Reforms will reflect in Ease of Doing Business ranking in 2017

Reforms will reflect in Ease of Doing Business ranking in 2017
Reforms will reflect in Ease of Doing Business ranking in 2017

Ramesh Abhishek, Secretary, Department of Investment Policy and Promotion (DIPP), took time out of his punishing schedule to meet 'India Investment Journal' to speak about, among other things, how his department is easing rules and re-engineering government processes to make India an easier place to do business in. India's rank has improved just one place to 130th in this year's World Bank Ease of Doing Business Index. Why Reforms on ease of doing business are underway on 10 parameters. Unfortunately, there is a gap between the implementation of reforms and their recognition by the private sector, which is surveyed by the World Bank for this report. We have undertaken very radical reforms on building permits in April in Delhi and May in Mumbai. This is a completely online system with no physical touch point. The private sector has to give its feedback by the end of May. The World Bank needs users to rate each reform. India's rank on Getting Electricity was 137 not so long ago. Today, we are in the 26th position, an improvement of 25 positions over last year. We expect a similar improvement in Dealing with Construction Permits when the next rankings are released. Then, take the new Bankruptcy code. The rules have been framed and it is being implemented from December onwards. I'm hoping that this will be reflected in next year's rankings. On the parameter on Trading Across Borders, the SWIFT single window interface tor facilitating trade is a completely online system from April this year. The FSSAI, Drug Control authorities, etc have come on board. This now accounts for 98 per cent of all imports and marks a huge improvement over the past that should show up in next year's rankings. The World Bank looks at imports of electrical goods and exports of auto parts and doesn't take into account other goods. But direct delivery from ports has increased and the number of days taken for giving clearances has come down drastically. On incorporation of companies, the Ministry of Corporate Affairs has introduced a new form called INC29 that cuts down time significantly. The World Bank has not given us credit for that as only 30 per cent users use this. As its use becomes more widespread over the year, our rank (155 in the latest index) on this parameter will also improve. The new Simplified Proforma for Incorporating Companies Electronically (SPICE) has gone live from December. This will streamline the process further and increase the ease of use on this count. The procedures relating to provident fund, insurance and tax payments have also improved. We're hoping to get credit for these improvements next year. How is the domestic Ease of Doing Business Index ranking states working out Will this affect the flow of FDI (foreign direct investment) into India The states have been doing wonderful work. There's huge competition among state governments to improve their rankings and attract more investments. We've put the rankings on a public platform and anyone can track a state's rank in real time. This gives investors the best possible picture of the investment climate in individual states and facilitates their decision making. We're working with ministries, regulators and the states to ease regulations to provide a simple and easy business climate across India in accordance with the vision of the PM. I must mention here the wonderful job done by Invest India (the government's newly set up investment promotion and facilitation agency), which has facilitated $40 billion in investments. Thanks to the combined efforts of all stakeholders, we received the largest FDI inflows last year. This year, we have seen a 30 per cent jump in FDI in the first six months of FY 2016-17. 30 per cent jump. There is massive interest in India among foreign investors. What else is the government doing to improve India's image as a foreign investment destination I have mentioned the initiatives we have taken which will reflect in next year's rankings. Besides these, we are actively engaging with foreign investors, reaching out to them and convincing and persuading them to invest in India. We are offering fast track solutions to problems faced by foreign investors in India by devising a dynamic and proactive mechanism to engage with them whenever they face problems with state governments, regulators, etc. How realistic is the target of being ranked among the top 50 nations within three years Improving from the 130th rank to 50 requires enormous amounts of government process re-engineering. For example, starting a business in India now takes 26 days. We have to bring this down to 9.5 days to come within top 50 on this count. We're working on this and all the other parameters. You have to appreciate that even after we reform the system, there is a time lag before they reflect in the rankings because the private sector has to use and feel happy with it. One major issue is our low per capita income, which makes costs appear very high. But all of these reforms (mentioned above) taken together mark a huge improvement in the ease of doing business. As I explained earlier, not all of it got reflected in the rankings due to methodological issues. They will next year. Improving processes and easing procedures remains a work in progress but I'm confident that we will reach the top 50 in due course, in accordance with the target set by Prime Minister Narendra Modi. How will the recent demonetisation impact the ease of doing business This measure will bring the shadow economy into a formal sector and give both policy planners and analysts a much better idea about size of economy and economic activity within it. The percentage of cashless transactions will go up. This will help the organised sector and boost the formal economy. The ease of accessing services will also improve with increased transparency. And as more activities transition from the shadow to the formal economy, tax compliance will go up. This will lead to more infrastructure investments and lower cost of logistics. What is the government doing to improve the logistics of doing business in India The Logistics Performance Index developed by the World Bank captures views of foreign handlers on ease of doing business with a country and we've seen a considerable improvement in this with regard to India. The dedicated freight corridor between Mumbai and Delhi will bring down the time taken to transport goods between these two cities from 14 days to 14 hours. There are other freight corridors being built or planned between important trade and industry hubs. These investments will improve the logistics of trade in this country once they're up and running. And GST will be a game changer for logistics as well. What is the progress of GST Will the government be able to meet its rollout deadline of April 1, 2017 The government is committed to rolling out GST. A few issues still have to be discussed and decided upon and I'm sure that these will soon be sorted out. Work is going on as per schedule. Your department has reportedly identified 150 MNCs to attract investments. Please talk us through this initiative. This is in addition to the investment promotion we have been doing. The extra focus on particular investors is because of the potential of their investments. We have been meeting their CEOs in their country and here, giving them comfort that we will handhold them through this entire journey. Our FDI policy has been liberalised so much. We have eased processes to ensure FDI is not hindered. India is now one of the most open countries for FDI - 90 per cent now comes under the automatic route. What is Make in India 2.0 The Make in India plans were made in December 2014. Many of those action points have already been implemented. A few that were found unfeasible have been discarded. Many more new initiatives and areas have been identified. We had consultations with stakeholders, companies, ministries and others to assess what more needs to be done. We have identified electronics manufacturing as a priority area and now have as many as 40 cell phone manufacturers in India. Every global auto brand is present in India and the country has become a global hub for the export of small cars. Almost all the world's top companies have R&D and design centres in India. We have to ensure that they are able to expand because generating jobs is our highest priority. But thanks to disruptive technologies like Artificial Intelligence, robotics, 3D printing, etc., there may not be enough jobs in traditional manufacturing. But the service sector is creating jobs as a result of the manufacturing sect. E-commerce has created millions of jobs. Ola and Uber have created thousands of jobs. Infrastructure, logistics, delivery of goods... these are creating jobs. And the government is specially focusing on leather, garments, gems and jewellery, which are labour intensive. Another sector that can create millions of jobs is value addition in the agri sector. B2C e-commerce has been liberalised in food products and these companies can attract FDI to help them reach the market.

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