Poor air link, red tape hurdles to investment in MP

  • Manoj Ahuja and Ranjan, Indore/Bhopal
  • Updated: Oct 18, 2016 10:55 IST
Red tape could remain the bugbear when Madhya Pradesh rolls out the welcome mat to about 3,500 delegates from 25 countries for a two-day global investors summit (GIS) from October 22. (File photo)

A multi-layered bureaucratic red tape and poor air connectivity are the two top obstacles preventing the kind of investment Madhya Pradesh has been pushing for since chief minister Shivraj Singh Chouhan’s visit to China five years ago.

Chouhan, the three-term BJP chief minister, promised a hassle-free environment for investors. But the bureaucracy’s attitude didn’t change as it continued to prefer a cumbersome multi-window system, alleged industrialists and experts.

Red tape could remain the bugbear when Madhya Pradesh rolls out the welcome mat to about 3,500 delegates from 25 countries for a two-day global investors summit (GIS) from October 22.

Past record from four such summits since 2007 has not been heartening. Actual investment has been low and of 2,357 memorandums of understanding (MoUs) signed, only 92 projects have been commissioned. Worse, 537 have been cancelled.

“Our minister concerned and bureaucrats show all the humility in their command to roll out the red carpet for investors and try to make them feel that if they are looking for the most industrialist-friendly country on earth,” remarked a dignitary from a foreign mission, who didn’t wish to be named. “On the contrary, in Madhya Pradesh, we confronted high-headed bureaucrats who appear to be doing a favour to us by sparing some of their time for us,” he said.

The bureaucracy’s attitude left him aghast, despite chief minister Chouhan’s proactive approach.

Industrialists feel the biggest impediments are departments within departments.

A case in point is getting clearances from several windows in the labour department —for such as health and safety, ESI, and provident fund — despite reforms in labour laws. A similar situation prevails in other departments.

“If you can get clearances in investor-friendly countries in 30 minutes, these will take at least two years in Madhya Pradesh,” said an industrialist, preferring to speak anonymously.

A single-window system for seamless and time-bound approval of paperwork of investors exists. Many processes have become transparent already. But the system is seldom implemented in letter and spirit.

CM asks industry dept officials to make single-window system more effective

Chouhan pulled up industry department officials last month and asked them to make the single-window system more effective. His anger is understandable. Industry body Assocham said in its August report that fresh investments dipped by 14% in the last fiscal.

To deflect criticism, the state government has been inviting “intention to invest” proposals online ahead of the summit and has finalised some big-ticket investment proposals. These include agreements with Micromax mobile phone-makers, ZF Steering Gear, Motherson Sumi, and Ramdev’s Patanjali, besides land allocation to Cadila Pharma.

“The ease of doing business has improved to some extent as many processes such as getting approvals and land allocations have become online, but nothing moves without meeting the officials concerned,” said Yogesh Mehta, the secretary of the state’s Association of Industry.

More improvements are needed to attract investors, admits minister

State industry minister Rajendra Shukla admitted as much, saying more improvements are needed in the single-window system to attract investors.

The managing director of the Madhya Pradesh Trade and Investment Facilitation Corporation Ltd, DP Ahuja, defended the state’s push as an investment destination.

“I feel that the ease of doing business in MP with easy accessibility of political establishment and peaceful nature of the state has made us the frontrunner and sought-after state for industrial investment. Availability of land with no disputes or litigation is our key strength. Further, in the last DIPP (department of industrial policy and promotion) ranking we were considered one of the best implementer of the single window.”

Most investors prefer Pithampur, where plots are limited

Another impediment has been land identified for industries. Madhya Pradesh has created a 25,000-hectare land bank for the industrial development, but most investors prefer Pithampur, where plots are limited. That is because most other places have infrastructure-related issues or are located in remote areas.

“Promises made to the industry at previous summits don’t reflect on the ground. Attracting new investments is fine, but existing problems should be addressed as well,” Dewas industry association president Ashok Khandelia said.



All the approvals and licenses will be issued within fixed time frame and action will be taken against officials responsible for delays.

The process of applying for approvals and licenses to be made online in all the major departments.

Drastic improvement in industrial infrastructure.

Rs 100-crore venture capital for start-ups.

Current status

Many processes made online but little action taken for delays.

Red tape still exists despite online processes.

Infrastructure, barring roads, remains poor

Scheme only partially successful

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