India’s business regulatory ecosystem is a complex maze made up of 1,536 laws and 69,233 compliances. There are hundreds of licenses, registrations, approvals, and permissions that need to be acquired from central, state, local, and regulatory bodies. It is this complexity of compliances that poses a significant challenge for enterprises. The 26,134 compliances with the provision for imprisonment create an added incentive to stay on the right side of the law.
The Jan Vishwas Amendment Bill introduced in December is another step forward in the pursuit of ease of doing business. A total of 186 compliances from 42 central acts have been proposed to be decriminalised. Out of these, 113 provisions are related to employer compliance stemming from 23 acts. It decriminalises minor offences and replaces them with appropriate monetary penalties. The majority of the compliances proposed for decriminalisation are from the following acts:
- The Merchant Shipping Act, 1958 (22)
- The Environment (Protection) Act, 1986 (12)
- The Air (Prevention and Control of Pollution) Act, 1981 (10)
- The Prevention of Money Laundering Act, 2002 (7)
- The Legal Metrology Act, 2009 (7)
It addresses the issue of imprisonment prescription for minor offences which have hampered the growth of the business ecosystem. It is this fear of jail time that has bred ‘economic dwarves’; companies that are unwilling to increase their geographical footprint or scale up for the fear of imprisonment. There is a trust deficit between the government bodies and the entrepreneurs and the bill is another step forward in filling the gap.
The bill is a milestone in India’s ongoing transformation into a business conducive nation. It will create a blueprint for regulators and government bodies at all levels to rationalise, decriminalise, and digitise compliance obligations. Other initiatives such as the Labour law codes, National Open Compliance Grid, National Portal for Compliance, and Unique Enterprise Number will change the way India complies. Recently, Ms Madhabi Puri Buch, (Chairperson, SEBI) launched the FICCI RegTech initiative in partnership with TeamLease RegTech. With the objective of automating SEBI compliances, the initiative will increase transparency in the regulatory framework.
All in all, India has made considerable progress in ease of doing business over these past few years. While these improvements are praiseworthy, we still have a long way to go, especially when it comes to rationalising the regulatory burden of employers. The ground reality on compliance for employers has remained largely unchanged. The complexity, ambiguity and high costs continue to impede entrepreneurship, innovation and job creation.
Written by: TeamLease RegTech
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