Recent reforms undertaken by the Government of India in terms of fast track project approvals and enactment of the Land Acquisition Bill will help in reviving the investment cycle in the coming quarters, said PHD Chamber of Commerce and Industry in a press statement issued in New Delhi on Monday.
The Chamber asserts that revival in new investment announcements during the Q2FY2014 is inspiring and is expected to continue in the coming quarters too on various recent reforms undertaken by the Government of India in terms of fast track project approvals.
There has been an up tick in new investment announcements of 4 percent from Rs846 billion worth of fresh investments announced in the Q1 FY2014 to Rs881 billion during the Q2FY2014. Also 280 projects were announced during the Q2FY2014 with cement and steel sector witnessing an increase of 50 percent and 40 percent respectively in fresh investment announcements.
PHD Chamber hopes that the new land acquisition bill will fasten the process of project implementation and push various PPP projects on the high road and attract investments from domestic and global stakeholders, going forward.
The Government of India recently cleared 36 infrastructure projects worth Rs1830 billion that were stalled because of various regulatory concerns. Fast track approvals will perk up sentiments for more and more investments, the Chamber added.
The power generation industry has recorded a healthy increase in new investment announcements during the Q2FY2014 with Rs372 billion worth of new investments being announced as compared to Rs92 billion worth of fresh investment announced in the Q2FY2013.
However, the manufacturing sector witnessed a sharp drop of 22 percent in new investments announcements during the Q2FY2014 over Q2FY2013. In an increasingly global environment, the sector continues to face structural constraints, such as inadequate, relatively inefficient and high cost infrastructure, high costs of borrowed funds, inflexibilities in labour markets and other institutional rigidities that inhibit the pace of industrial restructuring.
PHD Chamber believes that the removal of the rigidities in the manufacturing sector would not only regenerate the required production growth but also promote much greater investment environment.
PHD Chamber feels that labour laws in our country definitely need to be revisited, especially in light of the evolutionary changes in the industry, its types, processes and problems. It is certain that the benefits of the economic reforms shall not be achieved unless concomitant changes are made in the Labour Policy.
Inflexibilities in labour markets and other institutional rigidities hold back the pace of industrial restructuring as compared to other countries such as China, Malaysia, Thailand, and Bangladesh among others who are advantageous due to their liberal labour laws, it added.