Despite high conversion rate, launching a new venture is hard in Maharashtra

State govt also faces challenge of dispersal of investment especially in less developed districts

The BJP-led government faces the twin challenge of retaining its top slot in the era of competitive federalism and also of increasing the speed of converting investment proposals into actual projects. This is despite Maharashtra being ranked first last month, among Indian states in the ease of doing business index, owned by the Asia Competitiveness Institute (ACI) of the Lee Kuan Yew School of Public Policy in Singapore. The state was also leading the others with a 43 per cent strike rate since 2005 in materialising investment.

In spite of the state government's move to reduce the number of approvals from 76 to 37 and introduce amendments to some labour laws, Maharashtra was ranked tenth in the World Bank’s latest ease-of-doing-business Index, two places lower than when Devendra Fadnavis took over as its chief minister.

Besides, according to the Department of Industrial Policy and Promotion (DIPP)'s recent data, the state is placed eleventh among all states on the implementation of the Centre’s 340-point reforms action plan. Though Maharashtra has achieved 89.59 per cent of the reforms expected at this stage, the state is far behind the top three performing states of Telangana, Andhra Pradesh and Gujarat.

This apart, senior ministers and bureaucrats, on a condition of anonimity, admit that the government will have to strive for dispersal of investment especially in less developed regions and not just limit it to the golden triangle consisting of Mumbai, Pune and Nashik and also around Aurangabad, the state's premier tourist attraction.

According to the state industries department, Maharashtra received 432 applications for mega projects worth Rs 2.7 lakh crore between 2005 and 2016. So far, 248 units have become operational with investments worth Rs 1.15 lakh crore.

On the other hand, during the much hyped Make In India week held in Feburary this year, Maharashtra signed 2,603 MoUs involving a total investment commitment of Rs 8.05 lakh crore and 300,000 jobs. However, the state industries department data reveals that a paltry Rs 0.54 crore out of the Rs 2.20 lakh crore of commitments made in the manufacturing sector are on track.

Ficci national executive committee member Sushil Jiwarajka says Maharashtra has been the leading industrialised state in the country for some time. However, he cautions this can lead to complacency, as many challenges are still around.

"It is important to benchmark the state against successful island countries such as Dubai, Hong Kong, Singapore. SMEs are the largest contributors to employment. There is no real 'single window' and starting a new venture is still daunting task. Revival of sick units by incentivizing the sale and transfer would go a long way in optimizing existing investments," Jiwarajka opines.

A senior official told Business Standard, "Global IT major Twinstar Industries has identified land in chief minister Devendra Fadnavis' home district, Nagpur, for its Rs 68,000 crore plan to set up an LCD manufacturing unit. But the company has yet to put the project implementation on the fast track. Foxconn's $5 billion investment continues to be a mirage. The electronics contract manufacturer is yet to file its plea with the state-run Maharashtra Industrial Development Corporation (MIDC) for land acquisition and also start the assembly of mobile phones at Mhape, Navi Mumbai.''

Jiwarajka suggests that the government should encourage adoption of clean energy, energy efficiency, water conservation, afforestation through re-calibration of incentives. Besides, encouraging clusters, R&D and skill development will ensure  sustainable competitiveness. "A regular dialogue with industry will go a big way in tweaking policy and taking corrective steps on a timely basis," he says.