Indian business laws have 23,134 imprisonment clauses

Even as India strives to improve its performance in the ease of doing business ranking, a recent study has concluded that of the 69,233 compliances that businesses have to follow, 23,134 or 37.8% carry imprisonment clauses. More than half the clauses requiring imprisonment carry a sentence of at least one year, the study says.

The “Jailed for Doing Business” report by Delhi-based think tank Observer Research Foundation (ORF) says there are 1,536 laws that govern doing business in India, of which 678 are implemented at the Union level. Of the 1,536 laws, more than half carry imprisonment clauses.

It also says that within these laws, there are 69,233 compliance requirements, of which 25,537 are at the Union level. These compliances mandate companies to make 6,618 annual filings, of which 2,282 (34.5%) are at the Union level and 4,336 at the state level.

The study indicates the country had seen, on average, 10 regulatory changes every single day from 1 January 2019 to 31 December 2021, the period under review. These changes in compliance requirements notified by both central and state governments, occur constantly and add to business uncertainty, the study notes.

The report says in 2021 alone, there were 3,577 regulatory changes. During 2019-21, there were 11,043 changes in compliance requirements, translating to an average of 10 regulatory changes every single day, it points out.

The study makes 10 recommendations, which include reforms in the way policies are framed, the use of extreme restraint in using criminal penalties in business laws and the formation of a regulatory impact assessment committee within the Law Commission of India.

Commenting on the findings of the study, BC Bhartia, national president, and Praveen Khandelwal, national secretary-general of Confederation of All India Traders (CAIT) say the organisation will collaborate with ORF and conduct a national debate on the issue. “We will demand the central and state governments that the laws which have become irrelevant at present, should be abolished and all the laws should be reviewed. Provision of imprisonment should be imposed on only such laws whose violations are causing injury to the health of a person or injury to the sovereignty of the country, and in all other laws, only fines should be imposed for wrongdoing,” says Khandelwal.