9 Feb 2026·Source: The Hindu

4 min

EconomyPolity & GovernanceNEWS

Delhi's Business Transformation: From License Raj to Ease of Business

Delhi accelerates business reforms, reduces licensing barriers, and promotes investment.

The Delhi government, under Chief Minister Rekha Gupta, has undertaken significant reforms to promote ease of doing business. Key initiatives include abolishing the Delhi Police licensing system for various establishments and rationalizing the Municipal Corporation of Delhi (MCD) licensing framework. The government has reduced the license approval timeline for Green Category industries from 120 days to 20 days, with a deemed approval provision.

A single-window digital system integrates 49 services across 21 departments. ₹994 crore in GST refunds were released to traders. Collateral-free loans up to ₹10 crore are available for MSMEs.

A Traders' Welfare Board has been constituted with a grant of ₹10 crore.

Key Facts

Delhi government abolished the Delhi Police licensing system for various establishments.

MCD has rationalized its licensing framework.

License approval timeline for Green Category industries reduced from 120 days to 20 days.

A single-window digital system integrates 49 services across 21 departments.

UPSC Exam Angles

GS Paper 3 (Economy): Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Connects to the syllabus by addressing economic reforms, industrial policy, and investment models.

Potential question types include statement-based MCQs on government initiatives and analytical questions on the impact of reforms.

Visual Insights

Delhi's Ease of Doing Business: Key Statistics

Key statistics highlighting Delhi government's efforts to improve ease of doing business.

GST Refunds Released: ₹994 crore
Collateral-Free Loans for MSMEs: ₹10 crore
Traders' Welfare Board Grant: ₹10 crore
License Approval Time (Green Category): 20 days

More Information

Background

The concept of ease of doing business has gained prominence globally as nations strive to attract investment and foster economic growth. Historically, India faced significant hurdles in this regard, characterized by bureaucratic red tape and complex regulatory frameworks. The pre-1991 era, often referred to as the 'License Raj,' saw stringent government controls over economic activities, requiring businesses to obtain numerous licenses and permits, stifling entrepreneurship and innovation. This system created opportunities for corruption and rent-seeking, hindering economic progress. Following the economic liberalization of 1991, successive governments have undertaken reforms to dismantle the License Raj and promote a more business-friendly environment. Key milestones include the simplification of industrial licensing procedures, deregulation of various sectors, and the introduction of measures to improve infrastructure and reduce transaction costs. The enactment of the Companies Act, 2013 aimed to modernize corporate governance and streamline regulatory processes. However, challenges persist in areas such as land acquisition, labor laws, and contract enforcement. Several legal and constitutional provisions underpin the efforts to improve ease of doing business in India. The Constitution of India guarantees the right to property and freedom of trade and commerce, subject to reasonable restrictions. The government has also introduced various initiatives such as the Goods and Services Tax (GST) to simplify the indirect tax regime and reduce compliance burden. Furthermore, the Insolvency and Bankruptcy Code (IBC) provides a framework for resolving insolvency cases in a timely and efficient manner.

Latest Developments

The Indian government has been actively pursuing reforms to improve its ranking in the World Bank's Ease of Doing Business index. Recent initiatives include the implementation of a single-window clearance system for environmental approvals and the digitization of land records. The Startup India initiative aims to promote entrepreneurship and innovation by providing funding and mentorship support to startups. Furthermore, the government has been focusing on reducing compliance burden for small and medium enterprises (SMEs) through measures such as simplified tax filing procedures. However, challenges remain in ensuring effective implementation of these reforms at the state and local levels. There are concerns about the lack of coordination among different government agencies and the persistence of bureaucratic hurdles. Stakeholders also point to the need for greater transparency and accountability in regulatory processes. The NITI Aayog plays a crucial role in monitoring the progress of these reforms and providing recommendations for further improvements. Looking ahead, the government is expected to continue its efforts to streamline regulatory processes and reduce compliance burden for businesses. The focus is likely to be on leveraging technology to improve efficiency and transparency. The government has set ambitious targets for improving India's ranking in the Ease of Doing Business index. Achieving these targets will require sustained efforts and collaboration among all stakeholders.

Frequently Asked Questions

1. What are the key initiatives undertaken by the Delhi government to improve ease of doing business, as per the provided information?

The Delhi government has taken several steps including abolishing the Delhi Police licensing system, rationalizing the MCD licensing framework, reducing license approval times for Green Category industries, implementing a single-window digital system, releasing GST refunds, and providing collateral-free loans for MSMEs.

Exam Tip

Remember the key initiatives like single-window system and GST refunds for Prelims.

2. Explain the concept of 'License Raj' and its relevance to Delhi's current business transformation.

The 'License Raj' refers to the pre-1991 era in India characterized by stringent government controls over economic activities. Delhi's current reforms aim to dismantle this legacy by reducing bureaucratic hurdles and promoting a more business-friendly environment.

Exam Tip

Understanding the historical context helps in framing better Mains answers.

3. What are the potential benefits and drawbacks of abolishing the Delhi Police licensing system for businesses?

Abolishing the Delhi Police licensing system can reduce corruption and harassment, and simplify business operations. However, it might also raise concerns about security and public safety if not implemented with proper safeguards.

Exam Tip

Consider both positive and negative aspects for a balanced perspective in the interview.

4. What is the significance of the single-window digital system in promoting ease of doing business in Delhi?

The single-window digital system integrates 49 services across 21 departments, streamlining the approval process and reducing bureaucratic delays for businesses. This makes it easier for businesses to obtain necessary clearances and approvals.

Exam Tip

Focus on the number of services and departments integrated for Prelims.

5. What recent developments have occurred regarding GST refunds to traders in Delhi?

From April 2025 to December 2025, ₹994 crore in GST refunds were released to traders in Delhi. In September 2025, a record ₹227 crore was refunded in a single month.

Exam Tip

Remember the amount of GST refunds for potential MCQ questions.

6. How do the collateral-free loans for MSMEs contribute to the overall ease of doing business in Delhi?

Collateral-free loans up to ₹10 crore for MSMEs reduce the financial burden and risk associated with starting or expanding a business. This encourages entrepreneurship and investment in the MSME sector, which is crucial for economic growth.

Exam Tip

Focus on the loan amount and its impact on MSMEs for Mains answers.

Practice Questions (MCQs)

1. Consider the following statements regarding the recent initiatives by the Delhi government to promote ease of doing business: 1. The Delhi government has abolished the Delhi Police licensing system for various establishments. 2. The license approval timeline for Green Category industries has been reduced to 30 days. 3. Collateral-free loans up to ₹5 crore are available for MSMEs. Which of the statements given above is/are correct?

A.1 only
B.1 and 2 only
C.2 and 3 only
D.1, 2 and 3

Show Answer

Answer: A

Statement 1 is CORRECT: The Delhi government has abolished the Delhi Police licensing system for various establishments, as mentioned in the news summary. Statement 2 is INCORRECT: The license approval timeline for Green Category industries has been reduced to 20 days, not 30 days, as per the news summary. Statement 3 is INCORRECT: Collateral-free loans up to ₹10 crore, not ₹5 crore, are available for MSMEs, as stated in the news summary.

2. Which of the following initiatives is NOT directly mentioned as a part of Delhi government's efforts to improve the business environment?

A.Abolishing Delhi Police licensing system
B.Rationalizing MCD licensing framework
C.Providing collateral-free loans to MSMEs
D.Implementing a single-window system for environmental clearances

Show Answer

Answer: D

Options A, B, and C are directly mentioned in the news summary as initiatives by the Delhi government to improve the business environment. Option D, implementing a single-window system for environmental clearances, is a general initiative by the Indian government but not specifically mentioned in the context of Delhi's efforts in the provided text.

3. A Traders' Welfare Board has been constituted by the Delhi government with a grant of: