Industry body Assocham has called for reforms in national and state-level policies to ease the regulatory regime for MSMEs in the country. In its latest knowledge paper ‘Ease of Doing Business in the States’, Assocham highlighted key challenges MSMEs face, such as delays in construction approvals, complexities in land-use conversion, taxation issues, logistics and trade barriers, and restrictive labor laws. These are further compounded by state-specific administrative practices that add to a fragmented and sometimes unpredictable regulatory landscape.
Suggesting key reforms to ease the business environment for MSMEs, Assocham called for third-party technical licensors to issue construction permits as government approvals for building permits and occupancy certificates (OCs) burden regulatory capacity without adding significant safety benefits.
It also recommended broadening the classification of the white category or non-polluting industries as low-polluting industries are often misclassified as highly polluting due to gaps in Central Pollution Control Board (CPCB) categorisation. For instance, unclassified industries such as garment manufacturing are often mislabelled as miscellaneous or classified as high-polluting.
States like Karnataka, Haryana, and Madhya Pradesh have already added industries to the white category, Assocham said.
“The recommendations outlined are both actionable and future-oriented. Strengthening single-window clearance mechanisms through robust digital infrastructure emerges as a critical step in easing compliance burdens. Equally important is the push for sustainable industrial practices, including innovative measures like incentivizing wastewater recycling,” said Manish Singhal, Secretary General, Assocham in the paper. at the launch of a study/report/recommendations?
The industry body also underscored the need for reforms in labour laws to boost workers’ earning potential. “Simplifying regulations and removing prohibitive laws can create a more inclusive labour market. Such reforms not only improve income levels for all workers but also contribute to a more diverse and productive workforce,” the paper said.
Assocham also suggested reforms in the GST registration process for a smoother onboarding of MSMEs in the GST framework.
According to the paper, vague grounds are often cited for rejection or clarifications for example non-mandatory notarization of rental agreements, legibility, etc., and interpretations at discretion of officers force physical visits to GST Suvidha Kendras, extending approval timelines.
Moreover, businesses, particularly online sellers, are required to register a Principal Place of Business (PPoB) in every state of operation and wait three-four weeks for Additional Place of Business (APoB) amendments, driving up compliance and administrative costs.
Assocham proposed specifying the limited number of documents and clarifications that can be requested as part of the GST registration process. Any documents required in addition to those specified can be requested only after approval of designated independent authorities, it said. Moreover, “there should be a single window ‘multi-state registration’ module inspired by the US Streamlined Sales Tax Registration System (SSTRS) for one registration application to each participating state,” the paper added.
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