970x125
OVER THE LAST few months, Rajasthan eased restrictions on night shifts for women, Odisha spruced up building bye-laws so that small enterprises can use space more efficiently, and Tamil Nadu increased the number of industries for which entrepreneurs need not knock at the pollution control boards.
970x125
Across India, states are advancing small, targeted reforms to cut red tape. While sweeping national reforms inch forward despite renewed calls for bold reforms amid tariff tensions, states are increasingly leading the way, recalibrating business rules on the ground, pointed out government officials.
The Centre is helping nudge them towards deregulation, but states seem to be on board with the perceived benefits of these steps. The trend reflects a growing view at the highest levels of the Central government that progressive, state-level tweaks—faster to implement and with broader impact—should be prioritised for now.
The Rajasthan Labour Department had, in a July 8 notification, allowed commercial establishments to employ women during night hours. Officials said this not only provided operational flexibility to enterprises but also was a step towards gender-inclusive employment. Delhi did the same on July 30, after having scrapped the requirement for restaurants and hotels to seek police approval the previous month on June 19.
Odisha modernised building bye-laws in June to let MSMEs and IT/ITeS firms use space more efficiently. The state’s Department of Housing and Urban Development of Odisha has introduced major amendments to both the Odisha Town Planning and Improvement Trust (Planning and Building Standards) Rules, 2021 and the Odisha Development Authorities (Planning and Building Standards) Rules, 2020, which are designed to streamline regulations and ease the compliance burden.
For instance, parking requirements for industrial buildings have been reduced to 8 per cent from 30 per cent of the total built-up area to allow more productive use of space.
Tamil Nadu, which is among the pioneering industrial states in the country, expanded the list of ‘white category’ industries from 37 to 609 in June this year. This exempts many non-polluting businesses from obtaining Consent to Establish and Consent to Operate from the State Pollution Control Board.
Story continues below this ad
Privately, many foreign investors flag India’s cumbersome bureaucracy, varying state laws, and heavy compliance burden as hurdles that create uncertainty and hinder investment. With states set on the reform path, some of those concerns could be addressed.
On the ground, these tweaks by state governments are finding currency. Sandeep Anand Goyle, the Delhi chapter head of the National Restaurant Association of India (NRAI), told The Indian Express that establishments such as hotels, eateries, discotheques, amusement parks, and auditoriums in the capital, which no longer need to register with Delhi Police to run their operations, are expected to generate significant revenue for the Delhi government.
“Many major domestic and international chains had previously avoided investing in Delhi—preferring Gurugram or Noida instead—due to cumbersome licensing norms, particularly the eating house registration from the police via the MCD’s (Municipal Corporation of Delhi) unified portal for licensing,” Goyle said.
“We were spending six to eight months each year just following up on licence renewals. Even when our documents met the portal’s requirements, the follow-ups were constant. It became a choice between focusing on the business or chasing licences,” he said.
Story continues below this ad
While the Centre is now pushing for reforms at the state level, a newly-formed Deregulation Cell in the Cabinet Secretariat is also targeting select national regulations. On May 27, it set up an inter-ministerial group to review quality control orders (QCOs) that could enable “unfair trade practices” or hurt MSMEs. In June, it clarified that the National Building Code, 2016 is “not legally binding” but a “voluntary code of reference,” offering relief to the construction industry.
Earlier, in February, the Economic Survey 2024-25 called for state-led deregulation to liberalise standards and controls, such as lifting restrictions on women’s participation in factories and rationalising parking norms. It urged states to review regulations on administration, land, building and construction, labour, utilities, transport, logistics, local trade, environment, and sector-specific rules.
“The logic for staying small often is to remain under the regulatory radar and steer clear of the rules and labour and safety laws. Ironically, the biggest casualties are employment generation and labour welfare, which most regulations were originally designed to encourage and protect, respectively,” the Economic Survey 2024-25 said.
“Unburdened by licensing, inspection and compliance requirements, the people and small enterprises of India, with their high aspirations and intrinsic inventiveness, will find answers to the pressing challenges of growth, employment and development,” it said.
970x125
