Chhattisgarh Passes Ease of Doing Business Act 2026, Introduces Risk-Based Approval System

State becomes first in India to adopt a trust-based business permission framework aimed at easing compliance for MSMEs.

The Chhattisgarh Assembly on Thursday passed the Chhattisgarh Ease of Doing Business Act, 2026, paving the way for a risk-based and trust-based business approval system that the state government says will simplify regulatory processes and encourage investment.

With the new regulatory framework, Chhattisgarh expects to benefit over 1.5 million MSMEs, creating a more efficient and accountable business environment through streamlined approvals and monitoring.

With the new legislation, Chhattisgarh is set to become the first state in the country to introduce a comprehensive risk-based permission framework for industries and commercial establishments.

According to the government, the Act aims to reduce compliance burdens, simplify procedures related to setting up and operating businesses, and create a faster and more transparent business environment, particularly for micro, small and medium enterprises (MSMEs).

Under the new framework, industries and businesses will be classified into different risk categories based on their size and nature of operations. Low-risk enterprises will be eligible for simplified approvals, while projects falling under higher-risk categories will continue to undergo technical scrutiny and inspections.

Focus on self-certification and faster approvals

The Act provides for self-certification and certification by licensed engineers, architects and authorised professionals for low-risk businesses, reducing the need for repeated departmental inspections. The government said this would make the approval process more efficient and accountable.

It also removes the requirement for annual renewal of certain licences and permissions, replacing it with a risk-based regulatory mechanism. In addition, several services for MSMEs, including water supply permissions, firm registrations and building approvals, can be processed through self-declaration or authorised certification.

The legislation introduces an auto-approval mechanism for eligible cases where departments fail to take a decision within the prescribed timeline. However, projects involving higher levels of risk will continue to be subject to physical inspections and technical evaluations.

43 services brought under new framework

The Act initially covers 43 services offered by eight state government departments. Additional services may be included in the future with the approval of the executive council.

To oversee implementation, the government has established a three-tier monitoring mechanism. A state-level committee headed by the Chief Secretary and district-level committees led by collectors will supervise implementation under the guidance of a council chaired by the Chief Minister.

The state government estimates that more than 1.5 million MSMEs could benefit from the reform. It said the new system is expected to reduce the time and cost involved in establishing and operating businesses while maintaining oversight in sectors that require stricter regulation.

Officials described the legislation as a significant step toward creating a transparent, predictable and investment-friendly business ecosystem in Chhattisgarh.