corporate law

Enhancing India's Business Environment: Key Reforms and Initiatives

Introduction

The Department for Promotion of Industry and Internal Trade (DPIIT), in partnership with various Central Ministries, Departments, States, and Union Territories (UTs), has instituted a range of reforms designed to improve the business regulatory environment in India. To synchronize with the annual Doing Business Report (DBR) assessments conducted by the World Bank, DPIIT has launched the Business Reforms Action Plan. This plan evaluates and ranks States and UTs based on their compliance with designated reform parameters, emphasizing the streamlining of regulations and the elimination of superfluous requirements.

Key Reform Areas

The Business Reforms Action Plan addresses several key areas, including:

  • Investment Enablers
  • Online Single Window System
  • Land Administration and Transfer
  • Construction Permits Enablers
  • Labour Regulation Enablers
  • Environment Registration Enablers
  • Inspection Enablers
  • Tax Payment Processes
  • Obtaining Utility Permits

Labour Law Simplification

The Ministry of Labour and Employment has undertaken various initiatives to simplify Labour Laws, thereby enhancing the ease of doing business. Significant developments encompass:

  • The introduction of four Labour Codes:
    • Code on Wages, 2019
    • Industrial Relations Code, 2020
    • Code on Social Security, 2020
    • Occupational Safety, Health and Working Conditions Code, 2020

These codes consolidate and streamline 29 existing Central Labour Laws, enabling establishments to obtain a single registration, a single license, and submit one return, effectively replacing the previous multiple processes.

Additionally, the Shram Suvidha Portal (SSP) serves as a crucial IT initiative, simplifying compliance with Labour Laws and alleviating complexities.

Enhancements in Commercial Dispute Resolution

The Department of Justice (DoJ) and the Department of Legal Affairs have enacted measures to streamline the resolution of commercial cases, making the business environment more favorable. Key initiatives include:

  1. Commercial Courts Act, 2015: Specifically addressing commercial disputes, this act was amended in 2018 to establish commercial courts at the district level and create a Commercial Division in all High Courts. The pecuniary threshold for cases within these courts was lowered from Rs. 1 crore to Rs. 3 lakh.

  2. Designated Special Courts: Special courts have been created in 23 High Courts to handle infrastructure-related disputes, along with specific commercial benches in eight High Courts for high-value disputes exceeding Rs. 500 crores.

  3. Alternative Dispute Resolution: The Pre-Institution Mediation & Settlement (PIMS) framework enables parties to resolve disputes amicably outside of court, thereby reducing the caseload in Commercial Courts.

  4. Case Management Hearings: Mandatory pre-trial conferences have been implemented to facilitate timely case resolutions.

  5. Random Case Assignment: Utilizing the Case Information System (CIS) software, cases are now assigned to judges randomly and automatically, promoting transparency and adherence to the three adjournment rule.

  6. Electronic Filing: The majority of Commercial Courts have adopted e-filing systems to expedite case submissions, with e-service of summons operational in select courts to further decrease delays.

  7. Monitoring Through Data Rules: The enactment of the Commercial Courts (Statistical Data) Rules, 2018, aims to collect detailed data on commercial cases, assisting in the effective monitoring of case disposal times.

  8. Mandatory Mediation Post-Interim Relief: Parties are required to engage in mediation after seeking urgent interim relief.

Reducing Compliance Burden

DPIIT is actively working with Central Ministries and other bodies to reduce compliance burdens, enhancing the overall regulatory atmosphere for businesses. Focus areas include:

  1. Rationalizing and auto-renewing licenses, certificates, and permissions.
  2. Implementing risk-based and third-party inspections.
  3. Standardizing and simplifying return filing processes.
  4. Streamlining the maintenance of necessary registers.
  5. Minimizing or eliminating display requirements.
  6. Digitizing and simplifying manual records and forms.
  7. Decriminalizing minor technical and procedural defaults.
  8. Amending or repealing redundant laws.

Initiatives by the Ministry of MSME

The Ministry of Micro, Small and Medium Enterprises (MSMEs) has also made significant strides to enhance ease of doing business, including:

  • The launch of Online Registration via the Udyam Registration platform (completely online and free of charge).
  • The formation of a Review Committee to oversee the progress of policy implementation.
  • The establishment of a grievance cell to address concerns raised by MSMEs.
  • The introduction of the "MSME Sambandh Portal," which tracks procurement activities by Central Public Sector Enterprises (CPSEs) from MSMEs.