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Ever wondered why some countries attract businesses like magnets while others struggle? That’s where the Ease of Doing Business (EoDB) comes in. Ease of Doing Business which are aimed at creating a conducive business environment. It’s a ranking system by the World Bank (until 2021) that measured how easy or difficult, it is to start and operate a business in different countries.
Table of Contents
India – Ease of Doing Business Ranking
India ranks 63rd in the World Bank’s Doing Business Report (DBR). India’s rank in the DBR improved from 142nd in 2014 to 63rdin 2019, registering a jump of 79 ranks in a span of 5 years. India as one of the top 10 improvers, for the 3rd time in a row, with an improvement of 67 ranks in 3 years. India has emerged as one of the most attractive destinations not only for investments but also for doing business.
Central Government Inititives
Starting a Business
- Permanent Account Number (PAN), Tax Deduction & Collection Account Number (TAN), Director Identification Number (DIN) have now been merged into a single form (SPICe) for company incorporation.
- Elimination of incorporation fee for companies with an authorised capital of up to Rs. 15 Lakh.
- Five-page form and other attachments for reserving the name of the Company with the Ministry of Corporate Affairs have been simplified into a simple web service with only three fields to be filled.
- Registration under Employee State Insurance Corporation (ESIC) and Employee Provident Fund Organisation (EPFO) is available at Shram Suvidha portal as a common online service with no physical touchpoint.
- No requirement of inspection before registration under the Shops & Establishment Act in Mumbai and Delhi.
- Companies Act was amended to eliminate the requirement of a common company seal.
Dealing with Construction Permits
- Municipal Corporations of Delhi, as well as Municipal Corporation of Greater Mumbai, have introduced fast track approval system for issuing building permits with features such as Common Application Form (CAF), provision of using digital signature and online scrutiny of building plans.
- Delhi has uniform building by-laws which allow for risk-based classification regimes for different building types. It has a provision of deemed approval of sanctioning building plans within 30 days.
- For construction permits, the time reduced from 128.5 to 98 days in Mumbai and from 157.5 to 113.5 days in Delhi between Doing Business 2018 and 2020 reports.
- The total number of procedures reduced to 19 in Mumbai and 11 in Delhi.
- Cost of obtaining construction permits reduced from 23.2% to 5.4% of the economy’s per capita income.
Trading Across Borders
- The Central Board of Excise and Customs (CBEC) has implemented the ‘Indian Customs Single Window Project’ to facilitate trade. Importers and exporters can electronically lodge their Customs clearance documents at a single point. The government has launched ‘PCS1x’ which intends to integrate 27 maritime stakeholders at one platform.
- The number of mandatory documents required for customs purposes, for both import and export of goods, has been reduced to three.
- e-Sanchit, an online application system, allows traders to file all documents electronically.
- The electronic self-sealing of the container at the factory has reduced time and cost for exporting firms.
- A computerized risk management system has brought transparency and reduced the frequency of custom inspections significantly.
- Central Board of Indirect Taxes and Customs has provided a facility for Advance Bill of Entry (Advance Import Declaration).
Enforcing Contracts
- The Commercial Courts and Appellate Division of High Courts have been established in Mumbai and Delhi.
- National Judicial Data Grid (NJDG), provides case data including case registration, cause list, case status and orders/ judgements of courts district-wise across the country. NJDG is open to the public since 2015.
- New cases in district courts are assigned to Judges randomly through an automated system in Delhi and Mumbai.20
- e-filing of cases has been introduced in district courts of Delhi and Mumbai.
- A case management tool has been developed with the functionality of sending a notification to lawyers, viewing court orders/ judgements, tracking the status of cases, semi-automatically generate court orders etc.
Getting Credit
- Central Registry of Securitization Asset Reconstruction and Security Interest (CERSAI) is a geographically unified electronic registry that provides for registration by asset type. Since 2017, CERSAI also provides search through debtor's name.23
- Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) (Central Registry) Rules, 2011 was amended to include additional types of charges, including a security interest in - immovable property by the mortgage, hypothecation of plant and machinery, stocks, debt including book debt or receivables, intangible assets, patent, copyright, trademark, under-construction building.
- The definition of property, which now includes immovable as well as intangible, allows CERSAI to register these additional charges.
Getting Electricity
- Electricity connection is provided within 7 days if no Right of Way (RoW) is required and within 15 days where RoW is required.
- Service line cum Development charges are now capped at USD 339.84 in Delhi.
- The number of documents required for getting an electricity connection has been reduced to tow and no physical documents are accepted.
- The total number of procedures reduced to 3 in Delhi and 4 in Mumbai.
Registering Property
- All sub-registrar offices have been digitized and its records have been integrated with the Land Records Department, in both Delhi and Mumbai.
- In Mumbai, all property tax records have been digitized. Property is mutated automatically after registration.30 The digitization of property records ensures transparency and allows citizens to ascertain the history of transactions in digital mode.
- Online service for charges search at Registrar of Companies reduces the time taken for this procedure significantly.31
- Statistics regarding the number of land disputes at Revenue Courts are available online in both Delhi and Mumbai.
Resolving Insolvency
- The Insolvency and Bankruptcy Code of 2016 has introduced new dimensions in resolving insolvency in India. It is India’s first comprehensive legislation on corporate insolvency.
- Under Fast-track Corporate Insolvency Resolution Process (CIRP) for mid-sized companies, the process for insolvency shall be completed within 90 days with a maximum grace period of another 45 days.
Paying Taxes
- Reduction of corporate tax from 30% to 25% for mid-sized companies.
- Domestic companies can opt for concessional tax regime @ 22% (effective tax rate: 25.17% inclusive of surcharge and cess). Such a company cannot claim any income tax incentive or exemption. Such companies are not liable to pay the Minimum Alternate Tax (MAT)
- The tax rate for new domestic manufacturing companies is now 15% (17.01% inclusive of surcharge and cess). Companies that have been incorporated on or after 1st October 2019, making fresh investment manufacturing and commencing production on or before 31 March 2023, may opt for such a concessional tax regime. Such companies cannot avail of any other income tax exemption/ incentive under the Income-tax Act.
- A company that does not opt for the above concessional tax regime and avails any tax exemption/ incentive, shall continue to pay tax at pre-amended rates. However, the option of availing of the lower tax regime of 22% can be opted for after the expiry of tax during the holiday/ exemption period. Once the same has opted for it cannot be subsequently withdrawn by the taxpayer. MAT rate for companies availing exemptions/ incentives reduced from 18.5% to 15%.
- Robust IT infrastructure of online return filing for Indian taxpayers.
- The Goods and Service Tax came into effect on 01 July 2017. It subsumes eight taxes at the Central and nine taxes at the State level.
- The Employee State Insurance Corporation (ESIC) has developed a fully online module for electronic return filing with online payment. This has substantially reduced the time to prepare and file returns.
- With the introduction of the e-verification system, there remains no physical touchpoint for document submission to income tax authorities.
- Instead of filing 3 GST returns, the taxpayer has to now file only 2 returns.
Measures Underway
- Resolving Insolvency: Increased usage of Fast-track Corporate Insolvency Resolution Process (CIRP) as more insolvent companies opt for reorganization plans instead of liquidation.39
- Enforcing Contracts: The faster resolution of commercial disputes through dedicated commercial courts.40
- Registering Property: Digitization of land records and maps will bring transparency on encumbrances and ease the process of registering property.41
- Generating Electricity: GoI has initiated a campaign to improve regulatory and process framework in the power sector. It is working towards a reduction in entry barriers in the distribution industry and making it license-free.
- Starting a business: The new companies registered through the Agile platform of MCA are also facilitated to register under ESI Act, through the common transaction.
- Dealing with Construction permits: Central Public work department (CPWD) has introduced 49 new & emerging technologies to enhance the speed of work. ERP is under implementation and is expected to be completed by 2021. It will ensure transparency and increase efficiency.
State Reforms
- DPIIT has launched the latest Business Reform Action Plan for the year 2020 (BRAP 2019-20). It consists of 301 reform points across 15 areas. The highlights of State Reforms Action Plan 2020 are
• ‘Investment enablers’ - To incorporate reforms related to ‘Access to information and transparency, ‘Online Single Window System And more.
• Single Window system- To enable the single window system including online submission of application, payment of application fee and many more
• Sectoral reforms pertaining to sectors like Tourism, Telecom, Hospitality, Trade License, Healthcare, Legal Metrology, Cinema Halls and Movie shooting.
• Public procurement has been introduced first time by the Industries department in this year’s Action Plan.
• Reforms related to ‘elimination of the requirements of renewals of certificates/ approvals/ licenses’ and ‘implementation of computerized central random inspection system’.
2. For BRAP 2018-19, DPIIT has proposed to undertake a 100% feedback based assessment. The reform areas included.42
- Access to Information and Transparency Enabler
- Single window system
- Land administration and Transfer of Land and Property
- Land availability and allotment
- Environment Registration Enablers
- Construction Permit Enablers
- Labour Regulation-Enablers
- Obtaining Utility Permits
- Paying Taxes
- Inspection Enablers
- Contract Enforcement
- Sector Specific: Healthcare and Miscellaneous
3. BRAP 2017-18 was updated to 372 action points. It included new sectors such as Healthcare and Hospitality, Central Inspection system, Trade License, Registration under Legal Metrology, and Registration of Partnership Firms & Societies. Assessment for BRAP 2017-18 included feedback score which was sought on 78 reform points from actual users.
4. In 2016, DPIIT released a 340-point BRAP. It included recommendations on 58 regulatory processes and policies spread across ten reform areas spanning the lifecycle of a typical business.
5. Department for Promotion of Industry and Internal Trade (DPIIT) launched Business Reforms Action Plan (BRAP) and its assessment report in September 2015, capturing the findings of reforms implemented by States/Union Territories.
6. The Action Plan is spread across 24 reform areas and seeks to promote a sector-specific approach so as to create an enabling business environment across various sectors in the country. The various sectors include Trade License, Healthcare, Legal Metrology, Fire License/NOC, Cinema Halls, Hospitality, Telecom, Movie Shooting and Tourism
Startup India and Self-Reliant India (Atmanirbhar Bharat):
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Goal: To support new businesses (startups) and make India a global hub for innovation and entrepreneurship.
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As of 2024:
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India has 113 unicorns (startups valued at over
350 billion**. -
It’s the 3rd largest startup ecosystem in the world, with over 124,000 government-recognized startups.
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The numbers are growing fast, and the future looks even brighter.
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How the Government is Helping Startups:
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Startup India Initiative:
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The government’s flagship program to support startups.
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Offers financial help, infrastructure support, and mentorship.
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Startup India Seed Fund Scheme:
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Provides ₹447 Crore to fund 133 incubators (places that help startups grow).
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Credit Guarantee Scheme for Startups:
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Guarantees loans up to ₹10 Crore for startups, making it easier for them to get funding.
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Tax Benefits:
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Startups get income tax exemption for 3 years in their first 10 years.
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They also get an 80% discount on patent filings and 50% discount on trademark filings.
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Ease of Compliance:
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Startups can self-certify their compliance with labour and environment laws for 3 to 5 years, reducing paperwork and hassle.
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Regulatory Reforms:
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In 2022, the government introduced 53 reforms to make it easier for startups to:
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Do business.
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Raise money.
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Reduce compliance burdens.
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Why This Matters:
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These initiatives aim to:
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Encourage innovation.
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Make India self-reliant (Atmanirbhar).
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Create jobs and boost the economy.
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Help startups grow faster and compete globally.
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In short, the government is creating a supportive environment for startups to thrive, making India a global leader in innovation and entrepreneurship. 🚀
In summary, India's path to enhancing the Ease of Doing Business involves a multi-faceted approach including regulatory simplification, introduction of indices to foster competition among states for investment, and legislative changes to decriminalize minor business-related offences. These efforts collectively aim to position India as a more attractive destination for both domestic and international business operations.