THE BURDEN OF COMPLIANCE
India Legal|March 7, 2022
Unfriendly clauses in business laws have grown drastically in recent times. If India has to go up World Bank's Ease of Doing Business Index, there should be a master document citing all compliance obligations for each product
Shivanand Pandit
THE BURDEN OF COMPLIANCE

FOR many years, every government has attempted decreasing the rules and regulations surrounding doing business in India. However, according to the latest report by TeamLeaseRegTech, a company enabling ease of doing business, and Observer Research Foundation, among the 69,233 exclusive compliances that ern doing business in India, there are 26,134 imprisonment clauses or fines for non-compliance with business laws legislated since Independence. In other words, nearly 38% of compliances can send a businessperson to jail.

According to the report, the five most industrialised states have over 1,000 imprisonment clauses in their business laws, Gujarat (1,469), Punjab (1,273), Maharashtra (1,210), Karnataka (1,175) and Tamil Nadu (1,043). The report also mentioned that unwarranted compliances are specifically heavy on MSMEs and an average Indian MSME, having above 150 employees, encounters 500 to 900 compliances that cost Rs 12 to 18 lakh annually. Further, it stated that such governing strain influences were not just for businessmen running for profits, but also not-for-profit entities. There is an increasing gap between the goods and services the country needs and how the State views the businessmen generating them.

The report provides a few policy recommendations for change to lawmakers and the judiciary, which the executive, regulators and officials can implement.

These include:

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