Government moving to online approval system for over 200 permits needed to start business

NEW DELHI: By April 2015, starting a new business in India would no longer require budding entrepreneurs to make multiple trips to myriad government offices, with the Narendra Modi government moving to an online approval system for more than 200 permits required by different industries from central and state government departments.

The new system for registering and seeking clearances for any business would allow entrepreneurs to apply for and track the status of all permits and licences online to start with, and eventually on mobile phones, in line with PM Modi’s vision of bringing governance to people’s fingertips.

This initiative could be highlighted when Cabinet Secretary Ajit Seth meets India Inc on Friday with the commerce and industry secretaries to discuss measures to improve the ease of doing business. India is currently ranked 142nd on the World Bank’s index for this and the government is committed to improve this to 50.

Promising to simplify business processes and regulations in six months, the PM had told US businesses in October: “Whatever may have been India’s ranking on the ease of doing business index, I have now told officials that I don’t want to be so low on this ranking.”

PM Modi told US businesses in October that he had given officials “specific parameters to improve quickly”.

While the Modi administration has stoked a revival in investor interest in India, foreign investors spooked by policy uncertainties and the country’s notorious red tape are still looking for tangible signs of change in the business environment. This initiative could be a key enabler in changing the narrative, feel experts.


“The cabinet secretariat is prodding all ministries and state governments to complete the exercise by March 2015, so that anyone setting up a new venture in any sector or state can apply for the requisite permits and even pay fees online,” said a senior government official aware of the development.

The proposed national portal for registrations and clearances would also free up entrepreneurs from the guesswork associated with seeking clearances in India’s cumbersome and uncertain bureaucratic landscape, a system that spawns brokers and agents who charge for helping out aspiring businessmen.

“There will be a start-up matrix on the portal that will tell applicants what permissions are needed for which sectors. So if you are about to set up a pharma unit in Gujarat, it will tell you what are the permits needed from the health ministry and the state government,” the official explained.

As of now, 81 state-level clearances, including those relating to acquiring land, setting up a factory and associated nods such as registering a boiler and operating a diesel genset are being digitised.

Another 133 clearances granted by different central ministries and departments, including tricky security nods from the home and defence ministries, will also be put online. More than 50 of these central clearances pertain to the railway ministry alone.

“Moving to an online system for granting clearances is a good start, after years of creating multiple single windows for investors that only sent them to other official windows,” said former Boston Consulting Group chairman and Planning Commission member Arun Maira. “But it’s equally important to re-engineer the processes involved in the clearances and create an intelligent back end. If people using the new system have a bad first experience and throw their hands up saying even this doesn’t work, it could backfire,” he told ET, stressing the importance of doing things in the right order.