India Regulatory Brief: Ease of Doing Business Improving, Pulse Import Cap Lifted
Ease of Doing Business Improving
The ease of doing business has improved in India, according to the latest Ease of Doing Business Report issued by the World Bank. The 2016 report ranked India at 130 out of 189 countries (first place being the easiest place to do business), an improvement from India’s 134 ranking in 2015.
The World Bank reported that two key reforms in India were responsible for the improved ranking: the elimination of the requirements for a paid-in minimum capital and a certificate to commence business operations. Beyond these reforms, the Indian government has sought to address a number of other ease of doing business issues through a state by state approach, such as utilities connections, construction permits, minority investor protection and property registration, amongst others.
Next year, many expect India to move further up the Ease of Doing Business Report’s rankings because of planned reforms for contract enforcement and bankruptcy laws. The government has issued an ordinance to amend the Arbitration Law, and constitute commercial divisions in High Courts to improve enforceability of contracts. Separately, many analysts expect a bankruptcy code to be introduced in the upcoming winter session of Parliament.
Controversial Cap on Pulse Imports Lifted
The federal government recently lifted a cap on the import of pulse crops (such as dry beans, peas and lentils), a key staple in Indian cuisine, ahead of the Diwali (or festival of lights) holiday period. The government on October 18 reduced the allowable amount of pulse crop imports to 350 metric tons to curb hoarding and inflated prices in the market, but pulse prices increased in any case. The cap also threatened approximately 200,000 metric tons of pulse crops held at Indian ports.
Before the cap was lifted, it attracted considerable opposition from U.S. lawmakers. The Congressional delegation from Montana state, which is a major exporters of pulse crops, petitioned the U.S. departments of agriculture and commerce to resolve the issue. The U.S. lobby pushed India’s Union Commerce Minister Nirmala Sitharaman to comment that the cap was not a “trade distortion”.
SEBI to Release New Guidelines
The Security Exchanges Board of India (SEBI) will release a new set of guidelines to allow Foreign Portfolio Investors (FPI) to participate in the Indian commodity markets within a month, according to SEBI Chairmen U.K. Sinha. This reform became possible after the Forward Markets Commission was merged into SEBI.
SEBI is also planning new guidelines for credit rating agencies and mutual fund products. The new guidelines for credit rating agencies are designed to reduce the risks of debt on mutual funds, a reform that follows recent concerns over corporate debt investments. The new guidelines for mutual funds will enable investors to buy mutual fund products online.
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