India’s Step Forward
India’s government is rewriting the rules on basic standards of living and business. It’s an ambitious goal, but there’s been a rise in foreign direct investments in those sectors that have been affected by the “Digital India” campaign. So, the world seems to agree with what they’re doing – let’s not forget the Rs. 4.5 trillion pledged to the initiative by some of the biggest corporate names in the nation.
We want to have one mission and target – Take the nation forward digitally and economically.” Prime Minister Narendra Modi
This increased approval from the world’s business community has also given India the push to jump forward 14 ranks to 55th place out of 140 economies in the Global Competitiveness Index of 2015-16 released by the World Economic Forum.
As we discussed in our previous article in this series, Indian smaller to medium-sized businesses (SMBs) that are digitally disconnected are slowly dying out with an 8% decrease in revenue year-on-year.
The appearance of “Digital India” as a market force now brings new hope for these SMBs.
In this post, we will address some ways in which the “Digital India” initiative cuts through bureaucratic sloth and speeds up business practices. In our next post, we will go through the technical elements of how the digilocker works.
In short, this post will discuss:
- The purpose of the DigiLocker; and
- Immediate benefits of digital lockers to business
India’s DigiLocker: The Corporate Clog-Cutter
The Sluggish Source of Redundant Red-Tape
Indian governance bodies are reasonably self-aware, and understand the immense burden of documentation that is placed on the average citizen or business – even if they seldom attempt to ease it.
An SMB is required to acquire, manage, and regularly update a dizzying host of documentation across several dozen government departments. What’s more, there are even more government-issued documents that are shared with banks, other private organizations, etc.
With a population of 1.26 billion, it’s understandable why we need verification of documentation.
However, the real damage happens in the time it takes for each agency to verify these documents on the request of every government-to-business (G2B) service.
The process is then made worse by the fact that Indian government departments have historically been notorious for their lack of cooperation with each other.
It’s just as Mr. Narendra Modi himself remarked on his initial experiences as Prime Minister – “Even in one government, there were different governments. It was as if each had their own jagirs (fiefdom),” to the point that different departments even wanted to take each other to court.
Is it surprising, then, that this hostile atmosphere would slow inter-department verification processes – that should only take a day or two at most – to the point of taking weeks? In the end, the real losers of this constant jurisdictional feud are the citizens and, by extension, their businesses.
Still not convinced about the depth of this problem? Maybe this comparison will shed more light on the situation.
29 Days Later
In India, document verification at every step is so redundant that reserving a company name with the Registrar of Companies, paying stamp duties, filing the incorporation requirements, and receiving a certificate of incorporation takes 7 to 12 days on average. Side note: for Hummingbill, this took us OVER 4 MONTHS before we received our certificate of incorporation!
In the United States, this entire process can be completed in less than one day. Not just that, businesses can expedite processing to 2 hours by paying an additional fee.
The entire process of starting a business takes 29 days in India as of 2016; the same process can be completed in US in a mere 5 and a half days, 4 days if done from New York.
The economic ramifications of these differences are mind-boggling.
It takes the same time to finish business registration processes in India as it does 5 to 8 businesses in the United States.
This makes a big difference in productivity. Although these metrics are definitely not immediately related, it’s important to note that the nominal GDP of the United States is roughly 8 times that of India.
Imagine the swiftness with which eGovernance services could be requested and delivered – or a new business could be set up – if documents were digitally shareable and pre-authenticated to reasonable extents.
As the late Dr. APJ Abdul Kalam said,
We can not stress this enough. The arrival of Digital Lockers as a commonplace tool for the India of tomorrow could speed up every aspect of life in the country, from professional to personal.”
Thanks for reading and stay tuned for the next post on how the DigiLockers work.
Guest Post by Adam Walker & Aniket Saksena, Hummingbill Inc.