Making India easy for business
The
country needs to fix its dismal track record when it comes to issues around
cross-border trading, dealing with construction permits, and enforcing of
contracts, to improve its overall rank
Addressing global dignitaries at the recently concluded Seventh
Vibrant Gujarat Global Investors Summit in Gandhinagar, Prime Minister Narendra
Modi said he wants to make India the easiest place to do business. "Ease
of doing business in India is a prime concern for you and us. I assure you that
we are working very seriously on it," he said. "We want to make them
not only easier than earlier, not only easier than the rest, but, we want to
make them the easiest."
But that's easier said than done. The 2015 World Bank group's
Doing Business index ranked India at 142, down from 140, which it was the year
before. Analysing the ten different parameters - starting a business, dealing
with construction permits, getting electricity, registering a property, getting
credit, protecting minority investors, paying taxes, trading across borders,
enforcing contracts, resolving insolvency - the World Bank group gives
individual rankings for each one of these, which collectively provides the
final rank. Experts say if India is to improve its overall rank in Doing Business index, it is important to
fix issues when it comes to trading across borders, dealing with construction
permits, and enforcing contracts. India is dismally ranked 126, 184 and 186 in
trading across borders, dealing with construction permits, and enforcing
contracts, respectively.
Trading across borders
Easier export-import regulations have remained a major challenge
for successsive governments. Getting regulatory clearances in ports and
airports - which one needs in order to get the final custom clearance - is one
of them. Experts say one key reason for cargo clogging many ports and airports
is the multiplicity of regulators, and that not all of them sit at the
terminal. Points out a Bengaluru-based custom agent: "There was no drug
controller in Bengaluru for a long time. So if anybody wanted to bring in medicines,
they have to either use the Chennai or the Mumbai terminals." In Delhi, it
takes almost a week to 10 days if you want to get a food regulator's approval,
said another custom agent.
Said a trade expert familiar with the issues: "A person
should not be going to the regulator's office in the city. The regulator should
be at the terminal itself. Courier companies do not have the Electronic Data
Interchange (EDI) system yet - for easier custom clearance - even as the
discussions have been going on for the last seven to nine years. Further,
courier companies are not allowed commercial exports - only gifts and samples
are allowed. Even though the country's foreign trade policy allows the use of
courier companies for commercial exports, custom rules bar it.
Also, the number of documents required to carry out trading
across borders in India are more. According to World Bank group Doing Business
report, it takes seven documents to export, and ten to import, to and from
India. The comparative number of documents required in Singapore is three. It
takes 16 days in India, and six days in Singapore, to export. "It takes
time to get documents approved by officials," explains an Indian exporter.
Dealing with construction permits
According to the Doing Business report, it takes around 25
permits to start a greenfield construction project in India. The time taken to
get these permits is estimated at around 200 days.
"Dealing with multiple agencies and departments to get
various clearances in the construction sector has been a cause of concern for
developers," said Neeraj Sharma, Partner, Walker Chandiok & Co LLP.
"This significantly derails their project planning and execution, and
ultimately impacts the deliveries to the customers," he added. Many feel
that the time is right for the government to create an online single window
clearance mechanism which can decrease the time taken to get these clearances.
Another common industry complain is that urban planning bodies
are filled with semi-skilled people who do not understand the complexity of the
permit process. "India needs to significantly invest in capacity building
and training in this respect. This can be done by setting up more educational
institutions catering to the requirements of real estate and construction
sectors," said Sachin Sandhir, Global Managing Director - Emerging
Business and MD - South Asia, RICS. As per the Doing Business in India report it can take up to two months
just to take a building construction permit in Delhi. In Mumbai, it can take up
to 45 days to get permanent water and sewer connections. Sandhir said there was
a need to modernise and streamline standards, bylaws, statutes and practices as
the process remains complex, opaque, and lacks accountability.
Enforcing contracts
India is at the bottom of the chart at 186th place when it comes
to enforcing of contracts. As per the Doing Business report, it takes almost
four years to enforce a contract in India.
Settlement of claims is a protracted exercise burdened by
several formal procedural requirements, say those in legal fraternity.
"Even if private parties agree upon arbitration, which is an
extra-judicial remedy, courts often intervene when approached by either party.
This makes arbitration an even longer route for dispute settlement," said
Aakanksha Joshi, Associate Partner at Economic Laws Practice. "Often,
these tribunals have technical members who make decisions that are not in
accordance with the law. Such decisions are bound be challenged on legal
grounds, making dispute resolution even longer," she added.
Absence of speedy disposal of cases - complicated with less
number of judges - is another issue which pinches the litigant the hardest.
Experts advise that settlement through arbitration should be encouraged in a
time-bound manner.
For more information on Startup / Company registration in India
and approval of company name and trademark registration send query to us visit
this link Company Incorporation in India.
