Lok Sabha Question No. 802 (UNSTARRED), answered on 2016-11-21
Subject: Ranking on Ease of Doing Business
Ministry: COMMERCE AND INDUSTRY
Asked by: JYOTIRADITYA MADHAVRAO SCINDIA, V. SATHYABAMA, DINESH TRIVEDI, HARI BABU KAMBHAMPATI, MIDHUN REDDY, KAMAL NATH, PONNUSAMY VENUGOPAL, PREM SINGH CHANDUMAJRA, PR. SENTHILNATHAN, R. GOPALAKRISHNAN, JAYSHREEBEN  PATEL

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION

## LOK SABHA

## UNSTARRED QUESTION NO. 802. TO BE ANSWERED ON MONDAY, THE 21 ST  NOVEMBER,  2016.

## RANKING ON EASE OF DOING BUSINESS

## 802.   SHRI JYOTIRADITYA M. SCINDIA:

SHRIMATI V. SATHYA BAMA:

SHRI DINESH TRIVEDI:

DR. KAMBHAMPATI HARIBABU:

SHRI P.V. MIDHUN REDDY:

SHRI KAMAL NATH:

DR. P. VENUGOPAL:

PROF. PREM SINGH CHANDUMAJRA:

SHRI PR. SENTHIL NATHAN:

SHRI R. GOPALAKRISHNAN:

SHRIMATI JAYSHREEBEN PATEL:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state:

## वाणिज् यवव द्यग ं ्री

- (a) whether  expressing  disappointment  at  India's  rank  remaining  low  in  terms  of  'ease  of doing business', the Union Government has felt that the efforts and reforms undertaken by the Union Government as well as the States have not been adequately captured in the ranking released by the World Bank;
- (b) if  so,  the details of bottlenecks that came to the notice of the Union Government in this regard;
- (c) whether  the  Union  Government  proposes  to  work  with  renewed  focus  and  speed  to improve India's ranking in ease of doing business; and
- (d) if so, the details thereof along with the response of the State Government in this regard?

## ANSWER

## वाणिज् यवव द्यग ााज् यं ्रीस् वतं ््रभााा(स्रींतंरीिरंमलााीरीतंाांि( THE MINISTER OF STATE (INDEPENDENT CHARGE) OF THE MINISTRY OF COMMERCE & INDUSTRY (SHRIMATI NIRMALA SITHARAMAN)

- (a )& (b): India ranks 130 th in the World Bank's annual Doing Business Report (DBR) 2017 as against 131 st rank (Revised) in the Doing Business Report 2016. The Doing Business Report ranks countries on the basis of Distance to Frontier, an absolute score  that  measures  the  gap  between  India  and  the  global  best  practice  on  10 specified indicators.

Despite several rounds of follow up with World Bank and providing system logs, circulars, notifications and legal evidence some of the reforms were not recognized by the World Bank. These are as follows:

- i. Enactment of the Insolvency and Bankruptcy Code which has transformed India's corporate  insolvency  landscape  by  replacing  outdated  laws  with  a  new  legal

framework.  Once  implemented,  it  will  improve  our  rank  significantly  in  resolving insolvency index in next year's ranking.

- ii. Introduction of online single window system for building plan approval in Delhi and Mumbai,  integrating  permission  of  various  agencies.  This  has  reduced  time  to process  and  issue  building  plan  approvals  from  231  days  to  21.85  days  on  an average in Delhi, and from 147 days to 26.39 days in Mumbai. This reform was not captured  in  this  year  because  as  per  the  World  Bank's  methodology  majority  of users have not used the system.
- iii. Introduction  and  streamlining  of  INC-29  for  company  incorporation,  which  is currently  used  by  30%  of  new  companies.   This  reform  was  not  factored  in  this year  because  as  per  the  World  Bank's  methodology  more  than  50  per  cent  of users should have used the system in the period 2 nd June, 2015 to 1 st June, 2016.
- iv. The elimination of the requirement of a company seal while applying for    government  registrations  and  permissions  at  the  time  of  setting  up  of  a business. The Companies Act, 2013 was amended in 2015 to make provision for the same but has not been accounted for by the World Bank. The World Bank has observed that, to open a bank account, a company seal was required.
- v. Online  registration  for  ESIC  and  EPFO,  which  has  expedited  the  time  taken  to register. This functionality has been made  applicable from 1 st December, 2015.  The World Bank has not accepted the evidence provided in this regard.
- vi. Online filing and payment of returns at the Employee's Provident Fund Organization, where the majority of returns and payments are now filed and paid fully online.  This reform has not been considered even though it was implemented by EPFO on 5 th June, 2015.
- vii. Streamlining of name reservation process at Ministry of Corporate Affairs, reducing the  time  taken  to  an  average  of  1.86  days.  Private  sector  practitioners  have confirmed to the World Bank that it still takes 2-7 days on average in both Mumbai and Delhi to reserve the company name.
- viii. Registration under VAT and Profession Tax has been merged into a single process from  1 st January,  2015  by  Government  of  Maharashtra.  Incorporation  experts confirmed to the World Bank Team that in practice, business founders were still using two separate forms to register for VAT and Professional Tax.
- ix. Registration for VAT in Delhi has been made online and is allotted real time and business can start operations immediately on receipt of TIN number. Local experts agreed that in the measured period, the time to register as a VAT taxpayer has not changed.
- x. Delhi  Pollution  Control  Committee  has  removed  the  requirement  of  obtaining consent to  establish for  a  non-hazardous  warehouse. In  practice,  all  businesses would have a diesel generator set which, though is not a major source of pollution, still requires NOC.
10. (c) & (d): Yes, the Union Government has already circulated a new set of reforms to Ministries/ Departments and State Government of NCT of Delhi and Maharashtra. For reforms to be recognized by World Bank in the 2018 Report, the Department of Industrial Policy and  Promotion  has  provided  the  concerned  Departments/State  Governments  target dates for implementation of reforms. World Bank has been supporting us with Doing Business, 2017 country ranking and with Business reform action plan for State ranking on ease of Doing Business.