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Policy Reforms That Transformed Business Environment

March 05, 2026 4 min read Economics Polity & Governance GS Paper III
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What Happened

  • Active registered companies in India grew by approximately 27%, from 1.55 lakh in 2020-21 to 1.98 lakh in 2025-26 (as on February 3, 2026)
  • The growth is attributed to a sustained wave of business-friendly policy reforms under the Ease of Doing Business (EoDB) umbrella
  • The RBI's Business Expectations Index has consistently remained above the neutral benchmark of 100 through FY 2024-25 and into Q2 of FY 2025-26, indicating positive business sentiment
  • Over 47,000 regulatory compliances have been reduced across the economy in the last five years
  • The World Bank's new B-READY (Business Ready) Assessment, replacing the discontinued Doing Business rankings, is scheduled to include India in its Third Report in 2026

Static Topic Bridges

Ease of Doing Business Framework in India

India's EoDB reform programme is coordinated by the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry. It encompasses legislative, regulatory, and procedural reforms aimed at reducing the cost and time of doing business.

  • India improved from rank 142 (2014) to rank 63 (2020) in the World Bank's Doing Business rankings -- a 79-rank improvement
  • Seven editions of the Business Reforms Action Plan (BRAP): 2015, 2016, 2017-18, 2019, 2020, 2022, and 2024
  • Over 9,700 reforms implemented across States and Union Territories through BRAP
  • Key reform areas: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency
  • The Regulatory Compliance Burden (RCB) initiative has eliminated over 47,000 compliances
  • The Jan Vishwas Act, 2023 decriminalized 183 provisions in 42 Central Acts; the 2026 Bill expands this to 784 provisions in 79 Acts
  • The World Bank discontinued the Doing Business Report in 2021 due to data irregularities and replaced it with B-READY, which evaluates 180+ countries across 10 topics

Connection to this news: The 27% growth in active company registrations serves as a tangible outcome indicator for EoDB reforms, suggesting that reduced regulatory burden and simplified business processes are translating into increased entrepreneurial activity.

Role of DPIIT and Industrial Policy

DPIIT is the nodal department for formulating and implementing India's industrial policy, promoting FDI, and coordinating EoDB reforms. It operates under the Ministry of Commerce and Industry.

  • DPIIT was reorganized from the Department of Industrial Policy and Promotion (DIPP) in January 2019
  • Key functions: FDI policy formulation, intellectual property rights administration, startup ecosystem development, internal trade promotion
  • Startup India initiative (launched January 2016): recognized over 1.25 lakh startups by 2025 [Unverified exact 2025 count]
  • Industrial policy shift: from licensing era (Industries Development and Regulation Act, 1951) to liberalization (New Industrial Policy, 1991) to facilitation (current approach)
  • DPIIT manages the National Single Window System (NSWS) for business approvals -- a single digital platform for clearances from central and state agencies
  • Production-Linked Incentive (PLI) Scheme: launched across 14 sectors with an outlay of Rs 1.97 lakh crore to boost domestic manufacturing

Connection to this news: The business registration growth reflects DPIIT's success in simplifying company incorporation through the MCA21 portal, reducing incorporation time, and the supportive ecosystem created by reforms like Startup India and the National Single Window System.

Business Expectations Index and Economic Sentiment Indicators

The RBI's Industrial Outlook Survey captures business expectations of the manufacturing sector through the Business Expectations Index (BEI), which serves as a forward-looking indicator of economic activity.

  • BEI is based on a quarterly survey of approximately 3,000 manufacturing companies
  • An index value above 100 indicates net positive expectations regarding output, order books, employment, and investment
  • The survey covers parameters including: production, order books, inventories, employment, imports of raw materials, exports, profit margins, and overall business situation
  • Other sentiment indicators: PMI Manufacturing (compiled by S&P Global), Consumer Confidence Survey (RBI), OBICUS (Order Books, Inventories, and Capacity Utilisation Survey)
  • PMI above 50 indicates expansion; India's manufacturing PMI has remained in expansionary territory for an extended period
  • The BEI staying above 100 through FY 2024-25 and Q2 FY 2025-26 suggests sustained manufacturing optimism despite global headwinds

Connection to this news: The sustained positive BEI reinforces the company registration growth data, indicating that improved business sentiment driven by policy reforms is translating into actual business formation and investment decisions.

Key Facts & Data

  • Active registered companies: 1.55 lakh (2020-21) to 1.98 lakh (2025-26), ~27% growth
  • India's Doing Business rank: 142 (2014) to 63 (2020), 79-rank improvement
  • BRAP editions completed: 7 (2015 through 2024)
  • Reforms across States/UTs: over 9,700
  • Regulatory compliances reduced: over 47,000
  • BEI benchmark: 100 (above = positive expectations)
  • World Bank B-READY India assessment: scheduled for Third Report, 2026
  • Jan Vishwas Act 2023: 183 provisions across 42 Acts
  • Jan Vishwas Bill 2026: 784 provisions across 79 Acts
  • PLI Scheme: 14 sectors, Rs 1.97 lakh crore outlay