India: Maharashtra Spearheads Policy Reforms To Facilitate Ease In Business Establishment

"My best compliments to Nexdigm for partnering with India's aspirational growth story. Maharashtra has always remained driving force of this growth story and will continue to do so. The state does not intend to rely upon legacy and historical achievements, but to strive and to explore pragmatic interventions. The article underpins the same. COVID pandemic has created entirely unprecedented business environment. It is pertinent to generate trust and confidence amongst investors. With these fresh initiatives, along with existing financial incentives, Maharashtra desires to achieve this. The policy stability, quality infrastructure, ingenious business leaders, abundant pool of skill workforce and conducive eco systems are some of the hallmarks to be noted here. We seek the support and dialogue with all stakeholders and I wish that this article is a sincere attempt in this mission."

Bhushan Gagrani
Principal Secretary
Urban Development Dept. Mumbai

Ranking 63rd on the World Bank's Ease of doing business scale, 2020, India has constantly been pushing its resources and infrastructure to make the nation an inviting, promoting, and supporting the economy for business growth. As another big step up the ladder, the Maharashtra state government recently announced two major reforms as a part of the Magnetic Maharashtra 2.0 program, which will further smoothen the process of setting up businesses in the state. With enablers like digital connectivity and synergy between departments, these reforms – Maha Parwana (Single permission) and Zero Parwana (Zero permission) aim to bring down the overall time spent by companies in regulatory procedures, to match pace with other South Asian nations.

Maha Parwana (Mega Permission) Scheme

This is the most recent initiative of the Government of Maharashtra to attract new FDI into the state. Under the proposed scheme, the new unit with a proposed investment of INR 50 Crore or more, intending to be set itself up in the country, will be given an assurance letter (single permission) called 'Maha Parwana' (mega permission). The mega permission will fast track the required industrial approvals, which would then be received within 1 - 7 days as opposed to the earlier timeline of six months or more for industries in Orange/ White/ Green categories (pollution categories).

The scheme assures that such industries would get all the 25 statutory permissions and clearances from other state departments within the prescribed time of 30 days. In case these industries don't get these clearances within the stipulated time, the permissions would be deemed cleared automatically. Once the mega permission is obtained, the Industries in this category (Orange/ White/ Green) will be allowed to start their operation instantly (can be as fast as 24 hours). Post they start operations, the industries will also be provided with a window of 2 years to get the remaining clearances.

For approvals, the companies need to apply at the Maharashtra Industry, Trade, and Investment Facilitation Cell (MAITRI), a single-window system. If there are no lacunae in the application, then the permission would be issued online within 48 hours.

The scheme also proposes to assign a Relationship Manager for companies depending on the size of the operation. The relationship manager will be a well-qualified officer who will act as a pseudo company employee to liaison with all the government offices on behalf of them.

Major Highlights

• Online Permission in just 24 hours to 7 days
• Statutory permissions / clearances within 30 days
• Minimal approval requirements for Red Category Industries
• Relationship Manager to handhold companies from day one

Zero Parwana (Zero Permission) Scheme

This scheme is another initiative of the Government of Maharashtra to attract investments into the states. Under the proposed scheme, the new unit intended to be set up in the state will be exempted from obtaining any government permissions for a period of 3 years. The scheme will allow the investors in Green & Orange Zones (select Industries include electronics, food processing, engineering, formulation, logistics, garment, and textile), and Red Zones (select Industries include chemical, bulk drug, paper, steel) to submit their proposals with necessary details on a special MIDC portal through self-certification. For investors in green and orange zone, the MIDC will issue consent to set up within 24 hours. In industries in the Red zone, where chemical, bulk drug, paper, steel industries are allowed, MIDC will issue consent after submission of self-certification by the investor in 15 days.

Major Highlights

• 3 year exemption from government permissions
• Online submission of proposal via self-certification
• • Approval / Consent: Within 24 Hours for Green / Orange Category
  • Within 15 days for Red Category

Other updates within Magnetic Maharashtra 2.0

As an attempt to keep India's long-term vision of growth alive amidst the covid19 lockdown, the Maharashtra government has facilitated business pacts with representatives of 12 countries, including the USA, China, Singapore, and South Korea on June 15, 2020. Despite the disruption of international business, this was achieved through a virtual meet of the delegates. This was one of the first virtual investor meetings organized by any state in India. Few highlights of the event were:

1. The Maharashtra government signed 12 MoUs with foreign and Indian companies with an investment worth INR 16,000 crore (details provided in the figure)
2. These include companies from engineering, Auto and spare parts manufacturing, IT, logistics, chemicals, and food processing sectors
3. Projects worth INR 60,000 are in the pipeline, and the state government is working to make this a reality soon
4. To attract pharmaceutical companies to set up base in the state and reinitiate the attractiveness to the sector in the state of Maharashtra, the government has decided to set up a single-window system for companies to obtain clearances and to address their grievances.
5. The infrastructural initiatives and regulatory reforms mentioned above are aimed at facilitating the setup and operations of these companies as a part of the Magnetic Maharashtra 2.0 initiative

Other Initiatives by Maharashtra Government

1. Infrastructure and Labour

For new investments in specialized sectors such as Hi-Tech engineering, Plug and Play plots with ready infrastructure (including built-up sheds, trunk infra, basic utilities, advanced utilities, etc.) will be made available. This will be complemented with flexible pricing models (leasing models) where the investors will have the option to choose between renting the plot, paying in installments, or opting for the traditional model of 95 years so that there is no capital stress at the beginning of the project. 40,000 hectares of land with ready-made shed facilities are reserved by MIDC in Mumbai, Pune, Nashik, Nagpur, and Aurangabad for foreign investors willing to invest in the state.

2. Labour Bureau

To address the shortage of skilled, semi-skilled, and unskilled workers, a labour bureau is proposed to be set up to maintain a database of the ready workforce and also to provide training as per Industrial requirements

3. Premium Reduction on FSI

Maharashtra Government has issued a notification to reduce the premium for fungible floor space index (FSI) to 40% from 60% or the ready reckoner rate for the industry for two years. The attempt is a bid to attract more investments post COVID 19 in the state of Maharashtra. Fungible FSI is an additional floor area developed by a builder over and above the FSI limit set by the state government.

With more than 30% of India's FDI in the state, these recent policy makeovers are a necessity to keep the oars running during the impending slowdown due to the pandemic. Utilizing the benefits of digitalization to its advantage, Maharashtra has shown the country that in unprecedented times like now, agility in policy reforms and resource optimization is a must for states as a survival strategy.

Figure: Signed MOUs

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.