To provide a boost to businesses, several states across India are advancing small, targeted reforms to cut red tape. Over the last few months, Rajasthan, for instance, eased restrictions on night shifts for women, while Odisha tightened building bylaws so that small enterprises can use space more effectively. In parallel, the state of Tamil Nadu increased the number of industries for which entrepreneurs need not approach the pollution control board.

These reforms at the national level are moving forward despite renewed calls for broader reforms amid tariff tensions. States seem to be calibrating business rules on the ground more effectively. For this, the Centre is also helping the states in deregulating strict laws, and states appear to be on board with the perceived benefits of these steps.

State Government Reforms

The Rajasthan Labour Department notified on July 8 that all commercial establishments are allowed to employ women during night hours. Officials stated that this not only provided operational flexibility to enterprises but was also a step forward in maintaining gender-inclusive employment policies in the state. Similarly, the Delhi government, on July 30, allowed employers to keep women in night shifts after scrapping the requirement for restaurants and hotels to seek public approval.

The Odisha government modernised building bylaws in June to let MSME and IT/ITeS firms use spaces more effectively. The State Department of Housing and Urban Development has also introduced major amendments to both the State Town Planning and Improvement Trust (Planning and Building Standards) Rules, 2020. The changes include reducing the parking requirements for individual buildings to 8% from 30% of the total built-up area to allow more productive use of space.

The Tamil Nadu government, among the most industrialised states in the country, has also taken up reforms to boost businesses. These include expanding the list of white-category industries from 37 to 609 in June this year, exempting many non-polluting businesses from obtaining consent to establish and consent to operate from the State Pollution Control Board.

With states taking proactive measures to boost businesses, many foreign investors wary of state laws and heavy compliance burdens may now be more attracted to invest.

Reforms in Delhi

These changes by the state governments are finding traction. As Sandeep Anand Goyle, the Delhi chapter head of the National Restaurant Association of India (NRAI), told national media, establishments such as hotels, eateries, discos, amusement parks, and auditoriums in the capital will no longer need to register with Delhi Police to run their operations, potentially generating significant revenue for the Delhi government.

“Domestic and international chains previously avoided investing in Delhi, Gurgaon, and Noida due to cumbersome licensing norms, particularly the eating house registration from the police via the MCD’s unified licensing portal,” Sandeep said. “We were spending 6 to 8 months each year just following up on licence renewals, even when our documents met the portal’s requirements. The follow-up was constant, forcing us to choose between focusing on business or chasing licences.”

A newly formed deregulation cell in the Cabinet Secretariat is targeting selective national regulations to ease business. On May 27, it set up an inter-ministerial group to review Quality Control Orders (QCOs) that could address unfair trade practices affecting enterprises.

The Economic Survey 2024–25, released in February this year, called for state-level regulations to liberalise standards and controls. The suggestions included lifting restrictions on women’s participation in factories and rationalising parking norms. It further urged state governments to review regulations on administration, land, building and construction, labour, utilities, transport, logistics, local trade, environment, and sector-specific rules.

“The logic for staying small is to remain under the regulatory radar and steer clear of rules on labour and safety laws. Ironically, the biggest casualties are employment generation and labour welfare, which most regulations were originally designed to encourage and protect,” stated the Economic Survey 2024–25. “Unburdened by licensing, inspection, and compliance requirements, the people and small enterprises of India—with their high aspirations and intrinsic inventiveness—will find answers to the pressing challenges of growth, employment, and development,” the survey further stated.

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