Home >Companies >News >Companies still see red on  red  tape
To take business reforms to states, the industry department has been ranking states starting 2016 on the basis of regulatory compliance requirements. (Bloomberg)
To take business reforms to states, the industry department has been ranking states starting 2016 on the basis of regulatory compliance requirements. (Bloomberg)

Companies still see red on  red  tape

  • While an average enterprise has to adhere to 25,537 central compliances, it has to abide by 69,233 compliances if it were to operate in all the states
  • India climbed 14 rungs in the World Bank’s ease of doing business rankings last year to 63 among 190 countries

India Inc. continues to face a high burden of meeting government compliances despite the country’s impressive rise in World Bank’s Doing Business ranking in recent years and the Union government prodding states to carry out business reforms.

The situation is acute even in industrialized states such as Maharashtra (3,657 compliances) and Gujarat (3,048), according to data compiled by consulting firm Team Lease.

While an average enterprise has to adhere to 25,537 central compliances, it has to abide by 69,233 compliances if it were to operate in all the states.

“Ease of doing business can’t actualize till we simplify our compliance regime. While we are worried about the lack of formalization, cost of compliance is disproportionately high, and it takes disproportionate bandwidth, essentially taking away attention of Indian enterprises from their core job," said Rituparna Chakraborty, co-founder and senior vice-president at Team Lease.

India climbed 14 rungs in the World Bank’s ease of doing business rankings last year to 63 among 190 countries; becoming one of the top 10 most improved countries for the third consecutive year. Ever since the Modi administration first came to power, India’s ranking has improved 79 places from 142 in 2014 to 63 in 2019, a record for a major economy.

Compliance burden.
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Compliance burden.

Amitabh Kant, chief executive of government think tank Niti Aayog, said at a webinar organized by Renew Foundation on Tuesday that India is eyeing to be among the top 50 countries in this year’s World Bank ranking.

To take business reforms to states, the industry department has been ranking states starting 2016 on the basis of regulatory compliance requirements. In the 2018 ranking, the last one that was made public, Andhra Pradesh topped the list, beating more industrialized states in the state business reform assessment ranking.

“There is a definite improvement in ease of doing business; however, implementation of law remains a challenge. The conflicting interpretation of laws further add to challenges for businesses and Indian companies," said Amit Maheshwari, partner at Ashok Maheshwary & Associates LLP, a tax compliance and regulatory firm.

“I don’t think we have moved away from the inspector raj regime. There is a huge regulatory overload, there are multiple rules and regulations and they are not necessarily in sync. So, while the regulatory burden has come down a little bit it has not reduced in the real sense," said Dinesh Kanabar, founder and CEO, Dhruva Advisors, a taxation and regulatory boutique firm.

“The compliance burden is high and is just getting complex due to digitization. The systems are still not linked on the backend. For instance, Sebi and MCA are not linked. The deadline extension for covid relief is not consistent across regulators," said Girish Vanvari, founder, Transaction Square, a regulatory boutique firm.

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