Investment Clearance Cell: Bringing businesses and government closer
A project of national importance
Improving India’s business climate is one of the key focus areas of the Government of India. The World Bank’s Doing Business (DB) scores and ranking are a widely recognized measure of the ‘Ease of Doing Business’ (EoDB) in an economy. The DB scores highlight areas where improvement has happened and areas which need further reforms.
Over the last few years, India has made significant improvement in its EoDB rank. However, starting a new business is one area where India stills lags far behind - ranking 136th on this specific parameter. Investors and entrepreneurs face significant hurdles in terms of time and cost in commencing new business activities. The report points out that this is due to the large number of procedures required to legally start and formally operate a company . Currently, India has about 10 procedures at an average to just register a private firm. This costs about 9.3% of income per capita and 18-person days. Recognizing this challenge, the government has been taking several initiatives to address it.
One such crucial initiative, announced by the Hon’ble Finance Minister in her Union Budget speech 2020, is the ambitious Investment Clearance Cell (ICC). The vision of the ICC is to set up a cell providing end-to-end facilitation and support to businesses. This would eventually include pre-investment advisory, information related to land banks, and facilitating clearances at Centre and State level. Invest India, under the guidance of DPIIT, took up the challenge of executing this momentous project soon after its announcement.
Towards this end, ICC has been working at a rapid pace over the last year to develop a national single window portal called ‘Maadhyam’ The name aptly resonates the endeavour to create a cutting-edge technology platform to serve as a single unified medium connecting businesses and the government.
Need for a ‘genuine’ National Single Window System
A common lament among the business community has been regarding the time and costs needed to comply with government requirements, with businesses having to maneuver a complex web of rules and regulations. Adding to the complexity are the many levels of legislation and administration - from the central government to state governments and to the district/local/village level administration. There are also multiple channels – physical offices, online portals, state single windows, ministry single windows etc.
These complexities impose various kinds of costs on businesses. One major category of such costs are ‘transaction costs’ – i.e. costs related to figuring out applicable regulations, the associated approvals and licenses, and the procedures to obtain these (where, how, what, when etc.). Adding to these are the administrative and ‘paperwork’ costs involved in obtaining these approvals and filing regular renewals. An entrepreneur may end up spending significant effort on these activities or bear the cost of outsourcing these to professional services firms. Interestingly, governments themselves bear significant administrative/paperwork costs in creating and administering regulations. Hence this is a lose-lose situation for both businesses and governments.
Further, there are the costs arising due to delays and uncertainty around time taken for final decisions on issuance of approvals. An entrepreneur might have to make expensive provisions in their business plan to account for these delays - delaying business operations, losing revenue, holding capital, and incurring costs to maintain the assets already deployed, like depreciation, interest etc.
The Government’s latest Economic Survey calls for simplification of regulations and process reforms. It states that administrative processes in India are often riddled with significant procedural delays and other regulatory complexities, making them inefficient and cumbersome for all stake holders involved.
Hence, the immediate mandate of the ICC is to minimize these transaction and uncertainty costs for both business and government. Maadhyam was conceptualized to serve as the enabling platform for this. It uses the latest technology to minimize these costs, including those arising from information asymmetry, administrative paperwork, uncertainty, and delays.
Maadhyam: Connecting the Dots
Most of the transaction costs associated with business regulation are related purely to exchange and processing of data or information. This is where Maadhyam is expected to bring transformational improvements using technology.
The guiding principle is visionary though simple - any entrepreneur or investor anywhere in the world should be able to identify, apply and obtain the approvals necessary to commence any business activity in India. The aim is to serve all types of businesses and investors – irrespective of nationality, sector, and investment size. Access to the internet would be all that would be required.
The platform will also allow investors to virtually visit potential land plots, surrounding ecosystem, video conference with the relevant authorities and feel welcomed.
An example of the innovative use of technology to serve investors is the ‘Know Your Approvals’ (KYA) service in Maadhyam. One of the most striking features of the platform, it is an intelligent information wizard that generates a list of approvals required by any business to commence operations. It does so by asking the investor a series of dynamic questions about their planned business activities and identifies the applicable approvals basis the responses provided. The questionnaire, simple and user friendly on the surface, has a complex, automated logic built into it to sieve through hundreds of approvals, and shortlists only those relevant to the specific investor or entrepreneur.
Alternatively, investors can also browse and add individual approvals to their virtual cart, like any other e-commerce shopping cart (Flipkart, Amazon) and can review before applying. It is as simple as that!
Maadhyam has been designed keeping the investor at the center stage, and boasts of the following features:
- Single unified interface for investors to identify, apply, track and obtain approvals.
- Intelligent auto-population of forms, eliminating the need to fill in same information again.
- Ability to track status of any application and raise reminders to authorities.
- A unified document repository where investors can upload and save their documents, and view and download documents issued by government authorities.
- A user-friendly communication module to respond to any clarifications requested by processing authorities.
- Guidance for investor to navigate application procedures where multiple forms or approvals need to submit in a specific sequence.
- Scheduler to arrange and conduct meetings online with authorities.
Maadhyam is also expected to serve as a key platform for the government authorities using it, as it will help authorities allocate resources efficiently and plan their workflow effectively.
Maadhyam is one of the crucial initiatives in achieving the vision of making India a top business destination. Government and businesses need to collaborate in this continuous effort for long term economic success and Maadhyam enables just that!
You can visit Maadhyam below. We keenly look forward to your feedback!
The beta version of Maadhyam is now accessible publicly and open for trials and feedback. We request you to spare some time to go through the portal, test the services available and provide your feedback. It will help us improve Maadhyam further for you!
Maadhyam beta version: https://ppe-nsws.maadhyam.gov.in/
Maadhyam feedback form: https://www.investindia.gov.in/maadhyam/feedback
Alternatively, you can also use the ‘Contact Us’ section on the website to fill in the form, or send us an email, or simply call us!