There can be a market for certification because in involves choice but there cannot be a market for censorship because it involves force.
There was an incident in Pune a few years back where the Shiv Sena and some other political parties marched on the streets to protest against a particular billboard ad campaign in the city. They were outraged that the municipal authorities allowed the display of large posters of skimpily clad women at major junctions in the city. Never mind that it was an undergarments manufacturer merely advertising its wares.
The why of censorship is a complex topic with long history and lots of nuances. But the short summary is that all societies have always allowed some kind of censorship. But the how and what of censorship is very interesting and is not part of much debate. Should movies be subject to censorship, what about drama? Street play? What about a guy screaming from a footpath?
From the standpoint of the viewer there is a case from differentiating between media which are avoidable and which are not. For example, a billboard which is smack above a traffic signal is non-avoidable. But a video on YouTube will not play by itself in front of you so is avoidable. The yardsticks that apply to these two types of media should be different. For non-avoidable media there is a case for applying the standards which are most acceptable for all (i.e. most conservative) but you can have much lenient standards for things which you will not be exposed to unless you choose to be. In the ideal case for such avoidable media all you need is certification and not censorship.
There is a strong case of opening up the certification sector to private participation. The government can continue giving out its ratings but I need not be forced to use them. If there are other entities which rate the movies, then I can choose the ones I trust the most. This reduces the possibility of me getting accidentally offended by something. After all many people do read reviews in newspapers before deciding to go for a movie. The credibility of the review depends on the track record of the writer so the writer has a good incentive to be consistent (if not entirely honest). This is similar to how a market for certification will work.
Certification and censorship work on two very different premises. Certification is useful for people who want to avoid certain things willingly. Censorship is for someone to deny others what they might be interested in watching. There are some instances in which censorship makes sense, like disallowing certain content for children but the vast majority of cases can be addressed with certification alone.
Siddarth Gore is a Research Scholar at the Takshashila Institution and he tweets @siddhya