POLICY WATCH – EASE OF DOING BUSINESS

INTRODUCTION

• Ease of doing business has been a key agenda of the government. The government is

set to slash the requirements and time taken for starting a new business from 10

processes and 18 days to 5 processes and as many days. 10 key services, including

name reservation, incorporation as well as registration for various taxes such as

goods and services tax, will soon be available in two forms instead of multiple

individual once at present.

INSIGHTS

• Ease of starting business is just the beginning. If the government has relaxed norms

at level of Central Government, obviously people who are registering will have

tougher time.

• Now, it is in two forms instead of 10, for starting a business then it will improve is of

doing business ranking which is currently 63.

• For startups, it is number of rules and regulations to be followed.

• According to a study large / with business especially farmers company, the

companies have to follow at least 1900 rules and regulations at Central level and if

we club it states about 6000 rules and norms have to be followed.

• Ministry of law, department of Revenue and company registration, these three

Central Agencies will be integrated.

• India is third largest startup economy of the world after US and China.

• Excise duty and Customs at Central level and VAT, Sales Tax at state level and now

after integrating the whole system there is GST- goods and services tax.

• Cost of doing business is important element of ease of doing business scenario, one

year back India’s interest rate was among the highest and in last one year RBI has

cut interest rate, repo rate by more than 1%.

• Now cost of doing business in terms of power cost, cost of meeting contractual

obligation.

• Growth rate is 4.5 % (the biggest challenge is growth rate)

• In terms of India, foreign companies for MNCs look at two things basically:-

1. Their on business prospect

2. Larger economic growth scenario in particular country.

• Ease of doing scenario improvement will bring incremental FDI and in this

manufacturing is very important and revival of investment is also very important.

• Current challenge of government is to revive investment boost consumption.

• Industries expects at least 1.5 Lakh crore to 2 lakh crore would be invested by the

government to revive consumption which will basically improve or help to improve

capacity utilization and help in bringing new investment. Once these new

investments comes through public investment, government spending in schemes

like PM-kisan and all will boost consumption and will help in reviving.

• Average capacity utilization industry wise is about 75%. Overall, the capacity is

there but demand is lacking, most in demand is required.

Budget 2020 – Expectation

- Government should look at relaxing norms and GST for start-up sector.

- Funds of funds, there must be more schemes to the startups and get these points to

start their business.

- Investment Revival.