Rajasthan has recently been able to attract a whooping number of 295 investment MoUs worth an eye-popping Rs 3.21 lakh crore from top industry giants. Vying for number one position at government’s ease of doing business rankings, will it be able to capitalize on this new found industrial revolution of its own?
The Center recently ranked Rajasthan at number six in terms of ease of doing business rankings for Indian states with a score of 61 percent by the Department of Industrial Policy and Promotion. The state government, however, contested the rankings as it didn’t take into account its efforts to curb controversial labor laws, including Industrial
Disputes Act 1947.
But number six still bodes well for the state that has been seeing rise in SMEs and corporate investments over the last few years. The largest state of India by area, Rajasthan predominantly has been an MSME-led state with more than 90 percent of the industries in the state falling within the MSME category and employing around 1.87 million people.
However, like most other states, the ground realities for MSMEs in Rajasthan have remained the same in terms of
capital, including bank funding, R&D, cluster development, red tape and skill development efforts by the state.
“There is a lot of difference between what is being promised and what is delivered. More than focusing on a business, it is about facing the local authorities and bureaucracy that eats up our time, money and efforts,” says Lalit Singh Gehlot, a Jaipur-based steel trader who tried raising fund from banks but didn’t work out because of collateral needs.
The state launched its new MSME policy to reflect on its pro-industry stance and efforts to turn Rajasthan into an increasingly industrialized state at the recently held ‘Resurgent Rajasthan Partnership Summit’ organized by the state government. Among the key policy initiatives that the new policy focuses on, includes strengthening single-window system, encouragement of MSME clusters, marketing and capital support, revival of sick units and helping unemployed youth for setting up micro-enterprises.
Launching the new policy, Kalraj Mishra, Union Minister for MSMEs, said, “We will give subsidies to help develop the MSME sector in Rajasthan. We plan to push the cluster development in Rajasthan even further.”
Gunning for Start-ups & Corporates
As per the Rajasthan MSME Assistance Scheme 2015 launched in November 2015, the state government has promised financial assistance primarily in terms of reimbursement of service processing fee for loans taken by women, SC/ST and differently-abled entrepreneurs apart from micro and small enterprises seeking loans under the CGTMSE scheme.
Moreover the MSME Ministry is also looking to set up 33i ncubation centers for MSMEs across its 33 districts to offer tools and training for people and necessary support regulatory support.
“Our MSMEs provide support base, supply base, and employment base to the state so we have to hand hold our micro small and medium enterprises so that micro becomes small, small becomes medium and medium becomes
big,” said Vasundhara Raje, Chief Minister, Rajasthan, at the summit adding, “Rajasthan is already a home to leading companies that are reaping the advantages of our natural endowments, infrastructure and policy reforms. The state is investing significantly in human capital.”
The existing corporates in Rajasthan, including Mahindra and Reliance group, and the new ones are betting big on Raje’s vision. For instance, investments worth Rs 11k crore by Kumar Mangalam Birla, Rs 10k crore by Gautam Adani, Rs 6.5k crore by Anil Ambani etc., have been promised.
“Rajasthan has emerged as an important investment destination for the Mahindra Group with the Mahindra World City (a special economic zone and an integrated business city) in Jaipur. States like Rajasthan with their proactive
and business-friendly policies will play an important role in helping India move up on the global ease of doing business scale,” said Anand G Mahindra, Chairman, Mahindra Group.
Witnessing the start-up boom in India, the state on the lines of top start-up hubs like Bengaluru, Delhi and Mumbai wants Jaipur to be at par with them. As a five-year target, the state’s Start-up Policy 2015 has already envisaged 50 incubators or corporate incubators to support around 500 innovative start-ups and a 100,000 sq.ft of incubation space.
Moreover, it is also aiming to mobilize venture funding of Rs 500 crore towards start-ups. “If Bengaluru is where it all began in start-ups, I can assure you Rajasthan is where it will be. Rajasthan is a world-beater and will remain so in the times to come,” said Raje.
However, Jaipur continues to act as a feeder to Delhi NCR. The only significant success story emerging out of Jaipur has been the city-based Girnar Software that runs auto classifieds portal CarDekho apart from Razorpay, another Jaipur-based online payments solution start-ups that raised $120,000 from global start-up accelerator Y Combinator in March this year.
But that still means that the sun will take long to shine bright over the state.
(This article first appeared in the Indian edition of Entrepreneur magazine (January, 2016 Issue).