New Delhi: India could soon be an easier place to do business. The government is set to launch a project that will not just provide entrepreneurs the opportunity to seek all clearances for starting business at the click of a mouse but is also going to guarantee approvals in a specified number of days.
In all, around 35 approvals from authorities ranging from municipalities, state government agencies and the Centre are required to start a business. These could include registration under the Companies Act and the Shops & Establishment Act to registration for VAT and with the Income Tax authorities.
Infosys, which was selected two years ago to execute the project, is expected to help the government roll out the project in Andhra Pradesh by the end of the year, minister of state for commerce & industry Jyotiraditya Scindia told TOI. "This will be an additional window, especially for smaller companies and start-ups. All we are trying to do is put everything together without affecting the functioning of any of the agencies," Scindia said.
Though the e-biz portal, which is being tested, would also deal with export and import related registrations, a separate platform for trade is being developed. While states such as Delhi had shown interest, Andhra seems to have stolen a march for the moment.
For long, India, despite its attractiveness due to a large market and cheap labour, has ranked poorly in terms of ease of doing business. In International Financial Corporation's Doing Business Report 2011, India was placed 134 among 183 countries. When it came to starting a business, it was ranked even poorly at 165, as it took 29 days to complete 12 procedures. In terms of dealing with construction permits, it was at the 177th position since it took 195 days to get 37 permits.
Though the government has been trying to improve India's ranking for the last few years, it is only now that things seem to be falling in place. The commerce and industry ministry is also piloting the National Manufacturing Policy (NMP) to help businesses speed up the closure process, where India ranked 134th as it takes seven years to complete the formalities.
To begin with, in the proposed National Manufacturing & Investment Zones, the government has proposed a faster mechanism for settling the assets of a sick company. For instance, to settle labour dues independent of those of creditors, companies might be asked to purchase job loss policy from insurance companies to provide compensation for a specified number of days for every year of service rendered. Alternatively, a sinking fund could be maintained at the zonal level.
The NMP is in the final stages with Prime Minister Manmohan Singh scheduled to meet ministries over the next few weeks, officials said. But that would still leave the government with the task of enforcing contracts where India has a poor track record. The IFC report ranked India at 182 among 183 countries. But that's expected to be taken up only in the next phase.
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