Through programs like Make in India, Ease of Doing Business (EoDB), Business Reform Action Plan (BRAP), and the Jan Vishwas Acts, the Indian government has significantly improved the business climate in the last ten years. These reforms have also greatly improved government-business interaction, decriminalizing minor civil offences, computerizing regulatory processes, removing superfluous legislation, and streamlining procedures.
But creating a genuinely favorable business environment requires more than just loosening rules; it also requires that the sectors consistently adhere to them. Although companies have worked hard to adopt these improvements, it is time for the government to recognize their achievements and implement a system to incentivize compliance.
Establishing a Compliance Rating Mechanism, in which sectors are assessed and ranked according to their compliance with regulations, is one viable strategy. This technique may work similarly to the GST compliance rating score or the credit rating systems used by financial organizations. By recognising and rewarding sectors for their best practices, such a rating system would inspire other companies to do the same. Governments cultivate a culture of compliance that fortifies the regulatory environment as a whole while the industry gains from incentives.
Four important characteristics might serve as the foundation for the suggested ranking. (i) Timely Compliance: A history of timely adhering to different regulatory regulations. (ii) Penalty History: A review of previous fines or infractions (iv) Internal Record Strength: The resilience of the business’s internal compliance systems; (iii) battles and Litigation: A history of legal battles with regulatory agencies.
Industries with a high compliance rating may be awarded benefits like lower license renewal costs and longer validity periods for required renewals. In addition to fostering goodwill, recognizing and rewarding compliance initiatives will encourage companies to enhance their operations.
The government might create a specialized task force to collect and evaluate compliance data to implement this system, evaluating it according to clear and impartial standards. Furthermore, this project may improve India’s position in worldwide regulatory framework evaluation indexes such as BREADY.
The compliance rating system may transform the MSME sector. A higher grade may increase export capabilities and funding availability, boosting competitiveness and growth. By rewarding companies with a solid compliance history, the government may promote a culture of voluntary compliance and trust-based governance.
India’s overarching objective of establishing a business-friendly atmosphere that promotes innovation and expansion is in line with this move towards a reward-oriented compliance system. Rewarding compliance may be essential to creating a strong, investor-friendly economy as India works to realize its ambitious Viksit Bharat goal by 2047.
