Ease-of-Doing-Business-for-MSMEs (DU)

Ease of Doing Business for MSMEs
2 | PHD Research Bureau and Department of Commerce, Delhi School of Economics

Ease of Doing Business

for MSMEs
A Report under the Collaborative Arrangement between PHD

Research Bureau, PHD Chamber of Commerce and Industry and
Department of Commerce, Delhi School of Economics (DSE)
Project
PRB/DOC/01/2019
September 2019
PHD RESEARCH BUREAU DEPARTMENT OF COMMERCE

PHD CHAMBER OF COMMERCE DELHI SCHOOL OF ECONOMICS
University of Delhi, Delhi-110007
AND INDUSTRY Telephone: (011) 2766-7891 I Fax: (011) 2766-6781
PHD House 4/2 Siri Institutional Area, August Kranti Marg, New
Delhi 110016
Email: info@ commercedu.com I Website:
Phone: 91-11-49545454 | Fax: 91-11-26855450, 26863135 www.commercedu.com
Email: [email protected] | Website: www.phdcci.in


Message from President, PHD Chamber
A conducive business environment is very important for starting

and operating a business. India has been continuously improving
in World Bank’s Ease of Doing Business Rankings and has jumped
by 65 spots from 142nd rank in 2015 to 77th rank in 2019 among
190 economies.
The government has undertaken plethora of economic and

business reforms in the last five years with the objective of
Shri Rajeev Talwar providing ease of doing business in the country. There is a
significant improvement in almost all the parameters set by the
World Bank.
Improvement in parameters such as starting a business, dealing

with construction permits, getting electricity, getting credit,
paying taxes, enforcing contracts, resolving insolvency and trading
across borders are highly appreciable.
The MSMEs play a very significant role in the growth and

development of the Indian economy by contributing at around
32% in GVA, 33% in Manufacturing GVA and 40% in exports. Thus,
ease of doing business reforms for MSMEs become crucial to
provide an efficient business environment for more than 60
million MSMEs in the country. At this juncture, the states can play
a major role in promoting MSMEs by undertaking proactive
measures for their growth and competitiveness.
The States’ Policy Conclave 2019 is an excellent initiative of the

State Development Council of PHD Chamber of PHD Chamber of
Commerce and Industry for engaging in meaningful deliberations
between the state officials and industry stakeholders. I am
sanguine that the discussions during the sessions would provide
fruitful outcomes that would spur the growth of industry and
especially the growth and resilience of MSMEs in the country.
I wish all the best to the conclave and look forward to enriching
deliberations.
(Rajeev Talwar)

Message from Senior Vice President, PHD Chamber
The Micro, Small and Medium Enterprises (MSMEs) sector has

emerged as a highly vibrant and dynamic sector over the last few
decades. There are 634 lakh unincorporated non-agriculture
MSMEs in the country engaged in different economic activities,
out of which 31% are in manufacturing, 36% are in trade and 33%
are in other activities. The sector is the backbone of Indian
economy as it contributes a significant share in GDP,
manufacturing, employment, investments and exports.
Dr DK Aggarwal
India’s rank in World Bank’s Ease of Doing Business rankings
jumped 65 positions to 77th rank in 2019 from 142nd five years
ago. Government has taken various initiatives to improve the ease
of doing business for MSMEs such launch of MSME Samadhan
Portal, MSME Sambhand Portal, MSME Sampark Portal; single
window system; reduction in registration fees, among others.
Going ahead, to improve the ease of doing business rankings

further, it is a pre-requisite for the states to give a special focus to
the growth and development of MSMEs sector. The states’
impetus would enable percolation of the reform measures at the
grassroots, thereby facilitating growth of MSMEs and overall
socio-economic development in the states.
The States’ Policy Conclave, 2019 is focussed on discussing how

the state governments can collaborate with industries for
development of the nation at large. I am confident that the
conclave would touch upon issues of topical importance and pave
the way for all-inclusive growth in the country.
My best wishes for the grand success of States' Policy Conclave

2019 which will be a useful platform for different stakeholders
including corporate, government officials, administrators,
researchers, policy planners, businessmen and business leaders.
(DK Aggarwal)

Message from Vice President, PHD Chamber
Continuous government efforts have resulted in the significant

improvement in India’s rank in World Bank’s ease of doing
business rankings. India currently ranks at 77th position out of 190
economies.
The government has implemented several reforms at the national

level to ease and rationalize the business regulatory processes
accompanied by the introduction of information technology as
enabler to make governance more efficient and effective.
Shri Sanjay Aggarwal
Apart from central government, state governments have also
initiated many reforms, such as initiating single window system,
tax reforms, among others to make business environment in the
state efficient and conducive. This would attract more
investments and help states improve their BRAP rankings.
Going forward, both central and state governments should

continue with their effective reform measures for promotion of
ease of doing business in the country to spur industry growth in
the coming times.
PHD Chamber is working diligently for the growth and

development of states. The States’ Policy Conclave 2019 is an
excellent platform to deliberate on issues of topical importance to
the states. I am sure that the discussions pertaining to Ease of
Doing Business in the states would go a long way in strengthening
industry sector. Major thrust given to MSMEs in the conclave
would pave the way for their growth and development.
I wish grand success to the Conclave!
(Sanjay Aggarwal)

Message from Chairman, States Development Council,

PHD Chamber
Ease of doing business holds a prime importance for the overall

growth and development of trade and industry. Improvement in
India’s ranking in World Bank’s Ease of Doing Business to 77th
position in 2019 from 142nd position in 2015 is highly inspiring.
The improvement in rankings has been observed primarily due to

significant progress made in eight out of ten parameters such as
dealing with construction permits, trading across borders, starting
Shri Sharad Jaipuria a business, getting electricity, getting credit, paying taxes,
enforcing contracts and resolving insolvency.
The central and state governments have undertaken many

reforms to promote ease of doing business as a whole. However,
promotion of ease of doing business to MSMEs sector becomes
crucial at this juncture, as the MSMEs have emerged as an engine
of economic growth of the Indian economy.
The role of states in the promotion of MSMEs is of prime

importance as the growth at national level is an aggregation of
growth at state level. The States' Policy Conclave 2019 is a
prestigious flagship event of the PHD Chamber’s State
Development Council. The objective of the conclave is to foster
the spirit of cooperative federalism so that union and state
governments come on a platform to forge a common national
agenda for development with thrust on empowerment of the
states of India.
I am sure that the deliberations during the various sessions would

provide an effective roadmap for all states to ease the business
environment for the MSMEs.
(Sharad Jaipuria)

Message from Secretary General, PHD Chamber
The ease of establishment and operation of businesses play a

pivotal role in the growth and development of an economy.
Prosperity of businesses facilitates creation of jobs and generation
of incomes which improves the country’s position in socio-
economic and business rankings in global charts.
Over the years, government has implemented several reforms to

streamline business processes and improve the business
Dr Mahesh Y Reddy regulatory environment. India’s performance on the World Bank’s
Ease of Doing Business Index has improved at a remarkable pace
from 142nd rank in the year 2015 to 77th rank in the year 2019.
Similarly, states/UTs have introduced several reforms as a part of

BRAP to improve their business regulatory environment and
attract investments. Although, the business climate at macro level
is expanding, the ease of doing business environment at MSMEs
level needs more facilitation. Therefore, focussed reforms to
promote ease of doing business for MSMEs are needed to make
India a best place to do business, going forward.
The states can play a massive role in being the harbingers of

improved business environment to the MSMEs by implementing
pro-MSMEs policies and providing state of the art infrastructure.
The States’ Policy Conclave 2019 of PHD Chamber of Commerce

and Industry aims to provide an effective platform for the state
machineries to interact with the industries on various
opportunities and challenges. I am sure that the discussions in the
conclave would be of immense significance.
(Mahesh Y Reddy)

Message from Chairman, Ease of Doing Business

Committee, PHD Chamber
Micro, small and medium enterprises have a very special and vital
role in the Indian economy. The government has given a major
thrust to the growth of MSMEs as the next level of economic
growth is expected to come from this crucial sector of the
economy. However, the sector needs facilitation in terms of ease
of doing business. This is where the states can play a major role in
Shri PK Malhotra ensuring percolation of reform measures at the grassroots for the
growth of MSMEs.
The state’s role towards building the required infrastructure for

smooth running of business is the key towards an efficient
manufacturing sector for a strong and sustainable economic
growth.
At this juncture, I am elated to know that PHD Chamber of

Commerce and Industry is organizing its States’ Policy Conclave
2019 which has ease of doing business as one of the themes.
States have initiated reforms for ease of doing business which is
evident from the significant implementation of Business Reforms
Action Plan by the states. I am hopeful that the dignitaries from
various states in the Conclave would highlight their best practices
to the benefit of other states.
I wish all the success to the States’ Policy Conclave and look
forward to interesting deliberations!
(PK Malhotra)

Message from Former Head, Department of Commerce,

Delhi School of Economics, University of Delhi
Sharp jump in ease of doing business rankings to the level of 77

from 100 is highly inspiring and more than the expectations. The
reform measures undertaken by the government have started
paying off and fruitful outcomes are visible now. The
implementation of GST and Insolvency and Bankruptcy Code along
with improvements in registering for new electricity connection,
Prof Kavita Sharma upgradation of port infrastructure, among others have facilitated
the country to improve in various parameters.
Further, MSME sector holds the potential to push India’s growth

in the double-digit trajectory, if facilitated by ease of doing
business. Therefore, it is essential that great emphasis may be
given to realize the true economic potential of this sector.
Going ahead, given the ongoing reform momentum, it is expected

that India will rank at around 50 on the Ease of Doing Business
Index in the coming times.
I am elated to be a part of the States’ Policy Conclave 2019 of PHD

Chamber of Commerce and Industry and look forward to
interesting deliberations.
(Kavita Sharma)

Message from Associate Professor, Department of

Commerce, Delhi School of Economics, University of
Delhi
India improved its Ease of Doing Business Ranking significantly

from 100th position in Doing Business 2018 report to 77th position
in Doing Business 2019 report by the World Bank.
The implementation of GST and Insolvency and Bankruptcy Code

Dr Niti Bhasin along with improvements in starting a business, dealing with
construction permits, getting electricity, among others have
yielded positive results.
Under the Make in India initiative, central and state governments

are executing their respective annual Business Reform Action Plan
(BRAP) to improve their rankings on the ease of doing business
which reflect their willingness to reform and attract investments.
Going ahead, there is a need to sustain this momentum of

implementing reforms both at the Centre and State level to make
India one of the best destinations to do business. I believe this
report would provide important insights to policy makers for
creating a conducive business environment for the MSME sector
of the Indian economy.
I am delighted to know about PHD Chamber’s States’ Policy

Conclave 2019 which aims to engage in effective policy dialogues
at the state level. I wish grand success to the programme.
(Niti Bhasin)

Acknowledgements
At the outset, we thank Shri Rajeev Talwar, President, PHD Chamber, Dr DK Aggarwal,
Senior Vice President, PHD Chamber, Shri Sanjay Aggarwal, Vice President, PHD Chamber
and Dr Mahesh Y Reddy, Secretary General, PHD Chamber for their benevolent and constant
support to prepare the study on Ease of Doing Business for MSMEs.
We would like to place on record our deep appreciation to Shri Sharad Jaipuria, Former
President and Chairman, States Development Council, PHD Chamber for his guidance and
support to prepare the study. We thank Shri PK Malhotra, Chairman, Ease of Doing Business
Committee and Former Law Secretary, Ministry of Law and Justice and Ms Aditi Anand,
Co-Chairperson, Ease of Doing Business Committee for their guidance and suggestions for
conducting the survey study.
We are indebted to Prof Kavita Sharma, Professor and Former Head, Department of
Commerce, Delhi School of Economics, University of Delhi and Dr Niti Bhasin, Associate
Professor, Department of Commerce, Delhi School of Economics, University of Delhi for
collaborating with us under the Collaborative Agreement of PHD Research Bureau, PHD
Chamber of Commerce and Industry (PHDCCI) and Department of Commerce, Delhi School
of Economics (DSE) to conduct research studies on various operational issues and challenges
faced by industry.
We are extremely thankful to all the member firms of PHD Chamber of Commerce and
Industry and other industry stakeholders for providing their valuable inputs in the survey of
Ease of Doing Business for MSMEs. Last but not the least, we would like to place on record
the support of Mr Rohit Kumar, Director, State Development Council and his team.
We appreciate the help of Mr Hariom Kuthwaria, Graphic Designer, PHD Chamber who
assisted in producing the Study.
-PHD Research Bureau

PHD Chamber of Commerce and Industry

Contents
S. No. Title Page No.
1 Introduction 23
2 Objectives and Research Methodology 25

Ease of Doing Business at International Level: India’s
3 28
Position
4 Ease of Doing Business: World Bank Rankings 32
5 Ease of Doing Business at the State Level 40
6 Ease of Doing Business for MSMEs 48

Role of States in Promotion of MSMEs and Ease of
7 55
Doing Business
8 Ease of Doing Business for MSMEs: Survey Findings 61
9 Conclusions and Recommendations 71
Annexure 78

Tables
1 Profile of Data Collected 26
2 World Bank Ease of Doing Business Rankings 28

India’s Ranking on Various Parameters of World Bank’s Ease of
3 33
Doing Business Index
4 India’s performance in Getting Electricity 33
5 India’s performance in Paying Taxes 34
6 India’s performance in Trading across Borders 35
7 Top performers on the basis of BRAP 2015 41
8 Top performers on the basis of BRAP 2016-2017 42
9 Top performers on the basis of BRAP 2017-2018 43
Rankings of the States and Union Territories on the basis of the

10 45
implementation of the Business Reform Action Plan (BRAP)
11 Various Reforms Undertaken by the States 46
Estimated Number of MSMEs (Activity and Enterprise Category

12 48
Wise)
13 Growth Rates of MSMEs 49
14 Sate wise distribution of MSMEs- top 5 States 49
15 Union Budget Announcements for MSMEs (2019-20) 51
16 Average days to obtain finance by MSMEs 54
GSDP Growth and State Ranking on Implementation of Reforms

17 58
Index
GSDP Growth and State Ranking on Implementation of Reforms
18 59
Index (North Eastern States)
19 Responses of Survey on Ease of Doing Business for MSMEs 78
20 Survey Questionnaire 80

Charts
1 Ease of Doing Business for MSMEs so far 18
2 Perception of Industry (MSMEs) on top 20 business reforms 20
3 Time (days) Required to Start a Business 30
4 Time (Days) Required to Register a Property 30
5 Time (days) Required to Get an Electricity Connection 31

India’s Ranking on the World Bank’s Ease of Doing Business
6 32
Index
7 India’s Distance to Frontier 32
8 India’s performance in Dealing with Construction Permits 34
9 Snapshot of MSME Sector 50
10 State wise Distribution of MSMEs 55
11 Growth of Industry and BRAP Ranking 2017-18 60
12 Improvement in Ease of Doing Business for MSMEs 61
13-17 Perception of Industry on Business Environment 62-65

Executive Summary
The ease of doing business has gained importance in the last few years owing to the impact
it has on the overall industrial climate; investments and job creation in the economy. The
government has given major thrust to ease of doing business and has worked aggressively
to ensure that India moves up on the rankings of ease of doing business of the World Bank.
India has been continuously improving in the World Bank’s Ease of Doing Business Rankings
and recently jumped 23 positions to mark its position at 77 th rank among 190 economies.
However, there is a need to give major impetus to ease of doing business for MSMEs as the
MSMEs have a very special and vital role in the growth and development of the Indian
economy.
The growth of MSMEs is of paramount importance as the sector has potential not only to
generate additional export earnings but also generate millions of employment opportunities
for the growing young population in the country. At this juncture, it becomes imperative to
assess the business environment for MSMEs in the country and to suggest measures to
make it more conducive in the coming times.
With the objective of knowing about the ease of doing business for the MSMEs, PHD
Chamber of Commerce and Industry in collaboration with Department of Commerce, Delhi
School of Economics conducted a survey of MSMEs across the sectors in the country. The
findings of the study were very interesting as there was no uniform trend discernible in
terms of perception of respondents towards ease of doing business. Majority (45%) of the
respondents agreed to ease of doing business for MSMEs in the country and said that the
economic and business reform measures undertaken by the government have been fruitful
for them. Of the rest 55%, around 32% of the respondents opined that there is a dire need
for improvement in the ease of doing business climate for MSMEs while 23% were
indifferent about improvement in the ease of doing business environment in the country.
Majority of the respondents agreed to a significant improvement in number of tax payments

in a year, cost of transportation and logistics, time required to enforce a contract, bringing
out a law suit against a company, supply of electricity, time to obtain an electricity
connection, time involved in transportation of goods, number of documents in starting a
business, online availability of business procedures, starting a business, IT enabled business
procedures, cost to obtain an electricity connection and cost to obtain an internet
connection, among others.
However 32% of the respondents disagreed on the improvement in availability of land,

process to acquire a land, cost of land, cost for starting a business, cost of labour, cost to
register a property, single window mechanism for approvals and clearances, common
application for business approvals, compliances under various labour laws, cost of business
approvals and clearances, procedure for registering a property, electricity tariffs and
number of tax returns to be filed in a year, among others.

Chart 1: Ease of Doing Business for MSMEs so far

40% 38%
35%
30%
26%
25% 23%
20%
15%
10% 7%
6%
5%
0%
Agree Disgaree Indifferent Strongly Agree Strongly Disagree
Source: PHD Research Bureau, PHDCCI, Survey on Ease of Doing Business for MSMEs, April-June 2019.
This can be attributed to the fact that the survey was conducted in the month of April to
June 2019 while lot of reform measures were undertaken by the government in the recent
months (July-August 2019). It may be mentioned that recently the government has
undertaken plethora of reforms for the MSMEs including provisions for banks’ lending to
NBFCs for further on-lending to MSMEs up to Rs.20 lakh per borrower under the Priority
Sector Classification, payment of all pending GST refunds to MSMEs within 30 days and
withdrawal of Angel Tax provisions for Startups and their investors.
The support and outreach programme such as extension of loan facility upto Rs 1 crore
within 59 minutes through an online portal, online filing of Udyog Aadhaar Memorandum
(UAM), MSME SAMADHAAN Portal, among others to the MSMEs were also launched in the
recent past to provide them with a supportive business environment.
Going ahead, the ease of doing business for MSMEs is expected to improve significantly in
the coming times with the percolation of economic and business reforms at the ground
level. This is where the role of states becomes exceedingly important. The state’s role
towards promoting ease of doing business is the key towards a competitive manufacturing
sector for a strong and sustainable economic growth.
The states have implemented the Business Reform Action Plan (BRAP) to improve the
regulatory environment for businesses to grow and flourish. It may be noted that the states
which have performed well on the BRAP have observed high growth of GSDP. Further, it has
been observed in few states that the states with high rankings on BRAP witness high
industry growth.

The states form the core of the federal structure in India and for any development initiative
to succeed; the role played by states assumes immense significance. In order to improve the
ease of doing business in the country, the state governments may identify the issues that
exist in their respective states and work towards addressing those bottlenecks, thereby
ensuring a conducive business environment, particularly for MSMEs.
Going ahead, the overall smooth functioning and the quality of governance at state level can
stimulate growth by making the policy environment more business friendly. Further reforms
in ease of doing business at the ground level especially for the small and medium sized
businesses along with desired reforms in labour laws such as fixed term employment for
flexibility in hiring by industry across the States would be crucial to strengthen the
manufacturing sector, Make in India programme and create millions of employment
opportunities for growing young workforce. Though the government has announced Fixed
Term Employment but only few states have implemented it. So, all the state governments
may implement Fixed Term Employment for the benefit of the industries in general and
MSMEs in particular.
It is also recommended that the government may reduce the performance bank guarantee
for MSMEs such that it is one-tenth for micro, two-fifth for small and one-third for medium
enterprises for level-playing field; provide deemed NSIC registration renewal in case of
delay; and reduce high primary and collateral security demanded by banks. Further, there
may be extension of loans of Rs 1 crore by banks without any collateral and reduced rate of
interest to MSMEs and introduction of punitive measures for habitual defaulters who do not
meet payment obligations towards MSMEs in maximum 45 days.


Key Findings of the Survey
Respondents strongly agreed on improvement in ease of doing business

Promotion of ease of doing business has become
most crucial for the growth of industry and the
reforms undertaken in this direction have started
giving fruitful outcomes. Relatively easier and lesser
number of procedural requirements, efficient
judicial system, online availability of required
 Number of tax payments in a year
information, among others have made it easier to
bring out law suits against a company and enforcing  Cost of transportation and logistics
a contract has become easier. Obtaining the pre-  Time required to enforce a contract
requisites for a law suits has become hassle free and
less time consuming.  Bringing out law suit against the company
The historic restructuring of tax system in the

country, accompanied by increase in use of digital
payments and technological upgradation at the
receiving end, i.e. government departments, have
resulted in the improved tax payments, competitive
pricing and economies of scale.
Respondents agreed on improvement in ease of doing business

Ease of doing business has significantly improved as  Supply of electricity
getting approvals has been made a lot easier and  Time to obtain an electricity connection
hassle free. The improvement in communication and  Time involved in transportation of goods
coordination between the government departments  Number of documents in starting a business
and citizens is visible. Steps such as removal of  Online availability of business procedures
tedious procedures, curtailment of transmission loss  Starting a business
of electricity, availability of online applications and  Business procedures are IT enabled
online approval systems, among others, have  Cost to obtain an electricity connection
 Obtaining construction permit/certificate
created a transparent working environment and thus
 Cost to obtain an internet connection
raised the confidence of people and firms. This has
 Cost of enforcing a contract
resulted in the improvement of various parameters
 Cost of documenting in exporting and importing
of ease of doing business, such as getting electricity,  Time of processing building permit & certificate
starting a business, construction permits, among  Credit Availability
others. Further, there is an increase in efficiency and  Documents required for exporting and importing
sales of the businesses due to requirement of very  Procedures for new water & sewage connection
minimal paperwork and approvals, which has been  Time for documenting in exporting and
made possible with the implementation of GST. importing
 Time to register a property
 Cost for new water and sewage connection
 Behavior of inspectors
 Road police checks/inspections

Respondents indifferent on improvement in ease of doing business

Government has undertaken various dynamic  Process of tax registration
reforms over the last few years to promote ease of  Protection of shareholders from undue board
doing business. However, the effectiveness of these control
reforms has to be made significant at the MSMEs  Ease in documentation for construction permits
level. People are neutral to the improvement of  Time taken to recover debt under insolvency
certain parameters of ease of doing business either proceedings
 Recovery rate under insolvency proceedings
due to lack of awareness or due to presence of
 Compliance under various environmental laws
structural bottlenecks hampering the effectiveness
 Simplification in Tax structure
of the reforms. At this juncture, there is a need to
 Role of shareholders in the management of the
work on the implementation and awareness aspect company
of the reforms, so that their benefits can spread  Cost involved to recover debt under insolvency
equally to the firms of different size, nature firms proceedings
and across states.  Cost of environmental laws
 Contracts entered into are easily enforceable
 Time to obtain credit
 Tax rates in the country
Respondents disagreed on improvement in ease of doing business

Although, procedural requirements have been  Cost for starting a business
reduced, the communication between government  Cost of labor
departments have become transparent and hassle  Cost to register a property
free, however, the cost aspect of some of the  Single window mechanism for approvals and
parameters still needs to be relaxed further. There clearances
are various approvals, documentation requirements  Common application for business approvals
and multiple visits to departments that consume a  Compliance under various labor laws
 Cost of business approvals and clearances
significant amount of time and initial investment in a
 Procedures for registering a property
business. Further, the government has upgraded
 Electricity tariffs
itself technologically, however, there are segment of
 Number of tax returns to be filed in a year
people that need to be made aware about the  Inspection conducted by departments are
technical know-how of these facilities, so that the defined
effectiveness is fully realised. In addition, there is  Obtaining various business approvals and
manual interference in the automated mechanisms clearances
that needs to be removed.  Employment of labor
 Credit availability at reasonable rate of interest
 Reduction in number of inspections conducted
Respondents strongly disagreed on improvement in ease of doing business

Obtaining land is one parameter of ease of doing  Availability of land
business that requires improvement in every aspect.  Process to acquire land
The procedure to acquire land should be free from
complex and costly procedural bottlenecks.  Cost of land

1. Introduction
The ease of establishment and operation of businesses play a pivotal role in the growth and
development of an economy. Prosperity of businesses facilitates creation of jobs and
generation of income which can be spent both domestically and internationally. Clear and
certain legislative and executive regime, augmented by an efficient judiciary that ensures
timely enforcement of contracts, protects property rights, resolves insolvency and protects
the rights of creditors and investors are pre-requisites for healthy business environment in
an economy. Some the key factors that encourage businesses especially MSMEs to flourish
and realise economic gains include sound policy framework, effective rules, simple
procedures, increased transparency, curb on corruption and red tapism, strong
infrastructure backed by efficient information technology system and timely
implementation of policies with strong tracking and monitoring mechanism to measure
progress1.
Across the globe, MSMEs face many difficulties in starting and operating businesses.
However, their difficulty level varies with the regulatory and institutional environment in
which they operate. Effective business regulation and continuous and focused reform
measures to ease the business environment provide MSMEs opportunities to grow,
innovate and move from informal to the formal sector of an economy. For instance, in
Denmark, the average number of newly registered companies is 8 per 1,000 workers per
year, whereas in Uganda this figure is less than 1 new company per 1,000 workers per year.
This difference can be explained by many factors including the level of business regulations2.
Various studies have also found that an economy that undertake reforms to ease the
regulatory burden on businesses tend to attract greater foreign investments as
Multinational Corporations (MNCs) prefer countries that have predictable and stable
business environment with fewer, cheaper and simpler regulations3.
At international level, the World Bank every year assesses the policies to ease the regulatory
burden, undertaken by countries across the world through its Ease of Doing Business Index
(EDBI). The index uses 10 different indicators that measure various aspects of business
regulations which are important to domestic firms and for national competitiveness. Doing
Business also measures features of labor market regulations which are reported as a
separate section and not included in the ranking. EDBI is considered as a reliable source of
1
Gaur, A. D., & Jasmin, P. (2017). Ease of Doing Business in India: Challenges & Road Ahead. In International
Conference on technology and Business Management (pp. 77-84).
2
Doing Business Report, World Bank, 2019
3
Corcoran, A., & Gillanders, R. (2015). Foreign direct investment and the ease of doing business. Review of
World Economics, 151(1), 103-126.
Jayasuriya, D. (2011). Improvements in the world bank's ease of doing business rankings: Do they translate into
greater foreign direct investment inflows?. The World Bank.
Kelley, J. G., Simmons, B. A., & Doshi, R. (2016, September). The power of ranking: the ease of doing business
indicator as a form of social pressure. In Annual Meeting of the American Political Science Association Mini-
Conference on Assessment Power in World Politics, Philadelphia, PA.

information on the business environment of an economy[1]. EDBI rankings aim to compare

the business environment of different countries.
It rewards any policy that reduces the time and cost of doing business and reveals how well
an economy’s government is doing than others4. Ease of doing business rankings impacts
the reputation of the countries and hence influences them to initiate important policy
reforms to improve the regulatory environment in their economy.
At the national level, reforms undertaken by the government to improve business

environment in the country, such as removing regulatory burdens, cutting delays,
introduction of Goods and Services Tax (GST), promoting paperless transaction, among
others have been widely acknowledged in the light of India’s improved ranking in the World
Bank’s Ease of Doing Business (EODB) Index from 130th in 2016 to 77th in 2019 out of 190
economies. Further, at the state level, under the Make in India initiative, state governments
are executing their respective annual Business Reform Action Plan (BRAP) to improve their
rankings on the ease of doing business which reflect their willingness to reform and attract
investments.
Although, governments at both central and state level have been initiating significant
reforms to improve ease of doing business in India, but there is a need to check the ground
realities i.e. to analyse whether such reforms have been implemented properly and their
benefits have reached to small and medium scale businesses, which are the backbone of the
Indian economy.
Analysis of the Ease of doing business at the MSMEs level becomes essential because in a
dynamic economy like India, which is rapidly growing and continuously reforming its
business environment, the results in major cities and on large businesses may not be
representative of other small areas and businesses of the country5. In the light of the above
arguments, this study aims to evaluate the ease of doing business at international, national
and state level, analyse the impact of ease of doing business reforms undertaken by the
Indian government on MSMEs.
[1]
Pinheiro-Alves, R., & Zambujal-Oliveira, J. (2012). The Ease of Doing Business Index as a tool for investment
location decisions. Economics Letters, 117(1), 66-70.
4
Kelley, J. G., Simmons, B. A., & Doshi, R. (2016, September). The power of ranking: the ease of doing business
indicator as a form of social pressure. In Annual Meeting of the American Political Science Association Mini-
Conference on Assessment Power in World Politics, Philadelphia, PA.
5
Piwonski, K. (2010). Does the ‘Ease of Doing Business’ In a Country Influence its Foreign Direct Investment
Inflows?.

2. Objectives and Research Methodology
The ease of doing business has gained importance in the last few years owing to the impact
it has on the overall industrial climate; investments and job creation in the economy. India
has been continuously improving in the World Bank’s Ease of Doing Business Rankings and
has made remarkable progress of 65 spots in the Doing Business Report of World Bank in
the last five years.
However, there is a need to give major impetus to ease of doing business for MSMEs as the
MSMEs have a very special and vital role in the growth and development of the Indian
economy. The growth of MSMEs is crucial as the sector has potential not only to generate
additional export earnings but also generate millions of employment opportunities for the
growing young population in the country.
At this juncture, it becomes imperative to assess the business environment for MSMEs in
the country and to suggest measures to make it more conducive in the coming times.
Against this objective, PHD Chamber of Commerce and Industry in collaboration with
Department of Commerce, Delhi School of Economics conducted a survey study to assess
and analyse the ease of doing business environment at the MSMEs level.
2.1 Objectives of the Study
Following are the objectives of the study:
(i) To evaluate the ease of doing business scenario at international level and
thereby analyse India’s position.
(ii) To evaluate the ease of doing business at national and state level in India.
(iii) To analyse the impact of reforms undertaken by the government for MSMEs.
(iv) To analyse the level of ease of doing business for MSMEs.
(v) To draw conclusions and recommendations based on the analysis and findings of
the survey.
2.2 Research Methodology
Both primary and secondary research has been conducted to determine various factors
contributing to the ease of doing business in the India at the MSMEs level. Both quantitative
and qualitative tools have been used for the study.
Extensive secondary research has been conducted to evaluate the ease of doing business
scenario at international, national and state level. Different news articles, national and
international journals, books and websites which focused on various aspects of ease of
doing business were referred. World Bank database on ease of doing business has been
used in-depth. Other authenticated sources referred for the secondary analysis on the study

include Annual Reports of the Ministry of Micro, Small and Medium Enterprises,
Government of India; Business Reform Action Plan (BRAP) Reports of the Department for
Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry,
Government of India, among others.
For secondary analysis, trends in ease of doing business across the world and in India were
analysed using the World Bank’s ease of doing database and the trends in ease of doing
business at the State and Union Territory level in India were analysed using the Business
Reform Action Plan (BRAP) reports of the Department for Promotion of Industry and
Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India.
For primary analysis, Simple Random Sampling Technique6 was used. The selection of
MSMEs did not involve any criteria and the questionnaires were sent across the country.
The statistical tools used for the study were simple aggregates and averages. Descriptive
statistics were used to describe the study variables and items of each variable of the study.
The data has been presented in graphs and charts for lucid illustration.
The target population of this study was MSMEs operating in India. To obtain the responses,
online invitations and hard copies of the questionnaire were sent to potential participants.
740 numbers of responses were received from across the country, comprising of maximum
number of responses from small enterprises (329), followed by 246 responses from medium
enterprises and 165 from micro enterprises. Further the respondents comprised of 370
services MSMEs, 222 manufacturing MSMEs and 148 trade MSMEs.
Table 1: Profile of Data Collected

Manufacturing Trade MSMEs Services Total
MSMEs MSMEs
Micro 65 45 55 165
Small 95 30 204 329
Medium 62 73 111 246
Total 222 148 370 740

Source: PHD Research Bureau, PHDCCI, Survey on Ease of Doing Business for MSMEs
Various qualitative methods like focus group interview, depth interview have been adopted
and after considering the opinions of various industry experts and academicians, an
extensive questionnaire pertaining to the selected aspects of doing business in India was
administered on MSMEs from a variety of sectors across India. The survey/ questionnaire
was self-administered to assess and operationalise each of the variables at a specific point in
6
Simple random sampling is a sampling technique where every item in the population has an even chance and
likelihood of being selected in the sample.

time (cross-sectional). The questionnaire incorporated 19 parameters/measures of ease of

doing business with 56 items/questions in total. The measures/parameters used were:
Obtaining
Starting a business
Getting electricity Getting Credit
business approvals and
clearances
Tax Enforcing
registration, payin Registering contracts and
Labor regulations
g taxes and filing property quality of judicial
returns processes
Access to
Inspection Resolving Construction
Information
Reforms insolvency permits
technology
Trading across Transportation Environmental Single Window

borders and logistics compliances Clearance System
Obtaining
Availability and Protecting
infrastructure
allotment of land investors
related utilities
All questions used a Likert scale7 to record participant responses. Respondents were asked
to rate their experience on a 5-point Likert scale of 1 to 5, (where 1-5 represents strongly
disagree, disagree, indifferent, agree and strongly disagree respectively) against each
parameter of the ease of doing business based on individual questions in the questionnaire.
After the responses were collected, they were decoded and analysed.
7
The Likert scale is a five (or seven) point scale which is used to allow the individual to express how much they
agree or disagree with a particular statement. It is the most widely used approach to scaling responses in
survey research, such that the term is often used interchangeably with rating scale.

3. Ease of Doing Business at International Level: India’s Position

At the international level, the World Bank, every year since 2003, assesses the policies to
ease the regulatory burden, undertaken by countries across the world. It is done through
the Doing Business Report, Distance to Frontier Score also known as Ease of Doing Business
score and the Ease of Doing Business rankings. The ranking of economies is determined by
sorting the aggregate ease of doing business scores of 190 economies across the world.
Governments across the world are making significant efforts in improving their business
regulatory environments to make doing business easier for entrepreneurs. Since its launch
in 2003, Doing Business has inspired more than 3,500 reforms in the 10 areas of business
regulation measured by the report. The majority of these reforms have been made in low-
and lower-middle-income economies. The three regions which have improved the most
since 2004 are Europe and Central Asia, Sub-Saharan Africa and the Middle East and North
Africa.
Around the world, registering a business now takes an average of 20 days and costs 23% of
income per capita, compared to 47 days and 76% of income per capita in 20068. The average
paid-in minimum capital that entrepreneurs may deposit is 6% of income per capita,
compared with 145% of income per capita in 2006. The global average time to prepare, file
and pay taxes has fallen from 324 hours in 2005 to 237 hours in 2017. On an average,
entrepreneurs across the world find it easier to start a business and deal in construction
permits but find enforcing contracts and resolving insolvency the most difficult.
The economies that rank highest in the ease of doing business are those that have
consistently well-designed business regulation or whose regulatory environments have
thrived thanks to comprehensive reform over the years. While, New Zealand has topped the
Ease of Doing Business rankings in the years 2017, 2018 and 2019, Singapore topped the
Ease of Doing Business rankings from 2007 to 2016.
Table 2: World Bank Ease of Doing Business Rankings

Rank 2019 2018 2017 2016 2015
1 New Zealand New Zealand New Zealand Singapore Singapore
2 Singapore Singapore Singapore New Zealand New Zealand
3 Denmark Denmark Denmark Denmark Hong Kong SAR
4 Hong Kong SAR Korea, Rep. Hong Kong SAR Korea, Rep. Denmark
5 Korea, Rep. Hong Kong SAR Korea, Rep Hong Kong SAR Korea, Rep.
6 Georgia United States Norway United Kingdom Norway
7 Norway United Kingdom United Kingdom United States United States
8 United States Norway United States Sweden United Kingdom
9 United Kingdom Georgia Sweden Norway Finland
10 Macedonia, FYR Sweden Macedonia, FYR Finland Australia
2019 Rank 2018 Rank 2017 Rank 2016 Rank 2015 Rank
India 77 100 130 130 142
Source: PHD Research Bureau, PHDCCI, compiled from World Bank Doing Business Reports
8
World Banks’s Ease of Doing Business Reports

Some of the international best business regulatory practices are:
 New Zealand ranks number one among 190 countries in starting business parameter
of the World Bank’s ease of doing business. Number of procedures in starting a
business in New Zealand is just one with no minimum capital required. It takes less
than a day to start a business and just one day to register the property.
 In Georgia, only one procedure is required to start a business. Further, it just takes one
day to register the property and no cost is involved in registering the property.
 In Singapore, it just takes 64 hours in a year to pay taxes with only 5 tax payments in a
year. The total tax rate as percentage of profits is as low as 20.6%.
 Denmark ranks number one among 190 countries in trading across border parameter
of the World Bank’s ease of doing business. Roughly, around one hour is required for
documentary compliances at the time of export and import. Also, negligible costs are
involved in exporting and importing.
 India has established the best regulatory performance in extending the shareholder’s
rights which is one of the variables of protecting the minority investor parameter of
the World Bank’s ease of doing business.
 China has established the best regulatory performance in extent of disclosure index
and corporate transparency index which are variables of protecting the minority
investor parameter of the World Bank’s ease of doing business.
 Hong Kong ranks number one in paying taxes parameter with only 3 tax payments
required to be made in a year.
 Korea has established the best regulatory performance in getting electricity with only
3 procedures required and 13 days to obtain an electricity connection.
 United Kingdom has also established the best regulatory performance in getting
electricity with only 3 procedures required to obtain an electricity connection. It made
getting electricity faster by implementing several initiatives to expedite the external
connection works performed by sub-contractors.
 The United Arab Emirates made getting electricity easier by eliminating all costs for
commercial and industrial connections of up to 150 kilo-Volt-Amperes (kVA).
 Saudi Arabia has established the best regulatory performance in corporate
transparency index which is one of the variables of protecting the minority investor
parameter of the World Bank’s ease of doing business rankings. It has strengthened
minority investor protections by providing clear rules for the liability of directors and
increasing the role of shareholders in major decisions.

India’s Position with Respect to the World
Few years ago, India was far behind in the ease of doing business ranking, with 142nd rank in
2015, but has gradually improved to 77th position in 2019 due to several reforms
undertaken by the Indian government such as cutting delays, promoting paperless
transactions, among other measures.
On an average, entrepreneurs across the world require 20 days to start a business, however,
in India entrepreneurs require just 16 days to start a new business. Similarly, in India, it
takes 69 days to get a property registered which is lower than the world average of 48 days
and world’s best practice is of 1 day (in Georgia and New Zealand).
Chart 3: Time (days) required to Start a Chart 4: Time (Days) Required to Register
Business a Property
40 75
35 69 69 69
35 70
33
30 30 65 63 63 63
30 29
60
25
26
55
24 51 51
23 23 20 50 50 50
20
21 50 48
17
15 45
10 40
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
India World Average India World Average
Source: PHD Research Bureau, PHDCCI, compiled from World Bank Database
Further, globally average number of days to obtain an electricity connection is 86 while the
number of days in obtaining an electricity connection in India is 55 which is lower than the
world average but higher than South Korea, where only 13 days are required.

Chart 5: Time (days) required to get an Electricity Connection

120 116 116
110
100
100 105
90 99
92 91
80 89
86
70
59 59
60 55
50
40
2014 2015 2016 2017 2018 2019
India World Average
Source: PHD Research Bureau, PHDCCI, compiled from World Bank Database
It takes 275 hours in a year to pay taxes in India which is significantly higher than Singapore
which has the world’s best regulatory practice in the time required to pay taxes (64 hours a
year). In India, it takes around 4 years to resolve insolvency, whereas in countries like
Singapore and Denmark insolvency can be resolved in less than a year.
As per World Bank’s Doing Business Report, 2019, eight of the top 20 economies on ease of
doing business rankings were from the developing countries (namely- Malaysia, Hong Kong,
South Korea, Taiwan, Lithuania, Estonia, Latvia, Mauritius and UAE). India is improving
significantly and though it has a long way to achieve the level of its counterparts in the
world economic system, the efforts made in the past are highly appreciable.

4. Ease of Doing Business: World Bank Rankings
Over the past five years, India’s performance on the World Bank’s Ease of Doing Business
Index has improved at a remarkable pace from 142nd rank in the year 2015 to 77th rank in
the year 2019 on the back of implementation of robust reform measures such as removing
regulatory burdens, cutting delays, introduction of Goods and Services Tax (GST), promoting
paperless transactions, among others. India has improved notably in the areas of getting
electricity, dealing with construction permits, protecting minority investors, getting credit,
paying taxes and trading across borders in 2019 rankings as compared to 2015.
Chart 6: India’s Ranking on the World Bank’s Ease of Doing Business Index
150 142
140 130 130
130
120
110 100
100
90 77
80
70
60
50
2015 2016 2017 2018 2019
Source: PHD Research Bureau, PHDCCI, compiled from Doing Business Reports, World Bank
India’s performance has improved at a remarkable pace on distance to frontier score/ease

of doing business score from 40.7 in 2005 to 67.2 in 2019 on the back of strategic reform
measures undertaken by the government.
Chart 7: India’s Distance to Frontier

100 Frontier
90
80
67.2
70 60.7
60 54.0 54.7 55.3
51.3
50 40.7
40
30
20
10
0
2005 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
Source: PHD Research Bureau, PHDCCI, compiled from World Bank’s Doing Reports

India was among the top 10 economies which made remarkable improvement in
performance on the Doing Business indicator in 2017-2018. During this period, India
implemented a total of seven business regulation reforms across different areas measured
by Doing Business. It ranked impressively in protecting the rights of minority investors (7 th
rank) and established the best regulatory performance in extending the shareholder’s rights
(one of the variables of protecting the minority investors index).
Table 3: India’s Ranking on Various Parameters of World Bank’s Ease of Doing Business
Index
Parameter Rankings
2019 2018 2017 2016 2015
Overall Ranking 77 100 130 130 142
1. Starting a business 137 156 155 155 158
2. Dealing with construction permits 52 181 185 183 184
3. Getting electricity 24 29 26 70 137
4. Registering property 166 154 138 138 121
5. Getting credit 22 29 44 42 36
6. Protecting minority investors 7 4 13 8 7
7. Paying taxes 121 119 172 157 156
8. Trading across borders 80 146 143 133 126
9. Enforcing contracts 163 164 172 178 186
10. Resolving insolvency 108 103 136 136 137
Source: PHD Research Bureau, PHDCCI, compiled from Doing Business Reports 2015-2019, World Bank
Getting Electricity: In India, cost associated with getting electricity has reduced significantly
from 219.6% (% of income per capita) in 2015 to 29.5% in 2019, number of procedures in
obtaining construction permits have been reduced from 6 in 2015 to 4 in 2019 and the
number of days required in obtaining construction permits have also reduced from 116 days
in 2015 to 55 days in 2019. Further, the price of electricity has been lowered from 22.9 US
cents per kwh in 2015 to 17 US cents per kwh in 2019.
Table 4: India’s performance in Getting Electricity Parameter

Variables 2019 2018 2017 2016 2015
Cost to get electricity (% of 29.5 46.6 53.2 198.3 219.6
income per capita)
Number of procedures in getting 4 4 4 4 6
electricity*
Price of electricity (US Cents per 17.0 17.6 20.6 22.0 22.9
kwh)
Time in getting electricity (days) 55 59 59 100 116
Source: PHD Research Bureau, PHDCCI compiled from World Bank’s Doing Reports 2015-2019 (Note: * figures are
rounded off)

Dealing with construction permits: Cost associated with obtaining construction permits has
reduced from around 30% in 2015 to 5% in 2019, number of procedures in obtaining
construction permits have been reduced from 33 in 2015 to 18 in 2019 and the number of
days required in obtaining construction permits have also reduced from 180 days in 2015 to
95 days in 2019.
Chart 8: India’s performance in Dealing with Construction Permits

Dealing with Construction Dealing with Construction Permits: Dealing with Construction
Permits: Cost (% of Warehouse Procedures (Number) Permits: Time (Days)
Value)
35 200
29.8 35 33 33 33 180 180 180
30 27.2 26.4 30
23.2 30 170
25
144
20 25 140
15
20 18
10 5.4 110 95
5 15
0 80
10
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
2015 2016 2017 2018 2019
Source: PHD Research Bureau, PHDCCI, compiled from World Bank’s Doing Reports
Protecting minority investors- India ranked impressively in protecting the rights of minority
investors (7th rank in 2019) and established the best regulatory performance in extending
the shareholder’s rights (one of the variables of protecting the minority investors index).
Getting credit– India ranks comparatively good in getting credit parameter of ease of doing
business index. India’s rank in getting credit has improved from 36 in 2015 to 22 in 2019.
Paying taxes– The number of tax payments per year in India have reduced from 41 in 2015
to 12 in 2019 and total tax rate as a percentage of profit has reduced from 55.5% in 2015 to
52.1% in 2019.
Table 5: India’s performance in Paying Taxes Parameter

Variables 2019 2018 2017 2016 2015
No. of payments per
12 14 33 41 41
year
Time in paying taxes
275 216 251 253 253
(hours per year)
Total tax rate (% of
52.1 56.2 56.2 55.5 55.5
profit)
Source: PHD Research Bureau, PHDCCI, compiled from World Bank’s Doing Reports 2015-2019

Trading across borders- Cost of exporting associated with border compliances and
documentary compliances measured in US dollars has reduced from USD 413 in 2015 to
USD 252 in 2019 and from USD 102 in 2015 to USD 78 in 2019, respectively. Similarly, cost of
importing associated with border compliances and documentary compliances measured in
US dollars has reduced from USD 574 in 2015 to USD 331 in 2019 and from USD 145 in 2015
to USD 100 in 2019 respectively.
Table 6: India’s performance in Trading across Borders Parameter

Variables 2019 2018 2017 2016 2015
Cost to export: border
252 382 413 413 413
compliance (USD)
Cost to export:
documentary compliance 78 92 92 102 102
(USD)
Cost to import: border
331 543 574 574 574
compliance (USD)
Cost to import:
documentary compliance 100 135 135 145 145
(USD)
Source: PHD Research Bureau, PHDCCI, compiled from World Bank’s Doing Reports 2015-2019
Major reforms undertaken by the Indian government over the past five years (2015-2019)
to make doing business easier are briefed below:
 Reforms implemented in 2013- 2014 are:
1. Starting a business:
India made starting a business easier by considerably reducing the registration fees.
2. Getting electricity:
In India the utility in Mumbai made getting electricity less costly by reducing the
security deposit for a new connection.
3. Protecting minority investors:
India strengthened minority investor protections by requiring greater disclosure of
conflicts of interest by board members, increasing the remedies available in case of
prejudicial related-party transactions and introducing additional safeguards for
shareholders of privately held companies.
 Reforms implemented in 2014- 2015 are:

India made starting a business easier by eliminating the minimum capital
requirement and the need to obtain a certificate to commence business
operations.

The utility in Delhi made the process for getting an electricity connection simpler
and faster by eliminating the internal wiring inspection by the Electrical
Inspectorate. The utility in Mumbai reduced the procedures and time required to
connect to electricity by improving internal work processes and coordination.
 Reforms implemented in 2015-2016 are:

India made getting electricity faster and cheaper by streamlining the process of
getting a new commercial electricity connection.
2. Paying taxes:
India made paying taxes easier by introducing an electronic system for paying
employee state insurance contributions.
3. Trading across borders:
India made exporting and importing easier by launching the Indian Customs
Electronic commerce Gateway (ICEGATE) portal and simplifying border and
documentary procedures.
4. Enforcing contracts:
India made enforcing contracts easier by creating dedicated divisions to resolve
commercial cases.

India made starting a business faster by merging the applications for the
Permanent Account Number (PAN) and the Tax Account Number (TAN) and by
improving the online application system. Mumbai also made starting a business
faster by merging the applications for value added tax and the Profession Tax (PT).
2. Dealing with construction permits:
India reduced the number of procedures and time required to obtain a building
permit by implementing an online system that has streamlined the process at the
Municipality of New Delhi and Municipality of Greater Mumbai.
3. Getting credit:
India strengthened access to credit by amending the rules on priority of secured
creditors outside reorganization proceedings and by adopting a new law on
insolvency that provides a time limit and clear grounds for relief to the automatic
stay for secured creditors during reorganization proceedings.
4. Protecting minority investors:
India strengthened minority investor protections by increasing the remedies
available in cases of prejudicial transactions between interested parties.

5. Paying taxes:
India made paying taxes easier by announcing that payments to be made
electronically to the Employees Provident Fund and introducing a set of
administrative measures easing compliance with corporate income tax.
India reduced import border compliance time in Mumbai by improving
infrastructure at the Nhava Sheva Port. Export and import border compliance costs
were also reduced in both Delhi and Mumbai by eliminating merchant overtime
fees and through the increased use of electronic and mobile platforms.
7. Enforcing contracts:
India made enforcing contracts easier by introducing the National Judicial Data
Grid, which makes it possible to generate case management reports on local courts.
8. Resolving insolvency:
India made resolving insolvency easier by adopting a new insolvency and
bankruptcy code that introduced a reorganization procedure for corporate debtors
and facilitated continuation of the debtor’s business during insolvency proceedings.
9. Labour market regulation:
India increased the mandatory length of paid maternity leave.

 India made starting a business easier by fully integrating multiple application forms
into a general incorporation form.
 India also replaced the Value Added Tax (VAT) with the nationwide Goods and
Services Tax (GST) for which the registration process is faster and compliance is
easier.
 Mumbai abolished the practice of on-site inspections for registering companies
under the Shops and Establishments Act.
2. Dealing with Construction permits:
 India streamlined the process of obtaining a building permit and made it faster and
less expensive to obtain a construction permit.
 A single window clearance system is now implemented in Delhi.
 An online building permit approval system was introduced in Mumbai during the
second half of 2017.
 It also improved building quality control by introducing decennial liability and
insurance.

3. Getting credit:
 India strengthened access to credit by amending its insolvency and bankruptcy law.
 Secured creditors are now given absolute priority over other claims within
insolvency proceedings.
 The Delhi Electricity Regulatory Commission reduced charges for low voltage
connections. It also ensures that electrical connections be completed within 15
days of the application’s acceptance. To comply with this regulation, Tata Power
Delhi Distribution deployed more personnel as well as tracking tools and key
performance indicators to monitor each commercial connection.
 Getting electricity is also made easier in Delhi through a reduction in the time for
the utility to carry out the external connection works.
5. Paying taxes:
 India made paying taxes easier by replacing many indirect taxes with a single
indirect tax i.e. the Goods and Services Tax (GST) for the entire country.
 India also made paying taxes less costly by reducing the corporate income tax rate
and the employee’s provident funds scheme rate paid by the employer.
 India has introduced the National Facilitation Action Plan (2017-2020). Under this
plan it has implemented several initiatives that has improved the efficiency of cross
border trade and reduced the documentary compliance time and cost for both
exports and imports.
 Enhanced risk-based management now allows exporters to electronically seal their
containers at their own facilities.
 Only 5% of shipments may undergo physical inspections.
 India has also invested in the upgradation of port infrastructure and allowed
electronic submission of supporting documents with digital signatures.
7. Labour market regulation:
 Mumbai eliminated restrictions on weekly holiday work and introduced a 100%
wage premium for work on the weekly rest day.
 Mumbai also changed regulations pertaining to overtime hours and paid annual
leave.
 Reforms implemented during 2018-19
India is striving to attain a ranking among top 50 in Ease of Doing Business across the world.
The country has been undertaking major reforms, which have successfully cut cost, time,
documentation and procedures for the conduct of business in the country. The reforms
include an easy procedure for filing Goods and Service Tax returns, the elimination of
incorporation fees for small businesses, increase in the recovery rate under the Insolvency

and Bankruptcy Code 2016, among others. These reforms have brought a significant amount
of efficiency and transparency in doing business in the country.
Several reforms have been implemented to improve the trade experience of companies.
These reforms include introduction of a single window for all import and export
transactions, integration of all stakeholders such as port and terminal operators at a
common platform and fast tracking clearances of consignments at ports. The government
has launched ‘PCS1x’, an upgraded version of the e-commerce portal for Port Community
System (PCS), which intends to integrate 27 maritime stakeholders at a common platform.
In the trading Across Borders, the government has reduced the time and cost of exports and
imports through various initiatives, including the implementation of electronic sealing of
containers, upgrading of port infrastructure and allowing electronic submission of
supporting documents with digital signatures.
The Central Board of Indirect Taxes and Customs has implemented ICEDASH, an ease of
doing business dashboard to monitor daily clearances at each port in real time. The customs
department has also started a 24x7 facilitation centre at Jawaharlal Nehru Port Trust (JNPT),
which acts as a single window for clearing consignments expeditiously. A drive-through
scanner scans 100 containers per hour, compared to 8-10 containers per hour done through
mobile scanners. This has speeded up the clearance of consignments as containers do not
need to be opened. Further initiatives taken by the government to improve ease of doing
business in the country include relaxed norms for company incorporation, and removing
requirement of a bank account for GST registration. This is expected to help India improve
further its ease of doing business ranking in the coming times.
Some other steps which have been taken by the government include clubbing of several
forms into one; removal of company seal or rubber stamp; and combined registration for
EPFO and ESIC. Under ‘Paying Taxes’, the process of filing GST returns has been simplified
and hence made faster; instead of filing three returns, a GST taxpayer has to now file only
two returns. In addition, the Ministry of Corporate Affairs has eliminated the incorporation
fee for companies with authorised capital of up to Rs 15 lakh for ease of starting a business.
In a nutshell, the government has been initiating significant reforms to improve ease of
doing business in India. Several initiatives have been taken by the government across
different parameters to support the growth of ease of doing business environment in the
country. Some of the initiatives that have experienced improvement over the years are
trading across borders, simplification of filing GST returns, ease of paying taxes, starting a
business, getting credit and dealing with construction permits, among others. A consistent
progress made across different parameters is likely to expedite India’s ranking in top 50
countries in ease of doing business in years ahead.

5. Ease of Doing Business at the State Level
The government, over the past few years has implemented several reforms at the national
level to ease and rationalize the business regulatory processes accompanied by the
introduction of information technology as enabler to make governance more efficient and
effective. Though government’s measures for improving India’s ranking in the Ease of Doing
Business Index cover certain regulatory policies affecting the state governments, a lot more
is still required to be done by the respective States and Union Territories (UTs) to make
India’s business environment easy and lucrative for both domestic businesses and foreign
investors.
Need for monitoring business reforms at the State/Union Territory level
 India being a federal economy, businesses, besides the central government

regulations also have to comply with several rules, laws and procedures enforced by
the respective State governments in the form of obtaining large number of licenses,
registrations, among others which add to the compliances.
 Further, World Bank’s Ease of Doing Business Index ranking of India is based on the
reforms undertaken by only two major States/UTs of India namely Mumbai and
Delhi. Ranking is not based on reforms undertaken by other states and UTs.
In the light of the above arguments, it is necessary to assess and monitor the performance
of other states and UTs on business reforms undertaken by them.
Reasons for monitoring business reforms at the State/UT level

Business Reforms Action Plan (BRAP)

Keeping in mind the vision to make India an easy place to do businesses, Department for
Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and
Industry, Government of India in association with the World Bank, commenced a dynamic
national level exercise in 2014 to rank all the Indian States and Union Territories on the basis
of the reforms undertaken by them on selected parameters. In December 2014, under the
‘Make in India’ initiative, the representatives of the State Government identified and shared
a 98-Point Business Reform Action Plan (BRAP) to be implemented by them for improving
the regulatory framework for business as part of easing the doing business in the country.
The aim of this exercise was to create conducive business environment by streamlining
regulatory structures and creating an investor-friendly business climate by cutting down red
tape. The aim of the BRAP was to lay out the first of a series of recommendations targeted
at increasing transparency and improving the efficiency and effectiveness of various
government regulatory functions and services for business in India as well creating an
investor-friendly business climate by cutting down red tape. Subsequently, a report titled
“Assessment of State Implementation of Business Reforms” was released in September
2015 assessing the reforms implemented by States between the period 1stJanuary 2015 to
30thJune 2015. Sates and UTs were ranked on a total of 8 reform areas namely:
 Starting up a business
 Allotment of land and obtaining construction permits
 Environmental compliances
 Labour compliances
 Obtaining infrastructure related utilities
 Registering and complying with tax procedures
 Inspection reforms
 Enforcing contracts.
In 2015 BRAP rankings, Gujarat held the 1st rank, with the score of 71.1%, followed by
Andhra Pradesh at 2nd rank, with the score of 70.1% and Jharkhand occupied the 3rd rank,
with the score of 63.1%.
Table 7: Top performers on the basis of BRAP 2015
Rank States
1 Gujarat
2 Andhra Pradesh
3 Jharkhand
4 Chhattisgarh
5 Madhya Pradesh
6 Rajasthan
7 Odisha
8 Maharashtra
9 Karnataka
10 Uttar Pradesh
Source: PHD Research Bureau, PHDCCI, complied from Department of
Promotion of Industry and Internal Trade

To give this exercise momentum, 18 joint workshops were conducted in partnership with
the World Bank Group to help States/UTs to better understand the essence of these
reforms. Such an assessment promoted both competitive and cooperative federalism
among the States and Union Territories (UTs).
In October 2015, DPIIT circulated a 340-point BRAP to all the states and UTs which included
recommendations on 58 regulatory processes spread across 10 reforms namely:
 Construction permit enablers

 Environmental enablers
 Labour regulation enablers
 Obtaining electricity connection
 Online filing of tax returns
 Inspection reform enablers
 Access to information and technology enablers
 Single window system
 Availability of land
 Commercial dispute resolution enablers.
Consequently, an online portal (www.eodb.dipp.gov.in) showcasing dynamic real time

rankings was developed and launched in April 2016 which was the first such platform for
knowledge sharing on regulatory compliance requirements across States/UTs in the country.
Final rankings of States/UTs on implementation of the 340 points were released on 31 st

October, 2016.
Table 8: Top performers on the basis of BRAP 2016-2017
Rank States
1 Andhra Pradesh
1 Telangana
3 Gujarat
4 Chhattisgarh
5 Madhya Pradesh
6 Haryana
7 Jharkhand
8 Rajasthan
9 Uttarakhand
10 Maharashtra
In 2016-17 report, the ranking of Gujarat slipped to 3 rd from 1st position in 2015 and the 1st
position was taken by Andhra Pradesh and Telangana. The national implementation average
stood at 48.93% significantly higher than 2015’s national average of 32% and 12 States
achieved more than 90% implementation score. The results of the assessment demonstrate

that states have increasingly risen to addressing the challenge of making it easier to do
business.
In April 2017, DPIIT released the BRAP, 2017 which included 405 recommendations across
12 reform areas namely:
 Labour regulation enablers

 Contract enforcement
 Registering property
 Inspection reform enablers
 Single window system
 Land availability and allotment
 Construction permit enablers
 Environmental registration enablers
 Obtaining utility permits
 Paying taxes
 Access to information and transparency enablers
 Sector specific reforms.
However, BRAP 2017-18 was subsequently updated to 372 action points with addition of
new sectors such as Healthcare and Hospitality, Central Inspection system, Trade License,
Registration under Legal Metrology, and Registration of Partnership Firms & Societies. An
important addition to methodology under BRAP 2017-18 was the inclusion of feedback
exercise where feedback was sought on 78 reform points from actual users of new system.
The respondent data in various categories was provided by the States/UTs.
Table 9: Top performers on the basis of BRAP 2017-2018

Rank States
1 Andhra Pradesh
2 Telangana
3 Haryana
4 Jharkhand
5 Gujarat
6 Chhattisgarh
7 Madhya Pradesh
8 Karnataka
9 Rajasthan
10 West Bengal
Again, Andhra Pradesh was the best performer in the implementation of BRAP 2017-2018
followed by Telangana and Haryana. Gujarat dropped to 5 th place from 3rd in the previous
year. On 11th October 2018, the 80-action point BRAP2019 based on 12 reform areas was
circulated by DPIIT to states and UTs. DPIIT has also initiated a new reform wherein it will

help states to rank districts to promote ease of doing business in India. DPIIT has developed
a district level 218 action point reform plan that has been shared with the governments of
States and Union Territories for implementation. States will evaluate their districts based on
achievements in implementation. This exercise is important as companies set up
manufacturing base in some districts and therefore it is fundamental to make business
environment investor friendly.
Business Reform Action Plan (BRAP) Timeline
•The representatives of the State Government identified and shared a 98-Point Business
Reform Action Plan (BRAP) to be implemented by them for improving the regulatory
December
framework for business
2014
•A report titled “Assessment of State Implementation of Business Reforms” was released

assessing the reforms implemented by States between the period 1stJanuary 2015 to
September
30thJune 2015.
2015
•DPIIT circulated a 340-point BRAP to all the states and UTs which included
October recommendations on 58 regulatory processes spread across 10 reforms.
2015
31st •Final rankings of States/UTs on implementation of the 340 points were released. Andhra
October Pradesh, Telangana and Gujarat were the top three performers.
2016
•DPIIT released the BRAP, 2017 which included 405 recommendations across 12 reform
areas. However, BRAP 2017-18 was subsequently updated to 372 action points with
April 2017 addition of new sectors
•Again, Andhra Pradesh was the best performer in the implementation of BRAP 2017-
2018 followed by Telangana and Haryana. Gujarat dropped to 5th place from 3rd in the
April 2018 previous year.
• 80-action point BRAP2019 based on 12 reform areas was circulated by DPIIT to states
and UTs.
•DPIIT has also initiated a new reform wherein it will help states to rank districts to
October promote ease of doing business in India. DPIIT has developed a district level 218 action
2018 point reform plan that has been shared with the governments of States and Union
Territories for implementation.

Table 10: Rankings of the States and Union Territories on the basis of the implementation
of the Business Reform Action Plan (BRAP)
Rank Score (percentage)
State/UT 2017-2018 2016-2017 2015 2017-2018 2016-2017 2015

Andhra Pradesh 1 1 2 98.4 98.8 70.1
Telangana 2 1 13 98.3 98.8 42.5
Haryana 3 6 14 98.1 96.9 40.6

Jharkhand 4 7 3 98.1 96.6 63.1
Gujarat 5 3 1 98.0 98.2 71.1
Chhattisgarh 6 4 4 97.3 97.3 62.5

Madhya Pradesh 7 5 5 97.3 97 62
Karnataka 8 13 9 96.4 88.4 48.5
Rajasthan 9 8 6 95.7 96.4 61

West Bengal 10 15 11 94.6 84.2 46.9
Uttarakhand 11 9 23 94.2 96.1 13.4
Uttar Pradesh 12 14 10 92.9 84.5 47.4
Maharashtra 13 10 8 92.9 92.9 49.4
Odisha 14 11 7 92.1 92.7 52.1
Tamil Nadu 15 18 12 90.7 62.8 44.6
Himachal Pradesh 16 17 17 87.9 65.5 23.9
Assam 17 24 22 84.7 14.3 14.8
Bihar 18 16 21 81.9 75.8 16.4

Goa 19 21 19 57.3 18.2 21.7
Punjab 20 12 16 54.4 91.1 36.7
Kerala 21 20 18 44.8 26.9 22.9

Jammu & Kashmir 22 31 29 32.7 0.3 5.9
Delhi 23 19 15 31.7 47.6 37.4
Daman & Diu 24 23 - 28.7 14.6 -
Tripura 25 22 26 22.5 16.7 9.3
Dadra & Nagar 26 25 - 21.9 1.8 -
Haveli

Puducherry 27 26 20 15.7 1.5 17.7

Nagaland 28 26 31 14.2 1.5 3.4
Chandigarh 29 31 24 11.5 0.3 10

Mizoram 30 29 28 3.7 0.9 6.4
Andaman & Nicobar 31 31 25 1.2 0.3 9.7
Islands
Manipur 32 27 - 0.3 1.2 -
Sikkim 33 30 27 0.1 0.6 7.2

Arunachal Pradesh 34 31 32 0 0.3 1.2
Meghalaya 34 31 30 0 0.3 4.4
Lakshadweep 34 31 - 0 0.3 -
Source: PHD Research Bureau, PHDCCI, complied from Assessment of State Implementation of Business Reforms,
Department for Promotion of Industry and Internal Trade.
Business reforms undertaken by the States over the last few years
Over the years, states/UTs have introduced several reforms as a part of BRAP to improve
their business regulatory environment and attract investments. Some of the reforms
undertaken by the Indian states over the last few years to improve their business regulatory
environment and attract investments are as follows:
Table 11: Various Reforms Undertaken by the States

Reforms States implementing Best Practices
reforms
Single window Andhra Pradesh,  Andhra Pradesh and Telangana have the best
clearance Maharashtra, Rajasthan, single window mechanism
systems Gujarat, Haryana,  Telangana government has enacted the
Jharkhand, Chhattisgarh, “Telangana State Industrial Project Approval and
Madhya Pradesh, Self Certification System (TS-iPass) Act, 2014”
Telangana, Punjab and  Punjab government has implemented the one stop
Uttarakhand clearance system which provides one stop office
for all new and expansion projects
Tax reforms All the states and Union  In July 2017, Indian states and UTs have
Territories implemented the State/Union Goods and Services
Tax (SGST/UTGST) subsuming various state level
indirect taxes such as VAT, CST, Entry tax, etc.
making the compliance easier for businesses.
Construction Chhattisgarh, Uttarakhand,  Online applications and uploading of building plans

permits Andhra Pradesh, Haryana, for obtaining automated construction permit
Gujarat, Madhya Pradesh, approval.
Rajasthan, Telangana and

Maharashtra Majority of the States and UTs have defined clear

timelines for construction permitting
Environment Andhra Pradesh,  Gujarat government launched an online e-
and labour Karnataka, Uttar Pradesh, governance system known as XGN.
reforms Chhattisgarh, Gujarat,  Jharkhand government has implemented a single
Madhya Pradesh, Bihar, simplified online integrated return for all the 14
West Bengal Haryana, applicable labour laws.
Jharkhand, Odisha, Punjab,
Rajasthan, Tamil Nadu,
Maharashtra, Telangana
and Uttarakhand
Inspection Andhra Pradesh,  Jharkhand government has implemented an online
reforms Rajasthan, Haryana, inspection and compliance monitoring mechanism.
Telangana, Jharkhand,  Computerised allocation of units of inspectors for
Chhattisgarh, Uttarakhand, joint synchronised inspection
Madhya Pradesh, Odisha,
Karnataka, Punjab, Punjab,
Gujarat and Uttar Pradesh
Judicial Rajasthan, Chhattisgarh,  Chhattisgarh government has constituted a judicial
proceedings Gujarat, Jharkhand, Andhra bench and commercial/district courts in each
Pradesh, Madhya Pradesh, district for speedy resolution of disputes.
Maharashtra, Telangana  Every commercial dispute greater than Rs. 1 crore
and Haryana fall under the jurisdiction of commercial court.
Source: PHD Research Bureau, PHDCCI, complied from Department for Promotion of Industry and Internal Trade, Ministry
of Commerce and Industry, Government of India

6. Ease of Doing Business for MSMEs
The previous sections talked about the reforms undertaken by the central and state
governments to improve the business regulatory environment in the country and in their
respective states. These section talks about the ground realities i.e. whether the reforms
undertaken by government at both the levels have been implemented properly and their
benefits have reached the small and medium scale businesses which are the backbone of
the Indian economy.
India’s continuous rank improvements at World Bank’s Ease of Doing Business Ranking from
130th rank in 2017 to 100th rank in 2018 and 77th rank in 2019 as well as continuously
increasing State governments’ score (%) of BRAP implementation over the last three years
speaks volume on the government’s credibility and its efforts to make India a better place to
do business.
Importance of MSMEs in the India
Over the last few decades Micro, Small and Medium Enterprises (MSMEs) sector has
emerged as a prominent sector of the Indian economy contributing significantly towards
socio-economic development through the rapid expansion of entrepreneurial activities and
employment generation.
Over the years, MSMEs have broadened their domain by spreading activities across various
sectors of the economy. They are producing wide range of goods and providing services to
meet both domestic and overseas demand. There were 634 lakh non-agricultural MSMEs in
the country out of which 197 lakh are engaged in manufacturing, 230 lakh in trade and 207
lakh in other services. Out of the total number of estimated MSMEs- 51% are located in
rural areas and 49% in urban areas. Micro enterprises account for 99% of the total
estimated MSMEs whereas small and medium sectors accounted for 0.5% and 0.01%
respectively.
Table 12: Estimated Number of MSMEs (Activity and Enterprise Category Wise)
Type of Estimated Number of Enterprises (in lakhs) Share (%)

Activity/Enterprise Rural Urban Total
Manufacturing 114.1 82.5 196.6 31
Trade 108.7 121.6 230.3 36
Other services 102.0 104.8 206.8 33
Electricity 0.03 0.01 0.03 0
Total 324.9 309.0 633.9 100
Share (%) 51 49.0 100 -----

Micro enterprises 324.1 306.4 630.5 99.5

Small enterprises 0.8 2.5 3.3 0.52
Medium enterprises 0.01 0.04 0.05 0.01
Total 324.9 309.0 633.9 100
Source: PHD Research Bureau, PHDCCI, compiled from Annual Report, 2018-2019, Ministry of Micro, Small and
Medium enterprises (Note: data pertains to 2015-16)
The number of MSMEs increased to 634 lakh in 2015-16 as compared to 362 lakh MSMEs in
2006-07. Over a period of 10 years from 2006-2007 to 2015-2016, total number of MSMEs
have grown at an annual compounded growth rate of 6.4%. The number of manufacturing
MSMEs and services MSMEs have registered an annual compounded growth rate of 6.1%
and 6.6% respectively over the same period.
Table 13: Growth Rate of MSMEs
2015-2016 2006-2007 Annual compound
growth rate (%)
Total number of MSMEs (in lakhs) 633.9 361.8 6.4
Manufacturing 196.6 115 6.1
Services 437.2 246.8 6.6
Medium enterprises
Maximum number of MSMEs are located in Uttar Pradesh (90 lakhs) followed by West
Bengal (89 lakhs), Tamil Nadu (50 lakhs) and Maharashtra (49 lakhs). The state wise
distribution of MSMEs shows that top 5 states account for 50% of the total number of
MSMEs in the country.
Table 14: State wise distribution of MSMEs- top 5 States (2015-2016)

S.No. State Number of MSMEs Share (%)
(in lakhs)
1. Uttar Pradesh 89.9 14
2. West Bengal 88.7 14
3. Tamil Nadu 49.5 8
4. Maharashtra 47.8 8
5. Karnataka 38.3 6
Medium enterprises
MSMEs are pillars of economic growth as they contribute around 32% in gross value added
and 29% towards GDP, employ around 111 million people (36.2 million in manufacturing,
38.71 million in trade and 36.28 million in other Services) and contribute around 40%
towards exports. Further, MSMEs contribute significantly in overcoming regional disparities
and balancing distribution of wealth by running businesses in remote/backward areas as
well. They also aid in the success of ‘Make in India’ project of the Indian government.

Chart 9: Snapshot of MSME Sector
Share of MSMEs in GVA* Share of MSME in Exports
32%
40%
60%
68%
MSMEs Others MSME Other Sectors
1200 Employment Generation by MSMEs (in Lakhs) 1110 1200

1000 1000
362
800 800
612
600 498 600
212 387
400 151 400
161 227
200 360 200
187 174
0 0
Rural Urban Total
Manufacturing Trade Other Services Total Employment Generation
Category Wise Number of MSMEs Number of MSMEs by Region

(in Lakh)
49%
207, 33% 197, 31% 51%
230, 36%
Rural Urban
Manufacturing Trade Other Services
Source: PHD Research Bureau, PHDCCI compiled from MSME Annual Report 2018-19. Note: All of the above data pertains
to 2015-16. (Note:* Data pertains to 2016-17)
Table 15: Union Budget Announcements for MSMEs (2019-20)

S. No. Announcement Impact

1. An amount of Rs. 350 crore allocated for This will provide ease of access to credit for
FY2020 for 2% interest subvention for all MSMEs.
GST registered MSMEs on fresh or
incremental loans.
2. Creation of Payment platform for MSMEs by This will enable MSMEs to file bills and
the Government. receive payment thereof on the platform
itself.
3. Extension of the pension benefit to about This will promote old age protection and
three crore retail traders & small social security of workers in the MSMEs
shopkeepers whose annual turnover is less sector.
than Rs 1.5 crore under a new Scheme
namely Pradhan Mantri Karam Yogi
Maandhan Scheme.
4. The stand-up India scheme has been This will provide assistance to entrepreneurs
provided extension for the entire period to set up their businesses and industry with
coinciding with the 15th finance commission capital provided under this scheme
period of 2020-2025
5. ‘Angel Tax’ issue has been resolved by This will strengthen the start-up campaign in
introducing e-verification, speedy the economy
assessments of start-ups and redressal of
their grievances and relaxing some of the
conditions for carry forward and set-off of
losses for start-ups
6. The government has also proposed to start This will serve as a platform for promoting
a Television programme with Doordarshan start-ups, discussing issues affecting their
bouquet of Channel exclusively for Start-ups growth, match-making with venture
capitalists for funding and tax planning
7. The proposal to streamline multiple labour This will provide more room for deployment
laws into a set of four labour codes of workforce in the factories.
8. The government has proposed to set up 80 This will help in unleashing the
Livelihood Business Incubators (LBIs) and 20 entrepreneurial spirit in rural India and
Technology Business Incubators in 2019-20 stimulate the growth of the MSMEs in rural
to develop 75,000 skilled entrepreneurs in economy
agro-rural industry sectors by consolidating
the Scheme for Promotion of Innovation,
Rural Industry and Entrepreneurship’
(ASPIRE).
9. Non-Banking Financial Companies (NBFCs) This will inject liquidity in the system and
have been given Rs 1 lakh crore in the break the logjam thereby giving a push to
current financial year with the government’s economic growth. And since, NBFCs have
promise to bear the first loss of upto 10% of been significant credit providers to MSMEs,
the high-rated pooled assets purchased by increased liquidity would ease the credit
state run banks availability for MSMEs.

Recent Reforms for MSMEs

 Announcements made by Hon’ble Minister of Finance for MSMEs- All pending GST refund due
to MSMEs shall be paid within 30 days and in future all GST refunds shall be paid within 60
days from the date of application; TReDS to use GSTN system in medium term to enhance
market for bill discounting for MSMEs; Amendment to MSME Act to move towards single
definition to be considered; on line tracking of loan applications by customers of MSME to
increase transparency, reduce harassment and improve turnaround time for customers; Banks
to issue improved transparent One Time Settlement (OTS) policy to benefit MSME and retail
borrowers in settling their over-dues.
 Reserve Bank of India has notified and approved banks’ lending to NBFCs for further on-
lending to MSMEs under the Priority Sector Classification. Borrowers of the MSMEs segment
will be able to avail credit up to Rs 20 lakhs at concessional rate.
 Hon’ble Prime Minister launched a Support and Outreach Programme for the MSME sector,
including 12 key initiatives:
1. Loans upto 1 crore within 59 minutes through an online portal.
2. Interest subvention of 2% for all GST registered MSMEs on fresh or incremental loans.
3. All companies with a turnover of more than 500 crores to be mandatorily on TReDS platform
to enable entrepreneurs to access credit from banks, based on their upcoming receivables,
thus, solving the problems of cash cycle.
4. All PSUs to compulsorily procure 25% from MSMEs instead of 20% of their total purchases.
5. Out of the 25% procurement mandated from MSMEs, 3% reserved for women entrepreneurs.
6. All CPSUs to compulsorily procure through GeM portal.
7. 100 Technology Centres to be established at the cost of Rs 6000 crore.
8. Government of India to bear 70% of the cost for establishing Pharma clusters.
9. Returns under 8 labour laws and 10 Union regulations to be filed once in a year.
10. Establishments to be visited by an Inspector will be decided through a computerised random
allotment.
11. Single consent under air and water pollution laws. Returns will be accepted through self-
certification and only 10% MSME units to be inspected.
12. For minor violations under the Companies Act, entrepreneurs no longer have to approach
court but can correct them through simple procedures.
 Prime Minister's Employment Generation Programme (PMEGP) is a major credit-linked

subsidy programme, aimed at generating self-employment opportunities through
establishment of micro-enterprises in the non-farm sector. The Cabinet Committee on
Economic Affairs approved the continuation of (PMEGP) beyond 12th Plan for three years
from 2017-18 to 2019-20. Allocation of Rs 2327 crore has been made in budget 2019-20.
 The launch of web portal www.psbloansin59minutes.com to enable principle approval for

MSME loans up to Rs. 1 crore within 59 minutes from SIDBI and 5 Public Sector Banks (PSBs).

 Establishment of Export Promotion Cell (December 2018) with an aim to create a sustainable
ecosystem for entire MSME development and :
o Evaluate readiness of MSMEs to export their products and services
o Recognize areas where improvements are required in order to be able to export
effectively and efficiently
o Integration of MSMEs into Global Value Chain.
 Major decisions regarding MSMEs in the GST Council Meetings:

o Increase in Turnover Limit for the existing Composition Scheme to Rs 1.5 crore.
o Two Threshold Limits for exemption from Registration and Payment of GST for the
suppliers of Goods i.e. Rs 40 lakhs and Rs 20 lakhs.
o A Composition Scheme shall be made available for Suppliers of Services (or Mixed
Suppliers) with a Tax Rate of 6% (3% CGST +3% SGST) having an Annual Turnover in the
preceding Financial Year up to Rs 50 lakhs.
o Rate Rationalisation: Major changes in the Tax rates of various items whereby 28%
items pulled to 18%, 18% items pulled to 12% & 12% items pulled to 5%. Further various
essential goods were made tax free. Mostly goods are unbranded and manufactured by
MSMEs.
 To facilitate meaningful restructuring of MSME accounts that have become stressed, RBI
decided to permit a one-time restructuring of existing loans to MSMEs that are in default but
‘standard’ as on January 1, 2019, without an asset classification downgrade.
 In order to promote the Ease of Doing Business, the Ministry of MSMEs introduced various
initiatives including:
o Online filing of Udyog Aadhaar Memorandum (UAM)
o MSME SAMADHAAN Portal- for empowering micro and small entrepreneurs across the
country to directly register their cases relating to delayed payments.
o MSME SAMBANDH Portal- to help in monitoring the implementation of public
procurement policy for micro and small enterprises.
o MSME SAMPARK Portal – A digital platform wherein jobseekers (passed out
trainees/students of MSME Technology Centres) and recruiters get connected.
o Digital Payments- to pass on the benefits of the schemes of Ministry of MSME through
digital payment gateway.
 Launched in 2015, Pradhan Mantri Mudra Yojana (PMMY) aims to provide formal access of
financial facilities to non-corporates and small businesses. Under MUDRA Yojana, 16.8 crore
loans have been disbursed amounting to Rs 7.8 lakh crore till March 2019.
However, despite being regarded as ‘the engine of economic growth’ MSMEs in India are
still facing several issues like infrastructural bottlenecks, lack of proper market linkages, and
challenges in terms of flow of institutional credit among others, discussed below:
• Infrastructure bottlenecks are major issue being faced by them. The MSMEs lack
adequate and reliable state of infrastructure including power, roads water etc.
• Lack of proper market linkages.

• Access to timely and adequate credit as well as bank finance is difficult for the sector
on account of high interest rates, unreasonable demand for collateral, conditional
working capital limits and high procedural transaction cost. It has been found that it
takes more than 15 days and so for the MSMEs to obtain finance. Majority of the
respondents (42%) said that it takes 46-60 days to obtain finance. While 27% of the
respondents said that it takes around 31-45 days for the same. Further, 16% of the
respondents said that it takes more than 60 days to get finance and 15% of the
respondents said that it takes around 15-30 days to obtain finance.
Table 16: Average days to obtain finance by MSMEs (% of responses)

MSMEs Less than 15-30 days 31-45 days 46-60 days More than
15 days 60 days
% of responses - 15% 27% 42% 16%
Source: PHD Research Bureau, PHDCCI, Survey on Ease of Doing Business for MSMEs, April-June 2019
• Difficulty in opening new businesses due to complex and overlapping procedural and
documental requirements, which cause investments to lie idle and reduce the
competitiveness of MSMEs in international market.
• Difficultly in complying with excessive formalities under various laws. Registration
process of exporters, obtaining license, custom and port handling procedures to
hamper operations and are time consuming.
• Excessive laws relating to taxation, labour and environment are rigid, complex and
time consuming that creates unnecessary problems to the functioning of MSMEs.
• Difficulty in complying with clearances like Centre level clearances, State level
clearances, statutory clearances, sector specific clearances, environmental
clearances, among others. This increases the source of doing business.
• Complex GST structure in India- 5-rated slab system and increased GST compliance
cost, lock-in of working capital requirement under GST, difficulties in claiming GST
refunds by exporters, exclusion of certain goods and services from GST.
• There is a lack of coordination among the various organization involved in the
promotion of MSMEs, including organisations of the State/UT Governments and
inadequate linkages with the institutional stakeholders in the private sector.
Thus, there is an urgent need to focus on the Ease of Doing Business for MSMEs and
implementation aspect of reform measures at the ground level.

7. Role of States in Promotion of MSMEs and Ease of Doing Business
MSMEs cater to the vital needs of the economy and are expected to foster the next level of
growth in the coming times. The MSMEs complement as ancillary units to the established
big organizations in India and provide employment to a large chunk of the population.
Further, they play a crucial role in the process of economic development by value addition,
equitable distribution of income as well as through export earnings. Each state’s MSMEs
provide a vast untapped potential which can be explored and harnessed with attractive
investments that could eventually provide huge gainful employment. Considering the
immense potential of the MSMEs, the states may focus on providing a conducive
environment to MSMEs, to accelerate growth and overall socio-economic development,
going forward. The distribution of MSMEs varies in each state. Uttar Pradesh has the largest
share (14%) of MSMEs in India as compared to other states, followed by West Bengal and
Tamil Nadu.
Chart 10: State wise Distribution of MSMEs

Uttar Pradesh 14.20%
West Bengal 13.99%
Tamil Nadu 7.81%
Maharashtra 7.54%
Karnataka 6.05%
Bihar 5.44%
Andhra Pradesh 5.34%
Gujarat 5.23%
Rajasthan 4.24%
Madhya Pradesh 4.22%
Telangana 4.11%
Kerala 3.75%
Odisha 3.13%
Jharkhand 2.51%
Punjab 2.31%
Assam 1.92%
Haryana 1.53%
Delhi 1.48%
Chhattisgarh 1.34%
Jammu & Kashmir 1.12%
Uttarakhand 0.66%
Himachal Pradesh 0.62%
Tripura 0.33%
Manipur 0.28%
Meghalaya 0.18%
Puducherry 0.15%
Nagaland 0.14%
Goa 0.11%
Chandigarh 0.09%
Mizoram 0.06%
Sikkim 0.04%
Arunachal Pradesh 0.04%
Andaman & Nicobar… 0.03%
Dadra & nagar Haveli 0.03%
Daman & Diu 0.01%
Lakshadweep 0.00%
0% 2% 4% 6% 8% 10% 12% 14% 16%

Percentage, %
Source: PHD Research Bureau, PHDCCI, Compiled from Annual Report 2018-19, Ministry of MSMEs

The states form the core of the federal structure in India and for any development initiative
to succeed; the role played by states assumes immense significance. In order to improve the
ease of doing business in the country, the states’ may aim at boosting the competitiveness
of MSMEs across the manufacturing and service sector such as the ESDM, textiles, IT and
ITeS, food processing, packaging, chemicals, finance and credit, transportation, logistics,
telecom, hospitality, tourism, education, defence, among others through the creation of
state of the art infrastructure, supporting the adoption of modern technologies, fostering
innovation and making them aware of e-commerce that has enough potential to boost their
growth.
MSMEs have a potential to contribute significantly in the inclusive industrial development of

the country. The states may encourage the cluster development approach for MSMEs as an
effective strategy for their development. This is cost-effective, inclusive, sustainable and
would enable competitiveness among the service sector MSMEs. The state governments
may make interventions in providing required support in the field of infrastructure, capacity
building of human resources, technology adoption, market development assistance and
product diversification. For promoting employment in the MSMEs, the states may work
towards extensive skill development, skill trainings, technology adoption, branding and
marketing support.
Each state may dedicatedly promote setting up of incubation centres in each and every
district for encouraging employment generation, inculcating the spirit of entrepreneurship,
skill training and research and development facility. The skill training body setup in each
state may target to exploit the potential of the skilled manpower as per the requirements of
the MSME enterprises; could expedite the growth of state’s economy. The skill training body
should also maintain a database that is accessible to the enterprises and provide a direct
interface with the skilled manpower available for ready employment.
Each state may focus on setting up of state level MSMEs Facilitation Centre that would
provide guidance and support to new investors for one-stop information about investment
opportunities, access to market, access to credit institutions, among others. The MSMEs
shall be facilitated in seeking credit from financial institutions by providing them with
detailed information and guidance in documentation. Special support in credit facility be
made to women and specially-abled entrepreneurs in all the states of India.
It is important to brand and market the MSMEs. Therefore, the state governments may
create business opportunities for MSMEs and establish linkage between the vendors and
anchor units that market events for MSMEs. Further, the state governments may provide
support for quality improvement to MSMEs in each state. The states’ may encourage
MSMEs to attain international quality benchmarks and also provide part of capital cost for
setting up of laboratories or institutions.

In a nutshell, the states may provide policy initiatives that are expected to encourage
investments in the MSMEs. The measures that would smoothen the functioning of MSMEs
are summarized as under:
 Streamlining procedures and regulations for ease of doing business in manufacturing

and service sector MSMEs
 Strengthen single window system for the access to credit and loan under 59 minutes
for manufacturing and service sector MSMEs
 Setting up of facilitating mechanism for guidance to new investors and support to
the existing investors.
 Fostering innovation through enhanced focus on research and development
 Focusing on thrust areas in the manufacturing and services sector
 Providing marketing and branding support to the MSMEs
 Promoting the entrepreneurship environment and incubation centres
 Focusing on skill development and training
 Supporting technology adoption among the MSMEs
7.1 Role of states crucial to achieve Ease of Doing Business
Indian economic development has been scripted by the development of the grass roots:
the states. Since national development is an aggregation, the failure in one state
undermines the success in others, in turn retarding the overall growth of the total. The
role of the states in shaping the economic environment of India has been immense,
despite globalization and liberalization of the Indian economy. Though the states are quiet
diverse in terms of area, population or governance, they are operating under similar policy
environment and hence endowed with almost equal opportunity to grow and prosper.
Post economic reforms, the states have been empowered by increased autonomy and that
has given rise to the level playing field among them. The performance at sub-national level
is thus predominantly governed by several economic parameters, which are all directed by
the quality of governance. Although, traditionally most of the states’ economies were
largely dependent on agriculture, the recent expansion of the service sector and consequent
robust economic growth in the states is indeed a major development. The service sector has
contributed to massive employment generation in most of the states. However, high
dependency on agriculture remains a challenge as a large proportion of the population in
these states draws its livelihood from the sector.
Thus, it becomes imperative for the states to develop the manufacturing sector which can
absorb excess labour from agriculture. The business firms would be willing to set up their
industrial units in states where there is a conducive business environment and ease of doing
business. Hence, states may work towards reducing the cost of doing business by
developing state of the art infrastructure, providing basic amenities and quality services and
single window clearances, among others. The most important ingredient- the availability of

land should also be at the top of reforms agenda of the state to facilitate industrial
development and to create manufacturing excellence for the promotion of employment.
7.2 Growth of states and the implementation of Business Reforms Action Plan
Improving India’s regulatory framework for business is a key prerequisite for increasing
investment in India and thereby creating jobs. Doing Business reforms will only address
central regulations, and regulations in Mumbai and Delhi; the rest of the country may also
improve simultaneously if improvement has to be made at the ground level.
It is with this objective that in December 2014, states agreed to a 98-point action plan to
suggest potential reforms that should be undertaken to improve the regulatory framework
for business nationwide. More importantly, this assessment allows us to generate a wide base
of knowledge on how States have been addressing the task of reducing the regulatory burden
on business, and identifying a series of good practices already underway in each State.
Implementation of Reforms scorecard is developed by the Ministry of Commerce,

Government of India in partnership with the World Bank. It issues rankings of states based
on states’ implementation of the Department of Industrial Policy and Promotion’s 406 point
Business Reform Action Plan- which is comprehensive reform recommendations on
spanning the life of a typical business. The following table provides a comparison between
the average growth rates of GSDP of states, and their ranking on the Implementation
Reforms Scorecard.
Andhra Pradesh which ranks 1st on Business Reform Action Plan (BRAP) 2017-18 also
registered double digit growth in GSDP during the last five years followed by Telangana
which ranks 2nd and has a high growth of GSDP of 9.7% over the last five years. The state of
Haryana ranks 3rd and has a high GSDP growth of around 9% in the last five years. Thus, the
implementation of reforms for the growth of industry has facilitated these states to scale up
their GSDP growth in the recent times.
Table 17: GSDP Growth and State Ranking on Implementation of Reforms Index
S. No States/UT Growth in Gross State BRAP Ranking in
Domestic Product 2017-18
(%)(2014-15 to 2018-19)
1 Andhra Pradesh 10.82 1
2 Telangana 9.68 2
3 Haryana 8.66 3
4 Jharkhand 7.27 4
5 Gujarat* 10.39 5
6 Chhattisgarh 4.92 6
7 Madhya Pradesh 7.98 7
8 Karnataka 10.06 8

9 Rajasthan 6.92 9
10 West Bengal 7.52 10
11 Uttarakhand 7.58 11
12 Uttar Pradesh 6.71 12
13 Maharashtra* 7.56 13
14 Odisha 8.09 14
15 Tamil Nadu 7.23 15
16 Himachal Pradesh 7.31 16
17 Assam* 9.25 17
18 Bihar 7.93 18
19 Goa 12.88 19
20 Punjab 5.84 20
21 Kerala* 6.51 21
22 Jammu & Kashmir* 6.3 22
23 Delhi 8.94 23
24 Puducherry 5.12 27
25 Chandigarh* 8.45 29
26 Andaman & Nicobar Islands* 9.67 31
Source: PHD Research Bureau, PHDCCI, sourced from Implementation Scorecard, Business Reforms Action Plan,
Department of Industrial Policy and Promotion 23-04-2019. Note: Growth in GSDP of the states is an average of over a
four year period, from 2014-15 to 2018-19; *depicts average growth in GSDP calculated from 2014-15 to 2017-18, as
data unavailable for 2018-19; the table does not include North Eastern States
Among the North Eastern states, Tripura ranks best and has the GSDP growth of around 9%
which is high commendable.
Table 18: GSDP Growth and State Ranking on Implementation of Reforms Index (North
Eastern States)
S. No States/UT Growth in Gross State BRAP Ranking in 2017-
Domestic Product (%) 18
(2014-15 to 2018-19)
1 Tripura* 9.24 25
2 Nagaland* 4.09 28
3 Mizoram* 13.28 30
4 Manipur* 6.12 32
5 Sikkim 7.8 33
6 Arunachal Pradesh* 6.42 34
7 Meghalaya* 3.55 34
Source: PHD Research Bureau, PHDCCI, sourced from Implementation Scorecard, Business Reforms Action Plan,
Department of Industrial Policy and Promotion 23-04-2019. Note: Growth in GSDP of the states is an average of over a
four year period, from 2014-15 to 2018-19; *depicts average growth in GSDP calculated from 2014-15 to 2017-18, as
data unavailable for 2018-19

7.3 BRAP rankings and growth of industry in few states
The analysis of industry growth and BRAP rankings reveal that the states with high industry
growth also scores well on BRAP and ranks in top echelons. Among the top 10 states as per
the business reform implementation index, Andhra Pradesh ranked 1 st in 2017-18 with an
industrial growth of 9.1%. Telengana ranked second with an industrial growth of around
8.5%. The chart depicts that the states’ industrial growth rate and their ranking on the
business reform index are in a harmony with the objective of their ease of doing business.
Chart 11: Growth of Industry and BRAP Ranking 2017-18

10% 1 0
9% 2 1
8% 3 2
7% 3
Percentage, %
6% 4
Rank
5% 6 5
9.14% 8.47%
4% 7 5.29% 6
3% 6.05% 5.95% 7
2% 9 8
5.71%
1% 9
0% 10
Andhra Telangana Haryana Chattisgarh Madhya Rajasthan
Pradesh Pradesh
Growth of Industry for 2018-19 BRAP Ranking for 2017-18
Source: PHD Research Bureau, PHDCCI compiled from various sources
In a nutshell, the states of India have been progressing steadily. Several states have been
progressing rapidly on different indicators. The states are taking significant steps to
promote the role of MSMEs along with contributing to their ease of doing business. States
have an ever important and competitive role in contributing to the national product and
they are seeking to expand their secondary sector and build infrastructure while balancing
socio-economic growth.

8. Ease of Doing Business for MSMEs: Survey Findings

During the last few years, India’s rankings in the ease of doing business have become
lucrative in terms of attractiveness for foreign investors and boosting the sentiments of
domestic businesses. However, apart from the parameters taken in the World Bank
rankings, there are certain other parameters that are crucial for the businesses at the
MSMEs level that needs to be examined. Further, as the MSMEs sector has emerged as an
engine of futuristic growth trajectory of the nation, it becomes essential to analyse the
degree of ease of doing business for this sector.
At this background, a survey has been conducted to examine the ease of doing business for
MSMEs. An extensive questionnaire pertaining to the select aspects of ease of doing
business in India was prepared and distributed in the MSMEs across the country.
The survey revealed that 38% of the respondents agreed on improvement in the ease doing
business at the ground level, followed by 26% of the respondents who disagreed on
improvement in the ease doing business. Around 23% of the respondents were indifferent
on improvement in the ease doing business, 7% of the respondents strongly agreed on
improvement in the ease doing business and 6% of the respondents strongly disagreed on
the same. This can be attributed to the fact that the survey was conducted in the month of
April to June 2019 while lot of reform measures were undertaken by the government in the
period July-August 2019. Thus, it is evident that there has been improvement in the ease of
doing business and the reform measures of the government would give fruitful results when
they percolate to the grassroots level.
Chart 12: Improvement in Ease of Doing Business for MSMEs (in %)

Agree 38%
40%
30%
20%
Strongly
Disgaree
Disagree 10%
6% 26%
0%
Strongly Agree Indifferent

7% 23%

According to the survey, the respondents agreed that there has been improvement in
certain parameters of ease of doing business for MSMEs, such as improvement in supply of
electricity; reduction in time taken to obtain electricity connection; reduction in time
involved in transportation of goods; reduction in number of documents required in starting
a business; online availability of business procedures; ease in starting a business; IT enabled
business procedures; reduction in cost to obtain an electricity connection; ease in obtaining
construction permit/certificate; improvement in cost to obtain an internet connection; cost
of enforcing a contract; cost and time involved of documenting in exporting and importing;
time involved in processing building permit & certificate; credit availability; documents
required for exporting and importing; decrease in number of procedures for new water &
sewage connection; reduction in time to register a property; reduction in cost for new water
and sewage connection; behaviour of inspectors has become cooperative; reduction in road
police checks/inspections while shipment is en route.
Chart 13: Respondents Agreed on Improvement in Ease of Doing Business (in %)
Supply of electricity 63
Time to obtain an electricity connection 56
Time involved in transportation of goods 50
Number of documents in starting a business 48
Online availability of business procedures 47
Starting a business 46
Business procedures are IT enabled 45
Cost to obtain an electricity connection 42
Obtaining construction permit/certificate 41
Cost to obtain an internet connection 40
Cost of enforcing a contract 38
Time of processing building permit & … 36
36
Documents required for exporting and … 35
Credit Availability 35
Time for documenting in exporting and … 34
34
Time to register a property 33
Cost for new water and sewage connection 30
Road police checks/inspections 30
Behavior of inspectors 30
0 10 20 30 40 50 60 70
The survey showed that the respondents disagreed with the improvement in the following
parameters of ease of doing business: reduction in the cost for starting a business; decline

in the cost of labor; decline in cost to register a property; presence of single window
mechanism for approvals and clearances; availability of common application for business
approvals; improvement in the compliance under various labor laws; reduction in the cost
of business approvals and clearances; decline in the number of procedures required for
registering a property; reduction in the electricity tariffs; dip in the number of tax returns to
be filed in a year; inspection conducted by departments are objective & well defined; ease
in obtaining various business approvals and clearances; ease in employment of labor;
availability of credit at reasonable rate of interest; and reduction in the number of
inspections conducted.
Chart 14: Respondents Disagreed on Improvement in Ease of Doing Business (in %)
Cost for starting a business 56
Cost of labor 52
Cost to register a property 47
Single window mechanism for approvals and

45
clearances
Common application for business approvals 43
Compliance under various labor laws 40
Cost of business approvals and clearances 40
Procedures for registering a property 35
Number of tax returns to be filed in a year 33
Electricity tariffs 33
Inspection conducted by departments are defined 32
Employment of labor 31
Obtaining various business approvals and clearances 31
Credit availability at reasonable rate of interest 29
Reduction in number of inspections conducted 28
0 10 20 30 40 50 60

According to the survey, respondents were indifferent about the improvement in

parameters such as simplification of process of tax registration; increase in the protection of
shareholders from undue board control; reduction in number of documents for construction
permits; decline in the time taken and cost involved to recover debt under insolvency
proceedings; increase in recovery rate under insolvency proceedings; ease in fulfilling
compliance under various environmental laws and decline in cost; simplification of tax
structure in the country; expansion of role of shareholders in the management of the
company; contracts entered into are easily enforceable; decrease in the time to obtain
credit; and reduction in the tax rates in the country.
Chart 15: Respondents were Indifferent on Improvement in ease of doing business (in %)
Process of tax registration 46
Protection of shareholders from undue board

45
control
Ease in documentation for construction permits 44
Time taken to recover debt under insolvency

43
proceedings
Recovery rate under insolvency proceedings 41
Compliance under various environmental laws 40
Role of shareholders in the management of the

38
company
Simplification in Tax structure 38
Cost involved to recover debt under insolvency

38
proceedings
Cost of environmental laws 34
Contracts entered into are easily enforceable 34
Time to obtain credit 31
Tax rates in the country 28
0 5 10 15 20 25 30 35 40 45 50

As per the survey results, respondents strongly agreed that there has been improvement in
ease in bringing out law suit against the company; decrease in the number of tax payments
in a year; reduction in the cost of transportation and logistics; and decline in the time
required to enforce a contract parameters of ease of doing business.
Chart 16: Respondents Strongly Agreed on Improvement in ease of doing business (in %)
Bringing out law suit against the company 36
Number of tax payments in a year 34
Cost of transportation and logistics 29
Time required to enforce a contract 27
0 5 10 15 20 25 30 35 40
Source: PHD Research Bureau, PHDCCI, Survey on Ease of Doing Business for MSMEs, April-June
2019.
Further, according to the survey, respondents strongly disagreed that there has been
improvement in parameters of ease of doing business, such as easy availability of land;
reduction in the cost of land; and process to acquire land is simple and less time consuming.
Chart 17: Respondents Strongly Disagreed to Improvement on ease of doing business
Availability of land 36
Cost of land 30
Process to acquire land 30
0 5 10 15 20 25 30 35 40
Source: PHD Research Bureau, PHDCCI, Survey on Ease of Doing Business for MSMEs, April-June
2019.

Perception of MSMEs on Doing Business Reforms
 The ‘starting a business’ in the ease of doing business for MSMEs has shown mixed
results, as the survey revealed that starting a business has become easy and number
of documents and procedures required for starting a business have decreased.
However, cost incurred for starting a business needs to be reduced.
 Majority of the respondents (46%) agreed that starting a business in India has
become easy. The reason could be attributed to the initiatives taken by the
government such as, reduction in registration fees, elimination of minimum capital
requirement, merger of the applications for the Permanent Account Number (PAN)
and the Tax Account Number (TAN), improvement in the online application system,
introduction of Goods and Services Tax (GST), among others. On the other hand, 27%
of the respondents have disagreed that starting business has become easy, while
10% had a neutral stance.
 According to 56% of the respondents, the cost incurred for starting a business has
not reduced significantly. The government has taken steps where the cost of
starting/incorporation of a business, such as Ministry of Corporate Affairs has
eliminated the incorporation fee for companies with authorised capital of up to Rs
15 lakh for ease of starting a business. However, the survey results show that there is
still a lot to be done at the ground level.
 The survey showed that the number of documents/procedures in starting a business

has reduced significantly, as 48% of respondents agreed to this. Recently, Ministry of
Corporate Affairs has integrated five procedures for starting a business in one step.
Using integrated e-Form SPICe (Simplified Proforma for Incorporating Company
Electronically), stakeholders can apply for Company Name, Company Incorporation,
DIN (Director Identification Number) of the directors, PAN and TAN for the newly
incorporated company, and avail all five services simultaneously.
 ‘Obtaining business approvals’ needs a lot of improvement as the majority of the

respondents disagreed that obtaining various business approvals and clearances
from the government department have become simpler and faster particularly for
MSMEs. Similarly, survey revealed that cost of obtaining business approvals and
clearances has not reduced for the MSMEs.
 The survey revealed that ‘getting electricity’ of ease of doing business has improved
significantly. Government has taken many steps to make getting electricity easier,
faster and cheaper, such as procedures for internal wiring inspection by the Electrical
Inspectorate (in Delhi) have been eliminated. In Delhi, service line charges have been
capped to INR 25,000/- in electrified areas for Low Tension loads up to 150 KW.
Administrative easing measures taken by government in this direction includes
online application with no requirement of physical documents to be accepted, online

approval system for obtaining Right of Way (RoW) permissions in Delhi, rationalised
cost of obtaining electricity connection, among others. However, similar initiatives
are required to be undertaken in tier 2 and tier 3 cities also, so that the effect could
be felt by MSMEs. In this context, 56% of the respondents responded positively that
the time (number of days) to obtain electricity connection has reduced significantly.
 The survey showed that while 42% of the respondents agreed that the cost to obtain
an electricity connection has reduced, 21% of the respondents disagreed with the
same. Further, more than 60% of the respondents agreed that the supply of
electricity has improved significantly. Only 18% of the respondents responded
positively that the electricity tariff has reduced significantly. However, majority
(33%) of the respondents disagreed and suggested that tariffs need to be reduced,
going ahead.
 The response on the ‘getting credit’ has been mixed as the survey revealed that
access to credit has improved but the cost of credit is high and the time taken to
obtain credit has neither improved nor the time taken to obtain the credit for the
MSMEs. According to the survey, credit availability parameter of ease of doing
business has shown significant improvement. 35% the respondents agreed when
asked about the improvement in credit availability. Similar was the case when asked
about improvement in the time taken to obtain credit; 27% of the respondents
agreed that improvement has been there (while 31% were indifferent on the same).
29% of the respondents disagreed that the credit is available at reasonable rate of
interest. When an MSME approaches the bank for a loan, if total loan amount is
greater than Rs1 crore, the CGTMSE (Credit Guarantee Fund Trust for Micro and
Small Enterprises) clause gets disregarded and the entire loan is treated as a normal
loan. The benefit of interest and securitization relaxation is not given on the first Rs 1
crore amount. So, the CGTMSE clause may be reconsidered.
 No significant change witnessed in the ‘paying taxes’ for the MSMEs. The survey
revealed that the respondents were positive that the tax structure in India has been
simplified and process of tax registration has become simple and fast.
Implementation of Goods and Service Tax has made India attractive across the world
and has created a common market for more than 133 core people. Implementation
of GST was a historic move and it complemented India’s move towards the fastest
growing economy in the world and promoting ease of doing business in the country.
At this backdrop, 38% of the respondents were indifferent that the tax structure
prevailing in the country has simplified, 28% agreed that tax rates in the country
have reduced significantly and 46% of the respondents were indifferent that the
process of tax registration is simple and fast. However, on the other hand, majority
(49%) of the respondents agreed (and strongly agreed) that the number of tax
payments has reduced significantly. Nonetheless, with the continuous reform
measures of the government to simplify and rationalise GST, it is expected that the
tax structure would become much simpler in the coming times.

 A lot of improvement is needed for the ‘deployment of labour’ as the survey

showed that situation of employment of labour in India has not improved in recent
years in any aspect. 31% respondents disagreed that the employment of labour has
become easy. In case of cost of labour parameter, 73% of respondents (52%
disagreed and 21% strongly disagreed) believed that the cost of labour has not
reduced. Similar was the case with improvement in compliance under various labour
laws as 40% respondents disagreed on this aspect. Labour laws in India are
restrictive in nature. Amendments are required in The Industrial Disputes Act (1947)
because of its rigid provisions such as compulsory and prior government approval in
the case of layoffs, retrenchment and closure of industrial establishments employing
more than 100 workers. This clause applies even when there is a good reason to shut
shop, or worker productivity is seriously low.
 According to the survey, nothing much has changed in context of the environmental
compliances as 40% of the respondents were neutral about the easiness in
compliance under environmental laws and 34% of the respondents were neutral
about reduction in cost of complying with environmental laws.
 On one hand, the survey revealed that cost incurred and number of procedures in
registering a property or transfer of title has not reduced. However on the other
hand time taken to register a property has reduced significantly. According to the
survey, 47% of the respondents disagreed that there has been improvement in the
cost incurred in registering a property. 35% of the respondents disagreed that the
number of procedures has reduced to register a property. The registration fee for
property documents is 1% of the value of the property, subject to a maximum of Rs
30,000/-. Stamp duty is compulsory but different rates of stamp duty are payable in
different states, depending on the legislation prevalent in that state. In this context,
amendments need to be made in the Transfer of Property Act, 1886 to ensure that
the cost, time and procedures involved in registering and transferring of title of the
property is reduced further. However, 33% of the respondents agreed on the
parameter that the time taken to register a property has reduced significantly.
 In the ‘contract enforcement’ the general consensus is positive. According to the

survey, 34% respondents remained neutral when asked whether the contracts
entered into are easily enforceable, while 31% of the respondents disagreed on the
same. Businesses find it difficult to operate in an environment characterised by lack
of contract enforcement, as poor contract enforcement tends to increase the risk
and reduce the returns (increased legal costs), thus affecting the overall risk to
return ratio. Contrary to this, 44% and 42% responded that there has been much of
improvement in the cost and time aspect of enforcing a contract in the court of law
has reduced significantly, respectively. Focus is needed on ease of enforcement of
contracts.

 As per the respondents, neither the inspections conducted by various government

departments and institutions regarding business compliance of various laws, rules,
regulations etc. have reduced nor the inspections conducted are objective and based
on well- defined procedures. However, 30% of the respondents agreed on the
parameter that the behaviour of inspectors have become cooperative over the time.
 A lot needs to be done for the improvement of business approvals and clearances as
the ‘getting business approvals’ as the survey revealed that 43% of the respondents
disagreed that there is a common application for various business approvals and
clearances and 45% of the respondents disagreed that there is one stop office or
single window mechanism for obtaining all the approvals and clearances. It is
assessed that the single window mechanism curtains multiple windows, which links
to various diversified windows adding to the complexities for registering and
delivering that in turn makes the portal ineffective in terms of time-bound delivery.
 The survey further showed that respondents strongly disagreed that there has been
any improvement in the availability of land, its cost and process to acquire it. 36%
of the respondents have strongly disagreed that the land is easily available and only
21% of respondents agreed (and strongly agreed) that the land availability has
become easy over time. 30% of the respondents strongly disagreed that the cost of
land has reduced and similarly 30% of the respondents strongly disagreed on the
parameters that the process to acquire land has become simple and less time
consuming.
 Respondents were neutral on improvement in the ‘insolvency proceedings’ of ease

of doing business. 43% of the respondents were indifferent that time taken to
recover debt under insolvency proceedings has reduced, 38% respondents were
neutral on cost involved to recover debt under insolvency proceedings has reduced.
Majority of the respondents (41%) were indifferent on the increase in the recovery
rate on insolvency proceedings. Although, India has implemented a new Insolvency
and Bankruptcy Code, delays in admission of cases and judgement, along with
infrastructural bottlenecks have affected the IBC mechanism.
 The survey revealed that various government initiatives towards digitisation have
been successful, as respondents have responded positively in this direction. 47% of
the respondents agreed and 13% strongly agreed that all the information related to
business procedures and compliances are available online. 40% of the respondents
agreed that the cost to obtain an internet connection has reduced significantly and
45% of the respondents agreed that various business procedures/compliances (like
applications, approvals, tax payments, returns, clearances, etc.) under various laws
and Acts are IT enabled/online.
 According to the survey results, improvement has been there in relation to

procedure and cost of obtaining new water and sewage connection. 34% of the

respondents agreed on the simplification of procedures for obtaining new water and
sewage connection. Similarly, 30% of the respondents agreed that cost incurred for
obtaining new water and sewage connection has reduced.
 The survey showed that there is a need to increase the protection of shareholders’
interest as majority of the respondents were neutral on the improvement in the role
of shareholders in the management of the company.
 Majority of the respondents are positive on the export and import procedures. 35%
of the respondents agreed that the number of documents and border compliances
(custom clearances and inspections) required for exporting and importing has
reduced significantly. Further, the cost involved in documentary and border
compliances in exporting and importing has also reduced, as 36% of respondents
agreed on this, followed by 31% that disagreed with the same. 34% of the
respondents agreed on the reduction in time required for documentary and border
compliances in exporting and importing.
 The survey revealed that there is a positive view on the ‘border compliance
parameter’. Time involved in transportation of goods has reduced significantly and
around 50% respondents agreed to this. This has been made possible by the
improved logistics sector. To promote ease of doing business, the road police checks
have reduced drastically and have led to free movement of goods & services across
the states. Around 30% of respondents agreed that the inspections while shipment is
en route have reduced significantly.
 In ‘construction permits’, there has been positive consensus among MSMEs. Around
44% of the respondents were indifferent that documentation for obtaining
construction permit has become easy. 41% of the respondents agreed that cost and
36% of respondents agreed that time involved in obtaining permits has reduced.
In a nutshell, the survey revealed that 45% (majority) of the respondents have responded in
favour of improvement in the ease of doing business for MSMEs, followed by 32% of
respondents that were not in favour, while 23% were neutral on the improvement. The
analysis showed that over the years the ease of doing business environment has improved
for MSMEs due to plethora of strategic reforms undertaken by the government. However,
there are still certain challenges that need to be focussed upon to promote Ease of Doing
Business for MSMEs. Implementation aspect of the reform measures at the ground level
may be improved, going forward.

9. Conclusions and Recommendations

Ease of doing business holds prime importance for the overall growth and development of
trade and industry as it attracts foreign investors and provides boost to the domestic
businesses. Over the last few years, India improved its Ease of Doing Business Ranking
significantly, which can be attributed to the plethora of reforms undertaken, such as
implementation of GST and Insolvency and Bankruptcy Code along with improvements in
registering for new electricity connection, upgradation of port infrastructure, among others.
The payment of all pending GST refunds to MSMEs within 30 days, withdrawal of Angel Tax
provisions for Startups and their investors, and provisions for banks’ lending to NBFCs for
further on-lending to MSMEs up to Rs.20 lakh per borrower under the Priority Sector
Classification have yielded positive results.
Over the years, states/UTs have introduced several reforms as a part of BRAP to improve
their business regulatory environment and attract investments. Although many states have
implemented reforms for improving business environment, further reforms are required
owing to the high number of state level clearances required from various authorities like
Industrial Development Authority, District Collector/Revenue Department, Town Planning
Department, approval of building plan, among various others.
Though improving ease of doing business in general is of paramount importance, providing

a high degree of ease of doing business of MSMEs becomes crucial as MSMEs are pillars of
economic growth. MSMEs sector plays an important role in India’s development in terms of
contributing around 32% in gross value added (GVA), 33% in manufacturing GVA, employing
around 111 million people and contribute around 40% in exports. However, despite being
regarded as ‘the engine of economic growth’ MSMEs in India are still facing several
challenges. At this juncture, it becomes imperative to assess the business environment for
MSMEs in the country and to suggest measures to make it more conducive in the coming
times.
With this objective, PHD Chamber of Commerce and Industry in collaboration with
Department of Commerce, Delhi School of Economics conducted a survey of MSMEs across
the sectors of the country. The survey revealed that at the aggregate level, 45% of the
respondents opined that there is an improvement in the doing business environment for the
MSMEs. Of the rest 55%, around 32% of the respondents opined that there is a need for
improvement in the doing business climate for MSMEs while 23% were indifferent about
improvement in the business environment.
Majority of the respondents agreed to a significant improvement in number of tax payments

in a year, cost of transportation and logistics, time required to enforce a contract, bringing
out a law suit against a company, supply of electricity, time to obtain an electricity
connection, time involved in transportation of goods, number of documents in starting a
business, online availability of business procedures, starting a business, IT enabled business

procedures, cost to obtain an electricity connection and cost to obtain an internet

connection, among others.
However 32% of the respondents disagreed on the improvement in availability of land,

process to acquire a land, cost of land, cost for starting a business, cost of labour, cost to
register a property, single window mechanism for approvals and clearances, common
application for business approvals, compliances under various labour laws, cost of business
approvals and clearances, procedure for registering a property, electricity tariffs and
number of tax returns to be filed in a year, among others.
This can be attributed to the fact that the survey was conducted in the month of April to
June 2019 while lot of reform measures were undertaken by the government in the recent
months (July-August 2019). Going ahead, the ease of doing business for MSMEs is expected
to improve significantly in the coming times with the percolation of economic and business
reforms at the ground level. At this juncture, the role of states becomes exceedingly
important. The state’s role towards promoting ease of doing business is the key towards a
competitive manufacturing sector for a strong and sustainable economic growth.
It may be mentioned that the states which have performed well on the BRAP have observed
high growth of GSDP. Further, it has been observed in few states that the states with high
rankings on BRAP witness high industry growth.
Going ahead, the overall smooth functioning and the quality of governance at state level can
stimulate growth by making the policy environment more business friendly. Further reforms
in ease of doing business at the ground level especially for the small and medium sized
businesses along with desired reforms in labour laws would be crucial to strengthen the
manufacturing sector, Make in India programme and create millions of employment
opportunities for growing young workforce.
Key findings of the survey
Strongly Agree (7%)

 Bringing out law suit against the company
 Number of tax payments in a year
 Cost of transportation and logistics
 Time required to enforce a contract
Agree (38%)
 Supply of electricity  Time of processing building permit & certificate
 Time to obtain an electricity connection  Credit Availability
 Time involved in transportation of goods  Documents required for exporting and
 Number of documents in starting a business importing
 Online availability of business procedures  Procedures for new water & sewage connection
 Starting a business  Time for documentary in exporting and
 Business procedures are IT enabled importing

 Cost to obtain an electricity connection  Time to register a property

 Obtaining construction permit/certificate  Cost for new water and sewage connection
 Cost to obtain an internet connection  Behavior of inspectors
 Cost of documentary in exporting and importing  Road police checks/inspections
Indifferent (23%)
 Process of tax registration  Number of tax returns to be filed in a year
 Protection of shareholders from undue board  Inspection conducted by departments are
control defined
 Documentation for construction permits  Obtaining various business approvals and
 Time taken to recover debt under insolvency clearances
proceedings  Employment of labor
 Recovery rate under insolvency proceedings  Credit availability at reasonable rate of interest
 Compliance under various environmental laws  Electricity tariffs
 Procedures for registering a property  Number of inspections conducted
Disagree (26%)
 Cost for starting a business  Number of tax returns to be filed in a year
 Cost of labor  Inspection conducted by departments are defined
 Cost to register a property  Obtaining various business approvals and
 Single window mechanism for approvals and clearances
clearances  Employment of labor
 Common application for business approvals  Credit availability at reasonable rate of interest
 Compliance under various labor laws  Electricity tariffs
 Cost of business approvals and clearances  Number of inspections conducted
 Procedures for registering a property
Strongly Disagree (6%)

 Availability of land
 Cost of land
 Process to acquire land
Recommendations
The analysis showed that over the years, the ease of doing business environment has
improved for MSMEs due to plethora of strategic reforms undertaken by the government.
However, to reach the desired level of ease of doing business, more focussed reforms are
required to give a boost to the development of MSMEs sector and make India a best place
to do business.
Some of the specific recommendations for the ease of doing business for MSMEs:
 Reforms in labour laws- Formulate flexible and uniform labour laws across the
country. Flexibility is required in terms of freedom to hire contract labour, the
freedom to retrench workers (based on Productivity, Quality and Discipline) and
close down undertakings without prior government endorsement.

 Capital Gain Tax- Growth of MSME industry generates employment, state revenue
on a regular basis which is recurring revenue for the government whereas Capital
Gain Tax is one time revenue. Reconsidering the applicability of capital gain tax on
the capital (generated out of selling a property) invested would encourage the
growth of MSMEs across the country. The section 54 of the Income Tax Act must be
extended to cover the industrial sector.
 Indirect Tax Benefits- Indirect tax benefits could be provided under GST similar to
that provided in VAT regime through Industrial Promotion Scheme. Lower rate of tax
should be levied on products manufactured by MSME manufacturing industry.
Incentive schemes can be launched in GST regime also as provided in the earlier VAT
regime. Matching of Invoices both Inwards and Outwards must be done by GSTN
without hiccups availing of Input Tax Credit (ITC) under GST.
 Equal treatment for PSU and MSME entities- There should be equal treatment for
PSU and MSME entities and all government procurement agencies must accept
supplies from PSUs and MSMEs against a guarantee certificate.
 Coordination among states- Coordination and cooperation among the states must
be ensured so that there is no overlapping of business regulations. Best practices of
top ranked states in BRAP rankings should be adopted by other states also.
 New Bill of definition of MSMEs - New Bill of definition of MSMEs should be passed
as soon as possible in the Parliament. This will give a huge boost to investment and
employment along with productivity.
 Simplify land acquisition- Simplification of land acquisitions is required as it remains
complex, because of the difficulties in establishing legal ownership and a 'clean'
holding for purchase.
 Increase awareness among MSMEs- Frequency of awareness campaigns for MSMEs
sector need to be increased so that every industry can take optimum benefit of the
Government schemes.
 Speedy addressing of intellectual property rights- Cutting the average time for
addressing pending intellectual property rights applications from more than five
years to 18 months.
 Reduction in logistics cost- Logistics cost should be reduce from 14% of invoice to
8% to make MSMEs competitive internationally.
Policy recommendations for the growth of MSMEs:
 Immediate Release of Central Government Guarantee for Bank Loans to BSNL and
other PSUs to enable payments to MSMEs- The BSNL alone owes more than Rs.1000
crores to its MSME vendors who have made supplies against Bharat Net& other
telecom projects of national importance. The Ministry of Finance may kindly permit
Central Government Guarantee for BSNL and other central PSUs to enable them to
raise bank loans specifically for making payments of the MSME vendors without any
further delay and to instruct the PSUs to allow all the pending supplies from their

vendors to be suspended without any levy of LD till they are able to pay past arrears
and arrange funds for future purchases.
 Reduction in the Performance Bank Guarantee/ security deposit requirement for
government purchase scheme to one-tenth for Micro and one-fifth for Small
Enterprises- When a contract is awarded to the MSME it is required to put up the
same value of Performance Bank Guarantee(PBG). However, MSMEs enjoy very
small bank limits and mostly do not have sufficient Bank Guarantee limits. It is
therefore recommended that the Government Purchase scheme should be amended
so as to reduce the PBG/ security deposit requirement to One-tenth for Micro
Enterprises, two-fifth for Small Enterprises and one-third for Medium Enterprises
compared to the PBG required from non-MSMEs.
 Rejuvenation of BSNL for positive impact on Telecom MSMEs- Due to heavy
competition, most of the private telcos are incurring substantial losses and the
combined debt of private telcos is in excess of Rs. 4.8 lakh crores. BSNL is facing the
brunt of the hard times in the telecom sector and is unable to pay for its CAPEX
needs. With the current trend of fall in revenues, it is difficult for them to cover even
their OPEX needs, some of which are actually for Bharat Net Project. Therefore, the
fibre and tower assets of BSNL and other telecom PSUs may be spun-off into a
National Fibre Authority and to monetize the same through InvITs or by raising
infrastructure bonds.
 Crucial Role of Infrastructure PSUs in sustaining MSMEs –Exim Bank of India
funding for Make in India- Most private sectors infrastructure projects prefer to buy
imported capital equipment instead of Made in India – MSME products since almost
all the imported capital goods come with concessional long-term finance at very low
interest rates supported by the Exim Banks of the exporting countries. Therefore, the
Exim Bank of India may be allowed to provide concessional long-term funding to
Indian Infrastructure projects especially the central government PSUs on the same
terms as those provided for project exports under Make in India scheme.
 Deemed NSIC registration renewal in case of delay- When the renewal application is
submitted by an MSME to NSIC, it sometimes takes a very long period say up to 2- 3
months in completion of the renewal process. But the delay in renewal of the
registration sometimes causes a vacuum for the MSMEs due to expiry of their earlier
registration until the receipt of renewed registration and the MSMEs face problems
during this period when they have to submit tenders to the Government
organizations. It is suggested that NSIC should fix a maximum time frame for
completing the entire renewal process and issuance of the renewal registration
certificate say maximum within a period of two weeks from the date of submission
of the renewal application. However, keeping in view the other exigencies etc., in
case, the renewal registration certificate is not issued even in a maximum period of
30 days it should be treated as ‘Deemed Renewed’ and a provisional renewal
registration certificate should be issued automatically by NSIC to the applicant unit
so that there is no hindrance faced by the MSME in submitting the tenders etc. This
procedure will also help NSIC to sharpen its renewal procedures in order to avoid the
renewals in default.

 Reduction in the High primary security and collateral security demanded by Banks-
The current bank norms result in double securitization by banks, where in the first
place they demand primary security of 133% of the fund based limit and, in addition
collateral security worth 125% of the proposed limit is required in order to sanction
the case, bringing the security requirement to 258% of the finance provided by the
bank. It is recommended that the total of primary security and collateral security for
loan limits given by banks should be brought down to maximum 75% for MSMEs.
 Delays in Realisation of Bills/Receivables- The working capital cycle of MSMEs keeps
prolonging due to delays in realization of their bills/receivables. Due to such delays
MSMEs find it extremely difficult to service their debt instalments or interest
obligations in a timely fashion, leading to their classification into NPAs. It is
therefore, recommended that the 90 days limit fixed by RBI for classifying overdues
of MSMEs should be increased to 180 days so that MSMEs are not constrained to
divert their working capital towards servicing of their loan-instalments and clearing
of their overdues at the cost of their normal business operations. This improvement
in the RBI guidelines will save a large number of MSMEs from turning sick or getting
closed resulting in loss of economic activity and loss of employment, and further
preventing avoidable classification of bad debts and unwarranted litigation by banks
thereby saving the banks from losses.
 Modification in the Restructuring Scheme for MSMEs announced by RBI- The
Reserve Bank of India announced the policy for restructuring of existing loans to
MSMEs up to Rs. 25 crore that are in default as on 01-01-2019 but classified as
‘Standard’. This restructuring facility has been opened for standard accounts only
which may become NPAs later but not for those MSME accounts which have already
become NPAs before 1st January 2019. As a result of this, the restructuring will cover
only a small fraction of the MSME default accounts- say only about 5% or so and not
the bulk of NPAs in the MSME Sector. It is therefore recommended that at-least one-
year period should be considered for eligibility of MSMEs’ stressed and NPA accounts
for eligibility under the restructuring scheme. All such accounts which turned into
defaults or became NPAs after 1stJanuary, 2018 should be covered under the policy
of RBI for being eligible for restructuring.
 Violation of CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises)
norms- When an MSME approaches the bank for a loan, if the total loan amount is
greater than Rs1 crore, the CGTMSE clause gets disregarded and the entire loan is
treated as a normal loan. The benefit of interest and securitization relaxation is not
given on the first Rs 1 crore amount. The loans of Rs 1 crore must be extended by
banks without any collateral and at reduced rate of Interest to the MSMEs. The
CGTMSE clause must be reconsidered and regarded, particularly when the MSME
approaches the bank for a loan.
 Delayed Payment of Bills and Receivables of MSMEs- Large number of MSMEs
undertake their operations as vendors to Government Organizations including Public
Sector Undertakings and Private companies or work as ancillaries to big companies
as their suppliers of components. Payment of bills and receivables from buyers of
MSMEs are generally delayed. As a result of these delays, MSMEs face financial

hardships and liquidity constraints which lead to severe pressure on their working
capital management and many of them turn into ‘Non-Performing Assets’ (NPAs). It
is therefore recommended that punitive measures should be introduced against the
habitual defaulters who do not meet their payment obligations as per agreed terms
maximum in 45 days. For example, their accounts can be classified as defaulters as it
happens in case of non- payment of bank dues. In addition, stringent regulations
should be introduced for dishonour of cheques against the issuers of such cheques in
addition to the existing provisions.
Specific suggestions for improvement of doing business for the service sector MSMEs:
The services sector is a people driven sector and investments in the sector MSMEs can lead
to higher employment generation. The availability of developed infrastructure, advanced
technology, access to capital, skilled manpower, among others have a huge potential to
bolster the growth and competitiveness of service sector MSMEs. Such factors would
strengthen the functioning and growth of service sector MSMEs and would bring them at
par with international benchmarks. Incubation and handholding MSMEs by the government
could play an eminent role in transforming service sector MSMEs into a backbone of Indian
economy.
Few areas where thrust needs to be given include, developing market access for service
sector MSMEs, effectively addressing financing needs, reforms in the area of IPRs, skill
development of human capital, employment generation and studying international
practices with respect to ease of doing business in the services sector, among others. E-
commerce has enough potential to boost the growth of service sector MSMEs. An
intelligence generation cell needs to be setup that could make several small businesses and
MSMEs aware of national rules and regulations encompassing the e-commerce. These
measures would foster the growth of service sector MSMEs and would make them
competitive with MNCs in domestic and foreign markets.
In a nutshell, reforms in ease of doing business at the ground level especially for the small
and medium sized businesses along with desired reforms in labour laws such as fixed term
employment for flexibility in hiring by industry across the States would be crucial to
strengthen the manufacturing sector, Make in India programme and create millions of
employment opportunities for growing young workforce.

Annexure
Table 19: Responses of Survey on Ease of Doing Business for MSMEs (in %)
Strongly Indiffer- Strongly
S. No. Parameter(s) Agree Disagree
Agree ent Disagree
1 Starting a business has become easy 8 46 10 27 8
The cost incurred for starting a business has
2 8 25 6 56 4
reduced significantly
Number of documents/procedures in starting a
3 8 48 6 23 15
business have reduced significantly
Obtaining various business approvals and
4 clearances from the government departments is 8 27 21 31 13
simple and fast
Cost incurred for obtaining business approvals
5 4 25 19 40 13
and clearances has reduced significantly
Time (in number of days) to obtain an electricity
6 15 56 10 15 4
connection has reduced significantly
Cost to obtain an electricity connection has
7 8 42 23 21 6
8 Supply of electricity has improved significantly 15 63 17 2 4
9 Electricity tariffs have reduced significantly 8 10 25 33 23
10 Credit is available easily 6 35 32 10 17
11 Credit is available at reasonable rate of interest 8 27 19 29 17
Time taken to obtain credit has reduced
12 6 27 31 19 17
significantly
Tax structure prevailing in the country is
13 9 17 38 15 21
simplified
Tax rates in the country have reduced
14 4 27 28 15 26
significantly
15 Process of tax registration is simple and fast 8 21 46 15 10
Number of tax payments in a year have reduced
16 34 15 23 23 5
significantly
Number of tax returns to be filed in a year have
17 4 25 8 33 29
18 Employment of labor has become easy 8 15 29 31 17
19 Cost of labor has reduced significantly 6 6 15 52 21
Compliance under various labor laws has become
20 4 17 23 40 15
easy
Compliance under various environmental laws
21 6 11 40 23 19
has become easy
Cost of complying with environmental laws has
22 4 15 34 28 19
Cost (taxes and fees) incurred to register a
23 6 17 19 47 11
property has reduced significantly
Time taken to register a property has reduced
24 4 33 27 23 13
significantly
Number of procedures for registering a property
25 6 25 25 35 8
or transfer of title have reduced significantly

26 Contracts entered into are easily enforceable 4 17 34 31 13

Cost of enforcing a contract in the court of law
27 6 38 30 17 9
has reduced significantly
Time required to enforce a contract in the court
28 27 15 23 20 15
of law has reduced significantly
Inspections conducted by various government
departments and institutions regarding business
29 6 23 26 28 17
compliance of various laws, rules, regulations etc.
have reduced significantly
Inspection conducted by various departments
30 and institutions is objective and based on well- 4 21 28 32 15
defined procedures
31 Behavior of inspectors is cooperative 6 30 28 19 17
There is a common application for various
32 4 20 22 43 11
business approvals and clearances
There is one stop office or single window
33 mechanism for obtaining all the approvals and 6 13 21 45 15
clearances
34 Land is available easily 4 19 15 26 36
35 Cost of land has reduced significantly 9 15 17 28 30
Process to acquire land is simple and less time
36 6 23 15 26 30
consuming
Time taken to recover debt under insolvency
37 11 4 43 20 22
proceedings has reduced significantly
Cost involved to recover debt under insolvency
38 7 13 38 29 13
Recovery rate under insolvency proceedings has
39 11 20 41 17 11
increased
All the information related to various business
40 13 47 19 15 6
procedures and compliances is available online
Cost to obtain an internet connection has
41 38 40 15 2 4
reduced
Various business procedures/compliances (like
applications, approvals, tax payments, returns,
42 28 45 15 4 9
clearances etc.) under various laws and Acts are
IT enabled/online
Procedure for obtaining a new water and sewage
43 15 34 23 19 9
connection is simple and fast
Cost incurred for obtaining a new water and
44 13 30 25 23 9
sewage connection has reduced significantly
Role of shareholders in the management of the
45 company and major corporate decisions has 11 28 38 19 4
expanded
Bringing out suit against the company or Board
46 of Directors by investors for non-performance of 36 23 13 23 4
duties has become easy
Protection of shareholders from undue board
47 9 21 45 21 4
control and entrenchment has increased
Number of documents and border compliances
48 11 35 19 24 11
(custom clearances and inspections) required for

exporting and importing have reduced

significantly
Cost involved in documentary and border
49 compliances in exporting and importing has 7 36 13 31 13
Time required for documentary and border
50 compliances in exporting and importing has 5 34 25 25 11
Cost of transportation and logistics has reduced
51 29 20 19 18 14
significantly
Time involved in transportation of goods has
52 4 50 15 15 15
Road police checks/inspections while shipment is
53 4 30 28 26 13
en route have reduced significantly
Documentation/procedure for obtaining
54 7 20 44 16 13
construction permit is easy
Obtaining construction permit/certificate has
55 5 41 20 23 11
become less costly
Time involved in processing of
building/construction permit application and
56 7 36 23 20 14
obtaining construction certificate has reduced
significantly
Table 20: Survey Questionnaire

S. No. Questions Strongly Disagree Indiffer- Agree Strongly
Disagree ent Agree
1. Starting a business has become easy. O O O O O
2. The cost incurred for starting a business has O O O O O
reduced significantly.
3. Number of documents/ procedures in starting a O O O O O
business has reduced significantly.
4 Obtaining various business approvals and O O O O O
clearances from the government departments is
simple and fast.
5. Cost incurred for obtaining business approvals O O O O O
and clearances has reduced significantly
6. Time (in number of days) to obtain an electricity O O O O O

connection has reduced significantly.
7. Cost to obtain an electricity connection has O O O O O
8. Supply of electricity has improved significantly. O O O O O
9. Electricity tariffs have reduced significantly. O O O O O
10. Credit is available easily. O O O O O
11. Credit is available at reasonable rate of interest. O O O O O
12. Time taken to obtain credit has reduced O O O O O
significantly.
13. Tax structure prevailing in the country is O O O O O
simplified.

14. Tax rates in the country have reduced O O O O O

significantly.
15. Process of tax registration is simple and fast. O O O O O
16. Number of tax payments in a year has reduced O O O O O
significantly.
17. Number of tax returns to be filed in a year have O O O O O
18. Employment of labor has become easy. O O O O O
19. Cost of labor has reduced significantly O O O O O
20. Compliance under various labor laws has become O O O O O
easy.
21. Compliance under various environmental laws O O O O O
has become easy.
22. Cost of complying with environmental laws has O O O O O
23. Cost (taxes and fees) incurred to register a O O O O O
property has reduced significantly
24. Time taken to register a property has reduced O O O O O
significantly.
25. Number of procedures for registering a property O O O O O
or transfer of title has reduced significantly.
26. Contracts entered into are easily enforceable O O O O O
27. Cost of enforcing a contract in the court of law O O O O O
has reduced significantly.
28. Time required to enforce a contract in the court O O O O O
of law has reduced significantly.
29. Inspections conducted by various government O O O O O
departments and institutions regarding business
compliance of various laws, rules, regulations etc.
have reduced significantly
30. Inspection conducted by various departments and O O O O O
institutions is objective and based on well-
defined procedures
31. Behavior of inspectors is cooperative O O O O O
32. There is a common application for various O O O O O
business approvals and clearances
33. There is one stop office or single window O O O O O
mechanism for obtaining all the approvals and
clearances
34. Land is available easily O O O O O
35. Cost of land has reduced significantly. O O O O O
36. Process to acquire land is simple and less time O O O O O
consuming
37. Time taken to recover debt under insolvency O O O O O
proceedings has reduced significantly.
38. Cost involved to recover debt under insolvency O O O O O
39. Recovery rate under insolvency proceedings has O O O O O
increased
40. All the information related to various business O O O O O
procedures and compliances is available online.

41. Cost to obtain an internet connection has O O O O O

reduced.
42. Various business procedures/compliances (like O O O O O
applications, approvals, tax payments, returns,
clearances etc.) under various laws and Acts are
IT enabled/online.
43. Procedure for obtaining a new water and sewage O O O O O
connection is simple and fast
44. Cost incurred for obtaining a new water and O O O O O
sewage connection has reduced significantly
45. Role of shareholders in the management of the O O O O O
company and major corporate decisions has
expanded
46. Bringing out suit against the company or the O O O O O
Board of Directors by investors for non-
performance of duties has become easy
47. Protection of shareholders from undue board O O O O O
control and entrenchment has increased.
48. Number of documents and border compliances O O O O O
(custom clearances and inspections) required for
exporting and importing have reduced
significantly
49. Cost involved in documentary and border O O O O O
compliances in exporting and importing has
50. Time required for documentary and border O O O O O
compliances in exporting and importing has
51. Cost of transportation and logistics has reduced O O O O O
significantly.
52. Time involved in transportation of goods has O O O O O
53. Road police checks/inspections while shipment is O O O O O
en route have reduced significantly.
54. Documentation/procedure for obtaining O O O O O
construction permit is easy.
55. Obtaining construction permit/certificate has O O O O O
become less costly
56. Time involved in processing of O O O O O
building/construction permit application and
obtaining construction certificate has reduced
significantly.


PROJECT TEAM
Dr S P Sharma
Chief Economist, PHD Chamber of Commerce and Industry
[email protected]
Ms Surbhi Gupta Ms Megha Kaul Ms Kritika Bhasin

Ph.D Scholar Economist Research Officer
Department of Commerce PHD Chamber of PHD Chamber of
Delhi School of Economics Commerce and Industry Commerce and Industry
University of Delhi
Ms Shivani Mehrotra Mr Sanjay Sharma

Research Associate Research Associate
PHD Chamber of Commerce PHD Chamber of
and Industry Commerce and Industry
Disclaimer
“Ease of Doing Business for MSMEs” is prepared by PHD Chamber of Commerce and Industry and
Department of Commerce, Delhi School of Economics. This report may not be reproduced, wholly or
partly in any material form, or modified, without prior approval from PHD Chamber of Commerce
and Industry and Department of Commerce, Delhi School of Economics.
It may please be noted that this report is for guidance and information purposes only. Though due
care has been taken to ensure accuracy of the information to the best of the PHD Chamber's
knowledge and belief, it is strongly recommended that readers should seek specific professional
advice before making any decisions.
Please note that the PHD Chamber of Commerce and Industry and Department of Commerce, Delhi
School of Economics do not take any responsibility for outcome of decisions taken as a result of
relying on the content of this report. PHD Chamber of Commerce and Industry and Department of
Commerce, Delhi School of Economics shall in no way, be liable for any direct or indirect damages
that may arise due to any act or omission on the part of the reader or user due to any reliance
placed or guidance taken from any portion of this publication.
Copyright 2019
PHD Chamber of Commerce and Industry
ISBN No. 978-93-84145-89-7
ALL RIGHTS RESERVED.
No part of this publication including the cover, shall be reproduced, stored in a retrieval system, or
transmitted by any means, electronic, mechanical, photocopying, recording, or otherwise, without
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and Industry).

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Shortly after independence, a group of visionaries led by Prof. V. K.R.V. Rao and supported
by the then Prime Minister Pt. Jawahar Lal Nehru were driven by an ambition to create a
center for advanced learning and research in social sciences comparable to the best in the
world and worthy of an independent subcontinent. Thus, in 1948 the Delhi School of
Economics (DSE) was conceived on the lines of the London School of Economics.
Subsequently, when Prof. Rao became the Vice-Chancellor of the University, the process of
setting up four new departments, namely, Sociology, Geography, Business management and
Commerce, was initiated.
Guided by the vision of its founders, the school lays highest importance on maintaining
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Manmohan Singh, Prof. P.K. Ghosh and Prof. L.C. Gupta have contributed to the social and
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The Department of Commerce, formally set up as a separate entity in 1967, has imbibed the
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PHD Research Bureau; the research arm of the PHD Chamber of Commerce and Industry
was constituted in 2010 with the objective to review the economic situation and policy
developments at sub-national, national and international levels and comment on them in
order to update the members from time to time, to present suitable memoranda to the
government as and when required, to prepare State Profiles and to conduct thematic
research studies on various socio-economic and business developments.
The Research Bureau has been instrumental in forecasting various lead economic
indicators national and sub-national. Many of its research reports have been widely
covered by media and leading newspapers. The Research Bureau has undertaken various
policy studies for Government of India and State Governments.
Research Comments on Newsletters Consultancy

Activities Economic
Developments
 Research  Global Economic  Economic Affairs  Trade and
Studies Developments Newsletter (EAC) Investment
Facilitation
Services (TIFS)
 State Profiles  India's Economic  Forex and FEMA  Business
Developments Newsletter Research and
 Impact  States' Economic  Global Economic Consultancy:
Assessments Developments Monitor (GEM) Innovative and
 Thematic  International  Trade & customised
Research Developments Investment research
Reports Facilitation solutions for
Services (TIFS) growth of
Newsletter Industry and
 Releases on  Financial Markets  State businesses
Economic Development
Developments Monitor (SDM)
 Foreign exchange
market
 Developments in
International
Trade

Studies Undertaken by PHD Research Bureau

A: Thematic research reports 20. Economy on the Eve of Union Budget 2014-15 (July
2014)
1. Comparative study on power situation in Northern
and Central states of India (September2011) 21. Budget 2014-15: Promise of Progress (July 2014)
2. Economic Analysis of State (October 2011)

22. Agronomics 2014: Impact on economic growth and
inflation (August 2014)
3. Growth Prospects of the Indian Economy, Vision
2021 (December 2011)
23. 100 Days of new Government (September 2014)
4. Budget 2012-13: Move Towards Consolidation

24. Make in India: Bolstering Manufacturing Sector
(October 2014)
(March 2012)
5. Emerging Trends in Exchange Rate Volatility (Apr
25. The Indian Direct Selling Industry Annual Survey
2012) 2013-14 (November 2014)

26. Participated in a survey to audit SEZs in India with
CAG Office of India (November 2014)
2010-11 (May 2012)
7. Global Economic Challenges: Implications for India
27. Role of MSMEs in Make in India with reference to
Ease of Doing Business in Ghaziabad (Nov 2014)
(May 2012)
8. India Agronomics: An Agriculture Economy Update
28. Exploring Prospects for Make in India and Made in
India: A Study (January 2015)
(August 2012)
9. Reforms to Push Growth on High Road (September 29. SEZs in India: Criss-Cross Concerns (February 2015)
2012) 30. Socio-Economic Impact of Check Dams in Sikar

District of Rajasthan (February 2015)
2011-12: Beating Slowdown (March 2013) 31. India - USA Economic Relations (February 2015)
11. Budget 2013-14: Moving on reforms (March 2013) 32. Economy on the Eve of Union Budget 2015-16
(February 2015)
12. India- Africa Promise Diverse Opportunities
(November 2013) 33. Budget Analysis (2015-16)
13. India- Africa Promise Diverse Opportunities: 34. Druzhba-Dosti: India's Trade Opportunities with
Suggestions Report (November 2013) Russia (April 2015)
14. Annual survey of Indian Direct Selling Industry- 35. Impact of Labour Reforms on Industry in Rajasthan:
2012-13 (December 2013) A survey study (July 2015)
15. Imperatives for Double Digit Growth (December 36. Progress of Make in India (September 2015)
2013) 37. Grown Diamonds, A Sunrise Industry in India:
16. Women Safety in Delhi: Issues and Challenges to Prospects for Economic Growth (November 2015)
Employment (March 2014) 38. Annual survey of Indian Direct Selling Industry
17. Emerging Contours in the MSME sector of 2014-15 (December 2015)
Uttarakhand (April 2014) 39. India’s Foreign Trade Policy Environment Past,
18. Roadmap for New Government (May 2014) Present and Future (December 2015)
19. Youth Economics (May 40. Revisiting the emerging economic powers as
2014) drivers in promoting global economic

growth(February 2016)

41. Bolstering MSMEs for Make in India with special 61. Role of Trade Infrastructure for Export Scheme
focus on CSR (March 2016) (TIES) in Improving Export Competitiveness
42. BREXIT impact on Indian Economy (July 2016) (November 2017)
43. India’s Exports Outlook (August 2016) 62. India - China Trade Relationship: The Trade Giants
44. Ease of Doing Business : Suggestive Measures for of Past, Present and Future (January 2018)
States (October 2016) 63. Analysis of Trade Pattern between India and
45. Transforming India through Make in India, Skill ASEAN(January 2018)
India and Digital India (November 2016) 64. Union Budget 2018-19 – (February 2018)
46. Impact of Demonetization on Economy, Businesses 65. Ease of Doing Work for Women: A survey of Delhi
and People (January 2017) NCR (February 2018)
47. Economy on the eve of Budget 2017-18 (January 66. Restraining Wilful Defaults: Need of the hour for
2017) Indian Banking System (March 2018)
48. Union Budget 2017-18: A budget for all-inclusive 67. Impact of GST on Business, Industry and Exporters
development (January 2017) (April 2018)
49. Annual Survey of Indian Direct Selling Industry 68. India – Sri Lanka Bilateral Relations: Reinforcing
2015-16 (February 2017) trade and investment prospects (May 2018)
50. Worklife Balance and Health Concerns of Women: 69. Growth Prospects of the Indian Economy: Road to
A Survey (March 2017) US $5 Trillion Economy(May 2018)
51. Special Economic Zones: Performance, Problems 70. India's Free Trade Agreements Dynamics and
and Opportunities (April 2017) Diagnostics of Trade Prospects(May 2018)
52. Feasibility Study (socio-Economic Survey) of 71. India – UK Trade Relations and Societal Links: Way
Ambala and Rohtak Districts in Haryana (March Forward (June 2018)
2017) 72. Rural Economy: Road to US $5 Trillion
53. Goods and Services (GST): So far (July 2017) Economy(September 2018)
54. Reshaping India-Africa Trade: Dynamics and Export 73. Indian Economy on the Eve of Union Budget 2019-
Potentiality of Indian Products in Africa (July 2017) 20 (Interim): Steady…strong…fastest moving
55. Industry Perspective on Bitcoins (July 2017) economy (January 2019)
56. Senior Housing: A sunrise sector in India (August 74. Interim Budget 2019-2020: A Dynamic, Inclusive &
2017) Pragmatic Budget (February 2019)
57. Current state of the economy (October 2017) 75. Women Entrepreneurship: Transforming from
58. Equitable finance to fulfill funding requirements of Domestic Households to Financial Independence
Indian Economy (October 2017) (March 2019)
59. The Wall of Protectionism: : Rise and Rise of 76. Prospects for Exports from India: Five Pronged
Protectionist Policies in the Global Arena, Strategy to Achieve USD700 Billion Merchandise
(November 2017) Exports by 2025 (March 2019)
60. India-Israel Relations: Building Bridges of Dynamic 77. India Towards Shared Prosperity: Economic Agenda
Trade(October 2017) for the Next five Years (March 2019)

78. Job Creation: A Pan India Survey of Households 98. Smart Infrastructure Summit 2016- Transforming
(March 2019) Uttar Pradesh (August 2016)
79. India Inc. Speaks Live: Wish List for the Next Five 99. Smart Infrastructure Summit 2016-Transforming
Years (May 2019) Uttar Pradesh : Suggestions for the State
80. Suggestive Roadmap for Revitalizing Economic Government (August 2016)
Growth (June 2019) 100. Rising Jharkhand: An Emerging Investment Hub
81. Indian Economy on the Eve of Union Budget 2019- (February 2017)
20 (July 2019) 101. Punjab: Roadmap for the New Government
82. Union Budget 2019-20: Road to US$ 5 trillion Suggestions for the Industrial and Socio-Economic
economy (July 2019) Development – Focus MSMEs ease of doing
business (May 2017)
B: State profiles 102. Prospering Himachal Pradesh: A Mountain of

Opportunities (August 2017)
83. Rajasthan: The State Profile (April 2011)
103. Kashmir: The way forward (February 2018)
84. Uttarakhand: The State Profile (June 2011)
104. Analysis of State Budgets for 2018-19: Select Sates
85. Punjab: The State Profile (November 2011)
(March 2018)
86. J&K: The State Profile (December 2011)
105. Rising Uttar Pradesh One District One Product
87. Uttar Pradesh: The State Profile (December 2011)
Summit (August 2018)
88. Bihar: The State Profile (June 2012)
106. Rajasthan: Steady Strides into the Future-
89. Himachal Pradesh: The State Profile (June 2012)
Emerging Growth Dynamics and the Way Forward
90. Madhya Pradesh: The State Profile (August 2012)
(September 2018)
91. Resurgent Bihar (April 2013)
107. Rising Jharkhand: Economic Profile (January 2019)
92. Life ahead for Uttarakhand (August 2013)
108. Rising Jharkhand: Skill Development to Spur Socio-
93. Punjab: The State Profile (February 2014)
Economic Growth (January 2019)
94. Haryana: Bolstering Industrialization (May 2015)
109. Progressive Haryana: Economic Profile (February
95. Progressive Uttar Pradesh: Building Uttar Pradesh
2019)
of Tomorrow (August 2015),
110. Progressive Haryana: The Agricultural Hub of India
96. Suggestions for Progressive Uttar Pradesh (August
(February 2019)
2015)
97. State profile of Telangana- The dynamic state of
India (April 2016)




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Ease of Doing Business for MSMEs

2 | PHD Research Bureau and Department of Commerce, Delhi School of Economics

Ease of Doing Business

A Report under the Collaborative Arrangement between PHD

PHD RESEARCH BUREAU DEPARTMENT OF COMMERCE

3 | PHD Research Bureau and Department of Commerce, Delhi School of Economics

4 | PHD Research Bureau and Department of Commerce, Delhi School of Economics

Message from President, PHD Chamber

A conducive business environment is very important for starting

The government has undertaken plethora of economic and

Improvement in parameters such as starting a business, dealing

The MSMEs play a very significant role in the growth and

The States’ Policy Conclave 2019 is an excellent initiative of the

5 | PHD Research Bureau and Department of Commerce, Delhi School of Economics

Message from Senior Vice President, PHD Chamber

The Micro, Small and Medium Enterprises (MSMEs) sector has

Going ahead, to improve the ease of doing business rankings

The States’ Policy Conclave, 2019 is focussed on discussing how

My best wishes for the grand success of States' Policy Conclave

6 | PHD Research Bureau and Department of Commerce, Delhi School of Economics

Message from Vice President, PHD Chamber

Continuous government efforts have resulted in the significant

The government has implemented several reforms at the national

Going forward, both central and state governments should

PHD Chamber is working diligently for the growth and

I wish grand success to the Conclave!

7 | PHD Research Bureau and Department of Commerce, Delhi School of Economics

Message from Chairman, States Development Council,

Ease of doing business holds a prime importance for the overall

The improvement in rankings has been observed primarily due to

The central and state governments have undertaken many

The role of states in the promotion of MSMEs is of prime

I am sure that the deliberations during the various sessions would

8 | PHD Research Bureau and Department of Commerce, Delhi School of Economics

Message from Secretary General, PHD Chamber

The ease of establishment and operation of businesses play a

Over the years, government has implemented several reforms to

Similarly, states/UTs have introduced several reforms as a part of

The states can play a massive role in being the harbingers of

The States’ Policy Conclave 2019 of PHD Chamber of Commerce

9 | PHD Research Bureau and Department of Commerce, Delhi School of Economics

Message from Chairman, Ease of Doing Business

The state’s role towards building the required infrastructure for

At this juncture, I am elated to know that PHD Chamber of

10 | PHD Research Bureau and Department of Commerce, Delhi School of Economics

Message from Former Head, Department of Commerce,

Sharp jump in ease of doing business rankings to the level of 77

Further, MSME sector holds the potential to push India’s growth

Going ahead, given the ongoing reform momentum, it is expected

I am elated to be a part of the States’ Policy Conclave 2019 of PHD

11 | PHD Research Bureau and Department of Commerce, Delhi School of Economics

Message from Associate Professor, Department of

India improved its Ease of Doing Business Ranking significantly

The implementation of GST and Insolvency and Bankruptcy Code

Under the Make in India initiative, central and state governments

Going ahead, there is a need to sustain this momentum of

I am delighted to know about PHD Chamber’s States’ Policy

12 | PHD Research Bureau and Department of Commerce, Delhi School of Economics

-PHD Research Bureau

13 | PHD Research Bureau and Department of Commerce, Delhi School of Economics