In an effort to reduce compliance burden and ensure better easing of doing business environment in the country for companies operating in India, the government has started identifying redundant rules in state and central acts that can be removed.
“We are very keen on improving compliance burden in the country. It is a major assignment given by the prime minister and Cabinet secretary is monitoring its progress," Department for Promotion of Industry and Internal Trade (DPIIT) secretary Guruprasad Mohapatra said on Thursday while speaking at an event on ease of doing business organized by industry lobby Confederation of Indian Industry (CII).
Mohapatra said the idea came during a meeting of prime minister Narendra Modi with Marriott International president and chief executive officer Arne Sorenson who complained about the complex regulations in starting and running a hotel in India.
Quoting a study by National Restaurants Association of India (NRAI), the Economic Survey FY20 said to obtain a license from Delhi Police to open a restaurant, one needs 45 documents– far more than the number of documents required for a license to procure new arms (19) and major fireworks (12).
The Survey said a major challenge most companies face is the complex architecture of the Indian governance framework including the density of legislation and statutory compliance requirements. “Manufacturing units have to conform with 6,796 compliance items, which is a tedious and time consuming task," it added.
Mint on 8 July reported that the situation is acute even in industrialized states such as Maharashtra (3,657 compliances) and Gujarat (3,048) with high compliance burden quoting a study by consulting firm 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.
However, India remains a laggard on many counts. Enforcing a contract in India takes on average 1,445 days compared to just 216 days in New Zealand, and 496 days in China. Paying taxes takes up more than 250 hours in India compared to 140 hours in New Zealand, 138 hours in China and 191 hours in Indonesia. While India takes 60-68 hours and 88-82 hours in border and documentary compliance for exports and imports respectively, Italy takes only one hour for each. Moreover, the cost of compliance is zero in Italy. In India, it costs $260-281 and $360-373 for exports and imports respectively. These parameters provide a measure of the scope for improvement.
Speaking at the inaugural session of the CII event, trade minister Piyush Goyal said government is genuinely working to create a true single window system for businesses which will be reminiscent to the common application form filled up by students applying for foreign universities.
Goyal said worries on availability of land for industry in India are unfounded, as 500,000 hectares of land has already been identified. “I will be soon soft launching the land bank portal through which one can visualize the land using Google Earth sitting anywhere in the world. Six states have already shared data for this," he added.