Having associated with the GIM-2022 that concluded recently, Federation of Karnataka Chamber of Commerce & Industry (FKCCI) president BV Gopal Reddy, speaking with a team of editors and staff from The New Sunday Express, expressed confidence that consistency and fine-tuning of policies by the Karnataka government help the state be a better investment destination. He suggests that Bengaluru be made the second financial capital of India to compete with Mumbai, which is in the top position. Besides, he also speaks about issues related to industries, policy changes in power tariff and uniform tax collection at gram panchayats that have to be addressed. Excerpts.
How do you look at Rs 10 lakh crore worth of investment proposals that the state attracted during GIM?
Chief Minister Basavaraj Bommai and Industries Minister Murugesh Nirani are proactive. Earlier, it used to be just signing of MoUs, but now about Rs 2.83 lakh crore of investment proposals have already been cleared by the government. Huge investments have come in the renewable energy sector. We at FKCCI are also promoting “Beyond Bengaluru”, which is also the government’s slogan, to improve tier 2 and 3 cities. The FMCG cluster is coming up in Hubballi-Dharwad. Investments have come into Karnataka because of the climate, hierarchy-less atmosphere and people’s attitude. We are helping investors get all NoCs in a time-bound manner. Investors will be happy to get clearances without any hindrance and on a fast-track mode.
How confident are you of realising the remaining investments and what are the challenges before the government?
The power tariff is the main problem as every other day, some change or enhancement happens. Let them (ESCOMs) fix a one-time tariff for one or two years. Policy changes for every three to six months make it difficult for MSMEs. After Covid, all metal prices went up and it was difficult for MSMEs to survive in this situation. Now, everything is settled and consistency in policies too is helping.
What is the scenario post-Covid?
Every industry is picking up and the economy too is upbeat. A lot of investments have come here because Karnataka is proactive. Policies, such as an amendment to 79 A and 79 B (of Karnataka Land Reforms Act) that any industry can purchase land and can start their own business within six months, have helped. There was little labour problem earlier, but migrants are coming back now. We have learnt a lot. Because of the labour shortage, industries went further with mechanisation. Now, instead of 10 labourers, we can work with five.
The Karnataka government is proposing reservations for Kannadigas. Is it difficult to implement?
Whatever the policy, the skilled labour force should be exempted from this. The industry can’t train people from the start till the end. We have already suggested it to the government and hope policy makers will look into it when they pass the Bill in the Assembly.
Telangana and Gujarat too are inviting the industries …
Each state will concentrate only on some sectors and not all. In Karnataka, everybody is invited with an open mind as the state is friendly for all industries.
Your take on GST?
As a trade and industry body, we have conducted 900-1,000 workshops to promote GST, and created awareness. Now, at least 80 per cent of people know about it.
You are expecting higher investments which means more competition. So, how is the private sector prepared to face it?
There should be competition, only then will quality improve. Around 20 per cent of the land in industrial areas should be reserved for civic amenities, including housing. The government should also assure housing facilities for workers.
What needs to be done to take industries beyond Bengaluru?
We have suggested that our ports should be connected with better roads and infrastructure. All our containers and consignments are now going to Krishnapatnam or Chennai ports. Four-five years ago, we had given a proposal to set up a container depot at Hassan, but nothing materialised. We have to develop our own ports, like Karwar Belekeri and the existing Mangaluru. Connectivity from Hospet to Belekeri via Mangaluru has been promised and we hope it is implemented as the state and the Centre have promised it. In Karnataka, new airports at Vijayapura and Shivamogga are coming up and one has been proposed between Hubballi and Dharwad will benefit North Indians.
Many youngsters are taking to agriculture and agri-based industries. What are the prospects?
There should be a value-add chain, only then the industries can sustain. Take millets for example. While Karnataka is a producer, the grains go to other states for processing. Incentives are required for locals as 2023 is declared as the year of millets.
How do you look at competition with China?
You can’t compare India with China. But the world is looking at India, its manpower and investments which it has been attracting hugely. Now they do not trust China because of lack of quality and uncertainty of delivery of goods in a time-bound manner.
Your take on Bengaluru infrastructure not being able to cope with development?
The movement of heavy-duty and passenger vehicles should be curtailed. Fix a time for heavy vehicles to enter Bengaluru. Now, I think our new commissioner has thought of such policies and the government should do something that benefits everyone. They should implement the Peripheral Ring Road project that will reduce 50 per cent of the city’s traffic and maintenance of roads here will also be easy.
How can we make the business environment more viable?
There should not be day-to-day intervention. For example, any tax collection or any statutory requirement should all be in the electronic mode. An industry requires 12-13 licences. Compliance is difficult for a small industry with six to seven workers. Now the pollution control board has hiked the fees for NoC. It should be reduced and we have given a representation.
What are the challenges in terms of effluent treatment plants?
Every industrial area should create a separate effluent treatment plant. Bringing Peenya’s effluent to Kengeri is not correct. See that treated water is required for our garden maintenance.
There is a proposal to increase the power tariff to pay pensions to Escom employees...
Already we have given our representation and told the government not to burden us.
What is FKCCI’s role in increasing self-employment?
We are travelling to every district. Some 10-12 districts have started programmes, while Ballari recently launched a skill development centre for women.
Where do you see Karnataka in the next 5-10 years?
Revenue wise, it will take time to compete with Maharashtra. As of today, we are number two in revenue collection. But in compliance, we are number one. Our revenues are 60 per cent of Maharashtra’s. If we have to climb up the ladder, we should make Bengaluru the second financial capital of India after Mumbai.
How is the training part addressed?
We are proposing skill development centres in tier 2 and 3 cities. It is better to have a skill development centre to cater to that particular industrial hub and that meets its requirements. In Industrial Training Institutes (ITI), there should be practicals to match industry requirements.
What are the challenges faced by the automobile sector?
There was a passenger vehicle chip problem before and after Covid. There was no movement of goods and the demand was less for vehicles. Now, it is picking up and that attracts businesses. Passenger vehicles are back in full demand, and people now have to wait for two to three months for the delivery of vehicles. In rural areas now, demand has picked up. There is a big demand for EV vehicles too. But there is a problem with disposal of spent batteries which is hazardous. Until today, there was no policy to dispose of lithium-ion batteries. The chip shortage is easing and a chip park is coming up at Devanahalli.