Thursday, January 22, 2015

Open door vs One window

Open door vs One window

The essence of facilitation is in opening doorways of trust

There’s no doubt about the fact that Prime Minister Narendra Modi’s ‘Make in India’ call is the most powerful campaign launched in the post-independence era. This is the first instance of an undeniably precise governmental initiative to elevate India to a privileged position of pride on the global map.  It is reported  that the Modi government is working hard to cut the lead time of business registration in India from 27 days to just one day!  In fact by April 2015  over 200 state & central permits required by different industries are to be issued online.  Modi is keen that India be included in the coveted list of top 50 countries ranked on the World Bank’s ‘Ease of doing business’ Index 2014, which has currently slipped to an embarrassingly low position of 142 .   

The pm’s hotline invitation to  global investors to invest in India is circuitously a clarion call to the Indian business fraternity to enhance its value proposition to meet global benchmarks.   In the same breath, he’s highlighted the need to scrap the long list of obsolete laws that stand in the way of India’s global economic advancement.  In fact, his aspiration is to scrap one law every day! The Law Commission is working towards simplifying compliance requirements for doing business in India including the introduction of self-certification.  More importantly, the cleansing exercise should be extended to the rut of inter-ministerial departmental procedures and processes (informal or formal) – commonly known as ‘red tape’ – that has countless files move from department to department and desk to desk merely collecting layers of dust and opaque notes from secretaries and under secretaries.  We need to create agile and able systems to mitigate the arbitrary decision making.    

Today, any fipb application needs to be accompanied by heaps of past fipb/ sia/ rbi approvals apart from the Investee Company’s Certificate of Incorporation and Memorandum of Association.   Although the fipb/ sia/ rbi and the mca have undertaken a massive computerisation program,  these basic documents can’t yet be tracked through any central repository. 

On the other hand many of our government departments  are mechanically digitizing their day-to-day records and paper work which by no means would improve the speed and quality of decision making. Relocating mountains of physical records from cupboards to computers  is no solution. We need to streamline processes and procedures  to facilitate quick and fair decision making.  It would not be out of place to mention that following successful implementation of the Civil Service Computerisation Programme (cscp) the Singapore Government seamlessly automated work functions and prodigiously reduced paperwork and achieved many public services online.   Singapore government’s mission 2015 is now poised to witness paradigm shift from a comprehensive ‘government-to-you’ approach to a collaborative ‘government-with-you’ approach.
But back home,  the much-hyped single-window system for FIPB applications demands,  at least two dozen documents with multiple hard copies. Worse, even a small amendment causes a merciless repeat of the entire process. Additional documents are sought from time to time, again with multiple copies. To add to our woes, multiple industry-specific watchdogs have become mega factories of perfunctory and pointless regulation, supposedly to facilitate business growth? 
Any enduring relationship blooms on the rock-solid foundation of trust. Trust, in the fdi context, implies that investors be allowed to commence business from Day one of company incorporation in India (subject to the fdi limits on ownership). The criticality of compliance can’t be over-emphasised, but why not grant an in-principle approval to commence business, coinciding with the incorporation certificate.   And they be given allotted a fixed time-frame, say 90 or 120 days, to complete all formalities to the tee, except for manufacturing in select industry. Is not the incorporation in itself a tangible manifestation of the investment commitment?  It is sad to see investors moving from door to door in hapless fashion seeking umpteen approvals and licenses?  

We have for long cherished our ‘One Window’ policy as a monumental gesture to ease foreign investment but the essence of facilitation is not about merely installing transaction windows, it’s about opening engaging doorways of trust for foreign companies  keen to invest in the India story. An ‘open door policy, not one window policing’, is the need of the hour.  Let them begin business on day one.

Courtesy : Business India January, 2015 

Views expressed are my personal

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