Govt clears decks to cut industry red tape

NEW DELHI: The government has cleared all the recommendations of the Govindarajan committee on easing of procedures and documentation for industry.
Guidelines to that effect have been sent to the respective ministries for implementation. The government is also in the process of changing FDI calculation norms in line with international practice which is slated to double the FDI figures for India as against fresh inflows which is represented as FDI at present.
This was a particular issue raised by MNCs working in the country to bridge the image gap between India and China as an investment destination. These developments were communicated by senior government officials from the department of industries during a closed-door meeting with CII’s MNC council last week.
Some of the key points in the report include overriding power to single-window facilitation agencies, both at the centre and state, exemption from environmental clearance for projects below certain investment levels and creation of an Industrial Investment Facilitation Board for domestic investment proposals on the lines of the Foreign Investment Approval Authority.
KN Shenoy, chairman of CII’s MNC council and vice chairman of Volvo India, said, “We were concerned about the implementation of the Govindarajan committee recommendations and have been assured that to make the state governments comply with reforms the financial incentives scheme in line with the APDRP in the power sector will be instituted.�
According to Mr Shenoy, while the single window system exists, it has major gaps where even after a proposal has passed through the window the respective state department could have still delayed it.
“In the new system the state department has to give its assent within a time period pending which it will have to reply to the higher authority,� he said. Procedural delays have been the main cause of concern for multi national companies in the country and ranked even above sectoral FDI caps as a problem area. Meanwhile the government is also working towards adopting the international norm for FDI calculation. MNC council members were also apprised that preliminary data suggests the doubling of FDI as reported for the country at present, after inclusion of quasi investments from existing MNCs.
This is likely to place the FDI figure in the region of $8-10bn. “Even though it will remain less than the $40bn or so attracted by China it will at least bridge the gap. International investors question us as to why India attracts just about 10% of what China does,� said Mr Shenoy.