Ease of Doing Business: New Measures Cut Compliance & Speed Up Startups

The Ministry of Corporate Affairs (MCA) is leading a transformative effort to reshape India's business landscape.Through a series of strategic reforms, the MCA aims to streamline compliance procedures, eliminate bureaucratic obstacles, and position India as a global business hub. These reforms, ranging from simplifying incorporation processes to decriminalising minor offenses, are designed to significantly enhance the ease of doing business in India.

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Over the past decade, India has strengthened its position as a Top 5 global economy and is on track to become the third-largest economy, trailing only the US and China. This remarkable growth trajectory is reflected in the country’s improvement in the Ease of Doing Business (EoDB) ranking. From a lowly 142nd position in 2014, India surged to 63rd in 2019, highlighting the government’s relentless efforts to streamline regulations and foster a business-friendly environment.

MCA's Key Reforms to Boost Ease of Doing Business in India

1. Establishment of C-PACE: A key initiative is the creation of the Centre for Processing Accelerated Corporate Exit (C-PACE) in March 2023. This centralized mechanism has expedited the voluntary strike-off process for companies under Section 248(2) of the Companies Act, 2013. As a result, 13,560 companies were struck off in FY 2023-24, with 11,855 more removed by November 15, 2024. The average processing time for such applications has been reduced to just 70-90 days.

2. Expansion to LLPs: In August 2024, the MCA empowered C-PACE to handle the striking off of Limited Liability Partnerships (LLPs). By November 15, 2024, a total of 3,264 LLPs had been struck off under the Limited Liability Partnership Act, 2008.

3. Decriminalization of Offences: To reduce the burden on judicial courts and streamline corporate operations, the MCA decriminalized 63 offences under the Companies and LLP Acts. This measure aims to ease litigation and shift prosecution cases to adjudication, simplifying compliance for businesses.

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Additional Reforms to Enhance Ease of Doing Business and Compliance

• Straight Through Process (STP): Conversion of 54 forms to STP, eliminating the need for approval from field offices, speeding up processing.
• e-Form SPICe+ and AGILE PRO-S: These forms provide a one-stop solution for business incorporation, PAN/TAN allotment, GST registration, and more.
• Threshold for Small Companies: The paid-up capital limit has been increased to ₹4 crore and turnover to ₹40 crore, expanding eligibility for reduced compliance requirements.
• Centralized Registrar of Companies (CRC) and Central Scrutiny Centre (CSC): These new centers standardize and streamline company incorporation and form scrutiny processes.
• Central Processing Centre (CPC) and e-Adjudication Portal: Ensuring efficient processing and adjudication of offences.
• Zero Fees for Company Incorporation: Offering zero fees for company incorporation with authorized capital up to ₹15 lakh, alongside a fast-track process for mergers, including those involving startups.
• Listing Rules 2024: The Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024, allow Indian public companies to list their equity shares on international stock exchanges at GIFT IFSC.

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Impact and Future Outlook

These reforms are part of the MCA's ongoing efforts to foster a more business-friendly environment, reduce compliance costs, and simplify regulatory procedures in India. They signal the beginning of a new era for ease of doing business, creating a system that is simpler, more efficient, and conducive to growth. By reducing compliance burdens and streamlining procedures, these initiatives are set to attract domestic and foreign investment, stimulate economic growth, and solidify India’s position as a global economic powerhouse.

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As the government continues prioritizing regulatory reforms, businesses can look forward to a future characterized by efficiency, transparency, and sustainable growth.

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