Relevance: GS Paper III (Indian Economy – Industrial Policy)

Source: DPIIT / The Hindu

Context: A Matter of Trust

India is undergoing a quiet revolution in how it treats its wealth creators. The government is moving from a colonial mindset of “Suspicion” (prove you are innocent) to a modern mindset of “Trust” (we believe you until proven otherwise).

The goal is simple: To shift from “Seeking Permission” to “Ease of Existence,” ensuring that an entrepreneur spends time on their product, not on paperwork.

Key Reforms: Cutting the “Regulatory Cholesterol”

Just as cholesterol clogs arteries, unnecessary rules clog the economy. Here is how the government is clearing the blockage:

1. Trade: The VIP Treatment

• Trust-Based Customs: If you have a clean track record (Trusted Importer), you get “Factory-to-Ship” clearance. You don’t wait at the port.
• Pay Later: Honest businesses can now clear their goods immediately and pay the duty 30 days later. It’s a “Buy Now, Pay Later” model for imports.

2. Decriminalization: Dignity for Business

• Jan Vishwas Act: The government has realized that a clerical error is not a crime.
• The Shift: For minor mistakes in 42 laws (like the Air Act or Environment Act), business owners will now face Fines, not Jail. This removes the fear of harassment and restores dignity to honest enterprise.

3. Labour & Tax: Flexibility & Certainty

• Labour Codes: Factories with up to 300 workers (earlier 100) can now adjust their workforce without seeking government permission. This flexibility encourages them to hire more, not less.
• Tax Stability: To reduce disputes, the Minimum Alternate Tax (MAT) is proposed to be lowered to 14%.

The Enablers: Technology as the Equalizer

Impact: Trust Translates to Growth

• Global Confidence: The world trusts this new India. We attracted $748 billion in FDI (2014-25), a massive 143% jump.
• Less Headache: Over 47,000 compliances have been removed. That is 47,000 fewer forms to fill.
• Formalization: More businesses are joining the formal economy, with GST taxpayers doubling to 1.5 crore.

State-Led Innovation (Competitive Federalism)

• Kerala: Digitized land tax, making property deals transparent.
• Tripura/Assam: Introduced “Self-Certification” for building safety. You certify your own safety; the government trusts you.

UPSC Value Box

Why this matters for Governance:

• Psychological Shift: This is a move from “Inspector Raj” to “Partner State.” When the state trusts its citizens, citizens trust the state with their investment.

Analytical Insight:

• The Challenge: While laws are changing at the top, the “mindset” of the local inspector needs to change.
• Way Forward: We need a “Regulatory Guillotine”—a periodic review where outdated laws automatically expire unless re-enacted.

Summary

EoDB 2.0 is not just about rankings; it’s about reality. By removing jail terms for minor errors (Jan Vishwas) and digitizing approvals (NSWS), India is telling the world: “We value your time and your dignity.”

One Line Wrap: True Ease of Doing Business is when the government becomes an invisible enabler, not a visible hurdle.

Q. “The shift from ‘Suspicion-based’ to ‘Trust-based’ governance marks a new phase in India’s industrial policy.” Discuss the significance of decriminalization in improving the Ease of Doing Business. (10 Marks, 150 Words)

Model Hints

1. Introduction: Contrast the old “License Raj” with the new “Jan Vishwas” (Trust) approach.
2. Body:
   • Decriminalization: Explain how removing jail terms for minor errors reduces fear and harassment.
   • Digital Trust: Cite NSWS (Single Window) and Self-Certification.
   • Impact: Mention the surge in FDI ($748 bn) and reduction in compliances.
3. Conclusion: Conclude that these reforms empower MSMEs to focus on Innovation rather than Litigation.