India Shines on World Bank’s ‘Ease of Doing Business Index’
19th November 2018
According to the World Bank’s “Doing Business 2019” report, India has climbed 23 spots from a year ago to rank 77 out of 190 countries on the ease of doing business index. The series of reforms brought in by the current government has significantly improved India’s ranking and made it easier for companies to set-up and run businesses in India.
Though India is currently battling a volatile Rupee and a widening current account deficit, the jump in India’s ranking of ease of doing business is commendable and would encourage both domestic and overseas investment in India.
The following are key indicators of the ‘Doing Business 2019 Report’;
Starting a business Procedures
India made starting a business easier by fully integrating multiple application forms into a general incorporation form.
The Ministry of Corporate Affairs (MCA) launched the Simplified Proforma for Incorporating Company Electronically (SPICe) e-Form. The SPICe is a versatile form which leverages on digital technology by eliminating the need for hard copies of physically signed documents being attached to an e-form. SPICe is now the Sole, Simplified & Versatile form available for incorporation of a company in India.
The MCA has also integrated the MCA21 System with the CBDT for issue of PAN and First TAN to a company incorporated using the SPICe. On approval of SPICe forms, an electronic e-mail with a Certificate of Incorporation as an attachment along with PAN and TAN is sent to the user.
Dealing with Construction permits Procedures
India streamlined the process of obtaining a building permit and made it faster and less expensive to obtain a construction permit.
For example; the procedure or steps involved in obtaining a construction permit in Delhi has been reduced to 8 from earlier 29. The time frame for taking approvals relating to the construction project has been reduced to 60 days from 213 days in 2016.
Getting electricity Procedures
The Delhi Electricity Regulatory Commission reduced charges for low voltage connections. Obtaining electricity was also made easier in Delhi through a reduction in the time for the utility to carry out the external connection works.
The Insolvency and Bankruptcy Code, 2016 enacted as a law on 28th May, 2016 after extensive consultations with stakeholders.
The Code provides for a new legal framework for dealing with insolvency matters.
All the elements of the corporate insolvency eco-system, namely; the National Company Law Tribunal (NCLT), the National Company Law Appellate Tribunal (NCLAT), the Insolvency Professionals (IP), the Insolvency Professional Agency (IPA), the Insolvency Professional Entity (IPE), and the Insolvency and Bankruptcy Board of India have been made operational.
The new insolvency and bankruptcy code that introduced a reorganization procedure for corporate debtors and facilitated continuation of the debtor’s business during insolvency proceedings.
The recently amendment to the Indian Bankruptcy Code has significantly improved investor’s confidence. The Code now gives secured creditors absolute priority over other claims within insolvency proceedings, by preventing willful defaulters from buying up any of their own troubled assets at discounted rates.
Protecting minority investors
Limits for certain related party transactions revised.
The existing limit of obtaining shareholder approval if the value of property to be purchased exceeds 10% or INR 1 billion (Whichever is less), has been amended and now, shareholder approval would be required if the value of property is 10% or more of the net worth of the company or INR 1 billion, again whichever is less.
National Company Law Tribunal, made functional with effect from 1st June 2016. NCLT adjudicates on all corporate law matters in a time bound manner.
Paying taxes Payments
India made paying taxes easier by replacing many indirect taxes with a single indirect tax, the GST, for the entire country. India also made paying taxes less costly by reducing the corporate income tax rate and the employees’ provident funds scheme rate paid by the employer.
Trading across borders
India reduced the time and cost to export and import through various initiatives implemented under the National Trade Facilitation Action Plan 2017-2020, including the implementation of electronic sealing of containers, the upgrading of port infrastructure and allowing electronic submission of supporting documents with digital signatures.
Though India is currently battling a volatile rupee and a widening current account deficit, the jump in India’s ranking of ease of doing business is commendable and would encourage both domestic and overseas investments in India