Un-Ease of Business

Naveen Manglani had set up a tractor and railway parts manufacturing unit in Phase II of Chandigarh’s Industrial Area in 1982. However, he says, it is becoming increasingly difficult every passing year to do business from Chandigarh, the first planned city of the country, courtesy cobwebs accumulated from age-old regulations, laws and redtapism across different departments.
With little coordination among different departments of the Chandigarh administration, those seeking to set up their own business-cumindustrial units, restaurants/hotels or information technology (IT) units — are made to run around for government approvals.Not surprisingly, since introduction of the rankings of the ease of doing business, Chandigarh has been faring badly.

“Over the years, there has been no improvement. Things have only got difficult for businessmen in Chandigarh,” rues Manglani, who is also president of the Chamber of Chandigarh Industries (CCI).
Whereas the state governments of Punjab and Haryana are making efforts to bring in changes to create congenial environment for business, the UT administration has adopted a rigid approach on the ground of maintaining character of the city, thus creating a hurdle in growth.
Arun Mahajan, another Chandigarh-based industrialist, says that different rules pertaining to industries were framed in the 1960s and 1970s, but have not been amended till now. “The administration has not deviated much from the original rules, even though the conditions then were totally different.”
As per industrial area norms, an industrial plot is divided into three parts — front portion (office area), rear portion (cycle stand), and middle area. The estate office objects to installation of machinery in the office area. Even today, bicycle sheds are mandatory for the industrial plots and manufacturers are not allowed to use that area for any other purpose, even when no one comes to work on bicycles now.

The industrial plots, says architect Vinod Joshi, were allotted about 40 years ago when work in the industrial units was done manually. At present, work is done by the machines. To protect these machines, temporary sheds have to be fabricated, but the estate office has objections to these.
The floor-to-area ratio (FAR) of the industrial plots is 1. To meet ever-increasing requirement of space, the Punjab and Haryana governments have increased their industrial FAR to 2, but the UT administration has barred any enhancement in the Industrial Area FAR.
Apart from industrial units, there are around 30,000 other commercial units operating in different parts of Chandigarh, which too have been pressing for need-based changes to be allowed.
With administration paying little heed to their demand, the traders have made need-based changes in their buildings to meet requirements, thus violating the laid down norms of Chandigarh Estate Rules, 2009.
Since 2009, the estate office issued around 3,000 misuse notices to traders in Sectors 17, 22, 26, 34 and 35 for violating estate rules. The estate office has also resumed over 500 buildings for violations.

PENALTY FOR MISUSE
Charges for misuse were increased in 2009 from Rs 10 per square feet to Rs 500 per square feet In May last year, the charge was slashed to Rs 300 from Rs 500 per square feet in commercial areas It was slashed to Rs 180 per square feet in residential areas Traders have been contending that the administration is not eligible to impose misuse penalty without making changes in the Capital of Punjab (Development and Regulation) Act, 1952, and getting it approved by the Parliament. The decision of the administration to change the misuse charges has been challenged in the court too.
Criticising the administration, Chandigarh Beopar Mandal (CBM) president Anil Vohra said the rigid attitude of administration has made Chandigarh an unfriendly place for doing business. He added that the traders have to face harassment on a daily basis at the hands of officials, especially those from estate office and department of excise and taxation.
IMPACT OF GST
Goods and services tax (GST), based on the principle of “one nation, one market, one tax,” has taken away benefits which industrialists were getting in Chandigarh.
In the old tax regime, industrial units operating from Chandigarh were provided tax concession as they were charged central sales tax (CST) at the rate of 1% for interstate transaction, whereas the units in neighbouring states had to pay higher CST rate.
NO POLICY FOR TRANSFER
Even after 35 years, the UT administration is yet to finalise a policy for transfer of leasehold industrial plots, allotted on the condition that these would be transferable after 15 years. Even the 2015 industrial policy promised transfer of industrial plots after developing a suitable mechanism.
NO ADVISERS’ MEET IN 2 YEARS
The UT’s Industry Advisory Committee for redressal of issues pertaining to industries has not met for the last two years. Not only that, the committee has met just once since it was set up in September 2015.
The committee was constituted in September 2015 for two years to deliberate on and resolve long-pending issues of Chandigarh’s industrialists. No notification for a new members of the committee or continuation of old members has been issued till now.
UNITS MOVING OUT
Due to strict norms, unfriendly environment and high rentals, industrial units are moving from Chandigarh’s Industrial Area to Mohali. Nearly 800 local industrial units have either closed down or moved to Mohali and other favourable destinations in the last five years.
FAILED TO CASH IN ON AIRPORT PROXIMITY
Barring hospitality segment, the airport has had no effect on business opportunities so far. Industrialist Arun Mahajan says that there is little possibility of investors coming to Chandigarh due to paucity of land and an unfriendly business environment. The UT’s official records show there are around 2,900 acres of vacant land left, of which only around 650 acres are in possession of the administration.
UT LAGS IN REFORM IMPLEMENTATION
The Business Reform Action Plan (BRAP), 2017, which includes 372 recommendations framed by the Union commerce and industry ministry’s department of industrial policy and promotion, in association with the World Bank, is to be implemented by all 29 states and seven UTs. According to the DIPP data on http://eodb.dipp.gov.in, which provides real-time ranking and tracking of the states and UTs based on the implementation of its recommendations, Chandigarh was languishing at 28th slot as on June 13, with a score of 14.41%.