India’s ease of doing business agenda is back on Delhi’s table. At a meeting with Union secretaries on June 30, Prime Minister Narendra Modi reviewed deregulation, ease of doing business, ease of living and Aatmanirbharta. The familiar message is to cut needless regulation and make government work across departments. The harder problem lies elsewhere. If India wants to become a developed economy by 2047, the next business reform battle will be fought in states, districts and cities.
Ease of doing business has moved to the states
For nearly a decade, New Delhi chased the World Bank’s Ease of Doing Business rankings. The numbers improved sharply. India moved from 142nd place to 63rd in the 2020 report after reforms in taxation, insolvency, construction permits, electricity connections and cross-border trade.
READ | Ease of doing business needs state-level reform
The World Bank discontinued the rankings in 2021. That ended the external scoreboard, not the reform agenda. India still needs faster approvals, cleaner land records, cheaper compliance and more predictable enforcement. The difference now is that the most important part of this work cannot be done by the Union government alone.
DPIIT’s Business Reforms Action Plan, launched in 2014-15, has become the main domestic instrument for judging state-level reform. BRAP asks a more useful question than the old global ranking did: which states are actually reducing friction for firms?
The answer matters because businesses do not invest in India in the abstract. They choose a state, a district, an industrial park and a city. They deal with state pollution boards, local development authorities, power utilities, labour offices, municipal bodies and land-record systems. Their view of India’s investment climate is formed through these offices.
BRAP makes state business reforms measurable
Competitive federalism has become a serious economic reform. States now understand that investment does not automatically flow to the largest market or the lowest-cost location. Investors ask how long approvals take, whether power supply is reliable, how quickly land can be converted, whether logistics work, and whether government decisions can be anticipated. Governance is an economic asset.
Some states reached this conclusion earlier. Gujarat built on industrial policy continuity and infrastructure. Tamil Nadu combined manufacturing with a skilled workforce and specialised clusters. Telangana’s TS-iPASS gave firms a right to time-bound clearances and fixed responsibility for delays. Karnataka gained from its technology ecosystem while adding manufacturing. Andhra Pradesh invested in online approval systems that brought departments onto a common platform. These states differ politically and economically. Their common advantage is administrative capacity.
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Almost every state now advertises a single-window clearance system. Many still operate as single-window forwarding systems. Firms submit applications online, only to see them move through the same departmental maze. The file is digital. The process is not.
BRAP has responded to this gap. Earlier assessments depended more heavily on whether reforms had been notified. The newer approach gives greater weight to evidence and user feedback. That distinction matters. A notification is not a reform unless an entrepreneur experiences it as one.
Land, labour and courts still decide investment
Land remains the hardest state-level test. Ownership records are often fragmented. Conversion from agricultural to industrial use can take months. Utility connections need separate approvals. Even after allotment, roads, water supply, drainage and worker housing often arrive late.
Labour reform has also moved from statute to implementation. The four labour codes are now in force. Their value for business will depend on inspector practice, state portals, payroll clarity, dispute handling and how quickly firms understand the new requirements. A central law can simplify the rulebook. State administration decides whether compliance becomes predictable.
Contract enforcement remains a weak link. In the 2020 Doing Business report, India ranked 163rd on enforcing contracts, with a commercial dispute taking 1,445 days through a local first-instance court. Commercial courts, alternative dispute resolution and court digitisation have helped, but delay still raises financing costs. Firms do not only ask how quickly they can begin operations. They ask what happens when a payment is delayed, a licence is contested, or a contract breaks down.
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Ease of living is now industrial policy
The line between ease of doing business and ease of living is thinner than Delhi often assumes. Manufacturers ask whether skilled workers will relocate. That depends on schools, hospitals, rental housing, public transport, safety and urban services. A city that can hold talent can hold investment.
China’s manufacturing base offers a plain lesson. Factories were supported by cities that could absorb migrant workers at scale. India cannot treat worker housing, transport and health services as welfare add-ons after the investment has arrived. They are part of the investment proposition.
The Centre can simplify taxes, negotiate trade agreements and build national infrastructure. It cannot issue every factory licence, verify every land record, process every construction permit, or repair every industrial road. Those responsibilities sit with states.
The next wave of investment will go to states that reduce uncertainty and run predictable administrations. Incentives will still matter. But a tax concession cannot compensate for a land record that cannot be trusted, a power connection that waits on five desks, or a court case that outlives the business plan.