India is improving rapidly as a place to do business, thanks to the sustained efforts of the government, according to Chandrajit Banerjee, Director General of Confederation of Indian Industry.
His view is backed up by the fact that India’s Doing Business ranking improved from 142 in 2015 to 63 (out of 190 economies) in 2020, the latest World Bank Report stated.
And India has jumped six places 37th (out of 63 countries) in 2022 on the annual World Competitiveness Index of Institute of Management Development (IMD).
Banerjee said that at the heart of Ease of Doing Business (EoDB) reforms in India is the government’s focus on the rationalisation and digitalisation of regulatory compliance, encompassing the entire business cycle from start to exit. This has received top priority after a 2020 study found that businesses in the country have to navigate over 69,000 regulatory compliances. In the two years since, more than 33,000 regulations have been simplified, rationalised, digitised or decriminalised by either State or Central government.
Banerjee explained: “Targeting to make ‘Starting a Business’ easier, where India stood at the 136th position in the global ranking, the Department for Promotion of Industry and Internal Trade (DPIIT) in September 2021 launched the game-changing National Single Window System (NSWS). NSWS seeks to provide all business approvals/clearances electronically, cutting across Central ministries/state governments in a time-bound and hassle-free manner.
“Trade facilitation has also seen a flurry of reforms recently, where India’s global ranking jumped up from 146th position in 2018 to 68th position in 2020. Initiatives such as the shift towards paperless compliance system, greater clearances through Risk Management System, etc. have helped lower dwell-time and transaction costs for exporters and importers.
“We must sustain the pace of reforms for continued digitisation and ensure speedy clearances of cargo. Introducing uniformity of customs procedures across geographical locations and enhancing the effectiveness of grievance redressal mechanisms are also important.”
He said when it comes to enforcing contracts, where India was ranked 163rd in 2020, a range of reform measures are being introduced. He said: “This includes establishment of dedicated Commercial Courts, automatic and random allocation of cases, launching of Electronic Case Management Tools, and renewed emphasis on Alternative Dispute Resolution mechanisms. As a result, the disposal time for commercial cases has reduced in the last 2 years by almost 50% to 626 days and the time taken for filing of cases and serving of summons has also come down to 15 days from 45 days, as per the website of the Ministry of Law and Justice.
“In parallel, the scope for litigation is being reduced by decriminalising business laws involving non-serious offenses. A long journey is still to be covered before India’s enforcing contracts mechanism could be compared with the best in the world.”
Insolvency made easier
Banerjee said another factor in India’s progress was the government’s introduction in 2016 of the Insolvency and Bankruptcy Code (IBC), allowing failed firms to exit painlessly either through quick liquidation or business restoration when viable. As a result, average time to resolve insolvency fell from 4.3 to 1.6 years between 2017 and 2020, he said.
“Going forward, new areas of reforms must be identified on a regular basis, which should essentially revolve around developing an effective Single Window System for all regulatory approvals and renewals with provisions of time-bound clearances or deemed approvals, self/third-party certification for all possible areas, and stringent deterrent action for non-compliances of rules and regulations. Focus would also have to be accorded to effective delivery of benefits to the industry,” he said.
“The significant improvement in EoDB will certainly go a long way to improve the global competitiveness of the Indian industry and further expand our chances of attracting foreign investment.”