The Prime Minister, Dr. Manmohan Singh, had constituted an Investment
Commission under the Chairmanship of Shri Ratan Tata to recommend policies
that the Government can take up to step up the rate of investment in India.
The Commission has presented a report to the Prime Minister, here today.
The Commission has identified the following as major impediments to
higher investment in India.
Investment restrictions and/or
entry route barriers in several sectors of significant investment
potential/investor interest.
Absence of long-term policies,
non-implementation/reversal of policy and breach of contract.
Lack of level playing field –
especially in sectors with PSU dominance.
Inflexible labour laws.
Many agencies engaged in doing the
same or similar activities relating to FDI.
Bureaucratic delays, discretionary
interpretation, vested interest, bias and subjective practices (In particular,
approvals from Ministry of Environment & Forests seen as a major impediment
in terms of inordinate delay).
Centre-State divergence on
investment related policies.
High cost of entry, transactions
and exit; ineffective dispute resolution.
Poor infrastructure.
Priority Sectors are not clearly
identified/specified.
Based on the investment goals and
the identified impediments, a set of broad recommendations have been made which
could facilitate and improve the investment climate. These are listed below:
Remove/reduce restrictions on
sector caps and entry route on all sectors other than those considered
“strategic”. Permit “automatic route” for all investments within the sector
cap.
Provide labour flexibility by
removing the requirement of State Government approval from Chapter V-B and
permitting Contract Labour in all areas.
Promote SEZs for key sectors.
Redefine norms on the basis of scale, investment quantum/levels and sector
focus. Separate the Developer of the SEZ from the Occupants.
Provide a level playing field in
sectors with PSU dominance – establish an Independent Central Regulatory
Commission headed by a Chief Commissioner appointed by the President or the
Prime Minister with independent Regulators for each regulated sector.
Provide long term visibility and
consistency of policy.
Improve business environment –
reduce number of procedures and approvals; make all approvals time bound and
non-discretionary.
Eliminate scope for discretionary
interpretation to stop corruption; update key laws and statutes using Study
Groups or Committees (with Government and Industry participation) to reflect
this.
Establish effective mechanisms to
resolve centre-state issues – establish an Empowered Committee framework (as
done for VAT implementation) for implementation of key policies that require
Centre-State cooperation such as Power Sector reform, Labour law reform, Urban
land reforms (including (ULC Act), APMC amendment.
Other Recommendations
Create a special high level fast
track mechanism for priority sector projects.
Enhance availability of skilled
manpower for sectors like Biotechnology, Automotive Engineering, Textile
Engineering, IT – establish new private educational institutes with
international collaborators.
Facilitate upgradation of Urban
infrastructure by having a directly elected Mayor in key cities – as is the
case with major cities in China and the USA.
Establish a single point contact
at the Centre to implement policies and procedures to enhance investment as
well as facilitate high value projects across Ministries and Departments.
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YSR/DS/LV
(Release ID :16061)