Lok Sabha Question No. 2945 (UNSTARRED), answered on 2019-07-10
Subject: Change in System to Start New Industries
Ministry: COMMERCE AND INDUSTRY
Asked by: Gitaben Vajesingbhai Rathva

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE

## LOK SABHA

UNSTARRED QUESTION NO. 2945. TO BE ANSWERED ON WEDNESDAY, THE 10 TH  JULY, 2019.

## CHANGE IN SYSTEM TO START NEW INDUSTRIES

## 2945. SHRIMATI RATHVA GITABEN VAJESINGBHAI:

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

## वाणिज्य एवं उद्योग मंत्री

- (a) whether it is a fact that there is a need to bring huge change in administrative system of the country for starting a new industry;
- (b) if so, the reaction of the Government thereto;
- (c) whether India currently stands at 132nd position in the list of 185 countries at the world level in the terms of ease of doing business;
- (d) if so, the reaction of the Government in this regard;
- (e) whether  these  bottlenecks  are  turning  out  to  be  hindrances  in  foreign  capital Investment in Indian industries; and
- (f) if so, the details thereof and the corrective steps being taken by the Government in this regard?

## ANSWER

## वाणिज् य एवं उद्योग मंत्री श्ी ीीयूष गोयल) THE MINISTER OF COMMERCE & INDUSTRY (SHRI PIYUSH GOYAL)

- (a) & (b): Government of India has undertaken a series of reforms to bring in favourable changes  in  administrative  system/procedures  to  facilitate  starting  a  new business. Department for Promotion of Industry and Internal Trade (DPIIT), in coordination with Central Ministries/Departments, States and Union Territories (UTs), has spearheaded such reforms to improve the business climate in the country. A summary of initiatives taken in this regard is given in Annexure .
- (c): India  currently  stands  at  77 th position  out  of  190  countries  assessed  by  the World Bank in its latest annual Doing Business Report (DBR), 2019 released on 31 st October, 2018.
- (d): A  number  of  reforms  have  been  undertaken  since  2014,  which  has  led  to improvement of India's rank from 142 nd in DBR, 2015 to 77 th in DBR, 2019.
- (e) & (f):  The  Foreign  Direct  Investment  (FDI)  Policy  of  India  has  been  formulated keeping  in  mind  that  it  is  more  investor  friendly  and  removes  the  policy bottlenecks that have been hindering investment inflows into the country. The extant FDI policy framework follows a negative list approach wherein barring a select few sectors, FDI is permitted up to 100% in the automatic route, subject to applicable laws/regulations, security and other conditionalities. Detailed FDI policy on various sectors indicating therein sector-wise FDI limits is provided in 'Consolidated  FDI  Policy  Circular  of  2017',  as  amended  from  time  to  time through subsequent Press Notes.

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## ANNEXURE  REFERRED  TO  IN  REPLY  TO  PARTS  (a)  &  (b)  OF  LOK  SABHA UNSTARRED QUESTION NO. 2945 FOR 10.07.2019.

## INITIATIVES TAKEN TO IMPROVE EASE OF DOING BUSINESS IN INDIA

## A. World Bank's Ease of Doing Business Assessment

-  The World Bank released the Doing Business Report (DBR), 2019 on 31 st October, 2018. India ranks 77 among 190 countries assessed by the Doing Business Team. India has leapt 23 ranks over its rank of 100 in the DBR 2018. The DBR is an assessment of 190 economies and covers 10 indicators which span the lifecycle of a business. The indicator wise rank of India in World Bank's DBR 2019 is as follows:

| S. No.     | Indicator                         | Rank       |
|------------|-----------------------------------|------------|
| 1.         | Starting a Business               | 137        |
| 2.         | Dealing with Construction Permits | 52         |
| 3.         | Getting Electricity               | 24         |
| 4.         | Registering Property              | 166        |
| 5.         | Getting Credit                    | 22         |
| 6.         | Protecting Minority Investors     | 7          |
| 7.         | Paying Taxes                      | 121        |
| 8.         | Trading Across Borders            | 80         |
| 9.         | Enforcing Contracts               | 163        |
| 10.        | Resolving Insolvency              | 108        |
| Overall 77 | Overall 77                        | Overall 77 |

Some  of  the  major  indicator  wise reforms  undertaken  by  the  Government  towards easing the business environment in the country are as under:

## (i) Starting A Business:

- a)  The minimum capital requirement for public and private company has been eliminated under the Companies (Amendment) Act, 2015.
- b)  Introduced a single form SPICe  (Simplified Proforma  for Incorporating Company electronically) by merging five different applications in it i.e. Name reservation,  Company  incorporation,  Director  Identification  Number    (DIN), Permanent Account Number  (PAN) and the Tax Deduction/Collection Account Number (TAN).
- c)  Introduced  an  e-form  AGILE  (Application  for  registration  of  the  Goods  and Services  Tax  Identification  Number  (GSTIN),  Employees'  State  Insurance Corporation (ESIC) registration plus Employees' Provident Fund Organization (EPFO) registration).  Any applicant, if  he  wants  to  register  for  any  of  these bodies, can fill in e-form AGILE and get registration at the time of company incorporation itself. This form enables a user to apply for GST, EPF and ESI registration with the SPICe form.
- d)  Launch  of  a  new  and  simplified  web  based  service  i.e.  R.U.N.  (Reserve Unique Name) for reserving a name. This has also removed the requirement to use a Digital Signature Certificate (DSC) during name reservation.
- e)  Incorporation fee reduced to zero for companies with authorized capital up to INR 15 lakhs
- f) The  requirement  to  issue a physical  PAN  card  has  been  eliminated. Additionally, PAN and TAN are mentioned in the Certificate of Incorporation (CoI) which is considered as a sufficient proof for PAN and TAN.
- g)  Online  and  common  registration  for  EPFO  &  ESIC  is  provided  on  Shram Suvidha Portal.
- h)  Registrations under Mumbai Shops & Establishments Act are provided in real time without any cost and any inspection
- i) Eliminated the requirement of bank account details for GST registration

## (ii) Dealing with Construction Permits:

- a)  An  online  single  window  system  has  been  introduced  in  Delhi  (By  Municipal Corporations  in  Delhi)  and  Mumbai  (By  Municipal  Corporation  of  Greater Mumbai) integrating internal and external departments, removing requirement of visiting them individually.
- b) Unified building bye-laws 2016 have been introduced in Delhi.
- c) Deemed  approvals  have  been  introduced  in  Delhi,  if  approvals  are  not granted within defined timelines.
- d) Risk based classification of buildings has been introduced for fast tracking building  plan  approval,  inspection  and  grant  of  occupancy-cum-completion certificate.
- e) Requirement of submitting notarized certificates or affidavits for building plan approval has been replaced with e-undertaking in Delhi.
- f) Multiple inspections at completion stage have been replaced by single joint inspection in Delhi.
- g) Road  cutting  and  restoration  for  water  and  sewer  connections  have  been simplified.

## (iii) Getting Electricity:

- a)  Procedures  for  internal  wiring  inspection  by  the  Electrical  Inspectorate  (in Delhi) have been eliminated.
- b)  In Delhi, service line charges have been capped to INR 25,000/- in electrified areas for Low Tension loads up to 150 KW.
- c)  Time  taken  by  the  utility  to  carry  out  external  connection  works  has  been reduced in Delhi.

## (iv) Getting Credit :

- a) Secured creditors are paid first during business liquidation, and hence have priority over other claims such as labor and tax.

## (v) Paying Taxes:

- a)  17 indirect Central and State taxes have been replaced with a single indirect tax, Goods and Service Tax (GST), for the entire country. The previous sales taxes including the central sales tax, CENVAT, state VAT and the service tax have been merged into the GST. Unification of these taxes will  reduce the cascading effect of taxes and make taxes paid on inputs creditable to a higher percentage.
- b)  Corporate income tax has been reduced from 30% to 25% for companies with a turnover up to INR 250 crore.
- c)  Electronic  System  for  payment  of  Social  Security  Contributions  has  been introduced enabling easier return payment.
- d)  Making payment of EPF has been made mandatory electronically.
- e)  Administrative  charges  on  The  Employees'  Provident  Funds  Scheme,  1952 (EPFS)  have  been  reduced  in  March  2017  from  0.85%  to  0.65%  of  the

monthly pay. The Employees' Deposit Linked Insurance (EDLI) administrative charges of 0.01% have been removed.

## (vi)     Trading Across Borders:

- a)  Time  and  cost  to  export  and  import  has  been  reduced  through  various initiatives,  including  the  implementation  of  electronic  sealing  of  containers, upgradation  of  port  infrastructure  and  allowing  electronic  submission  of supporting documents with digital signatures.
- b)  Enhancement of risk-based inspections for both imports and exports, whereby only about 5% of goods are physically inspected.
- c)  Advance Bill of Entry has been adopted which allows importers to start the process of customs clearance before the arrival of the vessel.
- d)  Equipment  on  the  Nhava  Sheva  Port  in  Mumbai  has  been  upgraded  by adding  15  new  Rubber  Tyre  Gantry  Cranes.  The  Phase  1  of  the  Fourth Container  Terminal  at  the  Jawaharlal  Nehru  Port  Trust,  with  an  additional annual capacity of 2,400,000 TEUs, was completed in February 2018.
- e)  The new container terminal, Adani CMA Mundra Terminal Private Limited has been fully operational since June 2017, with an additional annual capacity of 1,300,000 TEUs.
- f) e-Sanchit, an online application system, under the Single Window Interface for  Trade  (SWIFT)  has  been  implemented.  It  allows  traders  to  submit  all supporting documents electronically with digital signatures.

## (vii) Enforcing Contracts

- a) National Judicial Data Grid has been introduced which makes it possible to generate case measurement report on local courts.
- b)  The Commercial Courts Act 2015 has been amended to reduce the pecuniary jurisdiction of commercial courts from INR 1 crore to INR 3 lakhs to establish commercial courts at the District Level. This will help in speedier disposal of commercial disputes and reduce pendency.

## (viii) Resolving Insolvency

- a) Insolvency and Bankruptcy Code 2016 has been adopted that introduced a reorganization procedure for corporate debtors and facilitated continuation of the debtors' business during insolvency proceedings.
- b)  Professional  institutions  have  been  established  for  effective  handling  of restructuring and insolvency proceedings.
- c)  Time-bound resolution process is done under the IBC and liquidation is the last resort.
- d)   Section 42 of the Insolvency & Bankruptcy Code 2016 has been amended to provide  that  a  creditor  has  the  right  to  object  to  decisions  of  the  liquidator accepting or rejecting claims against the debtor brought by the creditor itself and by any other creditor.

## B. Implementation of Business Reforms by States/UTs

1. The  Department  spearheaded  a  dynamic  reform  exercise  that  commenced  in 2014  to  rank  all  the  States/UTs  in  the  country  based  on  implementation  of designated reform parameters.
2. The  aim  of  this  exercise  is  to  create  a  conducive  business  environment  by streamlining  regulatory  structures  and  creating  an  investor-friendly  business climate by cutting down red tape.
3. DPIIT also developed an online portal, which can be accessed at http://eodb.dipp.gov.in, wherein all the reforms implemented are accessible for

public  viewing.  The  portal  also  gives  dynamic  ranking  which  updates,  as  and when, any of the reform points are recognized and approved.

4. In  2017,  the  reform  exercise  was  updated  to  372  action  points  with  additions introduced such as Central Inspection system, Trade License, Registration under Legal Metrology, and Registration of Partnership Firms & Societies.

## 5. Initiatives taken by DPIIT for the reform process:

- i. A nationwide workshop was held on 29 th July, 2017 to discuss the relevance and importance of implementing reforms. The all-day conference witnessed an active involvement  of  almost  100  participants  from  26  States/UTs.  The  workshop witnessed sharing of the best practices by States/UTs
- ii. A  unique  handholding  method  was  introduced  where  leading  States  were partnered with laggard States/UTs. West Bengal merits a special mention for its effort for conducting a 3 day workshop for Nagaland
- iii. Priority  reforms  was  identified  for  North  east  States  and  others  with  low implementation score
- iv. 8  workshops  were  conducted  along  with  the  World  Bank  to  address  queries posed by States/UTs in Tripura, Punjab, Haryana, Daman & Diu, Dadra Nagar Haveli, Andaman and Nicobar Islands, Goa and Karnataka
- v. To handhold all the 8 north-eastern States, video conferences were arranged.
- vi. The  assessment  of  States/UTs  under  Business  Reform  Action  Plan,  2017-18 was released jointly by DPIIT and the World Bank on 10 th July, 2018.

## 6.  Some important achievements under the exercise for 2017-18 are:-

- i. 19  States  have  designed  an  Information  Wizard  providing  information  for  all approvals, licenses, registrations timelines, and procedure to establish business/industrial unit (pre-establishment & pre-operation).
- ii. 21 States/UTs have designed and implemented online Single Window System.
- iii. 16  States/UTs  have  stipulated  Construction  Permits  to  be  provided  within  45 days (Building plan approval to be provided in 30 days/ Plinth level inspection to be  completed  in  7  days,  final  occupancy  certificate  provided  in 8  days). Telangana, Assam and Tamil Nadu have mandated even shorter timelines of 29, 30 and 37 days, respectively. Tamil Nadu has claimed to have done away with the process of issuance of completion certificate.
- iv. 21 States/UTs have implemented a GIS system to provide details about the land earmarked for industrial use across the State
- v. 23  States/UTs  have  reduced  the  number  of  documents  required  for  Obtaining Electricity connection to only 2
- vi. 18  States/UTs  have  brought  all  compliance  inspections  conducted  by  Labour, Factories,  Boilers  Departments  and  Pollution  Control  Boards  under  Central Inspection Framework
- vii. 12 States/UTs have merged of the payment of court fees and process fees into a single  transaction  with  some  states  like  Jharkhand,  Maharashtra,  and  Gujarat even repealing process fees from the Court Fees Act
- viii. 29 States/ UTs have notified a list of white category industries exempted from taking pollution clearances.
- ix. 20  States/UTs  implementing  an  online  application  system  Wholesale  Drug License and Retail Drug License (Pharmacy).
- x. 18  States/UTs  have  online  systems  for  Registration  of  Partnership  firms  and Societies,
- xi. 20 States/UTs have implemented an online system for registration and renewal under the Legal Metrology Act, 2009.
7. Business Reform Action Plan 2019 for States:-
- i. An 80 point Action Plan, 2019 has been prepared by DPIIT and shared with all the States and UTs for implementation of reforms.
- ii. As  capacity  building  initiatives,  7  workshops  have  been  conducted  in  Union Territories (Dadra & Nagar Haveli, Delhi, Chandigarh, Daman & Diu, Puducherry, Andaman & Nicobar Islands and Lakshadweep).
- iii. 8 regional workshops have been conducted in Lucknow (North Region), Kolkata (East Region), Mumbai (West Region), Bengaluru (South Region) and Guwahati (North-eastern Region).
8. District Reform Action Plan:A comprehensive 218-point District Reform Plan has  been  prepared  and  shared  with  the  State  Governments  with  a  request  to implement the same in the districts. The Action Plan is spread across 8 areas: Starting a Business for Construction, Urban Local Body Services, Paying Taxes, Land Reform Enabler, Land Administration and Property Registration Enablers, Obtaining Approval, Miscellaneous and Grievance Redressal/ Paperless Courts and Law & Order.

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