On Independence Day, Prime Minister Narendra Modi called for regulatory reform so we can better weather the storm of uncertainty that besets us. We must cut through the regulatory thicket that stifles our competitiveness, while often hurting the very cause it purports to protect. A prime example is the mandate that 33% of industrial land be set aside for “green cover” to get environmental clearance. This rule means that a factory running on one acre in China would need 50% more land — 1.5 acres — in India for the same output. The assumption that reserving such green cover benefits the environment, in practice, not only handicaps Indian industry but also hurts the environment.

The handicap to industry is clear: For the same output, it must use 50% more land in India, a famously land-scarce country, than in competitors like Vietnam or China which reserve 0-10% land for green cover. The damage to the environment happens through two mechanisms. One is relatively straightforward: We force industry to use much more land than necessary, while creating small, spread out green fragments on industrial land with little to no environmental benefit. The harder to see, but potentially more........

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