Industry body the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has urged states to simplify regulatory frameworks and strengthen single-window systems to improve the business environment for micro, small and medium enterprises (MSMEs).
The call comes from ASSOCHAM’s Ease of Doing Business in the Indian States – Phase II report, developed with analytical support from The Convergence Foundation. The study covers 18 states including Gujarat, Maharashtra, Tamil Nadu, Uttar Pradesh, Odisha and West Bengal, and is based on extensive consultations with industry stakeholders.
According to the report, cumbersome and overlapping laws, ineffective single-window systems and infrastructural gaps continue to constrain MSME growth. It also highlights complex company law provisions and Goods and Services Tax (GST)-related challenges as major barriers, along with a lack of coordination between departments at the state level.
The report notes that in several states, single-window mechanisms often function as “multiple windows” due to fragmented processes and manual interfaces. It recommends that states digitise approvals, set fixed timelines and hold departments accountable to ensure faster clearances.
Beyond procedural simplification, ASSOCHAM proposes a consolidated compliance framework for MSMEs at the national level. The study recommends creating a single annual filing form combining AOC-4, MGT-7A, DIR-3 KYC, MSME Form-I and DPT-3, and moving to biennial or triennial cycles for smaller enterprises. It further suggests graded penalties and audit exemptions for micro and small firms to ease compliance pressure.
In Bihar, for instance, the report points to unreliable electricity, underdeveloped industrial land banks and delays in environmental approvals as key hurdles. It recommends introducing a Digital Environment Clearance Portal, a state-specific registration system integrated with GST, and fixed timelines for startup and MSME benefits.
Odisha and West Bengal were cited for power reliability issues, while Andhra Pradesh and Haryana face delays in land conversion approvals. The report notes that such bottlenecks lead to production losses and undermine competitiveness.
ASSOCHAM President Nirmal Minda said reforms such as the GST have improved the national framework but added that “businesses still navigate multiple layers of compliances and approvals.”
He said the chamber is working with central and state governments to implement reforms that create a more predictable and transparent environment.
Secretary General Manish Singhal said empowering MSMEs would be central to India’s growth ambitions, adding that “states have a pivotal role in making business easier, faster and more predictable.”
The report recommends that states establish dedicated industrial land policies, digitise zoning and conversion processes and clarify criminal provisions in business laws to ensure proportional penalties. It also calls for improved infrastructure access, including reliable electricity, water and transport links.
ASSOCHAM’s analysis stresses that aligning central and state reforms is vital for achieving India’s long-term economic goals. By adopting digital, transparent and time-bound regulatory mechanisms, it said, states can help MSMEs reduce operational friction and contribute more effectively to national growth.
The study stressed that predictable, technology-driven governance could significantly enhance India’s competitiveness and investment appeal while fostering employment and inclusive development.
