To streamline approvals, the Government of India launched the National Single-Window System on September 22, 2021. This portal aims to serve as a “one-stop shop” by integrating clearance systems of both Central and State departments. It currently facilitates over 644 Central and 6,113 State-level approvals. However, many labour-related approvals at the state level still follow manual processes and are not yet fully integrated with the Single-Window system.
The complexity of compliance begins with the approval process, which involves multiple licenses, certifications, no-objection certificates, registrations, exemptions, maintain compliances and follow the regulations. Most of these procedures are still manual, differ from state-to-state, understanding the requirement will be complex issue for the enterprises who are wished to start the business in India. The regulations, applicability, compliances completely mismatch state-to-state. Couple of compliances required personnel to visit various authorities’ multiple times for in-person interactions to obtain the necessary approvals.
Indian labour laws are complex due to the dual regulatory authority of both the Central and State governments. There is no uniformity across the county and required manual interactions between employers and authorities continue to slow down key processes such as obtaining licenses, registrations, no-objection certificates (NOCs), and inspection closures.
To improve the Ease of Doing Business in India and to attract foreign investment, the following recommendations from Core Integra Consulting Services as market leader in Labour Law Compliances:
Online Processes
The Central Government should develop a unified digital portal to simplify and centralize the registration and approval process. This platform should allow all type of establishments and companies to obtain all necessary licenses and approvals through a single interface.
Deemed Approvals
A time-bound approval system should be implemented. If authorities do not process applications within the prescribed timeframe, approvals should be granted automatically (deemed approval) for all type of applications for business and across the county as standard process.
Combined Registers and Returns
To eliminate duplication, the government should introduce a unified system for maintaining registers and filing returns across all labour laws across the country. Both Central and State governments should recognize these combined registers and allow online return submissions via a common portal.
Inspections
A self-certification or third-party inspection model should be introduced to minimize the frequency of inspector visits and reduce the risk of excessive documentation demands.
Online Inspections
Virtual inspection mechanisms should be implemented to improve transparency, efficiency, and accountability, reducing the need for physical visits. Encourage the combined inspection across covering all the regulatory authorities across the country.
Exemptions
Newly established companies and non-hazardous manufacturing units should be exempt from inspections for a specified initial period. Inspections should only be conducted based on verified complaints of non-compliance.
Simplified Compliances
The consolidation of labour laws is essential. State-specific acts should be aligned with Central labour codes to ensure uniformity in compliance. Penalties such as imprisonment for minor violations should be removed, and criminal charges should be reviewed and revised.
Despite global progress, labour law compliance in India remains largely manual. Countries such as Singapore, China, New Zealand, and Denmark have successfully simplified their regulatory frameworks to attract investment. It is time for India to adopt a more streamlined, transparent, and digital approach to compliance in order to drive investment, economic growth, and improved worker welfare.
The majority of Indian states have yet to digitize labour law compliance processes. Key activities such as registration, display of abstracts, maintenance of registers, periodic intimations, health and safety notifications, return submissions, and inspections remain largely manual. In many states, registrations, record maintenance, and return filings are still required to be submitted in physical, paper-based formats. Failure to implement the uniformity make the complex environment to the enterprises operates in India.
Mahesh Krishnamoorthy is Managing Director, Core Integra.
