Data Collection Survey for Investment Promotion Program in India Final Report
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Data Collection Survey for Investment Promotion Program in India Final Report January 2020 Japan International Corporation Agency (JICA) Nomura Reserch Institute, Co. Ltd. 4R JR 20-002 Data Collection Survey for Investment Promotion Program in India Final Report January 2020 Japan International Corporation Agency (JICA) Nomura Reserch Institute, Co. Ltd. Introduction Under President Narendra Modi, India adopted the “Make in India” policy in September 2014, aiming to create employment in manufacturing for 100 million people, and the “Skill India” policy in July 2015, to provide occupational training and boost the job uptake rate. Through these policies, the government has been encouraging private sector investment by both Indian and foreign companies, in order to promote economic growth and job creation. To achieve the aims of these policies, the Indian government’s Department of Commerce undertook to improve 98 existing items in the government’s business improvement action plan, set out in December 2014, to create a new business improvement action plan covering 340 items. It encouraged each state and regional governments in each area under direct government authority to adopt the plan and has published rankings of progress made by each state every year since October 2015. As a result of this undertaking, protection of the rights of small investors, etc. has been favorably assessed, and in the World Bank’s “Ease of Doing Business” rankings, India moved up from 142nd place among 189 countries in 2015 to 130th place in 2016 and to 100th place in 2017. However, being in 100th place is still far from the government’s goal of getting India into the top 50 in the “Ease of Doing Business” rankings. Complicated procedures for everything from investing to obtaining construction permits and paying taxes remain in place, and further progress needs to be made by the Department of Commerce and regional governments to implement regulatory reform to improve the investment climate. Further, in addition to the system-related issues just mentioned, firms are hesitating to invest in India because of the poor industrial infrastructure (poor roads, water shortages, power outages) and the lack of human resources with the skills and technologies required by industry. To support the government’s program for improving the investment climate, JICA implemented the Tamil-Nadu Investment Promotion Program (TNIPP) and the Tamil-Nadu Investment Promotion Program Phase 2 (TNIPP2) for the Chennai-Bengaluru Industrial Corridor (CBIC) in the state of Tamil Nadu, and the Gujarat Investment Promotion Program (GIPP) for the Delhi- Mumbai Industrial Corridor (DMIC) in the state of Gujarat. This study collected information on the investment climate necessary for considering policies for yen loans and support for institutional reform in the four states of Haryana, Rajasthan, Maharashtra and Andhra Pradesh, in order to further improve the investment climate for DMIC and CBIC in the future. The information collected was organized into a policy matrix and policy actions outlining the policy-, system- and procedure-related issues, infrastructure issues and industrial workforce issues in each state, along with a list of sub-projects, in order to study the type of support that JICA should offer to further promote investment in these states and ensure the sustainable growth of industry (particularly manufacturing) in each state. Study findings were discussed with the finance, planning, and industry promotion departments in each state, development corporations, and personnel in charge of infrastructure development, in order to identify the more realistic options for which there are strong needs. Outline of Study Findings 1. Main Issues in Each State and Policy Matrix 1) Policy Matrix Proposed to Haryana With regard to investment procedures, Haryana already has a single-window system, but in reality it is necessary to have individual consultations about documents. To improve this part of the process, it was suggested that the format of various forms be standardized and that specialized staff be made available for investors to consult with. With regard to training human resources, it was suggested that job opportunities and an educational environment be provided for youths coming to urban areas, and at the same time to train trainers, etc., since there is a need for programs to bring manufacturing skills up to the standards required by foreign firms. Where readying infrastructure is concerned, in addition to projects around the MED development where Japanese firms are clustered, it was suggested that the state government adopt a flexible scheme to provide funding for small-scale PPP, etc. projects. Policy Issues Policy Actions 1. Improve the ・ Expand the departments concerned at HEPC (Haryana Enterprise investment Promotion Corporation) application process ・ Eliminate handwritten application procedures and integrate with the online system ・ Introduce a standardized format for construction applications and introduce common software ・ Introduce a standardized format for forms and introduce digital lockers 2. Smooth introduction ・ Create a relationship manager position in charge of attracting of investors investment ・ Set up a Japan desk ・ Introduce a compliance inspection system for principal sectors 3. Improve industrial ・ Introduce E-Karma to teach and give job opportunities to the workforce training unemployed and to students (entrepreneurial spirit) 4. Improve industrial ・ Establish a training program for human resource development and workforce training set up relevant organizations (manufacturing skills) ・ Introduce an ITI virtual education program ・ Introduce an industrial education program concurrently with the above ・ Set up organizations for youth vocational training ・ Introduce a basic training program for manufacturing technology at ITI 5. Improve the business ・ Introduce a system to identify small priority infrastructure projects and enviromentment to monitor their implementation attract further investment 2) Policy Matrix Proposed to Rajasthan With regard to investment procedures, Rajasthan already has a single-window system, but given the need for the state to attract still more manufacturers, it was suggested that specialized staff be made available whom investors can freely consult regarding permit procedures. Although foreign firms already operate at Neemrana and other industrial estates, there are few industrial clusters in Rajasthan. Since the bulk of the manufacturing industry is along DMIC, measures to nurture supporting industries and training programs for acquiring manufacturing skills that meet industry needs are needed, and a number of related actions were suggested. In terms of infrastructure, the most important issue is a reliable supply of water to industrial estates, and a number of water supply projects around industrial estates were proposed. Policy Issues Policy Actions 1. Speed up and smooth ・ Appoint a relationship manager investment procedures 2. Modernize industry ・ Promote attracting supporting industries promotion policies ・ Introduce an investment incentive system aimed at SMEs with advanced technologies ・ Promote technological support to local firms by foreign firms 3. Train an industrial ・ Draw up a medium to long-term plan for developing human resources workforce in promising industries ・ Draw up revised training programs meeting industry needs ・ Conduct leader training with the cooperation of industry ・ Rebuild decrepit training facilities (ITIs, engineering schools, etc.) ・ Draw up a plan to promote employment of women workers 4. Improve the industrial ・ Set up a Japan desk Improve the electricity supply facilities near infrastructure industrial estates (Neemrana, Ghiloth, etc.) ・ Draw up a plan for a reliable supply of industrial water using reservoirs and recycled water 5. Build basic ・ Introduce a system to identify small priority infrastructure projects and infrastructure to monitor their implementation promote investment 3) Policy Matrix Proposed to Maharashtra With regard to investment procedures, Maharashtra already has a single-window system, but application procedures for investors are not necessarily user-friendly. It was therefore suggested to make specialized staff available and to make it possible to complete all procedures with related departments through a portal site. It was also suggested to set up a portal site on the food logistics industry for farmers and producers. Regarding promotion of industry, since overseas manufacturers are already clustered in the state, it was suggested that efforts should be made to nurture supporting industries, introduce and support occupational training meeting industry needs and training facilities, and build roads leading to Mumbai. Given that this state is already highly industrialized, it is time now to promote industries other than manufacturing. Actions to modernize the food logistics industry, including agriculture, were proposed, including provision of cutting-edge seeds/seedlings, mechanization, making it possible for farmers to process their crops for distribution, traceability from producers to consumers, and setting up cold chains, to bring structural change to intermediate distribution and build import/export-related facilities. Policy Issues Policy Actions 1. Speed up and smooth Make it possible to complete permit procedures with all departments via investment an integrated portal system procedures Appoint a relationship manager Set up a portal site for farmers