At the launch of the ‘Make in India’ campaign, Prime Minister Narendra Modi articulated his wish to take India higher on the ease of doing business index of the World Bank, where India is currently ranked 134 out of 189 countries.
By Sanjeet Singh & Shubhra Singh
There can be a case to question the study’s ranking system as it rates countries such as Ethiopia (125), Uganda (132), Bangladesh (130), Pakistan (110), Nepal (105) and Vietnam (99) higher in the ladder, but then it would serve us better that we examine the factors that project India as an unfavourable place to do business and to address them quickly.
The study points out factors that determine the degree of ease of doing business in a particular country or region. The ease of starting a business, dealing with permissions for construction, registering property, getting electricity connections and other regulatory approvals are at the top of the check list of any potential investor. But then do we need the World Bank to tell us this?
Many policy initiatives to attract businesses highlight the ‘positive’ incentives on offer, including tax breaks, subsidies, rebates, exemptions, etc. These, it is easy to see, carry a defined cost, what may be termed as ‘revenue foregone’ for the government. However, what is not easily noticed is that these incentives figure lower in the ‘wish list’ of many a potential investor, especially the new ones. What figures at the top is how quickly can I get my business going? How long will approvals take? Are predictable processes and timelines in place for regulatory clearances? Of course, factors such as availability of infrastructure, cost of money, labour costs, etc, are also critical to the decision-making process of a new business seeking to invest in a new environment.
India’s strength in IT can allow the country to take that big leap on the path of making doing business easier. Cloud computing, which allows remote access of software applications and data hosted in servers, eliminates the need for heavy investment in hardware and obviates the need for movement of physical files by making storage and retrieval of information online efficient. Remote meetings and sharing information in real time through this platform provide added advantages. Efficiencies through the use of these technologies in government processes can translate into enhanced productivity, efficiency and transparency in delivery of government services.
The gains through adopting such a technology in the sphere of the special economic zones (SEZ), which were set up as specialised enclaves where it would be easier to do business, could be more easily visible over a short period of time. The ‘e’mpowered SEZ approval system could serve as a technology demonstrator showing the way to grant approvals for commencement of business in a matter of days.
Advances in cloud computing and other e-technologies can transform the way in which businesses interact with authorities and make it easier for businesses to obtain approvals under the SEZ regulatory mechanism, in a time-bound manner, with minimal or no physical interaction. This would enhance transparency of the process, allows the applicant to follow the progress of his application and reduce instances of grievances. This would also significantly reduce processing time and ease the burden of processing and conveying large volumes of documents between different stakeholders and regulatory bodies. An empowered ‘single-window mechanism’ would ensure more efficient delivery of services for the stakeholders.
How would such a process work and what would be the contours of such a system? A business can register online on an e-portal (which could also offer links to other regulatory imperatives—PAN, company registration, RBI, etc). Once registered, the applicant would be introduced to a concise online application for applying for an approval as a developer of an SEZ, a co-developer, a unit in an SEZ, infrastructure developer or to seek approval for ‘authorised services’, or any other approval.
The application, with mandatory documentation in digital form, would be uploaded on the cloud and would generate an e-receipt which would be time-stamped. To ensure veracity of the application, the applicant may append his digital signature or could physically sign the e-receipt and post it to the designated address. Applicable fee could be paid electronically to the designated government account. The development commissioner of the SEZ would serve as the single point of interface for the applicant, wherever there is a need for applicant-government interaction.
The documents uploaded would be digitally stored in a designated e-cloud to be accessed by the concerned regulatory authorities that would be duly authorised for the purpose. An audit trail would be in place, which would ensure greater accountability during the entire process and also allow the applicant to follow the progress of his application through updated status and by other value-added services such as e-alerts by SMS or email. An e-SEZ app would allow the applicant to follow the progress of his application on desktops or mobiles or tablets by simply clicking on the app. This would allow greater ease and predictability to the entire work process.
The application received at the e-portal would be processed by the development commissioner of the SEZ, and those requiring approval of other regulatory bodies such as the Unit Approval Committee (UAC) or Board of Approval (BoA) would be forwarded electronically to the relevant authority’s designated e-address. Wherever required, the relevant state government would also receive a copy of the application for simultaneous processing. Applications found wanting in some respects would be communicated back to the applicant (via email with a SMS alert) clearly specifying the deficiency, which could then be rectified by the applicant and resubmitted.
The BoA at the central level and the UAC at the SEZ level are multidisciplinary bodies. An application received by these bodies would be e-conveyed to the respective constituents which include other government departments such as revenue, labour, environment, home affairs, etc. The application processing would take place simultaneously in the respective departments and comments, if any, will be required to be conveyed back to the designated authority of the BoA or UAC in a time-bound manner.
Issues on which there is consensus and no objections are conveyed by any constituent of the approval body may be taken as approved by the BoA/UAC. Only those cases where there are substantive objections need to be taken up for further consultation.
In case of a department-specific objection, the department of commerce (or the development commissioner for the UAC) can hold consultations with the objecting department to reach a clear position, which if unresolved or for any other reason can be placed in the agenda for the BoA/UAC. Each stakeholder department will have electronic access to the application and supporting documents originally filed, and would eliminate the need for circulating a paper agenda or documents.
The BoA or UAC meeting can also be held through video conferencing or as remote meetings, eliminating the need for officers to travel long distances. Web links at PC terminals of each representative would allow participation in the meeting to take up the reduced concise agenda, the agreed issues having been excluded from the agenda to avoid mere routine formalities. The specific points of objection on issues would be flagged for decision which would allow more time for a focused discussion on them. A provision can be made to allow applicants to participate in the e-conference to offer any clarification or additional inputs to the BoA or UAC, in support of their case. This would enhance transparency of the process and cut down time consumed in seeking clarifications on a proposal.
The decisions of the meeting would be communicated to the stakeholders at the end of the meeting, along with the rationale used to arrive at the decision, especially where approval is being declined. Wherever the decision is reserved or deferred for certain reasons, the applicant would be informed with an indication as to the likely time it would take to arrive at the decision.
The ‘e’mpowering process for SEZ approvals can cut down the processing period from less than a day to three days in a majority of the cases. Cases which need no approval or require self-certification can be classified as ‘green channel’ cases. Cases where we may offer clearances in less than three working days can be bracketed as ‘blue channel’. While those needing longer approval processing time can be in the ‘orange channel’. Regular audit of processes will not just reduce the approval time within each channel but also allow more processes to be moved to lower channels, requiring lesser processing time. The process could be replicated in many government approval processes, significantly cutting down on approval time and the burden cast on the applicant, reducing the cost of doing business in India. India’s move up the ease of doing business index would be a naturally corollary.
Sanjeet Singh is director in the Ministry of Commerce and former DG of Export Promotion Council for EOUs and SEZs. Shubhra Singh is treasury officer with the ZOHO Corp. Views are personal