New Delhi: In keeping with its pledge to improve India’s business climate, the government has constituted a committee to recommend a simpler mechanism to replace the myriad permissions needed to start an enterprise.

The mandate of the committee will be to study the requirement of various prior permissions, examine the possibility of replacing these with a regulatory mechanism, identify the safeguards that need to be incorporated to do this, recommend a framework of the proposed regulatory mechanism and draft the proposed legislation, the department of industrial policy and promotion (DIPP) said in a statement on Tuesday.

Finance minister Arun Jaitley had made this proposal in his budget speech on 28 February. “If we really want to create jobs, we have to make India an investment destination which permits the start of a business in accordance with publicly stated guidelines and criteria," Jaitley said. “I intend to appoint an expert committee for this purpose to examine the possibility and prepare a draft legislation where the need for multiple prior permissions can be replaced with a pre-existing regulatory mechanism."

Ajay Shankar, a former secretary of DIPP, will head the committee. It will have 10 other members, including Manoj Kohli of Bharti Airtel Ltd, Dhruba Purkayastha of International Finance Corp., Jaijit Bhattacharya of KPMG, Siddhartha Sibal of Accenture and Chandrajeet Banerjee of the Confederation of Indian Industry.

The move assumes significance in the backdrop of the National Democratic Alliance government’s thrust on improving the ease of doing business. It has initiated other measures such as launching an e-biz portal that integrates 14 regulatory permissions in one place and has announced several labour reforms to boost manufacturing and job creation.

DIPP will also rank state governments on the ease of doing business on the basis of a list of 98 action points it has drawn up.

Prime Minister Narendra Modi aims to improve India’s position to the top 50 in the World Bank rankings on the ease of doing business from the current 142.

The government has launched a Make In India campaign that seeks to give a boost to India’s manufacturing sector, for which improving the ease of doing business is seen as critical.

“Ease of doing business whether in manufacturing sector or infrastructure sector is a major issue for industry. It is imperative to take steps to address this to enable the industry to grow. This is a much needed step to simplify compliance and we hope to see some concrete action out of this," said Abhaya Agarwal, a partner at EY Llp consultancy.

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