Invest India is the official investment promotion and facilitation agency of the department of industrial policy and promotion mandated to facilitates the investment into India. The team of domain and functional experts of the agency provide sector and state specific inputs and hand holding support to investors through the entire investment cycle from preinvestment decision making to aftercare.
The agency assessed with the location identification expediting regulatory approvals facilitating meetings with relevant Government and corporate officials and also provide after care services that includes initiating remedial action on the problems faced by the investors.
All facilitation and handholding support to the investors under the make in India programme is being provided by the invest India.
■ eBIZ PROJECT:
eBIZ is is one of the integrated services projects and part of the 31 mission mode projects under the national e-governance plan of the Government of India.the eBiz platform has also launched two services viz., ‘Issuance of Industrial License’ and ‘Issue of Industrial Entrepreneur Memoranda’ issued by DIPP on 20 January 2014.
The focus of eBIZ is to improve the business environment in the country by enabling fast and efficient acess to government to business services through an online portal this will help in reducing unnecessary delays in various regulatory processes required to start and run business.
E-Biz will serve as 24 hours online single-window system for providing efficient and convenient Government to Business services to the business community in India .Since, business users will get services from single contact point it will result in savings of time, effort and cost. The benefits will accrue across all sectors, including, Manufacturing, Information Technology, construction services among others.
This project aims at creating an investor friendly business environment in India by making all regulatory information starting from the establishment of a business through its ongoing operations and even its possible closer easily available to the various stakeholders concerned in effect it aims to develop a transparent efficient and convenient interface through which the government and business can interact in a timely and cost-effective manner in the future.
The vision of a business eBIZ is to be the entry point of all the individuals businesses and organisations which would like to do business or have any existing business in India by creating a one stop shop of convenient and efficient online services to the business community by reducing the complexity in obtaining the information and services related to the starting business in India.
■SPECIAL ECONOMICS ZONES:
A special economic zone is an area in a country that is subject to different economic regulations than other regions within the same country. The SEZ economic regulations tend to be conducive to–and attract–foreign direct investment . FDI refers to any investment made by a firm or individual in one country into business interests located in another country.
The special economic zones Policy was announced in April 2000 with a view to overcome the shortcoming experienced on account of the multiplicity of controls and clearance absence of the world-class infrastructure and an unstable physical fiscal regime and with a view to attract largest foreign investment in the India.
When a country or individual conducts business in an SEZ, there are typically additional economic advantages for them, including tax incentives and the opportunity to pay lower tariffs. The special economic zones is specially delineated duty free and enclave and shall be deemed to be foreign territory for the purposes of trade operations and duties and tariffs.
In other words social economic zones is a geographical region that has economic loss different from a country typical economic laws usually the goal is to increase foreign investment.
The social economic zones concept recognises the issues related to economic development and provides for developing self sustaining industrial Township so that the increased economic activity does not create pressure on the existing infrastructure.
Today there are approximately 3,000 social economic zones operating in 120 countries which accounted for over US dollar 600 million in exports and about 50 million jobs.
☆ objectives of social economic zones in India:
- Single window clearance for setting up to a SEZ and a unit in social economic zones.
- Single window clearance on matters relating to Central as well as State Government.
- Easy and simplified compliance procedures and documentation.
- Generation of additional economic activity .
5.promotion of exports of goods and services.
- Promotion of investment from domestic and foreign sources.
- Creation of employment.
- Development of infrastructure facilities.
- Simplified procedures for development operation and maintenance of the social economic zones and for setting up units and conducting business.
☆ SEZ Act 2005 and SEZ rules 2006:
The Government of India has enacted the Special Economic Zone Act, 2005
which has come into force from 10th February 2006. In exercise of the powers conferred by Section 55 of
the SEZ Act, 2005, Ministry of Commerce & Industry has notified the SEZ Rules, 2006 on 10th February, 2006.
To instil confidence in investors and signal the governments commitment to a stable social economic zones policy regime and with a view to impart stability to the social economic zones resume thereby generating greater economic activity and Employment through the establishment of social economic zones and comprehensive special economic zones act 2005 which received presidential assent on the 23rd June 2005.
The SEZ Act has been enacted by the Parliament and has received the assent of the President on 23rd June 2005. The SEZ Rules have already been notified. The SEZ Act along with SEZ Rules have become operative w.e.f. 10th February, 2006. The SEZ Act, 2005 contains
provisions relating to fiscal exemptions in Section 26 & Section 27. Now all the activities relating to the SEZ shall be guided by the provisions contained in the SEZ Act, 2005 and the SEZ Rules, 2006.
The main objective of the social economic zone at are:
Generation of additional economic activity promotion of exports of goods and services promotion of investment from domestic and foreign sources creation of employment opportunities and development of infrastructure facilities however the social economic zones Act does not require environmental impact assessment as part of the application for new units this is because social economic zones are only permitted to contain not populating industries and facilities the social economic zones rules 2006 provided for:
- Single window clearance for setting up of and social economic zones;
- Simplified procedures for development operation and maintenance of the special economic zones and for setting up units and conducting business in social economic zones;
- Single window clearance for setting up unit in special economic zone;
- Single window clearance on matter relating to Central as well as State Government;
- Simplified compliance procedures and documentation with an emphasis on self certification.
☆ approval mechanism of SEZs:
The developer submit the proposal of establishment of social economic zone to the concerned state government the state government has to forward the proposal with recommendation within 45 days from the date of receipt of such a proposal to the board of approval the applicant also has the option to submit the proposal directly to the board of approval the board of approval has been constituted by the central government in exercise of the powers conferred under the social economic zone act all the decisions are taken in the board of approval by consensus there are altogether 19 members in the board of approval.
☆ administrative setup:
The functioning of the social economic zone is governed by a three-tier administrative setup the board of approval is the Apex body and is headed by the secretary department of Commerce approval committee at the zone level deals with approval of units in the social economic zones and other related issues each zone is headed by a development commissioner who is the ex officio chairperson of the approval committee.
Once an social economic zone’s has been approved by the board of approval and Central Government has notified that the the area of the social economic zones units are allowed to be set up in the social economic zones on the proposals for setting up of the units in the social economic zones are approved at the zone level by the approval committee consisting of development commissioner customs authorities and representatives of the state government all post approval clearance including grant of imported exporter code number change in the name of the company or implementing agency broad banding diversification and many more are given at the zone level by the development Commissioner.
☆ incentives and facilities offered to the social economic zones:
The incentives and facilities offered to the units in social economic zones for attracting investment into the social economic zones including foreign investment includes:
- Hundred percent income tax exemption on export income for social economic zones units under section 10A A of the Income Tax Act for first five years 50 percent for next 5 years thereafter and 50 percent of the ploughed it back export profit for next 5 years.
- Exception for minimum alternate tax under section 115JB of the Income Tax Act.
- Duty free import or domestic procurement of goods for development operation and maintenance of social economic zone unit.
- Exception from state sale tax and other levies as extended by the respective state government.
- Single window clearance for Central and state level approvals.
- Exception from Central sales tax.
- exemption from service tax.
- External commercial borrowing by social economic zone unit of to us dollar 500 million in A Year Without any maturity restriction throughout recognised banking channels.
In September 2016 the number of formal approval was 408 and the number of notified social economic zones was 328 plus. Total investment in social economic zone on 31st March 2016 was rupees 376494 crore.
7 Central Government social economic zones are located at Santa Cruz ,cochin ,kandla and Surat , Chennai, Visakhapatnam ,falta and Noida in India
☆ argument against social economic zones :
- Create powerful and regional private monopolies.
- Shift focus on exports from serving the local markets.
- Loss in revenue of government due to special incentives offered.
- May result in land scams.
- Too many small social economic zones in China has few of large social economic zones.
- Main force non social economic zones units to shift to social economic zones.
■ INDUSTRIAL PARK IN INDIA:
An industrial Park means a project in which plots of developed space or built up stairs or a combination with common facilities and qualities infrastructure facilities is developed and made available to the units for the purpose of industrial activity or commercial activities.
The industrial parks are usually promoted by the SIDC or such other government agency or statutory authority. The projects are planned, approved, developed, managed and regulated by a governmental agency with minimal private sector participation.
Objectives to be fulfilled by and industrial Park are:
- No single unit shall occupy more than 50 percent of the allocable industrial area.
- Investment on infrastructure to be not less than 50 percent of the total project cost in the case of an industrial model Town industrial park or growth centre and 60 percent of the total project cost in the case of an industrial park on growth centre.
- Allocated area for industrial use to be not less than 60 percent of the total allocable area.
- Area for commercial use to be not more than 10 percent of the total allocable area.
- Industrial model town for the development of industrial infrastructure for carrying out integrated manufacturing activities including research and development by providing plots or Assets and common facilities within its precincts.
- Minimum area required to be thousand acres with minimum 50 units in case of industrial model town and varied area requirement with a minimum of 30 units in case of industrial park and growth centre.
- An industrial park for development of infrastructural facilities for build up space with common facilities in any area allotted for a year marked for the purpose of industrial use.
- A growth Centre under the growth Centre scheme of the Government of India provided that the scheme referred in this Clause is implemented by an undertaking and the growth Centre is distinctly developed as a separate profit centre.
The industrial estates are meant to curb the scattered growth of industrial activity and encourage industrial growth within Geography kal locations centrally linked by transport communication water power supply and many more.
■ MODIFIED INDUSTRIAL INFRASTRUCTURE UPGRADATION SCHEME:
Industrial Infrastructure Upgradation Scheme was launched in 2003 with the objective of enhancing industrial competitiveness of domestic industry by providing the quality infrastructure through public-private partnership in selected functional clusters/locations which have potential to become globally competitive. The Scheme was recast in February 2009 on the basis of an independent evaluation to strengthen the implementation process. Key objective of the modify IIUS continuous to be the enhance competitiveness of industry by providing quality industrial growth in Employment generation and Technology upgradation the central assistance of rupees 203.1 8 crore has been released 22 projects in March 2017 under modified industrial infrastructure up upgradation scheme.
■ INDIA’S FIRST DEFENCE INDUSTRIAL PARK:
The union government DIPP in July 2015 approved a proposal from the kerala industrial infrastructure development corporation ,KINFRA stand for Kerala Industrial Infrastructure Development Corporation, KINFRA aims at bringing together all the suitable resources available in the state and developing infrastructure to promote industrial growth of the State,to set up the country first defence industrial park at ottapalam. The proposed Park which will be established at part of the make in India, make in Kerala project, will have modern common infrastructure facilities and at attracting component manufacturers in the defence industry first of the union government has agreed to bring it under the MIIUS. The total expenditure for the defense park is estimated at $231.25 crores. KINFRA will invest $181.35 crore, while the rest of the amount is being accepted as grant from the union government.
● significance :-
It is estimated that the defence components manufacturing sector has demand estimated at rupees 700 million a year from India and other countries having friendly relationship with it. In India there is a 15% gap between demand and supply. The defence Park can bridge the gap apart from providing the country and opportunity in defence related export of products from small and medium sized Enterprises.The Indian government has approved setting up of India’s first Defence Industrial Park at Ottappalam in Palakkad district of Kerala. The Rs. 231 crore park will be established with the help of Central and State governments. … 50 crore while the rest of the amount would be met by the State government. Ottapalam was selected for the defence Park keeping in view its strategic location as far as connectivity was concerned. Apart from common facilities such as dedicated power and water supply, the park will have a research and development centre.
Industrial sickness is defined in India as at industrial company registered for not less than 5 years which has at the end of any financial year, accumulated losses equal to or exceeding. Its entire Network and has also suffered cash losses in such financial year and the financial year immediately preceding such financial year.Industrial sickness has become a major problem of the Indian corporate industrial sector. Of late, it has assumed serious proportions. A close look reveals that there are, at least, five major causes of industrial sickness, viz., promotional, managerial, technical, financial, and political.
According to Companies Act 2002, sick industrial company means and industrial company which has-
- Failed to repair its Dept within any three consecutive quarter on demands made in writing for its the payment by a creditor or creditors of such company.
- The accumulated losses in any financial year is equal to 50% or more of its average net worth during 4 years immediately preceding such financial year.
■REASON FOR SICKNESS IN COMPANIES:-
There are different factors as a reason for industrial sickness.
• defective plant and machinery.
• management problems.
• entrepreneurial incompetence .
• demand forecasting- the Company production schedule is completely based on demand forecasting.
• financial problems .
• labour problems.
• gestation period.
•demand and credit restrain .
•erratic supplier of input / power cuts.
• Revival and Rehabilitation measures.
• government policy.
In the wake of sickness in the country industrial climate prevailing in the eighties, the government of India set up in 1981,a committee, of experts under the chairmanship of T.Tiwari to examine the matter and recommend suitable remedies therefore. Based on the recommendation of the committee, the government of India enacted a special legislation namely the sick industrial companies act,1985. The SICA stands for The Sick Industrial Companies Act,which received presidential assent on 8th January 1986.
The main objective of SICA was to determine sickness and expedite the revival of potentially viable units of closer of unviable units. It was expected that by Revival ideal investments in sick units will become productive and by closer the Locked Up Investments in an viable units would get released for productive use elsewhere.
The board of experts named the BIFR stands for The Board for Industrial and Financial Reconstruction ,was an agency of the Government of India, part of the Department of Financial Services of the Ministry of Finance.was set up in January 1987 and functional with effect from 15 may 1987. Appellate authority for Industrial and financial reconstruction was constituted in April 1987. Government companies were brought under the purview of SICA in 1991 ,when extension of changes were made in the Act including, inter-alia changes in the criteria for determining industrial sickness. SICA applies to companies both in public and private sector owning industrial undertaking.
The criteria to determine sickness in an industrial Company were given below:
- It should have 50 or more workers on any day of the 12 months preceding the end of the financial year with reference to which sickness is claimed .
- It should have a factory licence.
- The accumulated losses of the company to be equal to or more than its network that is it paid up capital plus it’s free reserves.
- The company should have completed 5 years after incorporation under the Companies Act 1956.
☆ SICA Repealed:
The Sick Industrial Companies Repeal Act, 2003 shall come in force from December 01, 2016 vide notification issued in official gazette on November 25, 2016. The ministry also dissolved the BIFR and AIFR.
The Companies Act 2002 inserted sections 424A to 424L that deal with sick companies to the administrated by the Tribunal in the Companies Act 1956 .the repeal act also was passed in 2004 however neither of the amendments was notified or become operative.
Insolvency and bankruptcy code 2016 received the president assent on 28 may 2016 and is to be become operative from the notified date administrative provisions under the insolvency act were notified on different dates from august to November relevant operative provisions were notified on 30 November 2016 the insolvency as amended the companies act 2013 to delete the provisions relating to sick companies it is also admitted the repeal act to allow companies having pending proceedings proceeding under the sica to approach the National Company Law Tribunal under the provision of the insolvency act within the specified time without payment of fees.
The repeal act Inter alia provides for the following:
• provides power to the central government to make rules for the implementation of the repealed act.
• no fees would be charged on abated appeals or references referred to the nclt within the prescribed time.
• repeal of the SICA and providing that such repeal shall not affect the order passed under the SICA.
• dissolution of the BIFR and the AIFR.
• Such terminated appeals of references may be referred to the nclt constituted under the Companies Act 2013 under the provision of the insolvency act within 180 days from the commencement of the insolvency act.
• abatment of reference or inquiries appeals and all other proceedings that were pending before the BIFR OR AIFR.
These notification settlement the long-term uncertain prevailing around existence of the SICA and provisions regulating sick companies the insolvency act is expected to provide faster resolution and is in line with effort to promote the ease of doing business in India.
■ INSOLVENCY AND BANKRUPTCY CODE,2016.-
The objectives of the new law is to promote entrepreneurship, availability of credit and balance the interest of all stakeholders by consolidating and amending the laws relating to recognization and insolvency resolution of Corporate persons from a partnership forms and individuals in a time bound manner and for maximization of value of Assets of such person and matters connected there with an incidental thereto.
The law aims to consolidate the the laws relating to insolvency of companies and limited liability and unlimited liability partnerships and other and titles with limited liability and limited liability partnership and individuals,presently contained a number of legislation , into single legislation. Such consolidation will provide for a greater clarity in law and facilitate the application of consistent and coherent provision to different stakeholders affected by Business failure or inability to pay Debts.
•the sailent future of the law are as follows:-
- Enabling provisions to deal with cross border ine solvency.
- Insolvency professionals wood handle the commercial aspects of insolvency resolution process insolvency professional Agencies will develop professional standards code of ethics and be first level regulator for insolvency professional members leading to development of a competitive industry for such professionals.
- Debt recovery Tribunal and NCLT to act as adjudicating authority and deal with the cases related to insolvency, liquidation and bankruptcy process in respect of individuals and unlimited partnership firms and in respect of companies and Limited liabilities entities respectively.
- Clear, coherent and speedy process for early identification of financial distress and resolution of companies and limited liability and entities if the underlying business is found to be viable.
5.Two distinct processes for resolution of individuals namely the fresh start and insolvency resolution.
- Establishment of a insolvency and bankruptcy board of India to exercise regulatory oversight over insolvency professionals, insolvency professionals Agencies and information utilities.
- Information utility would collect collate, authenticate financial information to be used in insolvency and liquidation and bankruptcy proceedings.
■ DISINVESTMENT IN INDIA:-
Investment refers to the conversion of money or cash into securities, debentures bonds or any other claim on money as follows ,disinvestment involves the conversion of money claims for securities and into money or cash for stop disinvestment can also be defined as the action of an organisation selling for liquidating an asset for subsidy in India contact details investment typically refers to sale from the government to the partly or fully. Of a government owned and enterprise.
Privatization implies a change in ownership resulting in a change in management. However disinvestment need not always and imply change in management. disinvestment is actually delusion of the state of the government in a public enterprise. If the delusion is less than 50% the government retains management even though disinvestment takes place. It is not privatised. But if the delusion is more than 50% there is transfer of ownership and management it will be called privatisation.Disinvestment in Public sector undertakings in India, is a process of public asset sales done by the President of India on behalf of the Government of India. It can be directly offered for sale to the public or indirectly done through a bidding process.
■ Reason for disinvestment:-
It is believed that the private ownership leads to better use of resources and their more efficient allocation.The division is no longer aligned with the core business.
Sustained lack of profitability, or margins continue to lag other parts of the business.
Capital is needed to grow other parts of the business.Company is over-leveragedtoo much debt.A previous acquisition isn’t working out. The proliferation of market based economy resulted in the fact that state could no longer meet the growing demands of the economical stop globalisation and WTO commitments need quick restructuring of the public sector undertakings. If they are not able to adapt to this,they would not be able to survive. There were two major reasons offered by the government for disinvestment. One was the to provide fiscal support and the other was to improve the efficiency of the Enterprises.
■ objectives of of disinvestment:-
The the following are the main objectives of this investment policy of the government-
- To introduce competition and market discipline.
- to D politicise the essential services.
- To find growth.
- To improve public finances.
- To diversify the ownership of PSU for enhancing efficiency of individual Enterprises.
- To encourage wider share of ownership.p
- To introduce competition and market discipline.
- To reduce the financial burden on government.
● DISINVESTMENT PROCESS IN INDIA:-
The Following Are the three methods adopted by the government of India for investing the public sector undertakings.
- Minority disinvestment.- a minority disinvestment is one such that at the end of 8 the government retains a majority stake in the company typically greater than 51% thus insuring management control.Disinvestment means sale or liquidation of assets by the government, usually Central and state public sector enterprises, projects, or other fixed assets. Examples of minority sales we are auctioning to Institutions go back into the early and mid 1990. Some of them were Andrew yule and co.ltd,CMC Ltd etc.examples of minority sales include recent shoes of power Grid Corporation of India Limited rural electrification Corporation Limited NTPC Limited NHPC Limited and many more.
- Majority disinvestment :
A majority disinvestment is one in which the government post disinvestment retains a minority stake in the company that is it sells of a majority stake.
Majority disinvestment took place in the sale of modern fruits to Hindustan lever BALCO to starlite, CMC to TCS etc.
- Complete privatisation:
Complete privatisation is a form of majority disinvestment where 100% control of the company is passed onto a buyer for example of this include 18 hotel properties of ITDC and 3 hotel properties of HCI disinvestment and privatisation are often loosely used interchangeably.
☆ methods of of disinvestment of Central Public Sector Enterprises:
- Initial public offering: offer of shares by an unlisted cpse or the the government out of its shareholding or a combination of both to the public for subscription for the first time.
- Further public offering: offer of shares by a listed CPSC of the government out of its share holding or a combination of both to the public for subscription.
- Offer for sale of shares by promoters through stock exchange mechanism:method allows auction of shares on the platform provided by the stock exchange extensively used by the government since 2012.
- Strategic sale:
Sale of substantial portion of the government share holding of a cpse of up to 50% or higher percent along with transfer of Management control.
- Institutional placement programme: only institution can participate in the offering.
- Cpse exchange traded fund: disinvestment through ptf route allows simultaneous sale of government stake in in various CPSE across diverse sector through single offering it provides a mechanism for the government to monetize its share holding in those CPSE which form part of the e t f basket.