It was assuring to hear Prime Minister Narendra Modi encouraging industry to rejuvenate animal spirits in the economy. The last four years have seen the government take a series of measures to improve India’s position in the World Bank’s ‘Doing Business’ ranking. The process adopted by the government has been inclusive and rigorous, which has resulted in India going up significantly, from 130 to 100, in the Doing Business 2018 ranking. However, as we strive to go higher up in the ranking, the depth of reforms would have to be proportionately higher.

A number of areas have seen improvements. Construction-related permission, a complicated and long-drawn procedure, has been simplified in Delhi and Mumbai, though there is scope to do more. The construction permit system has been made online and a number of procedures that were redundant have been done away with in these cities. Earlier, the process of seeking permission involved physical submission of documents, which has now been replaced by online mode of submission. The average time for getting permission has also dropped significantly, from around 150 days earlier to just 60 days now — although in terms of global best practice, it is far lower at 26 days. The number of procedures has also seen a sharp drop from 24 to seven now. To take this to the next stage and make it more investor-friendly, States could include these permissions under the Public Service Delivery Guarantee Act.

It would also be worthwhile looking at consolidating all permissions related to construction, from utilities and other agencies, under a single-window mechanism. Amongst the 10 parameters for the ‘doing business’ ranking, our distance to frontier score was the lowest for construction permits (38.8), which provides significant scope for improvement in ranking if we focus more on this aspect.

In paying taxes, after some initial glitches, industry has started to settle in to the GST regime, which is the biggest taxation reform in the history of independent India.

The number of returns and forms that were required to be filled has come down drastically, from 495 in the pre-GST regime to just 12 now. This should certainly improve our ranking further this year. Similarly, steps have been taken with regard to registration of companies and starting a business, where a number of forms have been merged. This has significantly reduced the time taken for registration.

While there is no doubt that we have moved at a considerable pace for improving the ‘ease of doing business’ in the last few years, for a country of the size and scale of India, there is a scope for instituting more deep-seated reforms as we aspire to be amongst the top 50 economies.

Operational aspects

We need to focus also on the operational aspects of the business and permissions or compliances required to carry out day-to-day operations. There are certain basic principles that need to be adopted in letter and spirit to further simplify the regulations as was highlighted in various reports earlier.

First, devolution of powers. Wherever the rules and Acts allow devolution of power at the local level, the powers must be devolved to decentralise the system for faster decision-making. For each permission, the project proponent need not come to the authority at the Centre or State.

Second, consolidation of rules. This implies, combining different regulations that serve the same purpose. One, for instance, needs to have an integrated environment clearance/permission system.

Third, risk-based exemptions. A mechanism must be formulated to ensure exemptions are given based on the risk involved. Enforcement should be risk-based and proportionate.

Fourth, third party certifications. A credible third-party mechanism should be introduced under each rule and Act to provide simpler compliance process for setting up and operating a business.

India has lowered regulatory barriers in line with international best practices in certain areas. States are also lowering these barriers and simplifying their regulatory regimes, which has helped them to attract investments. The need of the hour is to expedite the required changes to reach to the top of the ‘ease of doing business’ ranking, which will help boost investments and, in turn, GDP growth.

The writer is Co-Chairman, FICCI Electronic Manufacturing Committee, and President & CEO, Panasonic India Pvt Ltd.

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