Northern India poised for a quantum leap: a compendium on investment opportunities in northern states

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The compendium aims to showcase the vast growth potential of the northern region and the plethora of opportunities available to attract sizable investments in different sectors ranging from agro processing, infrastructure, tourism, IT & ITeS to Biotechnology. Together these states/UT contribute nearly 26 percent to the national Gross Domestic Product (GDP). Further, the region contributes nearly 32 percent to the country’s agriculture sector, 31 percent of the total geographical area and houses nearly 31 percent of the total population. This accompanied with rising income levels and facilitative government measures has further added to the attractiveness of the region.

In the past, though the region fell behind the western region in attracting foreign direct investment, pro-active government support in terms of incentives and dialogues with investors, development of infrastructure especially in power and roads and availability of educated professionals and skilled labour is expected to go a long way in attracting long-term investment inflow.

The CII-KPMG report was released at the Second Edition of Invest North: A Conclave to Showcase Investment Opportunities in Northern States organized by CII on 26-27 August 2013 at New Delhi.

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Northern India poised for a quantum leap: a compendium on investment opportunities in northern states

  1. 1. `
  2. 2. Northern India : Poised for a Quantum Leap A Compendium on Investment Opportunities in Northern States
  3. 3. Contents Executive Summary 03 I. The Northern Region: An introduction 04 II. Advantage North: Unique combination of complementary strengths 08 III. States/UT profiles 11 I. Chandigarh 11 ii. Delhi 15 iii. Haryana 19 iv. Himachal Pradesh 24 v. Jammu & Kashmir 29 vi. Punjab 34 vii. Rajasthan 42 viii. Uttar Pradesh 49 ix. Uttarakhand 56
  4. 4. Executive Summary The northern region of India comprises eight states-Delhi, Haryana, Himachal Pradesh, Jammu & Kashmir, Punjab, Rajasthan, Uttar Pradesh, Uttarakhand and UT Chandigarh. Though the region is popularly known for its snow capped mountains and for housing the country’s political capital New Delhi; the diverse geographic terrain, resource endowment and varied climatic conditions of these states/UT offer a variety of opportunities to investors. Together these states/UT contribute nearly 26 percent to the national Gross Domestic Product (GDP). Further, the region contributes nearly 32 percent to the country’s agriculture sector, 31percent of the total geographical area and houses nearly 31 percent of the total population. This accompanied with rising income levels and facilitative government measures has further added to the attractiveness of the region. To add to this are the state specific strengths. Illustratively, the low temperatures of high altitude regions, such as Jammu & Kashmir, Himachal Pradesh and Uttarakhand have immense potential in agro & fruit processing and hydelpower. The rich mineral resources and high solar radiation in Rajasthan offer opportunities in mineral processing and solar power sectors. Well-developed infrastructure and educated professionals have led to the development of IT/ITeS sector in Delhi/National Capital Region (NCR) and Chandigarh. The neighboring Haryana has emerged as a hub for automobiles sector, while the growth of textiles sector in Punjab has been taking place over the last few decades. Availability of large labor force accompanied with other factors has made Uttar Pradesh a manufacturing hub. Further, investment opportunities in these states are neither limited to these sectors nor to their resource endowment. This can be gauged from pro-active government support on developing other sectors as well, especially IT/ITeS. Almost all states offer opportunities in infrastructure and tourism. Several important infrastructure projects have been initiated in the northern region-Delhi Mumbai Industrial Corridor being one of them. The project is not only expected to attract around USD90-100 billion of investment, ease freight movement and generate employment, but also emerge as a global manufacturing and trading hub. In addition to the central government projects, there are several projects and other initiatives undertaken by the state governments. While, some state governments have recently announced new policies, others are also exploring the possibility of introducing new policies or amending old policies. Further, some state governments are also working towards announcing long term measures (reforms), such as instituting single window clearance mechanism. Still others are proactively holding bilateral discussions with domestic and international investors. A case in point is the Government of Rajasthan that has successfully attracted over USD25 billion of investment from Japanese investors by demarcating a separate Japanese investment zone in Neemrana. Almost all states have demarcated industrial areas to ease investment. All this clearly underlines the vast potential of the northern region. In the past, though the region fell behind the western region in attracting foreign direct investment, pro-active government support in terms of incentives and dialogues with investors, development of infrastructure especially in power and roads and availability of educated professionals and skilled labor is expected to go a long way in attracting long-term investment inflow. This will be facilitated by growing population and income. This report aims at highlighting the advantages and the investment opportunities available in the northern region to potential investors. - 3 -
  5. 5. The northern region is among the largest regions in India comprising of eight states —Delhi, Haryana, Himachal Pradesh, Jammu & Kashmir, Punjab, Rajasthan, Uttar Pradesh, Uttarakhand and UT Chandigarh. Together, these states and UT account for nearly 31percent of the total area of India. Rajasthan is the country’s largest state by area, accounting for nearly 10 percent of India’s total area and 34percent of northern region’s area. This large area of the northern region accounts for a sizeable population as well. With more than 368 million people, the region accounts for nearly 31 percent of India’s population residing in the country. Table: Geographic and demographic profile of northern region State/UT Geographical area (sq km) Share in northern region’s geographical area (percent) Share in India’s geographic al area (percent) Population (million) Share in northern region’s population (percent) Share in India’s population (percent) Chandigarh 114 0.01 - 1.1 0.3 0.1 Delhi 1,483 0.2 0.05 16.8 4.6 1.4 Haryana 44,212 4.4 1.3 25.4 6.9 2.1 Himachal Pradesh 55,673 5.5 1.7 6.9 1.9 0.6 Jammu & Kashmir 222,236 22.0 6.8 12.5 3.4 1.0 Punjab 50,362 4.9 1.5 27.7 7.5 2.3 Rajasthan 342,239 33.8 10.4 68.6 18.6 5.7 Uttar Pradesh 240,928 23.8 7.3 199.6 54.1 16.5 Uttarakhand 53,483 5.2 1.6 10.1 2.7 0.8 Northern region 1,010,730 100.0 30.6 368.7 100.0 30.5 India 3,287,263 - 100.0 1,210.2 - 100.0 Source: Census 2011 Economic snapshot The northern region is an important part of India as it contributed close to 26 percent to the national Gross Domestic Product (GDP) and nearly 32 percent to India’s agriculture sector (in FY12).1 Further, there are several high income states in this region. GDP performance The economic growth in the northern region has outperformed the growth in the rest of the country, with the region’s economy growing at a CompoundedAnnual Growth Rate (CAGR) of 8.4 percent compared to 7.7 percent for India during FY08-FY12. This growth has been mainly fuelled by the Services sector, though Agriculture and Industry also recorded higher growth than those of all-India. While Services sector grew at a CAGR of 10.9 percent in the northern region, it grew at 9.6percent at all-India level; Industry recorded the second highest CAGR of 6.7 percent in the northern region whereas 6.5 percent at all-India level; followed by Agriculture growth at a CAGR of 3.9 percent in the northern region and 3.1 percent at all-India level. 1 Note: FY13 data for state GDP and its composition not available for all states. Thus, FY12 data considered for northern region as a whole (Source: MOSPI) The Northern Region: An introduction - 4 -
  6. 6. Source: MOSPI The nine states/UT that comprise the northern region recorded variable growth with Delhi and Uttarakhand leading the pack with a CAGR of more than 11 percent during FY08-FY12. The CAGR recorded by other states during this period is as follows: Haryana and Rajasthan (9.2 percent each), Chandigarh ( 8.3percent), Himachal Pradesh (7.9 percent), Uttar Pradesh (7.1 percent), Punjab (6.2 percent) and Jammu & Kashmir (5.8 percent). Uttar Pradesh is the largest contributor to northern region’s GDP accounting for a share of 31percent, mainly owing to its large population. It is followed by Delhi, Rajasthan, Haryana and Punjab. Table: State-wise economic growth(percent) States/UTs Share in northern region’s GDP (percent) CAGR (percent) Period for CAGR Jammu & Kashmir 3.7* 5.8 FY08-FY13 Himachal Pradesh 3.8* 7.6 FY08-FY13 Punjab 14.0* 6.0 FY08-FY13 Uttarakhand 5.4* 10.7 FY08-FY13 Haryana 16.3* 8.6 FY08-FY13 Delhi 18.8* 9.9 FY08-FY13 Uttar Pradesh 38.0* 6.7 FY08-FY13 Rajasthan 17.0** 9.2 FY08-FY12 Chandigarh 1.1** 8.3 FY08-FY12 Note: Data at constant FY05 prices (as of August 2013) FY13 data not available for Rajasthan and Chandigarh (as of August 2013) *Share in northern region’s GDP (of seven states, except Rajasthan and Chandigarh for which data not available as of August 2013) **Share in northern region’s GDP in FY12 (as of August 2013) Source: MOSPI The composition of respective GSDPs has also undergone a change, with Services sector accounting for the highest share in all the states/UT of the region. The share of Services sector varies between 42.0 percent (in Himachal Pradesh) to 85.2 percent (in Delhi). 0 2 FY08 FY09 FY10 FY11 FY12 Northernregion India Figure: Comparison of GDP growth (percent) 8.2 8.4 8.3 9.5 7.4 9.3 6.7 8.6 9.3 6.2 4 6 8 10 - 5 -
  7. 7. Per capita income High economic growth results in high per capita income. In case of northern region, of the seven states for which per capita income for FY13 was available, five recorded a higher income level than all-India average. Delhi and Haryana lead the pack, followed by Uttarakhand, Himachal Pradesh and Punjab. In terms of growth, Uttarakhand leads all other states with highest CAGR of 8.6 percent during FY08-FY13, followed by Delhi at 7.7 percent, Haryana 6.8 percent, Himachal Pradesh 5.1 percent, Uttar Pradesh 4.9 percent, Jammu & Kashmir 4.5 percent and Punjab at 4.1 percent. Figure: State-wise per capita income (in INR) Note: Per capita income for FY13 (as of August 2013) Rajasthan and Chandigarh not included as data not available for FY13 (as of August 2013) Rajasthan and Chandigarh had per capita income of INR28,851 and INR89,351 respectively in FY12 and CAGR of 7.1 percent and 0.7 percent respectively during FY08-FY12 Source: MOSPI Note: Data at constant FY05 prices (as of February 2013) *Data for FY12 Source: MOSPI 20.6 17.2 21.8 10.9 16.7 0.7 21.4 21.9 0.4 24.6 40.7 29.5 35.7 28.7 14.1 31.1 23.2 15.8 54.9 42.0 48.7 53.4 54.6 85.2 47.5 54.9 83.8 0.0 20.0 40.0 60.0 80.0 100.0 120.0 Jammu & Kashmir Himachal Pradesh Punjab Uttarakhand Haryana* Delhi* Rajasthan* Uttar Pradesh Chandigarh* Agriculture Industry Services 120,414 65,500 51,586 30,421 48,409 53,548 18,891 39,168 0 30,000 60,000 90,000 120,000 150,000 Delhi Haryana Himachal Pradesh Jammu & Kashmir Punjab Uttarakhand Uttar Pradesh State India Figure: State-wise composition of GSDP (percent) - 6 -
  8. 8. Figure: Year-wise FDI inflow in northern region (in INR million) Source: Ministry of Commerce and Industry Within the region, Delhi attracted highest investment inflow of USD36.5 billion or 94.2 percent of northern region’s investment inflow. Positively, other states are undertaking measures to improve investor climate. These measures include introduction/extension of fiscal incentives, putting in place a mechanism for single window clearance, formation of land banks, increased supply of power and water. Table: Region-wise cumulative FDI inflow during April 2000-April 2013 (USD million) RBI’s region States/UTs included FDI inflow Share in northern region’s FDI (percent) Share in India’s FDI (percent) Delhi Delhi and parts of Haryana and Uttar Pradesh 36,554 94.2 18.7 Chandigarh Chandigarh, Punjab, Haryana and Himachal Pradesh 1,201 3.1 0.6 Jaipur Rajasthan 685 1.8 0.3 Kanpur Uttar Pradesh, Uttarakhand 348 0.9 0.2 Northern region - 38,788 100.0 19.8 India - 195,724 - 100.0 Source: Ministry of Commerce and Industry Though the northern region has performed well in terms of economic growth and foreign investment inflow, the opportunities have not been tapped to their full potential. Thus, the following sections, discuss both the sector- specific and project-specific investment opportunities in this region along with policy measures and other initiatives undertaken by the respective state governments. 96 476 148 388 186 0 100 200 300 400 500 FY09 FY10 FY11 FY12 FY13 Growing business opportunities on the back of rising consumer demand, increased government support, improving infrastructure and a host of other factors translated into investment inflow. During April 2000-April 2013, the Foreign Direct Investment (FDI) northern region attracted FDI inflow of USD38.8 billion, which accounted for a share of 19.8 percent in total FDI inflow in India during the period. On an annual basis, the FDI trend has been volatile, influenced by a variety of factors — both domestic and global. Positively, the FDI inflow in the northern region recorded a CAGR of almost 18 percent during FY09-FY13. - 7 -
  9. 9. Advantage North: Unique combination of complementary strengths The region’s high economic growth rate, abundant resource endowment, availability of skilled labor, expanding infrastructure, government support, rising consumer demand backed by increasing income are some among the many advantages offered by the northern India. Together, these factors make the region a viable investment destination. High economic growth rate As discussed earlier, the northern region recorded higher growth rate than all-India average during FY08-FY12. This has been enabled by high growth recorded by the Services sector, though Agriculture and Industry also recorded higher growth than all-India average. Abundant natural resources The northern region is endowed with abundant natural resources that offer opportunities for the development of several sectors. Illustratively, high solar radiation in Raja sthan has enabled the state to tap the potential of solar power. Capitalizing on this abundant natural resource, Rajasthan has emerged the second leading state (with 442 MW) in installed solar power capacity in India. As of March 2013, Rajasthan and other northern region states accounted for 33.3 percent of installed solar power capacity in India. 2 Likewise, abundant water resources in Jammu &Kashmir, Uttarakhand, Himachal Pradesh and other states, offer immense potential for hydro power generation. With an installed hydro power capacity of 15,467.8 MW, the northern region accounted for 39 percent of India’s total hydro power capacity as of June 2013. 3 Further, the geographical terrain, soil and climatic conditions of hill states, such as Jammu & Kashmir and Himachal Pradesh is suitable for production of several fruits. Infact, Jammu & Kashmir is the leading producer of almonds and walnuts in India. The state along with Himachal Pradesh leads all other states in the production of apples in the country. This not only highlights the potential for horticulture sector but also lays the foundation for Agro Processing industries engaged in manufacture of pulps, jams, jellies, etc. High agriculture produce in states, such as Punjab, Haryana and Uttar Pradesh also supports the growth of agro- processing industries on one hand and power generation on the other, as agri-residual can be used for the same. Infact, production of cotton has laid the basis for textile mills in Punjab and other states. Rajasthan, with more than 75 varieties of minerals, offers potential for development of diverse industries, such as Ceramics, Glass, Cement andSolar Equipment Manufacturing. 4 This abundance of raw materials not only offers opportunities for development of industries within the region, but also offers scope for export both of raw materials and finished goods from the state. 2 Ministry of New and Renewable Energy 3 Central Electricity Authority 4 Bureau of Investment Promotion, Government of Rajasthan - 8 -
  10. 10. 5 Central Electricity Authority 6 Note: Latest available from the Ministry of Road Transport and Highways 7 Telecom Regulatory Authority of India 2013.5 Likewise, the road network grew by 2.9 percent from 3,682,439 km in FY10to 3,790,342 km in FY11.6 In case of teledensity, of the top five states, three states belong to the northern region, Delhi, Himachal Pradesh and Punjab.7 Further, the Central Government has initiated projects, such as the Delhi Mumbai Industrial Corridor (DMIC) and the Dedicated Freight Corridors (DFC). The DMIC is a USD90-100 billion project that will cover 1,483 km, of which 52 percent will lie in the northern region. On the other hand, the Eastern DFC will cover 1,839 km, of which nearly 66 percent will lie in the northern region, while 50 percent of the 1,483 km of western DFC will lie in the northern region. Besides, several road projects and metro rail links are underway in the northern region. These projects will boost economic activity through investment inflow and employment generation. Rising consumer demand backed by higher incomes With more than 30 percent of India’s population residing in the northern region, and some of the high income states being part of this area, the potential for market development is high. Six of the eight states have higher monthly per capita consumption expenditure than the average for all India. Source: National Statistical Organisation Availability of educated and skilled workforce With rising population and improving literacy rates, the region is poised to grow further. Of the nine states/UT, six have a literacy rate higher than that of all-India average. Further, higher education institutions have been established in the northern region. The region boasts of seven Indian Institute of Technology (IITs), four Indian Institute of Management (IIMs) and the Indian School of Business (ISB). 0 500 1,000 1,500 Delhi J&K UP Uttarakhand Haryana Punjab Rajasthan Himachal Pradesh Average MPCE (INR) All India average MPCE (INR) Figure: State-wise consumption spending (INR) 2,362 1,552 1,237 1,746 1,916 1,879 1,421 2,095 2,000 2,500 Expanding infrastructure Infrastructure development, be it in power, roads or rail network or communication and technology, enables lowering of cost and time, thereby, improving investment attractiveness. Given this crucial role played by the infrastructure sector, the northern region states have been continually working towards improving the same. The installed power capacity of the region grew by 8.5 percent from 56,058 MW in June 2012 to 60,795 MW in June - 9 -
  11. 11. Source: Census 2011 Government support Governments —both at the centre and those of states—have been working towards improving investor climate. While, the Central Government has been relaxing FDI limits in different sectors, the state governments have announced new policies or made amendments in old policies to announce fiscal incentives and introduce other investor friendly measures. The government support extends beyond policy measures and fiscal incentives. Almost all state governments have demarcated industrial areas/estates. The Government of Rajasthan has gone a step beyond and developed an international investment zone at Neemrana. Infact, it is the only state in India to have three international investment zones. Besides, single window clearance has been at the forefront of all state governments’ agenda. 86.3 86.4 69.7 79.6 83.8 76.6 76.7 68.7 67.1 74.081.7 81.9 56.3 71.6 76.5 67.9 69.7 55.5 60.4 64.8 0 10 20 30 40 50 60 70 80 90 100 Census 2011 Census 2001 Figure: State-wise literacy rates (percent) - 10 -
  12. 12. UT overview8 Chandigarh is a Union Territory (UT) which has one of the highest per capita income in India. It has an area of 114 sq km and is the capital of Haryana and Punjab. According to Census 2011, the UT is inhabited by 1.1 million people, of which 86.05 percent are literate. Economy Chandigarh’s GDP grew at a CAGR of 8.3 percent during FY08- FY12. Services contributed the highest share of 83.8 percent in GSDP in FY12 while Industry and Agriculture contributed 15.8 percent and 0.4 percent, respectively, in FY12. Priority sectors for investment include IT/ITeS, Manufacturing and Engineering and Tourism and Hospitality. Source: MOSPI Investment inflow The aggregate FDI investment for Punjab, Haryana, Himachal Pradesh and Chandigarh was INR55.6 billion (USD1.2 billion) during April 2000-March 2013. Table: Infrastructure sector: key parameters Source: Ministry of Commerce and Industry Infrastructure sector Parameters Units Power Installed capacity 106 MW (as of June 2013) Aviation No. of airports 1 as (of August 2013) Road network Road length 2,284 km (as of March 2011) Sources: CEA; Airports Authority of India; Ministry of Road Transport and Highways Sector opportunities9 Investment opportunities are diverse in Chandigarh especially in the Services sector which contributes the most to its GDP. Apart from the priority investment sectors, consumer spending in the UT is significant in Automobiles and FMCG Goods which make these sectors also feasible for investment. 8 Chandigarh Administration; MOSPI; Census 2011; CEA; Airports Authority of India; Ministry of Road Transport and Highways; Ministry of Commerce and Industry 9 Chandigarh Administration; Chandigarh Industrial and Tourism Development Corporation (CITCO); CII; DoIT-Chandigarh; Chandigarh Government- Industrial policy 2009; Chandigarh Tourism;Ministry of Tourism; Press Articles 125 132 139 148 8.1 5.2 5.2 6.7 0 5 10 110 120 130 140 150 FY09 FY10 FY11 FY12 Graph: GSDP (INR billion) GSDP (INR billion) Growth (%) 224 416 130 47 0 100 200 300 400 500 FY10 FY11 FY12 FY13 Graph: FDI (USD million) States/UT profiles Chandigarh - 11 -
  13. 13. IT/ITeS Growth supporting factors ■ Chandigarh Administration’sIT Vision 2010 to promote the usage and application of IT ■ Well-developed infrastructure and well educated and qualified human resource base ■ Rajiv Gandhi Chandigarh Technology Park which has both SEZ and non- SEZ locations ■ Phase-I and II of the project completed ■ Conducive policy framework for the growth of IT sector Scope of investment ■ Minimizing physical interface with the consumers of government services through e-Governance: - Proposed automation of all the departments of Chandigarh Administration - All information relating to services to be available online through e- Governance centers ■ Technology habitats to be established to create employment ■ Multi service smart cards to be provided to residents to carry out transactions with Department of Administration ■ Human Resources upgradation processto continue through Chandigarh Training on Soft Skills (C-TOSS) program ■ Setting-up of venture funds by Administration for public and private IT companies Existing companies* ■ Infosys ■ Silicon Valley Systech Inc ■ Agilent Technologies ■ Wipro ■ IBM ■ Tech Mahindra Note: *Indicative list Manufacturing and Engineering Growth supporting factors ■ Focus on the targets and objectives contained in the National Common Minimum Programme ■ Aim is to promote industrial growth by creating an investor friendly environment and integration of private initiatives ■ Chandigarh Industrial Business Park engages in the manufacture/production of goods pertaining to any industry and the ones engaged in providing/rendering of services ■ Department of Industries offers the following incentives: - Assistance for imports-exports - Availability of raw material - Financial assistance under the Prime Minister’s Employment Generation Programme - Manage the Handloom Estate at Manimajra - Facilitate expansion of trade facilities through India International Trade Promotion Organisation Scope of investment ■ Industrial area of 1,475 acres being developed, of which Phase I and II have been completed - 152 acres is earmarked in MauliJagraon for Phase-III - 20 units exporting products worth approximately INR1.51 billion - 2,100 small scale industrial units with an annual turnover of INR14.3 billion ■ UT is a regional hub for Service sectors such as Education, Health, IT, Food and Vegetable Processing, Pharmaceuticals and Automobiles ■ Key thrust areas include Electronics, Light Engineering, Biotechnology, Automotive Components, Food processing, Handloom and handicraft, Furniture, Paper and paper products, Sanitary Fittings, Pharmaceuticals and Screw Manufacturing Existing companies* ■ Bhartiya Manufacturing Industries ■ Unipure Biotech ■ Bhushan Steel ■ Hindustan Machine Tools Note: *Indicative list Table: Overview of priority sectors for investment -12 -
  14. 14. Tourism and Hospitality Growth supporting factors ■ UT is a major tourist destination as it shares a border with Punjab, Haryana and Himachal Pradesh ■ As of 2012, total forest cover of 32.42 sq km and green space(including parks, gardens, green belts, leisure valley and road avenues)of over 33 percent of the UT ■ Well-connected by rail, road and airways ■ Society for Tourism & Entertainment Promotion in Chandigarh (STEPS) was set up to promote medical tourism, heritage tourism, adventure tourism, sports tourism, cinematic tourism ■ In 2012, 924,589 domestic tourists and 34,130 foreign tourists visited Chandigarh Scope of investment ■ Concept of ‘Night Tourism’ for tourists is introduced ■ ‘Sports Tourism’ to be promoted in collaboration with various sports federations and academies ■ Potential for ‘Medical Tourism’ as the pollution level in UT is one of the lowest and has an excellent environment, along with leading hospitals and medical services Existing companies* ■ Marriott ■ CITCO ■ Taj ■ Park Plaza Note: *Indicative list 10 Chandigarh Administration; Chandigarh Information Project –wise opportunities10 Project 1: Jawaharlal Nehru Chandigarh Education City Project 2:Modern Terminal Market (MTM) ■ A multi-institutional Education City at Sarangpur institutional area planned by Chandigarh Administration - 16 sites of six acres each identified on long lease - 130 acres made available by the Administration - Chandigarh Housing Board to provide common facilities ■ Courses to be offered - Management courses in various streams-Hospital Administration, Computer Science and other Engineering branches, Pharmaceuticals, Tourism, Bio-technology, Multimedia, Hospitality, Industrial Design, Media and Mass Communication ■ Project Background - MTM project plans to be a one-stop solution by integrating farm production and buyers for sale of produce - Choices include electronic auctioning and facility for direct sale to exporter, processor and retail chain network under a single roof for a respective user charge - MTM to offer facility for storage, cleaning, grading, sorting, packaging, palletisation of produce including logistics and extension support and advisory to farmers - MTM project to be developed on a hub and spoke model - The spokes to be located at the collection centers from where the Perishable Agricultural Produce would be brought to a central hub at Chandigarh - Central Hub, covering an area of 42 acres (of which maximum of only 17 percent can be utilized to create non-market assets)to be located at Agro Zone ■ Role of Private Enterprise (PE) - MTM to be built, owned and operated by a PE who may be an individual or a consortium of entrepreneurs from Agri-Business, Cold Chain, Logistics, Warehousing, Agri-Infrastructure or other related background - PE to develop required market infrastructure for MTM (including both hub and spokes) and to provide market services and essential services to the users of MTM - As of March 2013, the selection of PE is under process - 13 -
  15. 15. Government policies and initiatives11 Chandigarh Administration has undertaken a number of projects to accelerate the overall growth and development of the UT. Various projects, such as the metro project, are planned. Chandigarh has a lot of growth potential because of its well developed road network, availability of skilled labor, strong presence of service industry especially financial services. Table: Incentives to promote investments Incentives, single window clearance and institutions Land availability, identification of investment zones and infrastructure development Policies ■ Draft Chandigarh Industrial Policy, 2009 - Aims to create sustainable industry and create a pollution free industry based on promotional avenues for Micro Small and Medium Enterprises - Some of the thrust industries include Electronics, IT/ITeS, Light Engineering, Biotechnology, Automotive Components ■ IT Vision, 2010 - Development of IT/ITeS industry and IT- enabled infrastructure like e-Governance - Other focus areas include multi-service smart cards, technology habitats, Wi-Fi zones and touch screens Institutions - Chandigarh Administration - Chandigarh Economic Advisory Committee ■ Land availability - Administration identified areas for development of Industrial Park and Technology Park - Allotment of plots to be made on free hold basis ■ Identification of investment zones - 1,475 acres earmarked for Chandigarh Industrial Business Park - Rajiv Gandhi Chandigarh Technology Park covers more than 350 acres of area under Phase I and II ■ Infrastructure development - Focus on education, healthcare and transport - Metro project planned - International flights to start operating from Chandigarh airport very soon 11 Chandigarh Administration; Chandigarh Industrial and Tourism Development Corporation (CITCO) - 14 -
  16. 16. State overview12 Delhi is the national capital of India and is one of the leading cities of India with a well-developed infrastructure. It has an area of 1,483sq km. According to Census 2011, the state is inhabited by 16.8 million people, of which 86.3 percent are literate. Economy Delhi’s GDP grew at a CAGR of 9.9 percent during FY08-FY13. Services contributed the highest share of 85.2 percent in GSDP in FY12 growing at a CAGR of 12.2 percent.Industry and Agriculture grew at a CAGR of 8.1 percent and 9.2 percent and contributed 14.1 percent and 0.7 percent to the state’s GSDP in FY12. The state has industrial estates and 5 flatted complexes. Source: MOSPI Investment inflow The aggregate FDI investment for Delhi and parts of Haryana and Uttar Pradesh was INR1,699.9 billion (USD36.6 billion) during April 2000-March 2013. The state presents promising opportunities for investment in near future. Table: Infrastructure sector: key parameters Source: Ministry of Commerce and Industry Infrastructure sector Parameters Units Telecom Wireless subscribers 40.2 million (as of April 2013) Wireline subscribers 2.9 million (as of April 2013) Power Installed capacity 7,413MW (as of June 2013) Aviation No. of airports 1 (as of August 2013) Road network Road length 29,648km (as of March 2011) Sources: CEA; Ministry of Road Transport and Highways 12 MOSPI; DSIIDC; CEA; Airports Authority of India; Ministry of Road Transport and Highways; Government of Delhi; Press articles; Ministry of Commerce and Industry 1,558 1,698 1,856 2,027 2,21012.9 9.0 9.3 9.2 9.0 0 500 1,000 1,500 2,000 2,500 0 2 4 6 8 10 12 14 FY09 FY10 FY11 FY12 FY13 Graph: GSDP (INR billion) GSDP (INR billion) Growth (%) 1.9 9.7 2.7 8.0 0.0 5.0 10.0 15.0 FY09 FY10 FY11 FY12 Graph: FDI (USD billion) Delhi 3.2 FY13 Priority sectors for investment include Knowledge based industries, Pharmaceutical and Healthcare, Real Estate and Construction, Banking and Insurance. Other focus sectors include Tourism, Retail, Education, Infrastructure and Logistics, IT & ITES in education, Skills Development, Healthcare, Printing and Publishing. - 15 -
  17. 17. Delhi is one of the emerging cities of India and offers many investment opportunities.It is among the pioneers introducing privatization. Table: Overview of priority sectors for investment Knowledge based industries (KBI) Growth supporting factors ■ KBI refers to IT/ITeS, Education, Media, Biotechnology, R&D and Financial Services sectors ■ State supported by well-developed infrastructure, large skill base and increased penetration of telecom network ■ New Industrial Policy (2010-2021) proposes to develop an Electronic/Light Engineering Park/SEZ to promote hardware and IT sector ■ Other cluster developments: - Electronics and Light Engineering Park/SEZ - Fashion Technology and Design Park - Education and R&D hub Scope of investment ■ Delhi Skill Development Mission and Delhi Knowledge Development Foundation proposed to facilitate existing units to graduate to high-technology and knowledge-based industries offer opportunities for investors ■ Setting up ‘Centre of Excellence’ to promote innovation and entrepreneurship in high technology and knowledge based sectors ■ Investment required in the areas of data processing and filtering Pharmaceutical and Healthcare Growth supporting factors ■ Pharma companies with adequate access to clinical subjects, data on efficacy, safety of prospective drug and compositions are supported by the increase in healthcare accessibility and improving infrastructure to aid clinical research and formulation development ■ Supportive government policies, quick project approvals and fiscal incentives in the form of exemptions from excise duty and income tax and grant of capital investment subsidy to new establishments Scope of investment ■ Diverse investment opportunities - R&D oriented facilities - Drug manufacturing facilities - Packaging/labeling - Transportation of drugs - Oncology, neuro, respiratory, dermatology centers Existing companies* ■ FortisHealthcare ■ Panacea Biotech Note: *Indicative list 13 Government of Delhi; Press articles; DMRC; DSIIDC; First Pharmaceutical Census of India FY11; Press articles Sector opportunities13 - 16 -
  18. 18. Project– wise opportunities14 14 Government of Delhi, DSIIDC website, Press articles Project 1: Knowledge based industries park, Baprola Project 2 : Multi-level manufacturing hub at Mundka-Ranikhera Project 3: Modern Industrial Area at Kanjhawala ■ The Delhi Government expects to generate investment of INR700 billion for these projects which will be completed by 2016 and create an employment opportunity for 300,000 people ■ ■ ■ ■ ■ ■ ■ Estimated cost: INR12 billion DSIIDC is developing KBI Park at Baprola in an area of approximately 72.37 acres Project has been proposed to be completed in two phases Project will cater to specific needs of IT/ITeS industry, Media, R&D, Gems and jewellery and Business services Provide housing units for KBI workers and economically weaker section Project site is expected to be connected to mono rail As of April 2012, the KBI Park at Baprola received all the required sanctions from various civic agencies ■ ■ ■ ■ Estimated cost: INR30.98 billion Under the Industrial Policy for Delhi 2010-21, Delhi State Industrial And Infrastructure Development Corporation (DSIIDC) plans to build a Multi-Level Manufacturing Hub at Mundka- Ranikhera to provide built, organized and ready- to-use work spaces and employment for skilled work force in Light and Services based industries in Delhi DSIIDC acquired a land measuring 147 acres at Rani Khera on Rohtak road in Delhi - The area will have 610,000 sq meter under the built-up structure; 150,000 sq meter under the basement and 190,000 sq meter under the multi- storey parking - The proposed site is located 1.5 Km from NH-10 (Delhi Rohtak road) which is adjacent to the main railway line to Rohtak - Connected to Mundka metro station and 5-6 Km from the outer ring road The land use of the project is for Manufacturing (Light and Service industry) and will cater to electronics component manufacturing, systems testing, IT hardware manufacturing, gems and jewellery manufacturing, semi-conductor manufacturing and bio-technology ■ About 1000 acres of land has been allotted to develop Modern Industrial Area. This isndustrial area is being developed in land parcel carved out of villages Kanjhawala, Sultanpur Dabas, Karala and Pooth Kund in district North West. ■ This industrial area will accommodate new green, hi-tech and knowledge based industries as envisaged in MPD – 2021 and the Industrial Policy for Delhi 2010-2021 - 17 -
  19. 19. Government policies and initiatives15 In order to boost industrial growth, the Government has undertaken several initiatives including announcing a few policies. The major thrust is to provide education, employment and a greener or a more efficient way of industrialization. The major policies undertaken by the Government are as under: Table: Policies to promote investments Policies Provisions Delhi Industrial Policy ■ Emphasizes on Knowledge based industry ■ Handicrafts, handlooms, Khadi ■ Skill development ■ Industry academia linkage, innovation and entrepreneurship ■ Development of clusters ■ Improved transportation network Master Plan Delhi, 2021 . ■ Non-polluting industries (emphasis on clean, green and hi-tech industries for green-field industrial area development) ■ Key industriesincludeElectronics and IT hardware, Biotech, Telecommunication and enabling services, TV and Video production, Gems and Jewellery and Apparels ICT Policy, 2000 ■ Aims at promoting six ‘Es,’ in an integrated form for developing information and communication technology infrastructure and usage; The six Es are: - Electronic-governance - Equality - Education - Employment - Entrepreneurship - Economy ■ Government plans to establish modern IT parks in collaboration with private sector Transport Policy, 2002 ■ To provide safe, eco-friendly, cost-effective and efficient modes of transportation through a well integrated multi-modal transport system SEZ Policy, 2009 ■ To provide enabling infrastructure and a hassle free environment to promote exports from the state ■ Special emphasis on development of product-specific SEZs ■ Financial assistance under ‘Assistance to States for Infrastructure and Allied Development for Exports’ (ASIDE)’scheme to SEZs developed on PPP basis with approval from State Level Export Promotion Committee 15Government of Delhi; DSIIDC - 18 -
  20. 20. State overview16 Haryana has a rich industrial base supported by robust infrastructure. This large industrial base has resulted in employment of 319 per 1,000 population as compared to an all-India average of just 242 per 1,000 population. With an area of approximately 44,000 sq km, it is the 20th largest state in India and comprises 21 districts. Chandigarh is the capital of the state. Other prominent cities include Faridabad (the largest city of Haryana), Panipat, Ambala, Hissar and Kurukshetra. According to Census 2011, the state is inhabited by 25.4 million people, of which 75.6 percent are literate. Economy State economy grew at a CAGR of 8.6 percent during FY08- FY13. Services sector has been the key sector accounting for 54.6 percent of the state’s GDP in FY12.Industry and Agriculture accounted for 28.7 percent and 16.7 percent, respectively, in GSDP in FY12. Further, the state’s economy grew at a CAGR of 9.3 percent during FY06-FY12, higher than the CAGR of 8.5 percent witnessed by the Indian economy. Haryana’s contribution in the National Gross Domestic Product at constant (2004-05) prices has been recorded as 3.4 percent as per the Quick Estimates (QE) of 2011-12. Haryana’s economy has experienced a structural transformation over the last five decades. There was a gradual shift in the state’s economy, which was predominantly rural and agricultural based at the time of formation in 1966, from agriculture to Industries and Services sector as the former led to overall fluctuating economic growth on account of fluctuations in agricultural production. This became the base of the shifting of focus towards diversification and modernization of the state economy. Focused sectors for investment include Automotive, IT/ITeS, Sanitary ware, Agro-based industry, Textiles, Bicycles, Scientific Instruments, Tourism, Biotechnology, Petrochemicals, Real Estate and Construction. 16 Census 2011 (http://www.census2011.co.in/census/state/haryana.html); Government of Haryana; MOSPI 1,365 1,525 1,652 1,782 1,909 8.2 11.7 8.4 7.8 7.1 0 2 4 6 8 10 12 14 0 500 1,000 1,500 2,000 2,500 FY09 FY10 FY11 FY12 FY13 Graph:GSDP (INRbillion)and growth (percent) GSDP Growth rate Source: MOSPI Haryana - 19 -
  21. 21. Investment inflow The aggregate FDI investment for Punjab, Haryana, Himachal Pradesh and Chandigarh was INR55.6 billion (USD1.2 billion) during April 2000-March 2013. Table: Infrastructure sector: key parameters Infrastructure sector Parameters Units Telecom Wireless subscribers 19.6 million (as of April 2013) Wireline subscribers 0.6 million (as of April 2013) Power Installed capacity 8,113.7 MW (as of June 2013) Aviation No. of airports 1 (as of April 2013) Road network Road length 41,729 km Sources: CEA; TRAI; Ministry of Road Transport and Highways; Airports Authority of India; Ministry of Commerce and Industry Sector opportunities17 The state offers plenty of Investment opportunities across diverse areas. One-third of state’s area falls under the National Capital Region facilitating further investments. The New Industrial Policy 2011 provides the right impetus to strengthen the base of the manufacturing sector besides knowledge-based and high-tech industries. The state is also well known for its handloom exports, Panipat being the largest exporter in India. Table: Overview of priority sectors for investment Automotive sector Growth supporting factors ■ Haryana State Industrial & Infrastructure Development Corporation (HSIIDC) has allotted 54 acres for automotive testing and R&D facilities ■ The development of railway siding and logistics centre facilities around manufacturing locations (especially Manesar) to help in transportation of raw materials and manufactured goods have been announced under the Industrial and Investment Policy 2011 ■ Speedier government clearance of investment proposals or incentives ■ International Centre for Automotive Technology (ICAT) set-up at Manesar as part of National Automotive Testing and Research and Development Infrastructure Project Scope of investment ■ Gurgaon-Manesar-Bawal region emerged as an auto hub ■ Investment opportunities exist in various related areas, such as manufacturing, supplies of equipment, parts and paints Existing companies* ■ Maruti Suzuki ■ Honda Motorcycle & Scooter 17 Government of Haryana, Rail Bandhu, June 2013; ICAT; Press articles; CII 224 416 130 47 0 100 200 300 400 500 FY10 FY11 FY12 FY13 Graph:FDI(USD million) Source: Ministry of Commerce and Industry ■ Yamaha Motor ■ Suzuki Motorcycle ■ Hero MotoCorp Note: *Indicative list - 20 -
  22. 22. IT/ITeS Growth supporting factors ■ Various government agencies including Secretariat for Information Technology, Haryana State Electronics Development Corporation and HSIIDC work for developing IT sector ■ HSIIDC developed IT Parks at IMT Manesar, Industrial Estates at Rai and Panchkula for development of IT/ITeS ■ First state to implement its State Wide Area Network (SWAN) for voice, data and video transmission ■ Emphasis on education ■ Policy initiatives and incentives including the IT policy Scope of investment ■ Gurgaon has emerged as a preferred destination for IT Industry in North India ■ Opportunities exist in data management, transmission, software, cloud services, etc. ■ In FY12, Haryana recorded IT exports of INR250 billion, growing between 8 and 10 percent over previous year Existing Companies* ■ IBM ■ Tata Consultancy Services ■ Hughes Note: *Indicative list Other sectors Agro based The agro based industry acts as the biggest employment generator in rural parts of Haryana. The State Government promotes organic farming by providing financial assistance to farmers. In addition, there is a huge potential for dairy farming in rural areas, the state being one of the leading Indian states in milk availability. Real Estate In FY12, the Real Estate sector accounted for 9 percent of GSDP in Haryana. The state has witnessed rapid growth in residential, commercial and hospitality segments. Some of the key players in Real Estate in Haryana include DLF, Unitech and Ansal Housing & Construction. The Government supports the Real Estate sector through various policies including Land Acquisition Policy 2010. Project –wise opportunities18 Project 1: Mass Rapid Transport System (MRTS) between Gurgaon – Manesar - Bawal Project 2: Multi-Modal Logistics Hub in Rewari Project details ■ 57 stations over the length of approximately 130 Km ■ Estimated project cost of INR631.77 billion Project background ■ As of February 2013, the Government of Haryana approved creation of Special Purpose Vehicle (SPV) for project and asked for initiation of land acquisition Project details ■ The proposed area includes 900 acres in Manesar-Dharuhera-Bawal industrial belt with an expected investment of INR19 billion ■ To be developed through a SPV of DMICDC and HSIIDC on the PPPbasis ■ As per DMIC plans, logistics hub will have a container freight station, custom-bonded and 18 Press articles - 21 -
  23. 23. ■ Delhi Mumbai Industrial Corridor Development Corporation (DMICDC) floated a tender in February 2013 for selecting the consultant who in turn will prepare the detailed project report ■ DMICDC carried out discussions with Japan International Cooperation Agency for loan domestic warehouses, a railway sliding, a truck parking area, an auto zone and a container- handling facility Project background ■ DMICDC and the Government of Haryana agreed in principle to form a joint venture for implementing the project ■ Techno-economic feasibility study approved by State Government and land acquisition process underway ■ The hub would be located in close proximity to Manesar, Dharuhera and Bawal to cater to their cargo requirements ■ In addition to Haryana, hub will be used by the national capital region (NCR) area, Punjab and Rajasthan for freight Project 3: Convention Centre at Pachgaon Chowk ■ Project area under consideration is approximately 400 acres, of which 150 acres to be developed in initial phase ■ Estimated project cost of INR25 billion Proposed development: ■ 194,758 sq meter to be designed to provide space to around 1,850 exhibition stalls ■ 22,500 sq meter reserved for convention centre ■ 113,155 sq meter reserved for proposed hotel building ■ 12,000 sq meter to be earmarked for retail and commercial activities Projects under DMIC Manesar - Bawal Investment Region (MBIR) ■ Under the DMIC project, investment regions at Manesar-Bawal and Kundli-Sonipat and Industrial regions at Faridabad-Palwal andRewari-Hissar have been identified ■ Concept Master Plan of MBIR finalized and development plan has been approved by the State Government ■ An area of 402 sq Km would be taken up for development initially Integrated Multimodal Logistics Hub (IMLH), District Rewari ■ Feasibility study for IMLH project completed ■ Project to be implemented jointly through an SPV with 50:50 shareholding between HSIIDC and DMICDC at Bawal in Rewari district, over an area of 1,000 acres ■ Various modules of project include EXIM container yard and Container Freight Station (CFS), domestic container yard and warehousing, auto zone and commercial area Estimated project cost of INR30 billion Global City Project in Gurgaon ■ Global City is proposed to be developed as Second Node in Haryana (after MBIR) in Gurgaon over an area of 1,100 acres ■ DMICDC would provide knowledge support for designing and creating infrastructure ■ City to be designed by integrating smart community concepts ranging from water, power to integration of IT services in managing various public utilities ■ Project components would include exhibition and convention centre, high value innovation and knowledge industries, central business district and township Project 1: Mass Rapid Transport System (MRTS) between Gurgaon – Manesar - Bawal Project 2: Multi-Modal Logistics Hub in Rewari - 22 -
  24. 24. Township (IMT) under PPP model at Gohana, Sonipat (3,400 acre) ■ Development of infrastructure in IMT at Kharkhoda (3,300 acre) started under PPP model Commercial, residential and institutional projects ■ HSIIDC has several sites in various industrial estates for development of hotels, convenience shopping complexes, schools, hospitals, etc. ■ HSIIDC isdeveloping Vanijya Nikunj, a commercial complex in Gurgaon,Udyog Vihar for which an area of about 17 acres has been earmarked ■ Process for project development is under progress Operations and Maintenance (O&M) services within industrial estates ■ Some of the investment opportunities are - O&M of software technology parks - Water supply, distribution, treatment, recycling and management solutions - Distribution of electrical power - Security services - Horticulture and plantation services - Provision and operation of transport system within industrial areas - Provision and management of parking facilities Industrial units within the industrial estates ■ Industrial plots allotted to entrepreneurs for setting up of industrial projects in Industrial Estates and Industrial Model Townships developed by HSIIDC ■ Upto 10 percent of plots/sheds reserved in each industrial estate for allotment to NRIs/PIOs and for units with at least 33 percent FDI in total investment The state has also developed various industrial model townships (IMTs) to promote large industries with all the facilities. IMTs have helped state to attract private investors. The following table summarizes the development status of various IMTs in the state. Table: Status of the Industrial Model Townships (IMT) in Haryana Name of the Industrial Model Township Status ■ IMT Faridabad Under development ■ IMT Mewat at Sohana Planned and development work yet to commence ■ IMT Kharkhoda ■ Industrial Estate Dharuhera Land under acquisition ■ IMT Manesar ■ IMT Rohtak ■ IMT Bawal ■ Industrial Estate, Barhi (Phase I) ■ Industrial Estate Karnal ■ Industrial Estate Rai (Phase I & II) ■ Industrial Estate Barwala ■ Growth Centre Saha ■ Industrial Estate Yamunanagar Developed and under expansion Planned and under development ■ IMT Bidhal-Lath, located at Tehsil Gohana in Sonipat District, is nearly 70 Km from Delhi and is spread over 3,400 acres Land under acquisition and project to be developed under PPP model Table: Other Investment opportunities in Haryana Category Description Industrial Infrastructure ■ Industrial and Investment Policy 2011 of Haryana encourages PPP based development of infrastructure projects majorly in industrial infrastructure, power, roads, bridges, health, tourism and education sectors ■ HSIIDC has initiated action for development of Industrial Model - 23 -
  25. 25. State overview19 Himachal Pradesh has a strong hydro-power base supported by its abundant water resources and topography. It is one of the most dynamic hill states of India and has an area of 55,673 sq km spread over 12 districts. Shimla is the capital of the state. Other prominent cities include Dharamshala, Manali, Palampur, Dalhousie, Una, Solan and Mandi. According to Census 2011, the state is inhabited by 6.9million people, of which 83.8 percent are literate. Economy The state’s economy grew at a CAGR of 7.6 percent during FY08-FY13. This growth has been supported by the Services sector that grew at a CAGR of 10.4 percent during the same period and accounted for 42.0 percent of the state’s GDP in FY13. Industry also grew at a CAGR of 7.8 percent and contributed a share of 40.7 percent in FY13 whereas agriculture grew at a CAGR of 1.7 percent and accounted for a share of 17.2 percent in FY13. Priority sectors for investment include Pharmaceuticals, Tourism and Cement. Other key sectors are Agriculture, Fruit Processing and Horticulture, Information Technology and Biotechnology. Source: MOSPI Investment inflow The aggregate FDI investment for Punjab, Haryana, Himachal Pradesh and Chandigarh was INR55.6 billion (USD1.2 billion) during April 2000-March 2013. Table: Infrastructure sector: key parameters Source: DIPP Infrastructure sector Parameters Units Telecom Wireless subscribers 6.9 million (as of April 2013) Wireline subscribers 0.2 million (as of April 2013) Power Installed capacity 3,770.1 MW (as of July 2013) Aviation No. of airports 3 (as of August 2013) Road network Road length 47,963 km (as of March 2011) 19 Government of Himachal Pradesh; Himachal Pradesh Population Census data 2011, MOSPI, CEA, TRAI, Ministry of Road Transport and Highways; Airports Authority of India; Ministry of Commerce and Industry 417 435 468 489 516 3.8 4.4 7.6 4.5 5.4 0 5 10 0 200 400 600 FY09 FY10 FY11 FY12 FY13 Graph: GSDP (INR billion) and growth (percent) GSDP (INR billion) Growth (%) 224 416 130 47 0 100 200 300 400 FY10 FY11 FY12 FY13 FDI infow (USD million) Himachal Pradesh - 24 -
  26. 26. Sector opportunities20 The state offers diverse investment opportunities across many of its focus sectors. Various companies have already invested in the state. Diverse climatic conditions, pro-active government support for investment and presence and development of various industrial parks provide many investment and development opportunities in the state. Table: Overview of priority sectors Pharmaceuticals sector Growth supporting factors ■ 100 percent FDI permitted under automatic route ■ Patents (Second Amendment) Bill to provide a patent cover for 20 years ■ Automatic approval to Foreign Technology Agreements for bulk drugs ■ No licensing for manufacturing of drugs and pharmaceuticals with a few exceptions ■ Extended weighted deductions facility of 150 percent to expenditure on patent filing, obtaining regulatory approvals, clinical trials and in-house R&D in biotechnology Scope of investment ■ Figures among the leading growth areas for the pharmaceutical (pharma) sector in the northern region ■ Existing investment in drug manufacturing, R&D, packaging/labeling and transportation ■ Home to 364 pharma units and is ranked third in northern region ■ Developed an Export Promotion Industrial Park at Baddi with an investment of INR200 million ■ A Biotechnology Park (BTP) in Aduwal, Solan approved for development under Public Private Partnership (PPP) mode ■ Requires an estimated investment of INR2 billion and generates 500 new jobs Existing companies* ■ Ranbaxy Laboratories ■ Cipla ■ Morepen ■ Torrent Pharmaceuticals ■ Panacea Biotec Note: *Indicative list Tourism Growth supporting factors ■ Himachal Pradesh’s snowcapped mountains, religious shrines and ancient monuments attract a variety of tourists every year ■ Tourism Policy 2005 aims to increase tourism’s share in GSDP to 15 percent by 2020 ■ Witnessed 16.1 million tourists in 2012 ■ NABARD promotes work of rural artisans to attract tourists for development of ‘Tourism Clusters ■ State Government to initiate measures to attract more foreign tourists by offering multi-lingual guides, websites,etc. Scope of investment ■ Development of hotels, spas, resorts, tourist centres, recreational centres and ski slopes among others without disturbing the existing ecology ■ The State Government to upgrade civic ■ INR36.8 million sanctioned by the Government of India to develop eco- tourism in the state; Of this amount, INR29.4 billion has been released for the following identified circuits 20 Government of Himachal Pradesh; Press articles; Department of Pharmaceuticals, Government of India; First Pharmaceutical Survey of India, FY11; WHO; NABARD; Himachal Pradesh Economic Survey 2013; Annual Administration Report FY12, Department of Industries, Government of Himachal Pradesh - 25 -
  27. 27. infrastructure in major tourist destinations like Shimla, Manali, Dalhousie, McLeodganj, Kasauli and Chailon on priority through funds raised from the Government of India and through private investors ■ Proposed development of activity- based tourism and opening up new sub- destinations to increase the duration of the stay of visitors/tourists Shimla (Mandli-DodraKwar) Kullu (Kullu-Manali-Kothi) Kinnaur (Shongtong-Pooh) Bilaspur (ShriNainaDevi Ji) Existing companies* ■ Radisson ■ Sitara International ■ Oberoi Hotels & Resorts Note: *Indicative list Cement Growth supporting factors ■ Immense potential for growth of cement industry on account of an estimated 8,630 million tones of limestone deposit (as of FY12) ■ Growth of cement industry also supported by growing demand on account of development of towns/cities and related infrastructure Scope of investment ■ Investment opportunities exist in - Mining - Crushing/grinding - Manufacturing - Packing - Equipment providers - Transportation companies ■ Many companies, such as Lafarge, Dalmia, JP Associates, Harish Cements and India Cements, planning to set up new plants in the state having an estimated total production capacity of 12.02 million tons per annum (MTPA) Existing companies* ■ Ambuja Cement ■ JP Associates ■ Associated Cement Companies Note: *Indicative list Other sectors for investment Agriculture and Horticulture Information Technology The State Government provides many fiscal incentives to IT companies. Some of these include quality power to IT companies at competitive rate and special packages for investment proposals above USD2.5 million or for proposals from Fortune 500 companies. Also, companies operating in Business Process Outsourcing (BPO) sector are not taxable in the state. Tourism There is adequate internet bandwidth provided by the State Government throughout the state and it has also proposed an IT park at Waknaghat, Solan - 26 - The state’s diverse agro-climatic and pollution-free conditions enable growth of a variety of vegetables, fruits and cereals. The state’s conducive environment has resulted in the production of various high quality off-season and exotic vegetables as well as apples and stone fruit. The state provides many opportunities in the contract farming of maize, ginger, garlic and tea; organic farming of vegetables and pulses and support services, such as bio-fertilizers, organic manures, bio-pesticides, seeds for promoting organic farming. Private sector participation is sought to increase seed production and set up agri-clinics and agri- business centers. Companies also have the opportunity to set up micro-propagation units, post- harvest facilities, such as cold storage units and fruit processing units that include alcoholic beverages and marketing services.
  28. 28. Biotechnology The emerging potential of herbal-based industry including industrial feeding units, industrial production units and industrial processing units provides an opportunity for investment in the biotech sector of the state. The Government is also developing biotech industrial clusters, biotechnology parks with incubation facilities. Companies have an opportunity to invest in commercial micro-propagation, processing units for aromatic oils and fruits, production units for pharmaceuticals and bio-drugs and R&D centers for fruit-flori/herbiculture Project –wise opportunities21 Project 1: State Data Centre (SDC) Project 2: Tourism circuits in India ■ Department of Information Technology (DIT), Himachal Pradesh is building the SDC for the all government departments ■ Under National e-Governance Plan, SDC is identified as one of the core supporting components to consolidate services, applications and infrastructure to provide efficient electronic delivery of business services ■ Common delivery platform to provide various services ■ Selected agency to operate and maintain the project for five years under the PPP mode ■ Status of project as of July 2013: - Infrastructure put in place by Himachal Pradesh Housing and Urban Development Authority for SDC at Mehli - Request for Proposal floated for selection of SDC operator; pre-bid meetings held; corrigendum is being prepared - Expected to go live within six months post signing agreement with successful bidder ■ Three tourist circuits have been identified in the Himachal Pradesh: - Circuit 1:Chandigarh-Swarghat-Bilaspur- Mandi-Kullu-Manali-Manikaran-Naggar - Phase II, Circuit 1: Kalka-Berog-Solan- Shimla-Chail-Kufri-Naldara with private sector opportunity of INR250 million - Phase II, Circuit 2:Kangra-Dharamshala- Palampur-Dalhousie-Chamba with private sector opportunity of INR500 million Phase I ■ Investment opportunity of INR1.5 billion to build multi-level car parking, five-star hotels, public toilets and rest rooms, beautification and landscaping, water sports centre, convention centre, motels and camping sites in Circuit 1 alone on PPP basis Project 3: Tourism, Housing and Infrastructure ■ Himachal Pradesh Infrastructure Development Board (HPIDB) is the nodal agency for executing a variety of projects, such as Tourism, Housing, and Infrastructure on commercial/PPP mode ■ 29 tentative projects have been identified including the following: - A tunnel-cum-over bridge project between Kalka and Shimla worth INR10 billion - Three expressway corridors — Una-Mandi, Una-Dharamshala, Solan-Rohru - 15 nursing and five para-medical colleges - One integrated tourism development project - A Himalayan Ski village - Integrated IT and Biotechnology Parks - Special Economic Zone (SEZ) in Kangra district 21 Project Status, Department of Information Technology, Government of Himachal Pradesh; Ministry of Tourism, Government of India; IL&FS; HPIDB - 27 -
  29. 29. Government policies and initiatives22 In order to boost industrial growth, the State Government has undertaken several initiatives including announcing policies and incentives, particularly for its priority investment sectors. Policies and schemes for priority sectors include the following: 22 Annual Administration Report FY12, Department of Industries, Government of Himachal Pradesh Table: Key policies promoting investments Policies Industrial Policy, 2004 Tourism Policy, 2005 IT Policy, 2001 Hydro Power Policy, 2007 Biotechnology Policy, 2001 Provisions ■ Emphasizes on the development of key infrastructural sectors, such as power, housing and social infrastructure by means of fiscal incentives ■ Addresses issues impeding industrial growth such as long procedures for setting up of industry and obtaining permissions required under various labor laws ■ Identifies 18 thrust industries for state, including floriculture, horticulture and agro-based industries, sugar, pharmaceuticals, paper and paper products and wool products ■ The New Industrial Policy 2013 is expected to be announced soon. Details policies around production, distribution and sale of powers generated by small hydro power plants such as: ■ Production up to 2 MW, reserved for state residents and cooperative societies comprising state residents ■ Production up to 5 MW, preference to state residents or any private investor/PSU/co-operative societies comprising state-residents ■ Production above 5 MW, power can be produced by any private investor/cooperative society comprising state residents ■ Not more than two projects to any independent power producers ■ Up to 5 MW, State Government to acquire land for permanent structures; land for other purposes on lease basis on government approved rates ■ Increase share of tourism to 15 percent of GSDP by 2020 ■ Focuses on developing infrastructure in major tourist destination; also focuses on developing lesser known areas ■ Outlines tourism sub-plan which integrates and coordinates with other departments to surmount budget deficit ■ Aims at increasing investment in segments such as IT hardware, software, IT enabled services, telecom, e-commerce etc ■ Encouraging use of IT in industries where state has competitive advantage ■ Aims at diversifying local industries into being web-enabled and attract IT companies from elsewhere in India and overseas ■ Promotion of e-governance and e-tourism ■ Department of Information Technology to act as a single point interface for setting up an IT unit ■ Applications for setting up IT units placed before State Level Single Window Committee ■ IT Software/services deemed to be manufacturing activity for the purpose of incentives as per Government of India approved policy ■ IT units with connected load greater than 100 KW to be charged at concessional rate of electricity duty at 10 paisa per unit for five years from start of commercial production ■ Special packages for investment proposals of more than USD2.5 million or if company belongs to Fortune 500 list ■ Continuous power supply to IT industry ■ Emphasis on development of new technology in biotechnology stream for agriculture, animal husbandry and healthcare ■ State to provide infrastructural support to R&D institutions for skill development in biotechnology ■ Focus on conservation and commercial utilization of available resources - 28 -
  30. 30. State overview23 Jammu & Kashmir (J&K), a popular tourist destination, is also known for its handicrafts. The State Government has been continually working towards encouraging various sectors, such as HydelPower, Horticulture and IT/ITeS. The Services sector has been the key growth driver. The state has 22districts spread over an area of 222,236sq km. The state has two capitals. Srinagar is the summer capital of the state during May-October, while Jammuis the winter capital of the state during November-April. According to Census 2011, the state is inhabited by 12.5million people, of which 68.7 percent are literate. Economy The state’s GDP recorded a CAGR of 5.8 percent during FY08-FY13. Services sector has increased its share from 49.2 percent in FY09 to 54.9 percent in FY13. Further, the Primary (Agriculture), Secondary (Industries) and Tertiary (Services) sectors recorded CAGR of 2.8 percent, 2.5 percent and 9.4 percent, respectively, during FY08-FY13. Priority sectors for investment include Hydel Power, Tourism, Horticulture, Floriculture, Agro Processing and IT. Other key sectors are Infrastructure, Handicrafts and Handlooms, Pharmaceuticals, Gems and Jewellery, Sericulture, Electronics and Education. Source: MOSPI Table: Infrastructure sector: key parameters Infrastructure sector Parameters Units Telecom Wireless subscribers 6.8 million (as of April 2013) Wireline subscribers 0.2 million (as of April 2013) Power Installed capacity 2,393.5 MW (as of July 2013) Aviation No. of airports 3 (as of August 2013) Road network Road length 26,980 Km (as of March 2011) Sources: CEA; TRAI; Ministry of Road Transport and Highways; Airports Authority of India; Press articles Sector opportunities24 The state offers diverse investment opportunities supported both by demand and supply side factors. Pro-active government support, proximity to the national capital, affordable labor cost and a number of higher education institutions are some of the factors which make the state an attractive investment destination for long-term investments. 23 CEA; TRAI; Ministry of Road Transport and Highways; Airports Authority of India; Press articles; MOSPI 24 Government of Jammu and Kashmir; Press articles; CII 347 362 383 406 431 6.5 4.5 5.7 6.1 6.1 0 5 10 0 200 400 600 FY09 FY10 FY11 FY12 FY13 GSDP (INR billion) and growth (percent) GSDP (INR billion) Growth (%) Jammu & Kashmir - 29 -
  31. 31. Table: Overview of priority sectors for investment Tourism Growth supporting factors ■ Established several tourism development authorities ■ The State Government is playing a major role in the tourism sector by identifying new zones/circuits and by learning from other states in developing tourism. Illustratively, learning from Karnataka to develop forest-based resorts ■ Infrastructure development, such as four laning of roads (Pir Panjal-Banihal), railways (Chenani-Udhampur) and multi- level parking ■ Domestic events such as Amarnath Yatra, Sindhu Darshan, Gulmarg and Ladakh festivals are popular and attract tourists ■ Spring season, ideal for floriculture, is another period of tourist attraction ■ Srinagar Master Plan (2001-2021), currently in the review stage, is expected to increase hotel and lodging construction in the state ■ Currently, the tourism sector contributes about 7 percent to the state’s GDP Scope of investment ■ The Department of Tourism, estimated Kashmir’s tourism potential to be between INR8 and INR10 billion per annum. It includes: − Pehlgam: INR1.5 billion − Gulmarg: INR1.5 billion − Trade from handicrafts and Shikara: INR4-5 billion ■ A number of temples in Jammu and scenic landscape of Kashmir have attracted variety of tourists presenting diverse investment opportunities including hotels and restaurants, projects in heritage tourism and eco-tourism, tourist facilitation desk, transportation facilities, cable cars and ropeways and engineering, procurement and construction companies ■ State is working towards diversifying the definition of tourism to include amusement parks, adventure sports (water, aero), resort development, township, yoga centers and conversion of hot springs into spas ■ Three mega projects/circuits identified by the Ministry of Tourism for development in the state include Mubarak Mandi Heritage Complex, Naagar Nagar Circuit and Leh Existing companies* ■ Taj ■ ITC ■ The Lalit ■ Country Inn ■ Centaur Note: *Indicative list Hydro Power Growth supporting factors ■ River basins, such as Chenab, Jhelum, Indus, Ravi already house several projects and offer potential for development of more projects ■ Rising demand for power ■ GVK’s largest hydro power project is being developed in the state ■ Proactive support from the government and state agencies in terms of capacity addition plans, policies and concessions, bidding process and single window clearance mechanism Scope of investment ■ 33 independent power producer (IPP) projects being developed ■ State Government plans to add 6,000 MW of hydro capacity by 2018 ■ Power plants set up by Government present opportunity for national and international players in providing equipment or undertaking mechanical/civil engineering ■ Hydro power potential estimated at 20,000 MW, of which 16,200 MW of projects identified based on techno- economic feasibility ■ Close to 450 MW of projects are under construction by the State and Central Government ■ Development of hydro projects offers investment opportunities for - 30 -
  32. 32. work(Turbines provided by Alstom for INR18 billion, 240 MW Uri II hydel project is a case in point) EPC companies, equipment manufacturers, transmission and distribution companies Existing companies* ■ GVK ■ ABB ■ Schneider Electric and Alstom ■ NHPC ■ Jaypee ■ HCC Note: *Indicative list Horticulture, floriculture and agro processing Growth supporting factors ■ Favorable agro-climatic conditions resulting in high quality of produce and leading to exports and improved earnings ■ Leader in production of apples, apricots, almonds, walnuts and saffron that are all exported ■ Asia’s largest Tulip Garden; other flowers also exported from state ■ Proactively plays role in undertaking missions (Saffron mission), identifying areas such as organic farms promoted in Guri, Tangdor, Kupwara, Shopian, Badgaon and conducting studies for vegetables Scope of investment ■ Investment opportunities in organic farming of walnuts and almonds because of favorable climate ■ Apiculture (honey production), micro irrigation, activities, such as manufacturing of perfumes and essence and strawberry production ■ High production of crops/fruits presents opportunities for: - Processing raw products into fruit juices, pulp, jams or jellies - Sorting and grading - Packaging - Cold storage and warehouses - Transportation Existing companies* ■ Hindustan Unilever ■ Dabur ■ Golden Apple ■ Godrej Agrovet ■ Kanwal Foods and Spices ■ Harshna Naturals Note: *Indicative list Project –wise opportunities25 Project 1: Ramban to Banihal Highway Project Project 2: Power distribution in Jammu and Srinagar ■ Approximately 32.1 Km long ■ Expected to reduce distance between two capital cities, i.e., Jammu and Srinagar, by 50 Km ■ Approximate project cost of INR13.1 billion; to be completed within five years from commencement of construction ■ National Highways Authority of India (NHAI) to undertake development and rehabilitation, strengthening and four laning of Ramban to Banihal section of NH-1A, from 151 Km to 187 Km on Design, Build, Finance, Operate and Transfer basis As of July 2013 ■ NHAI announced payment of INR260 billion to private developers during concession period of 17 years, excluding three years of construction ■ In July 2013, J&K Government announced that the power distribution in Jammu and Srinagar cities will be awarded on PPP mode by October 2013 ■ The project aims at ensuring uninterrupted supply of power in these cities without increasing tariff or putting any additional burden on the consumers ■ The project is expected to bring down the overall aggregate technical and commercial losses substantially, which stood at 72.9 percent in FY11 as against an all India level of 26.1 percent 25 Government of J&K; Press articles Hydro Power Scope of investment - 31 -
  33. 33. Project 3: Other Upcoming Projects/opportunities in J&K ■ Mini-hydel projects: In July 2012, the J&K Energy Development Agency (JAKEDA) announced to develop six mini-hydel power projects of 9.5MW capacity in the state under PPP mode ■ Tourism-related projects: - In June 2013, the J&K Government announced plans to construct several ropeways in three regions of the state - Work on several cable car projects is in the pipeline; These include cable cars from Peerkho to Mahamaya,Mahamaya to Shahabad in Bahu Fort and one at Patnitop - Development of amusement parks, adventure sports parks and tourist resorts in the Valley of Gurez, the Valley of WularLake and the Valley of Wadvan - Evaluation of areas such as Gulabgarh, Kalakot, Kishtabagh and Ladakh for conversion of hot springs into spas ■ Manufacturing sector: Projects can be developed in partnership/guidance/collaboration with IRCON International Ltd.; Given the tax benefits in the state, J&K could be a potential manufacturing hub ■ IT/ITeS:The Government is exploring the possibility of developing industrial estate Rangrethas a centre for IT services given the availability of around 40,000 IT engineers and a large number of other IT trained people ■ E-Governance: Significant scope for further development of e-governance platform also exists in the state ■ Cold storage: In July 2013, the State Government announced that a project under PPP mode is being prepared to establish a multi-utility/commodity cold storage at Narwal vegetable and fruit mandi ■ Urban development: Large un-developed land and concentration of population in a few areas provides immense investment opportunities for city/town planning and urban development ■ Educational and vocational institutes: Development of higher educational institutes, and a fashion technology institute offer good investment opportunity ■ Handicrafts: A craft street has been built over 2 Km to house a large number of artisans and tie-ups with exporters are being looked into Government policies and initiatives26 In order to boost industrial growth, the Government has undertaken several initiatives recently including announcing a special package for industrial development. There are many subsidies given under this scheme so as to boost growth. The major focus is on IT, renewable energy and industrial policy among others. The key policies undertaken by the government are as follows: 26 Policy documents of Jammu and Kashmir; Ministry of Commerce and Industry; Press articles Project 1: Ramban to Banihal Project divided into six sub-projects—widening of Jammu-Udhampur road (65 Km), Chenani-Nashri tunnel (9.2 Km), Ramban-Udhampur road (43 Km), Banihal-Ramban road (36 Km), Qazigund-Banihal road (15.25 Km) and Srinagar-Banihal road (67.7 Km) Project’s main structure includes two long tunnels (Chenani-Nashri and Qazigund-Banihal), 12 short tunnels of 6.2 Km, 34 major bridges and 24 via ducts Project divided into six sub-projects—widening of Jammu-Udhampur road (65 Km), Chenani-Nashri tunnel (9.2 Km), Ramban-Udhampur road (43 Km), Banihal-Ramban road (36 Km), Qazigund-Banihal road (15.25 Km) and Srinagar-Banihal road (67.7 Km) Project’s main structure includes two long tunnels (Chenani-Nashri and Qazigund-Banihal), 12 short tunnels of 6.2 Km, 34 major bridges and 24 via ducts ■ ■ - 32 - Highway Project (Continued..)
  34. 34. Table: Policies to promote investments Policies Provisions J&K Industrial Policy, 2002-15 ■ 100 percent exemption from Excise duty for 10 years from production commencement to new/existing industrial units/parks/export processing zones etc. ■ Capital investment subsidy at the rate of 15 percent up to INR3 million to new industries in notified locations ■ Interest subsidy at the rate of 3 percent on working capital loan for 10 years after commencement of commercial production J&K State Hydroelectric Projects Development Policy, 2011 ■ Concession period: 35 years ■ Incentives from the Ministry of New and Renewable Energy (MNRE): Projects less than 25 MW are eligible ■ Water usage charge: NIL for 10 years ■ Income tax: Exemption for micro hydel projects as per Government of India policy ■ Time period: Financial closure and all clearances to be obtained in T+40 months for 25-100 MW project and within T+30 months for 2-25 MW Solar Power Policy for J&K, 2013 ■ Objective: To put in place investment climate to leverage the Clean Development Mechanism ■ Minimum capacity: 1 MW, if MNRE launches any scheme for lower capacity plant, then that shall also be considered. ■ Incentives: No entry tax; land by the State Government; no royalty required in the form of free power; exemption from demand cut up to 50 percent of the installed capacity solar power producer J&K Draft IT Policy, 2012 and J&K IT Policy, 2004 ■ Expansion of IT infrastructure through PPP ■ Development: IT parks, electronic governance and e-commerce; state departments to spend 1.5 percent of budget on IT-related activities ■ State designated agency: Jammu & Kashmir e-Governance agency; set-up an Industry Promotion Cell to help with information on establishing IT units, HR outsourcing and legal issues ■ Provide single window clearance ■ Customized package: For investment above INR100 million ■ Capital subsidy at the rate of 30 percent to new units with maximum limit (large units: INR90 million; medium: INR45 million; small: INR15 million; micro: INR 3 million) subject to first ten units per annum ■ Exemptions: Stamp duty; CST and GST as per industrial policy; excise dutyand service tax for 10 years ■ Expansion/modernization/diversification projects by more than 25 percent to receive benefits equivalent to new projects ■ Above mentioned incentives to be provided for minimum 50 percent employment to J&K residents ■ Interest subsidy: For hardware and software as per other industries ■ Location of units: IT software units may be located in residential areas ■ Lending: Banks and financial institutions to accord priority status to hardware/software/IT ■ Special incentives package: To be offered for investment of more than INR100 million - 33 -
  35. 35. State overview27 Punjab has been traditionally known to be an agrarian economy with high share of agriculture. Gradually, other sectors— manufacturing and services, have increased their contribution to the economy, with services growing at a faster pace. With an area of 50,362 sq km 22 districts, it is the 19th largest state in India. Chandigarh is the capital of the state. Other prominent cities include Ludhiana, Amritsar, Jalandhar and Mohali. According to Census 2011, the state is inhabited by 27.7 million people, of which 76.7 percent are literate. Economy The state’s GDP recorded a CAGR of 6.0 percent during FY09-FY13. Services sector has increased its share from 43.2 percent in FY09 to 48.7 percent in FY13. Further, the Primary (Agriculture), secondary (Industries) and Tertiary (Services) sectors recorded CAGR of 1.0 percent, 5.4 percent and 9.2 percent, respectively, during FY09-FY13. The New Industrial Policy (announced in June 2013) supports the growth of industries and services sectors. Under the policy, the State Government has approved a liberal package of fiscal incentives for integrated textile units, manufacturing, agro and food processing and electronics sectors. Priority sectors for investment include Textiles, Renewable Energy, IT, Agro Processing and Infrastructure. Other key sectors are Manufacturing, Real Estate, Tourism, Entertainment, Biotechnology, Health, Education, Financial Services and Retail. Source: MOSPI Investment inflow The aggregate FDI investment for Punjab, Haryana, Himachal Pradesh and Chandigarh was INR55.6 billion (USD1.2 billion) during April 2000-March 2013. The FDI investment has been greatly impacted by the global slowdown. Positively, the past trend shows increased potential for investing in Punjab. Source: DIPP 27 CEA; TRAI; CII; Ministry of Commerce and Industry; Ministry of Road Transport and Highways 0 2 4 6 8 0 500 1,000 1,500 2,000 FY09 FY10 FY11 FY12 FY13 Graph: GSDP (INR billion) and growth (percent) GSDP Growth rate 0 100 200 300 400 500 FY10 FY11 FY12 FY13 Graph: FDI (USD million) Punjab - 34 -
  36. 36. Power Installed capacity 7,509 MW (as of June 2013) Aviation No. of airports 6 (as of November 2012) Road network Road length 84,193 Km (as of March 2011) Sources: CEA; TRAI; CII; Ministry of Commerce and Industry; Ministry of Road Transport and Highways Sector opportunities28 The state offers diverse investment opportunities supported both by demand and supply side factors. Pro-active government support, proximity to the national capital, affordable labor cost and a number of higher education institutions are some of the factors which make the state an attractive investment destination for long-term investments. Overview of priority sectors for investment Textiles Growth supporting factors ■ Punjab is among the largest producers of cotton and blended yarn as well as mill- made fabrics in India ■ Abundant raw material supported by large labor pool, cluster development and government policy have made Punjab a well-known textile hub in India ■ The State Government has announced several tax incentives for Textiles, which is a major thrust area, in the New Industrial Promotion Policy, 2013 for establishing new units and expansion of existing units ■ The State Government has already put in place single window mechanism to expedite implementation of projects ■ The World Bank, in its study ’Doing Business 2009,’ has adjudged Ludhiana as the best place for carrying business operations in India. Ludhiana is known for its wide variety of garments (readymade, woolen and hosiery) ■ The establishment of Northern India Institute of Fashion Technology in Mohali is expected to aid availability of skilled manpower to the textile sector Scope of investment Punjab’s Textile sector offers diverse investment opportunities across the value chain — from raw materials to finished products (garments). These processes include yarn, ginning, spinning, weaving, bleaching, dyeing, fabrics, garment manufacturing, threads, woolens and hosiery Existing companies* ■ Vardhman Group ■ JCT Ltd ■ Nahar Group ■ Prince Textile Mills Note: *Indicative list Growth supporting factors ■ More than 300 days of sunshine per annum; solar insulation estimated at 4-7 kwh/sq meter per day ■ Rising demand for power ■ Developing technology to lower cost of energy production ■ Favorable policies and government schemes of renewable purchase obligation and renewable energy certificates ■ Rooftop program where solar photovoltaic projects set on government buildings/universities ■ Single window clearance mechanism ■ Diverse investment opportunities for plants of variable sizes using a range of diverse sources — wind, solar, mini hydel and biomass ■ Agro residue estimated at 10 million tons can be used in biomass 28 Government of Punjab; The World Bank; Company website; Press articles Table: Infrastructure sector: key parameters Infrastructure sector Parameters Units Telecom Wireless subscribers 29.6 million (as of April 2013) Wireline subscribers 1.3 million (as of April 2013) Renewable energy - 35 -
  37. 37. ■ 40 percent subsidy on solar pumps to farmers Scope of investment ■ As of March 2013, installed hydro power capacity of approximately 3,015 MW besides renewable power capacity of 388 MW (of which solar is 9 MW) ■ The third highest installed solar power capacity in the northern region after Rajasthan and UP ■ Investment opportunities in solar power generation companies, transmission and distribution companies, equipment companies, engineering, procurement and construction companies solar wafer manufacturers and solar-based appliances manufacturers ■ 250 MW of solar photo volataic projects awarded by Punjab Energy Development Agency on Build-Operate- Own (BOO) basis ■ Estimated investment of INR20 billion ■ Immense potential for mini hydel on account of various canals — Bhatinda, Kotla, Abohar, Sidhwan and Bhakra ■ Estimated power potential to be developed by 2022: Biomass (600 MW), waste to energy (50 MW), Small/mini/micro hydro (250 MW), solar (1,000 MW) Existing companies* ■ Azure Power ■ Soma Enterprise ■ Sovox ■ Welspun Solar ■ Lanco ■ Moserbaer Clean Energy ■ PunjLlyod ■ Orient Green ■ Viatom Energy Note: *Indicative list Agribusiness Growth supporting factors ■ Agribusiness is one of the key focus areas of the New Industrial Policy, 2013 that has offered several tax incentives for the agro/food processing sector ■ Highest share in procurement of wheat and rice; in FY13, the state accounted for nearly 34 percent of wheat procurement and 30 percent of rice procurement ■ 5,000 hectares identified to create a land bank for new industrial projects ■ Punjab Agro-Industries Corporation (PAIC) facilitates investment in the sector along with adoption of new technology Scope of investment Large crop production presents investment opportunities in the areas of: ■ Fertilizers, pesticides, manures ■ Farm machinery and equipment (tractors, water sprinklers, power gensets etc.) ■ Micro irrigation techniques ■ Cold storage and warehouses ■ Transportation companies Production of fruits and vegetables presents investment opportunities for: ■ Processing of fruits and vegetables into fruit juices, pulp, jams, jellies, ketchup, sauces, pickles, etc. ■ Sorting, grading, packaging, etc. Other opportunities include Poultry and Dairy Existing companies* ■ Nestle India ■ Jagatjit Industries ■ Verka Renewable energy - 36 -
  38. 38. Punjab Government has been very aggressive on the implementation front as well. It has invested 47.4 percent, 45.3 percent and 30.9 percent in the industrial park, multiplex and healthcare and medical education, respectively, of the proposed investment during 2002-2011. Table: Total and actual investments Sector No. of approved projects Proposed investment Actual investment (2007-2011) Actual investment during 2007-2011 (from projects approved during 2002-2007) Total investment (2002-2011) No. Investment (INR billion) No. Investment (INR billion) No. Investment (INR billion) No. Investment (INR billion) Manufacturing 54 153.7 12 9.2 20 29.8 32 39.0 Industrial parks 10 17.5 2 0.5 7 7.9 9 8.3 Multiplex 13 33.1 3 2.2 25 12.8 28 15.0 Hotel 16 9.9 4 0.4 10 2.1 14 2.5 Super mega mixed use integrated industrial park project 8 317.0 7 31.6 - - 7 31.6 Healthcare and medical education 1 1.1 1 0.4 - - 1 0.34 Total 102 531.9 29 44.2 62 52.5 91 205.7 Source: The Government of Punjab Plans and completed projects The state has various projects in different phases of development. The state has introduced Town Master Planning in six towns identified— Amritsar, Bhatinda, Jalandhar, Ludhiana, Mohali, Patiala— paving the way for their planned development. The Punjab Government plans to provide 147 cities/towns with basic amenities (power, water, sewerage, waste management) at an investment of INR100 billion by 2016.In addition, the state expects to be a power surplus state by FY14. Mega projects sanctioned (March 2007-till date) The Punjab Government has sanctioned several mega projects in different sectors including manufacturing, industrial parks, hotels, super mega mixed use integrated industrial park projects, healthcare and medical education. Out of a total proposed investment of INR531.9 billion, the total investment by Punjab during 2002- 2011 was at INR205.7 billion (38.7 percent). - 37 -
  39. 39. Availability 5,872 8,884 11,484 Generation 5,872 7,564 8,884 New Plants 0 1,320 2,600 Surplus (Deficit) (2,342) 19 1,917 Source: The Government of Punjab Three thermal projects of total capacity of 3,920MW are planned to be commissioned at Talwandi Sabo, Rajpura and Goindwal Sahib by the end of 2015. It would lead to an increase in the power generation capacity of Punjab. Additionally, in July 2013, the Punjab Government awarded the 250MW solar power projects to 26 solar development companies. The Government aims to produce 1GW from renewable resources over four years, with a quarter coming from solar energy. Of the 26 developers, 18 proposed projects are of between 1MW and 4MW while the remaining 11 projects would generate between 5MW to 30MW. In addition, Punjab Energy Development Agency (PEDA) is expected to award around 300MW in biomass capacity agreements. The Lotus Integrated Textile Park was inaugurated in July 2013 in Barnala which is spread across an approximate area of 100 acres. The project incurred a cost of INR1.1 billion and was completed under the Scheme for Integrated Textile Park (SITP) scheme. This textile park would generate a direct employment for 1,500 people. In addition, several projects are in the development stage in Punjab. These include: ■ Mega Logistic park in Ludhiana ■ Integrated Education hub in Jalandhar ■ Textiles hub in Malwa ■ Food hub (rice derivatives) in Amritsar andFerozepur ■ IT hub in Mohaliand Amritsar ■ Petro park in Bhatinda ■ Automobiles hub in Patiala ■ Sugar hub in Amritsar andGurdaspur ■ Hosiery, garments, knitting, weaving in Ludhiana ■ Hand tools, Sports goods and Leather goods in Jalandhar Project –wise opportunities29 Project 1: Ludhiana Metro Rail Project Project 2: Recreational Amusement Park, Ludhiana ■ Length: approximately 29 km ■ Implementation agency: Ludhiana Metro Rail Corporation, special purpose vehicle (SPV) created for the purpose ■ Project completion year: 2018-19 ■ Expected investment: INR98.40 billion (per km cost expected to be INR1.75 billion for elevated track and INR3.25 billion for underground track) Project Background ■ Detailed project report (DPR)approved by the Punjab Cabinet in June 2011 ■ The draft bill for the enactment of the Punjab Horse Race (Regulation and Management) Act 2013 was approved by the Punjab Cabinet in May 2013 ■ The act to facilitate the set up, management and operation of racecourses and betting activities; Additionally, licensing, regulation, control and management of horse races would also be provided ■ Project, which is estimated to cost INR6 billion, to be developed by Punjab Infrastructure 29 Press articles Table: Power generation: plans and estimates In MW FY13 FY14 FY15 Demand 8,214 8,865 9,567 - 38 -
  40. 40. ■ Execution of metro project on Build Operate Transfer (BOT) model approved by the State Cabinet ■ The project report was submitted to Union Government for final approval in November 2012 Development Board (PIDB)under Public Private Partnership (PPP) mode ■ A planned Recreational Amusement Park to come up near Mattewara area on the banks of Sutlej river in Ludhiana, Punjab ■ The main recreational activities to include a turf club, an entertainment city, lakes, safari, a five-star hotel, colleges, a jungle retreat, water park and many other amusement places ■ Infrastructure Leasing and Financial Services Ltd. (IL&FS), engaged to study all technicalities involved in the project and feasibility of different sections proposed in the park, submitted its detailed report in August 2012 ■ Earlier in June 2012, the district administration identified around 1,400 acres in Mattewara as part of land pooling Project 3: Textile Park, Muktsar Sahib ■ A Greenfield Mega Integrated Textile Park at Village Panjava, Tehsil Malout in Muktsar Sahib, Punjab announced by SEL Group at an investment of approximately INR15 billion ■ Project commissioned by SEL Textilesin April 2013 ■ SEL Textiles commissioned the yarn spinning section with a capacity of nearly 200,000 spindles in phase I ■ Total capacity of 188,160 spindles in ring spinning, 40 million meters per annum in denim fabric and 8 million pieces of denim garments per annum ■ Cotton, the major raw material for the project, to be procured from the northern belt consisting of Punjab, Haryana and Rajasthan Source: Government of Punjab; Press articles Government policies and incentives30 In order to boost industrial growth, the Government has undertaken several initiatives including announcement of a few policies, particularly in the textiles sector. There are several important policies and schemes in the state. Policies and schemes for some of the priority sectors include the following: Key policies to promote investments Draft Industrial & Investment Promotion Policy 2013 ■ Minimum investment amount reduced from INR1 billion to INR400 million ■ The policy has announced several initiatives for IT, Agro, Textiles and Manufacturing sectors Policies Provisions Policy for Development of Textile Park ■ Minimum investment: INR2.5 billion in Bhatinda, Mansa, Faridkot, Ferozepur, Muktsar Sahib, Sangrur and Barnala ■ Market fee/infrastructure development cess: 50 percent exemption for 10 years or up to 50 percent of capital investment Draft Agriculture Policy for Punjab, 2013 ■ Addressed important issues, such as crop productivity, irrigation, adaptation to climate change, environmental pollution, soil management, farm mechanization, horticulture development, post - harvest handling, allied agriculture activities (poultry, fish, dairy etc.) and credit Punjab Minor Mineral Rules, 2013 ■ Gives priority to first discoverer of new mineral, followed by individual/entity that wants to set a mineral-based industry; lease granted for five years with two renewals Housing and Urban Development Policy, 2013 ■ Addresses issues pertaining to common building rules, potential zones, development controls, incentives for constructing green buildings and affordable houses, rationalization of charges, etc. Policy for Development of Integrated Sugar ■ Minimum fixed capital investment of INR2 billion, mill capacity of 3,000 tons crushing in a day (TCD) and power generation of 15 MW; 30 Government of Punjab; Press articles Project 1: Ludhiana Metro Rail Project - 39 - Project 2: Recreational Amusement Park, Ludhiana
  41. 41. Complexes 100 percent electricity duty exemption for 10 years on power export ■ Sugar complex with minimum fixed capital investment of INR4 billion: minimum capacity of 5,000 TCD; exemption of letter of Intent fee for D-2 fees; buy-back power agreement with Punjab State Transmission Corporation Limited (PSTCL) for minimum five years Excise Policy, 2013-14 ■ Earmarked INR830 million for education; INR600 million for sports; INR180 million for preservation and maintenance of heritage buildings Mega projects Concession ■ Manufacturing, industrial park and hotel projects: 5 percent electricity duty exemption for five years ■ Multiplex projects: 50 percent electricity duty exemption for five years Decision of Empowered Committee (March 2013) ■ Implementation and investment period may be counted from date of signing of agreement ■ Investment quantum to be taken into account from submission of application to nodal agency New and Renewable Sources of Energy Policy , 2012 ■ Increase share of new and renewable sources of energy to 10 percent of total installed electricity capacity by 2020 ■ Exemptions: Stamp duty; registration fee; change of land use; external development charges etc. ■ Nodal agency: Punjab Energy Development Agency ■ Single window clearance mechanism Mega Housing Projects Policy, 2013 (upcoming) ■ Aims to provide affordable housing ■ Permissible area: Less than 20 percent of project area for group housing (not applicable for mixed land use) In addition to policy formation or amendments, following are some of the incentives being offered under Industrial Promotion Policy, 2013. Incentives to promote investments Sector Incentives Manufacturing Textiles ■ VAT and CST retention - FCI between INR1.5 billion and INR5 billion: 80 percent VAT +80 percent CST of FCI with cumulative ceiling of 80 percent of FCI; for 11 years from application - FCI of more than INR5 billion: 90 percent VAT +80 percent CST with cumulative ceiling of 90 percent of FCI; for 3 years from application ■ Electricity duty and property tax: 100 percent exemption (captive permitted only when power sold to Punjab State Power Corporation Ltd. (PSPCL)); eligibility period of 11 years and 13 years for FCI of INR1.5-5 billion and more than INR5 billion, respectively ■ Stamp duty: 100 percent exemption on real estate purchased/leased within 3 years from approval date ■ Market fee/infrastructure development cess/rural development fund: 50 percent exemption on cotton purchase for 11 years and 13 years for FCI between INR1.5 and 5 billion and more than INR5 billion, respectively Policies Provisions - 40 -
  42. 42. Agro/Food processing ■ Electricity duty and property tax: 100 percent exemption for 10-12 years (depending on investment) ■ Stamp duty: 100 percent exemption Hardware and IT IT/ITeS/Knowledge industry in Mohali and Amritsar only (minimum investment of INR10 million) ■ VAT and CST: Exemption of 80 percent for 10 years ■ Electricity duty: Exemption for including captives only if power sold to PSPCL ■ Stamp duty: 100 percent exemption for first transaction ■ Property tax: Exemption for 10 years ■ PPCB clearance: No objection certificate is not required for units notified by Department of Information Technology ■ Exemption from exemption under Labor Laws ■ Other incentives Electronic Hardware manufacturing (minimum investment of INR50 million) ■ VAT and CST: Exemption of 80 percent for 10 years ■ Electricity duty: Exemption for including captives only if power sold to PSPCL ■ Stamp duty: 100 percent exemption for first transaction ■ Preferential market access ■ Special incentive for semi-conductor wafer fabrication ■ Other incentives Sector Incentives - 41 -
  43. 43. State overview31 Rajasthan has a rich industrial base supported by its vast resource base, expanding infrastructure, and government support. With an area of 342,239 sqkm, it is the largest state in India and comprises 33 districts. Jaipur is the capital of the state. Other prominent cities include Udaipur, Ajmer, Kota, Jodhpur and Alwar. According to Census 2011, the state is inhabited by 68.6 million people of which 67.1 percent are literate. Economy State economy grew at a CAGR of 9.2 percent during FY08- FY12. This growth has been supported by the Services sector that grew at a CAGR of 10.4 percent during the same period and accounted for 47.5 percent of the GSDP in FY12. Industry and agriculture also recorded a healthy growth of 8.4 percent and 8.9 percent and accounted for a share of 31.1 percent and 21.4 percent, respectivelyin FY12. Priority sectors for investment include Auto and Auto Components, Glass and Ceramics, Solar Power, Petrochemicals, IT/ITeS, Textiles and Agro Processing. Other key sectors are Tourism, Renewable Energy, Mineral Processing, Cement, Education, Gems and Jewellery, Handicrafts, Biotechnology, Financial Services, Retail, Infrastructure and Logistics, and Real Estate. There are 323 industrial areas and 8 growth centers in the state. Source: MOSPI 31 Government of Rajasthan; Census 2011; MOSPI; Ministry of Commerce and Industry; CEA; TRAI; Airports Authority of India 1600 1745 1862 2147 2278 5.1 9.1 6.7 15.3 6.1 0 10 20 0 1000 2000 3000 FY08 FY09 FY10 FY11 FY12 Figure: GSDP (INR billion) and growth (percent) GSDP (INR billion) Growth rate (percent) Rajasthan Investment inflow The state witnessed fluctuating FDI inflowsduring FY09-FY13. However, the investments have started picking up during FY13. In fact, in FY13, the investment grew four times from FY12 levels. On an aggregate basis, the state witnessed an inflow of USD685 million during April 2000-April 2013. Source: DIPP 343 31 51 33 132 0 200 400 FY09 FY10 FY11 FY12 FY13 FDI (in USD million) - 42 -

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