Report on Reforming Investment Approval & Implementation

Transcript Report on Reforming Investment Approval & Implementation

Release of the Report on ‘Reforming Investment Approval & Implementation Procedures, Part-II’

(Downstream Issues - Implementation and Operation) By Shri Arun Shourie Minister of Commerce & Industry, Disinvestment & Development of North Eastern Region 17.12.2002

‘….We may have done away with the License Quota Raj but the Inspector Raj still survives. Many entrepreneurs- especially those in the small and medium sectors- are routinely harassed and humiliated under the Inspector Raj. This must end….’ Hon’ble Prime Minister In a recent speech 2

Background

  In a major initiative, a Committee was set up to suggest simplification in procedures for investment approval and implementation of projects; The Report is in two parts:   Part-I: Upstream issues presented in May 2002; , i.e., from the stage of conceptualization of projects till investment approval; Part-II: Downstream issues 2002.

, i.e. from the stage of investment decision till implementation of projects and their operational phase; presented in November 3

The Process

   A Sub-Group constituted for looking into downstream issues; Extensive consultations and interactions with Ministries & Business Organizations.

The Sub-Group also referred to:   Case studies and synthesis study commissioned by PMO; Base papers by Ministries/Departments;   Other studies and reports; Special Acts and State level initiatives;  (Annex-III refers) 4

Major Bottlenecks Identified in Implementation and Operation of Projects

     Plethora of laws regulate projects in various sectors; Cumbersome procedures prescribed under various laws/rules/ regulations, etc.; Lack of information on procedural requirements; Inadequate transparency in administration of approval; Multiplicity of agencies responsible for approval administration.

Major Bottlenecks Identified in Implementation and Operation of Projects (contd.)

   Regulatory framework and ground level hassles; Handling of approvals at State level; Greater difficulties encountered in :  Environment and forest clearances;   Land acquisition; Central Electricity Authority (CEA) clearance.

Clearances from Local authorities a greater problem than Central and State level

Summary of

Recommendations

Re-engineering of Regulatory Processes

 Re-engineering of regulatory processes necessary to:       Consolidate extant laws; simplify procedures prescribed therein; Prescribe and adhere to time limits; Develop trigger mechanisms; Prioritise regulatory reforms; Make procedures amenable to IT mode; Suggest generic structure for re-engineering of processes at State level.

Guiding Principles

 Each approval requirement to be examined and re-engineered in the following order:    Self-regulation; automatic approval upon filing documents. (‘blinking traffic lights’) Professional outsourcing. (‘stop-go traffic lights’) Prior case-by-case regulation by public agency. (‘policeman regulating traffic’) 9

Other Principles

    Specific public purpose to be served by each approval; Extent of details required to be presented along with application; Defined time-limits for each stage of processing; Approval/renewal requirement to keep pace with the technological and economic environment.

Re-engineering of Regulatory Processes How

   Set up Re-engineering groups in select Ministries/Departments:  Labour, Environment & Forests, Power, P&NG, Agriculture, DIPP, to begin with.

Secretary of concerned Ministry/ Department to head this group; Departments/Agencies/Stakeholders, involved in the approval process, to be associated.

Re-engineering of Regulatory Processes – The road map

   Re-engineering Group in each Ministry to complete re-engineering of processes within six months and review of extant laws within one year; Committee of Secretaries (COS) to review progress every month; Ministries/Departments to include position paper on progress of re-engineering in their monthly progress to CCER.

Other Recommendations

   Dispense with the need of publication of notices in official gazette; Financial limits as also sectors requiring environmental clearance to be made co terminus with Plan period , to be reviewed every five years. Expeditious disciplinary proceedings and exemplary punishment in proven cases of misuse of power, leading to delays in approvals; 13

Investment Facilitation

     Industrial Investment Facilitation Board (IIFB) to help resolve difficulties faced during implementation; IIFB to periodically review implementation of projects with proposed investment of Rs. 100 crores and above; Any investor can approach IIFB irrespective of investment limits; FIIA will continue its focus on foreign investors; Facilitation Teams in Ministries for follow up of projects.

Dismantling ‘Inspector Raj’

      Reporting, record keeping, licensing and inspection requirements to be reviewed during re engineering of regulatory processes; Minimize the need for investors to approach regulatory authorities for permissions; Mandatory reporting only for cases requiring prior case-by-case regulation by public agencies; Allow maintenance of common registers on labour related issues by enterprises employing up to 500 persons (present limit 19); Combine and outsource inspections; Greater use of IT in reporting/record keeping.

Role of States

     Responsible for implementation of most legislations, administration of approvals; Empowering the ‘Single Window’ vital along with re-engineering of regulatory processes; Some states have taken initiatives to reduce delays; Information on ‘Best Practices’; ‘Performance of States’ to be disseminated; Incentivise the States.

State Level Recommendations

     Committee under Secretary (Industry) to finalize schedule for joint inspections; Outsource authority to approve building plans; Introduce ‘Composite Application Forms’; Task Force to coordinate shifting of utilities; Periodic interactions with investors on problem solving and procedural simplifications.

Action Plan for Greater Use of IT

   Greater use of IT in approval administration with a time bound action plan for electronically accepting and processing applications, inter linking departments, etc.; Dissemination of information on procedural and documentary requirements, time frame, agencies responsible, forms in downloadable formats, etc.; Status of pending applications to be displayed at website with reasons for delays.

Capacity Building Needs

    Capacity building initiatives needed, both at Central and State level; States will require assistance for the actual process of re-engineering; Training on modern management practices and use of IT.

Assistance of Multilateral Financial Institutions may be availed. 19

Implementation Status

   Government has in November 2002 directed, to begin with, some of the relevant Ministries/ Departments, to implement the report; Progress of implementation to be reviewed by Cabinet Secretary in February 2003; Action already underway in the Department of Industrial Policy & Promotion .