India, it's society and economy is undergoing one of the most rapid transitions on the planet. The team at IKAN Relocations offer some insights into the economic reforms since 2014 that have made India an easier place to do business and support the country's economic growth.

‘Rome was not built in a day’ - India's economic reform

In 2014 started the process of review and improvement for India’s world ranking in the 'Ease of doing business' index. The World Bank measure has identified India as the most improved country in this sphere. In 2014 out of 190 countries India was at a miserly 140th. It made it to the 100th position in 2018 and finally stands at 77 in the Ease of Doing Business 2019 survey.The World Bank index ranks 190 countries on the basis of 10 indicators: starting a business, dealing with construction permits, registering a property, getting credit, getting electricity, trading across borders, resolving insolvency, enforcing contracts, protecting minority investors and paying taxes.A focused approach by the India Government with changes and reforms including: implementation of the Goods and Services Tax (GST) in 2017, an amendment proposed to the Insolvency and Bankruptcy Code (IBC) in 2016, reforms towards 'construction permit', 'starting a business' and 'trading across borders' etc, all of which have brought about change. As per the World Bank report, within South Asia, India has the highest score for protecting minority investors.The focus to improve the ranking is clearly targeted towards increasing foreign investment flow into India thereby increasing the job opportunities within the country and overall prosperity.

India implements changes based on World Bank guidance

The following were specifically recognised by the World Bank in various categories:

Making it easier to start a business

• Cut or simplified post-registration procedures (tax registration, social security registration, licensing)
• Introduced or improved online procedures

India streamlined the business incorporation process by introducing the SPICe form (INC-32), which combined the application for the Permanent Account Number (PAN) and the Tax Account Number (TAN) into a single submission.

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Making it easier to deal with construction permits

• Reduced time for processing permit applications
• Improved or introduced electronic platforms or online services

Previously, the process of seeking permission involved physical submission of documents, which has now been replaced by online submission. The average time for getting permission has also dropped significantly, from around 150 days earlier to just 60 days now — although in terms of global best practice, it is far lower at 26 days. The number of procedures has also seen a sharp drop from 24 to seven.

Strengthening legal rights of borrowers and lenders 

• Granted absolute priority to secured creditors or allowed out-of-court enforcement
• Granted exemptions to secured creditors from automatic stay in insolvency proceedings

Strengthening minority investor protections

• Increased disclosure requirements for related-party transactions
• Increased director liability

Making it easier to pay taxes

• Introduced or enhanced electronic systems
• Simplified tax compliance processes or decreased number of tax filings or payments

The time needed to complete the applications for Employee’s Provident Fund Organization (EPFO) and the Employee’s State Insurance Corporation (ESIC) has also decreased.

Making it easier to trade across borders

• Strengthened transport or port infrastructure for exports
• Strengthened transport or port infrastructure facilitated customs
• Administration for exports and importsure for imports

In trading across borders, India reduced border compliance time by improving infrastructure at the Nhava Sheva Port in Mumbai. Export and import border compliance costs were also reduced in both Delhi and Mumbai after merchant overtime fees were abolished. With the increased use of electronic and mobile platforms since July 2016, importers under the Authorized Economic Operator (AEO) program have been able to clear cargo faster through simplified customs procedures.

Making it easier to enforce contracts 

• Introduced or expanded the electronic case management system

Making it easier to resolve insolvency

• Improved the likelihood of successful reorganization
• Introduced a new restructuring procedure
• Regulated the profession of insolvency administrators

India strengthened access to credit by amending the rules on priority of secured creditors outside reorganization proceedings and adopting a new insolvency and bankruptcy code that introduced a reorganization procedure for corporate debtors.

Changing labor legislation

• Reformed legislation regulating worker protection and social benefits

While India has made tremendous progress in various categories, it is the depth of these reforms which needs to be worked in the next few years to bring up India into the Top 50 ranking.The change in ranking is fully acknowledged by the growth in Foreign Direct Investment into India.

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