There is a need for an integrated value chain approach to Ease of Doing Business (EoDB) in order to achieve more quantifiable gains and better results for the states, a new study has found. The study by Pahle India Foundation was released on Friday by NITI Aayog CEO Amitabh Kant.

The report titled “An Integrated Value Chain Approach to Ease of Doing Business: A Case Study of Sugar, Alcohol Beverages and Tourism Sectors” recommends that states should be allowed to choose the sectors that are most important to them for prioritizing reforms.

Citing the case of the three sectors chosen because of their interconnectivity – sugar industry being input industry for alcoholic beverages sector and tourism being the output sector – it also recommends that reforms should be across the entire value chain including sectors that have backward and forward linkages for greater impact on economy.

India’s rank in the World Bank’s EoDB study improved from 130 in 2017 to 100 in 2018. The country’s rank went up subsequently to 77 this year. The Department for Promotion of Industry and Internal Trade (DPIIT) developed a Business Reform Action Plan (BRAP) and a system for ranking states’ performances to undertake reforms for facilitating EoDB.

“While this reform plan has had some impact, as seen from India’s rankings, there are still deep-seated issues that need to be dealt with. The limitations of the World Bank’s EoDB study is that it only considers two cities – Mumbai and Delhi, and does not factor in regional or sectoral diversity,” the report said.

Taking a slightly different approach to EoDB, the study evaluates the ease of doing business for individual sectors meaning that states can choose to concentrate on those sectors that contribute the most to their revenue and ease doing business for those sectors.

“This way the chances are that the impact of regulatory ease will be felt faster and in a more measurable manner,” it said.

For the alcohol beverages industry, the report recommended reviewing of the excise acts in order to remove redundancies and update the acts according to the business requirements of the day.

“One body instead of the present three – Excise, FSSAI and LMR - should mandate the labelling requirements for alcoholic beverages. FSSAI is the central authority that can play this role. Any changes in the label must be mandatorily introduced before the registration process for the next Excise year begins,” it said.

For sugar industry, the report said that a separate pricing mechanism for retail consumption and commercial consumption was needed.

“While the government can continue to control sugar prices for the retail sector, the price for commercial use must be market determined. Sugar needs a comprehensive trade policy. As part of the policy, the methodology for demand estimation must be improved upon to minimise pricing distortions,” it said.

As for the hospitality industry, the EoDB study said there was a need for a nodal ministry or department to make the policy environment for the sector more uniform. It added that since tourism was not mentioned in either Central, state, or concurrent List, suitable amendments must be brought to list tourism under the concurrent list.

“The hospitality sector requires a medium and long term vision plan and policy document. This is particularly important if India wants to capitalise on the tourism sector to become a USD 5 trillion economy,” it said.