How Gujarat cracked the code

Industry favours lesser number of procedures in setting businesses

Reforms in land acquisition and an empowered bureaucracy have played a key role in building Gujarat as one of the preferred business destinations in the country. As early as in 2007, the state government overhauled the process of acquiring land.

Earlier, farmers had to seek a non-agriculture (NA) certificate before selling land. "This used to slow down the process for industry to get land," said a retired state government official, who was involved in the process. Land reforms allowed industry to first purchase the land privately, and then get the NA certificate. "This addressed harassment by officers," the official added.

Industry and government representatives feel that the time taken to set up a new business in the state has roughly come down by 25-30 per cent, following the reforms. Further, an empowered bureaucracy facilitated quick decision-making, especially in the last five years. So much so that the contribution of Gujarat's bureaucracy in promoting industry became a benchmark for administrators in other states.

The international exposure that the bureaucracy gained through events like Vibrant Gujarat also played its part. "For the first time, Gujarat's bureaucracy learnt how to deal with global players. Our counterparts in other states are surprised to see our interaction with global players," a senior state government official, who deals with industries, said.

While other state governments are working to create a single-window clearance system, Gujarat has moved on. "Today, single-window clearance has no relevance since every department and authority is functioning efficiently online," a state official said quite bluntly. Increased inter-departmental communication and better simultaneous tracking of processes by different departments are what helped build confidence among investors, both domestic and international.

"The bureaucracy comes together to work as a team, which has resulted in speedy execution," notes Kulin Vyas, management consultant, and member of MSME committees in several industry associations. According to Pankaj Kotak, head-business development (Gujarat) at K Raheja Corp, which has set up an IT SEZ project, and several retail ventures in the state, senior bureaucrats are easily available for help and guidance.

"The rules and regulations are to a large extent well-defined, which leaves small room for miscommunication and misunderstanding," Kotak said. However it's not all intangibles. Land reforms and energising the bureaucracy apart, the state has been investing a lot in building infrastructure. Making power and water available have had a tremendous impact on industry, an official said.

One dominant viewpoint among businesses, however, is that the bureaucracy has focused on large industries. According to Vyas, it is time for the government turned its attention to SMEs.

Industry is also in favour of lesser number of procedures in setting up and running of businesses, and improvement in communication from regulatory bodies when it comes to clearances. Kotak prefers more training for officials who deal with industry regularly. "The government has already prescribed a set of procedures, but at times, the person dealing from the government's side may not be fully aware of it," he added.