Business Wire IndiaOnerous compliances and complicated regulatory framework have been the bane of the country from the time immemorial. Though recently, India has climbed 79 positions on the World Bank’s Ease of Doing Business rankings, a lot more needs to be done to advance the position further
Dr. Niranjan Hiranandani
The Prime Minister Narendra Modi has reportedly issued an urgent diktat to the Department of Promotion for Industry and Internal Trade (DPIIT) and government think tank, Niti Aayog to draw up a new framework to ease the compliance burden on the industries and the common people. It is a long due pronouncement that the company was awaiting with bated breath as the country (read industries) was languishing with complicated, time consuming and hassling processes, if it wanted to do an honest business.
Picture This! In order to set up an eatery in the national capital of Delhi, the entrepreneur needs to have a minimum of 45 documents in place. Compare this to getting a firearm, this comes to a lot lesser at around 19 documents.
As per the study by the National Restaurants Association of India (NRAI), a business unit is burdened with compliance issues. In India, one would need anywhere between 22 and 36 licenses to start a venture, while in China, an entrepreneur would require only 3-4 licenses to set up a restaurant.
Even the Economic Survey tabled for the year 2019-20 has a similar fact file to show. A manufacturer in India needs to conform to 6,796 compliance items which are time consuming and wastes productive man hours. Even the most industrialized states in the country like Maharashtra and Gujarat, a business unit is burdened with hundreds of compliance items. In Maharashtra, there are 3,657 compliances while in Gujarat, there are around 3,048 compliances. After Maharashtra and Gujarat, Tamil Nadu, Uttar Pradesh and Karnataka rank among the states with high compliance burden.
At the central level says research by compliance management services company, TeamLease Compliance, there are a total of 677 acts, 25537 compliances and 2282 regulatory filings combined that with the various state level acts and compliance, The company would have a total of 859 acts, whopping 44000 compliances and around 4436 filings.
The various industry bodies and trade associations were crying hoarse in the past to overhaul the system for businesses to be set and run successfully, which fell on deaf ears and had no effect in the past. The demand for single window clearance, easing the process of licensing and permission for various sectors like real estate, hotel and restaurants found empty promises but no action so far.
In the post–COVID era when India is setting its sight on the global business arena, wishing to establish itself as a manufacturing hub, it has become imperative for the government to mend the ways they run businesses in their backyard.
Therefore, it is believed that the new diktat on easing the compliance burden by the PM focuses on an extension of the validity period for licences also making the renewals automated, anonymous or faceless inspection to arrest malpractices and lowering the cost of starting a venture by lowering the fees levied. Certainly, the government has envisaged a new regime for business by taking these crucial steps and to polish its image in the eyes of the world.
To simplify the processes and permissions gamut, DPIIT has advised states, ministries’ and departments to detect the bottlenecks and hold-ups in the system. The new regime will also cover agencies and departments that directly give services to the people of the country. The instruction also underlines to move the entire process online from offline, inspections to be done anonymously. The recent announcement by the government to roll out faceless assessment for income tax is a step in the direction to let go of redundant practises.
If at all the government is fruitful in overhauling the system, it will eclipse the inherent flaws that the country has come to live with. The reduction of cost will induce positivity in the MSME sector making businesses competitive and viable. But it’s still a long way to go for the country to moult and make way for the new growth as a mammoth groundwork will be desired by the authorities as well as the people of this new India.
If it is achieved, nothing can stop India from the coveted spot under the sun. Amen!
The author is the President of the National Industry body, ASSOCHAM