India has 1,536 business laws with 69,233 unique compliances across Union, state and local laws. Among the 1,536 pieces of legislation, 54% have 26,134 clauses of imprisonment.
The government is working on decriminalisation of various offences under different business and economic laws.The idea is to avoid criminal culpability for businesses due to commercial disputes and civil offences, which are technical in nature and are not serious. India has 1,536 business laws with 69,233 unique compliances across Union, state and local laws. Among the 1,536 pieces of legislation, 54% have 26,134 clauses of imprisonment. Nearly two out of every five laws/rules have imprisonment clauses going up to 10 years. Of these, 29% are at the Union and 71% at the state levels, industry sources said.
Apart from improving India’s global ranking in ease of doing business — 63rd in the World Bank’s Ease of Doing Business Report 2020 — the move will send out a strong message to business and industry, both within and outside, about the country’s eagerness of attracting investment. Sources in the government said the Cabinet secretary will meet a group of secretaries on May 13 to deliberate on the issue that has been a pain point for business and industry in general, and manufacturing in particular.
Rishi Agrawal, co-founder and CEO, Teamlease Regtech, said a jail time of up to three years can be meted out under 86% of the 26,134 clauses. Five of the states, Gujarat, Punjab, Maharashtra, Karnataka and Tamil Nadu, have over 1,000 clauses of imprisonment in their business laws. Labour as a category comprises 30% in terms of legislations and 47% in terms of compliances, but contributes 68% in terms of provisions with criminality.
Within these laws, the Factories Act, 1948 is the largest contributor, accounting for 31% of all the criminal clauses.“If one compares the quantum of punishment prescribed for such misdemeanours with provisions prescribed in the Indian Penal Code, 1860, many of them are at par with homicide and death due to negligence. Unfortunately, a sizable number of provisions are asynchronous with contemporary times and put inordinate power in the hands of bureaucracy serving rent-seeking behaviour and sustaining an inspector raj. India’s employer compliance needs a complete rethink,” he added.
The staggering numbers point to the inherent hostility in India’s business laws, slowing entrepreneurs down and raising barriers to job creation. “Can we afford to send our job creators to jail for failing to display the abstract of an act?” he asked.