
I tried starting a manufacturing unit in India - rohan_shah
https://superr.in/economy/i-tried-starting-a-manufacturing-unit-in-india/
======
blntechie
I think what the OP went through is pretty much re-zoning of an agricultural
land to commercial/industrial land which probably will run into similar
roadblocks in Western world too? Of course, not saying it will take this long
but have heard about similar bureaucracy.

Small town governments in USA at least are very strict with their zoning codes
and based on things what I have heard, changing the zone sometimes require
even putting the change in a ballot! Mostly requires council approval I guess
but the process is similarly full of red tape. I remember a very similar
article by someone who tried to start a business at their home in some US
state and the red tape he had to go through.

~~~
praveen9920
It is not just about red tape, it is about corruption. Govt. Employees in
India join the Govt job only for "alternative" revenue ( bribes ). This
process is usually handled by "agents" who knows how much these govt employees
expect and provide "easy" services to whoever wants to get shit done.

To take an example a simple thing like driving license takes couple of months
to get if one is planning not to involve an agent, but you can get driving
license ( without knowing any driving ) in 1 month if you have an agent.

~~~
ipnon
It must become simple for a bribery captured in evidence to be prosecuted.
This is anarchy otherwise.

~~~
blntechie
Most of the time, they don’t ask for money explicitly at all but they will put
procedural roadblocks so one pick up the cue and bribe them. Like Priority
Shipping for a bad analogy. Pay to fasten and smoothen your experience kind of
thing.

Of course it’s illegal.

~~~
aitchnyu
Same for me registering a car. The dealer sent me 12 documents and the
inspector wanted a few more. The dealer wasn't clear what they were. So I had
to waste a few hours for two days. The agent was able to cut the queue and I
spent as much time as to expose the engine number under the bonnet. The agent
is the funnel for bribe from me to the department.

~~~
imtringued
It appears that way. If you talk to them directly they are going to ignore you
and delay things. Then there are agents that specialize in fast tracking. The
agents know the officials and hand over the arranged bribe and the agent just
charges more to cover the bribe.

There is now plausible deniability because the agents look like they are
actually providing a valuable service.

------
asdfasgasdgasdg
It's interesting because you can see how theoretically any of these
requirements would be a reasonable step before starting a manufacturing
operations. I know in silicon valley for example many environmental problems
were caused by insufficient oversight of manufacturing. However, the road to
hell is paved with good intentions, as described in the article. I'm sorry to
hear this is happening and I wish you good luck in challenging this process.

Maybe a default-yes approach would be more efficient. You should be required
to post notice of your plans to these offices, then they have two months to
raise any objections. If they do not, then you can go ahead. If they do,
they're required to keep the process moving or you can sue to remove the road
block.

~~~
jeffreyrogers
There's an economist who calls this "premature imitation". Basically India has
adopted a lot of ideas that (arguably) make sense in more developed economies
but that prevent India from developing to the point where those policies are
actually beneficial.

~~~
pjc50
It's hardly new; the colonial system was set up to prevent India
industralising, but was so beneficial to those taking bribes that it was
carried on even after independence. Known as the "license Raj".

~~~
KineticLensman
> the colonial system was set up to prevent India industralising

Hardly. The colonial system started to evolve from approx 1600 [0] but
industrialisation [1] didn't start in the UK until at least 150 later

[0]
[https://en.wikipedia.org/wiki/East_India_Company](https://en.wikipedia.org/wiki/East_India_Company)

[1]
[https://en.wikipedia.org/wiki/Industrial_Revolution](https://en.wikipedia.org/wiki/Industrial_Revolution)

~~~
pradn
Colonialism didn't seriously arrive in India until 1750, and it took until
1800-15 for the British East India Company to consolidate it's control over
the subcontinent. Before 1750, the Company was a straightforward trading
company, sharing trading rights with the Portuguese, French, and the traders
of the Indian Ocean rim. After 1750, they were able to seize tax-collecting
rights in Bengal, one of the most prosperous areas of the Mughal Empire. They
used tax revenue on agriculture in the fertile Bengal delta to fund further
trading and military activities around the subcontinent. Their policy was
often mercantile. They forced wages down, drove exacting standards for
manufacturing textiles, and engaged in monopsonistic policy.

So, I agree - an accurate statement would be to say "English involvement in
India came out of the prevailing ideology of mercantilism, and it then grew
into a colonial state". The colonial state did lead to India's
deindustrialization - ex: the flourishing textile industries of the
subcontinent were not allowed to modernize. But counterfactuals are hard. (I
still think an area of the world at the forefront of textile production for
thousands of years would not have gone gently into the good night without a
fight.)

------
duxup
I wonder about the larger context here.

Generally speaking in developed counties you can't just buy any given farmland
and rezone it ... at will, just because you want to. That's not an automatic
thing.

Nobody wants a smelting plant to just show up next to their town and pop up
because someone wanted to build a smelting plant .... or something with
massive truck traffic ... that now goes through small neighborhoods / school
zones day and night ...

Having said that, the bureaucracy described is pretty thick. And at least in
the US there's plenty of land that is locally zoned in a way that could change
from farmland to something like 'light industrial' without that level of
bureaucracy.

But you need to seek it out and not just buy rando farm land and announce you
want to build a factory too..

I feel like this story both could happen in the US, but also would be fairly
avoidable too.

I recall a hilarious story about a cosmetic company who operated exclusively
in China but wanted to diversity their manufacturing around a bit and bought a
building in a historic district in the US. But they did zero homework and were
astonished to find out that nobody wanted trucks coming and going day and
night through this small town's city streets and 'staging' in the local school
parking lot. The clueless CEO said 'this was never a problem in China'...

~~~
rohan_shah
The land in the write-up is located beside a highway and trucks don't need to
go through any town to get to the unit.

Nor a I trying to build a heavy industry like a smelting plant. I am currently
planning to build a warehouse shed which could be later converted into very
light manufacturing plant for animal feed pellets or something similar.

Also, there are very few areas zoned as Industrial land. Also, this isn't a
random piece of farmland. It's almost a barren land where most people grow
grape vines or just some dry land crops like cactus.

~~~
duxup
I wonder if India has a system where land is farmland or unused ... but is
staged to be used as light industrial in the future?

At least in the US that's a thing where local communities zone areas for
future / potential use ... but it isn't that zone at the moment because it is
being used for something else. At least in the US those are fairly plentiful.

------
coldcode
Much of the world operates like this, to soak you for as much money as
possible before you give up and pay, even if they provide nothing actually
useful or meaningful. It only looks reasonable from their perspective which is
to maximize their income. Tax collectors in Rome 2 millennia ago were expected
to gain their income by extorting more tax than people owned; as long as the
state got what they expected, anything else was yours, which provided a great
incentive for tax collectors to soak everyone for as much as possible, and
ensured the state got what it wanted.

It's an interesting study in economics, unless you are the takee.

------
epx
As a famous Brazilian writer said: "Underdevelopment is not improvised; it
takes centuries to perfect."

~~~
imtringued
So are you saying the poverty is there by design? People want things to stay
the same even if it means stagnation?

~~~
epx
Yes. As piva00 said, the elite benefits from the status quo. I think it is
something even deeper: people are deeply afraid of change.

Another factor is the laziness of the bureaucracy. Public servants prefer to
move paper around than being "permissive by default" and going to the field to
verify that things are ok.

Yet another factor is the weak justice/control system. It is difficult to
punish bad actors rapidly and effectively after the fact, so the government
tries to do as many checks as possible before the fact, which of course
doesn't work and makes the life of honest actors hell, but "at least we
tried!".

All that said, Brazil is probably much less bureaucratic than India. We
Brazilians tend to compare with USA (big country as well, same continent, so
natural comparison) but some friends that went to live in EU say bureaucracy
is a big thing there too.

------
rohan_shah
Author of the article here. Do ask me if you have any questions.

~~~
uj8efdkjfdshf
Some questions:

\- How much would you expect to spend if you were to pay all the bribes? Are
you unable to afford them, or is this more of a moral issue?

\- Is there any reason why you are effectively purchasing agricultural land
and rezoning it to industrial land, rather than buying existing industrial
land? What is your plan if you cannot obtain all the necessary NOCs?

\- Is there any utility/road/rail access to your land? If not, have you looked
into how much it will cost to build the necessary infrastructure?

\- Is the area at risk for natural disasters (especially flooding)?

~~~
rohan_shah
Not paying bribe because of moral issues as well as the fact that I could buy
10 MacBook Pro's with that much money.

There are agents who provide the "NA service". They quoted me 10,00,000 (10
Lakh or 1 Million Rupees) excluding all the legal payments to government.

All land is Agricultural Land by default. Industrial land banks (created by
MIDC are few and far and our land is near a MIDC industrial land bank which is
out of stock, meaning completely bought out)

Yes there is road access.

No. the land is almost barren land. Far away from flooding. So no problem with
natural disasters.

------
jacknews
Try building a factory on farmland in, say UK.

This doesn't seem to have anything to do with 'starting a manufacturing unit',
but everything to do with completely legitimate government land-use planning /
zoning rules, etc, albeit a seemingly inefficient process.

The author should have performed due diligence on that process before
embarking.

~~~
rohan_shah
Except the fact that all land in India is a farmland.

~~~
aitchnyu
To expand, many projects are intentionally or unintentionally running afoul of
farmland and water body conservation laws.

------
pkphilip
This is such an amazing writeup. You are an extremely patient person. I hope
this gets some press coverage in India. It is shameful that the whole process
is so stuck in bureaucracy

~~~
sushshshsh
John Stossel did a similar experiment over a decade ago I think. Tried to
start a simple business selling hats in a mall in 3 countries-- India, USA,
and Hong Kong. In HK he was up and running the same day, USA took about a
week, and India never completed his business registration.

~~~
pkphilip
Not surprised one bit! Would you happen to have a link to this experiment?

~~~
sushshshsh
[https://youtu.be/fmuTTeESEs4](https://youtu.be/fmuTTeESEs4) timestamp 3:45

Let it be known that today OP delivered

------
actuator
I remember recently reading a lot of articles on India trying to attract
manufacturing plants in the country. Do they have to face the same issues as
outlined by OP or are they handled differently?

Also, are they looking at streamlining some of these processes?

I don't have a problem with few of the questions that OP complained about. For
example, the health certificate looks like something, they might ask to check
for health safety in the workplace and also probably to see natural resources
outside are not being polluted.

~~~
josephpmay
Most people are willing to pay bribes, so this is not an issue for them

~~~
actuator
But is this scalable? A lot of big manufacturing moving now like Foxconn etc
is just assembly. What they should want in the long run is to have the whole
ecosystem in place.

India has lagged a lot in terms of its peer economies in other parts of Asia
which almost started at the same place in the last century. I know they did
liberalisation later than most, but they haven't catched up well even after
that.

------
econcon
There is zero benefit of setting manufacturing unit in India.

Afaik, most of the manufacturing that happens here is assembly.

Unless your product is one of those mass market, multi million dollar revenue
makers you'll be eaten alive by adminstrative costs.

~~~
OJFord
I'm a complete outsider, but from my perspective Indian manufacturing seems
poised to doubly benefit from increased export at China's expense, and
'patriotic' local sales (even required by legislation in some cases).

~~~
nindalf
> 'patriotic' local sales

Biggest winners from recent Amazon and Flipkart sales were OnePlus, Oppo,
Xiaomi etc.

------
ramshanker
I hate to say this, but what he went through is reality. :(

HOWEVER my friend, if there is a will there is a way. ;)

Is “bribe” the only way? It is one, but not the only one. Maybe you can rent
space, maybe you can buy a land already classified as “NA”. Maybe apply under
several “Special Economic Zones”.

I still would have preferred if I could start on my own land.

------
kkaranth
Yikes. It sucks that you had to go through this. I find it appalling that so
many bureaucratic jobs exist only to sustain their own existence: providing
little value to those who pay their salary via taxes.

Do you think this process would've been (significantly?) simpler if it wasn't
agricultural land involved?

~~~
rohan_shah
All land is Agricultural Land by default unless it comes under Municipal
borders of a city or owned by MIDC (Maharashtra Industrial Development
Corporation).

So yes, the whole point of this NA document is to convert the agricultural
land into non-agricultural land on paper.

~~~
Cthulhu_
I can understand why it's a complicated problem then. As far as I know over
here (and I don't know shit), the local government (on a county level) sets
zones according to a "destination plan"; residential, commercial or
agricultural.

You'd apply for a plot of land in a commercial district for a project like
this. Else, you'd need to get in touch with the county so that they vote on
changing the destination plan.

I'm fairly sure the county itself will handle a lot of the infrastructure
hurdles mentioned in this post, e.g. power lines, irrigation, etc.

------
pradn
This is much harder than it needs to be. But I also don't think agricultural
land should be rezoned willy-nilly. Much of India's population (~60%) rely on
agriculture. It should be with great thought that private parties should be
able to convert the land (not just because it reduces land able to grow food
and agriproducts), but also because it can be a way to dispossess the poor.
For an example, see the plight of those whose land was taken to found a new
capital city in the state of Andhra Pradesh. The landowners were more or less
given a good price for their land. However, those who rely on the land - farm
laborers and their dependents - haven't seen an improvement in their
situation. They've essentially been turned into migrant workers; they were
able to work on local land before. This is essentially what the English gentry
did during the enclosures. The resulting "reserve army of labor" helped seed
the English Industrial Revolution.

[https://en.wikipedia.org/wiki/Enclosure](https://en.wikipedia.org/wiki/Enclosure)

------
de6u99er
This sounds worse than Eastern Europe. My wife once had interactions with
Polish authorities and the first official told her immediately what amount of
bribe money will be necessary to get it done quickly, contrary to everybody
involved sitting it out as long as possible. When she asked why the bribe is
so high, the government employee explained to her whom of his colleagues he
has to pay himself to get it done quickly.

I respect your refusal to pay bribes, but I believe you would have already
received your approval if you were willing to pay a bribe. Not sure much those
delays cost you in regards of your time invested and lost opportunities.

I'd go to the first person you talked to, ask how much needs to be gifted to
him personally so he/she can take care of this. Then pay half of it at the
beginning and the second half once you have received your approvals.

~~~
DenisM
> you would have already received your approval if you were willing to pay a
> bribe

There is a law that prohibits American citizens from bribing foreign
officials:

[https://en.wikipedia.org/wiki/Foreign_Corrupt_Practices_Act](https://en.wikipedia.org/wiki/Foreign_Corrupt_Practices_Act)

~~~
renewiltord
Dude, for things like this you can't just apply Wikipedia knowledge. It's
really not enough. Section 78dd–1 is what it looks like in law. Read Section
78dd–1 (b).

> _(b)Exception for routine governmental action Subsections (a) and (g) shall
> not apply to any facilitating or expediting payment to a foreign official,
> political party, or party official the purpose of which is to expedite or to
> secure the performance of a routine governmental action by a foreign
> official, political party, or party official._

~~~
DenisM
I did not know that, thank you.

------
kepler1
I was told a saying that in China, at least you know who to bribe to get shit
done. In India, you have no idea.

------
Mandatum
When both the Talathi and Circle Officer denied, all I thought was "why didn't
you pay them". That's why I think relying on agents who handle the bureaucracy
and know which palms to grease are worth their weight in gold in developing
countries.

I think during our life time we'll see India massively improve in this area.
They've already made so much progress over the past 20 years, it's a really
exciting country to watch.

They need more coverage in Western media like this though. Similar with China.
An effective form of change is shaming the department or process, and if it's
covered in Western media - at least this is true of India, it often makes
local news. (See Hassan Minaj's coverage on Modi.)

------
galkk
Sounds just like Ukraine.

It's surprising (or didnt mentioned) that every official doesnt point you to a
"professional consultant with lots of experience that will help you navigate
through process for a fee".

Although changing land purpose definitely should be involved process: I may
have missed it, but it isn't mentioned what kind of manufacturing is going to
be there. It might require lot of water, it might be very environmentally
unfriendly

~~~
rohan_shah
They don't point to any agent because that person will take a cut into what I
could directly pay the beautocrat themselves.

But there are a few visiting cards stuck with glue on the table. Visiting
cards of such agents.

------
perryizgr8
You should tweet this to the Prime Minister. He keeps on harping about make in
India, self sufficiency and ease of business. Show him the reality.

------
robofanatic
I think there needs to be regulation. You can't just build whatever you want
on an agricultural land even if you own it. Lets say someone builds a Chemical
factory, what would the neighboring land owners or residents do if it starts
polluting the land?

~~~
imtringued
Who is arguing against regulation here?

------
csomar
Okay, I'll assume either negligence or innocence for the OP; but one important
point is: Is there a lack of industrial zoned land in that region? Why didn't
you buy or lease an industrial area to build whatever you are going to build.

Where I live, industrial lands run at 5-10 times the price of an agricultural
land. So someone might justify going through the lengthy process (and bribe
officials along the way) because he is going to profit at the end of it. At
the detriment of people living or running their farms nearby.

My guess is that many people here are sympathetic because they didn't have
their lives ruined by someone opening up a manufacturing unit next to their
homes.

~~~
rohan_shah
Almost all land in India is agricultural land.

There's very little industrial land. And all of that is used.

------
haltingproblem
Hernando de Soto did exactly this work almost 2 decades ago. He documented how
many steps and weeks it takes to register a property or start a business. His
thesis is that this cumbersome process limits capital formation in a business
which then limits being able to leverage it via a loan and hence limits the
size of small enterprises. The same goes for property since most small
entrepreneurs use their home as collateral. This has locked up trillions in
value which can be unlocked. His work is fascinating and was frequently
mentioned for a Nobel.

[1] Why Capitalism Triumphs in the West and fails everywhere else
[https://www.amazon.com/dp/B06XCFW5ZN/ref=dp-kindle-
redirect?...](https://www.amazon.com/dp/B06XCFW5ZN/ref=dp-kindle-
redirect?_encoding=UTF8&btkr=1)

[2] Mystery of Capital Video:
[https://www.youtube.com/watch?v=Nco18FWM85E](https://www.youtube.com/watch?v=Nco18FWM85E)

~~~
rohan_shah
Wow! Thanks for mentioning the work of Hernando de Soto. I had never heard of
the work before but will surely read the book now.

------
vikramkb
Have been through this process. So I know how this person feels. My simple
question is with so much tech why cannot the NOCs be obtained digitally and
also why can't this NOC process be time bound? Why should we spend months? If
it's not rejected with valid reasons in digital format then why cannot the NOC
be deemed valid? What is the use of so many tech brains in India if we can't
create a simple system digitally? What political leadership is this that we
have to suffer even after 73 years of independence?

------
willyt
TBH, apart from the bribes it mostly sounds pretty similar to the UK. Perhaps
this person would have had an easier time if they had hired a professional to
deal with it for them.

I often visit sites with potential clients and I have to tell them sorry, I
can try, but you will pay a lot of fees to me and the local government and you
will likely never get permission to build here.

Off the top of my head, here are some permissions / consultations you could
need to build a private house in a UK, most sites wont require all of these at
the same time but many sites will have a least one need for a specialist site
survey of some kind:

Planning permission (Regulation of the impact of your build on the community):
\- Roads department consultation \- Water supplier consultation \- Wastewater
consultation with water authority and EPA \- Archaeological service
consultation \- Natural heritage / ecology. \- Historic environment
consultation. \- Coal authority (abandoned mines) \- Contaminated land check
\- Landscape capacity study \- Full set of plans, sections and elevations and
report to show: \- Materials \- Relation to existing buildings \- Effect on
landscape \- Land use \- Room use \- Placement of windows / doors in relation
to existing buildings \- etc...

Building control / Building warrant (Safety of the finished building): \-
Radon assessment \- Structural engineers certificate. \- SAP (energy use)
calculation \- Full set of plans, sections and elevations showing compliance
with all building regulations \- Consultation with Fire Authority \- etc...

CDM regulations require the client to appoint a competent builder / architect
/ engineer etc Party wall agreement ....and some more I can't be bothered to
type out here....

This whole process typically takes a minimum of 6 months before you get
permission to break ground. Some of the consultations are a one line response
saying 'no objection' or they can require you to get specialist surveys done,
this can drag things out longer.

For a factory the process will have several more levels of detail for each of
the points above. E.g each point under planning permission might require a
specialist consultant to visit the site, make tests or surveys and perform
desk studies and then the submission of, I don't know, say, a 20 page written
report with their findings.

~~~
rohan_shah
Wow! That's a lot of stuff.

And I agree that these things need to be done. And I am not against it if the
people there follow the procedure and do the things that are needed to be
done.

But what if one of the people from the government doing the survey/inspection
just refuses to sign the paper! It's just crap. You can't complain to anyone
nor can you do anything else. You're just stuck.

That's where my problem lies.

~~~
willyt
There’s various rights of appeal, they are very slow. Also any government
decision can be challenged by a judicial review in the U.K although it would
be very expensive and would take years. In India, if no-one signs the paper,
can you take it to court? I suppose that would take a long time too?

------
anonymousiam
[https://www.youtube.com/watch?v=WeFT7lPAHU0](https://www.youtube.com/watch?v=WeFT7lPAHU0)

------
otohp
I am an indian. I dont have any problems with filling out forms, or providing
documents. As long as the process is well documented. But in india it doesnt
work that way.

Even in the age of computers, some departments are printing forms using ink
from the middle ages on paper from the egyptians. You require a prime lens
attached to your eyes to decipher the 7point font on the form.

------
pragnesh
I believe one can get land for manufacturing in MIDC area much more easily ->
[https://services.midcindia.org/Services/VacantPlotsDetails.a...](https://services.midcindia.org/Services/VacantPlotsDetails.aspx)
by getting allotment directly from government or buying resell.

~~~
rohan_shah
My land is beside a MIDC (Sangli Miraj Kupwad MIDC) which has been completely
sold out. And I want to build it in Sangli because of the cheap raw material
available in Sangli itself.

------
suhasrao
Thanks for confirming (was aware of) the fact that the most of Govt Dept job
needs to be get done by citizens themselves for themselves! And one need to
pay Extra for getting it done through them. Same situation in Karnataka. Would
like to share this on other social media to support you

------
HETAL3471
Nicely written, I am a farmer in Maharashtra and this is the case with all our
subsidies, loans etc which the govt so proudly declared every year. It is as
if we are set to fail in acquiring one of these. Hang in there tho hopefully
you will get it .

------
linux_devil
I totally understand setting up manufacturing unit on agricultural land in
India is a pain , also you should see it coming as you are using
"agricultural" land for manufacturing. Also there is a dedicated industrial
zone setup in each states and it would have been easier to do industrial setup
there. But I totally get the point, its a cobweb of permissions and N.O.C ,
not even including under the table settlements , not sure if that was the case
here.

------
sharadov
Rohan - Maybe you've not done a good enough job of greasing hands :-)

------
tmellon1
Misleading title ! The author basically tried to rezone agricultural land into
industrial land.

------
ajb
Seems like a classic 'tragedy of the anticommons', just like early post-
communist Russia:
[https://en.wikipedia.org/wiki/Tragedy_of_the_anticommons](https://en.wikipedia.org/wiki/Tragedy_of_the_anticommons)

~~~
rohan_shah
Great. Hadn't heard of this concept before. But seems perfect to describe the
situation.

Thanks.

------
blahbhthrow3748
How does this compare to the zoning process in America? It sounds like OP is
trying to build a factory from scratch on land that isn't zoned for factories?
It's actually surprising one person can just run back and forth and get all
the paperwork versus hiring a lawyer to do it.

~~~
rohan_shah
Actually there are almost no pre defined industrial zones.

There are very few and most of them are bought out.

I can hire an lawyer or agent to this work, but the cost is very very high. I
decided to do it myself to understand the depth of this mess.

~~~
ipsi
Having now done all of this yourself, do you think the amount they charge is
reasonable, given how incredibly painful it is to do this on your own?

~~~
rohan_shah
No, I don't find the amount reasonable because of two reasons:

1) They charge so high because there are few players with so many internal
contacts. So this is a monopoly or oligopoly market just taking advantage of
the system. I mean it is hard because of these people. These people lobby to
keep such systems in place.

2) It is unreasonable for any government, especially in a developing country
to make so many demands of the illiterate and poor population. If such a
situation continues, poor people will never be able to manufacture anything.

This creates a social division almost alike slaves and masters. Alike the
Soviet System of the Elite Aristocrats, Their friends in rich, non-competition
businesses and the government and the serfs and peasants.

~~~
imtringued
It does sound like feudalism but this time it's not about farmland. It's about
industrial land.

However, there is one difference. A small factory can employ many people. If
you succeed, you won't be the only one who benefits.

