Is Assam govt using MSME leeway to foster reckless industrialisation?

The Assam government has faced flak over its decision to ease out the process of setting up industries in the state for the sake of accelerating industrialisation. In a recent tweet, State Commerce and Industries Minister Chandra Mohan Patowary stated anyone will be able to set up industry in Assam just by submitting one self-declaration, said, “No permission, clearance or license will be required for three years. Land will also be deemed converted for industrial purpose.”

After the announcement, civil society organisations, lawyers and the opposition have criticised the move. The Assam government has been accused of ignoring serious environmental issues like protection of Dehing Patkai and Dibru Saikhowa National Park, which shook the state recently and consequently mobilised a movement. Instead, they are now allowing more people to set up industries without taking due diligence for the environment.

To clear the matter, Chandra Mohan Patowary posted again on Thursday. He stated that, that move will only allow Micro, Small & Medium Enterprises (MSMEs) and not for large industries.

The government clarification has a structural problem amid the other concerns of conversion of agricultural land to industrial land.

The bigger issue: Assam

Earlier, Finance Minister Nirmala Sitharaman revised the MSME definition from investment in plant and machinery or equipment based to a mix of investment and turnover. Manufacturing enterprises investing less than Rs 25 lakh, less than Rs 5 crore, and less than Rs 10 crore in plant and machinery or equipment were till now defined as micro, small and medium enterprises respectively. For services businesses, the investment threshold limit stood at less than Rs 10 lakh, less than Rs 2 crore and less than Rs 5 crore as micro, small and medium enterprises respectively. Now, with the revised definition, combining manufacturing and service MSMEs to enjoy same benefits, investment less than Rs 1 crore and turnover under Rs 5 crore will be defined as micro-units while small businesses will be categorized based on investment less than Rs 10 crore and turnover under Rs 50 crore. Medium enterprises will be defined on the basis of investment under Rs 20 crore and turnover less than Rs 100 crore.

So, the renewed definition of MSME can stretch to a business with a turnover up to Rs 100 crore. Doesn't it directly nullify the logic given by the State Industry Minister that the land is allocated only for MSMEs and not for large industries as Rs 100 crore enterprise is not wondering quite big for the state of Assam? What if the MSME might see a further upward revision of turnover in the future to make way for the corporates?

Assam: The shift from agriculture?

The Assam government has clarified "no hazardous industries will be allowed" and that's welcoming but how will they set up their units? They will, of course, have to procure agricultural land from the local indigenous population. Inside Northeast spoke to Raktima Kalita, Labour and Economic contributing writer from JNU Delhi, who reflected a key aspect of the issue of land conversion. "Land conversion has huge development induced displacement consequences and more ripple effects in terms of the precarity of labour", said Raktima Kalita.

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Another equation is that of the lowering output as farmlands get reduced by industries. "Land is the main thing. Even if you do commercial cropping and increase inputs to increase output per hectare, over time the productivity of land diminishes, especially if you use more and more inputs, as the same hectare of land can only take as much. Then previously Agri dependent people leave agriculture as it becomes more unviable. The cause of that will land only as per capita land decreases and the maximum becomes marginal landowners. In such a situation, they choose to do non-Agri jobs and sell off the remaining lands creating desperation for non-Agri works and migration, meagre wages and so on and so forth".

The alternative logic and questions

The neoliberal state will opine that moving away from agriculture to skilled technical jobs is the future ahead. However, the beneficiaries whose land are at stake will become highly vulnerable as they are not equipped with basic technical literacy and this sudden shift might seem like an economic shock. Moreover, the Assam Industrial Minister has said, "this will largely help Local Entrepreneurs". The question is, who is the business and industrialist class in Assam? Does unchecked land conversion have the potential to diminish the land rights of indigenous people and transfer those land rights to non-indigenous? If yes, then how can it benefit the local entrepreneurs?

Going forward

The tweet further mentioned, "no industries will be allowed in Eco-Sensitive Zones". But the Baghjan and Dehing Patkai episode clearly show that such rules are easily violated in Assam with loopholes such as due public views are not taken. With the EIA new draft 2020, which further limits the scope of taking views from the public, this can facilitate an easy way for the industrial lobby to get clearances with a state-level institutional backing. How the state government plans to curb these loopholes, only time will tell, as things stand now, there's a whole lot of lack of clarity.

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