In this Budget Talk series, till now U4U Voice has brought to you interviews of the Giants from the Industrial sector as well as the sector of Commerce in Jammu. One thing has been evident in all of these budget inspired interviews, the Industrial policy is good only on paper and Ease of doing business is not a reality here in Jammu and Kashmir. For the benefit of the uninitiated or for those who want to understand what is defective or awry with the policies, we spoke with Mr. Sunil Gandotra, MD Gee’s Industries.
Mr. Sunil Gandotra is a well known name in the Industrial Sector of Jammu and is known to be one of the few people who have a clear understanding of Industrial Policy. When it comes to drawing upon what the industrial policy lacks, Mr. Gandotra does not mince his words and validly points at what successive Governments have failed at for decades altogether. He does not see the condition improving much and is highly critical of the Red Tapism that according to him is the true cause for the failure of industry in Jammu and Kashmir.
Q. Where do you think our Industrial Policy went astray?
A. The previous government regimes prepares a really good policy and made sincere efforts over the years to improve it. The policy, however, is good only on paper. Because the policy never loomed out of paper, the industry in Jammu and Kashmir failed.
One of the main reasons behind this is ‘Mis-selling’ which eventually led to dwindling profits. The industry here was started with a huge install capacity. If, say, the first entrepreneur was initially making a profit of 10 percent, the next entrepreneur made 9 percent and profit shares decreased so on and so forth. With dwindling profits, majority of the units today are now cash-strapped and there is no way to generate capital in such low profit margin scenarios. You need to pay taxes, pay duties and most importantly pay the employees. In the dearth of work, industrial units here accept jobs at any rate just so that they can run even if only on a day to day basis.
Secondly, the market is very narrow and the finances are available at very high rates of interest and do not allow for proper sustenance or growth and the units consistently deteriorate without being able to infuse any cash into their systems.
Third, the industrial units have to doctor their balance sheets to show that they are in good health. A loss making unit, as such needs special attention such that it can come out of sickness. Instead, of providing a support system to the loss making units, the authorities catch them to scrutinize if the losses shown are distortions for tax-evasion.
Read the previous interviews here
Q. How easy or how difficult is it to do business here in Jammu and Kashmir?
A. The rules and regulations here are extremely hard and fast. The checklist for various clearances is very long with innumerable number of formalities that take forever to be completed. The entrepreneur who wants to set up a unit gets old in the process, gets disheartened and many times leaves the prospect of setting up industry itself.
In the simple instance of getting subsidy, which again can take years together for approval, there is an alternative to current regime. If the applicant has all the papers in place, a notional credit, of say 60 to 70 percent, can be provided instead of running around to multiple offices.
It is because of these decades old policies that there are barely any second generation entrepreneurs in Jammu and Kashmir barring a few.
Q. How effective do you think the current single window clearance system in the state is?
A. The single window system here is notional. Essentially, it has to be supportive and in Jammu and Kashmir it is not. One does not get clearances there and then at the counter. For a same company your plant can come into production in under six months in China but has no fixed time-frame for India where a person will always be running from office to office.
Q. What do you suggest can be done to improve the system to get the clearances in time?
A. The Babus need to be updated with the current scenario of industry viability. The Babus sitting in the government offices barely upgrade themselves and there are even fewer opportunities such as refresher courses arranged by the government. Consequently, a person who becomes a Babu after clearing his engineering for example and then a government exam, only possesses theoretical knowledge.
Without any knowledge about industry viability, the babus go on allocating more and more units in the same area of work. There’s only one well of water! By increasing the buckets the water will reduce and not increase!
Those in authority should be sent for refresher courses. The engineer turned babus are experts only in the technical aspects and do not understand the economics or financial aspects of industry. They need to be upgraded every two years and can be sent to any industrialized states on government expense.
Q. Do you think this government will be able to do anything different for the betterment of the state?
A. I doubt on that possibility. The state is stripped of funds as we know it. If I have funds in my kitty, that is when I can think of infusing any life in my plans. The state government as of now does not have enough funds to pay the salaries of its employees, and consequently there is barely anything that they would be able to do for the industry here in the state.