(ABP)

Vishkarma’s woes are not unusual. Despite more than two decades of economic liberalisation, India still does not have a ‘single window’ clearance for businesses like the kind China has in place. Currently, no less than 11-13 approvals, eight from the Centre alone, are required for an entrepreneur to start a business in India.

“On the face of it, Indian regulations appear reasonable in many aspects,” says Jai Mavani, head of infrastructure and real estate at KPMG. “However, the challenge lies in the process. Because of the multiplicity of approving authorities and absence of single-point ownership, often one has to traverse a labyrinth of documents and government corridors to get approvals.”

One consequence is that India now has sectoral variances: although there are far more opportunities in production, manufacturing and construction, investors find agriculture and the services sector easier to work with. Moreover, “funding by banks is still a mirage for a start-up,” says Vishambhar Saran, president of the Indian Chamber of Commerce in Kolkata.

Despite special loans and interest incentives, banks refuse to risk their bottom lines with fledgling businesses, particularly during economic crises. This has added a further 15-20 per cent procedural work to starting a business.

Centre Vs States
“A key issue is that while policies are formulated at the Centre from a national perspective, states set their own priorities because of local and political considerations,” says Suryavir Singh, head, strategic planning, Sahara Prime City. “They (bureaucracy) find refuge in the fact that rules and regulations are not uniform across all states.”

As sources of energy fall under the state list, Andhra Pradesh wants preference in gas allocation in the Krishna-Godavari Basin, Rajasthan is trying to squeeze the last penny out of Cairn Energy, which has started production from Barmer, and Orissa has been demanding more investments in lieu of its mineral resources.

The Tax Hurdles
Archaic local taxes such as octroi, which bring the Brihanmumbai Municipal Corporation the bulk of its revenues, have pushed manufacturing out of Mumbai. There are at least 11 such taxes in different states. Inter-state reforms suggested by the Sarkaria Commission can untangle these issues if they are implemented in the right spirit.

The Economic Survey of 2008-09 wants a neutral corporate tax regime to replace the Income Tax Act of 1961, which has been modified over 5,000 times by various finance ministers resorting to the Finance Act (Budget) route. Experts believe that a single, higher tax rate for both personal and corporate tax will ensure better tax compliance and revenue generation.

At The Receiving End
“Real estate is the most unnecessarily and overly regulated sector,” says Santosh Rungta, president, Confederation of Real Estate Developers’ Association of India. “It is difficult to create affordable housing when various taxes, levies, fees and charges account for 25-30 per cent of cost.” At every level, from land identification up to delivery and maintenance, clearances are required, and the lack of a single window for approvals complicates matters further.