Indian State-Level Reforms: Back to Basics
Indian State Reforms, Q3 2021
March 7, 2022After a slow start to 2021, Indian states accelerated the pace of business reforms during the third quarter of the year. Importantly, many states focused on reforms that are sector-agnostic. Instead of this approach, Indian states should choose important structural reforms related to land acquisition, industrial approvals, and reduced compliances that will help companies in a range of sectors.
The central government was quite active in encouraging and supporting state-level reforms. The Ministry of Power announced a new bailout package for states’ broken electric power utilities and a new government division to track states’ compliance with regulations. Additionally, the Ministry of Commerce & Industry is trying to deepen its push toward a true single-window clearance for businesses by including nearly one-third of Indian states on its new single-window portal.
In the third quarter of 2021, Telangana led the way with four significant business policy reforms; Haryana was just behind with three reforms. Tamil Nadu, Odisha, and Jammu & Kashmir had two positive reforms each, and five other states enacted a single reform each to help boost industrial growth and job creation.
As usual, not all the news is positive. Ahead of its state election, Uttar Pradesh blocked an attempt by the state electricity distribution company to increase rates, and Jharkhand followed in other states’ steps by adopting a stringent local employment regulation for private industry.
- 7/8, Center-State: Center announces new bailout program for state distribution companies.
- 7/8, Center-State: Center announces new Electricity (Rights of Consumers) Amendment Rules, 2021, to expand net metering.
- 9/1, Center-State: The Ministry of Power establishes a Regulatory Compliance Monitoring Division to track states’ compliance with regulations.
- 9/30, Center-State: The Ministry of Commerce & Industry launches a National Single Window System to facilitate clearances. Eighteen central government departments and nine Indian states participated from the launch.
- 8/24, Tamil Nadu: The government has introduced a mandate that encumbrance certificates must be issued to businesses within three days, offering clear title.
- 9/1, Haryana: The state assembly approved legislation to simplify and expedite land acquisition for a range of industrial purposes.
- 9/7, Odisha: The state issues its Odisha Tow Planning and Improvement Trust Rules, 2021, to allow transfers, single-window approvals, and more.
- 9/14, Haryana: The state notifies a policy for helping government departments assess the value of government-owned land and immovable property to simplify the process of selling these resources.
- No significant state-level changes adopted.
- 7/8, Andhra Pradesh: New AP IT Policy, 2021–24, encourages work from home, provides preferential market access to local firms, aggregates IT procurement by state, and contains support for startups.
- 7/14, Jharkhand: The state launches a new Jharkhand Industrial and Investment Policy, 2021. This policy prioritizes sectors such as textiles-apparel, food processing, auto components, pharma, and electronics. Other facets of the policy are subsidies for investments, relaxed taxes, and improved credit flow to small businesses. The policy also brings universities into the start-up ecosystem and provides a five-year exemption on electricity duties for mega information technology (IT) companies.
- 7/21, Telangana: The state launches a new Telangana State Logistics Guidelines, 2021–2025. The policy offers incentives for the creation of multimodal logistics parks, dry ports, warehousing and cold-chain storage, skilling workers, and strengthening truck shipping.
- 7/28, Tamil Nadu: The state launched an updated version of its Single- window Portal. The new system has expanded the included departments and clearances. Envisioned sectors include power, roads, and more.
- 7/28, Meghalaya: The state approved a new policy to allow and support public-private partnerships.
- 8/3, Telangana: The state approves an expanded program to offer financial support for grassroot startups.
- 9/1, Odisha: The state approves the Odisha Electric Vehicle Policy, 2021.
- 9/1, Jammu & Kashmir: The government approved the Jammu & Kashmir Private Industrial Estate Development Policy, 2021–30. The policy streamlines approvals for industrial estates and offers financial incentives to developers.
- 9/22, Punjab: The state approved the Punjab Micro and Small Enterprises Facilitation Councils Rules, 2021, to address delayed payments to small businesses in the state.
- 9/22, Telangana: The state approved its second information communications technology policy. Under the new policy the state will reduce approvals, focus support on small businesses in the sector, strengthen rules governing IT parks, redouble efforts to strengthen job skills, and more.
- 7/14, Telangana: The state introduces a comprehensive smart grid regulation. This will force government and private entities in the power sector in the state to prepare for rolling out “smart grids.”
- 8/11, Chhattisgarh: The state Electricity Regulatory Commission approved an across-the-board increase in electric power tariffs.
- 9/1, Jammu & Kashmir: The state’s Water Resources Regulatory Authority has increased water charges by 10 percent.
- 8/4 Uttar Pradesh: The state’s Electricity Regulatory Commission blocks a request by the state Power Corporation to increase consumer electric power rates.
- 9/14 Jharkhand: The state assembly approves legislation to enforce 75 percent local employment for jobs paying a monthly salary of $543 or less.
- 8/11 Haryana: The state brings out new Haryana Motor Vehicles Rules, 1993 with electric vehicles in mind.