India’s Ease of Doing Business reforms are shifting from procedural simplification towards predictable, digital and enterprise-friendly governance

Recent Developments:

• India has continued to shift from a compliance-heavy regulatory framework towards a facilitation-driven, transparent and trust-based business environment, with reforms aimed at reducing delays, compliance costs and regulatory friction.
• The Doing Business Report of the World Bank is no longer published; its final edition, Doing Business 2020, placed India at 63rd position, compared with 142nd position in 2014, representing a 79-position improvement.
• The World Bank has replaced the discontinued Doing Business framework with Business Ready, which evaluates the business and investment climate through Regulatory Framework, Public Services and Operational Efficiency across the firm life cycle.
• India was placed in Group A in the GovTech Maturity Index 2025, reflecting advanced performance in core government systems, digital public services, citizen engagement and GovTech enablers.
• India ranked 41st in the IMD World Competitiveness Ranking 2025, although it declined from 39th in 2024, indicating that competitiveness depends not only on regulatory reform but also on economic performance, government efficiency, business efficiency and infrastructure.
• India ranked 38th among 139 economies in the World Bank Logistics Performance Index 2023, improving by six positions from 2018; stronger logistics is important for reducing transaction costs and integrating Indian firms with global value chains.
• As of 27 March 2026, the Pradhan Mantri MUDRA Yojana had sanctioned more than 57 crore loan accounts worth ₹40.07 lakh crore, strengthening access to formal credit for micro-enterprises.

Ease of Doing Business: Concept and Significance:

Meaning:

• Ease of Doing Business (EoDB) refers to the extent to which the regulatory, institutional and administrative environment enables enterprises to start, operate, expand and exit efficiently.
• It depends on factors such as business registration, taxation, access to finance, land and property systems, contract enforcement, insolvency resolution, logistics, infrastructure, regulatory compliance and government services.
• A business-friendly environment does not mean absence of regulation; it means predictable, proportionate, transparent and efficiently administered regulation.

Evolution of the Approach:

• India’s reform approach has increasingly moved from merely reducing the number of procedures towards improving the quality, predictability and delivery of regulation.
• The objective is therefore shifting from obtaining a better ranking to creating an ecosystem in which firms can invest, innovate, formalise, scale and compete globally.
• This approach is consistent with the World Bank’s newer B-READY framework, which assesses both rules and the effectiveness with which public services are delivered in practice.

India’s Progress in Business Environment: Key Indicators:

Historical World Bank Benchmark:

• India improved from 142nd position in 2014 to 63rd position in Doing Business 2020.
• The improvement was supported by reforms in starting a business, construction permits, cross-border trade and insolvency resolution.
• India’s Doing Business 2020 score was 71.0, compared with 54.05 in 2014.
• The final Doing Business assessment also identified continuing weaknesses in enforcing contracts and registering property, showing that reform progress was uneven across regulatory areas.

Competitiveness and Digital Governance:

• India ranked 41st in the IMD World Competitiveness Ranking 2025, reflecting improvements and continuing challenges in economic performance, government efficiency, business efficiency and infrastructure.
• India remained in Group A of the GovTech Maturity Index 2025, demonstrating advanced digital-government capabilities across four broad dimensions: core government systems, public service delivery, digital citizen engagement and GovTech enablers.
• Digital governance can reduce transaction costs by enabling online applications, electronic documentation, real-time tracking, automated verification and interoperable databases.

Logistics Competitiveness:

• India ranked 38th in the World Bank Logistics Performance Index 2023, highlighting substantial progress in logistics efficiency.
• Improved logistics reduces inventory costs, transportation delays and supply-chain uncertainty, thereby improving manufacturing competitiveness.
• Multimodal connectivity through highways, railways, ports, dedicated freight corridors and digital logistics platforms can strengthen India’s integration with global value chains.

Major Reforms for Improving the Business Environment:

Startup India:

• Startup India, launched in 2016, seeks to promote entrepreneurship, innovation and investment by reducing regulatory barriers and strengthening the startup ecosystem.
• It supports the broader objective of transforming India from an economy of job seekers into an economy of job creators.

Udyam Registration:

• The Udyam Registration Portal, launched in 2020, provides MSMEs with a free, paperless and self-declaration-based registration mechanism.
• It reduces administrative friction and facilitates greater formalisation of enterprises.
• Since 1 April 2025, the revised MSME classification thresholds have raised investment and turnover limits, allowing more enterprises to remain within the formal MSME framework.

National Single Window System:

• The National Single Window System (NSWS) provides a digital interface through which businesses can identify and apply for required approvals.
• Its Know Your Approvals module guides investors regarding applicable approvals across Central and State authorities.
• As of August 2026, NSWS facilitates applications involving 32 Central Departments and 34 State Governments, with more than 67,000 approvals applied through the platform.
• The platform also provides real-time application tracking, document repositories, renewal facilities and query management, reducing the need to interact separately with multiple authorities.

Business Reforms Action Plan:

• The Business Reforms Action Plan (BRAP), developed by the Department for Promotion of Industry and Internal Trade, promotes competitive federalism by encouraging States and Union Territories to implement business reforms.
• BRAP focuses on reform implementation rather than merely prescribing reforms, thereby bringing the State and local levels into the EoDB agenda.

Reducing Compliance Burden:

• The Government has pursued the Reducing Compliance Burden initiative to simplify procedures, remove redundant requirements and reduce unnecessary regulatory obligations.
• The reform exercise has involved systematic simplification and rationalisation of more than 39,000 compliances affecting businesses and citizens.
• Simplification, rationalisation and technology-based process re-engineering can reduce both compliance costs and opportunities for administrative discretion.

Digital India Land Records Modernisation Programme:

• The Digital India Land Records Modernisation Programme seeks to improve the accuracy, accessibility and integration of land records.
• Reliable land records can reduce property disputes, transaction uncertainty and delays in land-related approvals, thereby supporting investment.

National Generic Document Registration System:

• The National Generic Document Registration System seeks to digitise property registration and make property transactions more transparent and accessible.
• Digitised registration can improve information availability regarding property valuation, applicable rates and land characteristics, reducing information asymmetry.

SPICe+:

• SPICe+ integrates multiple incorporation-related services into a common digital process.
• It reduces duplication in company registration and helps entrepreneurs complete several formalities through a single integrated interface.

MCA21:

• MCA21 digitises corporate regulatory services under the Ministry of Corporate Affairs.
• Its evolution towards technology-enabled services improves transparency, filing efficiency and corporate compliance.

Government e-Marketplace:

• Government e-Marketplace (GeM) digitises public procurement and expands access to government markets.
• It creates opportunities for startups, MSMEs, women entrepreneurs, artisans, self-help groups and other smaller suppliers to participate in public procurement.

Open Network for Digital Commerce:

• Open Network for Digital Commerce (ONDC) seeks to create an open and interoperable digital commerce ecosystem rather than restricting transactions to closed platform-based networks.
• It can reduce entry barriers for smaller sellers by enabling participation in a wider digital market architecture.

PM GatiShakti:

• PM GatiShakti National Master Plan, launched in 2021, promotes integrated infrastructure planning through a common digital platform.
• It seeks to improve multimodal connectivity, reduce logistics bottlenecks and coordinate infrastructure development across ministries and jurisdictions.
• Such coordination is important because fragmented infrastructure planning can increase project delays and logistics costs.

Pradhan Mantri MUDRA Yojana:

• Pradhan Mantri MUDRA Yojana, launched in 2015, provides collateral-free institutional credit to eligible micro and small enterprises.
• As of 27 March 2026, more than 57 crore accounts had received loans amounting to ₹40.07 lakh crore.
• The scheme strengthens EoDB by addressing one of the major constraints faced by small enterprises: timely and affordable access to formal finance.

Goods and Services Tax:

• Goods and Services Tax (GST) replaced multiple indirect taxes with a more integrated tax framework.
• GST has contributed to the creation of a common national market, greater digitalisation of tax administration and improved formalisation.
• Its effectiveness for businesses depends on continued efforts to simplify compliance and reduce procedural friction.

Why Ease of Doing Business Matters: Economic and Governance Significance:

Investment and Foreign Direct Investment:

• Predictable regulations, efficient approvals and reliable dispute-resolution mechanisms improve investor confidence.
• A transparent business environment can reduce the risk premium associated with investment and support greater Foreign Direct Investment (FDI).

MSME Formalisation:

• Smaller enterprises are disproportionately affected by complex compliance because they have fewer financial and administrative resources.
• Simplified registration, taxation and compliance can encourage informal enterprises to enter the formal economy.
• Formalisation improves access to institutional credit, government schemes, digital markets and public procurement.

Entrepreneurship and Innovation:

• Lower entry barriers encourage individuals to establish new enterprises.
• Faster registration and digital approvals allow startups to redirect resources from administrative procedures towards innovation and productive activity.

Employment Generation:

• Easier business entry and expansion can increase the number of productive firms.
• A larger and more competitive enterprise base is essential for generating formal, productive and non-farm employment.

Manufacturing and Global Value Chains:

• Competitive logistics, reliable infrastructure and predictable regulations reduce production and transaction costs.
• These conditions help Indian firms participate more effectively in global value chains, particularly in manufacturing and export-oriented sectors.

Persistent Challenges: Why Reform Implementation Remains Uneven:

Regulatory Complexity:

• Frequent amendments and overlapping regulations can increase compliance uncertainty even when individual regulations are simplified.
• Excessive compliance requirements disproportionately affect MSMEs and startups.

State and Local-Level Variation:

• Business conditions vary considerably across States and local jurisdictions.
• Central reforms may not produce the desired outcomes if municipalities, district administrations and local regulatory institutions lack adequate capacity.

Land and Construction Approvals:

• Land acquisition, conversion, title verification and construction permissions can remain time-consuming.
• Weak land records and fragmented approval systems increase transaction costs and project uncertainty.

Access to Finance:

• Small businesses may continue to face difficulties in obtaining timely, affordable and appropriately structured credit despite expansion of formal financial channels.
• Credit information gaps and limited collateral can constrain the growth of smaller enterprises.

Contract Enforcement:

• Effective business regulation requires not only clear rules but also fast and predictable dispute resolution.
• Delays in courts can increase the cost of enforcing contracts and discourage investment.

Infrastructure and Logistics:

• Deficiencies in transport, electricity, ports, warehousing, digital connectivity and urban infrastructure can increase the cost of conducting business.
• Better physical infrastructure must therefore accompany regulatory reform.

Policy Predictability:

• Businesses make investment decisions over long time horizons and therefore require stable and predictable tax, trade, environmental and industrial policies.
• Frequent policy changes can increase uncertainty even where the underlying regulatory objective is legitimate.

Way Forward: From Ease of Doing Business to Ease of Sustainable Enterprise:

Strengthen Local Governance Capacity:

• Capacity-building should extend to municipalities, district administrations and local regulatory bodies, because many business-related interactions occur below the Union level.
• Digital systems should be accompanied by trained personnel and adequate institutional capacity.

Move Towards a Genuine Single Window:

• A true single-window system should eliminate duplication rather than merely providing a common interface for multiple departments.
• Approvals should increasingly follow interoperability, risk-based regulation, common data standards and time-bound decision-making.

Adopt Risk-Based Regulation:

• Low-risk businesses should face proportionately lower inspection and compliance burdens.
• Regulatory resources should be concentrated on high-risk activities and genuine violations rather than routine procedural scrutiny.

Improve Contract and Commercial Dispute Resolution:

• Faster commercial dispute resolution is essential for reducing uncertainty and improving investor confidence.
• Greater use of commercial courts, mediation, arbitration and digital case management can strengthen the business environment.

Deepen MSME-Focused Reform:

• Compliance requirements should be proportionate to the size, risk and capacity of enterprises.
• Access to formal credit, digital markets, skilled workers, technology and public procurement should accompany regulatory simplification.

Ensure Regulatory Stability:

• Major tax, trade and industrial policy changes should provide adequate transition periods and predictable implementation frameworks.
• Greater consultation with industry, workers, States and other stakeholders can improve regulatory quality and legitimacy.

Measure Outcomes, Not Only Reforms:

• EoDB should increasingly be evaluated through time taken, cost incurred, user satisfaction, approval predictability and actual investment outcomes.
• This approach is closer to the logic of the World Bank’s B-READY framework, which assesses the interaction between regulations, public services and operational efficiency.

Conclusion:

• India’s EoDB journey has evolved from simplifying individual procedures towards building a broader ecosystem based on digital governance, regulatory predictability, infrastructure, formal finance and competitive markets.
• The historical improvement from 142nd position in 2014 to 63rd in Doing Business 2020 demonstrates the scale of earlier reform efforts, but the discontinuation of the Doing Business rankings means that future assessment should focus on actual business outcomes rather than ranking optimisation.
• The next phase should therefore combine regulatory quality, institutional capacity, logistics, access to finance, contract enforcement and cooperative federalism.
• The ultimate objective should be an economy in which firms can enter easily, operate predictably, scale efficiently, innovate continuously and exit responsibly, thereby strengthening investment, productivity, employment and India’s global competitiveness.

Value Addition for UPSC:

GS Paper III Linkages:

• Economic Growth: Better business conditions increase investment, productivity and productive capacity.
• Employment: Easier firm entry and expansion can support formal and non-farm employment.
• MSMEs: Simplified compliance and formal credit can accelerate MSME formalisation and scale.
• Infrastructure: PM GatiShakti and logistics reforms reduce connectivity and transaction costs.
• Digital Economy: NSWS, GeM, GST and digital corporate services demonstrate the role of Digital Public Infrastructure in economic governance.
• FDI: Regulatory predictability and efficient approvals strengthen India’s attractiveness as an investment destination.
• Competitive Federalism: BRAP makes States and Union Territories important partners in improving the business environment