In India over 26000 clauses can be used to put entrepreneurs in prison, finds report

New Delhi: TeamLease RegTech and Observer Research Foundation (ORF) has published a report titled ‘Jailed For Doing Business' which states that in India there are 26000 clauses in India that can put entrepreneurs in jail for non-adherence to business laws and regulations. India in last few years may have made significant strides in ease of doing business but non-compliance to 2 out of 5 laws can land entrepreneurs in jail. Th report found out that there are 69,233 unique compliances which regulate business activities in the country, out of which 26,134 clauses have provisions leading to imprisonment in case of nonconformity.

Report Findings

The report states that the most of imprisonment clauses statistically are bore by Micro, Small and Medium Enterprises (MSMEs). Reportedly a MSME faces 500-900 compliances that cost around 12-18 lakhs rupees annually. There are more than 1,000 imprisonment clauses in business laws of fives states, they are Punjab (1,273), Gujarat (1,469), Maharashtra (1,210),Tamil Nadu (1,043) and Karnataka (1,175). The report also finds out that these regulations not only impacts entrepreneurs seeking profit generation but not-for-profit institutions are subject to many of the clauses. “There is a widening gap between the goods and services the country needs and how the State views the entrepreneurs creating them.” the report added.

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First of its kind: TeamLease RegTech

 The TeamLease RegTech, has stated that this monograph is a first-of-its-kind compilation of business data that till date only existed in silos across various ministries and departments. The report has been collated by TeamLease RegTech in duration of last seven years. The data for report has been classified in 7 broad domains- finance and taxation, health and safety, labour, secretarial, commercial, environment, industry-specific and general. Vice Chairman of TeamLease, Manish Sabharwal said in a statement, “The excessive criminalization of India’s employer compliance universe breeds corruption, blunts formal employment and poisons justice.” The report also offers ten recommendations on rationalizing the excesses of business laws, rules and regulations with regards to restrains in criminalization and creation of regulation body for policy reformulation. The report also calls for injecting rationalization provisions in imprisonment clauses.

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