Ease of doing business

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Ease of doing business

Ease of Doing Business (EoDB), an index published by the World Bank is a benchmark study of the regulations across different Countries of the World. It is an aggregate figure that includes different parameters which define the Ease of Doing Business in a country.

The index is a means of measuring business regulations and its implementation across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. It provides indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

According to the World Bank’s latest ‘Doing Business’ index, India stands at 100 out of 190 countries in the Ease of Doing Business ranking. In this regard, Government of India (GoI) had in 2015 –’16 decided to formulate strategies and steps towards creating an enabling framework for stimulating investments and growth across the primary, secondary and tertiary sectors.

Department of Industrial Policy and Promotion (DIPP), GoI had laid emphasis on simplification and rationalization of the existing rules and introduction of information technology to make governance more efficient, effective, simple and user-friendly. Govt. of India (GoI) has been ranking States based on the Ease of Doing Business and also in getting timely clearances. The States had been ranked based on the parameters that include ease in setting up a business, registration of property, labour compliances, infrastructure availability, finance and tax issues, inspection reforms and ease in exiting business. Kerala is in the 20th position in the EoDB ranking of States done by DIPP, GoI during the year 2016-’17.

Government of Kerala (GoK) had decided to undertake reforms to help place the State on an equal footing amongst other top ranked States and identified specific areas for improvement in various aspects of doing business in the State. The key areas identified were i) Registration, ii) Revenue iii) Municipality Building Rules iv) Panchayat Building Rules v) Survey and Land Records, where speedy reformations required for making a more conducive atmosphere for starting business. It was also decided to adopt the best practices of other States to improve the ease of doing business environment in the State.

KSIDC, being the nodal agency of the Government of Kerala, had done a study on the modification / amendments to be made in the concerned Rules and Regulations related to the existing clearance procedures in the State.

Based on the recommendations of the study report by the agency, amendments to following seven Acts were prepared by KSIDC and vetted by the concerned departments. The same was approved by the Cabinet and an Ordinance issued on 20.10.2017. Amendments to the following Rules based thereon had also been prepared by KSIDC and put up to Government; the same have been cleared by the concerned departments and are being issued shortly.

  • Amendments to Acts

    • The Kerala Panchayat Raj Act, 1994
    • The Kerala Municipality Act, 1994
    • The Kerala Lifts and Escalators Act, 2013
    • The Kerala Groundwater (Control and Regulation) Act, 2002
    • The Kerala Head Load Workers Act, 1978
    • The Kerala Shops and Commercial Establishment Act, 1960
    • The Kerala State Single Window Clearance Boards and Industrial Township Area Development Act, 1999
  • Amendments to Rules

    • The Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and factories) Rules, 1996
    • The Kerala Panchayat Raj (Profession Tax) Rules, 1996
    • The Kerala Municipality (Registration of Private Hospitals and Private Paramedical Institutions) Rules, 1997
    • The Kerala Panchayat Raj Building Rules, 2011
    • The Kerala Municipality Building Rules, 1999
    • The Kerala Factories Rules, 1957
    • The Kerala Inter-State Migrant Workers (Regulation of Employment and Condition of Service) Rules, 1983
    • The Kerala Contract Labour(Regulation and Abolition) Rules, 1974
    • The Building and Construction Workers(Regulation of Employment and Condition of Service(Kerala)) Rules, 1998
    • The Kerala Motor Workers Rules, 1962
  • The key advantages to the entrepreneurs, based on the Ordinance issued and amendments made in the Rules are highlighted below:

    • Employers shall no longer be obliged to hire the services of headload workers if they have their own manpower or machinery for loading/unloading tasks. An employer may henceforth arrange loading and unloading operations on his own.
    • Changed the name of “Dangerous & Offensive Trades and Factories” licenses for starting and running enterprises to a more industry friendly “Factories, Trades, Entrepreneurship Activities and Other Services”, thereby removing all negative connotations.
    • Eliminated the need for NOC from the DMO for undertaking all activities. Henceforth, Clearance from District Medical Officers to be applicable only for hospitals, clinics, laboratories and paramedical institutions.
    • Specific time limits (15 days) fixed for issue or rejection of licenses beyond which deemed licences will be issued.
    • Approval based on Self-certification and Third party certification for specific levels is implemented in the State for clearances from LSG / PCB / CTP / Fire & Rescue. However, misrepresentations if any detected later, a penalty of maximum of Rs.5 lakhs shall be charged.
    • The power of the Local Body to issue stop memos to industries that have obtained all statutory approvals, on receiving complaints about nuisance created by the venture has been taken away; instead, the local body has to seek an expert opinion from the concerned departments and take action based on that.
    • Stop memos/prohibitory notices to be issued, if any, only if the establishment fails to comply with the corrective norms of the technical departments within the stipulated time frame.
    • Licences to be issued with a validity of 5 years and renewal of the same will also be for 5 years. Renewal will be automatic based on fee payment with no separate application process.
    • Introduction of self-certification for green category industries for Pollution Control Board and self-certification for factory licence from Factories & Boilers, for factories with less than 25 workers.
    • Investment Promotion and Facilitation Cell constituted on behalf of Kerala State Single Window Board and will be responsible for smooth interaction with applicants and issuing speedy approvals.
    • Single Window Board to have the power to issue composite clearances that will be binding to all departments/agencies. Deemed licenses may be issued by the respective Boards in cases where the stipulated time period of 30 days have exceeded.
    • Extraction of ground water below limits fixed for the Block concerned shall be permitted on the basis of self-certification of the unit concerned; however, in case of misrepresentation, a penalty of Rs.5 lakhs may be imposed.
    • All persons extracting ground water are now required to make provisions for treating, recycling and reusing used ground water.
    • The licence for lifts and escalators may now be issued for 3 years instead of 1 year at a time.
    • Only two documents required for obtaining electricity connections – proof of identity and proof of legal occupancy.
    • Coverage Area and Floor Area Ratios have been increased in the relevant rules thereby increasing he available land for construction
    • Categorizations of industrial activities in the ‘Hazardous’ category has been linked to the definition in Factories Act. The access road width, set back etc. will henceforth be dependent on this classification.
    • Delegation in powers of approval from the Department of Town and Country Planning have been ensured, with CTP being the appellate authority
    • Spot registration introduced under 5 labour laws
    • Orders issued for inspections to be done on the basis of a risk assessment of units, with the more risky to be inspected more often.
    • Provision for joint inspection by departments have been introduced.
    • An online single window clearance mechanism (SWIFT) including online Common Application Form (CAF), unifying the applications of the concerned departments/agencies with online payment provision, for speedy disposal of clearances in the State have been introduced.

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Last Updated on: 8 December 2022
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