Ease of doing business

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RANKINGS

The Ease of Doing Business (EODB) index is a ranking system established by the World Bank Group. In the EODB index, ‘higher rankings’ (a lower numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.

The research presents data for 189 economies and aggregates information from 10 areas of business regulation:

  • Starting a Business
  • Dealing with Construction Permits
  • Getting Electricity
  • Registering Property
  • Getting Credit
  • Protecting Minority Investors
  • Paying Taxes
  • Trading across Borders
  • Enforcing Contracts
  • Resolving Insolvency

Rankings and weightages on each of the above mentioned parameters are used to develop an overall EODB ranking. A high EODB ranking means the regulatory environment is more conducive for starting and operating of businesses.

 

India – Ease of Doing Business Ranking

Among the chosen 189 countries for this index, India was ranked 134 in 2015 on the World Bank’s Doing Business index. Since then there has been a remarkable improvement.

Since 2014, the Government of India launched an ambitious program of regulatory reform aimed at making it easier to do business in India. The program represents a great deal of effort to create a more business-friendly environment.

The efforts have yielded substantial results with India jumping 4places on the World Banks’ Doing Business rankings.

Positive changes have led to this impressive improvement in India’s ranking on the EODB index:

  • Starting a Business: India’s ranking on this parameter has improved from 164 in 2015 to 155 in 2016. This improvement has been mainly on account of decrease in number of procedures and time taken to start a business in India.
  • Getting Electricity: India’s ranking on this parameter has improved from 99 in 2015 to 70 in 2016. The number of days taken to get a permanent electricity connection for a business is just 53 days, which is less than the average time taken in South East Asian and OECD member countries.

Apart from the above-mentioned parameters, India fairs particularly well in terms of ‘Protecting interests of Minority Investors’, where it ranks 8 among the 189 countries which are part of this index.

CENTRAL GOVERNMENT INITIATIVES

Actions Completed

 

Starting a business

  1. The requirement of Common company seal is eliminated.
  2. Introduction of form -29 by MCA. With this form three processes such as Name Availability, Director Identification Number and Incorporation of Company are clubbed into one. The company can be registered within 1-2 working days in India.
  3. The provision is in place for getting PAN and TAN in T+1 day using digital signature.
  4. ESIC and EPFO are completely online with no physical touch point for registration or document submission.
 

Dealing with construction permits

  1. 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, provision of using digital signature and online scrutiny of building plans.
  2. Delhi has a uniform building bye laws, 2016 which allows for risk-based classification regimes for different building types. The uniform building bye laws have provision of deemed approval of sanctioning building plans within 30 days. 
 

Trading Across Borders

  1. The Central Board of Excise and Customs (CBEC) has implemented ‘Indian Customs Single Window Project’ to facilitate trade. Now importers and exporters can electronically lodge their customs clearance documents at a single point only with the customs.
  2. The number of mandatory documents required by customs for import and export of goods have been reduced to three viz. Bill of Lading, Invoice cum Packing List and Import Declaration.
 

Enforcing Contracts

  1. The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 has been enacted. The Commercial Courts and Appellate Divisions have already been established in Delhi and Bombay High Court.
  2. National Judicial Data Grid (NJDG), http://njdg.ecourts.gov.in/njdg_public/main.php provides case data including case registration, cause list, case status and orders/judgements of courts across the country and District-wise. NJDG was opened to general public on 19th September, 2015.
 

Getting Credit

  1. SARFAESI (Central Registry) Rules, 2011 has been amended. The amendment modifies rule 4 to include additional types of charges, including: "security interest in immovable property by mortgage other than deposit of title deeds"; "security interest in hypothecation of plant and machinery, stocks, debt including book debt or receivables"; "security interest in intangible assets, being know-how, patent, copyright, trademark or any other business or commercial right of similar nature"; and "security interest in any under construction residential or commercial building or a part thereof". This amendment allows (Central Registry of Securitization Asset Reconstruction and Security Interest) CERSAI to register these additional charges.
  2. This amendment will allow uploading of data pertaining to security interests created on all types of properties covered by the definition of property in Section 2(1)(t) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) i.e. immovable as well as intangible.
 

Getting Electricity

  1. In both Delhi and Mumbai, the distribution companies have stipulated that electricity connections will be provided in 15 days and the number of documents required to obtain an electricity connection have been reduced to only 2. Online application for connections above 100 KVA have been made mandatory in Delhi and Mumbai. This will reduce procedures, cost and time taken to obtain an electricity connection significantly.
  2. In Mumbai, Brihanmumbai Electric Supply and Transport (BEST) has improved its SAIDI by 3% in the period Jun 2015-Mar 2016, and SAIFI by 11% in the same period and Tata power has improved its SAIDI by 2.42 and it’s SAIFI by 2.41. 
 

Registering Property

  1. In Delhi, all sub-registrar offices have been digitized and sub-registrars' records have been integrated with the Land Records Department and in Maharashtra all property tax records have been digitized. The digitization of property records will overcome the cumbersome and time consuming paper work for registering properties. It will ensure transparency and allow citizens to ascertain history of transactions in digital mode.
 

Resolving Insolvency

  1. The Insolvency and Bankruptcy Code, 2016 is expected to introduce new dimensions in Resolving Insolvency in India. This is India’s first comprehensive legislation in the area of corporate insolvency.
 

Paying Taxes

  1. The ESIC has developed a fully online module for electronic return filing with online payment. This has greatly reduced the time to prepare and file returns.
  2. With introduction of e-Verification system, there remains no physical touch point for document submission to Income tax authorities. 
 

Measures Underway

 
  • Integrate processes for obtaining PAN, TAN, ESIC & EPFO registration with incorporation of company. 
  • Increasing the coverage of Credit Registry and Credit Bureau to register at least 70% of the individuals and firms with information on their borrowing history from the last 5 years.
  • Simplification in the forms for filing income tax return, VAT return, CST return, EPFO and ESIC return
  • Operationalizing Insolvency and Bankruptcy Code
STATE REFORMS
  1. DIPP launched an online portal in April 2016 to track implementation of reforms on a real-time basis. The online portal is aimed to provide the following:
    • Real time ranking and tracking of the States and UTs based on implementation of the recommendations
    • Details of the good practices to learn and replicate
    • Provide information on current policies and practices across States and UTs
  2. More than 7000 reforms have been uploaded by States on the portal, the validation exercise of which is underway. While the validation exercise is in the final stages, it can be seen from the website that around 10 States have implemented more than 90% of the reforms. A detailed data set of ease of doing business measures implemented by various states is available at URL: http://eodb.dipp.gov.in.
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