Teamlease reveals that some states in India are moving faster than others in trying to remove archaic laws

• The Government of India is working on an initiative to reduce compliance burden on MSMEs across states.
• Jayesh Ranjan, Principal Sec., I&C and IT Depts, Telangana government highlights Telangana ranks third in Ease of Doing Business ranking in the country.
• With the help of government initiative, Punjab has already removed 493 compliances in one day.

In March 2021, while addressing a webinar on the production linked incentives (PLI) scheme through video conferencing, Prime Minister Narendra Modi said, ”Our effort is to reduce 6,000 compliances burden on entities at the state and central level to boost domestic manufacturing.”

Human resources firm Teamlease, which is consulting the government of India as well as states in this project, said that Punjab and Telangana have made some good progress in this regard.

“The government is undertaking a massive exercise to reduce compliance burden on MSMEs. It has engaged Teamlease to study laws under which compliance has to be carried out by companies. Some of the laws are really outdated. In fact, this issue has been raised in front of the Prime Minister as well,” said Jayesh Ranjan, the information technology (IT) secretary of Telangana, while speaking at Business Insider’s MSME Exchange, a virtual event dedicated to small businesses.

Overall, the Teamlease team has identified over 69,233 compliances active in the country from which 43,696. Further, there are 1,536 acts and 6,618 filings active in the country for businesses.

Teamlease is working with 29 states, out of which only Punjab has been able to execute some reduction in compliances. It has removed 493 compliances in one day. Next state that will execute some reduction in compliances is expected to be Telangana.

For most businesses, labour laws constitute more than half of the compliance burden. Labour laws are a set of compliances that set the tone for the treatment of the labour force in the workplace like child labour laws. Non-compliance with the laws can lead to punitive action towards the company.

Let’s look into sector-wise classification in compliances:

Sector	Acts	Compliances	Filings
Industry specific	484	17,966	1,262
Labour	463	35,542	3,048
Commercial	189	6,928	472
Finance & Taxation	116	3,284	990
General	109	2,065	122
Environment, Health & Safety	107	2,922	231
Secretarial	68	3,526	493

Manish Sabharwal, chairman of TeamLease, said the team has been working with 29 states at a time to help them understand and reduce compliance. “The first state to actually cut down on compliance is Punjab who has removed 493 compliances in one day. And another state will be Telangana,” said Sabharwal.

Rishi Agrawal, chief executive officer (CEO) of Avantis Regtech – a TeamLease group company explains the compliance struggle for the MSME industry:

• A typical MSME with more than 150 employees deals with 500-900 compliances in a year. With this, they end up spending around 80,000 to 1 lakh in a month and about 12-18 lakhs in a year just on filing several compliances like with labour laws, tax consultant and so on.
• To help you with these compliances, a consultant will charge around ₹35,000 (differing as per the state and complexity of the filings).
• Besides, there is hardly any digitisation in terms of filing compliances.
• In addition to it, MSMEs witness sudden visits from inspection authorities which is a time consuming process.
• Talking about compliances required to open a factory, Agrawal says one needs about 4,000 pages of non-objection certificates (NOC) and filings.

Due to the pandemic, the process had been stalled, but sooner the states execute these recommendations, the better for businesses.

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