In the last 11 years, many reforms have taken place at the central level to make business easier and promote manufacturing. The result of which is that India has become a major stakeholder in the global supply chain. Now India is going to enter the next phase of reform. In this phase it is the turn of the states of India. Which can give new impetus to the manufacturing sector and business in the country.
Now state governments, under pressure from the Centre, are doing away with old land use rules that forced factories to keep 40 per cent of their plots vacant and be serviced by 60-foot-wide roads. Compliance checks by government inspectors are being limited through a new system that allows third party verification.
These reforms, which can mostly be implemented through changes in rules, have been identified by a task force led by Cabinet Secretary TV Somanathan. A top government official told ET that Madhya Pradesh, Andhra Pradesh and Tripura are the most likely to implement these measures. Let us also tell you what are those reforms on which many state governments are working.
Work going on on 23 major reforms
The official said that work regarding reforms is going on at a very fast pace in the country. He said that more than 50 percent steps have been taken by most of the states. The official said that every state has responded positively to the 23 key reforms in this process, and many states have expressed a clear desire to move forward.
The measures implemented include extending working hours for shops and establishments without altering labor schedules, allowing women to work in hazardous industries or night shifts, lowering the threshold for closing factories and easing land norms for mixed-used developments. Due to such reforms, the availability of land for manufacturing units has increased.
This transformation is being driven from New Delhi by a deregulation cell within the Cabinet Secretariat, which is coordinating efforts with states and tracking progress in real time. These reforms, first highlighted in the Economic Survey released in January, are aimed at opening up the last leg of India’s investment ecosystem.
Center has already done many reforms
Most of the major reforms have already been implemented at the central level, so the focus has now shifted to states where operational problems are greatest. The survey said that regulations increase the cost of all operational decisions of companies and identified key sectors where targeted action is needed to improve ease of doing business.
For example, an Indian factory owner with a 5,000 square meter plot may have to give up up to 69 percent of his plot to comply with building standards. This lost land could be worth up to Rs 1.58 crore and could have been used to create 509 additional jobs.
States are implementing changes to address this outdated and wasteful land use. Now a series of new reforms covering many areas are being prepared. The official said that significant progress has been made so far. A parallel effort is also going on at the national level. A panel led by NITI Aayog member Rajiv Gauba is finalizing central interventions to simplify the non-finance regulatory framework—the next step in the drive to increase ease of doing business in India.