Reforming Sectoral Policies to Improve Ease of Doing Business for MSMEs

MSMEs form a critical backbone of the Indian economy, contributing significantly to employment, manufacturing output, and exports. However, many of these enterprises continue to face substantial regulatory and procedural challenges that limit their potential for growth and competitiveness. To address this, there is an increasing need to upgrade and reform policies across sectors, aiming to ease business operations and improve the overall business environment for MSMEs.

One of the key areas requiring reform is the regulatory framework governing building and construction. Existing laws often mandate multiple layers of approvals and no-objection certificates, leading to delays and increased compliance costs. Streamlining these processes, including reducing the number of required approvals and permitting third-party technical experts to issue certain clearances, could significantly accelerate project timelines and reduce administrative burden. State-specific reforms also play an important role, given the diversity in governance models and economic conditions across regions. Policies must be tailored to address local constraints while aligning with national goals. Flexibility in policy design will allow for regionally appropriate interventions that can better support small enterprises operating under varying state regulations.

Environmental compliance is another area where reforms are needed. Many small-scale, low-emission industries are currently subjected to lengthy approval processes due to inaccurate categorisation. Clear and updated classification of non-polluting industries, along with expansion of the white category (non-polluting industries), could help reduce unnecessary procedural hurdles. A more precise and scientific approach to categorising industrial activity will ensure that compliance efforts are targeted and proportionate. Digitisation of regulatory interfaces is essential for improving transparency and accessibility. Strengthening single-window clearance systems and eliminating the need for offline submissions can make processes more efficient and user-friendly. This would especially benefit small businesses with limited resources and manpower to manage complex paperwork.

Additionally, policy upgrades should focus on reducing licensing fees and simplifying procedural requirements that disproportionately impact smaller enterprises. Implementing best practices across states and sharing success models can help drive consistent improvements in the business environment nationwide.

Overall, a comprehensive review and upgrade of sectoral policies—covering construction, environment, logistics, and compliance systems—can provide MSMEs with the operational flexibility and regulatory support they need. Such reforms are essential to unlock the sector’s full potential and to ensure that small businesses are well-positioned to contribute to India's long-term economic growth.