Committed to Simplify Regulation and Reduce Business Costs, Assures FM Sitharaman
The Finance Minister, Nirmala Sitharaman, during her recent visit to the US, emphasized India’s commitment to educating and empowering a generation poised not only to work in new industries but also to lead them. The Centre is set on further simplifying regulations and processes to diminish business costs, particularly for Micro, Small, and Medium Enterprises (MSMEs), recognizing deregulation as a significant catalyst for industrial growth.
At the Hoover Institution, Stanford University, Sitharaman remarked, “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.”
She further elaborated on India’s motivations, stating that scaling up manufacturing is crucial for absorbing a youthful workforce, reducing import dependencies, and building competitive global supply chains. The Economic Survey for 2024-25 has suggested states to reassess their regulatory frameworks, identifying areas for deregulation, comparing regulations with other regions, and estimating the regulatory costs on enterprises.
Sitharaman noted, “Over the last decade, structural reforms have been implemented, rationalizing over 20,000 compliances, decriminalizing business laws, and digitizing public services to minimize friction.” In the Union Budget for FY26, a high-level committee was announced to review all non-financial regulations, certificates, licenses, and permissions, with an expectation for recommendations within a year. Additionally, a mechanism under the Financial Stability and Development Council has been established to assess the impact of current financial regulations and subsidiary instructions.
Integrating MSMEs into Global Value Chains
During her address, Sitharaman acknowledged the importance of a vibrant network of small and medium enterprises 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,” she stated.
Since its launch in April 2022, the Open Network for Digital Commerce has successfully onboarded over 7.64 lakh vendors across 616 cities in India. Sitharaman outlined upcoming priorities, emphasizing reducing regulatory frictions, digitizing approvals, and integrating MSMEs into global value chains, especially providing special support to women-led and rural enterprises to enhance economic opportunities and foster inclusive growth.
India’s Vibrant Startup Ecosystem
The Finance Minister hailed start-ups as a cornerstone of the India-US relationship, noting the significant role Indian first-generation immigrants have played in establishing 72 unicorns in the US between 2018 and 2023, valued at least $195 billion and providing employment to 55,000 individuals.
Sitharaman acknowledged the US’s contribution to India’s start-up growth journey, as a substantial investor in Indian start-ups and a collaborator in creating the Global Capability Centres (GCCs). With more than 65% of GCCs in India having their headquarters in the United States, these centres are integral, providing high value-added services in fields such as R&D, management consulting, and auditing.
While the US boasts a mature start-up culture developed over decades, India’s journey is relatively nascent. Over the past decade, India’s government has focused on reducing entrepreneurial risk costs by amending regulatory and infrastructural barriers. Around 57 regulations have been simplified for start-ups. Consequently, India now ranks second globally in innovation quality among middle-income economies, earning top rankings in the quality of scientific publications and universities.
Sitharaman emphasized India’s demographic advantage, with 65% of the population under 35, underscoring an unprecedented opportunity to reap a demographic dividend. Meeting the demands of the ‘industry 4.0’ era requires aligning education and skilling with industry demands. “India aims to educate and empower a generation that will not only work in new industries, but also lead them,” she said.
