India Inc. Wants Freedom From Over Regulation
Prime Minister Narendra Modi expects India to break into the list of top-50 countries ranked for 'Ease of Doing Business' before 2022. In order to achieve this feat, India Inc. wants more active steps from both state and central government
The 'Ease of Doing Business' (EoDB) index ranks 190 countries based on the 10 indicators carrying equal weightage. Last year, India jumped to reach 100th position. In the next two years, India aims to find a spot amongst the top-50 countries in this list. Which means India needs to do a significant amount of work across all the measurable indicators. These indicators include increasing the tax base, improving cross-border trade, fine-tuning insolvency issues, improving electrification and credit ratings, easing norms on registration of properties, faster construction permits, easier contract enforcement among others. While the might of the central government ministries is fully behind the exercise, the Indian companies want more on-ground action. BW Businessworld spoke to a number of corporates across important sectors including telecommunications, automobile manufacturing, real estate developers and consumer goods companies to gauge their mood this Independence Day and seek their wish-list on how to further improve the EoDB from their perspective.
Telecom Sector wants ‘Freedom from Regulatory Bottlenecks’
A couple of months ago, in an internal presentation made to the minister, the Department of Telecommunications (DoT) said since 2014 the telecom sector has witnessed all-round growth where the teledensity has been enhanced to 93 per cent in March 2018 (from 75 per cent in 2014). The number of base trans-receiver stations have been more than doubled to 18 lakh in 2018 (7.9 lakh in 2014). And the spectrum auctions in 2015 and 2016 generated windfall gains for the exchequer to the tune of Rs 65,000 crore. Also, the sector received $6.1 billion in FDI in 2017-18 compared to $1.3 billion in 2015-16. While these are indeed noteworthy achievements, the private telecom operators want more. In a recently concluded meeting between the private operators and the DoT on ‘how to improve ease of doing business’ in the telecom sector, they listed out a number of steps that are urgently required from the government's side to improve the overall business environment. These include, providing a level-playing field to private operators in public projects; imposing lower levies on all public projects awarded to private operators; rationalising tender-conditions (turnover and prior experience) to encourage start-ups in the telecom sector; providing low-cost finance to entrepreneurs who are engaged to execute public projects amongst others. Established players like Vodafone and Cellular Operators Association of India (COAI) raised issues of telecom operators related to
high levies and low return, says Rajan S Mathews, Director General, COAI. "The draft National Digital Communications Policy 2018 proposes to address most of the telecom operators issue to achieve $100 billion investment but operators want to know by when it will be implemented," Mathews said. Amongst more specific steps, the telecom operators want the government to reduce the spectrum usage charge to 1 per cent, redefine Adjusted Gross Revenue as per TRAI recommendation, Fix GST at a uniform rate of 12 per cent, allow tax-free bonds, impose ‘Same-Service-Same-Rule for Over-the-Top (OTT) operators amongst others. Mathews said while OTT providers were able to compete fairly evenly with mobile operators’ voice services, there was a vast discrepancy in their expenditure as they are not obliged to pay licence fees or spectrum charges.
Real Estate Sector wants ‘Freedom from Tedious Approvals’
For several years, the real estate sector was plagued with reduced launches and muted demand specifically in the residential space. The rollout of RERA or the Real Estate Regulation and Development Act is getting stabilised and is expected to usher transparency in the real estate sector, further protecting the interest of home buyers in the longer run. Imposition of the Goods and Services Tax regime too usher in the winds of positive changes to the home buyers, signs of which were evident in the first half of 2017 when the residential sector received investments of over Rs 16,000 crore. Even the private equity investments crossed the $4 billion mark in 2017. What else is required now? Ashish R Puravankara, Managing Director, Puravankara Ltd, one of the leading listed developer says while the implementation of RERA and GST has brought to the industry a significant amount of stability, more is required. “The much awaited “Single Window Clearance”, be introduced to faster approvals and plan sanctions. This would lead to the average construction time cycle crashing and buyers getting their homes earlier. This policy in conjunction with RERA & GST will usher in a new era of accountability and transparency into the market which inadvertently would boost consumer sentiment and demand, untimely helping India Inc. with substantial GDP growth due to real estate and allied industries," says Puravankara. J C Sharma, Vice Chairman and Managing Director, SOBHA Limited has another take. He commends the measures taken by the Central government for the housing sector. “It is now time for the State Governments to rise to the occasion and bring in the required reforms to address land and approval related issues as well as ensure proper implementation of RERA, fulfilling the promise of ‘housing for all’ initiative,” says Sharma.
Automotive Sector wants Freedom from Complex Taxation
The automotive industry is a key sector contributing nearly 26 per cent to industry GDP and virtually 50 per cent to the manufacturing GDP in 2017. The government wants two key contributions going forward. One, faster adoption and manufacturing of hybrid and electric vehicles and second to jump to BS VI emission norms. Y K Koo, MD & CEO, Hyundai Motor India wants government support on the GST front. "We will require a reduction on GST for EV products from 12 percent to 5 percent, and an import-duty-cut on CKD (Completely Knocked Down) kits for electric vehicles. We need tax rationalization for sure," Koo says.
Rockman Industries, one of the largest manufacturers of alloy-wheels for the two-wheelers in India says the industry wants freedom from multi-step clearances. “There has been a significant, positive impetus to the auto sector as a result of the recent reforms, including GST. To further fuel this growth, there is a need to ease the land-acquisition process, initiate labour reforms, and stronger implementation of the one-window clearance policy. I believe the auto industry will get an additional boost with these transformative steps,” says Ujjwal Munjal, Managing Director, Rockman Industries.
Overall, India has already initiated many steps towards improving its future EoDB rankings. How fast the steps will translate into actions holds the key to improved rankings.