Delhi, the epicentre of India, with its multiple facets has what it takes to become the most prosperous state in the country. The Dollar Business caught up with Satyendar Jain, Cabinet Minister of Industries, Health, Home, PWD & Power, Government of Delhi, to know more about how he plans to create a better state for businesses and industries in particular, and residents of the national capital in general.

Interview By Ahmad Shariq Khan | October 2016 Issue | The Dollar Business

TDB: It’s been two years since you took charge as a Cabinet Minister in the Government of Delhi? How has the journey been so far?

Satyendar Jain (SJ): It has been a satisfying journey. In many ways, Delhi is different from other Indian states, which makes it even more interesting.

TDB: When it comes to ease of doing business, what inherent strengths can Delhi leverage on? What lessons do you wish to take from other global capitals?

SJ: Being home to the Union Government of the country, and Embassies and High Commissions of other countries, Delhi is the epicentre of policy creation, culture and literature. It is one of the fastest growing states in India. Our economy is dominated by services sector, with a 87.48% share in gross state domestic product (GSDP), followed by industry and agriculture. At current prices, GSDP of Delhi is estimated at Rs.5,58,745 crore in FY2016, up from Rs.4,94,460 crore in FY2015, indicating a growth of 13%.
The literacy rate of Delhi is 86% and it has an abundant supply of skilled and qualified workforce, ideal for a whole range of industries such as banking, financial services and insurance (BFSI), agri and processed food, construction and real estate, IT and ITeS, and tourism. These make the region matchless in terms of its industrial prowess. In recent times, we have initiated many endeavours and schemes to help bolster a pro-business ecosystem within the region. And with regards to lessons to be taken from global capitals, we have miles to go, but we are constantly learning and imbibing the best practices from them.

TDB: Your government has decided to do away with MCD trade licence and the requirement of consent from pollution controlling body. What is your expectation from this change of rules and how will it help the industry?

SJ: We believe that these changes will bring in a huge relief to city-based small industries. Pollution checks had turned out to be a major stumbling block. We saw that the requirement of the No Objection Certificate was neither aiding environment nor business. And in the current situation, while green laws are being continuously violated, our traders have been facing hurdles while doing businesses in the region. The rule, however, will apply only to industries that fall in the green or orange or yellow zones, which are considered non-polluting or have negligible pollution.

TDB: Delhi is home to many young entrepreneurs and start-ups. How does your ministry plan to promote the start-up culture in the state? 

SJ: The start-up culture is integral to Delhi’s overall business culture. I believe that NCR has always acted as a springboard for many start-ups that have made it big, both across national frontiers and otherwise. In the first six months of 2016, start-ups in NCR have attracted almost twice the amount of investments raised by those in India’s technology capital, Bengaluru. According to data from research firm, Tracxn, so far Delhi NCR firms account for more than half of the total $1.8 billion raised by Indian start-ups in the first six months of 2016. Today, 20% of India’s most valuable software companies are headquartered in NCR, not to talk about international companies such as Google, Microsoft and IBM. I believe people who have worked for these conglomerates have acquired the expertise and experience to kick-start businesses.
We are also working towards launching a ‘Skills University’ for vocational training and skills development – and in the last budget, Rs.310 crore has been earmarked for the same. Indeed, Delhi is poised to become the biggest start-up hub after Bengaluru. We have a single-window business facilitating mechanism that helps in creating a robust and efficient business environment in the state. And we are committed to offering a more enabling business ecosystem.

TDB: How do you see the incentives, duty structure and tax deductions currently available to businesses in Delhi? Are you proposing any changes? 

SJ: My proposals are keeping in view of the distributive character of Delhi as an important centre of trade and the promises that were made to the people of Delhi for bringing in transparency and predictability in tax administration. This government believes in providing a stable tax regime. We are not tinkering with the tax rates, barring a few clarifications to remove ambiguity in case of a few select items. We do not want to alter tax rates without due thought and analysis. We are against playing to the gallery to keep alive the tradition that finance ministers have historically raised or reduced taxes on items in the budget. We wish to collect and mine data, do data analysis, have mutli-level consultations and studies before proposing modifications in the tax regime. We are also moving towards a uniform tax regime across the northern states so as to minimise the opportunities for tax arbitrage and eliminate corrupt practices. In this context, we have had successful discussions with the finance ministers of our neighbouring states, who expressed the same desire. The VAT rationalisation proposals that this government will recommend will be in line with the principle of uniformity in tax rates across neighbouring states. Because of transparent, honest, efficient and effective governance, the overall revenue for FY2016 has grown at an unprecedented rate of 17% over FY2015.

TDB: And how do you plan to streamline or reform the VAT administration structure?

SJ: VAT constitutes nearly 65% of Delhi’s total tax revenue. However, multiple entries on some items create ambiguity and confusion, which cause problems for traders. With the last budget, we have attempted to simplify taxation by bringing them into one entry. And this time, utmost encouragement for voluntary compliance of tax has been attempted for a strong partnership with the trading community. Most of the industrial inputs are taxed at 5%, under Entry No. 84 of the Third Schedule of the Delhi Value Added Tax Act, 2004 – and the VAT rate on wood and timber has been reduced from existing 12.5% to 5%.
We are committed to simplifying the VAT structure to make it easier for the trader community to comply with Delhi VAT Rules and Regulations. The compliance mechanism will also be made business friendly and less expensive. In fact, the rationalisation exercise by the Delhi Government will be exhaustive, in terms of compliance and process, and bring in certainty in interpretation of definition of goods. The government is also confident of improved tax collection by putting an end to the ‘Raid Raj’, seeking cooperation from the trader community, creating awareness campaigns among people, effectively using systems and processes for forward and backward linkages of trade information, and preventing tax fraud by plugging the loopholes. The ‘Inspector Raj’ has been done away with and the point of levy of excise duty has been shifted from transport permit level to import permit level, which has resulted in a 31% increase in excise revenue collection in FY2016.

TDB: Tell us about your endeavours to empower MSMEs in your state?

SJ: We are committed to abolishing the ‘Inspector Raj’ in the next one year for the benefit of the MSME sector in NCR. This was reiterated last year, at the second edition of the MSME Summit – going forward, we vow to work for it at a faster pace. We are also looking at ensuring single-window clearances under a single agency in Delhi – the Delhi State Industrial and Infrastructure Development Corporation (DSIIDC) is being looked at to be the nodal agency for this purpose. This will do away with the need for multiple approvals.
The work on regularisation of 29 industrial areas and 22 non-confirming industrial areas has already started. Also, together with the MSME Development Institute, Ministry of MSME and Confederation of Indian Industry (CII), we are soon going to launch a MSME Facilitation Cell in Delhi with a focus to resolve the grievances and issues of the industry in the state. We are also exploring different funding avenues for kick-starting a culture of entrepreneurship in Delhi – and we are already in talks with different financial institutions like the Bank of Baroda, Syndicate Bank, Allahabad Bank, SIDBI, etc., for the same.

TDB: Union Minister Nitin Gadkari recently said that his ministry is in talks with your state government to set up a logistics park, which will take nearly 50% of vehicles off Delhi roads. How has been the progress so far? 

SJ: The current logistics cost needs to be cut in order to boost business in the country. So, this is a Centre-State project of Rs.30,000 crore. The Centre has prepared a roadmap for setting up 15 multi-modal logistics parks around major cities, which have a share of about 40% of the country’s road freight movement. The project aims to make transport of cargo faster, reduce cost and improve the supply chain. Under the proposed plan, freight from production area will be shipped to nearby logistics parks, where it will be aggregated and transported to a logistics park near the consumption zone on a larger vehicle. Freight arriving at the destination logistics park will be disaggregated and distributed to the consumption zones inside the city.