India's chief economic adviser V. Anantha Nageswaran on Friday said there is a need to deregulate and rationalise laws relating to building regulations to encourage small and medium enterprises and create jobs.

The CEA said the existing industrial building regulations limit factory land usage, reducing land utility and resulting in unquantified costs. Better utilisation of land could bring down the fixed cost of production per unit, thus incentivising the entrepreneur to hire more workers.

While making a presentation at the Bengal Chamber of Commerce s AGM virtually on Friday, Nageswaran said, "If we deregulate properly and substantially both in the central and state government, that will enable SMEs to grow bigger and V. Anantha Nageswaran absorb more labour."

"In the economic survey we talked about India having to create around 8 million jobs per annum for the next 10-12 years. We can t do that with only large enterprises, which rely more on capital whereas SMEs rely more on labour, because their cost of capital is higher," Nageswaran said.

The CEA said that India still has a large number of small enterprises. In FY23, there were 14,96,116 enterprises listed with the MCA of which 13,93,677 were private non-financial firms. Of them, 97,187 (6.9 per cent) had a paidup capital of over 1 crore.

The economic survey had referred to a report which illustrates how land remains unutilised while complying with the four building regulations relating to ground coverage, setbacks, parking and floor area ratio.

Growth potential The CEA said that India is poised to remain the fastest-growing major economy in FY25. The economic survey had estimated a growth rate of 6.5-7 per cent for FY25.

"This is a good achievement in the current global context and if on top of that we can address some of the issues in agriculture, SMEs, deregulate the economy, manage the energy transition, skill our workforce, our potential to grow will increase to 7.5-8 percent rather than 6.5-7 per cent," he said.