Over 26,000 Clauses that can Land Entrepreneurs in Jail for Breaking Business Laws: Report

Over 26,000 Clauses that can Land Entrepreneurs in Jail for Breaking Business Laws: Report Even as the government looks to ease regulations around doing business in India, a new report on imprisonment clauses in Indian business compliance regulations framework said on Thursday that there are still 26,134 imprisonment clauses as penalties for non-compliance with business laws enacted since independence. According to the report Jailed For Doing Business by TeamLease RegTech and Delhi-based independent think tank Observer Research Foundation, India has 69,233 unique compliances that regulate doing business in the country, of which 26,134 clauses have imprisonment clauses, or nearly two out of every five compliances can send an entrepreneur to jail. Excessive compliances are particularly burdensome for MSMEs, according to the report, as a typical MSME with more than 150 employees faces 500-900 compliances each year, costing Rs.12-18 lakhs. "This regulatory overreach affects not only for-profit enterprises, but also non-profit institutions. The gap between the commodities and services the country requires and how the government regards the entrepreneurs who provide them is expanding." According to TeamLease RegTech, the monograph is a first-of-its-kind compilation of business compliance data that had previously only existed in silos among ministries and departments. The data was gathered over the course of seven years and grouped into seven broad domains: labour, finance and taxation, environment, health and safety, secretarial, commercial, industry-specific, and general, according to the statement. "The overcriminalization of India's employer compliance universe encourages corruption, stifles formal employment, and taints justice," Manish Sabharwal, TeamLease's Vice Chairman, remarked. "This research is a fantastic contribution to ideas for concrete improvements; the government has made a decent start in purging compliances, but actually lowering regulatory cholesterol demands expanding that initiative to purge the 26,134 jail provisions for employers at the federal and state levels." According to the analysis, some laws show a disproportionate focus on imprisonment during the legislative process. For example, Acts of sedition can result in a sentence of one to three years, which is similar to not whitewashing latrines and urinals every four months. Over 1,000 imprisonment clauses exist in the business legislation of five states: Gujarat, Punjab, Maharashtra, Karnataka, and Tamil Nadu. Using criminal sanctions with discretion and forming a regulatory effect assessment committee, according to the report's ten proposals for rationalising the excesses of business regulations, could create the framework for policy reformation. It also suggested that imprisonment clauses be streamlined. For instance, removing criminality from procedural mistakes and unintended omissions while maintaining incarceration for wilful violations such as death, environmental harm, and tax evasion.