Currently, India has the reputation of being a notoriously difficult place to do business. According to World Bank's "Ease of Doing Business" index, India ranks 134 out of 189 countries, behind China (No. 96) and neighbours Pakistan (No. 110) and Bangladesh (No. 130).
During the launch of the Make in India campaign, the prime minister had announced that his government would take steps to bring the country's ranking among the top 50. The government has made the Department of Industrial Policy and Promotion (DIPP) the nodal agency to push procedural reforms to make India a better place to do business.In turn, DIPP has set a time frame of 3-6 months for implementing the changes. It has asked all ministries to come on board and work to reform the regulatory structure and overhaul the investment climate. States are also being encouraged to join the Centre's efforts to improve the regulatory structure and cut down delays.
Among the focus areas is reforming the tax system. It has been suggested that the number of taxes be reduced and online payment of taxes allowed. Education and higher education cess, dividend and withholding taxes can be incorporated under corporation tax to simplify the process, officials said.The Minimum Alternate Tax (MAT) for developers of special economic zones (SEZs) and units in SEZs is proposed to be abolished.There is emphasis to expeditiously implement the Direct Tax Code and goods and service tax (GST).
"To achieve all this, the government, along with the states, will need to carry out radical measures on a war footing," said an official, who did not wish to be named.
The DIPP has set timelines for various reforms for ministries and departments. For example, it has been suggested that there should be no inspection for low-risk business and com puter-based selection for high-risk ones. There is also a proposal for a uniform policy and procedure for all states so as to enable the single-window clearance system, along with a combined application form with an institutional mechanism to provide various approvals.
The DIPP has cited examples from various countries such as Malaysia, New Zealand, Canada, Rwanda, Turkey and the UAE to ease up the processes and reduce delays. It has also been suggested that the requirement of minimum paid-up capital for starting a business should be done away with, as 90 countries have no such requirement. To remove hurdles in getting electricity for businesses, several measures have been identified which include removing the requirement of pollution control certificates for providing a connection.State electricity boards and the power ministry have been asked to simplify procedures to get an electricity connection.