A slightly in-depth look at the campaign

1. BUSINESS DIGEST VOL. NO. 8 ISSUE NO. 10 JANUARY 2012
EMPOWERING
INDIA
Improving Business
Pranab Mukherjee, Anand Sharma and Arun Jaitley
at FICCI’s 84th Annual General Meeting

2. Inside…
16
Cover Story:
» Empowering India project gets going
BUSINESS DIGEST
EMPOWERING
INDIA
Improving Business
VOL. NO. 8 ISSUE NO. 10 JANUARY 2012
Chairman » GDP growth may slip to 7.5% or less
Dr. Rajiv Kumar in 2011-12: Pranab Mukherjee
» FDI in multi-brand retail only through
Editor consensus: Anand Sharma
» GST delay on fears that Centre may be
Meera Kumar
unfair to non-UPA states: Arun Jaitley
» Create wealth without sacrificing value
Managing Editor system: Swamiji Tejomaynanda Pranab Mukherjee, Anand Sharma and Arun Jaitley
at FICCI’s 84th Annual General Meeting
Sukumar Sah » President Harsh Mariwala address
Advertising & Circulation
Animesh Goswami
4 Secretary General’s Message
PL Joseph
Veena Srivastava
6 R. V. Kanoria is new FICCI President
Rahul Siwach
Dinesh Bhandari
8 Kanoria lays out road map for FICCI
Design & Art
10 Economic Outlook Survey
www.seemasethidesign.com 12 India’s energy security on fragile ground: FICCI-E&Y Report
© All Rights are reserved. 14 FICCI survey on water use by industry
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Revolution model to move to a post-carbon era
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Business Digest) required to be
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34 FICCI’s anti-piracy initiatives gain further momentum
Federation of Indian Chambers of
Commerce and Industry, New Delhi 36 States Initiatives
» FICCI study delves into corporate patronage to art
and Published at Federation House » Maharashtra creating industrial growth benchmark for the country: CM
Tansen Marg, New Delhi - 110001 » Technical Textiles: Nagpur and Pune workshops evince keen interest...
R.N.I No. DELENG/2004/13722 40 Macro-economic indicators
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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. COVER STORY
the administration of labour laws states have demonstrated clear best India is among the fastest growing
include 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 and
signi 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 from
Chairman, Bain & Company India resolution and exit procedures), no 2010 to 2020. Investors continue to
Pvt Limited., “ e report makes clear state-led reforms emerged as the be drawn towards India with FDI
it clear that several states have role of the Judiciary or the Centre is in ows increasing more than 250
started to take proactive steps much stronger. times from $140million in 1990 to $36
towards improving their business billion today. However, they continue
environment. However, there remains
signi cant potential for further
improvement, which we believe RELATIVE PERFORMANCE AMONG STATES
can be greatly aided by learning
Andhra Pradesh Gujarat
from one other. Each state in India 1 Land acquisition Information 1 Land acquisition
Information
today is in the enviable position of Availability
10
2 Property
registration
Availability
10
2 Property
registration
facing a number of attractive growth
Payment
opportunities, which, if supported by Payment
of taxes 3
Obtaining
of taxes 3
Obtaining
9
an environment that is more geared 9 Construction
permits
Construction
permits
towards business, can set the stage Availability
Availability 4
for tremendous development in the of Power
8
4
Single
of Power
8
Single
window
window
near future.” clearance
mechanism
clearance
mechanism
e Empowering India report aims 5
7
5
Industrial
7 Industrial
to help states chart a path for reforms Environment
related compliances 6 Labour reforms
clusters
Environment
related compliances 6 Labour reforms
clusters
that will transform India and make
it a more dynamic, progressive and
business 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 registration
Rajasthan has handled its power
situation e ectively to reduce its Payment
of taxes 3
Obtaining
Payment
of taxes 3
Obtaining
de cit, with signi cant thrust on 9 Construction
permits
9 Construction
permits
alternate sources of energy. West
Availability Availability
Bengal, though not known recently of Power
4
Single
of Power
4
Single
8 8
for its industrial leadership, has also window
clearance
window
clearance
mechanism mechanism
launched a single window system, 5 5
including a common application Environment
7
related compliances
Industrial
clusters Environment
7
related compliances
Industrial
clusters
6 Labour reforms 6 Labour reforms
form which cuts down the application
form from 99 pages to seven.
All these examples highlight that Information Rajasthan Tamil Nadu
Availability 2 Property 1 Land acquisition
a compelling opportunity exists 10 registration Information
Availability 2 Property
10 registration
for states to further improve their Payment
of taxes 3
business environment by learning 9
Obtaining
Construction
Payment
of taxes 3
permits Obtaining
from the experience and best 9 Construction
permits
practices of one another. Hence, the Availability
of Power
4
Single Availability
focus of the report is on learning from 8
window
clearance
of Power
8
4
Single
window
best practices across Indian States to mechanism
clearance
mechanism
5
make sure our recommendations are Environment
7 Industrial
clusters 5
7 Industrial
practical and grounded in realities related compliances 6 Labour reforms Environment
related compliances 6 Labour reforms
clusters
that exist in India today.
e 12 identi ed factors in uencing
the business environment are: land West Bengal
1 Land acquisition
acquisition, property registration, Information
Availability 2 Property
10
obtaining construction permits, single registration
window mechanism, availability of Payment
of taxes 3
Obtaining
power, industry clusters, availability 9 Construction
permits
of information, labour practices,
environment-related clearances, Availability
of Power
4
Single
payment of taxes, dispute resolution 8
window
clearance
and exit procedures. In ten of these mechanism
5
12 factors, we found examples where Environment
7 Industrial
clusters
related compliances 6 Labour reforms
January 2012 || FICCI Business Digest || 17

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