Stepping up Business Environment

Over the next few years, the government, both at the centre and in states, has to consider ways of improving the business environment for small businesses. While the long-term solution is a wholesale revamping of the laws and regulations governing business, a number of steps can be taken in the short term, and a number of policy experiments could be initiated for the long term.

Steps in the Short Run:

1. Create a website with all the rules and regulations applicable to businesses across states and the centre.

2. Review the existing regulatory landscape for outdated regulations which can safely be done away with.

3. Strengthen grievance redressal mechanisms against inspections.

4. Minimize human interaction and shift reporting and data submission to an online-only mode wherever possible.

5. Shift important decision making from the inspector to higher-level officers.

6. Create a system for self-certification and third-party certification.

7. Allow firms a time period to remedy faults and lack of compliance rather than penalize them immediately.

8. The government could institute a ‘use it or lose it’ policy to free up locked land, which can be used for industrial estates, common facilities, incubators, etc.

9. The Apprenticeship Act should be amended.

Mid-term Steps:

1. Get states to share best practices on business regulations and see what can form the basis for tried and tested regulatory change.

2. Based on these inputs, create a state-approved model regulatory structure that is available for businesses opening up in NIMZs.

Long-term Steps:

1. Indian legislation governing business needs to be thoroughly revamped. A committee could be constituted with the mandate to propose a more streamlined and modern set of laws, especially in the areas of taxation, labour, environment, and safety. Preliminary work can be started here, but in controversial areas, the focus has to be on building consensus for the time being.