1. States asked to follow Punjab model to attract investors

States asked to follow Punjab model to attract investors

DIPP wants them to set up effective dispute-redressal mechanism.

By: | New Delhi | Updated: March 26, 2015 12:58 AM

The Centre has asked states to consider institutionalising a single-window clearance mechanism, similar to the ‘Punjab model’, by month-end to ensure faster and time-bound approvals of investment proposals.

An efficient single-window mechanism will be an important criterion in ranking states on a new ‘ease of doing business’ index that the Centre is planning to introduce by July 1, sources told FE. This is because such an e-governance mechanism reduces human interface (as the applications are made online), thereby, increasing transparency, besides reducing corruption and delays.

Among other things that the states have been told to adhere to by the department of industrial policy and promotion (DIPP) include digitisation of land records, setting up effective dispute-redressal mechanism, improved state-specific labour laws and a single-window clearance for shutting down businesses.

Punjab had set up a Bureau of Investment Promotion (BIP) in December 2013 for one-stop clearance of investment proposals. BIP has a board of governors headed by the chief minister at the top; an executive committee led by the chief secretary and a CEO to takes care of the daily operations.

BIP has powers to give approvals related to pollution control, excise and taxation, labour issues, factory licences, boiler registrations, town and country planning, land and power-related issues, besides revenue issues (such as stamp duty exemption).

The Centre wants to incorporate such a bureau in all states as the back-end of its Government-to-Business (G2B) portal called e-Biz as part of a competitive and cooperative federalism model to make India an attractive investment destination.

Punjab has given the Bureau’s CEO extensive powers to receive, process and approve investment proposals. Its mechanism also has a provision for ‘deemed approval’ in cases where the needed clearances are not given within the specified time-frame. However, the state is looking to address the issue of the possibility of legal complications arising out of such deemed approvals in cases of projects found unfit later. The state also has an easier clearance mechanism for less polluting industries.

Sources said states such as Haryana and Maharashtra are considering the ‘Punjab model’, while Rajasthan, which even has a separate legislation – the Rajasthan Enterprises Single Window Enabling and Clearance Act 2011 – is also studying the Punjab model to see if its own mechanism needs improvements.

A study conducted by consulting firm Accenture last year, on the request of DIPP, had also listed the single window clearance mechanism in Punjab and Rajasthan, in a list of six select best practices across various states. This was done with a view of help states consider and even adopt best practices followed by their peers to improve their own prospects in attracting investment.

The study had pointed out that Rajasthan was a pioneer in making it mandatory for investors to apply through single window for industrial investments of over R1 crore, while in states, application through single window was not mandatory but just a means for business facilitation. The state’s single window portal has interesting features like auto-deletion of inactive / dormant IDs created by applicants, and email alerts to applicants regarding the clearances given.

For greater ease of doing business, the Centre, on its part, had last month announced the launch of 11 Central Government services on the ‘eBiz’ platform for starting a business. In the next few years, over 200 services related to investors and businesses will be rolled-out across the country via e-Biz.

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