World Bank: Starting a business down to 5 processes: India to World Bank

India has conveyed to the World Bank that processes for starting a business in the country have been reduced to five from 14 in the past year, in response to its survey on ease of doing business.

After India rose only one rung to no. 130 among 190 countries in the World Bank’s 2017 ease of doing business report, New Delhi complained that several of its reforms had not been acknowledged. India now wants to ensure the World Bank takes note of all reforms in its 2018 rankings.

According to officials, in a reply to a World Bank questionnaire, India said five procedures — including obtaining direction identification number, permanent account and tax deduction account number (PAN and TAN) —have been merged into one. Besides, processes for employee provident fund have been moved online and inspection requirements done away with, further reducing the number of steps. In the 2017 report, India was ranked 155 among 190 countries on ‘Starting a Business’ parameter — one of 10 factors on which the World Bank ranks countries on the ease of doing business.

5 points of ease
1) Five procedures, including obtaining DIN, PAN and TAN merged

2) Processes for employee provident fund online

3) Removal of company seal as well as digital signature requirement

4) Bank accounts not required mandatorily for any forms

5) No more inspection under the Shops and Establishment Act

Total cost of incorporating a firm reduced from Rs 5,293 in 2016 to Rs 3,860 this year
Officials cited earlier said some reforms incorporated last year by the government have not been counted by the World Bank yet in its latest survey, such as removal of the requirement to get a company seal as well as a digital signature. “The requirement of obtaining digital signature is not specific to registration of companies, and a person may have digital signature readily available for a variety of online transactions. Hence, to count it as an additional procedure may reflect an incorrect stance,” the government said in its response.

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The study takes into account business practices in Delhi and Mumbai only. In Mumbai, the government reduced a procedure by clubbing VAT registration and professional tax into one online process. The government has also told the World Bank, “Bank accounts are not required mandatorily for any forms during procedures associated with starting a business and are incorrectly counted as a procedure.”

Inspection under the Shops and Establishment Act has also been done away with. The total cost of incorporating a company has been reduced from Rs 5,293 in 2016 to Rs 3,860 this year due to reduction in the number of procedures. World Bank is expected to send a team to India in July to get feedback from industry and users in order to vet the responses.

The Department of Industrial Policy and Promotion had also given a detailed reply regarding some of the reforms for enforcing contracts which have not been acknowledged in the previous studies of the World Bank.

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