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Empowering India - Cover Story (Business Digest, Jan 2012)


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A slightly in-depth look at the campaign

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Empowering India - Cover Story (Business Digest, Jan 2012)

  1. 1. BUSINESS DIGEST VOL. NO. 8 ISSUE NO. 10 JANUARY 2012EMPOWERINGINDIAImproving Business Pranab Mukherjee, Anand Sharma and Arun Jaitley at FICCI’s 84th Annual General Meeting
  2. 2. Inside… 16 Cover Story: » Empowering India project gets going BUSINESS DIGEST EMPOWERING INDIA Improving Business VOL. NO. 8 ISSUE NO. 10 JANUARY 2012Chairman » GDP growth may slip to 7.5% or lessDr. Rajiv Kumar in 2011-12: Pranab Mukherjee » FDI in multi-brand retail only throughEditor consensus: Anand Sharma » GST delay on fears that Centre may beMeera Kumar unfair to non-UPA states: Arun Jaitley » Create wealth without sacrificing valueManaging Editor system: Swamiji Tejomaynanda Pranab Mukherjee, Anand Sharma and Arun Jaitley at FICCI’s 84th Annual General MeetingSukumar Sah » President Harsh Mariwala addressAdvertising & CirculationAnimesh Goswami 4 Secretary General’s MessagePL JosephVeena Srivastava 6 R. V. Kanoria is new FICCI PresidentRahul SiwachDinesh Bhandari 8 Kanoria lays out road map for FICCIDesign & Art 10 Economic Outlook 12 India’s energy security on fragile ground: FICCI-E&Y Report© All Rights are reserved. 14 FICCI survey on water use by industryNo part of this publication may bereproduced, stored in a retrieval 24 Geospatial Empowerment – Paradigm for the Futuresystem, or transmitted in any form orby any means, Electronic, Mechanical,Photocopying, Recording and/or 26 Mega Trends: FICCI, Jeremy Rifkin introduce Third Industrial Revolution model to move to a post-carbon eraotherwise without the prior writtenpermission of the Publisher. 28 PM urges telecom industry to beef up domestic R&D & manufacturing capabilityStatement about Ownership and otherParticulars about the Journal (FICCI 30 Harvard Professor Dani Rodrik proposes new ‘traffic rules’ for the world economyBusiness Digest) required to bepublished under Rule 8 of theRegistrar Central Rules, 1956. 32 India assumes presidentship of SAARC Chamber of Commerce & IndustryPrinted and Published by SecretaryGeneral on behalf of (or owned by) 34 FICCI’s anti-piracy initiatives gain further momentumFederation of Indian Chambers ofCommerce and Industry, New Delhi 36 States Initiatives » FICCI study delves into corporate patronage to artand Published at Federation House » Maharashtra creating industrial growth benchmark for the country: CMTansen Marg, New Delhi - 110001 » Technical Textiles: Nagpur and Pune workshops evince keen interest...R.N.I No. DELENG/2004/13722 40 Macro-economic indicatorsFederation of Indian Chambersof Commerce and Industry, FICCI,Federation House, Tansen Marg, WE LOOK FORWARD TO YOUR FEEDBACKNew Delhi - 110001Phone: 23738760-70 (11 Lines) We would like your feedback/comments to enable us toFax: 23320714, 23721504 improve our offering. Write to us at: orE-Mail:, sukumar@ficci.comWebsite: For Advertising, please write to: publications@
  3. 3. COVER STORY T he Federation of Indian Chambers of Commerce and Industry (FICCI), in partnership with Bain & Company, India, has launched a nationwide Empowering India project with the release of a report that identi es opportunities to improve the business environment across all states. Bid to improve business e report identi es best practices and high-impact reforms that have environment been implemented across 7 major states along 12 key factors; the report outlines actionable recommendations for implementing similar reforms in FICCI launches other states. e states reviewed were Andhra Pradesh, Gujarat, Karnataka, Empowering India project Maharashtra, Rajasthan, Tamil Nadu and West Bengal. Some of the ndings showed that Andhra Pradesh, with its time- bound single-window mechanism, supported by legislation, has considerably eased the burden of businesses in the state while Tamil Nadu leads in the promotion of industrial clusters as is demonstrated Domestic best practice frontier with international examples by its large automotive cluster, one of the top 10 in the world. Land acquisition Domestic best Information Availability 1 “In the next phase we hope to practice Japan, Korea (primary focus) 10 Singapore 2 Property registration expand our coverage to the remaining Gujarat Singapore, Portugal, Egypt major states as well, and therea er International Maharashtra, Gujarat Gujarat, Karnataka bring the entire country under the examples Payment of taxes 3 Obtaining Construction project fold” said Harsh Mariwala, 9 Rajasthan, Karnataka permits President, FICCI. Azerbaijan, China Egypt, Denmark, China Karnataka (Bengaluru) e report and its recommendations were developed a er seeking perspectives from government and Availability 4 industry through 180 interviews as Rajasthan, Rajasthan, Single window of Power 8 Gujarat Andhra Pradesh & Singapore, HK, Mexico clearance well as a survey of 75 FICCI members. Brazil, France mechanism Tamil Nadu Other ndings see Gujarat Gujarat Maharashtra Tamil Nadu, Gujarat emerging as one of the leaders in US, UK 7 5 Japan, China land acquisition due to a transparent Environment related compliances Multiple countries Industrial clusters policy, which incorporates the inputs 6 Labour reforms of all stakeholders, as well as a more e ective process enabled by its computerized land bank system that Legend: In each of the spider gures, the helps investors to choose suitable land. outer Green frontier indicates strong Karnataka has introduced practices implemented internationally. e noticeable reforms in property regis- Yellow frontier shows the strongest practices/ tration with a computerized process initiatives identi ed across 7 states, and the and ‘anywhere’ registration across Red frontier in the following gures indicates major urban areas. Karnataka has the position of each State. also initiated progressive reforms e distance between each frontier is a qualitative assessment of the opportunity to simplify the process of obtaining available to each state for introducing construction permits by introducing reforms. a provision for online submission of building plans in Bengaluru. Recent initiatives by the Maharashtra government to improve 16 || FICCI Business Digest || January 2012
  4. 4. COVER STORYthe administration of labour laws states have demonstrated clear best India is among the fastest growinginclude introducing an online labour practices or implemented strong economies – it has grown at 8%management system, which promises initiatives to improve the business annually in real terms since 2001 andsigni cant impact. environment. In the remaining is expected to account for nearly 10% According to Ashish Singh, two factors (commercial dispute of the growth in global GDP fromChairman, Bain & Company India resolution and exit procedures), no 2010 to 2020. Investors continue toPvt Limited., “ e report makes clear state-led reforms emerged as the be drawn towards India with FDIit clear that several states have role of the Judiciary or the Centre is in ows increasing more than 250started to take proactive steps much stronger. times from $140million in 1990 to $36towards improving their business billion today. However, they continueenvironment. However, there remainssigni cant potential for furtherimprovement, which we believe RELATIVE PERFORMANCE AMONG STATEScan be greatly aided by learning Andhra Pradesh Gujaratfrom one other. Each state in India 1 Land acquisition Information 1 Land acquisition Informationtoday is in the enviable position of Availability 10 2 Property registration Availability 10 2 Property registrationfacing a number of attractive growth Paymentopportunities, which, if supported by Payment of taxes 3 Obtaining of taxes 3 Obtaining 9an environment that is more geared 9 Construction permits Construction permitstowards business, can set the stage Availability Availability 4for tremendous development in the of Power 8 4 Single of Power 8 Single window windownear future.” clearance mechanism clearance mechanism e Empowering India report aims 5 7 5 Industrial 7 Industrialto help states chart a path for reforms Environment related compliances 6 Labour reforms clusters Environment related compliances 6 Labour reforms clustersthat will transform India and makeit a more dynamic, progressive andbusiness friendly economy. Karnataka Maharasthra Information 1 Land acquisition Information 1 Land acquisition e report also showed that Availability 10 2 Property Availability 10 2 Property registration registrationRajasthan has handled its powersituation e ectively to reduce its Payment of taxes 3 Obtaining Payment of taxes 3 Obtainingde cit, with signi cant thrust on 9 Construction permits 9 Construction permitsalternate sources of energy. West Availability AvailabilityBengal, though not known recently of Power 4 Single of Power 4 Single 8 8for its industrial leadership, has also window clearance window clearance mechanism mechanismlaunched a single window system, 5 5including a common application Environment 7 related compliances Industrial clusters Environment 7 related compliances Industrial clusters 6 Labour reforms 6 Labour reformsform which cuts down the applicationform from 99 pages to seven. All these examples highlight that Information Rajasthan Tamil Nadu Availability 2 Property 1 Land acquisitiona compelling opportunity exists 10 registration Information Availability 2 Property 10 registrationfor states to further improve their Payment of taxes 3business environment by learning 9 Obtaining Construction Payment of taxes 3 permits Obtainingfrom the experience and best 9 Construction permitspractices of one another. Hence, the Availability of Power 4 Single Availabilityfocus of the report is on learning from 8 window clearance of Power 8 4 Single windowbest practices across Indian States to mechanism clearance mechanism 5make sure our recommendations are Environment 7 Industrial clusters 5 7 Industrialpractical and grounded in realities related compliances 6 Labour reforms Environment related compliances 6 Labour reforms clustersthat exist in India today. e 12 identi ed factors in uencingthe business environment are: land West Bengal 1 Land acquisitionacquisition, property registration, Information Availability 2 Property 10obtaining construction permits, single registrationwindow mechanism, availability of Payment of taxes 3 Obtainingpower, industry clusters, availability 9 Construction permitsof information, labour practices,environment-related clearances, Availability of Power 4 Singlepayment of taxes, dispute resolution 8 window clearanceand exit procedures. In ten of these mechanism 512 factors, we found examples where Environment 7 Industrial clusters related compliances 6 Labour reforms January 2012 || FICCI Business Digest || 17
  5. 5. COVER STORY e Empowering Industry feedback on states’ business there is still signi cant room for environment varied heavily between improvement. Even in states that India report aims to states – not due to the absence currently have the ‘best practices’, help states chart a of policy frameworks, but rather policies need to be more broad-based due to the varying perceptions of and implementation needs to be path for reforms that implementation e ectiveness. strengthened heavily before they can will transform India e report notes that the proof reach the standards being followed of all initiatives lies in dogged and internationally. and make it a more unyielding implementation on the e current status of all the dynamic, progressive ground, which makes investors seven individual states along these note and acknowledge changes, and factors has also been indicated in and business friendly enhances their con dence in the subsequent gures. economy. reforms e ort of any government. Looking at the initiatives e extent of reforms in each State implemented in di erent States, it suggests signi cant opportunity for is clear that reforms in the business States by adopting domestic and environment are being treated international best practices as a high priority for each State. e current status of best practice To varying degrees, all States have initiatives across the country along begun the process of investor- ten key factors (ex-commercial friendly reforms. At the same time, to face challenges in dealing with the disputes and exit procedures) is there is signi cant room for further current regulatory environment and shown below in relation to some improvement as initiatives are taken some of the associated complex and international examples. e graphic o the ground and launched into full time-consuming procedures required shows the international examples blown implementation. to set up and run a business in the and the gap between the intern- e success of reforms depends on country. e clear silver lining is ational examples and the best four key themes: that states have recognized the need practices implemented in India. for improvement and have already e considerable distance between policy framework introduced a number of reforms to the Indian best practice frontier and improve the business environment the international example frontier for investors and facilitate industry. shows that while many states have e Empowering India project introduced strong reforms that other report addresses four key themes: states can learn from and replicate, implementation the policy framework, e ectiveness of procedures, critical enablers to enhance e ectiveness, and the In the context of India, strengthening implementation becomes even more important as a implementation discipline to make large number of strong initiatives bear the risk of losing e ectiveness due to lack of adequate or the various initiatives work. Implem- consistent implementation. is may be driven by accountabilities which are not clear or not adequately enforced and o en lack of measurable matrices for individuals involved. entation discipline is a frequently Based on best practice initiatives introduced and implemented by various Indian States and occurring theme throughout also reforms introduced in other countries, we have dra ed recommendations for the ‘model this report. template’ for a state. e recommendations aim to address the above mentioned four critical Industry, across states in India, components of reforms: policies, procedures, enablers and implementation. expresses the urgency to strengthen implementation. Most states have RECOMMENDATION THEMES introduced strong policy frameworks Strong tracking and Introduction of the and procedural improvements but monitoring mechanisms to appropriate policy leave a lot to be desired in terms measure progress frameworks lin ion Po of implementation. Strengthening Clearly defined individual lic Stro Improvements to cip tat and departmental yf n existing policy e dis men implementation involves cultivating accountabilities enforced ra g a performance-driven culture among me frameworks ple through robust target- setting, monitoring and wo Suggestions to government departments; xing clear r Im rewards/ penalties Improved k rationalize regimes ownership among individuals and business departments who are empowered Cr ur s in itic environment to enforce time-bound deliverables ed ent al es from all involved parties; establishing e Pr ovem Reduction, clear metrics to track and measure na Enablers such as IT- ble simplification, rs consolidation or oc performance; and aligning incentives pr enablement, GIS as Im digitization of with performance. Furthermore, well as incentives to procedures to bring facilitate procedural the enforcement of initiatives must improvements about greater speed be tracked through user feedback. and responsiveness 18 || FICCI Business Digest || January 2012