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March 14, 2021

Government to remove 6000 compliance norms by 15th August, 2022

by CA Jessica Nagaonkar in Compliance Law, Corporate Law

Government to remove 6000 compliance norms by 15th August, 2022

Prime Minister Narendra Modi recently stated the government plans to do away with more than 6,000 compliance requirements for businesses both at the central and state levels this year to facilitate ease of doing business in India, especially in the wake of the Covid-19 outbreak. The government is planning to scrap thousands of compliance requirements for companies for Department for Promotion of Industry and Internal Trade (DPIIT).

The Department for Promotion of Industry and Internal Trade (DPIIT) is a central government department under the Ministry of Commerce and Industry in India. It is responsible for formulation and implementation of promotional and developmental measures for growth of the industrial sector, keeping in view the national priorities and socio-economic objectives. While individual administrative ministries look after the production, distribution, development and planning aspects of specific industries allocated to them, DPIIT is responsible for the overall industrial policy. It is also responsible for facilitating and increasing the foreign direct investment (FDI) flows to the country. The Centre is carrying out a systematic exercise across departments and states, to be implemented in two phases by 15 August, to reduce the compliance burden in 10 areas that have an adverse impact on time and cost of businesses.

Focus of DPIIT in reduction of compliances

For the purpose of reduction of compliances, the DPIIT is focussing on four issues:

  • relaxing compliance burden
  • removing archaic laws
  • decriminalising several civil offences
  • and further simplification of the citizen-government interface.

According to a DPIIT assessment, as many as 4,000 of these compliance requirements are in the states’ domain and the Centre accounts for 2,000. The DPIIT has announced the launch of a regulatory compliance portal that will act as a bridge between citizens, industries and the government to reduce compliances.

First Phase of the Exercise

  • The deadline of the first phase will be 31st March, 2021.
  • In the first phase, regulatory burden will be reduced in six areas that do not require amendments to any laws.
  • This includes removal of renewal requirements for licences; implementing third party or joint inspections with government authorities, standardizing and simplifying returns filing and reducing the number of filings, rationalizing or removing maintenance of registers and records, minimizing or eliminating display requirements for licenses, and digitizing and simplifying all manual records and procedures.

Final Phase of the Exercise

  • The final phase will be completed by 75th anniversary of India’s independence on 15th August, 2022
  • Compliance burden will be reduced in four areas that require amendments to existing laws.
  • This includes evaluating regulations in terms of time and cost to business and implementing ‘one-in-one-out policy; identifying and decriminalizing regulations which prescribe imprisonment as punishment for minor offences; identifying and repealing archaic laws and rules; and intensive use of new-age technologies such as blockchain, artificial intelligence, chat-bots and DigiLocker.

While central departments are to reduce around 2,000 regulations, states have agreed to reduce around 4,000 compliance requirements. The cabinet secretary is taking two to three meetings every month to review progress. There are five key central government ministries such as finance, commerce, corporate affairs, mines and health that need to reduce a major chunk of the compliances.

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