 "Reforms have been announced, but need to percolate to the local level")
A distinguished panel took part in the Business Standard Rajasthan Round Table 2016, held recently in Jaipur. The panellists by and large felt that though the state was industry-friendly, this positive climate had yet to fully percolate down to the local level, and that government and industry representatives needed to meet more frequently to identify problem areas. It was also felt that Rajasthan needed to market itself more aggressively to investors in other states. The availability of skilled manpower was considered adequate. However, it was agreed that much more needed to be done to make the state a more attractive tourism product for Indian travellers.
Edited excerpts:
Moderator: Mr Singh, to understand Rajasthan’s economic policies and its connect with people, we can start with what are your worry areas and what should the state government be mindful of? Give us a brief perspective and we can ask our panellists to respond to some of the issues.
Gajendra Singh: One thing which was very detrimental to the economy of Rajasthan was the state’s debt. When we came to power in 2003, the debt was not that high. When we left in 2008 and came back to power in 2013, the fiscal indiscipline which was committed by the previous government was enormous. I will give you the example of the energy department. It is not a profitable department because we are giving subsidised electricity to farmers and then there is a lot of theft that takes place. Even then, when we left, the total our discoms owed the financial institutions was about Rs 15,000 crore. But in five years’ time this debt went up to as much as Rs 75,000 crore.
Gajendra Singh: From Rs 15,000 crore to Rs 75,000 crore with Rs 10,000 crore as your interest factor, Rs 10,000 crore is the loss of the discom. The first thing industries want is that energy should be cheap. With the department in such deep debt we can’t make electricity cheaper. This is something which was inherited by our government.
There are many schemes and lots of funding taking place. But the results take a little time. If we can have two consecutive terms — that means ten years — that is when a state really starts to turn around. We have to first mop up the mess which the last government created. Now looking at industries, this time in Resurgent Rajasthan we took care to sign MoUs where the parties were serious. We made sure that they were interested in investing. We looked at their background. What has been their track record? Are they serious or are they not serious? In 60-65 per cent of the MoUs signed, either the works have started or the land has been allotted, or people are still looking for land. That is a very good response. Energy is one thing which is top-heavy. But now with the new solar policy, they are going to bridge the gap by VGF funding. Solar is now Rs 4 a unit, it is now on the threshold of takeoff. The moment that happens, the whole situation in Rajasthan is going to change, especially with the green corridor coming up. The financials are going to change tremendously.
Moderator: You have brought about many significant policy changes both in land and labour. Have you begun seeing its positive impact on industries coming from other states? One view from New Delhi was that if states start doing their land reforms and labour reforms, which you have done in small measure, there would be investments in adjoining states, potential investments. And they will start flowing towards Rajasthan. Are there any such indications?
Gajendra Singh: All the states have become very competitive. It is a question of survival of the fittest. Andhra is seeing what Rajasthan is doing and Rajasthan is seeing what Gujarat is doing. The plus factor for all industrialists is that we have our own demand, because 65 per cent of our population is under the age of 35. The challenge for any government today is creating jobs. Every state is working hard to be competitive. In ease of doing business we are now rated by the World Bank in the top 5. Then there is single window clearance. There are a lot of things we are trying to rectify. Whether it’s agriculture, medical health, or education, we are trying to see how bottlenecks can be removed. A land bank of 10,000 hectares has been created. We have plenty of land. But then the one disadvantage that we have is the water problem. So we are opening out. An investor sees the climate of the state. He sees the leadership. He sees the policies of the government. And let me tell you, the policies of the government are very, very pro-industry.
Moderator: Let me turn to my industry colleagues on the panel. Mr Kajaria, Mr Singh explained how the policy changes are working out. What is your sense of the ground-level changes, since you have facilities in the state? And have they begun impacting the environment?
Ashok Kajaria: We are working in four states — Uttar Pradesh, where we started, Rajasthan, Andhra and Gujarat. This is one of the very positive states. Their new policy came out on October 8, 2014. We had committed an investment of Rs 400 crores by September 2017 or 2018. We have already invested Rs 225 crore and we have the vision to invest another Rs 200 crore. But I have a suggestion. A lot of plants and investments have come after October 2014. You have to highlight that, because that will also attract others. All those who are already there are your ambassadors. People should know that so many plants have come up after October 2014. Difficulties are there in every state. But you have to market your state and talk about the good things you have done. This will attract people from other states. There are a lot of problems in states like Haryana and UP, we are already there. But simultaneously you must target investors.
Moderator: Any suggestions?
Gajendra Singh: I agree with Mr Kajaria. We must meet more often. Please do come, exchange views, and tell us your problems. Otherwise how will we come to know your problems? How will the doctor come to know the patient’s symptoms? We are not doing you a favour. If we are not competitive, you all will not come to our state.
Moderator: Mr Singh, why don’t you set up an industry council? An industry council which can actually be a standing body?
Ashok Kajaria: In the two and a half years that Ms Veenu Gupta has been there, we must have met umpteen times. Whenever we have a problem and have come with a proposal, it has been resolved in good time. Market yourself and you will achieve the desired result — that is all I can say.
Moderator: It is an excellent suggestion. I think the ministry is also forthcoming on this. Mr Bajoria, your unit is also in the state and JK Tyre is one of the leading companies in the country. What is your perspective on what is happening in Rajasthan? Just as Mr Kajaria talked about marketing issues, what is your take on the state of development in the state and what needs to be done?
A K Bajoria: Out of about Rs 10,000 crore turnover that JK Tyres is expecting in 2016-17, almost Rs 1,200 crore — or about Rs 100 crore a month — will come from Rajasthan. When we established the first mother plant in Kankroli in the 1970s, our turnover was just Rs 3-4 crore per month. The population of Kankroli was just about 15,000, and today it is almost three lakh. We have invested more than Rs 700 crore since that time, and we are constantly bringing newer equipment every year. And of the 14,000 people that we employ, about 1,500 people are in Rajasthan. I have a humble suggestion. We have invested Rs 2,500 crore in Chennai, which is supposed to be the Detroit of India, and tyres are also an auto component. In Tamil Nadu we have invested Rs 2,500 crore, of which the eligible assets for refund of tax are Rs 1,500 crore in a span of 14 years from the day we commissioned the plant, from the sales which takes place in the state. We have already accumulated Rs 100 crore in the last two and a half years from sales made in the state, and we still have almost another 12 years to go. So, we will get back at least 40-50 per cent of the eligible assets. So perhaps you can do some such tweaking. In the last 10 years industry in Rajasthan has shown a decline of almost 10 per cent. Now there is no reason why this should be so. We operate in five states of India, and I can say that Rajasthan is one of the most peaceful states. In fact, we are very happy in Rajasthan.
Moderator: So are you suggesting more fiscal incentives?
A K Bajoria: More incentives to attract more investment. Mr Singh said that a lot of the MoUs signed in Resurgent Rajasthan are going to be converted into projects. But I would say that this would go up to double if you can match [Tamil Nadu]. So you are not losing. You will not even be revenue-neutral. In fact, you are going to be revenue-positive, because you are only allowing eligible assets. For instance, in Tamil Nadu, they do not allow buildings as an asset in terms of refund of tax. They do not allow some other machinery and equipment. It is only eligible assets. But it’s a huge incentive, because all the industries are around and we are able to supply tyres to them.
Moderator: I think this is competitive federalism you are talking about. Mrs Gupta, can you respond to this?
Veenu Gupta: I think Mr Bajoria, you probably need to look at the policy more closely, because we have a provision for a customised package. And in the customised package the kind of incentive you are talking about is possible. So if you invest Rs 400 crore, or if you provide employment to 400 people, then that enterprise becomes eligible for the customised package and there 100 per cent of eligible fixed capital investment is allowed at VAT reimbursement. We have granted these kinds of packages to several industries. So it is possible.
Moderator: Do you think once GST is launched, which looks likely by next April, Rajasthan’s attractiveness will increase, because it’s right now a consumption state mainly? It is not a manufacturing state.
Veenu Gupta: No. It is a manufacturing state in many sectors. If you look at auto, if you look at textiles, at handicrafts, gem and jewelry, there are several sectors in which it is a leading manufacturing state. And as far as GST is concerned, what is it that industry is looking at? Industry looks at the policy framework, it looks at the political leadership, it looks at the infrastructure, and of course, the fiscal incentives. Right now, there is a lot of competition among states as far as fiscal incentives are concerned. So if we offer something, then there are two other states who say, ‘okay we will offer you this-plus’. So what GST would do is that, as far as fiscal incentives are concerned, it would to a great extent be a leveller. And thereafter the actual strengths of the state would come into play — in terms of infrastructure, in terms of ease of doing business, in terms of handholding.
Moderator: That’s right. Mr Agrawal, you head CII in Rajasthan. What is your assessment of the way things are panning out in Rajasthan? And there is always this concern that investments are happening, but probably jobs are not getting created. Are there any issues on getting skilled people in the state? What more does the government need to do to address these issues?
Rajat Agrawal: The single-window approval scheme is working reasonably well, but for MSMEs the investment has to be below Rs 10 crore. The committee is chaired by the collector, the district magistrate of that district. They are really busy people. Here the heads of all 12 departments relevant to industry also have to be present. So things get delayed. Our suggestion from CII is that the GM of the District Industries Centre and commissioner (industry) should take charge of that. This will really help the smaller investors. Second, initiatives should be launched to spread awareness of all the portals that the government has launched. Third, getting electrical connections should be made much simpler — right now, small entrepreneurs have to fill in a 16-page form. Also, stamp duty should be rationalised, and automatic land conversion can be made as per the master plan. In Andhra Pradesh, land-use conversion from agriculture to industrial is automatic after 20 days.
Moderator: That can be streamlined, you’re saying.
Gajendra Singh: That is why I said that we need to interact more often — because, until the patient goes to the doctor and tells him the problem, how will the doctor know what the illness is? We will sit down and try to sort these issues out.
Moderator: Mr Nair, you head a travel company, HolidayIQ. The chief minister talked about the new focus on tourism and, of course, Rajasthan is well-known for its tourism initiatives. What do you think is missing, or what do you think needs to be done?
Hari Nair: I run an online tourism portal. We are actually the first travel community in India. Indian travellers participate in this forum, give reviews, and provide advice to other travellers who want to plan vacations in India. And we noticed three things. One is that tourism in India in the future is going to be about Indians, not about foreigners.
Second, the real growth in tourist numbers is coming from the smaller, second tier cities of India. Jaipur on the basis our data is the fastest growing tourism-origin market — not where people go, but where tourists actually originate from and go to other places. So, the larger point here is that the smaller or second tier cities of India will drive tourism demand in the future. And the third sort of corollary to that is that the product needs to become relevant for a more youthful demographic. A large number of people in India are below 35, and that is reflected in the tourism product they want.
By and large, the reviews suggest that Rajasthan does well in what people are looking for, except in two areas. One, people said they rated Rajasthan lower than other states. Now, let’s go beyond that. The review said, on activities, Rajasthan consistently rates below what I would consider to be your competitor states in the tourism product. I am not sure if it can be easily fixed by public policy, but I certainly believe it can be fixed by entrepreneurs getting out there and thinking about what needs to be done. Adventure tourism and the desert have interesting branding opportunities. See how the Sahara is utilised for creating tourism products.
The second point which is very interesting is, Rajasthan did not fare well on weekend getaways. Weekend getaways are driving the market for leisure travel in India. It is no more the one-week holiday or the 10-day holiday that is driving the market. It is the two-day holiday and the one-day holiday that is driving the market. So Rajasthan has an option — in fact, therefore, an opportunity — to recreate some parts of its tourism product to be much, much sharper: shorter, sharper focused products to the Delhi market, to the Ahmedabad market, where these are all potential markets that can have a weekend getaway to Rajasthan. Weekend getaways mean that you have to be within 200-300 km of the city you are targeting. So, if you are targeting Ahmedabad, if you are targeting some of the other cities around, you should incidentally be targeting Jaipur as well, for holidays within Rajasthan.
Moderator: I think Hari, the three points that you made were excellent. I think Mr Singh would like to respond.
Gajendra Singhb Mr Nair, of the 470 MoUs signed during Resurgent Rajasthan, 220 were for tourism alone. So I was quite surprised. Basically, one of the fastest growing sectors is religious tourism. And as you rightly said, activities. But what all are the activities now? As you talk about the desert, you need ballooning, you need ATVs, this is what is not there. You come to Jaipur, and what do you see? You see Amer, you go to the City Palace and you go to some restaurants and eat Rajasthani food. Go to Chokhi Dhani and then there is nothing more to do. So you are very right that adventure tourism is something that has to be developed. And our advantage of course is that we have the desert, we have lakes, we have mountains, we have wildlife, we have the tiger. And we have very nice roads. I think Rajasthan has scratched only the surface at the moment.
Moderator: I think we have got a nice overview of the issues affecting Rajasthan’s industry and tourism challenges. The discussion on tourism thing was really eye-opening.
Gajendra Singh: Rajasthan actually can survive on tourism alone. That is the vast potential which is there.
Moderator: But I still didn’t get an answer on the question about skilled people. Is there any perspective on Rajasthan’s skill challenge? Mrs Gupta, would you have something on it? Is that an issue?
Veenu Gupta: There is this huge mission that has been set up for skill development, RSLDC. And there are several partners. One of the best things that has happened in this state is that industry is coming forward. We now have a training school set up by Honda. We also have training programmes being conducted by Saint Gobain. Some of these big enterprises are setting up their own skilling centres primarily in order to get skilled people to supply to other industries. So the effort is to encourage more and more industries to set up skilling facilities of this kind. And the state government is fully supporting them.
Moderator: What roles can industry play in improving apprenticeship and skilling? They are all connected issues.
A K Bajoria: JK Tyre has adopted two ITIs in Rajasthan. And we have been running them for the last four years. We have been able to take over the management. We have tweaked the courses to suit our requirement as well as that of the industries all around Udaipur and Rajsaman. And wherever we get requests, we try to introduce those courses. We have set up a large university about 28 km from Jaipur — J K Lakshmipat University — where we have invested Rs 210 crore in the last three years. Our objective is to take this much further.
We already have about 1,800 boys and girls undergoing management courses, engineering courses and general aptitude courses where we invite industry batches of ten and twenty. We give short-term training of one week, two weeks, and so on. We also have a government-approved R&D laboratory. We have started giving courses like any other engineering college with the help of Udaipur University, where we train tyre engineers, rubber engineers and polymer engineers who are immediately employable and who are not getting employment after passing out from the normal engineering courses. So I think we are certainly making a difference.
Moderator: That makes sense. Mr Kajaria?
Ashok Kajaria: Skilling, I would say, is not an issue. Skilled manpower is very much available. I think instead of more education, what is needed is on-the-job training — after 30 days a man should be able to run a machine. If a man is put in a job, after 30 days should be able to run that machine.
Moderator: And you don’t see it as a problem?
Ashok Kajaria: Not at all.
Moderator: That is very encouraging, actually. Mr Agarwal?
Rajat Agrawal: I want to add here that under the aegis of CII we have already adopted 36 ITIs, and we are running them with relevant courses. And a few of the ITIs are in great demand throughout the industry. Skilling is reasonably good in Rajasthan. And, as rightly said by Mr Kajaria, on-the-job training is the best training and we keep faith in that.
Moderator: We are coming to the close of the session. Mr Nair, coming to service sector skilling, you do complain even when you go to European countries — you do complain about hotel services. And in India we are relatively better off, I think. Is that a problem in Rajasthan, or do you think there is scope for improvement? From your industry perspective?
Hari Nair: Correct. Once again, I would like to comment on this not so much from a Rajasthan perspective but what we see across India. I am sure it will have relevance here as well. I want to connect this to a larger trend and that trend is accommodation. You see, a big part of the tourism experience that somebody carries back lies in how you handle the accommodation experience, by and large, right? And what we have seen in accommodation in India is that there is going to be in the future an increasing challenge for formal accommodation to come in, especially in newer destinations, new places where hotels have to get built, and it will take a certain amount of time for hotels to get built, and so on. So we believe that a lot of accommodation that is going to come to tourism in India in the short run is going to be what I call informal accommodation of the homestay varieties, the guesthouses, and so on, and so forth. And there is sound economics that will drive that process.
If that is the case, then actually I think there is a skilling problem there. And I think that is something that makes sense to try and solve. And the skilling is not of a mega type. It is very, very simple, how to make a bed, how to keep the bathrooms clean. It is just housekeeping stuff, by and large. A little bit of presentation on the food side. So these are not complex problems to solve, but highly meaningful problems to solve in terms of sheer impact on employment that you will generate across the state. So I was wondering, while we have an ITI structure which is very manufacturing industry-oriented, maybe we need to create a parallel structure like that for tourism in a very simple way, which does not need a lot of infrastructure.
In fact, I have been talking to one of the state governments in the North-East, where I am trying to tell them that if you have homestays ready, make them the places around which you do the training. So you bring 20 different people to one homestay, and let’s say it’s a homestay that does the job well. Then they become the champions to improve things around that region, and so on. So we can think a little imaginatively, a little differently. So that is how I would think about skilling. I think there is an opportunity, because it doesn’t require a lot of upgradation. I think it is just basic stuff.
Moderator: Well, it’s time to bring this session to a close. It was in my view a very interesting session with very clear takeaways. I, for one, found that industry sees the need for more promotion of what the government is doing, and the government is more keen on engaging with industry and even recognises the service sector opportunities that Mr Nair very beautifully explained. So, I think we can end this discussion on a positive note. Once again, I thank all of you for having taken valuable time off for being part of this panel.
Edited excerpts:
Moderator: Mr Singh, to understand Rajasthan’s economic policies and its connect with people, we can start with what are your worry areas and what should the state government be mindful of? Give us a brief perspective and we can ask our panellists to respond to some of the issues.
Gajendra Singh: One thing which was very detrimental to the economy of Rajasthan was the state’s debt. When we came to power in 2003, the debt was not that high. When we left in 2008 and came back to power in 2013, the fiscal indiscipline which was committed by the previous government was enormous. I will give you the example of the energy department. It is not a profitable department because we are giving subsidised electricity to farmers and then there is a lot of theft that takes place. Even then, when we left, the total our discoms owed the financial institutions was about Rs 15,000 crore. But in five years’ time this debt went up to as much as Rs 75,000 crore.
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Moderator: For the state alone?
Gajendra Singh: From Rs 15,000 crore to Rs 75,000 crore with Rs 10,000 crore as your interest factor, Rs 10,000 crore is the loss of the discom. The first thing industries want is that energy should be cheap. With the department in such deep debt we can’t make electricity cheaper. This is something which was inherited by our government.
There are many schemes and lots of funding taking place. But the results take a little time. If we can have two consecutive terms — that means ten years — that is when a state really starts to turn around. We have to first mop up the mess which the last government created. Now looking at industries, this time in Resurgent Rajasthan we took care to sign MoUs where the parties were serious. We made sure that they were interested in investing. We looked at their background. What has been their track record? Are they serious or are they not serious? In 60-65 per cent of the MoUs signed, either the works have started or the land has been allotted, or people are still looking for land. That is a very good response. Energy is one thing which is top-heavy. But now with the new solar policy, they are going to bridge the gap by VGF funding. Solar is now Rs 4 a unit, it is now on the threshold of takeoff. The moment that happens, the whole situation in Rajasthan is going to change, especially with the green corridor coming up. The financials are going to change tremendously.
Moderator: You have brought about many significant policy changes both in land and labour. Have you begun seeing its positive impact on industries coming from other states? One view from New Delhi was that if states start doing their land reforms and labour reforms, which you have done in small measure, there would be investments in adjoining states, potential investments. And they will start flowing towards Rajasthan. Are there any such indications?
Gajendra Singh: All the states have become very competitive. It is a question of survival of the fittest. Andhra is seeing what Rajasthan is doing and Rajasthan is seeing what Gujarat is doing. The plus factor for all industrialists is that we have our own demand, because 65 per cent of our population is under the age of 35. The challenge for any government today is creating jobs. Every state is working hard to be competitive. In ease of doing business we are now rated by the World Bank in the top 5. Then there is single window clearance. There are a lot of things we are trying to rectify. Whether it’s agriculture, medical health, or education, we are trying to see how bottlenecks can be removed. A land bank of 10,000 hectares has been created. We have plenty of land. But then the one disadvantage that we have is the water problem. So we are opening out. An investor sees the climate of the state. He sees the leadership. He sees the policies of the government. And let me tell you, the policies of the government are very, very pro-industry.
Moderator: Let me turn to my industry colleagues on the panel. Mr Kajaria, Mr Singh explained how the policy changes are working out. What is your sense of the ground-level changes, since you have facilities in the state? And have they begun impacting the environment?
Ashok Kajaria: We are working in four states — Uttar Pradesh, where we started, Rajasthan, Andhra and Gujarat. This is one of the very positive states. Their new policy came out on October 8, 2014. We had committed an investment of Rs 400 crores by September 2017 or 2018. We have already invested Rs 225 crore and we have the vision to invest another Rs 200 crore. But I have a suggestion. A lot of plants and investments have come after October 2014. You have to highlight that, because that will also attract others. All those who are already there are your ambassadors. People should know that so many plants have come up after October 2014. Difficulties are there in every state. But you have to market your state and talk about the good things you have done. This will attract people from other states. There are a lot of problems in states like Haryana and UP, we are already there. But simultaneously you must target investors.
Moderator: Any suggestions?
Gajendra Singh: I agree with Mr Kajaria. We must meet more often. Please do come, exchange views, and tell us your problems. Otherwise how will we come to know your problems? How will the doctor come to know the patient’s symptoms? We are not doing you a favour. If we are not competitive, you all will not come to our state.
Moderator: Mr Singh, why don’t you set up an industry council? An industry council which can actually be a standing body?
Ashok Kajaria: In the two and a half years that Ms Veenu Gupta has been there, we must have met umpteen times. Whenever we have a problem and have come with a proposal, it has been resolved in good time. Market yourself and you will achieve the desired result — that is all I can say.
Moderator: It is an excellent suggestion. I think the ministry is also forthcoming on this. Mr Bajoria, your unit is also in the state and JK Tyre is one of the leading companies in the country. What is your perspective on what is happening in Rajasthan? Just as Mr Kajaria talked about marketing issues, what is your take on the state of development in the state and what needs to be done?
A K Bajoria: Out of about Rs 10,000 crore turnover that JK Tyres is expecting in 2016-17, almost Rs 1,200 crore — or about Rs 100 crore a month — will come from Rajasthan. When we established the first mother plant in Kankroli in the 1970s, our turnover was just Rs 3-4 crore per month. The population of Kankroli was just about 15,000, and today it is almost three lakh. We have invested more than Rs 700 crore since that time, and we are constantly bringing newer equipment every year. And of the 14,000 people that we employ, about 1,500 people are in Rajasthan. I have a humble suggestion. We have invested Rs 2,500 crore in Chennai, which is supposed to be the Detroit of India, and tyres are also an auto component. In Tamil Nadu we have invested Rs 2,500 crore, of which the eligible assets for refund of tax are Rs 1,500 crore in a span of 14 years from the day we commissioned the plant, from the sales which takes place in the state. We have already accumulated Rs 100 crore in the last two and a half years from sales made in the state, and we still have almost another 12 years to go. So, we will get back at least 40-50 per cent of the eligible assets. So perhaps you can do some such tweaking. In the last 10 years industry in Rajasthan has shown a decline of almost 10 per cent. Now there is no reason why this should be so. We operate in five states of India, and I can say that Rajasthan is one of the most peaceful states. In fact, we are very happy in Rajasthan.
Moderator: So are you suggesting more fiscal incentives?
A K Bajoria: More incentives to attract more investment. Mr Singh said that a lot of the MoUs signed in Resurgent Rajasthan are going to be converted into projects. But I would say that this would go up to double if you can match [Tamil Nadu]. So you are not losing. You will not even be revenue-neutral. In fact, you are going to be revenue-positive, because you are only allowing eligible assets. For instance, in Tamil Nadu, they do not allow buildings as an asset in terms of refund of tax. They do not allow some other machinery and equipment. It is only eligible assets. But it’s a huge incentive, because all the industries are around and we are able to supply tyres to them.
Moderator: I think this is competitive federalism you are talking about. Mrs Gupta, can you respond to this?
Veenu Gupta: I think Mr Bajoria, you probably need to look at the policy more closely, because we have a provision for a customised package. And in the customised package the kind of incentive you are talking about is possible. So if you invest Rs 400 crore, or if you provide employment to 400 people, then that enterprise becomes eligible for the customised package and there 100 per cent of eligible fixed capital investment is allowed at VAT reimbursement. We have granted these kinds of packages to several industries. So it is possible.
Moderator: Do you think once GST is launched, which looks likely by next April, Rajasthan’s attractiveness will increase, because it’s right now a consumption state mainly? It is not a manufacturing state.
Veenu Gupta: No. It is a manufacturing state in many sectors. If you look at auto, if you look at textiles, at handicrafts, gem and jewelry, there are several sectors in which it is a leading manufacturing state. And as far as GST is concerned, what is it that industry is looking at? Industry looks at the policy framework, it looks at the political leadership, it looks at the infrastructure, and of course, the fiscal incentives. Right now, there is a lot of competition among states as far as fiscal incentives are concerned. So if we offer something, then there are two other states who say, ‘okay we will offer you this-plus’. So what GST would do is that, as far as fiscal incentives are concerned, it would to a great extent be a leveller. And thereafter the actual strengths of the state would come into play — in terms of infrastructure, in terms of ease of doing business, in terms of handholding.
Moderator: That’s right. Mr Agrawal, you head CII in Rajasthan. What is your assessment of the way things are panning out in Rajasthan? And there is always this concern that investments are happening, but probably jobs are not getting created. Are there any issues on getting skilled people in the state? What more does the government need to do to address these issues?
Rajat Agrawal: The single-window approval scheme is working reasonably well, but for MSMEs the investment has to be below Rs 10 crore. The committee is chaired by the collector, the district magistrate of that district. They are really busy people. Here the heads of all 12 departments relevant to industry also have to be present. So things get delayed. Our suggestion from CII is that the GM of the District Industries Centre and commissioner (industry) should take charge of that. This will really help the smaller investors. Second, initiatives should be launched to spread awareness of all the portals that the government has launched. Third, getting electrical connections should be made much simpler — right now, small entrepreneurs have to fill in a 16-page form. Also, stamp duty should be rationalised, and automatic land conversion can be made as per the master plan. In Andhra Pradesh, land-use conversion from agriculture to industrial is automatic after 20 days.
Moderator: That can be streamlined, you’re saying.
Gajendra Singh: That is why I said that we need to interact more often — because, until the patient goes to the doctor and tells him the problem, how will the doctor know what the illness is? We will sit down and try to sort these issues out.
Moderator: Mr Nair, you head a travel company, HolidayIQ. The chief minister talked about the new focus on tourism and, of course, Rajasthan is well-known for its tourism initiatives. What do you think is missing, or what do you think needs to be done?
Hari Nair: I run an online tourism portal. We are actually the first travel community in India. Indian travellers participate in this forum, give reviews, and provide advice to other travellers who want to plan vacations in India. And we noticed three things. One is that tourism in India in the future is going to be about Indians, not about foreigners.
Second, the real growth in tourist numbers is coming from the smaller, second tier cities of India. Jaipur on the basis our data is the fastest growing tourism-origin market — not where people go, but where tourists actually originate from and go to other places. So, the larger point here is that the smaller or second tier cities of India will drive tourism demand in the future. And the third sort of corollary to that is that the product needs to become relevant for a more youthful demographic. A large number of people in India are below 35, and that is reflected in the tourism product they want.
By and large, the reviews suggest that Rajasthan does well in what people are looking for, except in two areas. One, people said they rated Rajasthan lower than other states. Now, let’s go beyond that. The review said, on activities, Rajasthan consistently rates below what I would consider to be your competitor states in the tourism product. I am not sure if it can be easily fixed by public policy, but I certainly believe it can be fixed by entrepreneurs getting out there and thinking about what needs to be done. Adventure tourism and the desert have interesting branding opportunities. See how the Sahara is utilised for creating tourism products.
The second point which is very interesting is, Rajasthan did not fare well on weekend getaways. Weekend getaways are driving the market for leisure travel in India. It is no more the one-week holiday or the 10-day holiday that is driving the market. It is the two-day holiday and the one-day holiday that is driving the market. So Rajasthan has an option — in fact, therefore, an opportunity — to recreate some parts of its tourism product to be much, much sharper: shorter, sharper focused products to the Delhi market, to the Ahmedabad market, where these are all potential markets that can have a weekend getaway to Rajasthan. Weekend getaways mean that you have to be within 200-300 km of the city you are targeting. So, if you are targeting Ahmedabad, if you are targeting some of the other cities around, you should incidentally be targeting Jaipur as well, for holidays within Rajasthan.
Moderator: I think Hari, the three points that you made were excellent. I think Mr Singh would like to respond.
Gajendra Singhb Mr Nair, of the 470 MoUs signed during Resurgent Rajasthan, 220 were for tourism alone. So I was quite surprised. Basically, one of the fastest growing sectors is religious tourism. And as you rightly said, activities. But what all are the activities now? As you talk about the desert, you need ballooning, you need ATVs, this is what is not there. You come to Jaipur, and what do you see? You see Amer, you go to the City Palace and you go to some restaurants and eat Rajasthani food. Go to Chokhi Dhani and then there is nothing more to do. So you are very right that adventure tourism is something that has to be developed. And our advantage of course is that we have the desert, we have lakes, we have mountains, we have wildlife, we have the tiger. And we have very nice roads. I think Rajasthan has scratched only the surface at the moment.
Moderator: I think we have got a nice overview of the issues affecting Rajasthan’s industry and tourism challenges. The discussion on tourism thing was really eye-opening.
Gajendra Singh: Rajasthan actually can survive on tourism alone. That is the vast potential which is there.
Moderator: But I still didn’t get an answer on the question about skilled people. Is there any perspective on Rajasthan’s skill challenge? Mrs Gupta, would you have something on it? Is that an issue?
Veenu Gupta: There is this huge mission that has been set up for skill development, RSLDC. And there are several partners. One of the best things that has happened in this state is that industry is coming forward. We now have a training school set up by Honda. We also have training programmes being conducted by Saint Gobain. Some of these big enterprises are setting up their own skilling centres primarily in order to get skilled people to supply to other industries. So the effort is to encourage more and more industries to set up skilling facilities of this kind. And the state government is fully supporting them.
Moderator: What roles can industry play in improving apprenticeship and skilling? They are all connected issues.
A K Bajoria: JK Tyre has adopted two ITIs in Rajasthan. And we have been running them for the last four years. We have been able to take over the management. We have tweaked the courses to suit our requirement as well as that of the industries all around Udaipur and Rajsaman. And wherever we get requests, we try to introduce those courses. We have set up a large university about 28 km from Jaipur — J K Lakshmipat University — where we have invested Rs 210 crore in the last three years. Our objective is to take this much further.
We already have about 1,800 boys and girls undergoing management courses, engineering courses and general aptitude courses where we invite industry batches of ten and twenty. We give short-term training of one week, two weeks, and so on. We also have a government-approved R&D laboratory. We have started giving courses like any other engineering college with the help of Udaipur University, where we train tyre engineers, rubber engineers and polymer engineers who are immediately employable and who are not getting employment after passing out from the normal engineering courses. So I think we are certainly making a difference.
Moderator: That makes sense. Mr Kajaria?
Ashok Kajaria: Skilling, I would say, is not an issue. Skilled manpower is very much available. I think instead of more education, what is needed is on-the-job training — after 30 days a man should be able to run a machine. If a man is put in a job, after 30 days should be able to run that machine.
Moderator: And you don’t see it as a problem?
Ashok Kajaria: Not at all.
Moderator: That is very encouraging, actually. Mr Agarwal?
Rajat Agrawal: I want to add here that under the aegis of CII we have already adopted 36 ITIs, and we are running them with relevant courses. And a few of the ITIs are in great demand throughout the industry. Skilling is reasonably good in Rajasthan. And, as rightly said by Mr Kajaria, on-the-job training is the best training and we keep faith in that.
Moderator: We are coming to the close of the session. Mr Nair, coming to service sector skilling, you do complain even when you go to European countries — you do complain about hotel services. And in India we are relatively better off, I think. Is that a problem in Rajasthan, or do you think there is scope for improvement? From your industry perspective?
Hari Nair: Correct. Once again, I would like to comment on this not so much from a Rajasthan perspective but what we see across India. I am sure it will have relevance here as well. I want to connect this to a larger trend and that trend is accommodation. You see, a big part of the tourism experience that somebody carries back lies in how you handle the accommodation experience, by and large, right? And what we have seen in accommodation in India is that there is going to be in the future an increasing challenge for formal accommodation to come in, especially in newer destinations, new places where hotels have to get built, and it will take a certain amount of time for hotels to get built, and so on. So we believe that a lot of accommodation that is going to come to tourism in India in the short run is going to be what I call informal accommodation of the homestay varieties, the guesthouses, and so on, and so forth. And there is sound economics that will drive that process.
If that is the case, then actually I think there is a skilling problem there. And I think that is something that makes sense to try and solve. And the skilling is not of a mega type. It is very, very simple, how to make a bed, how to keep the bathrooms clean. It is just housekeeping stuff, by and large. A little bit of presentation on the food side. So these are not complex problems to solve, but highly meaningful problems to solve in terms of sheer impact on employment that you will generate across the state. So I was wondering, while we have an ITI structure which is very manufacturing industry-oriented, maybe we need to create a parallel structure like that for tourism in a very simple way, which does not need a lot of infrastructure.
In fact, I have been talking to one of the state governments in the North-East, where I am trying to tell them that if you have homestays ready, make them the places around which you do the training. So you bring 20 different people to one homestay, and let’s say it’s a homestay that does the job well. Then they become the champions to improve things around that region, and so on. So we can think a little imaginatively, a little differently. So that is how I would think about skilling. I think there is an opportunity, because it doesn’t require a lot of upgradation. I think it is just basic stuff.
Moderator: Well, it’s time to bring this session to a close. It was in my view a very interesting session with very clear takeaways. I, for one, found that industry sees the need for more promotion of what the government is doing, and the government is more keen on engaging with industry and even recognises the service sector opportunities that Mr Nair very beautifully explained. So, I think we can end this discussion on a positive note. Once again, I thank all of you for having taken valuable time off for being part of this panel.