Introduction
I have been watching the Centre’s renewed push for state-led legal and regulatory reform with interest. The recent guidance asking states to re-examine and, where needed, rewrite or repeal laws to accelerate ease-of-doing-business outcomes is less about paperwork and more about a shift in governance tone: from permission-driven control to trust-based, outcome-focused regulation. The Economic Times has captured the contours of this initiative in detail, highlighting proposals such as an omnibus Ease of Doing Business bill, a Right to Business framework with affidavit-based clearances, and a set of six deregulation principles for states to apply across sectors To bring ease of business bills, Centre nudges state govts to revamp laws, drive reforms.
Why this matters now
India’s competitiveness depends on aligned action across the Union and states. Many of the friction points that bog down small and medium enterprises—land-use permissions, building approvals, multiple licences, repeated inspections—are governed at the state or municipal level. The Centre’s strategy recognizes that national targets need local law reform to be effective. Requiring states to inventory regulations, assess them against clear principles, and adopt omnibus or sectoral fixes can dramatically shorten implementation cycles and reduce regulatory uncertainty for businesses.
What the proposal asks states to do
- Create a comprehensive, sector-wise repository of all regulations (including municipal circulars) with last-updated dates.
- Assess laws and subordinate rules against six principles: licence only for high-risk activities; lifetime validity for licences; outcome-based processes; use of qualified independent third parties for inspections; risk-based and transparent inspections; and repeal of redundant rules.
- Consider an omnibus Ease of Doing Business bill or adopt a Right to Business Act with an affidavit-based clearance system and moratoriums on inspections for eligible MSMEs.
- Introduce or upgrade Right to Public Services Acts to include automated appeal escalation and public dashboards.
Concrete examples and precedents
Some states have already experimented with similar mechanisms. For instance, a few jurisdictions introduced self-declaration systems and time-bound approvals for low-risk activities; this reduces the need for NoCs and cuts weeks or months off project timelines. These pilots provide a practical roadmap for scaling reforms while retaining safeguards for environmental and public health priorities.
Benefits — who gains and how
- Entrepreneurs and MSMEs: Faster start-up timelines, lower compliance costs, and fewer surprises from inspections.
- Investors: Greater predictability and transparent timelines help investment decisions and risk assessments.
- Governments: Reduced administrative burden, data for smarter enforcement, and improved investor confidence that can expand tax bases and job creation.
- Citizens: Faster delivery of services and, over time, better local economic opportunities.
Potential challenges and how to manage them
- Fragmented implementation: States vary in capacity. Recommendation: tier reforms—start with high-impact, low-complexity areas (e.g., licence rationalisation) and create a central-state support cell for capacity building.
- Regulatory capture and short-cutting: Self-declaration must be paired with calibrated audits and third-party verification for critical sectors. Use risk-based sampling and transparent public dashboards so accountability is visible.
- Local political and administrative resistance: Tie reform incentives to measurable rewards—technical assistance, faster project approvals at the central level, or conditional financing support—while protecting local autonomy on sensitive subjects.
- Environmental and social safeguards: Reforms must not dilute protections. Streamline processes but retain strict outcome-based enforcement where necessary (for example, via independent environmental auditors and transparent monitoring).
Practical recommendations
For policymakers
- Prioritise an inventory-first approach: mandate a public-facing repository that lists regulations with last-update dates—transparency creates pressure and enables pruning.
- Pilot the affidavit-based clearance and automated appeal systems for a subset of MSMEs and low-risk activities for 12 months, publish results, and scale fast if outcomes are positive.
- Invest in third-party inspection frameworks and digital dashboards to show real-time compliance and appeals status; this reduces discretion and increases trust.
- Link reform milestones to incentive structures (capacity grants, conditional borrowing windows, or performance-linked funding) to accelerate adoption without heavy-handed directives.
For business owners
- Prepare to engage: maintain accurate compliance records and be ready to use online single-window systems; this will accelerate approvals when states implement self-declaration pathways.
- Participate in feedback loops: provide constructive feedback through local chambers and business associations so reforms are practical and do not create unintended burdens.
- Use transparency to your advantage: public dashboards and timelines make it easier to hold authorities to commitments—document delays and escalate systematically.
My perspective and continuity
I’ve written and argued before for simplifying permits, removing duplicate approvals, and designing regulations that enable rather than obstruct productive activity. These current moves feel like a logical next step—turning years of incremental reforms into a rulebook that institutionalises speed, transparency, and risk-based governance. If implemented well, the proposed packages could move us from “ease of doing business” to genuinely freeing business to create jobs and innovate Dismantling of Permit Raj ?.
Conclusion
The Centre’s nudge to states to revamp laws is a welcome acceleration of a long-running reform journey. Success will hinge on careful sequencing, digital transparency, incentive alignment, and protecting public-interest safeguards. Policymakers should prioritise quick wins and measurable pilots; businesses should engage and be ready to adopt new digital processes. Done right, this is an opportunity to turn regulatory reform into a durable habit of governance—not a one-off project.
Regards,
Hemen Parekh
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