Ease of doing business in India

The World Bank every year assign ranks to countries all over the world on the basis of ease of doing business in their countries. These rankings are allotted totalling the score achieved on 10 factors that play a major role in doing business. Top rankings are allocated to countries that have better, more specific regulations for doing businesses and stronger protections of property rights. As per the ‘Doing Business 2020’ report released by World Bank, India is ranked 63 out of 190 economies for 2019. India had jumped 14 ranks up, making 63rd spot in 2019 from 77th rank in 2018 and had ranked 100 in 2017.

What parameters is a country ranked on?
The ease of doing business rankings are based on a country’s performance on 10 parameters such as enforcing contracts and starting a business.  In India, these rankings are based on the business environment in Mumbai and Delhi.  A lower rank indicates better performance on that parameter, whereas a higher rank indicates worse performance on the indicator.  India’s ranking improved in six out of the 10 parameters over the previous year, while it remained the same or fell in the remaining four.

Note that these parameters are regulated by different agencies across the three tiers of government (i.e. central, state and municipal).  For example, for starting a business, registration and other clearances are granted by central ministries such as Finance and Corporate Affairs.  Electricity and water connections for a business are granted by the state electricity and water boards.  The municipal corporations grant building permits and various other no objection certificates to businesses.

The measures taken for ease of company formation India are:-

• Process of applying for Industrial License (IL) and Industrial Entrepreneur Memorandum (IEM) has been made online and this service is now available to entrepreneurs on 24×7 basis at the eBiz website. This had led to ease of filing applications and online payment of service charges.
• The Companies (Amendment) Act, 2015 has been passed to remove requirements of minimum paid-up capital and common seal for companies. It also simplifies a number of other regulatory requirements.
• SEZ Units allowed removing goods for repair, replacement, testing, calibration, quality testing and research and development on self-attestation.
• The time required for giving a new electric connection in Mumbai has been reduced to 21 days from 67 days. The number of procedures involved has been cut down to 3 from existing 7.
• Registration process of VAT and Professional tax has been merged into a single process with single ID on 1st January, 2015 by the Government of Maharashtra.
• Initially the documents required for export and import of goods was ranging up to eleven documents. Now the number of documents required for export and import of goods are limited to three documents.
• The MCA has introduced an integrated process for incorporation of a company. Now the applicants can apply for Director’s Identification Number (“DIN”) and company name availability simultaneously with the application for incorporation of a company. Earlier, the initial Directors were required to obtain a DIN and then the application for name availability could be made by the Director. Once the name approval was granted the incorporation application could be made. Hence, the integrated process will expedite the incorporation process for company registration in India.

India’s incredible progress in doing business rankings over the past 3 years is a tremendous achievement, especially for a complex and bureaucratic economy. The constant emphasis on improving business reforms at the central and state levels had made significant improvements. The focus now needs to be on continuing this move to continue and upgrade its ranking.