Union Budget 2024-25: Accelerating the Ease of Doing Business

While the Ease of Doing Business (EoDB) in India has significantly improved, to achieve our aspiration of a Viksit Bharat by 2047, we must continue to explore opportunities to accelerate progress across multiple dimensions.

Here is our seven-point recommendation for 2025 and beyond towards accelerating India’s Ease of Doing Business:

Deliver a ‘One India’ Experience: We need to ensure investors have consistent experience of doing business across all states. The Business Reforms Action Plan assessment, which includes 301 reform points covering 15 business regulatory areas, shows significant variability in scores. We must address the variability between ‘top achievers’, ‘achievers’, ‘fast movers’, and ‘aspirers’ to ensure holistic growth. A key enabler can be an EoDB council that brings together the centre and states to adopt best practices from each other.

Create Plug and Play ecosystems: States must have adequate land banks and ready infrastructure to encourage sector-based ecosystems that companies can plug into. Over time, this will create highly-skilled, deep pools of expertise and anchor value chains in manufacturing and services, which will result in a competitive advantage. We need to reduce the lead time for setting up or expanding operations, starting from a zero base, especially in emerging sectors like semiconductors, green hydrogen, nuclear, and electronics.

Develop Advanced Infrastructure: Over the past decade, we have made significant investments in infrastructure through various initiatives. The focus should now be on upgrading technology in power, roads, and transmission and also upgrading existing assets.

Improving speed, safety, and turnaround times in transport infrastructure will be critical to bringing down cost-to-market and encouraging greater trade volume.

Implement Trade Facilitation 2.0: The vision would also need significant Global Value Chain participation by India from the current levels of about 40% to about 50-55% that will create economies of scale and deepen the value addition emerging from India. To improve logistics, we need to address key parameters such as average cargo release times for both imports and exports and streamline trade processes outside customs areas. Implementing ‘Single Window 2.0’ can be crucial, offering a fully automated system for applications, processing and issuance of orders, permissions, and licences, while ensuring seamless back-end coordination among regulatory agencies.

Reduce Compliances, Simplify and Streamline Taxation: A drastic reduction in compliances across central and state governments is essential for enhancing the ease of doing business. A holistic review of existing compliances, many of which can be managed digitally, will significantly improve operational speed, and reduce corruption. It is encouraging that the government aims to streamline the Income Tax Act. Addressing tax administration through a separate Tax Management Act could cover procedural aspects such as tax collection, recovery, audits, assessments, appeals, and administrative rulings, similar to practices in major commonwealth countries. Additionally, streamlining withholding tax (TDS and TCS) by rationalising TDS provisions and leveraging available GST transaction information will simplify the complex and compliance-heavy non-salary TDS/TCS regime. This comprehensive approach will create a more efficient, transparent, and investor-friendly environment.

Accelerate Advance Pricing Agreements for GCCs: India needs to significantly accelerate advance pricing agreements (APAs) for global capability centres (GCCs) to sustain the country’s competitive advantage to enable GCCs to overcome the challenge of negotiating tax certainty for their transfer pricing transactions with their foreign headquarters and other companies within their Multinational Enterprise (MNE) group. For context, India has close to 1,600 GCCs, employing about 1.66 million people and these numbers have the potential to go up significantly.

Going Green: India must develop a clear pathway for decarbonising, managing climate change, and making cities more liveable. It should take into account future development and carbon emissions through 2047 and beyond. This requires a tangible action plan with co-ordinated efforts and investments flowing from the central government to states and major cities. The goal should be to have one city among the Top 50 and three cities in the Top 100 most liveable cities worldwide by 2047.

India has made remarkable improvements in the past few years including tax reforms, developing world-class infrastructure, and sector-specific policies and structured incentive packages. While this pragmatic and solutions-oriented Budget has articulated the intent to make it easier to do business in India, we believe the above recommendations can help propel that journey towards a Viksit Bharat.

The writer is CEO, Deloitte South Asia. Views are personal