To,
Shri Hemant Soren Ji
Hon’ble Chief Minister,
Government of Jharkhand

Subject: Proposal to abolish the paper-based Trade License system in the State in line with the Central Government’s simplified enterprise registration framework under the MSMED Act.

Respected Sir,

I have consistently advocated for Ease of Doing Business for Micro, Small and Medium Enterprises (MSMEs). I am confident that our State Government and all Urban Local Bodies should also adopt a similarly progressive approach.

Recently, the Central Government has made important amendments to the MSMED Act (Micro, Small and Medium Enterprises Development Act), 2006, which have substantially reduced the compliance burden on businesses. The key features of these amendments are as follows:

1. Simplified and Digital Registration:

The MSMED Act provides legal recognition to MSMEs through a completely digital, free and self-declaratory registration process under the Udyam Registration Portal.

2. Voluntary Compliance:

Registration under the Act has now been made voluntary instead of mandatory for MSMEs.

3. Digital, Free and Voluntary:

By making registration digital, free and voluntary, the Central Government has successfully removed unnecessary regulatory barriers for entrepreneurs and simplified the process.

In contrast, businesses in our State are still burdened by old procedures imposed by municipal bodies, particularly the Trade License process. The present Trade License system is largely paper-based and inspector-based. This not only increases red-tapism and unnecessary compliance, but is also contrary to the digital, self-declaratory administrative model adopted by the Central Government. At a time when information is readily available in abundance, unnecessary procedural barriers are avoidable.

If the Central Government can, through the MSMED Act, introduce a simplified, voluntary and digital system to facilitate businesses across the country, then there is no reason why our municipal bodies should continue to burden traders with an outdated licensing process. I submit the following suggestions:

1. End the mandatory requirement of Trade License:

Businesses that are already registered under the Central Government’s Udyam Portal should be completely exempted from the requirement of obtaining a municipal Trade License.

2. Paperless Compliance:

The inspector-based system should be eliminated and a completely digital and self-declaratory framework should be adopted for any necessary local compliance.

Removing the paper-based Trade License system will send a strong and positive message to the business community, improve local transparency and bring Jharkhand’s MSME policy in line with the principles of the country’s new policy framework.

I hope for your positive consideration of this proposal in the interest of the economic development of the State and the convenience of its business community.

Yours faithfully,
Mahesh Poddar
Former Member of Parliament (Rajya Sabha)

Copy to:
1. Shri Sudivya Kumar, Hon’ble Minister, Urban Development and Housing Department, Government of Jharkhand
2. Shri Avinash Kumar, IAS, Chief Secretary, Government of Jharkhand
3. Shri Sunil Kumar, IAS, Principal Secretary, Urban Development and Housing Department, Government of Jharkhand
4. Chairman/Secretary General, Chamber of Commerce, Jharkhand

Former Member
Standing Committee :- Ministry of Finance, Urban Development
Consultative Committee :- Road Transport & Highway, Power & Renewable Energy, Water Resources
Joint Committee :- Office of Profit, Committee on Public Undertakings
Bureau Member :- Bureau of Indian Standards (BIS)