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7 industry

  1. 1. Madhya Pradesh: Means BusinessIndustries 1
  2. 2. Overview Overview Madhya Pradesh (MP) – State that means business  MP is the second largest State in the Country stretching over 308,000 sq kms.  The State is blessed with large mineral resources of coal, diamond, limestone, methane etc.  MP is among the top 4 states of the Country for industrial investments. Economic Snapshot Madhya Pradesh is emerging as a key growth center for the Country  Per capita GSDP USD 369**  Gross state domestic product (GSDP) USD 23,983.63 Mn**  Manufacturing sector USD 8.5 bn**  Average growth rate 5.5% per annum (Registered & Unregistered) Advantage MP Madhya Pradesh has one of the upcoming industrial base in India  Total electricity generation capacity 6,449.25 MW*  The State is centrally located  India’s first greenfield SEZ Indore SEZ  Investor friendly Government policies  Industrial Centers 8 Power Electricity generation capacity at present is 6,449.25 MW and estimated to rise to a surplus in 2008-09  MP is rich in low grade coal suitable for power generation.  Potential of hydro-energy generation.  Installed power capacity (MP’s share)  Hydel Power Generation: 852.7 MW*  Thermal Power Generation: 2,147.5 MW* 2*Ministry of Power (powermin.nic.in) **Source: Indiastat.com (as on 23 Feb 2006)
  3. 3. Enabling Infrastructure • The State is well connected with the rest RAILWAY NETWORK of India with almost 425 trains passing MP IS CENTRALLY LOCATED AND WELL through the State on a daily basis. Of CONNECTED WITH ALL MAJOR CITIES IN INDIA these 175 trains pass through the State capital Bhopal alone. • 25 airstrips.** • Convenient air links from key Indian GWALIOR cities like Delhi & Mumbai to Bhopal, Jabalpur, Gwalior, Indore and AIRPORTS Khajuraho. KHAJURAHO • 5 operational airports. • Indore airport has the capability of INDORE BHOPAL handling international cargo. JABALPUR • An international airport proposed in Bhopal. • The total length of roads spanning MP is 67,600 kms.** • National highways of 5,200 kms run ROAD NETWORK through the State.* • 18 National highways including trunk routes of Delhi-Mumbai, Delhi- Chennai, Delhi-Bangalore, Delhi- Hyderabad. • The total length of State highways in the State is 9,885 kms.** • Convenient linkages to western ports i.e. Kandla Port, Jawahar Nehru Port Trust. 3*Source: Department of Road Transport & Shipping (morth.nic.in) **Source: www.destinationmadhyapradesh.com
  4. 4. Madhya Pradesh: A Preferred Investment Destination31% of the State under forest Over 2,000 kms of roads India’s 1st operational Offers diverse tourists destinationscover with a largely unexploited being developed with Greenfield SEZ at Indore catering to various segments ofspecies of rare, valuable Private Partnership (BOT) tourism such as religiousmedicinal- herbal plants (Bhojpur), eco/ adventure (Panchmari), heritage (Sanchi, Khajuraho) tourism etc.Over 100 agricultural farms with Third largest producer ofan area of over 20,000 acres is cement in India*available on lease to investorFavourable climatic Various blocks availableconditions for cotton for power, cement, ironand over 40,000 power- and steel unitslooms are driving thetextile industryLargest producer of pulses Over 18,000 technicaland oilseeds in the Country graduates and 230,000(~75% of soyabean graduates add to workforceproduction) each year Availability of coal and natural gas Over 144 BCM of coal bed 12 blocks with reserves (G.A.I.L pipeline) along with support methane reserves available totalling 2,585 million tons from Government to make investment of coal has been identified in Thermal Power Plants lucrative 4*Source: www.mpsidc.org & Brochure: MP Means Business
  5. 5. MP: The Right Place with the Right Environment Savings in Office Space Rates (A comparison of rates in Central Business Districts) Fastest mover* in overall DESTINATION MADHYA PRADESH performance among the big States in the Country. Fastest mover in agriculture Delhi (740 Kms) (MPV - 789.5) Fastest mover in Ahmedabad Bhopal and Indore have substantial cost infrastructure development. (570 Kms) advantages, even when compared to other Tier (MPV - 220.63) III and IV cities. Savings in Land Cost Ranks 2nd in terms of Kolkata (1350 Kms) (Estimated Values for Multi- governance. Mumbai (MPV - 613.19) product SEZs) (780 Kms) (MPV - 1000) Pune (800 Kms) (MPV - 206.51) Hyderabad (840 Kms) Key Markets Ranks 3rd in terms of law & (MPV - 257.9) (Distance From Bhopal) order Chennai MPV – Market Bangalore (1430 Kms) Potential Value (1400 Kms) (MPV - 362.84) (MPV - 254.52) Cost of skilled labour is USD 2.4/day vis-a-vis USD 3.5 – USD 4.0/day in metros The cost of land is one of the lowest in the Country. MP is centrally located. The State is at an easy distance from Even central hubs such as Indore and Bhopal fare* Fastest mover is the State where the rate of all the key consumer markets in the Country. well against other cities in terms of low land cost.improvement between 2003 & 2006 was greaterthan that between 1991 & 2003 5**Source: India Today (September ‘06 Issue) Source: (Reference: RK Swamy) - Distances rounded off
  6. 6. Industrial Policy: Catalyst for the InvestmentsThe Government of MP has devised an investor friendly industrial policy, SPECIAL INCENTIVESwhich is aimed at achieving global competitiveness. The policy emphasizes • Special package for Mega Projects on project basis by apex levelon industrial growth in the state through adopting cluster approach, investment promotion empowered committee headed by the Chiefestablishing specialized infrastructure and offering favourable incentives. Minister. • Industrial investment promotion assistance – 50% to 75% of commercialThe main thrust of this policy is: tax for 3-10 years • Concessional registration charges and stamp duty exemption for • Establishment of a Madhya Pradesh Trade and Investment Term Loans. Facilitation Corporation which would take decisions about • Interest subsidy on term loan for 5 – years @ 3% to 5%. rationalization of taxes, facilities of mega projects and other related • For thrust sector industries, 25% capital subsidy would be provided limiting up to a maximum of USD 56,000 matters. • Land on 75% concessive rate for Mega Projects limited to USD 4.4 • Enacting an Industrial Facilitation Act and to change the rules of million. • Entry tax exemption for 5 years. business with a view to make single window system decisive and result • 5 years electricity duty exemption on captive power generation oriented. • 15% capital subsidy to SSI up to USD 33,000 in backward areas • Developing infrastructure for supporting the identified industrial • Infrastructure grant up to USD 0.22 million crore for developing private sector industrial parks clusters • Partial reimbursement for Project report, ISO Certification, Patent and Technology Purchase cost • Reviving closed down/ sick industrial units by granting special packages. • Attractive incentive schemes. CLUSTER APPROACH Crystal IT Park Indore SPECIALIZED INFRASTRUCTURE • Indore – Pharmaceutical, Textile, Food Mandsaur, Khargone, Chhindwara, Processing, IT, Auto Components Food Parks Hoshagabad, Mandla and Bhind • Bhopal – Engineering, Biotechnology, Herbal, IT, Food Processing Stone Park Katni • Jabalpur – Garment, Mineral, Forest & Herbal, Herbal Park Rewa Food Processing Granite Park Chhatarpur • Gwalior – Electronics, IT, FMCG, Engineering, Food Processing Life Sciences Project Bhopal • Rewa – Refractories, Lime Stone, Forest Based Apparel Park Indore (SEZ) • Sagar – Mineral Processing Gems & Jewellery Park Indore 6
  7. 7. Doing Business Made Easy Through MPAKVN In a bid to build a competitive environment; industries and their ancillaries would be promoted in clusters based on the availability of raw materials, skilled labour and market potential. Under this Industrial Policy through Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd (MPAKVNs) scheme, the State Government, has identified industrial clusters. Many of the industrial giants have their establishments in these areas, however 44% of developed area is still untapped and open for investment. Area Developed: 1,330 Hectares Area Developed: 2,262 Hectares Area Developed: 790 Hectares Area Developed: 273 Hectares Allotted: 618 Hectares Allotted: 800 Hectares Allotted: 125 Hectares Allotted: 115 Hectares JABALPUR AKVN GWALIOR AKVNBHOPAL AKVN REWA AKVN Units established: 286 Units established: 326 Units established: 52 Units established: 121 Major Groups:HEG, Crompton Major Groups: JK, Surya Major Groups: Raymond, Hindustan Major Groups: Birla, Jaypee Greaves, P&G, Godrej, Lupin, IFB, Roshini, Godrej, Grasim, Cadbury, Hotl Petroleum, PBM, Ayur Oswal, Nahar ine, Crompton Greaves Special Infrastructure: Integrated Special Infrastructure: ICD, Food Special Infrastructure: ICD, Food Special Infrastructure: Stone Park, infrastructure development centres Park Park Food Park (IIDC) Area Developed: 2,492 Hectares Malanpur, Malanpur Allotted: 1431 Hectares Phase II, Banmore, Chainpura, Siddhgawan, Units established: 575 PratappuraINDORE AKVN Total developed 7,147 Major Groups: Tata, Ranbaxy, Eicher, Rewa, Waidhan area Hectares Bridgestone, Hindustan Motors, Kinetic, 3,089 Total allotted area SRF, S Kumars, Gajra, Nicholas Piramal, Mandideep, Hectares Pillukhedi, Indorama, IPCA, Bhilwara Mandideep Phase II Total units Borgaon, Maneri, 1,360 established Special Infrastructure: SEZ, Crystal IT Pithampur, Kheda, Purena Dewas, Maksi, Park, Food Park, Apparel Park Megh Nagar Growth centres 19 7 Source: MPSIDC
  8. 8. Industries
  9. 9. MP: The Emerging Power • Madhya Pradesh is an emerging industrial powerhouse of the country. • The State houses around 1,800 companies and 19 industrial growth centers (located across 7147 Hectares.) that are close to major cities. This makes good social infrastructure accessible to industrial units. • Further, there are around 171,000 small-scale industries that contribute significantly to the economy. • MNCs like Cadbury, Bridgestone, Hindustan Lever, Coke and renowned Indian companies like Ranbaxy, Tata, Grasim, Hindustan Motors, Eicher, Kinetic, Hotline, Raymonds, Lupin, Crompton Greaves, Surya Roshni, Nahar Spinning, Anant Spinning, Godrej, HEG and several other big groups have presence in Madhya Pradesh. • These companies not only meet local requirements, but also export a variety of products and services to both developed and developing countries.9
  10. 10. MP: Attracting Investments In US$ Million • MP offers an unparallel locational advantage to companies as they Company Location Investments incur lower transportation cost for transferring goods to every corner of BORL Bina 1,267 the country. Bina Thermal Bina 542 Few Large & Medium Projects Under Implementation • Further, cost of basic requirement such as land, water, skilled STI Power Chainpura 261 manpower is less as compared to other states. HEG Ltd. Mandideep 111 • State has peaceful & conducive atmosphere for industrialization, law LG Hotline Malanpur 111 and order situation in the state is under control. Biofill Pharma Pithampur 24 • State also allows the industrial units to have captive power plants to Eicher Group Pithampur 24 produce power as per their requirement. Enbee Pilukhedi 22 JK Industry Banmore 22 • The State Government desires to have a higher rate of economic development through rapid industrialization. Some of the key Pratibha Syntex Pithampur 19 initiatives taken by government recently include: Hindustan Copper Balaghat 18 Escorts Malanpur 9 •New Industrial Policy-2004 Maral Overseas Nimrani 7 •Madhya Pradesh Trade and Investment Facilitation Corporation Caparo (TRIFAC) Engineering Pithampur 7 •Udyog Mitra Yojana- 2004 Coca Cola Pilukhedi 7 Lupin Mandideep 4 •Industrial Facilitation Council MOIL Balaghat 4 •Industrial Projects – SEZ, Indore, Food Park, Apparel Parks, etc HP Bottling Plant Maneri 4 •Modernization of Roads and other infrastructure •Power Sector Reforms10
  11. 11. Enabling Infrastructure• State Government is committed to support the investors & M.P. – SPECIALIZED INFRASTRUCTURE provide them a hassle free atmosphere in the Government machinery. The state has taken several initiatives to promote investments in the state by creating enabling infrastructure. Some of the key initiatives are highlighted below. • A Special Economic Zone at Indore is being established in 1038 hectares of land with the investment of US$ 222 million, has become operational. • 8 IIDs (Integrated Infrastructure Development Centre) are being setup at Nandantola, Nimrani, Jagga M.P.S.I.D.C. Khedi, Lamtara, Naogaon, Sindiya, Pratappura, Jaderua • 165 Industrial Areas with basic infrastructure facilities are functional.Investment Highlights • 217 proposals of foreign direct investment with an investment of US$ 1.3 billion are cleared by GOI for M.P. • 207 letter of Intent with a proposed investment of US$ Growth Centres 804 million are cleared by GOI for M.P. Integrated Infrastructure Crystal IT Park ESTABLISHED • 1978 Industrial Entrepreneurs Memorandum have been Development Centers Apparel Parks PROPOSED issued by GOI in favour of industrial groups who have Food Parks Diamond Parks shown interest to invest in M.P. with a proposed investment SEZ Indore Agri Export Zones of US$ 14.43 billion. Stone Park 11
  12. 12. SEZ Advantage Madhya Pradesh Government has adopted the SEZ policy for developing Special Economic Zones in the state. The SEZs, earmarked as duty-free enclaves, aim at promoting rapid industrial development and employment generation. The approved policy regime includes: • Exemption of all state and local taxes • Exemption from stamp duty and registration fees • Grant of labour, energy, environment, industrial health and safety related permits and approvals through a dedicated single window mechanism • Exemption from electricity duty; cess and any other tax or levy on sale of electricity for self generated and purchased power. • Expeditious process for land acquisition to set up SEZs Common Incentives FOR SEZ UNITS FOR DEVELOPERS OF SEZ S Indirect Tax Incentives Income Tax Incentives Income Tax Incentives  Nil customs duty  15 year corporate tax holiday on export profit – 100%  100% tax holiday for a period of any 10 consecutive years out of 15 years beginning from the year in  Nil excise duty for initial 5 years and 50% for the subsequent 5 years 50% of reinvested reserves for the balance 5 years which the SEZ is notified  Exemption from central sales tax  Exempt from dividend distribution tax  Exemption from service tax  Long-term capital gains arising on transfer of shares  Exemption from securities transaction tax Other Benefits in developer company tax exempt  No minimum alternate tax (MAT)  Duty free procurement of capital goods (including second hand capital goods), raw materials and  SEZ units will be eligible to obtain clearances/ consumable spares from domestic market Other Benefits permissions from different departments under  Full freedom in allocation of developed plots to single agency clearance system  Full freedom for sub-contracting labour approved SEZ units on purely commercial basis  SEZ authority will ensure continuous and good  Facility to realize and repatriate export proceeds  Full authority to provide services like quality of power supply within 12 months water, electricity, security, restaurants and recreation  M.P. has liberal labor policy providing complete  Facility to retain 100% foreign exchange receipts in centres on commercial lines flexibility in SEZs the export earners foreign currency account  No net foreign exchange earning requirement  SEZ Development Committee monitors imposed infrastructure development for each SEZ 12Source: Ministry of Commerce and Industry, Department of Commerce
  13. 13. Thrust Areas • Industry in Madhya Pradesh is largely resource driven, leveraging the state’s natural wealth in the form of limestone, coal, soya, cotton, bauxite, iron-ore, silica etc. Therefore the state has a strong industrial base in sectors like textile, cement, steel, soya processing and optical fibers. • However, there have been a few exceptions to the resource driven industrialisation and the State as a result of its aggressive incentive policies and strong solicitation/facilitation is developing into a strong base in the Auto, auto ancillary and textile sectors. • Substantial opportunity would emerge in following sectors. Cement Auto & Auto Components Textiles & Apparels Pharmaceuticals Engineering & Electrical Equipment Chemicals13
  14. 14. Cement
  15. 15. Sector Profile: Cement Cement: Evolving Landscape MP: The Cement Production Powerhouse MP is Naturally Strong MP: A Preferred Investment Destination Exploring the Opportunities: Project Profiles Way Forward15
  16. 16. Cement: Evolving Landscape •India is the second largest producer of cement in the world after China. India: A Major Consumer of Cement The Indian cement industry’s capacity as on March 2005 was around 160 mn tonnes (including the mini cement plants). It consists of over 54 cement 2004 players and more than 129 manufacturing plants and is highly fragmented and regional in nature. •Its estimated market size in value terms is around US$ 8.89 billion and around 130 mn tonnes per annum (mtpa) in volume terms. It owes its regional nature to the concentration of cement plants near the clusters of limestone reserves, located only in few states. This has led to a surplus situation in some regions and shortages in others. •India is one of the fastest growing markets for cement ~7.2% CAGR (2000-01 to 2004-05). The demand in the Country is riding high on the continuing growth Key Drivers of Growth in all the sectors especially in the IT/ITeS, Hospitality industries which in turn has driven the retail, real-estate and infrastructure boom. • Strong housing demand • High level of commercial construction activity• Even though industry has huge potential, it faces certain challenges, for • Increased government focus on infrastructure spending instance, the high power and fuel costs and erratic power supply in most of the • Higher investment in industrial projects states is affecting the companies. Hence, most companies have opted to set up their own captive power units to get a regular supply of power and optimise costs. The industry is not only looking for locations with availability of limestone for production of cement, but also for availability of coal for their captive power plants 16
  17. 17. MP: The Cement Production Powerhouse• M.P. is the third largest producer of cement in the Country. It caters to 13% of the Installed Capacity Requirements: India national demand. The State’s rich limestone reserves and the logistical 220 MT advantages of these sites reduces the overall cement manufacturing & supply 70 Mt of 187 MT Capacity chain cost, helping the cement companies to get a higher Return on Investment required to (ROI). meet domestic demand alone 160 MT 130 MT• At present several major groups such as Birla Corporation, Vikram Cement, Prism Cement, J.P. Rewa, Diamond Cements, & ACC cement are present in Madhya Pradesh. Out of these units J.P. Rewa & ACC are in process of investing US$ 244 million for expanding their production capacities.• The State also has the appropriate knowledge pool to operate the cement plants. 2005 2009 •Being centrally located and in proximity to key cement consuming states such as Maharashtra, Uttar Pradesh, Gujarat, Andhra Pradesh etc, cement plants in MP can cater to different regions of the state. Apart from access to large market the centrally located plants benefit in terms of stable market demand. Further as a result of constant demands the state has one of the highest capacity utilisation rates in the Country (around 94%). •It is estimated that India needs an additional capacity of around 70 MT to meet its domestic demand by 2009. With its inherent advantages in terms of availability of raw material and its cost competitiveness, MP is likely to continue as a leader in cement industry. With the expected demand projection and the inherent advantages, MP is likely to attract significant investment in the sector to become the Cement Production Powerhouse of the Country17
  18. 18. MP Is Naturally Strong •Madhya Pradesh has a vast reserve of limestone. The total Limestone Reserves reserves of limestone is 3625.98 mn tonnes spread across Coal Reserves the districts of Damoh, Hoshangabad, Mandsaur, Narsinghpur, Rewa, Satna, Panna, Katni, Sagar, Dhar, Khargone, Jhabua, Balaghat, Sidhi and Morena. •In India, energy costs account for 35 per cent of the total production costs. Further, the power costs are high in India and are growing at a rapid rate. The industry is trying to insulate itself against this by setting up captive thermal power plants. The share of energy costs can be reduced to 16-20% if captive power plants are set-up. •Madhya Pradesh has a several locations (marked in circle) that offer limestone and coal. This provides an excellent opportunity to set-up a captive power plant to ensure regular and cost competitive supply of power. Proportion of •The industry is expected to witness a significant boom as Own Power To Purchase several project of similar profile are likely to mushroom near (India) Likely To Increase the limestone reserves of the State. Further Availability of high quality limestone for cement production and coal for captive power plants makes Madhya Pradesh an ideal location for cement production.18
  19. 19. Add-ons to Natural Advantage•With land rates being as low as US$ 2 per sq mt in the industrial belts ofRewa, MP has the lowest cost of land in the Country. Madhya Pradesh Has Access To Key•The key cement markets are in close proximity to MP and are well connected Cement Markets Across The Country.through railway lines and roads. This ensures high and sustained demand ofcement produced in these plants.•MP also has a strategic locational advantage; as some of the key cementconsuming centers like Kanpur, Nagpur, Patna, Nasik etc are in closeproximity to its limestone reserves. Since, freight expenses form 16-22% of theoperating costs the proximity to these markets would serve as an edge in the Delhi (740 Kms)long run. Jaipur Lucknow•Further, the largest cement consuming states of Maharashtra and Uttar (580 Kms) (680 Kms)Pradesh are deficient in cement as they have only 1.9% and 1% of the total Ahmedabad Kanpur (600 Kms) (570 Kms)limestone reserves of the country. Patna (910 Kms)•Even today around 25% of the cement produced in the central India isexported in surrounding regions of North, East and West. With the rising Kolkataindustrial and infrastructural activity expected to happen both within the state Nagpur (1350 Kms) Mumbai (350 Kms) Bhubaneshwarand its surrounding regions, the state holds a huge potential for cement (780 Kms) (1200 Kms) Punemanufacturers (800 Kms) Hyderabad Cement Movement Across The Country 2004-05 (MT) (840 Kms) Destination North South East West Central Source Chennai North 21.5 0.2 3.4 Bangalore (1430 Kms) Key Markets (1400 Kms) (Distance From South 29.9 0.7 5.9 0.2 Bhopal) East 0.1 0.1 16.8 0.3 1.3 West 0.2 0.7 0.3 17.3 1.1 Central 2.5 2.5 0.1 14.4 19
  20. 20. MP : A Preferred Investment Destination Installed Capacity• Most of the leading cement manufacturers of the Country have 2 Mn presence in MP. Seven major Cement 4.2 Mn Tonnes plants are operating in the State with the Tonnes annual installed capacity of 15.97 million tonnes. 2 Mn• Availability of raw material and investor Tonnes friendly environment has facilitated (Maihar several leading players in setting up their Cements Ltd.) shops in the state. Eyeing the potential opportunity, the existing players are 1.55 Mn proposing to expand their operations in Tonnes the State. For instance, JP Cements and ACC Ltd. have proposed expansion of 2.2 Mn around 1.3 mn tonnes each in annual Tonnes capacity.• Satna region of MP, has the most 3 Mn 1.02 Mn number of cement plants in the Tonnes Tonnes Country. (Vikram Cements Ltd.) (Diamond Cements Ltd.) Presence of leading cement manufacturers and their expansion plans, are true reflection of investor confidence and the huge potential the State holds for the cement manufacturers.20
  21. 21. Way Forward Proposed Projects Location Player Description Sidhi Jaiprakash Install Cement unit with installed capacity of 2 million tonnes Associates Ltd. Satna JV (SAIL & JAL) Install Cement unit with installed capacity of 2.2 million tonnes Satna M/s Rewati Install Cement unit with installed capacity of 2 million tonnes Investments New Limestone Grasim Install a Cement plant with an investment commitment of US$ 111 million Area •M.P. State Industrial Development Corporation has prospected that Damoh-Panna area, and Bela-Pagra of Rewa have limestone deposits of 8 mn tonnes and 20 mn tonnes respectively. •Besides these areas, the area around Raghurajnagar and Nagod Tehsil of Satna district also have deposits of limestone. Considering the present scenario & the availability of raw material, there is a scope of further investment of $2.5 bn* in this sector in the state. 21Source: www.destinationmadhyapradesh.com
  22. 22. Auto & Auto Components
  23. 23. Sector Profile: Auto & Auto Components Evolving Landscape Madhya Pradesh : Auto Hub of India Advantage Madhya Pradesh M.P.: An Investment Destination Offering Specific Incentives Exploring the Opportunities: Project Profiles23
  24. 24. Evolving Landscape•The Indian automotive industry has flourished in the recent years. This extra- Full Throttle- Car Sales Have Soared This Year ordinary growth in the Indian automotive industry has been a result of the 7.67 17.65 increase in the per-capita disposable incomes which has resulted in 27.57 improvement in the living standards of the middle class. 4.75•Car Companies in India have lined up more than US$ 6.67 Billion investments.•Most automakers of the world either have active presence in the Country or they 20.58 source components from Indian component manufacturers. The leading global players such as Hyundai, Ford, Mercedes, Toyota, Suzuki and GM have set up base in India. April-•The growth of the industry is primarily driven by the cost advantage of August manufacturing components in India, which is typically lower by about 30% as compared to developed countries.•As the automobile industry has grown and matured, the Indian auto components India’s Auto Ancillary Exports industry has also grown tremendously, and is rapidly achieving global US$ Million competitiveness both in terms of cost and quality.•The Indian automotive component industry has grown at a staggering pace over the last few years. The US$ 8.7 billion industry has registered a 30% jump over last year. The exports have increased from US$ 1 billion in 2003-04 to US$ 1.4 billion in 2004-05.•Industry observers believe that while Indian automobile market is likely to grow at a measured pace, the auto components industry is poised for a take-off and is one of the handful of industries where India has a distinct competitive advantage.24
  25. 25. MP: Auto Hub of India •MP has been actively promoting the development of the engineering industry in the Key Players state. The state is one of the leaders in auto and auto ancillary industry with around 5 Original Equipment Manufacturers (OEMs) and over 100 auto component manufacturers. •Madhya Pradesh has an auto component industry of around US$ 306 million.60% of the auto industry in Madhya Pradesh is controlled by Auto component players. •The State has developed an industrial cluster at Prithampur which provides readily available infrastructure for companies willing to set up manufacturing facilities in the State. The estate is spread over an area of 5,000 hectares. The proposed multi product SEZ is in the vicinity of the industrial estate. •The state is witnessing an upsurge in investments in the sector. The strategic location, Government cluster development initiatives, skilled workforce are some of the factors that are providing the state a competitive edge over other states. Madhya Pradesh: Competitiveness Pithampur Auto Cluster Development  Strategic location The Union government of India has sanctioned an auto cluster in the Pithampur  Highly productive & disciplined industrial area. The Government of India will grant an amount of US$ 11 million for workforce the purpose. Local industrialists have agreed to contribute US$ 3 million for the  Presence of large number of players project. across the value chain  Proactive and professional approach of The cluster would be equipped with the world’s largest testing facility, with State Government capabilities of testing various category of vehicles in different climatic conditions at different stages. The track would also issue certificates for vehicles produced in the  Quality network of educational institutions Country and abroad.25
  26. 26. Automotive Proving Grounds - Pithampur • Area of Land – 4,000 Acres Project Implementation Schedule Proposed Facilities- •High speed circuit • High Speed Test tracks •Gradient Test Tracks •Oval shaped test tracks at the outer boundary •Braking test tracks •Buildings •Two straights of 3500 meters & Curves of radius •General Roads •External noise test track 100m each •Vehicle Dynamics Lab •Accelerated fatigue •Maximum testing speed of 350 Km/ hr •Power train lab •Gravel track •Wet skid pad •Off road track • Dynamic Platforms •Sustainability track for •Dry Handling Track •Dynamic Area of 150 meters radius trucks •Comfort Track •Two acceleration lanes of 1000m •Testing speed more than 200 km/hr Phase I: Phase II: August 2009 October 2010 • Straight Line Braking Exemptions- •Four different braking surfaces • Registration Fees & Stamp Duty •Low with basalt tiles 250 m long • Sales Tax •Low with ceramic tiles 250 m long • Entry Tax, • Octroi, •High (Asphalt): 200 m long • Works Contract Tax •Acceleration lane length of 1000 m • Property Tax • Other Local taxes26
  27. 27. Automotive Proving Grounds - Pithampur27
  28. 28. Advantage MP World is looking at India India- The Emerging Power • The global automotive parts industry • With cost reduction and precision has undergone a sea change over the engineering being the mantra for past decade. Consolidation and most OEMs India is all set-to restructuring have accelerated with the become the Auto component opening of new and increasingly supplier of the world. important markets. • Following the Country’s WTO • The search for scale and scope commitments, the Government economies by large manufacturers and announced the Auto Policy of the difficulty of smaller manufacturers 2002, aimed at developing India Pithampur- The Auto-Auto to sustain themselves in the as a manufacturing and export Component Hub of India investment race have led to increased base for small cars and auto • Pithampur is an industrial outsourcing to countries like India ancillaries. estate spread over 5000 • Suppliers are diversifying geographically, increasing research hectares of Madhya and development, and entering into Pradesh, India. joint ventures in an effort to seek more • Pithampur is a hub for the module contracts. automobile manufacturing Madhya Pradesh- • The world is also witnessing Strategically Placed For Auto industry and in addition to mushrooming of OEMs in India, China, units such as Eicher Thailand etc. • Being centrally located and in Motors, Kinetic Honda, close proximity to key Indian Hindustan Motors and Bajaj cities MP is the ideal location Tempo Ltd. for Auto-Auto Ancillary • With 5 OEMs ( plus 2 industry. proposed) and over 100 • Specialised infrastructure in a component manufacturers, cluster and government Pithampur is an ideal support have enabled MP to location for Auto and Auto surge ahead of other states. component industry28
  29. 29. Offering Specific Incentives Following the Country’s WTO commitments, the GoI announced the Auto There are several trends w.r.t government Policy of 2002, aimed at developing India as a manufacturing and export legislations that are making Indian companies base for small cars and auto ancillaries. Accordingly, the policy enumerated increasingly competitive: several measures to develop the automobile market, including: •Safety norms to be brought on par with that of •Removal of the clause on minimum foreign direct investment; developed countries •Removal of earlier stipulations on indigenisation and import-balancing Regulatory Trends •Emission norms and environmental standards requirements;National Policy in line with those in the developed world •Permitting foreign automobile manufacturers to set up wholly-owned •Fiscal duties have been significantly reduced subsidiaries in India, without requiring approval from the Foreign over the years Investment Promotion Board; •Gradual de-reservation of items for small-scale •Specific fiscal incentives for cars less than 3.8 meters in length, to enable sector augurs well for the industry India to emerge as the Asian base for the export of small cars and multi- utility vehicles; •Value added tax (VAT), as a system of taxation, aimed to harmonise the tax structure •Incentives to manufacture automobiles using alternative fuel technology, across states such as CNG and electric batteries; •Exports are virtually not subject to any taxes •Proposals to discourage the use of old vehicles by levying higher taxes on on account of the various advance license older vehicles; schemes, etc. •Proposal for a terminal life policy for commercial vehicles (CVs) along with incentives for the replacement of such vehicles. •Commercial tax rates levied on automobile components industries and trade are being rationalized and will be brought at par with the rates prevalent in GovernmentState Support other competing states. initiatives would act •Entry tax rates on raw material such as steel being used by automobile as a key driver for component industries shall be rationalized. growth of your investments. 29
  30. 30. MP: A Strategic Location • The cluster at Pithampur also has significant locational advantages on following three aspects. 1)Proximity to steel plants of Bhilai, Nagpur etc is likely to result in reduction raw material costs. The cost of raw material is around 60% of the total North production costs of which steel is the key component (42%) within the raw material. Jamshedpur 2)Proximity to ports both in east coast and west coast (1220) provides a vital linkage to the international markets. Since, the auto industry is exports driven this linkage is West East critical to the development of the cluster. Further, water (28%) Kandla Bhilai (5%) (933) linkages to both sides provides better linkages to Haldia Nagpur Mumbai Satara, Pune, and (1350) countries. Ahmednagar, Raigad (352) (780) (800) 3)Proximity to Markets: Being centrally located and being well connected to major cities such as Delhi, Vishakapatnam (1310) Mumbai, Pune, Kolkatta etc. assists the companies to reduce logistic costs. Key Steel Plants South (Distance from Bhopal) Further, automobile manufacturers are spread across (25%) the country. Being centrally located the auto Key Ports (Distance from Bhopal) component manufacturers would have access to a Region larger client base in the country. (Share of Passenger Car Market)30
  31. 31. MP: A Preferred Investment Destination Market Intensity Index Comparisons-•Madhya Pradesh is one of the leading states in the Country for the auto and A Reflection of Low Cost of Living auto ancillary industry in the Country. To its advantage several units are cluttered around a small stretch of land which would enable both forward and backward support to your business.•The low set-up costs make business proposition one of the best in the world. For example, cost of developed land in Pithampur industrial area is only US$ 1.7- US$ 4 pr sq meter.•The city of Indore also fairs well in terms of low cost of living index. Hence, the companies in Indore can expect manpower costs savings of upto 30% in comparison to companies in Chennai, Mumbai, Pune etc. Manpower costs are approximately 8-10% of the total costs. Investment Opportunities in MP•In terms of technical manpower as well the state is well placed with over •Information Technology Based Designing & Testing 18,000 technical graduates and an overall and an overall figure of 230,000 graduates add to the workforce every year. – Leverage the Proving Grounds @ Pithampur - Leverage Embedded Software @ Bhopal•Some of the other supporting factors assisting your business would be: 1. Central location •Research & Development Center 2. Availability of skilled manpower •Manufacturing Hub For South-East Asia 3. Low operating cost •Auto- Component Manufacturing Facility 4. Co-operative Labour Union etc. •Offshoring/ Outsourcing Auto Components 31
  32. 32. Textiles & Apparel
  33. 33. Sector Profile: Textiles Textile: Evolving Landscape Madhya Pradesh : Emerging Textile Hub of India Madhya Pradesh’s Inherent Advantages M.P.: An Investment Destination Offering Specific Incentives Exploring the Opportunities: Project Profiles33
  34. 34. Textile Evolving Landscape India contributes to about 25% share in the world trade of cotton yarn. It is the world’s Production Of Fibers (Mn Kgs) Indian Production Statistics (2005) third-largest producer of cotton and second-largest producer of cotton yarns and Raw cotton 4122 textiles. Man-made fibre 1023 Indian textile industry has about 22% to the world spindleage and about 6% to the Production Of Yarn world rotor capacity installed. It has second highest spindleage in the world after Cotton yarn 2272 China with an installed capacity of 38.60 Million Filament yarn 1109 It has the highest loomage (including handlooms) in the world and contributes with a share of 61%. It contributes about 12% to the world production of textile fibers and About 4% of Gross Domestic Product Contribution of yarns. Textile Sector India is one of the largest consumers of cotton in the world, ranking second to China About 14% of total industrial production in production of cotton yarn and fabrics and first in installed spinning and weaving Employs 20% of work force capacity About 17% of gross export earnings Through export friendly government policies and positive efforts by the exporters, textile exports have more than doubled from USD 7.55 billion in 1993-94 to USD 17 Commodities (Million USD) billion in 2005-06. India’s export of textiles Readymade garments 6038.69 The ready made garment sector is the biggest segment in the India’s textile export Cotton textiles 3290.31 (2004-05) basket contributing over 46% of the total textile exports. Man-made textiles 1948.72 Export of cotton based items continue to pre-dominate which is natural in view that Wool & woolen textiles 66.57 India is the world’s third-largest producer of cotton Silk textile 406.82 Exports have grown at an average of 9.47% p.a over the last decade. Textile exports Handicraft , Coir etc 1314.13 in 2005-06 has gone up to USD 17 billion which is 23% higher than previous year. Total 13065.24 The industry is poised to play an increasingly important role in global cotton and textile markets as a result of domestic and multilateral policy reform.34
  35. 35. MP: Emerging Textile Hub of India •The industrial history of MP dates back to the later part of 19th Infrastructure at a glance Century when in 1866, a cotton textile unit established by then Spinning Units 40 Maharaja Holkar at Indore. Spindles 14,14,000 •Presently, the textile industry in the state is thriving in the Export-Oriented Spinning Units 12 southwest (Malwa) region. A large number of cotton textile mills are Rotors 14,348 clustered around Indore, Ujjain, Burhapur etc. Looms 6,500 •Easy availability of cotton, Ginning and Pressing units, skilled Exclusive Weaving Units 8 manpower, developed education system, entrepreneur skills etc Power Looms 43,290 are some of the reasons for rapid growth of the industry in the Power Loom Units 17,524 State. Handlooms 47,000 •Presence of major textile players such as Bhilwaras, Indo-Rama, Composite Mills 20 Bhaskar, Oswals, Parasrampuria, Maikal, S-Kumar’s etc and the proposed expansion plans indicate the high investor confidence in the State. Bhaskar Industries Ltd. •The state is focussing on cluster development around sectors of strategic advantage by developing infrastructure in and around these clusters. Growth of export oriented spinning and large scale knitted garment units near Indore, and growth of Chanderi & Maheshwari products are excellent examples of cluster development.35
  36. 36. MP Making Businesses Work •Madhya Pradesh is poised to become the next destination for leading textile companies, who would find market environment conducive to park their investments. •The state presents a tremendous opportunity by providing significant advantages across the value chain. •The state has several units in a cluster, which could be acquired and refurbished to provide a quick start to your business. •In terms of technical manpower as well the state is well placed with over 18,000 technical graduates and an overall and an overall figure of 230,000 graduates add to the workforce every year. Madhya Pradesh Has Strengths Across The Value ChainProcess Raw Material Stitching Market Spinning Weave/ Knit Processing (Garment/ Apparel) • Climatic Conducive • Over 40 spinning • Over 47000 • Several export • MP is renowned for • Strategic central for cotton production units handlooms are oriented processing skills of its people in location to develop with large varieties • Over 1.4 million installed in MP units are present in stitching garments. warehouse available within and spindles • Over 43,000 power the state which can • Manpower is well • Well connected with Madhya Pradesh surrounding States • The manpower has looms be developed trained and is the entire Country • Being centrally on the job further. capable of through railway • Rich tradition of Advantage located and well experience in latest • The state has a producing world- network connected the raw technology weaving and knitting blend of both new class garments/ • Proximity to ports in material can also be • Several units are age and traditional apparels. Maharashtra and brought on short available for processing • Further, the states Gujarat provide cost notice from any part procurement by capabilities essential strong leather competitiveness of the Country investors to promote Indian industry is likely to both for exports and products complement the imports internationally. textile industry. •Availability of skilled manpower at competitive costs •Government initiatives in terms of proposed apparel parks, fiscal incentives etc would benefit the investors. •Success Stories: S Kumars, Bhilwaras, Oswals, Maikal, Indo-Rama etc.36
  37. 37. MP: A Preferred Investment Destination•Madhya Pradesh is poised to become one of the leading states in Handloom Clusters textile industry through its cluster development initiatives. To its Power-loom Clusters advantage several powerloom/ handloom units are cluttered Textile Clusters in The State around a small stretch of land. To provide a kick start to your Proposed Apparel Parks business there is a significant opportunity to target and acquire these units.•The clusters also have significant locational advantages. For instance, Malwa region near Indore cluster is a leading cotton growing belt and a textile hub in the Country providing the competitive edge to your company. The material costs account for nearly 55-60% of the costs of production in India. Even a 10% of savings due to proximity to Malwa region could result in ~5% increase in operating margins.•To further support your business endeavours Government of Madhya Pradesh has created specialised infrastructure in the form of Apparel parks. Being an industry with social importance, the Government also provides special fiscal and non fiscal Availability of Raw Material incentives to the units in the state.•Some of the other supporting factors assisting your business would be: 1. Central location Malwa region is 2. Low set-up costs (Land, building etc) a leading cotton 3. Availability of skilled manpower growing belt Malwa 4. Low operating cost Region 5. Co-operative Labour Unions (one of the best in the Country) 6. Government support etc.37
  38. 38. Offering Specific IncentivesFor ensuring maximum value addition in utilizing available resources and strengthening the different components of the Madhya Pradeshoffers special incentives to units present in the state. This has further increased the competency of the units in the state and has madeinvestments more lucrative. Highlights of Special Incentives Given to Textile Industry•Special Incentives to Readymade Garment, Powerlooms and Made-up Garment industries: • Benefits under Government of India’s schemes such as Apparel Park Scheme, Textile Centre Infrastructure Development Scheme (TCIDS) • Modernization of units of this sector through Technology Upgradation Fund Scheme (TUFS), Group Work Shed Scheme. • Exempted from the binding of minimum wage fixation on a daily basis.•An Apparel Training Institute would be set up with the assistance of Apparel Export Promotion Council in the State, so that maximum number of trained worker could get employment in the Ready-made Garment industry.•Efforts to establish a national level fashion designing technology institute in the State in order to facilitate textile industry of the State regarding the information for design development and to provide forecasts.•In order to accelerate the pace of modernization of the unorganized power-loom sector, modern power loom clusters would be developed at Burhanpur, Indore and Ujjain with financial assistance sought under Government of India’s Group Shed Scheme.•Development of the process house through private participation by providing necessary facilities and if required their cases would be considered by the committee for Mega Projects.•The provision related to labour laws declared for Special Economic Zone will be made applicable to the projects / special areas established such as Apparel Park, Garment Complex and unit established/being transferred under Group Work Shed Scheme.•Cotton ginning and pressing units would be provided high quality cotton and they would be encouraged for modernization under centrally sponsored schemes with the help of their recognized associations.•Construction of tar roads for smooth transportation to Cotton Mandi and construction of cement platform for storage of cotton, using Mandi Boards fund would be taken up on priority basis.•Units purchasing yarn produced within the State, would be given a "set off" of 2% (Two percent) on Commercial Tax would be given.38
  39. 39. The Way Forward… Market Intensity Index Comparisons- •With all the right ingredients in place, Madhya Pradesh has several locations A Reflection of Low Cost of Living which are suited for developing textile units. Investments are likely to flow in the next few years. The state is likely to witness the resurgence of textile industry, which would play a significant role even at national level. The improving infrastructure and rising standard of living are likely to infuse capital into the state. •The state could attract investments of around US$ 1.3 billion thereby generating direct employment for over 0.16 million people. Further, with the mordenization initiatives undertaken by the Government the states competitiveness in the textile industry is likely to rise. •MP also fairs well in terms of low cost of living index. Hence, the companies in Indore can expect manpower costs savings of 20-30% in comparison to companies in Chennai, Mumbai, Surat, Ahmedabad etc. The manpower costs in India typically form 8-10% of the total costs. Potential Projects Segment Investment Required No. of Units Output Employment (US$ Million) Quantity in Million Value (US$ Million) Spinning (1 mn Spindels) 489 10 131 Kgs 408 16,000 Weaving (1000 looms) 171 21 117 Kgs 104 2984 Processing 102 4 120 Kgs 200 1,600 Circular Knitting (1000) 111 33 127 Kgs 378 1,700 Garment Woven 254 520 130 pcs 722 107,000 Knitwear 185 333 100 Pcs 389 35,000 Total 1,313 921 2,200 164,240 39Source: Madhya Pradesh Textile Report, MPSIDC
  40. 40. Pharmaceuticals
  41. 41. Sector Profile: Pharmaceuticals Evolving Landscape Madhya Pradesh : Gaining Momentum M.P.: An Investment Destination41