After GST, Experts Urge Focus on Land and Labour Reforms

Rapid Summary

• Following the Goods and Services Tax (GST) reform, experts called for further reforms focusing on ease of doing business and deregulation.
• Key areas identified include land and labour reforms, trade reforms, judicial reform, disinvestment, agriculture market improvement, rationalization of ministries, decentralization of financing to local bodies, and ending inspector raj.
• A senior government official noted these reforms would improve efficiency and employment while contributing to India achieving its 2047 goals.
• Two high-powered groups were recently formed under Niti Aayog’s Rajiv Gauba to prioritize next-generation reforms in consultation with stakeholders.
• Prime Minister Narendra Modi emphasized the need for next-generation reforms in his Independence Day address this year.
• Challenges highlighted:

– High cost of doing business inhibits investment growth.
– Long contract enforcement times-1,445 days on average per World Bank data-and judicial delays hinder economic activity.
– High land costs could be addressed by private industrial parks near demand hubs offering infrastructure at scale.
– Pending notification of new labor codes is critical for formalizing flexible hiring mechanisms.
– Tax regime complexity discourages future investments due to frequent reopening of old cases.

• Policy recommendations:

– Eliminate Industrial Disputes Act; introduce unemployment insurance rather of strict job protections.
– Simplify tax litigation processes; provide skilling support for MSMEs like corporates.- Boost disinvestment revenue; expand global capability centers (GCCs) beyond metros with SEZs in tier-2 cities for IT exports growth.

• Trade policy suggestions included expanding foreign direct investment opportunities (including from China), lowering tariffs on intermediate inputs, fast-tracking trade deals globally (e.g., ASEAN India Trade Review).

Indian Opinion Analysis

India’s push toward holistic structural reform post-GST reflects its ambition to sustain long-term economic resilience while addressing foundational issues inhibiting enterprise competitiveness domestically and internationally.

Critical bottlenecks like rigid labor laws or high-cost industrial setups are longstanding concerns that deter global investors despite India’s market potential. Steps such as labor code notification or strategic creation around low-scale manufacturing regions may relieve workforce-related rigidity while stimulating intercity export networks through GCC expansions/Special Economic frameworks.

reinforcing Micro-Small-Medium Enterprise-focused state policies meeting “grounded” grassroots-size capacities case scaled-up integration representing placed central forces

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