A business-friendly environment is required for a country's economic growth. A country like India, which is one of the world's fastest developing country, has the potential to outperform the world's leading economies in terms of business. The government's Make in India initiative, launched in 2014 with the goal of transforming India into a manufacturing center, has made efforts to improve the Ease of Doing Business (EODB) in India by attracting more domestic and multinational companies to invest and do business in India. India's progress towards leapfrogging 79 places in the ranking to 63rd out of 190 countries is the result of continuous efforts of the government over the years and efforts to consolidate its position as a preferred place to do business.
There was a time when it was asked, "Why India?" because of the circumstances that existed previously. After considering the impact of the country's reforms, the question "Why not India?" has been raised.
What is “Make in India”?
It is a Prime Minister Narendra Modi initiative launched on September 25, 2014, to encourage national and multinational corporations to manufacture their products in India. The primary goal is to increase the manufacturing sector's contribution to GDP by 25% by 2025. It focuses on 25 sectors of the economy, including information technology (IT), business process management (BPM), automobiles, and others, with the primary goal of creating jobs, encouraging innovation, boosting skill development, and protecting intellectual property.
What is meant by "Ease of doing Business"?
'Ease of doing business,' as the term implies, refers to how easily one can start a business in India, that is, how many compliances one must go through or what obstacles investors face when starting up. Every year, the World Bank publishes a 'ease of doing business' index. One of the challenges investors have always faced when doing business in India is that the procedure is too complicated and generally requires a lengthy approval process. Unfortunately, India's ranking on the World Bank's 'Ease of Doing Business Index' has remained relatively stable in the 130s and 140s in a list of 189 countries over the last few years. India ranks 142nd in the Ease of Doing Business Index and 158th in the Ease of Starting a Business Index. And it is a delight for investors because one of the key highlights and objectives of this scheme is to make doing business in India easier in order to facilitate ‘make in India.' The government is taking a number of steps to move India into the top 50.
How will ease of doing business boost 'Make in India'?
There is a clear and direct link between "ease of doing business" and "Made in India." It goes without saying that the more difficult something is to achieve, the less likely people are to pursue it. The same is true in business. Investors are frequently discouraged from starting a business in India due to a variety of impediments. As a result, removing such obstacles and making it easier to do business in India will naturally attract investors who were previously hesitant to invest in India, thereby boosting 'Make in India.'
The Advantages of Starting A Business In India
Large Population
One of the major advantages of starting a business in India is that it has a large population and a large market without borders with well-established logistics. For decades to come, India's young population and growing economic power will be a magnet for foreign companies.
An Extensive Tax System
India has a vast network of tax treaties. Furthermore, the Indian tax system has recently been modified by the Direct Taxes Code as well as the Goods and Services Tax (GST) to facilitate doing business.
Furthermore, the Indian tax system has recently been modified by the Direct Taxes Code as well as the Goods and Services Tax (GST) to facilitate doing business.
Several important bills that benefit most industrial sectors have been passed in the Indian Parliament in recent years. The Goods and Services Tax Bill has improved the efficiency of product movement throughout India. The Direct Taxes Code Bill simplified tax laws. The Land Acquisition Bill, however, will be the most important (and contentious) law. The Companies Bill, which modernizes India's corporate law for the twenty-first century, was also passed. Such business-friendly legislation makes it simple for international players to carry out their plans to enter India.
Operational Costs Are Low
There is a discernible Low operating costs are possible for infrastructures, phones, internet, labour, salaries, and anything else needed to start a business. In addition, workers are willing to work for low wages. Not only that, but India's tax policies are very moderate in comparison to other countries, which may reduce the cost of doing business.
Financial System In India
India has a well-regulated financial system that has access to developed markets all over the world and can be financed through a variety of channels subject to RBI rules and regulations, among other things.
Large Trade Network
India has a vast infrastructure of technical and management institutions of the highest international standards, which are supported by bilateral and regional free trade agreements. Furthermore, there are numerous trading partners with whom to conduct business. These institutions produce high-quality human resources.
Initiatives of the Government
The Indian government has launched a number of initiatives to attract foreign investment in India's various sectors. It has periodically announced a number of enticing schemes and policies in order to entice investors. Individual ministries have made special efforts to ease the rules and regulations governing foreign investment in their respective industries.
Steps taken by the government to make doing business and starting a business easier:
1. INC-29
INC-29 expedites the process of registering any company in India. The Ministry of Corporate Affairs (MCA) has introduced Form INC-29 - Integrated Incorporation Form to simplify and expedite the company registration process in India. Form INC-29 Company Registration has combined the processes of obtaining a Director Identification Number (DIN), Name Approval, and Incorporation application into a single process, significantly reducing the time required to establish a company in India. The INC-29 form is available online at
http://www.mca.gov.in/MinistryV2/Download eForm choose.html.
Previously, eight forms had to be completed in order for the company to be registered. Because the entire incorporation process is in a single form, correct filing could result in approval in 48 hours, according to the government. If the form is rejected, you can request a refund using the Refund Form. One can also apply for a PAN (Permanent Account Number) and a TAN (Tax Deduction Account Number).
Through a single e-form, INC-29 will provide the following services:
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A DIN-Director Identification Number is assigned.
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A company's name
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Incorporation of a company
It does, however, have some drawbacks. One of these is that it has a more limited name proposal. Previously, 6 names (of applicants) could be submitted in order of priority, whereas INC-29 only allows a single name to be submitted. Furthermore, if the name submitted is rejected, there is only one chance for re-submission, and it is unclear what will happen after the second rejection.
Another thing to note is that it has combined various forms, but the previous procedure has not been eliminated. It's just that you now submit everything at once, which means that if there are any errors, you'll find out about them right away. The change is positive until we learn that only one resubmission is permitted before having to fill out the entire form again and pay Rs. 2000.
Furthermore, Section 8 of the Companies Act, 2013, which allows for the incorporation of a charitable company and companies defined in Chapter XXI, is not included in this new system. The maximum DIN allotment is three, which means that only three directors' DIN can be used at the same time, which is another shortcoming of the new system.
2. Trade facilitation across borders is a component of 'ease of doing business.'
India was ranked 126th out of 189 countries in the World Bank's 2015 Report on the component of "Ease of Doing Business," Trading Across Borders. This year, the number of documents required for imports and exports of goods has been reduced from around ten to three. Following the DGFT's Notification dated 12-3-2015, only three documents would be required for export and import. Bill of Lading/Airway Bill; Commercial Invoice cum Packing List, and Shipping Bill or Bill of Export are now mandatory documents for exporting goods from India, while Bill of Lading/Airway Bill; Commercial Invoice cum Packing List, and Bill of Entry are now mandatory documents for importing goods into India.
As a result of the DGFT's Notification, only three documents would be permitted for export and import, as two required documents by Customs (Packing List and Commercial Invoice) have been decided to merge into one document, one document needed by RBI (Foreign Exchange Control Forms - SDF for exports and A-1 for imports) and one document required by the Ministry of Shipping (Terminal Handling Receipt) have been omitted. The 'Cargo Release Order' is a commercial document issued by the shipping line to the concerned importer rather than a mandatory document required by any regulatory agency. In terms of the 'Technical Standard Certificate'/'Certified Engineer's Report,' 'Product manual,' and 'Inspection report,' these documents are only required in specific cases/products/tariff lines and are not required for all products.
"These new measures will go a long way toward lowering exporters' and importers' transaction costs." "They would significantly reduce turnaround time at ports and in banking channels," EEPC India Chairman Anupam Shah said.
This step is widely expected to help India significantly improve its ranking. Not only that, but it would also result in a reduction in transaction costs and time.
3. Permits for construction
On this score, India ranks 184th out of 187 countries, with the main issue being local authorities who require permits. Common application forms have been launched in Delhi to combat this. MCD will obtain clearances from all departments, eliminating the need for running around and cumbersome procedures. In addition, online color-coded maps for the airports of Delhi and Mumbai have been introduced in order to obtain a no-objection certificate from the Airports Authority of India. The Archaeological Survey of India and the National Monuments Authority are taking similar steps.
4. Contract Enforcement
Due to poor contract enforcement, including that between phone users and telecom companies, India has been ranked 186th out of 189 countries. So far, measures have included the establishment of Special Commercial Courts in Delhi and the Bombay High Courts to expedite cases involving contract enforcement.
5. Resolving insolvency
Due to the lengthy process involved, there are many pending insolvency litigations in the National Company Law Tribunal. The government's only action in this regard has been the announcement of the introduction of a bankruptcy code in India by the Finance Minister during the Union Budget.
Conclusion
India ranked 130th in the World Bank's Ease of Doing Business Index in 2016. Within a few years, India has risen to 63rd place, representing a 67-rank improvement as a result of the government's improvements in policies launched under the Make in India campaign, which aims to create more than 100 million jobs by 2022, establish India as a manufacturing hub, and increase the manufacturing sector's contribution to GDP to 25%. In a nutshell, the government has been implementing significant reforms to make doing business in India easier. The government has taken several initiatives across various parameters to support the growth of the country's ease of doing business environment. Consistent progress across multiple parameters is likely to accelerate India's ranking in the top 50 countries for ease of doing business in the coming years.
