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Empowering India Redesigning G2B Relations. Maharashtra. India’s promise is apparent to all – and IF the projections come true, we will be in a good place by 2020. India’s GDP HAS GROWN AT an average annual rate of 8% since 2001.

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India’s promise is apparent to all – and IF the projections come true, we will be in a good place by 2020

India’s GDP HAS GROWN AT an average annual rate of 8% since 2001

In ppp terms, India is expected to be the 3rd largest economy by 2020

Note: Gross domestic product (GDP) at constant market prices, rebased to 2005 constant prices and translated into $ using the Rs. :$ exchange rate in 2005.

Source: Economic Intelligence Unit; World bank development indicators; Euromonitor; World Economic outlook

but we re significantly behind our closest competitors
But we’re significantly behind our closest competitors…….

manufacturing remains a small contributor to GDP

China attracts over 4 times more fdi than india

Share of manufacturing has remained 13 - 16% during the past decade

Note: NMCC – National Manufacturing Competitive Council

Source: UN Stats; World Bank development indicators

and india ranks very poorly on doing business 132 out of 183 countries
…….and India ranks very poorly on ‘doing business’: 132 out of 183 countries

Afghanistan

160

Russia

120

Pakistan

105

Mexico

53

China91

Israel

34

Malaysia

18

India

132

Philippines

136

Sri Lanka

89

Brazil

126

Bangladesh

122

S. Africa

35

Thailand

17

Note: Ranking based on 183 countries

Source: World bank – Doing Business, 2012

the macro picture today is increasingly challenging
The macro picture today is increasingly challenging….
  • Large and rising fiscal deficits
  • Large and rising current account deficits
  • Stubborn, high inflation
  • Sliding Rupee
  • High cost of capital – and poor availability
  • Slowdown in project implementation
  • Etc.; Etc.

Steady GDP slowdown over last 6 quarters,

to > 6%

and at the central level we are not making it any easier for business in india
….and at the Central level, we are not making it any easier for business in India
  • GAAR…..
  • Retrospective taxation
  • Rollback of committed contracts (telecom, etc.)
  • And a host of other factors…

In this uncertain macro environment, investors in India are looking for help

the action today is shifting to the states vs the center
The action today is shifting to the States, vs the Center

Note: Growth rate of GDP is estimated at 2004-05 prices

Source: Directorate of Economics Statistics of respective State Governments, and for All-India — Central Statistical Organization

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And a few states are already driving a disproportionate share of economic activity – Maharashtra is a clear leader

9 states account for ~60% of GDP and industrial output

Note: GSDP: Gross state domestic product; Industrial output comprises of the output of industrial establishments, covering mining and quarrying, manufacturing, construction, electricity, gas and water supply

Source: RBI India statistics handbook; IndiaStats

objectives of empowering india
Objectives of Empowering India
  • Improve India's business environment and global ranking in ease of doing business
    • Identify critical indicators that determine the investment climate
    • Review states’ performance and lessons from best practice initiatives
    • Work with other states to replicate best practices, thereby improving their ranking in ‘doing business’
we focused on 7 states and on 12 key factors influencing the business environment in each state
We focused on 7 states, and on 12 key factors influencing the business environment in each state
  • 7 factors:Identifiedholistic best practices

Land Acquisition & Records

Property Registration

Construction Permits

Single Window Mechanism

Industry Clusters

Availability of Power

Availability of Information

  • Universe of factors affecting business
  • 12 key factors identified
  • 3 factors:Identified strong initiatives
  • Labour Reforms
  • Payment of Taxes
  • Environment-related Compliances
  • 2 factors: No clear best practices identified
  • Dispute Resolution
  • Exit Procedures

12 FACTORS

affecting business environment indentified

X

7 STATES

with ficci presence

Source: Bain analysis

for every factor we mapped where each of the 7 states stands and also some international benchmarks
For every factor, we mapped where each of the 7 states stands – and also some international benchmarks

International examples

Land acquisition

1

InformationAvailability

Japan, Korea

2

Property registration

10

Domestic best practice /initiatives

(primary focus)

Portugal, Egypt

Singapore

Gujarat

Gujarat,

Karnataka

Obtaining

Construction permits

Paymentof taxes

Gujarat,

Maharashtra

3

9

Egypt, Denmark

Azerbaijan, China

Karnataka

(Bengaluru)

Rajasthan,

Karnataka

Rajasthan,Gujarat

Single window clearance mechanism

4

AP

Rajasthan

Availability

of Power

8

Singapore, HK, Mexico

Brazil, France

Gujarat

Tamil Nadu, Gujarat

Maha-

rashtra

Japan, China

US, UK

5

7

Industrial clusters

Environment

related compliances

Multiple countries

6

Labour reforms

Source: Inputs from Primary interviews with State governments and industry; Bain analysis

maharashtra high level summary indicates strong progress in several areas but some distance to go
Maharashtra: high level summary indicates strong progress in several areas, but some distance to go….

Maharashtra fares well on Information availability, Labour reforms and Industrial clusters

International examples

State current practice

Domestic best practice

Source: Inputs from Primary interviews with State governments and industry; Bain analysis

today s agenda
Today’s agenda
  • The “Empowering India” initiative
  • Maharashtra Point of Departure
  • The path ahead
labour reforms outdated laws and inadequate quality of labour trouble industry
Labour reforms: Outdated laws and inadequate quality of labour trouble industry

Common

pain-points

Key gaps

Industry perspectives

Source: Inputs from Primary interviews with State governments and industry; Bain analysis

labour reforms maharashtra s labour management system has been effective in reducing complexity
Labour reforms: Maharashtra’s labour management system has been effective in reducing complexity

Salient features

‘Mahashramm’ helps boost transparency and simplicity of processes for both labour and industry

Source: Inputs from Primary interviews with State governments and industry; Bain analysis

labour reforms recommendations to sharpen the current system
Labour reformsRecommendations to sharpen the current system

Policy framework

  • Revise labour laws and consolidate into one, simple act
    • Introduce exemptions and simplifications for high priority industries
  • Periodically review labour management system for updated practices
  • Consider complaint-based vs. mandatory system of inspections
  • Establish linkages between workers, banks and industry for easier and greater inclusion
  • Create blueprint for industry-led skill development programme
    • Privatize ITIs to ensure quality training
    • Incorporate constant industry and candidate feedback to update training

Improvements in procedure

Criticalenablers

  • Leverage public private partnerships to improve linkages between workers and industry, boost quality of manpower and ease procedures for industry
  • User friendly e-portals as information portals and interface between stakeholders
  • Simplify labour compliance processes and dispute resolution
    • Encourage self-certification through documented user manuals
    • Establish grievance redressal cell to resolves disputes and issues
    • Institute reforms committee to review and simplify existing labour laws
  • Track progress of labour management system, fix accountabilities and track performance
  • Invest in upgrading ITIs, and fix responsibilities on officers for performance

Implementation discipline

Source: Inputs from Primary interviews with State governments and industry; Bain analysis

construction permits large number of regulations and departments involved make the process complex
Construction permits: Large number of regulations and departments involved make the process complex

Common

pain-points

Key gaps

Industry perspectives

Source: Inputs from Primary interviews with State governments and industry; Bain analysis

construction permits easing of processes in mumbai area and midc estates but still complex outside
Construction permits: Easing of processes in Mumbai area and MIDC estates, but still complex outside

Features

With the exception of a few areas, builders need to follow up with multiple bodies for NOCs

Source: Inputs from Primary interviews with State governments and industry; Bain analysis

construction permits recommendations for the model state
Construction permitsRecommendations for the model state
  • Revise construction laws every 2-3 years to remove outdated criteria
    • Involve stakeholders: Industry, urban authority, experts, PCB officials, public
  • Set mandate for single window and online processes at state level

Policy framework

  • Prepare blueprints for simplification of procedures
    • Establish task force to implement single window
    • Mandate time limits for approval processes by all departments, enabled by penalties
    • Prepare implementation plan and procedures for digitization of plan submission and approvals

Improvements in procedure

Criticalenablers

  • Unambiguous definition of various bye-laws is essential to digitize scrutiny
  • Coordination between departments is necessary for effective single window system
  • Selection of an experienced technology partner to transition systems online

Implementation discipline

  • Draft plan for state-wide transition of procedures online
    • Define time-bound implementation plan to take processes online and roll out to public
    • Enforce accountabilities by fixing responsibilities and track progress
  • Create a municipal policy reform body to periodically update construction norms
  • Track effectiveness trough user-feedback
    • Create time-bound redressal cell to address implementation gaps and complaints

Source: Inputs from Primary interviews with State governments and industry; Bain analysis

slide24
Single Window Clearance: Currently, there is lack of consistent implementation in the Single Windows that exist

Common

pain-points

Key gaps

Industry perspectives

Source: Inputs from Primary interviews with State governments and industry; Bain analysis

single window clearance midc has a system in place which could improve in scope and coverage
Single Window Clearance : MIDC has a system in place which could improve in scope and coverage

Features

‘Maha-Ebiz’ single window system in MIDC areas still need improvements across the board

Source: Inputs from Primary interviews with State governments and industry; Bain analysis

single window clearance recommendations for the model state
Single Window Clearance Recommendations for the model state
  • Pass Single Window Act to empower nodal agency and encourage efficient approvals
  • Include coverage of companies of all sizes, and ensure time-bound action by fixing accountabilities and penalties

Policy framework

Improvements in procedure

  • Simplify application process by introducing Common Application Form
    • Include all departments such as land, environment, construction permits, utilities
  • Constitute single window committee to oversee the processes
  • Enforce time-bound approvals through ‘deemed clearances’ and statutory time limits

Criticalenablers

  • Coordination between different departments is essential for a single window system
  • IT training and computer literacy enable easy implementation
  • Online information portal with all required details and procedures
  • Empower nodal agency to assign and enforce accountabilities
    • Fix responsibilities on individuals; track and monitor effectiveness through periodic meetings
    • Impose penalties on departments/individuals for delays; link to annual appraisal
  • Ensure consensus, transparency and accountability among departments to provide single, unified face to investors
    • Build user feedback and redressal and resolution mechanisms to track performance of nodal agency
  • Ensure publicity through marketing and transparency through continuously updated information portals

Implementation discipline

Source: Inputs from Primary interviews with State governments and industry; Bain analysis