Author of the article here. Do ask me if you have any questions.
The Indian gov't is typically reactive. However, EoBB is a huge priority for the current administration. The Department for Industrial Policy and Promotion (DIPP) [renamed to Department of Promotion for Industry and Internal Trade] is overseeing the EODB project.
Your mileage may be limited now because the party in power in Maharashtra is no longer the same as the party in power at the Centre... There is limited pressure they can apply.
Also they have done wonderful work in Gujarat by making this process completely online.
And land is a stage subject.
Therefore, this write-up is not targeted at the current central government but at the wrong doings of past 70 years and why India still lags.
Does it make a difference if same party is in power in center and state?
The general consensus I see is that it doesn’t make such a big difference (everyone compares to Gujarat which is reaping the benefits of good admin over last 20 years). Current states have a lot of rot to remove and any EoDB efforts won’t be apparent. Is this a correct understanding of the situation?
Also, India has a unique federal structure where states can override central laws.
There are some powers in the shared list , where the state can specify its own rules etc.
Over time it’s trending towards union control for example removing VAT and replacing with GST etc
Before the electoral bonds, all political funding happened through cash. Which was more non traceable than the current electoral bonds.
But yes the ideology of the party matters.
Central government is pro business and they have proved it in Gujarat by making it a lot easier to NA land in Gujarat.
State Government (esp. INC) is communist and anti-free-market anti-business party which seeks to create as many hurdles as possible.
Delhi has notably had lot of challenges because of different governments , but Delhi administration is not typical state government, it is like Washington DC , there are special provisions as it is the capital region
- How much would you expect to spend if you were to pay all the bribes? Are you unable to afford them, or is this more of a moral issue?
- Is there any reason why you are effectively purchasing agricultural land and rezoning it to industrial land, rather than buying existing industrial land? What is your plan if you cannot obtain all the necessary NOCs?
- Is there any utility/road/rail access to your land? If not, have you looked into how much it will cost to build the necessary infrastructure?
- Is the area at risk for natural disasters (especially flooding)?
There are agents who provide the "NA service". They quoted me 10,00,000 (10 Lakh or 1 Million Rupees) excluding all the legal payments to government.
All land is Agricultural Land by default. Industrial land banks (created by MIDC are few and far and our land is near a MIDC industrial land bank which is out of stock, meaning completely bought out)
Yes there is road access.
No. the land is almost barren land. Far away from flooding. So no problem with natural disasters.
Maybe Shenzhen? But that's hardly agricultural anymore from what I've heard. I imagine you'll find few, and I suspect the infrastructure will be very poor in those places.
If you want no red tape, you need to go somewhere desperate for your investment enough to waive environmental, social and health protections, like parts of Sub Saharan Africa.
And in fact this is what many Indian and Chinese companies do. Just be ready to line the pocket of the local strongman.
The alternative is to pay public servants well and charge a very large fee for the permits to finance that. Then, deal corruption on top of that without impunity.
However, the culture itself has to support that. The culture of demanding bribes for documents shows that there's a parallel market in play to which the bureaucratic system has been subverted.
Apparently not well enough. When it's a few here and there you can argue that it's a character issue. When it's pervasive, there's a problem with the incentive structure.
I also wouldn't be so quick to condemn the culture, and I'm not so sure you can disentangle the cultural from the economic anyway.
I've found your twitter and I can share my contact with you that way (I don't think HN has private messages). Otherwise, my email is my HN username@gmail.com
Thanks for laying all of this out. Hopefully some politicians will take notice.
It sounds like it's basically impossible to run a business without paying bribes. I imagine even if you got through the NA certificate process, they would come around later for "inspections."
It would require a total of ~15,000$ USD
https://www.investopedia.com/terms/f/foreign-corrupt-practic...
(Although given this account from presumably an Indian citizen, I can't imagine in any way recommending a non-local attempting this)
If you have an official who is refusing to perform their job, or taking inordinately long about doing it, then it's legal to pay them to do it. As long as you're not influencing their actual decision making process, i.e. causing them to overlook actual legal deficiencies in your paperwork, then it is legal.
It's called the facilitation payment exception to FCPA. Obviously one intending to make such a payment would be well advised to discuss with their lawyer to make sure it is indeed within the scope of the exception.
Come on. It's obvious that the "lawyer" (or agent as mentioned in the article) is paying the fees and you aren't even aware of the process unless go to the department directly and notice the lack of willingness to process your permit.
I agree that this process should in be a lot simpler but I wonder what the outcome would've been if you were willing to hire a broker and pay some bribes to get it done. Of course for you the actual manufacturing might be a secondary goal with the primary one being changing the process itself, but if someone just wants to start doing business, do you know how much it'd cost in terms of broker fees, bribes etc. to get everything setup?
Is your goal to open a factory, or is it reform? I'm glad if someone's trying to reform all these useless ideas and everything, but it doesn't exactly make sense that you couple basically two fundamentally different problems though. If you honestly want to get into manufacturing in India with any real practical timelines, you better get used to paying bribes as cost of doing business. If your idea cannot work with the extra cost of 10 MBP level bribes, better don't bother at all right?
An anecdote I have of relevance: I used to draft letters for my father in the 90s for his company. Once I mistyped 1997 as 1979 in a letter. The licensing authority fined his company Rs. 3,00,000 for that mistake. That was 10% of his annual revenue back then. That's because he had negotiated with the person a month back to not increase his bribe. And hence the agency used this as leverage to get a higher bribe.
Point is, you are trying to fight such a fundamental force and way of life in India, I will not bet money that you will succeed in this route, though I sincerely wish you would. Even if you do everything right, they will invent a problem because now you've hurt their ego on top of their pocket. Hell, if you actually start succeeding you should probably start worrying about personal safety as well (I would if I were you), because I doubt India is actually developed enough to ignore the worst case scenarios you can imagine in a corrupt society like this.
I’m curious if India has special zones created the way China did for Shenzhen, for example, and if so the process of applying there would be any easier/more efficient?
And as far I can see the central government is really committed to making a difference on the ground as they have done in states administered by them.
There are special zones in India but lot lot less than China or the USA. And all the land in that land bank is sold out where I want to start the unit. (Sangli Niraj Kupwad MIDC)
this is the problem in india. Should one know someone influential to get things done honestly and ethically?
It makes sense right? Why invest capital when you risk losing the value of your investment due to arbitrary bureaucratic hurdles like the ones faced by OP? This is the strategy Relience used in the past.
My point was that an individual should be able to conduct his business without someone handholding ( who is not stakeholder or partner or employee )
Will let you know.
I wish you best of luck for your endeavor, and following you on twitter.
- forcing their hand with public shaming
- forcing their hand with legal measures (looks like you're doing that)
- changing things by getting officials into office that _want_ to change things
P.S respect for hanging there this long already!
But the problem is everyone knows about this and majority of people think of this is good because they have been brainwashed by communistic ideology and they think that business people are bad and evil and hence they should be controlled and suppressed by all possible means.
Did you think of setting up the same in Gujarat since you had to runaround so much in Sangli?
But the whole point of me starting this unit is because I "want" to make it happen in India and not import from China. There is a lot of unemployment in India and hopefully, I want to help a bit.