Centre rolls out plan for higher ranking on ease of doing business

Ropes ministries and state governments in two-pronged strategy to cut red tape.

Written by Anil Sasi | New Delhi | Published: October 6, 2014 12:59:43 am

The Centre is set to roll out a two-pronged strategy to cut the bureaucratic red-tape that business have to face in India.

The first is getting states to commit to simplifying and rationalising the regulatory environment at their end, for which chief secretaries are being summoned to New Delhi for one-to-one deliberations.

The second step is giving specific instructions to the different arms of the Central government to cut inter-departmental wrangling on clearances.

This, accompanied by the benchmarking of six “best practices” granting clearances to industry that are being currently followed in states such as Maharashtra, Gujarat, Karnataka, Rajasthan and Punjab, would form the core of the Centre’s strategy to enable India to leapfrog its current rankings on the World Bank’s ‘Ease of Doing Business’ index.

As a step in this direction, the chief secretaries of Delhi and Maharashtra are learnt to have already concluded their meeting with Union commerce ministry officials here over the last few weeks, where the singular agenda was on how to simplify and rationalise the regulatory environment.

Since much of the interface that investors have is primarily with state government departments, states have been asked to take up at least five measures on priority — all returns to be filed on-line through a unified form, a check-list of required compliances to be placed on ministry or department’s web portal, all registers required to be maintained by the business to be replaced with a single electronic register, no inspection to be undertaken without the approval right from the top, and for all non-risk, non-hazardous businesses, the introduction of a system of self-certification.

At the Central level, different wings of the government, including the labour ministry, home ministry and the defence ministry, have been issued customised guidelines.

For instance, the issue of delays in the time taken in registration of establishments with the Employees’ Provident Fund Organisation (EPFO) and Employees’ State Insurance Corporation (ESIC) has been taken up with the labour ministry and as a result, both processes are being automated through on-line registration and ESIC registration number are to be provided on a real-time basis.

As part of the guidelines issued to streamline the processing of applications for grant of extension of validity of industrial license, the home ministry has been given a maximum of 12 weeks for grant of security clearance on industrial licence applications.

In addition, proposals for foreign investment clearance to the Foreign Investment Promotion Board would, in due course, be accepted in the digital form and the practice of submission of hard-copies is expected to be done away with.

“The information on the automation of the online registration on the labour ministry front has already been shared with a World Bank study group,” an official involved in the exercise said.

In addition, the Department of Industrial Policy and Promotion (DIPP) has developed a checklist with specific time-lines for processing all applications filed by foreign investors.

The DIPP is already implementing the ‘eBiz’ project that is expected to provide a single platform to avail business and investment related services through a single composite form.

Besides, a single payment mechanism that can be split and routed to the respective heads of account of Central, state or local government agencies, along with generation of challans and MIS reports, is being implemented.

All these measures are being put in place with an eye on improving India’s current ranking of 134 on the World Bank’s annual rankings to somewhere in the top 50, a target set just over a week ago by Prime Minister Narendra Modi when he launched his ‘Make in India’ marketing push to hard sell India as a competitive global manufacturing hub.

For states, a reference point is a comparative study commissioned by the DIPP and conducted earlier this year by Accenture Services that went into the practices followed by state governments for the grant of clearance, of which six best practices have been identified.

These including Gujarat’s experience in land-related interventions and online mechanisms for environment clearances, Maharashtra’s single-window clearances model for industries and the Karnataka model in managing indirect taxes have been circulated among all the states for peer evaluation.

Benchmarking these practices alone across major states, could lift India’s ranking on the ‘Ease of Doing Business’ index by over 80 places in the best case scenario, according to senior DIPP officials.

To complement the efforts, at the Centre, the process of applying for industrial license and Industrial Entrepreneur Memorandum is being completely being made online and this service is being made available to entrepreneurs on a round-the-clock basis on the eBiz website.

This, government officials said, would sufficiently cut human interface and ensure that no entrepreneur has to come to the ministry to file an application or make payment.

On the defence production side, a sector that is being progressively opened up to foreign investments, steps taken to streamline clearances — through the issue of Press Note 3 (2014) — include the exclusion of a large number of parts, castings and forgings from the purview of industrial licensing.

Dual use items, having military as well as civilian applications (unless classified as defence item) are expected to be excluded from industrial licence requirement, a step that will enable domestic and international companies to undertake manufacturing without going through a long-drawn clearance process.

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