Telangana has surprised many developed and older states in India by standing top on the Ease of Doing Business (EoDB) rankings announced for 2017. Pro-active, industry-friendly states like Gujarat, Maharashtra and Tamil Nadu have evolved policies to woo investments, but what catapulted Telangana to the No. 1 slot in EoDB rankings is its simplification of processes and transparent procedures.
NEW INDUSTRIAL POLICY
The dividends of standing up in EoDB may appear rich now, but seeds for it were sown three years ago as Chief Minister K. Chandrasekhar Rao has decided to bring out a revamped and refurbished new industrial policy, called TSiPASS (Telangana State Industrial Project Approval and Self-Certification System) Act 2014. He finalised the policy only after consulting doyens of Indian industry and leading MNCs.
Electronic governance, popularly called e-Governance, has come to the states several years ago, but its implementation had not been backed by accountability and fastness. The Telangana government has made it a policy to stick to the timelines and leave behind cumbersome certifications and inspections to industry applicants and rely on their self declaration to start with.
SINGLE WINDOW CLEARANCES
A mandatory 30 days of maximum time was fixed to dispose of an application for new industry or business in the state; if the clearance was not given within the time, the official concerned will have to explain reasons for it, otherwise, he or she will be held responsible for the delay, and on the 31st day, the applicant can start his or her venture.
TSiPASS is a single window cell for all industrial clearances. Signifying its corruption-free nature and greater transparency, at the time of launching of TSiPASS, CM KCR has famously said that: “There are no grills behind our single window.” This has been acknowledged by many leading industrialists and MNCs in the past three and a half years.
A large number of most sought after MNCs like Ikea, Amazon, Facebook, Google, Microsoft, among others, have chosen Hyderabad as their Indian or even Asian location not just because of the city’s location advantage, but also due to hassle free pro-industry policies of the local state government. In the last three-and-a-half years, as many as 6,000 big and notable industries have come here.
LARGE INDUSTRIAL LAND BANK
Some of the salient features of the Telangana’s new industrial policy include creation of an industrial land bank whereby all lands not fit for cultivation has been reserved for industries. This has led to the creation of a large industrial land bank of 2.50 lakh acres. No other state even comes close to this kind of initiative. The best any other state can offer is about 75,000 acres in Rajasthan. The system of approvals through self-certification is the first in the country.
Effectively, it means that mega projects can begin their civil works immediately after taking possession of the land. Usually, industries waste many months, even up to a year, waiting for permissions before they are allowed to commence their civil works.
All required permissions and approvals will be delivered to them before they get into commercial production. This feature will take the ranking of Telangana in the EoDB index comparable to the topmost countries in the world. Another first in the country is the right created for delivery of single window services.
If the right is violated, there is a penalty provision, on the lines of the Right to Information Act. Accountability will be established among officials through the creation of this right. Industrial parks will be developed in the ready-to-occupy model. China offers this facility and, therefore, attracts large international investments. Telangana will also follow on the footsteps of China with this model.
Reserving 10% water in all irrigation sources exclusively for industries is also a unique feature. The decision to have a separate power grid for industries is a bold one, and indicates the government’s seriousness in making quality power available to the industries. The package of incentives is very attractive and competitive compared to neighbouring states.
While some states may offer a little higher on some components but taken on a totality, the package offered by Telangana is among the best. SMEs are being supported in a big way. Apart from additional incentives, they will get support in the form of reservation of plots in industrial plots, compulsory tie-ups with mega projects, and marketing support.
Entrepreneurs belonging to the SC/ST community are going to be enormously benefitted from the special budget allocated for financial support to them by the government. They need not worry about raising margin money by themselves for their enterprise. This will be contributed directly by the government out of this budget.
A Credit Guarantee scheme will also be operated for them by the state government. For the first time, a corpus has been created to prevent incipient sickness among SMEs. Any such SME that faces incipient sickness can receive financial support from this corpus. This will serve as an insurance mechanism for them. The government will take responsibility for skill development among the youth who can aspire for industrial sector jobs. Creation of jobs will be priority for the new Industrial Policy. The concept of mini Industrial townships will be linked to industrial parks, for all such parks that are located in remote and rural areas. This will also contribute to the urbanisation of the state. Six new Industrial corridors are proposed that will link Hyderabad to other major towns in the state. Each corridor will see the development of industrial clusters.
Research and Innovation Circle of Hyderabad (RICH) is a unique concept that links all the knowledge-based institutions in the state with industries and investors.
These R&D institutions will take up research and product development required by the industry. Commercialisation of R&D output will be funded by the investors. Creation of an apex set up in the industries department led by a dynamic minister—K.T. Rama Rao—and his team of officials under the overall guidance of Chief Minister KCR is the key to the success of Telangana on its path to prosperity.