Wednesday, Dec 13, 2017
Government | Asia-Pacific | India

Maharashtra State

Maharashtra streamlines doing business to a ‘plug-and-play’ level of ease


2 years ago

Devendra Fadnavis, Chief Minister of Maharashtra
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Devendra Fadnavis

Chief Minister of Maharashtra
"“Foxconn has invested $5 billion in Maharashtra, which proves that the business community has faith in the state”"

"“I feel that Maharashtra, with a very qualified human resource, has the capacity to create a new Taiwan or Korea in electronics”"

India’s number one ranked state for efficiency and infrastructure is drawing big names, such as Foxconn and General Motors, thanks to its highly pro-business environment, which, as the state’s Chief Minister Devendra Fadnavis explains, is undergoing both physical and adminstrative changes to make it even more attractive to release its potential for finance, tourism and renewable energy.

 

As Chief Minister of Maharashtra, how do you interpret the very promising economic outlook for India today, will India be able to replace China as a global growth engine, and how does Maharashtra state contribute to India’s social and economic growth?

India today has three main ingredients: demography, democracy, and demand. We are going through a demographic dividend – 30% of our population is below 25 years of age, and around 65% is below 35. This makes that our country has created its own internal demand. India has been a major importer for many years, but the time has come to not only satisfy our domestic demand but to also export. The world demography, aside from the African countries, is changing; it is ageing. The world therefore requires human resources. For the last 20 to 30 years, China has served as a factory for the world. The Chinese economy however is a little bit shaky today. The reason being perhaps that the demographic curve is going down. China is on the path of ageing too. In the entire manufacturing community, including Japan, China, and Taiwan, all the companies are looking for a new destination. The quality of life in China has changed, and the manufacturing costs have gone up. The competitiveness and advantage that China once had are decreasing. The destination everyone is looking at is India, due to its demography and demand. I have visited many countries and can see that they are keener than ever before to enter India.

To grab that opportunity, there are two or three things we need to do. First, we need to have predictable policies, a stable government, and a little bit of ‘hand-holding’. Ease of doing business is a way of handholding. Therefore, we make the processes hassle free. In Maharashtra as well, for the past year, we have been doing the same. Just to quantify, in a designated industrial area, before you needed 76 permissions. We have now brought that number down to 36, and further reducing it to 25. The time range for these permissions would range from one to three years. We are trying to bring it down to three months. In the category of ease of doing business, we are still ranked eighth. In efficiency and infrastructure, Maharashtra is ranked at number one. We received a ranking of eighth because we could not put down our labor reforms on an e-platform. The central government and World Bank mandated that only reforms put on e-platform would be considered as reforms. We were short in time, and once we got the power, it was only six months before these evaluations started. Nevertheless, we were able to put all other reforms on the e-platform. The minute we put the labor reforms on the e-platform, we will be at par with number one. In the next four months, all reforms will be on the e-platform.

 

Between 2000 and 2015 Maharashtra attracted more FDI than any other state in India ($73.12 billion). Between now and 2019 you expect to attract $84 billion. Is this number realistic and would you say it is related to the ease of doing business?

Yes I think it is realistic and it is definitely related to the ease of doing business in our state that has improved immensely. More than just giving our word, we have been able to demonstrate. Whether it was Mercedes-Benz or Schindler, their investments in India were stuck for years. In Maharashtra however, we were able to clear them in a matter of days. Because of this, the businesses are getting the idea that this is a regime that actually means business. We have made our MIDC a one-stop shop for all investments and we are doing a lot of handholding there. Personally, we are looking at all the issues at hand. We are involved in certain forums where we interact with the private sector, understand their problems, and we personally look into it and solve their problems.

Foxconn has invested $5 billion in Maharashtra, which is proof that the business community has a lot of faith in the state. Many other states and a few other countries were chasing this investment from Foxconn, however they ultimately chose Maharashtra. General Motors also cleared their investment of $2 billion in Maharashtra.

There are many companies that are looking at our state as an investment destination. It is because the infrastructure here is world-class. We provide 24-7 electricity, water, and developed land. So I can say it’s like plug and play. This level of infrastructure is seen nowhere else in the country.

Moreover, Maharashtra has a history of a very stable administration. Processes in the state have always been better than in the rest of the country. Now through the ease of doing business, we are moderating it more. For example, in the labor departments, registrations that used to take six months to one year are now automated. Therefore they are now done in seven days. The moment you apply, you receive a receipt that says if you don’t get it in seven days, it is automatically cleared. Back in the day, an inspector would go to a factory and do all the inspections. Now, only when necessary, an inspector would do this and it would be through a computer-generated system, so that he knows when exactly he is to inspect that factory and only the necessary parameters. The inspection report then has to be posted within 48 hours. As a result of these transparent policies, businesses gain trust and feel confident in investing in the state.

 

Could you please share your views on “Mumbai Next” and “City Naina”?

If we look at the island city, then we notice that it has its own limitations due to it being landlocked. However, we plan to develop Mumbai as a financial services center. We have identified land in BKC (Bandra Kurla Complex), where we would actually build a financial services center. In Mumbai, we have a large presence of CEOs, banks, and a large presence of the financial services sector. Since Mumbai coincides with world markets in many different time zones, we could leverage upon this and develop Mumbai as a financial services capital. We will be developing it at the BKC.

We have therefore made two task forces: the Union Minister of State for Finance, Hon Jain Sinha, heads one; the Chairperson of SBI (State Bank of India) Arundatti Bhattacharya and Anshu Jain head another.

Through the trans-harbor link, we can link Mumbai and the hinterland so that the MMR (Mumbai Metropolitan Region) is the next destination. While creating the new Mumbai airport, not only could we get all the clearances in the last year, also the pre-qualification for four companies has qualified. By next month, all their financial bids will be submitted. The actual work will begin imminently on the new Mumbai airport and we aim to have it completed by the last month of 2019. With this new Mumbai airport, we are developing Naina, which is the Navi Mumbai Airport Influence Notified Area. It is an area designated to become a smart city, and is 600 square kilometers, an area larger than that of Mumbai. As of now, the first Integrated Development Plan (IDP) is out and for 80 square kilometers. Next month, we will publish the second IDP for 250 square kilometers. We plan to develop 22 sectorial smart cities.

 

Are all these Smart Cities built around the same concept? Because I read that together with Microsoft you are also building Smart Villages…

Yes. These can be thematic Smart Cities, dedicated to different concepts or sectors. This would be a city of the next generation. With the second IDP, the work would be accelerated very soon. We are also trying to build lots of infrastructure in Mumbai. The trans-harbor link, as mentioned, would link Mumbai and new Mumbai and would be a 22-kilometer link through sea. We have actually just signed an MOU with JICA of Japan. We will soon have the financial closures with them, and by next March we should be able to float the tenders for the trans-harbor link. That is on the eastern coast.

On the western coast of Mumbai, at the same time we have proposed a 32-kilometer coastal road, wherein also the final and environmental notification would be out in the next 10 to 15 days. Then we can also go for the bid.

We are also aggressively aiming for 108 kilometers of a metro network, out of which 35km will be underground and the rest overground. The metro 3 (underground) will start from Colaba and go all the way up till the last part of Mumbai. This was constructed four years ago and nothing really happened since then. In the last year, we have brought it to the tender stage and the tenders are also open. At any time, we could evaluate and give the work orders. For two more metro corridors, we provided the DPR in just four months and gave all clearances; now the tenders are being called.

At an accelerated pace, we are creating the infrastructure so that the Mumbai and MMR are linked with a proper public transport, and can be emerged as a Smart City.

 

You mentioned that Maharashtra has 24-7 electricity. Given that you are planning to build an additional capacity of 15,000 megawatts in renewable energy, would you dare to say that Maharashtra is somehow taking the lead in the fight against global warming?

Yes, and we have to. In Maharashtra we are blessed with having the sun for around 330 days a year. I therefore believe that solar energy is a very viable solution for us. At the same time, there are parts of Maharashtra that are very good for wind energy. For many years we have been using fossils to generate our electricity; around 65% of our energy comes from coal, which creates huge pollution and there will be a time in the future when coal will not be available anymore. Therefore we thought that it’s the right time to move toward green alternates. That is why we are aggressively going toward green energy.

 

In order to increase efficiency and financial capacity you are also planning to sell off state-owned enterprises. Could you shed a light on those?

It’s not actually an out and out sell. We want to actually infuse some capital, private capital, and we also want to free up some of our own capital. So it is a sort of disinvestment, but I won’t comment more on that as it is still under consideration and it has not been finalized as yet.

 

You have said that Make in India is not possible without Make in Maharashtra. What are the main sectors you would like to highlight as potentially worth investing in in Maharashtra?

I would say that Maharashtra has now become an automobile hub. Most of the automobile companies have their presence in Maharashtra and they are expanding. In the manufacturing sector, almost all the companies that have a presence in India have a presence in Maharashtra. I think more than 400 German companies have a presence in Maharashtra. Almost all the countries have a presence in Maharashtra. We would like to also focus more on electronics, namely because we are one of the largest importers in this category. If we do not do this methodically, by approximately 2030, our electronic imports would be even more than crude imports. I feel that Maharashtra, with a very qualified human resource, has the capacity to create a new Taiwan, or a new Korea in electronics. That is the capacity of Maharashtra.

 

Apart from automotive and electronics, what about biotechnology and education?

Absolutely. I think that because Maharashtra is also educationally well developed, there is huge scope potential in the state. We have our legislation in place for private universities so they also have opportunities to come to Maharashtra.

But I want to reiterate that infrastructure is the biggest sector, which would perhaps attract most investment in the next two years. We are creating a super expressway from Nagpur to Mumbai. It is an 800km access control road. This road can drive our entire economy as it brings closer together all four parts of Maharashtra. The entire GSDP could drive from this road. The entire stretch could be powered through fiber-optic for 800km long, so that we open up both sides for ICT. I call it the Communication Super Expressway. The alignment is finalized, and we are now looking at the financial options. We have also spoken to JICA who have shown interest. I met with the Malaysian government yesterday and they have offered to create this road on a government-government basis with financing.

This road, together with the Delhi Mumbai Industrial Corridor, will change the face of Maharashtra.

 

In terms of tourism, Maharashtra tops the list of state with most potential. What is the Maharashtra you would like to promote to the American business community?

There are a couple of things. First of all, Maharashtra is also the tiger capital. Ninety percent of the country’s tigers are in Maharashtra and 60% of the world’s tigers are also in the state alone. We are replicating models that are seen in Masai Mara for example, into our own forest areas for wildlife tourism.

Coastal tourism is also another aspect we are trying to develop. We have a lot of heritage and many forts, warrior forts in particular. We also have the Ajanta & Alora caves, which date back over 3,000 years; these are Buddhist caves. They serve as a major attraction to tourists from Southeast Asia who are interested in Buddhism. There is also a crater, about 60km from there. We recently had a travel mart, where we showcased India, specifically Maharashtra, and we could actually enter into MOUs with many global players into tourism.

 

Given that inclusiveness has been a major topic at the G20 Summit in Antalya in 2015, how can you make sure that you build a state for all the people where everyone benefits from the economic growth Maharashtra is experiencing today?

I think this is the biggest challenge, not only for us, but also for India as a whole. All our policies and schemes are aimed at inclusiveness. When we talk of housing, we have taken a task that by 2019 all the underprivileged in the rural areas would get a house. Each year we will build 25-30,000 houses so that we can build 200,000 houses for both tribe and caste. In a slum development scheme, which we have in Mumbai under the SRA, in 2015 we decided to begin building 300,000 houses. They will be completed in two years’ time. We will work to provide them with livelihoods so that they can join in the mainstream. Even in education, for example, our aims are targeted at the underprivileged. In higher education, we work to provide scholarships of 1,500 crores every year. Fifty percent of our students in the higher studies, one could say are subsidized by the government. Many times for the underprivileged, the government provides 100% of the cost. Only through inclusion can we have sustainable development.

 

How important is the Indian diaspora in the U.S. to Maharashtra and to what extent are actively trying to actively engage them in the development of the state?

I think they are very important. While they may be U.S. citizens, they have their roots in India. They do have a soft corner for India. I’m sure they would know Indian business better than other businesses. To invest in India is easier for them. While I was there I could actually address a lot of the Indian diaspora and especially people from Maharashtra and I could see that they are very keen to participate in the development process of Maharashtra. We are creating forums through which we can interact, facilitate, and attract them. They are doing the same in their own place as well, so I think that it is very important, and with this link I think the U.S. and India can become closer in business ties.

 

If you could define in three words what makes your leadership unique here in Maharashtra what would they be?

I am focused. I have no other focus other than development. Until I am able to achieve that I will be here. If ever I feel I cannot I will leave this chair. 



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