Ficci report bares state industry, FDI slack

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  • Published 19.01.12

New Delhi, Jan. 18: Bengal ranks last in overall industrial growth rate and business investment in a comparative study of seven major states by Ficci and consultancy firm Bain & Company India.

The report, which spans a 10-year period from 2001, comes at a time industry has aired concerns about the hands-off land policy of the Trinamul-led government and the crackdown on the AMRI directors, about which Ficci had issued a statement.

While Bengal has an annual growth rate of 3.7 per cent in industrial output, Odisha tops the list with 12 per cent . Although Uttar Pradesh and Andhra Pradesh have not been covered by the study, they find mention in the report. While Uttar Pradesh has a growth rate of 4.5 per cent, Andhra’s growth rate is 8 per cent.

“It is true that Bengal is not seen as an industrial leader in recent years,” said Ashish Singh, the chairman of Bain & Company India.

Bengal ranks second-last in terms of investment proposals. The state has attracted investment intentions worth Rs 87,000 crore between 2009 and 2011. Mineral-rich Odisha ranks highest among the states with the most number of investment proposals. Odisha got business proposals to the tune of Rs 4.96 lakh crore in the same period. Gujarat comes second with investment intentions of Rs 3.15 lakh crore.

“It will be beneficial for Bengal to continuously look for opportunities to simplify procedures and institute timelines for all government-to-business (G2B) services. This is also a great time for the state to focus on capacity expansion in power generation and infrastructure development to complement the expected industrial growth and learn from other states,” Singh said.

At least one power project in Bengal — the NTPC plant in Katwa — has got delayed because of the government’s reluctance to acquire land. NTPC has been asked to buy an additional 550 acres directly.

In terms of attracting foreign and domestic investment for business development, the report titled Empowering India says Bengal lags behind states such as Maharashtra and Gujarat. While Maharashtra topped the list for foreign direct investment (FDI) between 1991 and 2011 with Rs 85,000 crore, Gujarat attracted the highest domestic investment (Rs 9.4 lakh crore) in the same period.

“Maharashtra and Tamil Nadu have always been at the forefront of industry. Gujarat has revved up its efforts in the past 10-15 years. Its improved macro economic performance is a direct result of proactive reforms,” said Singh.

He, however, lauded Bengal for introducing a single-window system for business clearance, including a common application form that cuts down the number of pages from 99 to seven, a move that finds mention in the report. “It is very encouraging to note that Bengal has taken steps to improve business confidence, such as creating a common application form for setting up industry,” Singh said.

Experts said the FDI inflow to India had increased by more than 250 times in the past 20 years. While it was $140 million in 1990, the FDI inflow now is $36 billion.

The report, however, mentions the regulatory environment and complex and time-consuming procedures to set up and run a business as some of the hurdles.

“Several states have started to take proactive steps to improve their business environment. However, there remains significant potential for further improvement, which we believe can be greatly aided by learning from one other,” Singh said.

India, with a growth rate of 8 per cent since 2001, is among the fastest-growing economies in the world, the report says.