The Centre will look to further simplify regulation and processes to reduce business costs, particularly for MSMEs, Finance Minister Nirmala Sitharaman said on April 22 during her US visit, adding that deregulation is a ‘powerful catalyst’ for industrial growth.
“Flexible labour laws, transparent land markets and simplified tax regimes must converge to create a seamless, competitive environment. Achieving this vision will require sustained collaboration between the Centre and the state governments,” Sitharaman said in her address at the Hoover Institution, at Stanford University.
“For India, scaling up manufacturing is essential to absorb a youthful workforce, reduce import dependencies and build competitive global supply chains,” FM Sitharaman added.
The Economic Survey for 2024-25 had recommended the states to review their regulatory framework, through identifying areas for deregulation, comparing the regulations with other states and countries, and estimating the cost of each of these regulations on individual enterprises.
“Over the last decade, we have undertaken structural reforms, rationalizing over 20,000 compliances, decriminalizing business laws and digitizing public services to reduce friction,” said FM.
In the Union Budget for FY26, FM Sitharaman had announced a high-level committee to review all non-finance regulations, certifications, licenses, and permissions, expecting its recommendations within a year.
A mechanism under the Financial Stability and Development Council (FSDC) has also been set up to evaluate impact of the current financial regulations and subsidiary instructions.
Integrating MSME to Global Value Chain
During her address, FM Sitharaman said a vibrant and thriving network of small and medium enterprises is essential for manufacturing. “Our government has undertaken numerous initiatives to support the MSMEs from easing access to credit, redefining size thresholds, facilitating prompt payment from large buyers and simplifying compliance burdens,” FM said.
The Open Network for Digital Commerce, launched in April 2022, has successfully on boarded more than 7.64 lakh vendors across 616 cities in India. “Our next focus is reducing regulatory frictions, digitizing approvals and integrating MSMEs into global value chains, special support to women led and rural enterprises will help enhance economic opportunities and ensure more inclusive growth,” said Sitharaman.
India's Vibrant Startup Ecosystem
The Finance Minister hailed start-ups as the cornerstone of the India-US relationship. “For instance, a report by Indiaspora and BCG shows that Indian first-generation immigrants founded 72 unicorns, between 2018 and 2023 in the US. These unicorns were worth at least $195 billion in valuation and employed 55,000 people,” said the FM.
The US too has been foundational to India's start-up growth journey, said Sitharaman. “Not only is the US a large investor in India and Indian Start-ups, but it has also helped co-create the Global Capability Centres (GCCs) as a landscape in India,” she added. More than 65% of the GCCs in India have their headquarters in the United States. These GCCs provide high value-added services in areas such as R&D, management consulting and auditing.
While the US is a mature start-up hub - developed over 50 to 60 years - India's start-up journey has been a nascent one. “Over the course of last decade, the government's focus was on reducing the cost of entrepreneurial risk taking by removing regulatory and infrastructural barriers. For instance, around 57 regulations have been simplified for Start-ups. As a result, India now ranks second globally in innovation quality among middle income economies with top rankings in the quality of scientific publications and universities,” said the FM.
Sitharaman highlighted that 65% of India’s population is under the age of 35, and the country has an unprecedented opportunity to reap a demographic dividend, but this requires matching education and skilling with demands of ‘industry 4.0’. “India aims to educate and empower a generation that will not only work in new industries, but also lead them,” the FM said.
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