'Government cannot ignore FKCCI, at present, we do not have voice in government'
KFCCI President Ramesh Chandra Lahoti speaks about various issues in an interaction with the editors and staff of The New Sunday Express.
From issues faced by industries to the imminent need to shift focus beyond Bengaluru and changes industries are looking forward to, Federation of Karnataka Chambers of Commerce & Industry (KFCCI) president Ramesh Chandra Lahoti speaks about various issues in an interaction with the editors and staff of The New Sunday Express. Excerpts:
As FKCCI president, what are your top priorities, and how are you approaching your role to address them?
It has been a privilege for me to be part of FKCCI for the last 20 years. I have headed various committees. I am discussing issues faced by industries with ministers concerned both at the Centre and the state. I was in civic affairs and the problems faced by apartment owners were addressed. My work made me president of FKCCI.
The government is implementing various initiatives to attract foreign investors. What are the key challenges while attracting investors?
Every government, once in two years, organises ‘Invest Karnataka’. Getting MoUs and converting them into reality is a major concern. The government has formed three committees, known as ‘Vision Group’, and my question FKCCI or other trade bodies are not represented here. FKCCI is the main parent body representing industries. What is the present government’s vision in forming these three committees? The labour department is another issue. The present labour charges are Rs 16,500 and the government of Karnataka is proposing Rs 31,000. Neighbouring Tamil Nadu is paying Rs 12,500. It is about basic minimum wages. The investor is not aware of this. It is better to call investors with all the departments in one place.
Is the government failing to understand this?
The government is running at the whims and fancies of corporates, and policies are tailor-made. The government is not worried about local industries that have significantly contributed in the last five decades. It is only bothered about investments. It is aware that labour policies are not correlated with investment. Labour policies play a major part.
What about the infrastructure provided by the government?
Even basic facilities are not provided once an industry is set up. The government is not bothered about the facilities that were promised. Only taking back allotted industrial plots interests them if an industry is not set up within a stipulated time.
If the government is considering investment in the corporate sector, won’t that have a positive impact on other industries?
Why are trade bodies that have major members from MSME and SME sectors not being incorporated in the Vision Groups that the government has formed to attract investments? There was an issue with the Karnataka Electricity Regulatory Commission hiking electricity tariffs and Energy Minister KJ George spoke to us. We held several meetings throughout the state and convinced local industries. But when it comes to making policies and investments, there is no FKCCI representation. Such double-standards of the government cannot run for long.
How do you plan to support MSMEs?
At present, we do not have a voice in the government. The government cannot ignore FKCCI or any other trade industry bodies for long. Every six months, new policies, tariff and GST issues crop up and the government has to approach FKCCI. We are a dominant force. We contribute significantly to any corporates coming and setting up units in Karnataka. But SMEs cannot be ignored. This is the message I want to give to the government. We were the ones who initiated the $1 trillion dollar concept and we have to see how best we can make the state a $5 trillion economy. We do not want to be troubled by the government
How bad is the power situation in Karnataka?
At present, the state government can give power to industries throughout this year. We do not ask for any free power. The government purchases power for a lesser rate and charges us Rs 8 . If the government cannot provide us with power, we can have our own power generation units. Monsoon affects only agriculture and the government can supply power to industries.
What are the broader issues faced by industries in Karnataka?
Industries are facing major issues with the Pollution Control Board, as it is very difficult to adhere to their norms. The Pollution Control Board has become a nightmare for industries. As a president, I am going to raise the issue. Lower levels of corruption should go. I have discussed this with Union Minister Piyush Goyal and he suggested an idea that the interface between the officers and existing licence holder must go. There is no ease of doing business in Karnataka as of now. All licensing procedures should be rolled into one.
How many new industries and MSMEs have come up post-Covid?
Post-Covid, some 30 per cent of MSMEs have wound up because of payment and other issues. In Machohalli, Peenya, Dobbaspet and Kumbalgodu industrial areas, small SMEs have closed. In the last year, new industries have been coming up but not the way the government is projecting. It will take two years to make up this loss.
How do you see the situation of new industries? Is it the same across the country?
I have been to Rajasthan, Maharashtra and Gujarat and the issues are the same.
Industries in Bengaluru lack basic amenities, like poor streetlights and bad roads. How is this as compared to corporate firms?
Basic facilities are not provided in any of the industrial clusters like Peenya and Magadi Road. Forget other parts of the state, industries do not get facilities in Bengaluru. The government is not bothered after an industry is set up.
Industries are blamed for polluting water bodies by discharging effluents ...
It was the government that permitted us to open an industry. If an industry comes, it is natural that effluents are discharged. As an industry body, we have our local arrangement, but the government too has about 50 per cent responsibility. Take the case of Harohalli, where 15 industries have been set up and there are effluent treatment plants. A lake is situated about half-a-kilometre away. Still, the pollution control board has served them notices. We are in no way connected to pollution. If activists have a problem and complain about lake pollution, the government should relocate us. Give us time and option, we can relocate in a phased manner. If water bodies are getting impacted, let residents and activists raise issues with us. FKCCI will take it up with the government and ask for relocation.
What is the status of industries in Tier-2 cities?
Setting up industries in tier-2 cities depends on the interest and might of the minister concerned. Some units were set up in such cities, but because of the negligence of the government, they shifted to other states. I am going to suggest bringing at least one innovative idea to each district. I told Minister Priyank Kharge to get one big unit to Kalaburagi so that thousands of youth who come to Bengaluru for salaries of Rs 3-7 lakh per annum can stay back. If we put a few industries with employee capacity of 1,000-1,500 in Kalaburagi, we will see the difference.
Why do you think industries prefer Bengaluru?
The city has made a name globally because of its IT services. We cannot stop industries from coming to Bengaluru. But my appeal to the government is to bring at least two to three companies to district headquarters. In Kalaburagi, Belagavi, Shivamogga and Hubballi, we have basic livable conditions. I appeal to Minister MB Patil to focus on these places and attract investors to get youth in these districts to work.
What issues do district headquarters face? What reports are you getting from them about industries?
The basic feedback we get from places like Ballari, Kolar, Dharwad and Bidar is that the government should come up with incentives or subsidies to attract investments. There may be schemes, but they are not relevant to the current situation and cost. The food processing unit at Nanjangud has not been taken up because of lack of awareness. Let the government choose about eight districts for investment and Bengaluru should not be included in this. We are in tandem with the industry ministry and appeal to them to invest in tier-2 cities too.
Do different political parties have different commitment to industries?
I have seen all parties and there is no difference. Before coming to power, they say they will hear us. But once they come to power, they forget us. I was closely associated with FDI and retail policy. The present central government had promised not to control FDI, but they opened floodgates for FDI when they came to power. We cannot believe any government, but have to choose from the best.
PM Narendra Modi raised a slogan for ‘Local For Vocal’ and others. What is the reality?
Slogans are very fancy. When BJP declared him the PM face in 2014, the party called 140 industry heads and I was one among them. He had promised that 16 tax licences would be reduced to four and FDI would not be allowed. But that has still remained a dream. We have to blame ourselves for getting convinced by such slogans.
What are the major issues with small and medium enterprises (SMEs)?
Power tariff, high labour charges and our credit facility not matching the payments that we have to remit to the bank. These are three major concerns for SMEs. Loans are not easy. Do you know how difficult it is to get a MUDRA loan? It is okay for street vendors, but not for industries. It is difficult as there are lengthy processes.
FKCCI has a sub-committee. Have you given any recommendations to the government?
Yes. As there is a large-scale of migration from UP, Bihar and Assam, we have suggested that a super fast train be introduced from Bengaluru to Patna and another route. We had given the proposal to the railway minister.
Does Bengaluru need a second airport?
No. After Terminal-2 became operational, there is no rush in Terminal-1 and it is empty most of the time. Instead of going beyond Tumakuru for a second airport, the government can opt for HAL airport, if needed. For the current population, I don’t see any requirement for another airport for at least next five years.
What is your take on APMC laws?
Unfortunately, despite Modi taking back the proposed farm laws after massive protests by farmers, the BJP government did not withdraw it in Karnataka. This was a larger concern that we (FKCCI) represented a lot. But Basavaraj Bommai was not ready. Once the product reaches the APMC, his/her payment is secure, hence APMC should be brought back. There are 108 products listed in APMC, and the auction goes on. The prices fixed too are correct and the money goes to farmers directly. The bill was passed thanks to the Congress government. (JDS state president) HD Kumaraswamy had come to FKCCI and included issues around APMC laws in his party manifesto. But his party opposed it in the Legislative Council. Keeping politics apart, at times of droughts, APMC is needed as traders do not cheat farmers. The trading community is always with farmers. APMCs are not self-sufficient in pulses at present. We are self-sufficient in paddy, sugar, milk and wheat. About 45 per cent of the Indian population depends on pulses for nutrition and protein. We have to draw up a 5-year plan for pulse production to match 17.7 lakh million metric tonnes annually. This year, we have a shortage of 3.5 million metric tonnes
Is there a problem of middlemen even in APMC?
In the entire country, Karnataka’s APMC model is good, while Punjab and other states are following the model of auction. The payments are settled on the spot.
What advice do you give youngsters to become entrepreneurs?
More youngsters should choose entrepreneurship. A lot of banks are coming forward and they are being handheld. They can become successful entrepreneurs because of the friendly nature of people in Karnataka.