Ease of doing business to improve for service sector and knowledge-based industries, says AAP govt

In a step that would redefine 'industries' and come as a huge relief to hundreds of small and medium-scale entrepreneurs of Delhi and its neighbouring areas, the Aam Aadmi Party government in Delhi has decided to allow service sectors, IT-enabled and knowledge-based industries in all industrial areas within the capital's jurisdiction.

An order to this effect was passed recently by the Delhi government.

For nearly a year now, such industries were barred from operating freely within the marked industrial premises of Delhi, allowing only older manufacturing industries to function in such areas. Delhi has nearly 28 industrial estates.

They are, however, allowed in other states such as Rajasthan, Haryana, Himachal Pradesh, Uttar Pradesh, Gujarat and Andhra Pradesh. Even in Maharashtra IT parks are allowed under MIDC estates, while knowledge sector companies are part of the IT category, which comes under the Maharashtra industries department.

Industry association heads claim that the situation had been particularly difficult in the last eight months, where authorities from the municipal corporations of Delhi have been harassing entrepreneurs from service sectors by imposing fines on them and threatening them to seal their shops unless they convert their businesses to commercial, which requires huge money.

Rajan Sharma, president of Okhla Industrial estate association, says to convert a 2,000 square metre area to commercial status, it will require anywhere between Rs3 crore and Rs4 crore at the rate of Rs12,500 per square metre. "That aside, we will end up paying property taxes, electricity bills as fixed to commercial activities," said Sharma.

The Delhi government order will, however, allow industries like software, IT service, ITES (includes call centres, finance and accounting, Human Resource services and other consulting services), research and development, designing, business services such as tourism and legal services, as well as education services such as vocational training centres, media industry among others, to operate in the industrial areas of Delhi now on.

The order, issued recently by the state department of industries, resonates with the Centre's call for improving the ease of doing business in the country.

Sharma said even though PM Modi had been emphasising on the importance of IT, service sector and knowledge-based industries and improving the ease of doing business ever since he took over, the situation had been different in Delhi. He, however, is hopeful that the new order will improve the business scenario in the capital.

A World Bank study which has compiled the data for Mumbai and Delhi had given the country a dismal rank of 142 among 189 economies last year, which however, has jumped by 12 points to 130 this year.

An official from the department of industries told dna, "Allowing service sector and knowledge-based industries in the industrial estates of Delhi will not only increase economic activities in Delhi, but generate mass employment too. What's more, it will change the primitive looking industrial sectors by modernising them."

Another official informed that the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, as well as the Industrial Policy of Delhi 2010-2021 allows many service activities in industrial areas.

"Even the Master Plan of Delhi only gives a list of prohibited industries and does not exclude service activities from industrial activities," the official said.