant compliance costs for the units, and at the same time entails locking of funds and capital assets in non-viable businesses that may be productively employed in other ventures.
- Technology Enablement across Government
Significant improvement in efficiency, transparency and governance can be brought in by large scale adoption of technology in government. Suggestions include appointing a Chief Technology Officer at the level of Joint Secretary who could be made responsible for technology adoption.
These recommendations are a step in the right direction to make India an ideal business destination and have been positively received by the government. However, these good intentions require stringent implementation, policy reforms, political will and a change in the overall business climate of India.
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