What is there for ease of doing Business in India?

Last Updated at: March 24, 2020
332
What is there for Ease of Doing business in India_

This post is written by Poornima

 

The viability of a successful business depends on the vitality of the economy in which it embeds.

In the long run, a country can’t become wealthier in the per capita sense unless it has a high ease of doing business. Only oil-rich countries like Kuwait, Qatar, Libya, Venezuela and Angola managed to get sufficiently rich even with relatively low ease of doing business score. On the other hand, if you have adequacy in ease of doing business score, then you are almost guaranteed to become a rich country.

BENEFITS OF DOING BUSINESS IN INDIA

India’s ranking improved basically on four parameters:

  • STARTING A BUSINESS – India made starting a business easier by fully integrating multiple application forms into a general incorporation form.

Start Your Business

RELAXATION IN PROCEDURES

Earlier if a Person wants to incorporate Company then it has to apply for the DIN, Approval of the Name Availability, and Separate form for first Director, Registered office address, PAN, TAN etc. All the above has now been merged into a single form (SPICe) for company incorporation.

SPICe is a versatile form which leverages on digital technology by eliminating the need for hard copies of physically sign documents attaching to an e-form. SPICe is now the Sole, Simplified & Versatile form available for incorporation of a company in India. Therefore, the reforms undertaken by the Ministry of Corporate Affairs have helped in reducing the procedures for starting a business in India and provide Ease of Doing Business.

REDUCTION IN TIME CONSUMED

Consequently, only 3 relevant fields need to be filled instead of 15 fields. Further, the time for processing company name reservation applications has reduces drastically from between 5 to 15 working days in June 2014, to an average of 0.46 working days in March 2018. In addition, more than 90% of applications are being approving within 1 working day. This has resulted in speed, greater transparency, uniformity and eradication of discretion.

  • DEALING WITH CONSTRUCTION PERMITS– Obtaining all permits and authorizations to build a warehouse now costs 4% of the warehouse value, down from 5.7% the previous year. In addition, authorities enhanced building quality control in Delhi by strengthening professional certification requirements.
  • TRADING ACROSS BORDERS– with a single electronic platform- improved electronic submission methods for documents and upgrades to port infrastructure, import and export process became easier, and
  • SEZ (Amendment) Bill 2019 became the first legislation of the newly form Government which the Parliament passes. This will enable any entity to set up a unit in SEZs, including Trusts. This will help boost investments and create new export and job opportunities.
  • Export Credit Guarantee Corporation (ECGC) has introduced a new Export Credit Insurance Scheme (ECIS) called ‘NIRVIK’ for exporters in which increased insurance cover for export credit has been extended by banks from existing average of 60% to 90% for both Principal and Interest.
  • RESOLVING INSOLVENCY– Recovery rate under resolving insolvency has improved significantly from 26.5% to 71.6%. Also, the time taken for resolving insolvency has also come down significantly from 4.3 years to 1.6 years.

OTHER PARAMETERS CONTRIBUTING TO EASE OF DOING BUSINESS

REWARDING INNOVATIONS – THROUGH “STARTUP INDIA”

Noting the potential of entrepreneurial ventures to problem-solve for several challenges faced in India and witnessing the impact of the American and Chinese startup ecosystems on their economic growth and employment, the Government of India began to actively make innovation and startups the focal point of policy around 2014.

The purpose of this Scheme is to restrict the role of States and remove obstacles like in land permissions, foreign investment, environmental clearances, political interferences etc. The DIPP (Department of industrial policy and promotion) regulated it. Moreover, the scheme intends to increase Entrepreneurship in the country by providing a soothing environment for business persons. It reduces some barriers to enter the market for entrepreneurs.

TAX BENEFITS:

There no Capital Gain Tax and Tax in Profits for 7 years after getting registration into Startup India Scheme.

Startup Patent Application: Registration fees for Patent Application have been reducing up to 80%. Startup Trademark Registration: For Startup Entity, the trademark registration fees is Rs.4, 500/- for online and Rs. 5,000/- for physical filling whereas for others, it is Rs. 9000/- 0r Rs.10, 000/- respectively.

Funds for Investment: The Government provides INR 10,000 crore funds for investment into Startup through Alternate Investment Funds and guaranteed funds for Startup through National Credit Guarantee Trust Company/SIDBI over 4 years.

SIMPLIFICATION AND HANDHOLDING

Easier compliance, easier exit process for failed startups, legal support, fast-tracking of patent applications and a website to reduce information asymmetry.

FUNDING & INCENTIVES

Exemptions on Income Tax and Capital Gains Tax for eligible startups; a fund of funds to infuse more capital into the startup ecosystem and a credit guarantee scheme.

INCUBATION & INDUSTRY-ACADEMIA PARTNERSHIPS

Creation of numerous incubators and innovation labs, events, competitions and grants.

ONE NATION ONE TAX

The Goods and Services Tax (GST) is a vast concept that simplifies the giant tax structure by supporting and enhancing the economic growth of a country. GST is an indirect tax system which replaces taxes like service tax, excise duty, Value Added Tax, turnover tax, etc. GST is a value-added tax to be levied on both goods and services, at both the centre and state level. This is a single tax which will be levied on the product or service which is sold. The Goods and Services Tax has revolutionized the Indian taxation system. The GST seeks to create a national market for goods and services by subsuming multiple taxes at the national and state level, thereby creating a paradigm of one nation, one tax, and one market. This invites foreign investments as there is less confusion in relation to rates, where ever the business be.

LOWEST TAX RATES IN ASIA

Industry, as well as tax experts, see this as a big step towards attracting foreign investments in the country. India’s statutory rate for corporate tax is 22 per cent now, down from 30 per cent. However, the decision to cut the corporate tax brought a huge relief for domestic businesses and manufacturing firms. Since 2003, many countries started reducing their corporate tax but, in India, it had stayed around 30 per cent.

BUSINESS-FRIENDLY LAWS

The Indian government’s Make in India initiative focuses on 25 industrial sectors and aims at building best-in-class manufacturing infrastructure by enabling foreign investments, promoting innovation through skill development, and focusing on intellectual property protection. Moreover, these business-friendly laws make it easy for international players to actualize their plans of entering India. However, on implementation, these Bills will increase the efficiency in the movement of products across India.

Get Company Incorporation now

LOW OPERATIONAL COST:

There is a noticeable Low cost of operation possible from infrastructures to phones to internet to labour to salaries to anything that requires to set up a business. Moreover, workers are ready to work at a low cost. Not only this but tax strategies of India compared to other countries is very moderate and hence could cut the cost of operation of the business.

INDIAN FINANCIAL SYSTEM:

India has a well-regulated financial system which has access to developed markets all over the world. And can be financed through multiple sources restricted to some rules and regulations of RBI etc.

VAST TRADE NETWORK:

India boasts a vast network of technical and management institutions. They are of the highest international standards backing by the regional and bilateral free trade agreements. In addition to that, there are numerous trading partners to trade with. Indeed, these institutions develop excellent human resources.

India is a land of endless economic possibilities. Thereby, Entrepreneurs should utilize the opportunities and those businesses that walk in and stay enjoy healthy returns over a period of time.

 

0

 What is there for ease of doing Business in India?

332

This post is written by Poornima

 

The viability of a successful business depends on the vitality of the economy in which it embeds.

In the long run, a country can’t become wealthier in the per capita sense unless it has a high ease of doing business. Only oil-rich countries like Kuwait, Qatar, Libya, Venezuela and Angola managed to get sufficiently rich even with relatively low ease of doing business score. On the other hand, if you have adequacy in ease of doing business score, then you are almost guaranteed to become a rich country.

BENEFITS OF DOING BUSINESS IN INDIA

India’s ranking improved basically on four parameters:

  • STARTING A BUSINESS – India made starting a business easier by fully integrating multiple application forms into a general incorporation form.

Start Your Business

RELAXATION IN PROCEDURES

Earlier if a Person wants to incorporate Company then it has to apply for the DIN, Approval of the Name Availability, and Separate form for first Director, Registered office address, PAN, TAN etc. All the above has now been merged into a single form (SPICe) for company incorporation.

SPICe is a versatile form which leverages on digital technology by eliminating the need for hard copies of physically sign documents attaching to an e-form. SPICe is now the Sole, Simplified & Versatile form available for incorporation of a company in India. Therefore, the reforms undertaken by the Ministry of Corporate Affairs have helped in reducing the procedures for starting a business in India and provide Ease of Doing Business.

REDUCTION IN TIME CONSUMED

Consequently, only 3 relevant fields need to be filled instead of 15 fields. Further, the time for processing company name reservation applications has reduces drastically from between 5 to 15 working days in June 2014, to an average of 0.46 working days in March 2018. In addition, more than 90% of applications are being approving within 1 working day. This has resulted in speed, greater transparency, uniformity and eradication of discretion.

  • DEALING WITH CONSTRUCTION PERMITS– Obtaining all permits and authorizations to build a warehouse now costs 4% of the warehouse value, down from 5.7% the previous year. In addition, authorities enhanced building quality control in Delhi by strengthening professional certification requirements.
  • TRADING ACROSS BORDERS– with a single electronic platform- improved electronic submission methods for documents and upgrades to port infrastructure, import and export process became easier, and
  • SEZ (Amendment) Bill 2019 became the first legislation of the newly form Government which the Parliament passes. This will enable any entity to set up a unit in SEZs, including Trusts. This will help boost investments and create new export and job opportunities.
  • Export Credit Guarantee Corporation (ECGC) has introduced a new Export Credit Insurance Scheme (ECIS) called ‘NIRVIK’ for exporters in which increased insurance cover for export credit has been extended by banks from existing average of 60% to 90% for both Principal and Interest.
  • RESOLVING INSOLVENCY– Recovery rate under resolving insolvency has improved significantly from 26.5% to 71.6%. Also, the time taken for resolving insolvency has also come down significantly from 4.3 years to 1.6 years.

OTHER PARAMETERS CONTRIBUTING TO EASE OF DOING BUSINESS

REWARDING INNOVATIONS – THROUGH “STARTUP INDIA”

Noting the potential of entrepreneurial ventures to problem-solve for several challenges faced in India and witnessing the impact of the American and Chinese startup ecosystems on their economic growth and employment, the Government of India began to actively make innovation and startups the focal point of policy around 2014.

The purpose of this Scheme is to restrict the role of States and remove obstacles like in land permissions, foreign investment, environmental clearances, political interferences etc. The DIPP (Department of industrial policy and promotion) regulated it. Moreover, the scheme intends to increase Entrepreneurship in the country by providing a soothing environment for business persons. It reduces some barriers to enter the market for entrepreneurs.

TAX BENEFITS:

There no Capital Gain Tax and Tax in Profits for 7 years after getting registration into Startup India Scheme.

Startup Patent Application: Registration fees for Patent Application have been reducing up to 80%. Startup Trademark Registration: For Startup Entity, the trademark registration fees is Rs.4, 500/- for online and Rs. 5,000/- for physical filling whereas for others, it is Rs. 9000/- 0r Rs.10, 000/- respectively.

Funds for Investment: The Government provides INR 10,000 crore funds for investment into Startup through Alternate Investment Funds and guaranteed funds for Startup through National Credit Guarantee Trust Company/SIDBI over 4 years.

SIMPLIFICATION AND HANDHOLDING

Easier compliance, easier exit process for failed startups, legal support, fast-tracking of patent applications and a website to reduce information asymmetry.

FUNDING & INCENTIVES

Exemptions on Income Tax and Capital Gains Tax for eligible startups; a fund of funds to infuse more capital into the startup ecosystem and a credit guarantee scheme.

INCUBATION & INDUSTRY-ACADEMIA PARTNERSHIPS

Creation of numerous incubators and innovation labs, events, competitions and grants.

ONE NATION ONE TAX

The Goods and Services Tax (GST) is a vast concept that simplifies the giant tax structure by supporting and enhancing the economic growth of a country. GST is an indirect tax system which replaces taxes like service tax, excise duty, Value Added Tax, turnover tax, etc. GST is a value-added tax to be levied on both goods and services, at both the centre and state level. This is a single tax which will be levied on the product or service which is sold. The Goods and Services Tax has revolutionized the Indian taxation system. The GST seeks to create a national market for goods and services by subsuming multiple taxes at the national and state level, thereby creating a paradigm of one nation, one tax, and one market. This invites foreign investments as there is less confusion in relation to rates, where ever the business be.

LOWEST TAX RATES IN ASIA

Industry, as well as tax experts, see this as a big step towards attracting foreign investments in the country. India’s statutory rate for corporate tax is 22 per cent now, down from 30 per cent. However, the decision to cut the corporate tax brought a huge relief for domestic businesses and manufacturing firms. Since 2003, many countries started reducing their corporate tax but, in India, it had stayed around 30 per cent.

BUSINESS-FRIENDLY LAWS

The Indian government’s Make in India initiative focuses on 25 industrial sectors and aims at building best-in-class manufacturing infrastructure by enabling foreign investments, promoting innovation through skill development, and focusing on intellectual property protection. Moreover, these business-friendly laws make it easy for international players to actualize their plans of entering India. However, on implementation, these Bills will increase the efficiency in the movement of products across India.

Get Company Incorporation now

LOW OPERATIONAL COST:

There is a noticeable Low cost of operation possible from infrastructures to phones to internet to labour to salaries to anything that requires to set up a business. Moreover, workers are ready to work at a low cost. Not only this but tax strategies of India compared to other countries is very moderate and hence could cut the cost of operation of the business.

INDIAN FINANCIAL SYSTEM:

India has a well-regulated financial system which has access to developed markets all over the world. And can be financed through multiple sources restricted to some rules and regulations of RBI etc.

VAST TRADE NETWORK:

India boasts a vast network of technical and management institutions. They are of the highest international standards backing by the regional and bilateral free trade agreements. In addition to that, there are numerous trading partners to trade with. Indeed, these institutions develop excellent human resources.

India is a land of endless economic possibilities. Thereby, Entrepreneurs should utilize the opportunities and those businesses that walk in and stay enjoy healthy returns over a period of time.

 

0

FAQs

No FAQs found

Add a Question


No Record Found
SHARE