KCR’s vision to turn Hyderabad into a logistic hub under threat from officials

HYDERABAD: Chief Minister K. Chandrasekar Rao’s vision to turn Hyderabad into India’s logistics hub, catering and servicing in a post-GST regime to a swathe across central and southern India, is under threat from a section of bureaucracy. The platform — Telangana State Industrial Project Approval and Self- Certification System (TS-iPASS) — is a rare perfection among government initiatives to fast-track investments and setting up of industries in TS, where the scope for corruption or delay in permissions has been eliminated.

Over three months ago, a senior official of the Hyderabad Metropolitan Development Administra-tion (HMDA), which dispenses land outside the GHMC area for new industries, issued an internal memo to the industries department, seeking to declassify warehousing from the latter’s ambit, arguing “storage” is ineligible for permissions through the TS-iPASS.

This would force new investments in warehousing sector, crucial to the overall logistics plan, to seek permission in an older fashion, by applying to each department physically. There would be no time limits, no rights to entrepreneurs to get permission and would open the floodgates of harassment and rent-seeking.

Fight within
When investors and entrepreneurs complained to Jayesh Ranjan, principal secretary (industries and commerce), about this move, he reportedly flew into a rage over the transgression by a wing of the municipal administration and urban development (MA&UD). How could it arrogate to itself to define what an industry is, he reportedly remarked.

However, the tussle is not only intra-departmental but is now a clash between two principal secretaries heading the industries and MA&UD. Both departments are headed by K.T. Rama Rao and the feud is making potential inves-tors jittery and jeopardising the prospect of new industries.

Established in 2014, the TS-iPASS went live in 2016, headed by a nodal officer with a strong chasing cell, that would report to the commisionerate of industries, and was tracked directly by the Chief Minister’s Office. Shanta Kumari, an IAS officer headed the chasing cell. Once she was transferred before the Assembly elections, it was entrusted to Narsing Rao, principal secretary, CMO, whose focus was diffused by other responsibilities.

Once politicians got busy with elections, bureaucrats diluted the initiative and gave rejections for trivialities. The grip of the chasing cell weakened.

Why TS-iPASS is crucial?
TS-iPASS was crucial to the state’s high rank in the ease of doing business. It provided a single-point window for speedy processing of applications and clearances for the setting up of industries based on self-certification.

“The TS-iPASS allows new industries wishing to invest in TS to upload a request online. A chasing cell pursues various departments for permission on behalf of the industry. It comes with pre-defined time limits and no official can withhold permissions without valid reasons. It ensured a businessman did not have to meet different officials to get permission. In government, power is asserted and bribes negotiated when businessmen reach out for permissions. TS-iPASS did away with it. Naturally, investors loved it and bureaucrats hated it,” said a leading businessman with investments in Telagnana.

The initiative helped TS to the top of investment-worthy states. The state's industrial policy became a subject of study by other states. It is noteworthy that in a sustained slowdown in nati-onal economy, Hyderabad remains a booming centre, an outlier in crucial parameters like attracting investments, industries being established and jobs being created.

Core sectors industries that benefited most inclu-de pharma, aeronautical defence contract manufacturing and weapons equipment ancillaries, seed manufacturing, agri- and food processing, besides SMEs and MSMEs. The rubber-band effect of stretch-growth led to a consequential growth in real estate and a logistics hub began emerging, which spearheaded a boom in warehousing, transportation and allied services.

Vision of logistics hub
In the post-GST phase, the CM, whose TRS became the first non-BJP party to support the one-nation, one-tax regime, envisioned using the now obsolete state borders to transform Hyderabad into a logistics hub.

“Hyderabad has successfully challenged the numero uno position of Nagpur as a logistics hub to serve central India, besides being a great gateway to south. Post-GST, we could service up a catchment area of up to 400 km into Karnataka, Maharashtra, AP, Tamil Nadu. Previously, for example, we would be stopped at the 70-odd-km state border of Karnataka. Bizarrely, we would end up serving a place like say Srikakulum, north of Vizag, in the-then undivided state of Andhra Pradesh, which was over 750 kms. With state-border neutrality, we can now optimise logistics based on rational factors,” an entrepreneur in warehousing said.

Logistics and warehousing were crucial not only as investment and support for other industries, but as a crucial job creator. Real estate employs around 75to 80 people while developing one lakh square feet, post-development, a manufacturing unit today employs around 30 to 40 for that space. In contrast, warehousing generates a direct sustainable employment of 200 to 225, besides over 100 per cent indirect employment.

After successes in attrac-ting marquis investments from Amazon for a leviathan fulfilment centre and a Tata and Lockheed Martin defence unit, TS, led by industries minister K.T. Rama Rao have started scouting for bring logistics majors — DHL, Kuehna Nagal, FedEx, among others. The crucial enablers for this growth were the scaling of the tipping point and building momentum, foundational to which was the TS-iPASS.

Secret of success in attracting investments, creating jobs
“One of the biggest reasons for TS’s investor-friendly environment was TS-iPASS, which ensured time limits were set up for each approval, varying from one day to a maximum of 30 days, and above all,” said an investment advisory professional from Mumbai. “We experienced this when one major European investment we facilitated in TS applied for 14 different permissions and got them without having to interact with even one of them. From land administration clearances, irrigation, change of land use, master plan zone change, factory license, clearances from pollution control board, besides other commercial permits were all given within four weeks.”

“The attraction of investing in TS would reduce without TS-iPASS. The dream of it being a logistics hub would be just a dream if investors were told to revert to the older system of running from pillar to post,” said an analyst with a major investments advisory firm.

Officials contacted within HMDA or TS-iPASS were unwilling to officially comment.