India should focus on exports, SMEs, logistics and labour law: Kant | SupportBiz

Vertical View

India should focus on exports, SMEs, logistics and labour law: Kant

Amitabh Kant, CEO & MD, Delhi Mumbai Industrial Corridor Development Corporation Ltd. spelt out the challenges that need to be addressed if India was to significantly reduce its production costs and become a global manufacturing hub.

Kant was addressing a session on ‘Business Regulatory Environment’ during the Federation of Indian Chambers of Commerce and Industry’s (FICCI) workshop on ‘Empowering India – The Manufacturing Mandate,’ on July 16. He said exports would have to grow consistently between 20-25 per cent and an ecosystem would have to be created for SMEs to enable them to enhance production, upgrade technology and operate without hurdles by simplifying regulations, said a FICCI release.

He underlined the immediate need to lower the road transportation cost which has a direct bearing on the cost of production. “At present, it takes around 10-15 days for the goods to reach the ports from the industry which inevitably increase the cost of production and goods. The Eastern and Western Industrial Corridors that are being developed across the country will help in lowering the cost of production significantly and by 2017 efficiency in logistics costs will become a reality.”

“The major ports in the country are in need of an overhaul. We also need to rationalize, consolidate our archaic and rigid labour laws and pursue the policy of industrial clusters which has proved to be beneficial in the recent past. These clusters will bring together the entire spectrum of activities under one roof and one could seek all approvals from a single point,” he explained.

Sidharth Birla, Senior Vice President, FICCI and Chairman, Xpro India Ltd., in his remarks, pointed out the shift which is taking place in Indian polity and its consequences on the economic policy making and the implementation at the state level. “Since mid-90s, we are witnessing the trend that no single political party is getting full majority and the coalition politics has become a reality which cannot be wished away, at least in the near future.”

He said that regional parties now exercise considerable influence in policy decision making including that for economic issues. Understandably, these regional parties often have to take into consideration the sensitivities of their respective states and their own ideologies while taking positions on various policy matters.

“That partly explains the difficulties faced by the Government while coming up with the policies like allowing FDI in multi-brand retail or for that matter in areas like GST. However, States have to be taken on board to effect major economic reforms. Today, majority of the issues concerning industry are related to State policies or State regulations like land acquisition, pollution control board clearances, industrial clusters, factory inspectorate etc.,” Birla explained.

Birla said governance was a critical issue at the state level. “That is why we have seen that under similar macroeconomic and external circumstances, some states have performed exceptionally well while others lag behind. During the period 2005-06 to 2011-12, states like Bihar, Haryana, Gujarat, Delhi, Tamil Nadu, Madhya Pradesh, Chhattisgarh etc have shown an average growth more than 9 per cent and in some cases even more than 10 per cent.”

Some of these states have become the workshops for innovation in drafting and implementing various government schemes. Therefore, on the one hand, we have the Gujarat model of development and on the other hand, we have a Bihar model of development. On the one hand, we have a very successful PDS system in Chhattisgarh and on the other hand, we have a great land acquisition policy of Haryana and Gujarat for industrial development. In Rajasthan and Andhra, single window system is working very fine while Tamil Nadu leads in the promotion of industrial clusters as is demonstrated by its large automotive cluster. Empowering India report captures the best practices of a few states in some of the critical areas affecting ease of doing business and findings of the report have already been shared with you.

Business facilitation is very much in the agenda at the national as well as state levels. But there is lack of coherence in all such efforts. There are wide variations in government-business transactions taking place in different locations of the country. It has also been found that there is a lack of predictability and standardization in terms of timelines as well as process adopted by different state governments when it comes to facilitating business.

Birla said that FICCI regularly receives requests from its foreign counterpart chambers to host visiting business delegations to India in different states of the country. However, the zest for attracting investments should be equally matched by the congenial policy and implementation environment in the states. This has been the focus of FICCI’s empowering India project to identify the best practices in some of the states and then propagating the same in other states.