UTTAR PRADESH : Making the State investor friendly

UTTAR PRADESH is the most populous state in India, with a large pool of skilled, semi-skilled and unskilled labour. Alternately, the population is also looked upon as the largest consumer base in the country with approx. 223 million people. It is the largest producer of foodgrains among all States in India and accounted for about 18.39 per cent share in the country’s total food grain output in 2015-16.

However, there is tremendous locational advantage enjoyed by Uttar Pradesh along with advantages of connectivity that offers opportunities to harness the untapped potentials in terms of growth across the State. It is evident that there is huge disparity in terms of Industrial growth and development across districts.

Although between 2004-05 and 2015-16 the annual growth rate of Uttar Pradesh reached 10.54%, yet it is nowhere near its true potential.

It therefore looks necessary to address the reasons for realising the true potential in growth of industries in Uttar Pradesh through adoption of a new policy and strategy for promotion of industries. Moreover, since the announcement of recent Industrial Policy of Uttar Pradesh was in 2012, the changing dynamics in market place, several recent policy initiatives of the Government of India and an extremely competitive environment amongst States to attract domestic and foreign investment in industrial sector have together provided strong reasons for the State Government to design and fashion the new industrial & investment policy for Uttar Pradesh.

Being an economist and an author, I felt it’s my duty to give my suggestions for the betterment of the Industrial & Investment policy of the State. Following are some suggestions which can further improve the policy and make the investor friendly environment in the Uttar Pradesh and boost the investments.

1. 1. Investor Assistance Portal
      An ‘Investor Assistance Portal’ will be a unique online platform which will act as the first point of contact for any probable investor in the State of Uttar Pradesh. This portal will reduce contact between the investor and officials of different departments to a nil thus reducing the steps required in getting an approval. It can have the following features:
      • Provide a complete information of available Land Banks in the state of Uttar Pradesh like:
        • GIS based Land Bank Information
        • Development Plan & Town Planning Scheme
        • Uttar Pradesh State Industrial Development Corporation (UPSIDC) and other industrial development authority’s Land Bank
        • Special Investment Region
        • Special Economic Zone
        • Private Industrial Parks
      • Provide a One Stop Solution to Investors for identification, application and allotment of suitable Land
      • A comprehensive list of Pre-Establishment as well as Pre-Operation approvals required for setting up a business.
      • A customized list of approvals required by the investors specific to their business by keying in certain details in the form of questions
      • Online facility for filling of all required forms and making payments
      • Online availability of certificates and licenses to view as well as for download
      • Create time bound, web based transparent working mechanism for project clearance, Date of Production declaration, financial and non-financial assistances and clearances
      • Dashboard to view all the applications and their status
      • A unique account for each investor for all communications across departments
      • If approvals are not granted in a prescribed time by the concerned Authority, It will be treated as “Deemed Approval”.
      • Facilitation officers shall be appointed for improving ease of doing business in the State
      • These Facilitation Officers shall extend their support to the potential investors for setting industries in the State of Uttar Pradesh
      • These Facilitation Officers shall also extend their support to the industries for availing incentives provided by State Government.
      • A robust grievance redressal mechanism
      • A helpline number for all enquiries
      • Common Application Form across all departments
      • Detail of Incentives under various policies and the procedure for availing these incentives.
   2. Virtual Land Bank Exchange
      A virtual Land bank Exchange can be created to act as the platform for sourcing land for Industry/projects. The land owners interested in sale/ land can upload details of their lands for access by the industry.
   3. Ease of doing business
      State Government needs to set its priority on ease of doing business in State. Timely clearances and responsive post investment facilitation services have been identified as the cornerstone for improving business environment and boosting investor’s confidence.
      • • • Construction Permit Enablers
            • Design and implement an effective system that allows online application and payment without the need for a physical touch point for document submission and verification.
            • Develop legally valid master plans/zonal plans/land use plans for all urban areas (ULBs)
            • Make the master plans/zonal plans/land use plans for all ULBs online for easy information availability to assist applicants in developing building plans
            • Introduce self-certification to replace Tree NOC till required replanting activities are complied with.
            • Establish a dedicated conflict resolution mechanism for land and construction permits.
          • Environmental Registration Enablers

      The simplest approach for reducing the regulatory burden on business from environmental procedures and licensing is to introduce different inspection regimes for different categories of pollution. For green industries, the state can do away with mandatory inspections and replace them with need-based inspections which are only invoked in case there are specific complaints. The inspection regime for amber and red industries should also be differentiated, with less frequent inspections for Amber and more frequent inspections for Red industries and firms. Implementing this differentiated inspection regime will require a clear notification that outlines the process for each type of industry, and also mandates the frequency of inspections for Amber and Red industries.

      • • Labour Regulation Enablers
          • Ensure that the system allows users to download the final signed approval certificate from the online portal.
          • Introduce a provision for self-certification/third party certification
          • Single integrated returns across all applicable labor laws
        • Obtaining Water & Electricity Connection
          Design and implement a system that allows online application, payment, tracking and monitoring without the need for a physical touch point for document submission and verification
        • Online Tax Return Filing
          • Simplify application forms and procedure of approval
          • Single ID for all State taxes; Online payment and return filing system
        • Inspection reform enablers
          • Design and implement a system for identifying establishments that need to be inspected based on computerized risk assessment
          • Publish a well-defined inspection procedure and checklist on department’s web site
        • Access to Information and Transparency Enablers
          • Design and implement an online system where an investor can key in specific details (such as type of industry, number of employees, location etc.) and obtain information regarding all State approvals applicable to establishing her/his business/industrial unit
          • Mandate that the final professional tax registration certification (where applicable) will be issued within at most one (1) working day from the date of submission of application form
        • Single Window
          • Make Udyog Bandhu more effective and efficient
          • Introduce Provisions for deemed approval (for example, land diversion application)
          • Fix the time for disposal of application
        • Availability of Land
          Design and implement a GIS system giving details about the land earmarked for industrial use
        • Commercial Dispute Resolution Enablers
          • Establish Commercial courts to expedite commercial cases
          • Introduce E-filling, summons & cause list for commercial disputes
          • Introduce E-payment for court fees
          • Introduce Digitally signed court orders
   4. On the basis of investment, projects can be categorized into the following five categories
      1. Micro and small Projects
      2. Medium Projects
      3. Large Projects
      4. Mega Projects
      5. Ultra Mega Projects
   5. Industries can be classified as
      1. Priority Sector Industries
      2. Core Sector Industries
      3. General Industries
   6. MSME Sector
      Micro, Small and Medium Enterprises (MSMEs) cater to the vital needs of the economy in terms of their two specific roles, i.e. as a support base for large industry and as a stand-alone provider of goods and services. In fact, they form the backbone of the industrial sector in terms of numbers and provide the largest share of employment after agriculture.Micro Small Medium Enterprises Development (MSMED) Act, 2006 seeks to facilitate the development of these enterprises, enhance their competitiveness and provides a legal framework for recognition of both manufacturing and service entities in state. Government of Uttar Pradesh propose to frame rules for the implementation of this act, especially MSME facilitation council and procurement of goods and services by State PSUs and other government organizations.
      • Creating preference for Micro, Small and Medium Enterprises (MSME) in view of their limited requirement of land, and their capacity to absorb more labour per unit of capital and energy.
      • Increase the competitiveness of MSMEs and adoption of ― “Zero Defect Zero Effect” manufacturing practice
      • Price preference will be allowed for goods manufactured by Micro and Small Industries of Uttar Pradesh in case of purchases by Govt. Departments and State owned PSUs including Boards, Corporations, Development Authorities, Improvement Trusts, Municipalities, Notified Area Committees, Cooperative bodies and institutions aided by State Govt. and Companies where Govt. share is 50% or more.
      • Providing platforms for interaction between Enterprises of Uttar Pradesh.
      • Providing platforms for interaction between Enterprises of Uttar Pradesh and potential domestic and global markets through Trade Fairs, Road shows
      • Encouraging the MSEs to participate in national and overseas business fairs and exhibitions, and international delegations
      • Setting up a permanent exhibition-cum-convention centre for exclusive display of MSME products
      • The raw material generating units shall be persuaded to give purchase preference to the local industries, whose production is dependent upon the supply of such raw material. Similarly, the PSU’s / Private Sector large industries, located within the State would be persuaded to give purchase preference to the local industries while making purchases of raw materials and other items required by it.
      • A symbiotic relationship between the MSME and the Technical Institutions will be developed by linking each cluster with a technical institution to solve the technical and design related problem of the MSMEs
      • Special emphasis will be given on providing Common Facility Centres (CFC) mainly through Public-Private-Partnership initiatives to MSME projects of a cluster
      • Efforts will be made to provide linkages for MSMEs with micro-finance institutions, raw materials, focused market access etc
      • Schemes like Credit Guarantee Fund Trust Scheme, Cluster Development Programme for MSMEs, Credit Linked Capital Subsidy Scheme, Technology Up-gradation Scheme being operated by Govt. of India and various other Promotional Schemes of different Ministries of Govt. of India are proposed to be suitably dovetailed for the benefit of MSM Enterprises of the State. Efforts will also be made to suitably complement these schemes enabling the entrepreneurs to avail maximum advantage of these schemes.
      • Promote employment generation in industrial and service sector by providing facilitation under Industrial and Investment promotion Policy, MSME Act 2006 and other policy interventions
      • Promote quality certification, FPO, process ISO and patent certification for local industries.
      • Incentives to SMEs related to various activities related to food processing

      Cluster Development Approach
      Cluster development approach will help in enhancing the productivity and competitiveness as well as capacity building of Micro and Small Enterprises (MSEs) and their collectives in the State. Clustering of units also enables providers of various services to them, including banks and credit agencies, to provide their services more economically, thus reducing costs and improving the availability of services for these enterprises.

      Cluster development approach shall have the following objectives:

      • To support the sustainability and growth of MSEs by addressing common issues such as improvement of technology, skills and quality, market access, access to capital, etc.
      • To build capacity of MSEs for common supportive action through formation of self help groups, consortia, upgradation of associations, etc.
      • To create/upgrade infrastructural facilities in the new/existing industrial areas/ clusters of MSEs.
      • To set up common facility centres (for testing, training centre, raw material depot, effluent treatment, complementing production processes, etc).
        • Rural Functional Clusters
   7. StartupPolicy
      • Uttar Pradesh Start Up Portal shall be launched to provide a one stop solution to Start ups.
      • Startup Fests can be held in the State to galvanize the startup ecosystem to provide national and international visibility to the startup, innovators and the eco system players and to bring all the eco system players on one common platform.
      • Central Incubation Lab can be setup in the State to function as the hub of all government/ government aided incubation centers in the state.
      • Special endowment can be provided to the institutions of higher education in the State to setup incubation/innovators center in their respective institutions with an aim to promote entrepreneurship and innovation in the education institutes.
      • Assistance could be provided to corporates of national repute/SEBI registered venture capital Funds/ Industry Association to setup and operate incubation centers in the State.
      • Virtual Incubator Platform can be created to bring in together academia, industries and investors. This Platform can connect the academic institutions, startups, industrial mentors, equity venture firms and all other relevant stakeholder. This platform can also function as a repository of the ongoing startup projects in the State.
      • Government of the State can create a system to aggregate and grant access to the selected incubators/startups to the instrument facility in private and government laboratories, libraries in the institutions of higher education and public sector units across the state.
      • To motivate the youth to take up entrepreneurship, the universities and institutions of higher learning would be encouraged to follow the global best practice. The Central incubation lab can help them to upgrade their curriculum in order to introduce mandatory courses on entrepreneurship and financial literacy.
      • The State School curriculum will be updated to incorporate modules on basic electronics, entrepreneurship, digital and basic financial literacy to develop an aptitude amongst the student.
      • Faculties would undergo a tailormade training at the State Central Incubator Lab or other facility to develop a nuanced understanding of the latest development in the field of startups and other skills.
      • Students can take a semester off from their regular education program during their stipulated degree program to work on their startups for full time. After the semester, they can come back to complete their education. This provision can be extended upto 3 years for students pursuing their own startups. The student need to have 31% equity in their startup in order to avail this added relaxation.
      • Faculties in the institutions of higher learning would be encouraged to take time off to work with students at the incubator center for a stipulated time, after which they can join back to their normal work.
      • The Government can on a regular basis organize business idea challenges in its incubation centers to attract youth and motivate them to take up entrepreneurship.
      • The Government can invite banks to setup Startup only branch or dedicated unit in the branch which could focus on special needs of startups like opening of bank account, easier foreign exchange facilitation, easier handling of loan etc.
      • Government can invite and partner with leading global accelerators and incubators across the globe to facilitate the startup ecosystem in the state.
   8. Develop more Industrial Parks in private, joint venture and PPP mode.
   9. CSR by Big business houses in consonance with State Government.
   10. Provide greater economic benefits to the weaker sections of society including Schedule Castes/Schedule Tribes, Differently abled persons, retired soldiers and women entrepreneurs in order to bring them into the mainstream of industrial development.
   11. Increase the level of processing, reduction of wastage, value addition, enhance the income of farmers as well as increase exports thereby resulting in overall development of food and feed processing sector.
   12. Facilitate private sector participation in the construction and maintenance of industrial infrastructure.
   13. Set up new training institutes/centres for skill development with emphasis to train 30% women and up-gradation of existing training institutes with modern standard syllabus
   14. Realise the potential of Agriculture sector and rural economy by setting up some more food parks.To allot industrial land to Food Processing units and for food parks on preferential basis
   15. Providing preference to low energy and non-polluting industries
   16. Emphasising on industries that rely on local production, local skills, and local consumption
   17. Encouraging new investment in developing heritage tourism for which the state offers tremendous opportunities.
   18. Promoting development of ancillary units to cater to the upcoming investments in public and private sector
   19. Facilitation of high-end quality infrastructure facilities, including developed industrial land, availability of quality power, efficient transportation network, etc., shall be the prime focus of new Industrial Policy.
   20. Efforts will be made to ensure availability of 24 hours of uninterrupted power supply to the industries situated in all industrial areas.
   21. Steps shall be taken to revive viable sick units
   22. Promote innovation, start-ups and technology transfer
   23. Promotion of Non-Conventional energy
   24. Equally focus on Service Sector.
   25. There is a great potential to generate solar power through installation of rooftop solar power plants in the State. For installation of rooftop solar power plants the State Government shall provide capital /generation subsidy/ incentives.
   26. Incentives for power generation by solar energy by private entrepreneurs
   27. Promotion of clean and green technology
   28. Launch E Commerce portal in the state for providing marketing support to the small entrepreneurs.
   29. Introduction of Redressal system in every district to sort out trader disputes.
   30. Agriculture irrigation scheme with special focus on Bundelkhand. Formation of Bundelkhand and Poorvanchal fund for development of various industries in Bundelkhand.
   31. Focus on tourism sector
   32. Promotion of handicraft industries
       Uttar Pradesh is a state where the skills of art and craft is worshiped as gods and passed on from one generation to another. It is the land of art and artisans.
       The arts and crafts of Uttar Pradesh are not famous only in India but all over the world. Right from the silken saris to the earthen pottery, carpets weaving to chikankari embroidery, the hands of the legendary artisans and the master craftsmen have the magic to turn the ravage into gold. The silken touch with the masterly style produces the best sketches, designs, patterns and structure that are unique in their own nature captivating the hearts of every one who looks at them. Each region of U.P. deals with some specific art or craft.
       Handicrafts industries are labour intensive industries, so special emphasis will be provided to the handicraft industries to generate more employment opportunities in the state.
   33. Handicraft industries will be supported to enable them to export their products
   34. A Special Investment Board shall be constituted to increase the Investment in State.
   35. Provide best in class incentives to attract more and more investors to set up industries in the State of Uttar Pradesh.
   36. Linking of Industrial Services provided by State on the e biz portal of Central Government.
   37. Leveraging of industrial opportunities provided by DMIC.
   38. Leveraging of industrial opportunities provided by EDFC (Eastern Dedicated Freight Corridors)
   39. Attract Foreign Direct Investment in the State.
       A healthy business environment with predictable and non-discriminatory regime reduces the risk of doing business and is a major contributor to driving foreign investments.
   40. Improve the connectivity by establishment of Road, rail and Air Transport
   41. To boost the service sector and technology in State, IT parks will be established.
   42. Pharma Parks shall be established to cater to the consumption of medicines in the State
   43. Integrated Industrial Townships shall be developed along the National Highways
   44. Dry Port shall be established to promote the exports from the State
   45. Administrative procedures shall be simplified to improve the conducive environment for industries in the State.
   46. Necessary initiatives will be undertaken for simplification of labour laws.
   47. Focus on “Inclusive Growth” of the state.
   48. New Industrial Policy should be designed to create employment opportunities for both skilled and unskilled workforce.
   49. Branding of the State Uttar Pradesh.
   50. Marketing of the Industrial policy of the State Should be done with zeal.

The writer is an economist, author & philanthropist. He can be contacted at www.sunilkumargupta.com

Sunil Kumar

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