Published On : Thu, Dec 18th, 2014

Industries should be offered easy Exit policies too: Govind Daga

Nagpur: With new governments everywhere – in Delhi and Mumbai – development and industrialization have become the new mantras. The young Chief Minister of our state wants to offer ease of starting industries and one window facilities for new entrepreneurs. This is a good and desirable step no doubt but thinking rationally and logically, we also have to accept that if a Company is an entity that sees organic growth, to perish due to various factors is also a natural phenomenon and one should not react emotionally to it.

govind-dagaIndustries are born to fulfill some perceived market need. Sometime, they succeed in creating a need. (Like Maggie noodles e.g.) As long as they are fulfilling this, there is reason for their existence. But market realities change, products get obsolete, services get supplanted by cheaper alternatives; what is a promoter to do then? To give a simple example, lots of youngsters set up shops in Nagpur few years ago selling smart phones and other electronic devices. Today this market has been captured almost 100% by online portals such as Amazon and Flipkart. Keeping the shops going may not make sense; similar situations can arise with manufacturing units that employ many i the labour force. For their ‘right of livelihood’ an industrialist should not be forced to keep a loss making or sick unit going.

Even a profit making unit may have other compulsions to close down. In family run business’ there is the issue of the next generation not wanting to get involved and therefore succession problems; what is a promoter to do then?

Governments levy new taxes, duties, international prices of some commodities fall making imports a cheaper option.There are any number of reasons why it does not make sense to keep a company going any more.

Also look at the demographics of cities. When a city is young and yet to grow an industrial area may be set up on its outskirts. After some decades, when the city has expanded the industries could be occupying space that could be better utilized for housing or commercial uses.

Take the instance of MIDC, Hingna. A lot of hue and cry is made about their problems and issues. I say, instead of supporting them artificially, allow them to exit. Let the area be used for schools, colleges, houses and hospitals – also parks and play areas. Why have polluting industries in the heart of the city? Encourage them to shift manufacturing plants outside and allow them to gain from the enhanced commercial value of the land/ sheds they have occupied for over ten years.

Any government that wants to think about holistic planning of urban India must begin thinking along these lines too. Accept ‘death’ and have single window options to make it easy to close down business’ too.

… Govind Daga