New Delhi, Sept. 25 -- Doing business in India may still feel like navigating a labyrinth or being entangled in a spool of confusing cords. Countrywide rationalisation campaigns have eliminated copious amounts of unnecessary compliance; however, a quagmire of irrelevant, duplicated, or irrational compliance requirements still remains. A recently tabled report by the Parliamentary Standing Committee on Commerce on the ease of doing business has divulged that the sheer volume of business compliances remains "an overbearing friction point for domestic enterprise interface"; this is in spite of widespread central deregulation endeavours.
The Parliamentary Standing Committee on Commerce's report, titled "Doing Business in India: The Way Forward", highlighted that while 40,000 regulatory steps have been scrapped, several rules still overlap, thereby increasing operational costs for businesses. But here's where it revealed something that truly deserves more than a cursory look - currently, a typical business negotiates its way through several outdated compliances encased in 1,536 Acts. This also creates a load of 69,233 separate compliances and 6,618 additional statutory filings across three levels of government administration. Also, while the four Labour Codes have simplified matters on the labour front by merging 29 central laws, they may still give rise to further additional compliances when the states get involved with their own lists of rules.
Now, what's a business to do? It doesn't help that economic conditions and global outages remain par for the course, and businesses, especially MSMEs (micro, small and medium enterprises), continue to reel from regulatory complexity. The ones that operate in export markets already have tariff laws as well as quality standards and protocols introduced by foreign governments to tackle. Along with that are digital and AI (artificial intelligence) disruptions, with smaller businesses continuously playing catch-up. All in all, the MSME sector finds itself increasingly encumbered and constantly grappling with an endless paper trail.
Here's what has improved, though - it's easier and faster to start a business today and also to fold up. I won't say it's a quick job yet, but today, things are infinitely less complex than they were before 2020, when the Reducing Compliance Burden (RCB) initiative was introduced (the successor to the Business Reforms Action Plan (BRAP) of 2014). To date, 47,000 compliance requirements have been scrapped or changed, of which 16,108 were made easier, 22,287 were digitised, 4,458 were legalised, and 4,270 were removed due to redundancy. Therefore, while it's less daunting to start or wind up a business, the challenges of keeping one running are firmly in place. The cost of compliance increases primarily due to this and adds an additional hurdle for businesses that are anyway fighting through uncertain times.
Stakeholders have apprised the parliamentary committee of the various lags that still exist. For instance, the jurisdictions of several departments overlap, and therefore, businesses often duplicate their costs and efforts while meeting compliance requirements. The demand is for a seamless one-window approach wherein a business can get approvals without running from pillar to post between departments. Unified licensing and inspections would further shrink the time needed to receive licences. The parliamentary committee further recommends that regulatory approvals, licences, permissions, and renewals should come under the National Single Window System (NSWS) in a time-bound, predictable manner.
To drastically reduce the weight of compliance on businesses, there is also a growing clamour to shift towards trust-based systems that rely on self-certification, third-party accreditations, automatic renewals, and risk-based inspections. This obviously opens up an interesting sub-context too - can we trust our businesses to comply honestly? The Indian business scenario has passed through the Licence Raj and economic liberalisation to the IT and startup booms. We have indeed come a long way, and therefore, our own economic evolution would necessitate that we don't treat our own with preconceived notions. To foster a business climate of integrity, checks and balances would need to be put in place, a task easily done using technology. But most importantly, the onus would then have to fall on the businesses themselves to be strictly compliant. And to that effect, the prism of treating all businesses as wilful flouters of regulations must change. Because for all those who do operate in grey areas and bypass the law, there are hundreds of diligent entrepreneurs who are toeing the government line and are only asking for fewer regulatory hurdles. We will do well to remember that the path to Viksit Bharat will be built as much by our large companies and rockstar startups as by the strong core of the Indian MSME sector.
Views expressed are personal. The writer is an author and media entrepreneur
Published by HT Digital Content Services with permission from Millennium Post.