Observing that the business spectrum is highly gripped by a cobweb of laws & corresponding rules which have distorted & complicated the business structure in India, the Observer Research Foundation (ORF) said that out of 1,536 laws on businesses in India, there is a provision of imprisonment in 26,134 sections.
The report titled "Jailed for Business" said that there are 1,536 governing laws in India on the various businesses, out of which 678 are of Central Government and 858 laws are of state governments'.
Describing the country's business structure as very complex and unjust, the Confederation of All India Traders (CAIT) has urged the Union Government that the country's business should be simplified under the 'Ease of Doing Business' vision of PM Narendra Modi.
“During the past 75 years of independence, traders across the country were not only harassed but also made subject to thousands of rules and regulations and all kinds of restrictions due to which the business structure of the country has suffered badly. The responsibility lies on both the central government and all the states because the laws of the centre, as well as the states, are imposed on the traders. Under the 'ease of doing business' program, the central government has already abolished more than 3,500 irrelevant laws,” claimed CAIT National Secretary General Praveen Khandelwal.
Khandelwal added that it has also been said in the report that compliance with laws keeps changing from time to time which makes the structure of business even more uncertain.
“In 12 months till December 31, 2021, there have been 3,577 regulatory changes; In three year period from 1 January 2019 to 31 December 2021, there were 11,043 changes in compliance requirements, meaning an average of 10 regulatory changes every day which makes the business structure more complex. It’s almost difficult for the traders to know frequent changes and cope with the same. Even the officials do not understand the implication of frequent changes,” alleged Khandelwal.
CAIT National President BC Bhartia claimed Of the 69,233 compliance that businesses have to comply with, 37.8 per cent (or about two out of every five) have imprisonment clauses. More than half of the clauses causing imprisonment carries a sentence of at least one year.
“Of the 1,536 laws governing business in India, more than half have provisions for imprisonment. With these complications, the trade finds it difficult to grow in proportion if the capacity which halts promotion of entrepreneurship in the country, generation of more employment, smooth conduct of business which has a direct opposite effect on the country's GDP,” he said.
The ORF report says that Maharashtra, Gujarat, Punjab, Tamil Nadu and Karnataka have more than one thousand imprisonment sections. The report further states that the MSME, which works in the manufacturing sector and has about 150 employees, has to do 500 to 900 types of legal compliance in a year, due to this, an additional burden of 12 to 18 lakh rupees is being imposed on them. These are unwanted expenditures for the trading community which can not be reimbursed from any quarter.
“Criminalizing trade laws violates Indian business practices. Since the time of Mahabharata to the Arthashastra, in ancient India, criminal action against businesses was never a part of punitive action - there were only financial punishments that made people more fearful,” complained textile manufacturer Kiran Shah.
The traders' body has demanded central and state governments that the laws which have become irrelevant at present be abolished and all the trade laws should be reviewed with the provision of imprisonment should be imposed on only such laws whose violations are causing injury to the health of people or injury to the sovereignty of the country.
