In the ‘Doing Business Index’ of the World Bank, India’s rank lately slipped two slots, a setback that has presented a tough challenge for the new PM as well as the investors. The tailbacks range from obstructive business environment and scarcity of capital to the challenges involved in procuring land, labor, and licenses. Let it be very clear, if the PM is aspiring for enhanced work prospects for the unemployed and India’s dominance in the global manufacturing arena, our industrial sector needs to grow at 12-15 per cent annually and its share in the GDP will have to recover. In the past few days, overseas investors have ameliorated their views towards India, but much seems to be focused on the services sector. Hereunder, we have endeavored to segregate distinct aspects of doing business in India, and along with are some proposals that can change the milieu.
This can be termed as the most fundamental. Citizens prosper with better opportunities and so do businesses. The government has amended the Apprenticeship Act 1961, the Factories Act 1948 and the Labor Laws Act 1988. Mentioned below are some issues that the government should consider urgently.
- Multiplicity of labor authorities puts ambiguous picture. For states as well as the center, all aspects related to labors should be dealt with by a sole authority that shall take care of industrial disputes, enforcement of labor laws, maintenance of industrial peace and such other functions.
- Industrial corridors, investment zones, and such other infrastructure development projects must embrace a scheme dedicated to Workers’ Housing plans. Be it even a smart city, low-budgets homes must be a basic part.
- Skill development for active workforce demand partaking of industries in designing the curriculum and certification of academic courses.
- E-learning, R&D, train the trainer, and job-oriented skill expansion programs are the areas of focus that can promise comprehensively competent workforce.
- Similar to 100 smart cities initiative, 100 universities be identified and developed in the coming years to match steps with global leading players.
From over-dependence on foreign institutional investors to lack of long-term lending financial institutions for stable and promising corporate investments, bottlenecks are many; however solutions stated as under can bring in the break through.
- Long-term lending by financial institutions be promoted and a couple of FIs must be recognized to undertake this function.
- Government can think of diluting stake held in PSU undertakings and banks through capital market, thus raising fresh equity.
- Retail investors in capital markets to be fortified via information sharing programs and deepening of capital market.
- Amalgamation of a few public sector banks to match global trends with respect to magnitude of operations.
- Implementation of guidelines for year-on-year growth of MSME credit, along with zero-tolerance in terms of payment defaults to MSMEs and use of commercial bills.
- Fill equity gap of MSMEs by allowing sources of capital such as private equity, venture capital and angel funds. Listing on BSE and NSE without need of floating an IPO.
It all starts with resources. From railways to ports and from export oriented zones to land acquisition, every sector demands constructive measures. Hereunder are some key solutions.
- PPP model be thought over and executed for development of railways substructure, right from procuring of railway stocks for ease of mobility to commercialization of excessive land available with Indian Railways.
- Privatization or franchise arrangement of public sector ports.
- To promote hefty PPP infrastructure development projects, clearances prior to even bidding.
- Connectivity of ports, airports and railway corridors with industrial centers, especially connectivity of coal extraction plants and places of consumption.
- Smart cities with assured and reliable access to water, power, sewerage, and such other basics, along with inclusion of homes for low-income earners and affordable dormitories for MSME workforce.
- For all industrial zones and corridors, skill expansion centers to be made obligatory with a view to upgrading the quality of personnel as well as production.
- Inevitability and fairness to be accorded to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act with a view to ease land acquisition both for land owners and industrialists.
- Change in Land use to be notified in a time-bound manner for impartial deals.
- Any idle industrial space shall be allocated for time-bound period to avoid wastage of crucial resource.
- Coal sector demands revamping of CMN Act and MMDR Act, along with developing such a facility that transportation of extracted coal becomes swift and resourceful.
- Private investment in exploration and carriage of coal, along with setting up of coal dealing mechanism for transparent and quick sale and purchase.
- To rejuvenate E&P industry and fund-providers, gas pricing concerns be addressed.
- To attract flow of capital into the country, minimum area development norms can be reworked, and better inter-linkage of agencies involved in real estate development.
ROAD FOR CREATIVITY AND GLOBAL COMPETITIVENESS
- ‘Zero Defect-Zero Effect’ production be encouraged and e-commerce players be made to follow norms of the industry.
- MSMEs and other industries will spread wings only when the produced goods are in demand locally. Procurement by government, essentially from indigenous players is the need of the hour.
- As done in the defence, excessive dependence on imports in terms of capital goods, coal, electronics, food grains, and such other commodities that can be made in India to be dispensed with.
- Businesses to be encouraged to undertake valuation of quality of production and efficiency of labor so that global competition be met and beaten.
- MSMEs to be promoted by way of compulsory procurement by state departments, at least 25 per cent of their needs, from this sector.
- Multi-tier support system for MSMEs by collaborating with industry clusters and R&D institutions for inducing technology-based effectiveness.
- Liberal policies and assistance programs for MSMEs to nurture innovation.
- Rationalization and merging of programs run to help MSME producers in marketing their output through participation in trade fairs and events.
This is a glimpse of the roadmap towards successful execution of ‘Make in India’ dream of the government. It cannot be denied that the fiscal and legislative environment too needs a shift to a conductive phase, where GST and subsidy rationalization are pressing demands. For the same, the government can consider proposals of various committees, introduction of third party certification mechanism to replace the inspection system, and single-window clearance backed by supporting legislation. It is evident, that the above proposals are not exhaustive, but are capable to fetch promising outcomes if executed with authentic and dedicated labors.