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Thursday, Jul 18, 2002

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Improving the industrial climate

R. Balaji

The Pondicherry Government has taken a conscious decision to encourage the knowledge-based and other environmentally friendly industries. While the existing industries welcome this move, the old economy industries are disappointed that the focus on traditional avenues of investment has been lost and the conditions are deteriorating for the investors, particularly the medium and large-scale units. The Government will have to create an investor-friendly environment to hold on to existing investors and attract new ones, say industry representatives.

A recent report by an expert group has urged that to encourage private sector and stimulate market-based growth, the State will have to create institutional conditions conducive to investments. It will have to simplify procedures, create favourable regulations and revise existing laws. The industrial policy, which envisages smooth movement of paperwork and clearances, should translate into an effective one. It was up to the Government to expedite the paper work in accordance with the time schedules set forth in the policy, sensitise the bureaucracy to the new procedures and curtail discretionary powers of individual administrators.

Mr S. Ramesh, President (Corporate), Chemfab Alkalis Ltd, said that while the Government is focussing on environment-friendly industries, the traditional units should not be discouraged. The units contribute significantly to the economy of the Union Territory and conform to norms laid down by the authorities. For instance, Chemfab itself has obtained Occupation Health and Safety Management System certification OHSAS 18001:1999. The revenue to the Government from the Chemfab unit was around one crore rupees per month and it employs over 200 workers directly and an additional 300 indirectly. The unit has been around for nearly two decades, and like a number of other traditional industries, have long term plans and become a part of Pondicherry's economy. "Units like these will have to be encouraged," he said.

For instance, Chemfab was ready to set up a desalination plant with sufficient capacity to meet its own requirements and to supply, through the Government, water to other units. However, some of the land clearances for water intake were taking a long time. Paper work will have to be expedited and rules and regulations simplified. The Government is yet to come out with a policy on power, and the rail link was poor with a broad gauge link yet to come about. There has also not been any progress on the development of a local port, he said.

However, it is a matter of concern that there has been a significant reduction in interaction with industry representatives, said one investor. Pondicherry will have to emulate the example of neighbouring States in becoming truly investor friendly. There was no `green carpet' or fast track clearance, power tariff has been hiked by about 40 per cent in the last six months and quality power was not available and water shortage was a major problem, the investor said.

These issues will have to be sorted out to establish Pondicherry as an attractive investment destination and to consolidate its existing level of investments. The fiscal environment has proved disadvantageous with the shift towards an uniform floor rate of tax and the envisaged introduction of Value Added Tax. Further, Tamil Nadu has brought in a 12 per cent entry tax that has made the industrial units relatively uncompetitive. Under the circumstances, the Government will have to focus on encouraging the existing units in the Union Territory, Mr Ramesh said.

According to Mr K. Victor, Manager (Human Resources), Ace Glass Containers Ltd, of the Kolkata-based HNG group, industrial units based in the North had set up facilities largely due to the fiscal concessions and incentives. These included sales tax exemptions, income tax holidays, low power tariff and price preference. But with the proposed changes in the levy most of these would be lost to the industry. The Government will now have to focus on creating an investor friendly environment through increasing infrastructure facilities and the working conditions for the investors.

With the hike in power tariff steel industries and other continuous process units have been severely affected. Alternately, if the Government could take steps to increase availability of natural gas as fuel, it would reduce cost due to power. Natural gas was available in neighbouring areas like Cuddalore district, Tamil Nadu. Now the industries have to depend on costlier fuel like Furnace Oil, which has to be moved from Chennai, 160 km away. Local tankages were also not available, he said.

Raw material available locally has to be moved by road and the finished product has to be moved out. Road conditions could be improved and even within the industrial clusters, the road conditions were not up to par. Port facilities have not been upgraded and the rail link continues to be a metre gauge facility. All these could prove adverse to the interest of the industry.

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