Never was the phrase “Ease of Doing Business” ever so heard in the economic history of India than it is being accentuated from the last 2 years after the NDA government took over. Modi has dreamt of bringing India amongst top 50 countries for ‘ease of doing business.’ It ranked 134th in 2015 and has managed to progress to 130th in 2016 out of 189 total countries as per the World Bank report showing that the fruits of government’s efforts can soon be reaped. In the areas that India’s performance has improved, the biggest improvement was under the head of ease of ‘access to electricity’, where it moved up 29 spots to 70.
With the commencement of the Union Budget speech this year, Finance Minister, Arun Jaitley quoted, ‘We must strengthen firewalls against risks through structural reforms, rely on domestic market so that growth does not slow down.’ In our domestic economy, one would like to invest obviously, only when it is easy to step into the market without much hustle and bustle. One of the main object of ‘Make in India’ project is to ease the starting and continuing of any business in India as until and unless, it is feasible and easy to make in India, nobody would be attracted to make in India.
Simplifying the Procedure:-
The Department of Industrial Policy and Promotion (DIPP) has taken up a series of measures to improve ‘Ease of Doing Business’. The simplification and rationalization of the existing rules and introduction of information technology to make governance more efficient and effective has been emphasised upon the most. In 2015, INC-29-an e-form was introduced which gave a fast track procedure for registering any company in India. To simplify and fast track the procedure for company registration in India, the Ministry of Corporate Affairs (MCA) had introduced Form INC-29 – Integrated Incorporation Form. Form INC-29 Company Registration has now been merged with the process of getting Director Identification Number (DIN), Name Approval and Incorporation application into one single process – thereby significantly reducing the time taken to start a company in India while the process earlier included filling up of 8 different Forms. The INC-29 form can be accessed through http://www.mca.gov.in/MinistryV2/Download_eForm_choose.html. Another step taken towards single window clearance is the proposal of a Business Identification Number for companies and firms with an aim to do away with the need for procuring separate registration numbers such as Company Identification Number and Labour Identification Number which are total 18 in number.at doing away with the need for separate registration with authorities ranging from the registrar of companies to the direct and indirect tax wings, the labour department and for export and import. at doing away with the need for separate registration with authorities ranging from the registrar of companies to the direct and indirect tax wings, the labour department and for export and import. at doing away with the need for separate registration with authorities ranging from the registrar of companies to the direct and indirect tax wings, the labour department and for export and import.at doing away with the need for separate registration with authorities ranging from the registrar of companies to the direct and indirect tax wings, the labour department and for export and import.
Further, Application forms for Industrial Licence (IL) and Industrial Entrepreneur Memorandum (IEM) have been simplified. Application for processing of Industrial License (IL) and Industrial Entrepreneur Memorandum (IEM) can be made online and this service is now available to entrepreneurs on 24×7-basis at the eBiz website. This had led to ease of filing applications and online payment of service charges. Similarly, there are various other procedures that have been simplified so that the investors in the fear of getting trapped in the procedure itself do not resist starting any business. That is, minimum government and maximum governance seems to be the goal of the government.
Reducing the Litigation:-
Commercial disputes are not just an impediment in the progress of any business, be it on a small or a large-scale, but also discourage the investor to even step into the market. In other words, it creates a strenuous environment in the market. So, it was high time for the government to take necessary steps to reduce the litigation in commercial disputes to the maximum extent it could. Urgent steps have been taken to facilitate quick enforcement of contracts, easy recovery of monetary claims, reduce the pendency of cases in courts and hasten the process of dispute resolution through arbitration. The Arbitration and Conciliation (Amendment) Bill, 2015 was introduced in both houses of Parliament in its recent session has now become an Act after having received the President’s assent on 31.12.2015 and shall be deemed to have come into force on the 23rd October, 2015.
Indian judiciary has often been criticized for interfering in the International Commercial Arbitration especially, when the cases involved any foreign party. The amended Act aims to bring Indian Arbitration Act at par with the global standards with minimal court interference. It has come into force to provide speedy and cost-effective dispute resolution to the parties which will thus obviously attract more and more investors making the continuation of business easier in India.
It provides for a fast-track procedure to start and wrap-up the arbitration proceedings expeditiously as well as for appointment of the arbitrator which would now be made by High Court or Supreme Court instead of CJI or by CJ of High Court. Section 17 has been amended for empowering the Arbitral tribunal to grant all kinds of interim measures which the Court is empowered to grant, under Section 9 and such order shall be ‘enforceable in the same manner as if it is an order of Court. Also, the application to challenge the award can now be made only within a period of one year. While there are many other amendments, these few are just to illustrate the efforts being put by the government through such initiatives recently.
Furthermore, for the quick resolution of commercial disputes, the Government has proposed for the setting up of exclusive commercial divisions in various courts in India based on the recommendations of the 253rd Report of the Law Commission. The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015 has been notified to become an Act in the Gazette of India dated 1st January, 2016. This Act has further helped in making the litigation of commercial disputes less cumbersome by introducing Commercial Courts at the district level, Commercial Divisions in High Courts and Commercial Appellate Divisions for timely disposal of Commercial disputes. The Act has quite widely defined Commercial disputes as to include any dispute related to transactions between merchants, bankers, financiers, traders, etc. Such transactions deal with mercantile documents, partnership agreements, intellectual property rights, etc.
And, the specified value of a commercial dispute that will be dealt with by Commercial Divisions in High Courts and Commercial Courts will be an amount not below one crore rupees, and will be specified by the Central Government. However, in view of the Arbitration and Conciliation Act, 1996, (as Amended), all matters pertaining to international commercial arbitrations involving disputes of subject matter of value of more than 1 crores will be brought within the ambit of the High Courts and matters pertaining to international commercial arbitrations are to be heard and disposed by the Commercial Division and has also made certain amendments to the Civil Procedure Code as well in order to expedite the litigations which, in turn, will boost the ‘Ease of Doing Business’.
Infrastructural advancement will ease the doing of business too:-
Important steps towards Digital India have also contributed to doing business easier. For instance, The National Optical Fibre Network Programme (NOFNP) as mentioned by the Finance Minister in last budget that it has been implemented in many States. These kinds of infrastructural developments will not only just attract investors to India but, will undoubtedly make it easier to make in India. Investor obviously tends to invest at a place with maximum facilities. The move to recapitalize banks with a total budgetary outlay of Rs. 25,000 crores would also help enable the financial institutions to support infrastructure growth. With a step to revitalise the PPPs, a new credit rating system for infrastructure projects will be introduced.
Easing the Environment for Business:-
For a greater ease of doing business, it is more than important that the business environment be conducive and not obstructive. To create the positivity in environment, the following steps have been taken:-
- Amendment to Companies Act, 2013:- Towards an important step to ease the business environment, the Companies Act Amendment Bill, 2016 has been introduced. It would be helpful in improving the enabling environment for start-ups while the Start-up India plan introduced this year has already been incidental in encouraging more and more start-ups in India.
“The proposed changes are broadly aimed at addressing difficulties in implementation owing to stringency of compliance requirements,” says the ‘Statement of Objects and Reasons’ of the bill. The bill seeks to simplify various procedures such as, private placement process, removing restrictions on layers of subsidiaries and investment companies, amending CSR provisions to bring greater clarity and exempting certain classes of foreign entities from the compliance regime under the Act.
The bill has also proposed to allow unrestricted object clause in the Memorandum of Association and thus, give up “detailed listing of objects, self-declarations to replace affidavits from subscribers to memorandum and first directors”. Most importantly, the definition of small companies which are given various exemptions has now been increased from Rs. 2 crores to Rs. 5 crores meaning thereby that, government seeks to ease environment not just for giant corporate-houses, but also for small companies. An abridged form of annual return is expected to be announced in case of small companies. Likewise, section 134 is sought to be amended to provide for an abridged form of financial statements in case of small companies.
- Ek Bharat Shreshtha Bharat- Create closer engagement between states and districts:-
The launch of “Ek Bharat Shreshtha Bharat” is a new endeavor of unifying the diversity of the country. But, the question is how this endeavour of unifying the country will ease the business environment? For instance, Uttar Pradesh and Maharashtra are paired for the mission. Now they can utilize the strengths of each other. The State of U.P. is well versed in the technique of handicraft. Now Maharashtra being a state of big business houses can help these handicraft workers with appropriate capital so that they can avail requisite material for the craft. Since autonomous investment is not coming in this field, the State can impose social responsibility to these business houses to ensure that investment flows to the handicraft industry. Also the state of Maharashtra can provide for the export facility for these products. Thus people of U.P. seeing the benefit being derived from the state of Maharashtra, will instead of being in estranged relation will convert into engaged relations.
This diversified unity can just not only ease the environment for all types of businesses, but can also widen the horizons for various businesses. This programme indeed needs to be praised for its uniqueness and relevance and will hopefully aid in creating an easy business environment in the country.
All these recent initiatives and recent developments in this field undoubtedly seem to be attractive on the paper, but real development will only be possible only when it is implemented in an efficient and effective manner practically.