We are in the middle of trade war amongst most prosperous nations and economic powers. While every Country follows the policy nation first and wants to create jobs, set up local manufacturing to boost economy and cut down imports, are these the only reasons behind trade wars or there is more to it? Most of the times it is domestic political compulsions which drive these measures rather than economic considerations. In these circumstances countries have to prepare themselves to create industry friendly and conducive domestic environment to encourage local manufacture and increase per capita income to enable citizens to bear extra burden of tariffs.
With coming to power, Modi Government rolled out many initiatives to improve India’s standing in international community, boost economy, create business friendly environment and non-adversarial tax administration. In addition, Make in India initiative, introduction of Goods and Service Tax (GST) and the Bankruptcy and Solvency Act, Liberalisation of FDI Policy, etc. has strengthened India’s position as preferred place to do business
Ease of Doing Business is critical pillar of Make in India initiative launched by the Government to encourage manufacturing in India. Concerted efforts by all stakeholders resulted in improving India’s ranking in World Banks’ Ease of Doing Business Index from 130 to 100. This quantum jump is result of continuing dialogue with industry, improving business environment, reducing touch points with regulators and tax inspectors, addressing menace of corruption, etc. While lot has been done, many times more needs to be done.
The Department of Industrial Promotion and Policy (DIPP) has launched an online portal to track implementation of reforms on real time basis and also formed EoDB Team, which is taking constant feedback from industry and passing on to concerned departments, monitoring key initiatives to map efficacy & impact and in case of need suggest mid-course correction to concerned authorities. People from all walks of life are invited for consultation on industry/ sector specific issues or key tax and regulatory issues with EoDB Team and feedback is passed on to concerned departments.
Implementation of GST from July 1, 2017, to replace large bouquet of taxes at Federal and State level, to create a unified market and give boost to foreign investment is one of the major indirect tax reforms this Country has seen. Creation of GST Council comprising of Federal and State Finance Minsters as members, is newly minted statutory body spearheading implementation of GST in India, which is a unique example of federalism in India. GST has not only improved supply chain but also removed cascading effect of taxes with widening of tax base. However, lot of challenges are being faced by industry upon migration to GST like – lack of clarity on many key provisions, regular glitches on GSTN portal leading to tax payers not able to upload documents and returns, abnormal delay in sanction of export refunds, levy of compensation cess on vehicles clubbing them with sin goods, frequent amendment of the GST Rules both at Federal and State level –resulting in dampening euphoria of unified tax market. Though the GST Council has played a pivot role in quickly addressing concerns of industry, still large number of painful issues need to be addressed to bring in stability and reap benefits of this major tax reform.
On export-import front, Customs has introduced many initiatives to improve user experience including single window clearance, 24 X 7 clearance at key ports, revision of procedure of SVB investigations in case of related party transactions, reduction in number of documents to be filed, etc. While these efforts have improved clearance to certain extent yet colonial mindset of officers at ports is biggest challenge. Many time customs officers change settled classification, declared value is loaded without any reason, which disrupts business and causes considerable costs to industry in terms of delays coupled with loss of orders and increased cost of litigation. Even authorities functioning as quasi-judicial adjudicators, pass orders in utter disregard to judicial discipline and fair play. Fortunately, we have great institution of Tribunal and Courts, which comes to rescue of industry but at very high cost to industry. It is high time that Finance Ministry brings in some accountability in ensuring judicial discipline and reasonable approach by its own officers.
On corruption front the Government has moved to e-filing and self-assessment significantly cutting down face time with inspectors and regulators. Further, significant amendments are proposed to the Prevention of Corruption Act to give it more teeth and reach. However, still we face daily grind of retail corruption, which needs be addressed sooner than later.
While a beginning is made, sustained efforts at improving delivery of services and change of attitude of authorities from tax collectors and regulators to facilitators, ensuring speedy justice delivery system, improved infrastructure and easy availability of funds at reasonable costs would go a long way in ease of doing business in India and to realize the Prime Minister’s dream of India being amongst top 50 economies of world.
About the Author
Ashok Dhingra is the Founder and Managing Partner, Ashok Dhingra Associates, India. He has more than 39 years of vast experience including 22 years in Customs, Central Excise and Service Tax department including Directorate of Revenue Intelligence and more.
