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Prime Minister Narendra Modi gets cracking on 'Made in India' plan; identified eight key areas to bring in reforms

Govt identifies eight areas to reforms business regulatory processes, gives ministries including corp affairs and labour three months to change rules to cut delays and red tape

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Eager to make its Make in India campaign a success, Modi government has identified eight key areas to bring in reforms in the existing business regulatory processes and substantially improve India's position in the World Bank's 'Doing Business Report' and bring it among the top 50 favoured countries.

The recently released World bank report ranked India 134th out of 189 countries, way below China (96), Nepal (105), Pakistan (110) and Bangladesh (130), primarily on account of consistently poor regulatory environment, especially in dealing with paying taxes (158), construction permits (182) and enforcing contracts (186).

"The prime minister is very keen to initiate the processes as soon as possible to bring down huge delays and cut red tape involved in the processes. The Department of Industrial Policy and Promotion (DIPP) under the commerce ministry has been given the identified task to identify sectors, specific activities and concerned ministries where reforms are required," top government sources said.

The eight core areas identified to overhaul the licence regime and drastically cut down the times and processes are:

1. Starting a business: (Rank 179) - The DIPP has identified obtaining 12 procedures like environment clearance, land procurement, construction related permits and no-objection certificates as the major bottlenecks. It has given three months to the corporate affairs ministry to reduce the time taken in registration of business from 27 days to one day, as in Canada and New Zealand, by integrating director identification number (DIN), name availability and payment of registration fees and stamp duty. Doing away with requirement of company seal, remove requirement of minimum paid-up capital for starting business. It has given 30 days time EPFO, ESIC and labour ministry to implement single registration for all labour laws within 30 days and has asked CBDT to start doing combine allotment of PAN and TAN in a single process within three months. The ministries of corporate affairs and labour, and the CBDT have also been asked to form a unique company ID, similar to Malaysia and Singapore within three months.
DIPP will work in tandem with state governments to formulate a uniform policy and procedure for single window clearance for various approvals and the state would be required to do one single registration for VAT and other taxes and no inspection would be required for low-risk businesses.

2. Dealing with construction permits: (Rank 182) - Right now it takes 168 days and 35 procedures to complete. The government wants to consolidate and streamline building laws at both national and state level by removing overlapping and contradicting building bylaws and has asked the urban development ministry to act on this in three months.
To state and local government it has asked to introduce online portal with composite application forms and provide checklists to give one stop construction permit like 36 advance economies of the world.

3. Getting electricity: (Rank 111) - It takes 67 days and seven procedures to get electricity connection, which the government want to reduce to one stop single procedure and approval within a week with third party certification for installation. The environment ministry has been asked to remove requirement of pollution control certificates.

4. Registering property (Rank 92) – Currently, it requires five tedious and different procedures requires at least 30 days. The government wants to make the process online with option of online payment like in the case of issuance of passport.

5. Paying taxes (Rank 158) - On an average, firms make 33 tax payments in a year and spend 243 hours every year in filing taxes. The government wants to reduce number of taxes, simplify tax processes and allow online payment. It has also asked the finance ministry to expedite implementation of direct taxes code (DTC) and goods and services tax and abolition of minimum alternate tax for developers of special economic zones, simplification of VAT refund and advance ruling of tax for state level taxes on the lines of Income tax Act.

6. Trading across borders (Rank 132) - Exporting any standard container of goods requires nine documents to fill up and takes minimum 16 days and costs $1,170. While importing it requires 11 documents and takes 29 days and costs $1,250. The government wants to reduce documentation process and bring it down to just three documents -- bill of lading, commercial invoice and custom declaration. Allowing electronic submission and processing for custom declaration and introducing only risk-based inspections with automated selection of inspection based on predetermined criteria such as in the US and Georgia.

7. Enforcing contracts (Rank 186) - The trial and judgement in India takes almost three years and enforcing a judgement again takes 305 days that increases the burden for businesses. Now the government wants to set up specialized fast track commercial courts with time bound decision with a proposed limit of 60 days like in Slovak Republic for disposal of cases. It also wants to make provisions for not more than one adjournment for each party and make it enforceable.

8. Resolving insolvency (Rank 121) - As India has four different and overlapping laws (Company's Act, Sick Industrial Companies Act, SARFAESI Act and RDB Act) for resolving insolvency and lacks in having single comprehensive and integrated law on corporate insolvency, the government wants to introduce one single Bankruptcy law or unified insolvency code. Based on the model of US's Bankruptcy code (UNCITRAL Model law) it would encompass aspects of recovery, revival, reconstruction and winding up and also domestic and cross border insolvencies.

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