Tamil Nadu dropped six places to rank 18, the lowest among developed States, in the business reforms ranking for 2016 released by the Department of Industrial Policy and Promotion (DIPP) and the World Bank on Monday.
The ranking comes as a setback to Tamil Nadu which is the most industrialised State in the country housing the maximum number of factories (37,378 units), with most leading automobile manufacturers having a manufacturing presence in the State. Last week, the World Bank’s Ease of Doing Business report ranked Chennai 15 among 17 cities.
The DIPP-World Bank exercise studies the extent to which States have implemented DIPP’s 340-point Business Reform Action Plan (BRAP) set out for States/Union Territories, covering the period July 1, 2015 to June 30, 2016.
The BRAP includes recommendations for reforms on 58 regulatory processes, policies, practices or procedures spread across 10 reform areas spanning the lifecycle of a typical business.
The report said Tamil Nadu, Himachal Pradesh and Delhi need to accelerate the business reform process.
Of the 340 points on business reforms, the State had implemented 211 points (implementation rate of 62.80 per cent). The State has implemented reforms in terms of a single-window system, availability of land, ease of getting construction permits and environmental registrations. Tamil Nadu did not implement 125 points suggested for business reforms, including easy tax filing systems, while the rest four were not applicable to the State.
The rankings also do not augur well for the investment climate in the State, especially when it is facing stiff competition from its neighbours – Andhra Pradesh and Telangana – that have topped the rankings. Post the split, Andhra Pradesh and Telangana are vying with each other to woo investors with a lot of incentives.
Last year, Tamil Nadu hosted its first-ever global investors’ meet, which attracted investment commitments to the tune of Rs. 2.42 lakh crore across 98 projects. According to the government, 64 projects are at various stages of implementation.
‘Time to make amends’
Industry sources in the State said the current ranking was a worrying sign and the State needs to redouble its efforts.
“The industrial climate in the State has been dull in the last one-and-a-half-years. There is no interaction with the government. The government has to call industries at frequent intervals and find out what needs to be done; only then reforms can happen,” Rafeeque Ahmed, Chairman, Council for Leather Exports, said.
“The State is moving slowly in terms of industrial development and reforms. But the study might not be the correct indicator and is just one aspect of the whole picture,” said a senior official from an industry lobby.
In the IT sector also, the State seems to be falling behind. “Tamil Nadu has the best talent pool and the maximum number of engineering colleges, but still we are not able to make it to the number one slot in this sector. A few years back, we were in second position after Karnataka; now, we have been pushed to the fourth slot. We don’t have an updated IT policy. Technology has changed in the last few years but the State IT policy remains the same,” said a source from the IT industry.
Tier II towns like Coimbatore have a huge potential that is yet to be exploited. The State has not done enough branding and not created visibility for the IT industry, which is the need of the hour, he added.
