The road to regulatory reform, Pg9

• India’s economic growth has been services-led, with manufacturing stagnating at ~17% of GVA.

• Core reason: overregulation in manufacturing, under-regulation in services.

• Bureaucratic hurdles like license raj, NOCs, inspections and non-transparent approvals deter industrial growth.

• Need to shift from permission-based to self-certification model in low-risk sectors.

• Labour laws, especially for gig workers, must be modernised for flexibility and inclusion.

Detailed Insights

• Regulatory Chokepoints:

  • Arbitrary inspections and bribe-seeking behaviours reflect systemic flaws.

    • Instances cited where inspectors or consultants demanded bribes to bypass outdated norms.

  • Suggested Reforms:

    • Replace physical NOCs with self-certification and digital renewals.

    • Limit re-approvals to low-risk activities, adopt best practices from Southeast Asia.

    • Introduce certified third-party inspections to reduce government interference.

    • Automate approvals using geolocation-based tech for building height clearances, NOCs for mining, forests, defence.

  • Land and Labour Bottlenecks:

    • Land should be made easily available for industrial use by easing zoning/building rules.

    • Labour laws must be rationalised to accommodate gig economy without compromising protection.

  • Attitude Shift Needed:

    • Prevailing bureaucratic attitude is distrustful and control-oriented.

    • Governance must shift to enabler mode with performance metrics tied to ease of doing business outcomes.

Scientific/Technical Concepts Involved

• Self-Certification: Regulatory mechanism where businesses declare compliance, subject to random audit instead of pre-approval.

• Geo-tagging: Technology that embeds location data for automated clearances (e.g., building NOCs).

• Labour Code Rationalisation: Legal simplification aimed at balancing workers’ rights with employment generation.

Significance

• Vital for India’s goal of becoming a developed nation by 2047.

• Enables MSMEs, startups and formal manufacturing to scale with fewer frictions.

• Enhances investor confidence by lowering compliance burdens.

• Unlocks demographic dividend through gig and flexible work reforms.

Mains Mock Question:

India’s regulatory framework is often cited as a major barrier to manufacturing-led growth. Analyse the reforms needed to create a trust-based regulatory ecosystem and discuss the challenges in implementation.