Doing business in Karnataka is tough, say investors

Last Updated: Wed, Oct 02, 2013 10:39 hrs

Bangalore: Most investors and entrepreneurs find doing business in Karnataka an uphill task due to hurdles faced in land acquisition, poor road connectivity, inadequate power and slow rate of approvals, reveals a survey.

"Over 70 percent of investors and entrepreneurs feel the overall ease of doing business in the state difficult due to various factors, especially the land acquisition process and road connectivity," the survey conducted recently by the Associated Chambers of Commerce & Industry (Assocham) said.

Though communication infrastructure and availability of skilled workforce have improved over the years, stakeholders bemoan that infrastructure development has not kept pace with demand for rapid industrial growth across the state.

"Apart from providing quality roads connecting state and national highways, the state government has to improve other modes of transport such as rail, air and port for investors to make optimal use of the natural resources and human capital available," Assocham southern regional council co-chairman J. Crasta told IANS here.

Noting that the policy framework and taxation structure need to be fine-tuned to make the state more investor-friendly, Crasta said the approval process had to be put on fast track through a single-window agency to minimise delays in implementing projects.

"About 1,000 agreements were signed by the state government at the two Global Investors' Meet (GIM) held in 2012 and 2010, attracting investments worth $10-12 billion from across the country and overseas. Political instability, bureaucratic delays and infrastructure deficit have, however, held up their implementation," Crasta recalled.

Based on the survey findings, the trade body has petitioned the new government in the state with a slew of recommendations on land acquisition for the industrial sector keeping in view the amendments to the relevant law passed by parliament last week.

"We have represented to the government to ensure that the cost of land is fair and just for both parties (buyer and seller) and the allotment should be made at the earliest to kick-start the projects," Crasta said.

Other recommendations include speedy approvals through a single window and in a transparent manner; improve connectivity to major consumer markets like Chennai, Hyderabad and Mumbai and special incentives to make best use of Mangalore port.

"We have also sought of the state government in building human capital by setting up vocational training centres in industrial clusters and promoting entrepreneurship through skill development," Crasta pointed out.

State additional chief secretary M.N. Vidyashankar, however, maintained that the conversion rate of business proposals received during the GIMs was better than the national average.

"The conversion ratio of agreements signed at the GIMs is around 46 percent in the state as against the national average of 30 percent," Vidyashankar told IANS here.

Assocham southern region task force chairman and Jindal Steels chief executive Vinod Nowal said there was an urgent need to tweak the state's policies to attract more investments in the manufacturing sector, which creates more direct and indirect jobs across the chain.

"There is a misconception that industry is rolling in profits, when, in fact, it is under severe stress due to various factors such as economic slowdown, inadequate investments, infrastructure deficit, policy paralysis, high interest rate and inflation," Nowal observed.

Admitting that the ban on mining iron ore in the state following the multi-crore mining scam had severely affected the industrial sector, especially manufacturing, Nowal said about 50 percent of sponge iron units have shut down in the state due to shortage of raw material (iron ore).

"The remaining units are operating at 30-70 percent of their capacity. As the state government had failed to allot a single captive iron ore mine to any industry, all the mines are with merchant miners. The entire industry is suffering due to ban on mining in the state," Nowal lamented.

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