Ease of Doing Business: What India Inc wants

As the dust settles after India’s 30-place jump up the World Bank’s Ease of Doing Business ranking — from 130 to 100 — this is an opportune time to discover what corporate India’s recommendations are to build on the gains.

The Department of Industrial Policy Promotion and the NITI Aayog have chalked out several measures in the run-up to the stated objective of taking India’s ranking to the top 50. A pet peeve of industry, however, has been that DIPP’s assessment of business reforms in the states — a key driver in making states ease up on controls  — is largely based on the state governments’ responses. “These surveys miss out on flow of information from industry to the government,” says a senior executive from one of the industry chambers. Here’s what India Inc thinks the government should focus on in the coming months:

Starting a business 

While merging the applications for Permanent Account Number (PAN) and the Tax Account Number (TAN) helped, many in industry feel that the next step should be to converge GST with PAN / TAN registration. Further, a common form for registration of Employers Provident Fund and Employee’s State Insurance Corporation (ESIC) will go a long way in reducing the number of clearances involved here. Currently, the World Bank report says there are 12 procedures in Mumbai and 11 in Delhi.  Implementing a digital single-window system with time-bound or deemed approval of licences could help reduce the time taken for starting a business in India, say experts.
 

Chandrajit Banerjee, director general, Confederation of Indian Industry (CII), says improvements in the online system and merging the application for PAN and TAN have begun. “Even though the Distance to Frontier score has improved from 74.31 to 75.40, improvements have not been reflected on the rankings yet,” he says.

Dealing with construction permits  

This has been the worst performing parameter for India. Though ranking in construction permits has improved by four places, 24 procedures are still required in Delhi and 37 in Mumbai to obtain permits. “Technology usage must be maximised to reduce physical interface with approval authorities. This will substantially reduce the costs incurred and the time taken to get construction permits,” says Sunil Kant Munjal, chairman, CII Task Force on Ease of Doing Business and past president, CII.

Industry experts say integrating the data of No Objection Certificate-approving authorities at the Central and state  levels with the municipal board database could simplify procedures. So could providing online information on procedures.  Encouraging self-certification is the other key advice from industry players.

Sunil Kant Munjal, Chairman, CII Task Force on Ease of Doing Business

Registering property 

Anuj Puri, chairman, ANAROCK Property Consultants, notes that the key reasons for the lower ranking are the multitude of procedures developers need to follow. The way forward, he says, is to have single-window clearances for affordable housing projects along with fast-track approvals for all other projects. An online system for applications, payment and verification of documents across all states would reduce complexity and time considerably, say industry experts.

Another crucial reform would be to establish a single-point of contact that integrates land records across departments including the sub-registrar’s office and municipalities. An online stamp duty calculator for determining fees applicable for buyers should be made available . 

Trading across borders  

Most agree that the government has done a lot to reduce costs and the time associated with this parameter. However, the ranking does not reflect the changes on the ground. Scanner systems at all ports, integrated risk management system and making ports Electronic Data Interchange-enabled are among the ways in which technological changes could improve trading across borders, say experts. Another suggestion from industry is that the government could simplify the procedure for Authorized Economic Operators applications and increase their numbers. Currently, 700 applications need to be processed. 

Enforcing Contracts  

This parameter remains among the worst performing ones for the country. Legal experts feel any sustainable improvement in the ranks would only come through major improvements in the country’s ageing legal framework. 

“The first step is to strengthen the legal systems by court reforms and promote Alternative Dispute Resolution via arbitration,” says Kartik Mittal, senior solicitor with law firm, Zaiwalla & Co. This has to be supplemented with measures to prevent misuse of the legal system, namely, by discouraging individuals who make frivolous applications, he adds.

Setting up commercial courts at the district level and capping the maximum number of adjournments to three would speed up the judicial delivery system, many in industry feel. Extending the electronic case management system — e-filing, e-payment — across all states will lead to improvements in India’s rank, say experts.

Labour market regulation

The World Bank report tracks changes in labour rules every year but does not take them into account while arriving at the ranking. Many feel if the World Bank decides to do so next year, India’s overall rank would fall considerably. “The proposed four labour codes need to be speedily finalised,” says an industry player. Political resistance from labour unions to further easing of labour laws could make the going difficult for the government.

According to Pankaj R Patel, president, Federation of Indian Chambers of Commerce and Industry, many of the areas where ranking has to improve are action item for the states. He believes there should be more private sector participation in building regulatory processes.  “If the momentum of course correction continues at the current pace, the pain points will reduce, and India will continue to rise on the ease of doing business index,” Munjal adds.