Few good things are happening for India. In recent times, India became the top investment destination for FDI leaving behind China and USA. Amid tottering global conditions, India is also set to become the world’s fastest-growing major economy by 2016, ahead of China, writes Nilanjan Banik.
According to forecast by the International Monetary Fund, India is expected to grow at 6.3% this year, 6.5% in 2016, and is likely to cross China’s projected growth rate of 6.5%. China’s economy has been struggling with a slowing property market, and overcapacity in its export-dependent factories hit by weakening shipment orders from slowing European and other economies.
In a bid to usher in Acche Din (Good Days) which have been eluding Indians, the government unleashed few bold reforms. Fuel prices have been decontrolled; foreign investment norms in insurance have been eased; disinvestment is on track with the promise of more floating shares in our stock exchanges; a new coal allocation policy is in place; and the Centre is in the last stage of discussions with states for a unified goods and services tax.
Critiques argue in spite of these reforms, there has been no change in sectoral composition for FDI inflow. Computer software and hardware (6.85%), telecommunications (6.68%), automobile (5.28%), and drugs and pharmaceuticals (5.02%) still continue to remain as the favourite investment destination. Numbers in the parenthesis indicate FDI inflow into these sectors as a percentage of total FDI inflow into India between April 2000 and September 2015.
These sectors mostly employ capital intensive mode of production, with a lesser element of Made in India components. Also, these sectors are less affected than any typical brick and mortar-type enterprises, otherwise hassled by the Inspector Raj. The truly Made in India sectors such as agricultural services (0.67%), textiles (0.67%), ports (0.62%), railway related components (0.25%), and air transport related components (0.23%), continue to remain laggards.
However, if recent events are any indication these figures are likely to get changed. Recently, the cabinet approved INR 98,000 crore project to run first Bullet Train between Ahmedabad and Mumbai, with a likely extension to Delhi. Japanese government is not only providing soft loan for this project, but is also transferring technology to drive Indian manufacturing activities. Likewise, Boeing has tied up with Tata group to manufacture aero structures for aircraft, and other military hardware components. Indeed, things are looking better. And, why not?
To make India a better place to do business, government undertook a host of measures to cut down red tape, diminish human interface, and make the system technology enable. Government launched an eBIZ platform named G2B portal (read, government to business portal), and soliciting online application process for industrial licensing, with 24×7 accessibility.
Validity of industrial licence has been extended to three years, and a simple process to extend it to an additional two more years. This will certainly help local businesses, earlier trapped in maze of red tapes and a two year permit. Other measures such as urging State government to stop boiler inspection for factories, and compliance check for labor laws only, will be a big booster. All departments are advised to introduce on line returns through a single form undertaking, with no inspection without requisite approval. Visa on arrival scheme has been announced for Business travellers. 100 per cent FDI scheme through automatic route are granted for suburban railway corridors, high speed trains, dedicated freight lines, locomotives, coaches manufacturing, freight terminal, and signalling system.
A significant change also happened in the defence and financial sector. For the defence sector, the approval has shifted from the government route to an automatic route. A 24% cap for foreign portfolio and venture capital investment has been removed.
Industrial corridors and smart cities are being developed. Work on 5 smart cities on Mumbai Delhi industrial corridor has moved towards implementation. Chandigarh has emerged as the first smart city of India. Chandigarh city administration has already launched its “official mobile app”, to provide all types of citizen-centric and public utility services, and information to the residents. Important addresses, contacts, helpline numbers and e-mail ids of the consumer forum and various departments of the Chandigarh Administration are made available through the mobile application.
Additionally, 21 new industrial clusters have been approved and developed over the last 180 days with an eco-system of supply chain responsiveness, lower logistics cost, availability of labour, and technology up gradation. These clusters will provide cost and productivity gain, and drive India up in the manufacturing chain. Like railways, the shipping industry is to get lifetime licences from the local marine authority, a much better option than the previous annual trips to Delhi.
It seems Acche Din in true sense are around the corner.
(The columnist is with Mahindra Ecole Centrale, Hyderabad. All comments to firstname.lastname@example.org)