India Regulatory Brief: India Ease of Doing Business Rankings, States Seek Mining Ordinance Concessions

February 16, 2015 Posted by India Briefing Reading Time: 4 minutes

Government to Rank States on Ease of Doing Business

The Indian government is set to begin ranking states on the ease of doing business. The initiative will encourage state relaxation of dated legislation and establish a means for the federal government to identify poor performers.

The states will be ranked on the basis of: setting up and exiting business, registration of property, labor compliance, infrastructure availability, finance and tax issues and inspection reforms.

The move is in line with the Modi government’s competitive federalism’ agenda and will facilitative favorable reform for foreign investors.

India’s Mineral-rich States Seek Mining Ordinance Concessions

Mineral-rich states have sought to relax new guidelines from the Mines and Minerals Development and Regulation Amendment Ordinance. Though the Ordinance was designed to address emergent problems in India’s mining industry, states have faced difficulties implementing its provisions.

Goa and Karnataka are amongst the states urging improved state discretion and have accused central government of encroaching on state powers. Goa has called for a ten year extension to the lease period which is currently set at 50 years, while Karnataka’s Mines Minister, T.B. Jayachandra, is pressing to remove the 30 million tonnes annual production cap which was set by the Supreme Court.

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Jayachandra also suggested there would be difficulties granting mineral concessions through auction for resources that are on private and ‘patta’ land. He proposed that interim measures be taken to ease the process for granting these concessions, warning that existing demand and mineral reserves could encourage illegal mining.

Odisha is demanding that suggestions are taken from individual states before the MMDR’s implementation guidelines are decided, as well as petitioning the allocation of minerals in Odisha to Posco, a Korean owned steel plant. Meanwhile, Andhra Pradesh wants to remove limestone from notified minerals and amend Mineral Concession Rule, and Madhya Pradesh is requesting the transfer of mining leases for captive use on acquisition of the primary industry.

Bankruptcy Panel Report Seeks Changes in Companies Act

Last week, a government panel suggested changes in laws for developing an effective corporate insolvency regime to improve India’s ease of doing business rank.

The T K Viswanathan committee, constituted by the finance ministry, released a report suggesting changes in various pieces of legislation to ensure early detection and resolution of financial stress in companies and protect stakeholder interests. The report is the first step in the Center reform of the bankruptcy law.

However, the panel noted that developing an insolvency code would require more time due to the multiplicity of laws and adjudicatory forums governing insolvency matters in India. Nevertheless, sources in the finance ministry did not rule out tabling a code in the coming Budget session of Parliament.

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