ASSOCHAM: Business Regulations- Vital Reforms Key for Catalyzing Investments and Capital Formation

A robust and stable regulatory environment is crucial to boost investor confidence and encourage business growth in India. There is immense scope for India to improve on its ‘Ease of Doing Business’ ranking, from the current position of 142 out of 189 countries. However, India scores high on other important parameters like ‘Protection of Minority Investors’ (7^th place) and ‘Credit Availability’ (36^th place). India has tremendous untapped potential to attract FDI across major sectors like manufacturing, infrastructure, agribusiness and services.

In order to achieve a robust and a stable regulatory environment to induce investor-friendly business regulations, ASSOCHAM recommends the following:

Immediate / Short Term Measures:

• Clarity in FDI/ FII policy across sectors, with better Centre-State coordination to stimulate investments and improve business confidence.

• Review and update 105 archaic laws and business regulations to make them relevant to the current business context and boost investments.

• Improve labour market vibrancy by rationalising laws to create a conducive business environment

• Reduce multiplicity of legislation by grouping laws under 4 broad categories: industrial relations, wages, employment standards and social security.

  • Review laws on process for rationalizing workforce and factory closure.

  • Reduce the number of procedures and approvals involved in starting and doing business by creating a single window approval mechanism in each state.

• Prioritize key reform-oriented bills in the Winter Session of the Parliament to improve business sentiment, including Insurance Laws (Amendment) Bill, 2008, The Factories (Amendment) Bill, 2014, amongst others.

• Replicate best practices of IT and ITeS sectors in ongoing e-Governance projects through Public Private Partnership models.

• Implement 3P – new agreement for implementing sectoral contractual frameworks, and bidding guidelines for infrastructure acceleration

Medium / Long Term Measures:

• Simplify the land acquisition process for investors by creating land banks and reorienting the Land Acquisition, Rehabilitation and Resettlement Act, 2013 Act, with support from State Governments

Expand Industrial clusters/corridors model in all states with dedicated land and tailored laws for a particular cluster.

• Create online government to business (G2B) interfaces at the State level with the eBiz platform as a template.

• Roll out a single Goods and Services Tax (GST) through consensus of all states, as well as reorient the Direct Taxes Code to create a business friendly tax structure.

• Avoid retrospective application of tax laws and strengthen the scope of advance ruling mechanism for cross border transactions to improve investor confidence.

• Foster swift and transparent dispute resolution mechanism, including further developing e-courts and e-rulings.

• Create an enabling regulatory environment across all states to effectively implement the “Swachh Bharat” campaign by calibrating existing environmental laws.

• Develop deeper equity and debt (both corporate & structured) capital markets to facilitate increased FDI and FII inflows.

• Ensure effective People-Public-Private-Partnership for governance and development through empowered agencies with powers to authorize key investment projects.

A strong and stable regulatory and business environment forms the backbone to revitalizing the Indian economy and boosting investor confidence. A dedicated focus on building trust, transparency, clarity, consistency and predictability in the law of the land and business regulations will hugely encourage investors, both foreign and domestic, to invest in the India growth story and help actualize the ‘Make in India’ initiative.

Sincerely,

Rana Kapoor

President, ASSOCHAM