Govt to Slash Red Tape for Businesses By April

Saturday, November 29, 2014
Prime Minister Narendra Modi shakes hands with PepsiCo's chairman & CEO Indra Nooyi (left) in New York (file photo: PTI)

India is currently ranked a lowly 142nd on the World Bank’s index for the ease of doing business. But this is all set to change with Prime Minister Narendra Modi’s government committed to improve this ranking to 50.

By April 2015, starting a new business in India would no longer require multiple trips to different government offices. According to the Economic Times, the government is planning an online approval system for more than 200 permits required for industries from central and state government departments.

The new system for registering and seeking clearances for any business would allow entrepreneurs to apply for and track the status of all permits and licenses online, in line with Modi’s vision of bringing governance to people’s fingertips.

Promising to simplify business processes and regulations within six months, the Prime Minister had told U.S. business leaders in October that he had given officials “specific parameters to improve quickly”.

“Whatever may have been India’s ranking on the ease of doing business index, I have now told officials that I don’t want to be so low on this ranking,” Modi said.

There is a revival in investor interest in India with the new government’s focus on attracting foreign investment. Simplifying the country’s notorious red tape would be a tangible sign of change in the business environment. The government’s initiative is therefore welcome, experts told the Economic Times.

“The cabinet secretariat is prodding all ministries and state governments to complete the exercise by March 2015, so that anyone setting up a new venture in any sector or state can apply for the requisite permits and even pay fees online,” said an unnamed senior government official.

The proposed national portal for registrations and clearances would also free up entrepreneurs from the guesswork associated with navigating India’s cumbersome and uncertain bureaucratic landscape, a labyrinth system that spawns brokers and agents who charge for helping industries to acquire permits.

“There will be a start-up matrix on the portal that will tell applicants which permissions are needed for which sectors. So if you are about to set up a pharma unit in Gujarat, it will tell you what are the permits needed from the health ministry and the state government,” the official told the Economic Times.

Already 81 state-level clearances are being digitised, including those relating to acquiring land, setting up a factory and associated requirements such as registering a boiler and operating a diesel generator.

Another 133 clearances granted by different central departments, including security nods from the home and defence ministries, will also be put online. More than 50 of these clearances pertain to the railway ministry alone.

“Moving to an online system for granting clearances is a good start, after years of creating multiple single windows for investors that only sent them to other official windows,” said former Boston Consulting Group chairman and Planning Commission member Arun Maira.

“But it’s equally important to re-engineer the processes involved in the clearances and create an intelligent back end. If people using the new system have a bad first experience and throw their hands up saying even this doesn’t work, it could backfire,” he told the Economic Times.

The various ministries taking their permissions online include finance (from allotment of tax numbers to permitting external commercial borrowings), commerce (export import licenses), corporate affairs, labour, power, road transport, agriculture, shipping, water resources and petroleum and natural gas.

- Karan Singh

To Learn More:

Government moving to online approval system for over 200 permits needed to start business (by Vikas Dhoot, The Economic Times)


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