C&W Industrial Sector in India

8/14/2019 C&W Industrial Sector in India

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INDIA REPORT

RESEARCH AND BUSINESS ANALYTICS GROUP | March 2009

The oasis of economic growth

INDUSTRIAL SECTOR IN INDIA


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EXECUTIVE SUMMARY

Despite the current economic slowdown and a

downsizing of India's expected GDP from 9% to

approximately 7.1% as per the latest report by

Central Statistical Organisation, India still

remains one of the fastest growing economies in

the world, ranking only second to China. Thepace of this growth has largely revolved around

India's service exports, backed by a robust and

ever-increasing domestic consumption. Strong

long term fundamentals like dynamic industrial

environment, positive trend in outsourced

manufacturing, increasing domestic demand and

growth in exports have led the Indian economy

to gain greater foothold in the world market

over the past decade. Distinct advantages such

as lower costs of production and superior

output quality makes India a viable destination

for outsourcing of manufacturing for several

multi-national corporations (MNCs) across the

world.

The manufacturing sector in India has witnessed

a healthy average growth of approximately 9% in

the last four years, with a record growth of

12.3% in 2006-07, primarily attributed to the

global cost competitiveness competitive capital

and operative costs that India has been able to

provide vis--vis other locations. Further, the

expanding domestic market together with the

scaling up of operations by Indian companies,emergence of new industry segments and

amendments in the regulatory framework such

as incentives and subsidies, single-window

clearances, investor friendly policies by several

state governments, etc., have provided a further

boost to the manufacturing scenario in India. An

increased and sustained focus on themanufacturing sector is inevitable as well as

advisable to achieve the projected average

growth of 9% growth during the 11th Five Year

Plan (2007-2012).

India has always enjoyed certain core advantages

in the manufacturing sector, like rich mineral

resources (iron ore, coal etc.), developed

processing base, natural sea ports (Kandla, Kochi,

Visakhapatnam, Paradeep, etc.) and abundant

supply of cost-effective labour. Owing to these

natural advantages, the manufacturing sector inIndia has spread across primary, secondary and

tertiary processing segments. While the

traditional manufacturing strongholds in India

which have been steel, cement, heavy engineering,

textiles, etc., the emerging industrial and related

sectors include agro-based/food processing

industries, pharmaceuticals, automobiles, logistics

and warehousing, among others which are also

gaining grounds in India.

Like the manufacturing industry on the whole,

the Indian industrial real estate market has alsodelivered a strong performance in recent years,

CONTENTS

1

A RESEARCH PUBLICATION

IND IAREPORT

INDUSTRIAL SECTOR IN INDIA The oasis of economic growth-

INDIA REPORT | MARCH 2009

1 Executive Summary

2 Major Growth Drivers ofManufacturing in India

4 Industrial Sector - The Real EstatePerspective

4 Some of the Major Issues andConcerns in Land Acquisition

6 Major Manufacturing Clusters

7 Western Corridor:Maharashtra, Gujarat

10 Southern Corridor:Andhra Pradesh, Karnataka, Tamil Nadu

15 Eastern Corridor:West Bengal, Jharkhand, Orissa

19 Northern Corridor:Himachal Pradesh, Uttarakhand,Punjab, Rajasthan, National CapitalRegion (NCR), Uttar Pradesh, Haryana

24 Outlook

26 Conclusion


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2


IND IAREPORT

INDUSTRIAL SECTOR IN INDIA - The oasis of economic growth


The compounded growth of the manufacturing

industry over the past decade has been a result

of the combined factors as enumerated below:

Economic Growth

The Indian economy has witnessed GDP growth

of over 8% since 2003-04 and has emerged as a

favoured manufacturing and outsourcing

destination. Escalating demand from the growing

mid-economic stratum and increasing exports

has brought in an upsurge of emergent industry

segments including pharmaceuticals, automobiles

and auto ancillaries, FMCG, consumer durables,

logistics, etc. The manufacturing sector, striving

to increase its growth rate from current 7% in

the ongoing financial crisis which has adversely

impacted household income there by putting

pressure in consumer demand. However recenteasing of inflation and stable domestic demand,

will require significant increase in expansion of

plant capacities and increase in productivity.

Infrastructure Developments

Approximately US$ 350 billion has been set

aside for infrastructure development

expenditure by the 11th Five Year Plan period.

The upcoming Dedicated Freight Corridors

(DFC) by the Indian Railways and the proposed

development of approximately 1,500 km of

Delhi Mumbai Industrial Corridor (DMIC) willlead to further development of 13 new

industrial corridors. The central government is

also in the process of setting up a dedicated

fund of INR 50,000 crore for futureth

infrastructure projects. The 11 Five year plan

aims to create an integrated transport system in

the country to include some of the following

key infrastructure development projects:

Doubling existing handling capacity of ports

from 505 million metric tonnes to 1017

million metric tonnes by 2012.

An increase of 51% in rail freight movement

through development of DFC and

development of logistic services.

Completion of National Highway

Development Program (Phase 3 to 7) and

integrate road development with railwaysand other modes of transport.

Government Initiatives

According to the World Economic Forum's

Global Competitiveness Report 2008-09, India

currently ranks 50th among 134 most

competitive economies across the world and a

renewed initiative to strengthen India's policies,

infrastructure, tax regulations, access to finance,

inflation etc. will further increase the

competitiveness of the economy when

compared to others. In order to accelerategrowth and improve competitiveness of the

Indian manufacturing sector, several initiatives

have been undertaken by the Central

Government as below:

Liberalisation of Foreign Direct Investment

(FDI) policy by allowing 100% FDI in the

manufacturing sector

Implementation of technology up-gradation

schemes which provides benefits like

interest reimbursement, capital subsidy andprotection against foreign exchange

fluctuations for various sectors including

several small scale industries, textiles and

apparel, food processing, etc.

Introduction of Special Economic Zones

(SEZ) Act which will increase exports and

facilitate job creation. At the same time

companies operating from these zones will

reap the benefits of sound infrastructure, tax

exemption, improved efficiency and margins

due to potential synergy from the

development etc.

MAJOR GROWTH DRIVERS FOR MANUFACTURING IN INDIA

with average rental growth reaching around 25-30% in key markets. Supply shortages, however,

in prime centres such as Mumbai and Delhi

NCR have forced much of the manufacturingand logistics facilities to relocate to industrial

parks in emerging tier-II and III locations

A renewed initiativeto strengthen India's

industrial policies,

focus on

infrastructure

development, easing

tax regulations and

access to finance will

further enhance

competitiveness of

Indian manufacturing

sector.


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3


IND IAREPORT



The construction of DMIC spanning acrossapproximately 1500 kms and the

development of Manufacturing Investment

Regions (MIRs) across India

which is expected to double employment,

triple investment and quadruple exports

within this region in a five year time frame.

Exemption from central excise duty,

subsidies on capital investment and

transport, rebate on land and

rationalisation/ reduction in other duty

rates are some of the benefits extended tothe manufacturing sector.

Amendment of the 1984 Land Acquisition

Act, the proposed new policy on

Rehabilitation and Resettlement, and the

repealment of the Urban Land Ceiling and

Regulation Act by several state governments

will further eliminate ambiguity in present

land acquisition procedures.

Increasing Presence of Multinationals

Over the last few years, India has beenincreasingly pursued by multinational

organisations for gaining access to its

marketplace, and to avail its cost competitive

resources. Several multi national corporations

have already explored the opportunity of settingup production bases in India, prominent amongst

which are automobile majors , such as Nissan,

Suzuki, Fiat and Hyundai and iron and steel

majors like POSCO, Arcelor Mittal, Dow

Chemical, etc. are moving towards making India

their manufacturing hub for global exports.

Outsourced Manufacturing

India, only behind China, is the most preferred

global destination for outsourced manufacturing

activities. This is predominantly due to

advantageous factors like lower cost of

production, availability of skilled technical and

management talent coupled with an investor-

friendly government. Manufacturing companies in

sectors such as automobiles, pharmaceuticals,

food processing, electronics and hardware are

increasingly outsourcing production to obtain

cost efficiency and hedge revenues and

production risks over geography. According to

the Made In India Report by McKinsey and

Confederation of Indian Industries (CII),

revenues from manufactured productoutsourcing are expected to raise five times the

current value to over US$ 300 billion by 2015.

PIC

Manufacturingcompanies in

sectors such as

automobiles,

pharmaceuticals,

food processing,

electronics and

hardware, are

increasingly

outsourcing

production to obtain

cost efficiency and

hedge revenues andproduction risks

over geography.


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Real estate is a major cost component for most

capital intensive manufacturing industries. Unlike

other real estate segments like residential,

hospitality, retail and commercial office space,

which focus on built-up space and related costs,

the manufacturing sector requires large land

parcels in the range of 30-200 acres and above.

The quality of land and supply chain connectivity

are other crucial factor for the development of

this sector. Being an extremely complex and

cumbersome process, setting up or relocation ofmanufacturing unit is not always viable and

therefore each manufacturing set up has to

maintain long-term sustainability as an inherent

feature of the industrial space.

Operational and capital costs are the other

important criteria for site selection in this

segment, followed by industrial infrastructure

support and logistics/supply chain connectivity.

Easy availability and cost efficiency of both

skilled and unskilled labour is another important

factor which guides the manufacturing industry,together with pro-active Government policies

and incentives for industrial thrust areas. The

presence of ancillary industries is also kept in

focus during selection and set up of a

manufacturing base.

The establishment pattern of ancillary industries,

presents an interesting study in itself. While

there have been instances of industrial land

being selected on the basis of a strong presence

of ancillary industries in the vicinity, in many

cases the development of ancillary industries

have also been influenced by the existence of

major manufacturing facilities.

As the demand for new industrial locations rises,

companies are increasingly considering setting up

plants and manufacturing units that are

customised to their individual requirements.

Though small and medium enterprises (SME) are

usually content with industrial sheds in a location

of their choice, larger players are keen on

acquiring land and developing the area as per

their specific requirements. Land, by virtue of

being a state subject, has its own complexities

and the process of acquisition poses many

challenges which require professional assistance

and guidance.

INDUSTRIAL SECTOR -THE REAL ESTATE PERSPECTIVE


IND IAREPORT



4

Title Issues: 'Title' is the most vital part of any

land deal, however in India, due to heavy

fragmentation, unclear succession laws and other

factors, land title is usually shrouded in

controversies. Land deeds are segregated as

leasehold and freehold land, where leasehold

land only gives the user the right to usage of

land without the right to sell / re-sell or amend

the usage while freehold land gives the owner

complete rights to alter usage and even secede

from the land. However, there have been many

cases where leasehold lands have been garbed asfreehold and sold to unsuspecting buyers thus

SOME OF THE MAJOR ISSUES AND CONCERNS IN LAND ACQUISITION

Fragmented Land Holding: In India, land

ownership is usually fragmented with multiple

owners and thus there is low availability of large

contiguous land parcels with single owner. This

also leads to reduced availability of land with

clear title. A part of the problem is lack of

clearly zoned/demarcated land which is largely

due to archaic paper based land records lacking

standardisation across the various states. Even

though India is moving towards digital land

records, various legal bottlenecks threaten to

make the process painfully slow.

Being an extremelycomplex and

cumbersome

process, setting up

or relocation of

manufacturing unit is

not always viable and

therefore each

manufacturing set up

as to maintain long-

term sustainability as

an inherent feature

of the industrialspace.

Consideration for Industrial Land

Acquisition:

=Clear title

=Good connectivity to road, rail and ports

=Proximity to labour catchments

=Sound Physical infrastructure

=Accessibility of raw material and resources

=Supply chain connectivity

=Proximity to large markets

Source: Cushman & Wakefield Research


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increasing the opaqueness in the titles, possiblyleading to multiple claims on the same land

parcel. Due to the fact that land holdings are

fragmented, amalgamation of large land parcels

can be a very painfully slow process as various

owners need to be converted into sellers.

Further, with the ambiguities in land titles and

ownership, there is no actual existence of title

insurance as the costs far exceed the risks.

Although certain insurers are said to be

providing title insurance, the premiums are very

high therefore for all practical purposes title

insurance is non existent in India.

Zoning of Land and Conversion of Use:

Another aspect which can be precarious is the

aspect of zoning and land conversion process

which is under the jurisdiction of the town

planning authorities i.e. land use can be changed

from commercial to residential to industrial or

any combination. Thus upon acquisition, the

developer has to ensure that the land is

converted into the correct zone for industrial

use giving adequate reasons for conversion,

which is usually a slow as well as expensive

process to undertake.

Legal & Regulatory Issues:The legal andregulatory framework for land acquisition in

India is also rather complex. Inconsistent and

overlapping state and union government laws

lead to further complications and delays.

Amendment of Land Acquisition Act 1984 and

new policy on Rehabilitation and Resettlement

have been proposed by central government to

eliminate ambiguity of land acquisition. The

proposed amendment in Land Acquisition Act of1984 aims at redefining forceful acquisition of

land for public purpose. A new policy on

Rehabilitation and Resettlement has been

introduced with the focus on curbing real-estate

players from creating land banks and to

encourage development of land.

As every state has a separate legal and

regulatory framework, the mode of operation

differs from state to state. Technicalities like

Floor Space Index (FSI) and Floor Area Ratio

(FAR) benefits also differ between states, as aresult of which the amount of land being

acquired in a state can be different from anotherstate for the same project.

High Transaction Cost Due To

Complicated Tax Structure: Complicated

property tax regimes and stamp duty structures

also amounts to higher transaction costs on

purchase of real estate assets. In India, stamp

duty and property taxes are state functions and

it differs from state to state and in certain cases

even between cities within the same state.

Currently stamp duty paid on real estate

purchases ranges from 6% to 12% whileproperty tax and registration fees paid in

addition to stamp duty can increase the

transaction cost to as much as 10-15% of total

market value of the land. Disparity in stamp

duty rates is a hindrance for real estate. This

leads to a further lack of transparency in pricing

and creates valuation issues. Proposal for

uniform stamp duty structure across the

country along with rationalisation of stamp duty

rates to realistic levels would generate more

revenues.

Valuation:Valuation of land is one of the keyareas of concern in India as there is a wide

spread discrepancy between the circle rates and

actual market rates. Currently India has no

independent appraiser body that can meet

international standards like those set by

International Asset Valuation Committee,

International Federation of Surveyors, Royal

Institution of Chartered Surveyors, The Appraisal

Institute, American Society of Appraisers etc.

Thus the appraisers use various different

methods of valuations in India, the mostcommonly used method being the discounted

cash flow. However, even that measure, is difficult

to apply uniformly due to the wide spread

discrepancies in the variable factors such as

circle rates, actual rate of acquisition, stamp

rates etc. Therefore different appraisers can

arrive at different values for the same asset

based upon the valuation method, model and

assumptions being taken into consideration. This

allows for a large variance between the valuation

arrived upon.


IND IAREPORT



5

A new policy onRehabilitation and

Resettlement has

been proposed with

the focus on curbing

real-estate players

from creating land

banks and toencourage

development of land.


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MAJOR MANUFACTURING CLUSTERS

Several industries are diversifying and expanding

their operations in India to provide added

impetus to the manufacturing sector. High

growth sectors such as automobiles and

pharmaceuticals are the key beneficiaries of the

global trend in outsourced manufacturing

activities. Emerging sectors like food processing,

logistics, warehousing, and the growth in the

consumer goods segment have also provided a

fillip to the manufacturing sector.

The manufacturing sector is usually

concentrated in clusters to enable them to

leverage from the one another's operations. In

India, these clusters can be divided into four

major zones North, West, East and South. There

are several states across India that are promising

industrial destinations and are at various stages

of development. We have selected certain

prominent states to feature in each of the

respective zones. These zones have been

explored to focus on attractiveness, incentives

and initiatives of established and emergingindustrial locations along with types of


IND IAREPORT



6

Major Manufacturing Hubs in India

Automobile

Machine Tools

Textile

Drugs & Pharmaceuticals

Source: FedEx and Cushman & Wakefield Research

industries both existing and emerging in each ofthese locations.

The manufacturing

sector is usually

concentrated in

clusters to enable

them to leverage

from the one

another's

operations.

PIC


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IND IAREPORT



7

Western Corridor

Automobile

Machine Tools

Textile



Maharashtra

Maharashtra has for long been a major

manufacturing hub and one of the most

industrialised states in the country. Existing

industrial base and availability of skilled

manpower have encouraged the growth of the

manufacturing sector in Maharashtra. In order to

further stimulate the state's economy, the

revised Industrial, Investment and Infrastructural

Policy of Maharashtra aims to achieve industrial

growth of approximately 10% by 2010. As a

result, apart from sustaining growth of traditional

industries like automobile, pharmaceuticals,

engineering, chemicals and textiles, the new

policy also focuses on emerging industries like

bio-technology and food processing. Building up

quality infrastructure, incentivising the

manufacturing sector and attracting investments

are some of the key strategies of the state to

realise its industrial policy objectives.

Some of the key policies and incentives that are

likely to play a critical role in the growth of the

manufacturing sector in Maharashtra are as

follows:

WESTERN CORRIDOR

Industrial Promotion Subsidy for new units

and expansion of existing units in the state.

Interest subsidy to small scale units in apparel

and textile industry.

Customised package of incentives to

industrial projects with investment of over

INR 250 cores.

Exemption from electricity duty and waiver

on stamp duty.

Refund/ Exemption of Octroi for 15 years Development of manufacturing clusters and

industrial townships to improve

competitiveness.

Promote setting up of Special Economic

Zones (SEZs) to promote exports from the

state.

Specific policies for vital industries like

Biotech, Textile and Agro Processing.

Major Industrial locations are spread across the

state, however locations of Mumbai, Pune,

Nashik, Nagpur and Aurangabad are key


Western Corridor - Land Value Trend


Existing Corridors Land Values Outlook(YOY growth)

Emerging corridors

Pimpri Chinchwad 0%

Panvel 0%

Talegaon 0%Chakan 0%

Sanaswadi 0%

Ranjangaon 0%

Trans-Thane Creek

Taloja

-30%

-15%


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industrial hubs in Maharashtra. The proposeddevelopment of a four-lane road connectivity

between these locations and a greater emphasis

on knowledge based manufacturing along with

agro based industries is likely to further

stimulate growth of the manufacturing sector in

the state. Approximately 80,000 acres of land is

being developed for industrial use across 12

major locations.

Mumbai

Scarcity of land parcels and rising land prices hasled to the development of peripheral corridors

in Mumbai. The demand for industrial land in the

peripheral locations has been fuelled by several

infrastructural developments like the Maha

Mumbai SEZ, the proposed international airport

and the Mumbai Trans-Harbour Link project

(connecting Sewri to Nhava Sheva) Panvel, Taloja,

Trans-Thane Creek, Khopoli and Uran are likely

to witness accelerated growth in near future.

Panvel is a strategically placed, rapidly growing

location near Mumbai. Availability of large landparcels, octroi exemption and proximity to

Jawaharlal Nehru Port Trust (JNPT) make it an

ideal location for logistics and warehousing

industry. Taloja, another prominent industrial hub

in Navi Mumbai which is expected to witness an

upsurge in demand from the warehousing

industry owing to its closeness to the Panvel-

Pune Road and the proposed airport.

Additionally, Trans-Thane Creek which is the

largest industrial area near Mumbai and has

witnessed increasing presence from engineering,

electronics and pharmaceutical sectors in recentpast. This increased demand is likely to drive

demand in adjoining areas of Rabale, Ghansoli,

Mahape and Turbhe.

Pune

With over 9,500 acres of land under

development by Maharashtra Industrial

Development Corporation (MIDC), Pune has

reaped benefits of its existing industrial

experience, while also becoming one of the

largest industrial hubs in the state ofMaharashtra. It is also one of the largest

automobile manufacturing hubs in India, alongwith engineering and electronic industries. More

recently sectors such as food processing,

pharmaceutical and biotechnology industries

have also set up their manufacturing bases here

towards the north and north-eastern part of the

city.

Pimpri - Chinchawad is an established auto

cluster that currently houses many major

automobile players, along with several auto

ancillary units. Shortage of land in existing

locations has led to the emergence of newcorridors like Talegaon and Chakan. Chakan is

especially attractive due to existing tax benefits,

proximity to Jawaharlal Nehru Port Trust (JNPT),

National Highway (NH) 3 and 4, and proposed

airport at Rajgurunagar.

In addition to the presence of automobile sector,

MIDC has also started acquiring large areas of

land to set up Biotechnology and Infotech Parks

between Talegaon and Vadgaon. Mundwa,

Poonawala and Monshi also provide good

opportunities for industrial development.Ranjangaon is emerging as a major industrial

center with several greenfield projects currently

underway. It has already attracted several

manufacturing companies from automobile and

consumer good sectors.

About 4500 acres of land is being acquired by

MIDC for proposed development of industrial

parks and SEZs which will lead to development

of the area of Sanaswadi, north-east of Wagholi,

as another major location for industrial parks.

Nashik

Nashik is another key automobile and

engineering goods manufacturing centre. Over

the last few years, the district has also witnessed

increasing presence of agro processing units.

There are several industrial estates which are

currently operational in Nashik. Development of

4 additional industrial estates, proposed

construction of a 4 lane highway between

Mumbai - Nashik and proposed rail terminus are

some of the key infrastructure projects aimed to

accelerated industrial growth.

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IND IAREPORT



Trans-Thane Creekwhich is the largest

industrial area near

Mumbai and has

witnessed increasing

presence from

engineering,

electronics and

pharmaceutical

sectors in recent

past. This increasing

demand is likely to

drive demand inadjoining areas of.

Rabale, Ghansoli,

Mahape and Turbhe.


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IND IAREPORT



Spread over 2700 hectares of land, Sinnar is thelargest industrial estate in the district with about

174 medium and large operational

manufacturing units catering to engineering,

automobile components and food processing.

Satpur, Ambad, Pimpalgaon and Manmad are the

key industrial hubs in Nashik.

Gujarat is distinguished as one of the most

rapidly evolving industrial states in the country.

The state has set a growth target of 11.2% forth

the 11 Five year plan which will require the

industrial sector to grow over 14% during the

same time period. To achieve this accelerated

growth, the state government has put special

emphasis on manufacturing sector. A front

runner in attracting investments, presence of a

large industrial base, large scale development of

SEZs and investor friendly industrial policy are

major drivers for industrial growth in Gujarat.

While historically Gujarat has been a prominent

manufacturer of textile, engineering products

and pharmaceuticals, the emerging industries

include the automobile and food processing.

Key highlights of the current state industrial

policy are as follows:

Financial assistance at the rate of 20-50% of

fixed capital investment to industrial parks.

Gujarat

Exemption of stamp duty on development ofindustrial park.

Availability of interest subsidy to small and

medium enterprises.

Cluster Development Scheme (CDS) to

promote competitiveness of small and

medium enterprises by creating common

facilities to reduce cost, strengthen

infrastructure facilities and marketing of

products.

Up-gradation of industrial infrastructure

along with promotion and development of

SEZs.

The proposed development of DMIC is

expected to provide more opportunities for

industrial development in the state. About 40%

of the total proposed corridor will pass through

Gujarat influencing industrial growth in 18 out of

25 districts in Gujarat. Vadodra, Ankhleshwar,

Dahej, Bharuch, Surat, Navsari, Valsad and

Umargaon are key industrial locations which are

likely to be benefited from the upcoming

corridor. Peripheral locations of Ahmedabad arealso likely to witness major industrial

developments due to the proposed development

of automobile and pharmaceutical manufacturing

units at Sanand.

9

Gujarat isdistinguished as one

of the most rapidly

evolving industrial

states in the country.

The state has set a

growth target of

11.2% for the 11th

Five Year plan which

will require the

industrial sector to

grow over 14%

during the sametime period.


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10


IND IAREPORT



Andhra Pradesh

Andhra Pradesh has historically been an

agricultural state rather than industrial, but the

government is keen to ensure a more

wholesome growth for the state and is

attracting investments from various industries.

The state is rich in minerals, horticulture,

agricultural and food related production thus

making it a valuable centre for raw materials and

processing. The state also boasts of a large

presence of research & development institutions

around the urban centre of Hyderabad thus

enabling the city to achieve the title of 'bulk

drug capital of India.' The thrust industries as

per the state government are information

technology, pharmaceuticals and biotechnology.

Andhra Pradesh has some key advantages like

skilled population and a central location along

with good connectivity by road (major national

highways such as NH 7 and 9), Air (major

airports being redeveloped and Greenfield

airport being commissioned), Ports (2 major

ports and 10 minor ports with an additional

port at Gangavaram which is currently beingdeveloped) with a proactive government

providing strong infrastructure - the only state

to have an exclusive infrastructural development

act and subsidised land attracting various

industries to set up in this state.

Some incentives offered by the Andra Pradesh

government in the Industrial Investment

Promotion policy 2005-2010 are as follows:

100% reimbursement on registration of land

and building / leased property for industrial

use

Reimbursement of power at Rs 0.75 per unit

for eligible industries and Rs 1.00 per unit for

eligible food processing industries

VAT reimbursement of 25% paid by the

industry for a period of 5 years

15% investment subsidy subject to a certain

limits

Additional 5% on fixed capital investment up

to a limit for SC/ST

Southern Corridor

Automobile

Machine Tools

Textile



SOUTHERN CORRIDOR

Existing Corridors Land Values Outlook(YOY growth)

Emerging corridors

Bommasandra 5-7%Peenya 5-7%Jigani 5%Sriperumbudur 5%Irungattukottai 5%Vishakapattam 5%Balanagar 10%

NH 5 10%Dobaspet 5%Oragadam 5-10%Ennore 5%Kanakpura 5%Tumkur 5%Narasapura 5%Krishtanapatnam 20%Kadapa 15%

Southern Corridor - Land Value Trend


Andhra Pradeshranks second in

producing Value

Added food

products and has a

10% share of

beverages within the

country.


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IND IAREPORT



Vijayawada

Vijayawada emerged as an industrial hub due to

the connectivity with a natural harbor. Located

on NH 5 this location is accessible to large

markets such as Chennai and Kolkata by road

and a developed railway network, to be

connected it to other parts of the nation. There

are various small to medium scale industries in

the automobile body building, garment, iron and

hardware sector. It is also a major trading hub

due to the location and connectivity thus being

referred to as the commercial hub of AndhraPradesh.

Emerging locations such as Tada, which is being

promoted by the Andhra Pradesh state

government, has an industrial park set up by the

government with strong infrastructure and good

connectivity by being on the golden quadrilateral.

Karnataka is among the top five industrialised

states in India and was the first to introduce a

state Industrial Policy in1982-83. It is ranked asone of the largest exporter of software in India

and also one of the largest recipients of FDI in

the country. It is one of the leading states for

biotechnology while also being a manufacturing

hub for some of the largest public sector

industries namely Hindustan Aeronautics

Limited, National Aerospace Laboratories, Bharat

Earth Movers Limited, Bharat Heavy Electricals

Limited, United Breweries Group and Hindustan

Machine Tools. There are various industrial zones

within the state and although majority of themare concentrated in and around Bangalore city,

there is a steady disbursement of industrial

corridors to different areas of the state. The

Commerce and Industry Department, Karnataka

Industrial Area Development Board and

Karnataka State Industrial Investment

Development Corporation (KSIIDC) have

promoted industrial infrastructure development,

in addition to the incentives, in the state thus

attracting various new industries to set up

within the state. The key thrust areas for the

state are aerospace, engineering, automobile,

Karnataka

Hyderabad

Hyderabad is a major centre for pharmaceuticals

and biotechnology industries in the country. Its

prominence as an industrial town is due to the

robust infrastructure provided by the

government and the connectivity to other parts

of the nation through major national highways.

Development projects such as Genome Valley,

Fab City and the hardware park that are being

set up around Hyderabad are expected to

attract corporations to the city. Patancheravu on

NH 9, which has access to Bangalore andVijayawada, has an established manufacturing hub

and has recently witnessed the growth of

sectors such as warehousing and logistics.

Visakhapatnam

Visakhapatnam is an important centre for

industrial development in India as it is also the

largest port in the country. The second port at

Gangavaram will further increase trading

opportunity and efficiency thus attracting more

industries to set up base in this region.Warehousing facilities, strong connectivity and

upcoming infrastructural initiatives such as the

international airport make this location

attractive for various sectors like heavy

industries, fertilizer, oil and gas. The proposed

Petroleum, Chemicals and Petrochemical

Investment region (PCPIR) on the Kakinanda-

Visakhapatnam coastal corridor is expected to

be spread over 604 sq. km which has already

attracted large corporations to the area and

smaller support industries are following suit.

There are various food processing units that are

established and currently being set up in order

to cater to the seafood export industry that

leverages from the established fishing industry. In

the recent years there has been an influx of large

textile corporations moving into the city due to

the SEZ and textile parks being set up in the city

limits. The setting up of the Jawaharlal Nehru

Pharma City (SEZ) - a 2200 acre campus

development - has worked as the necessary

catalyst for the growth of the pharmaceutical

industry.

11

The second port atGangavaram will

further increase

trading opportunity

and efficiency thus

attracting more

industries to set up

base in this region.


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IND IAREPORT



machine tools, steel, cement, pharmaceuticals,food processing, apparels and textiles,

electronics, IT and biotechnology.

Some of the Incentives and concessions under

the New Industrial Policy (2006-2011)

Capital investment subsidy to small scale

industries (SSI) in all areas

Exemption of electricity duty on captive

power plants

Exemption of stamp duty and reduction of

registration charges in thrust areas

Waiver of conversion fee for up to 50 acres

in thrust areas

Reduction of 18% on land acquisition

charges through Karnataka Industrial Areas

Development Board (KIADB) in thrust areas

Subsidy of up to $200,000 for setting up of

effluent treatment plant in any area

Entry tax concessions for 3/5 years on

capital goods/ raw materials in thrust areas

The new Industrial Policy for 2006-2011 aims to

achieve a Gross State Domestic Product

(GSDP) growth rate of 9% per annum and 12%

average annual growth over the policy period in

the industrial sector, which accounts for 18% of

GSDP. This growth target will ensure that the

government continues to play an important part

in attracting industries to choose Karnataka as

an ideal location for manufacturing.

Bangalore

Bangalore is home to various industrial houseswhich have set up manufacturing units around

the city giving rise to several industrial zones, of

which Bommasandra, Peenya and Jigani are the

most prominent locations. However, to keep

pace with the rapidly growing industrial sector

new locations like Tumkur, Mysore, Dobaspet

and Kanakpura are gaining prominence in and

around the city. Major industries find Bangalore

favourable due to factors like availability of

skilled workers, easy connectivity, favourable

climate, relatively lower costs.

Mangalore

Mangalore is predominantly characterised by the

oil and gas, port (ship building) related activities

and food processing industries. Some of the

established locations around Mangalore are

Baikampady and Yeyyadi which house small scale

industries. The upcoming export promotion

industrial park's at Ganjimutt is expected to

provide a further fillip to the export oriented

industries in these locations.

Mysore

Mysore has established industries such as

weaving, sandalwood products, and lime and salt

production. The Karnataka Industrial Areas

Development Board (KIADB) has established

four industrial areas in and around Mysore which

are located in Belagola, Belawadi, Hebbal

(Electronic City) and Hootagalli areas. Currently

the city is witnessing heightened interest from

the IT sector and is proving to be a competitor

to Bangalore. There is considerable growth,

powered by IT on the State Highway 17 whichconnects Bangalore and Mysore.

Tamil Nadu is a major contributor to the nations

GDP as it is one of the largest state economies

within India and considered as one of the most

industrialised states in India. In 2006-07, the

manufacturing sector contributed 20.23% to the

GSDP and by 2011 the state plans to raise the

contribution to 27% as specified in the State

Government Industrial Policy 2007.The government is working with various nodal

agencies such as Tamil Nadu Industrial

Development Corporation (TIDCO) aimed at

identifying and promoting establishment of large

and medium scale industries within the State,

State Industries Promotion Corporation of Tamil

Nadu (SIPCOT) aimed to identifying, developing,

and maintaining industrial areas in backward

areas of the State, Tamil Nadu Industrial

Investment Corporation (TIIC) which assist

financially new or existing units in operations

Tamil Nadu

The Commerce andIndustry

Department,

Karnataka Industrial

Area Development

Board and Karnataka

State Industrial

Investment

Development

Corporation

(KSIIDC) have

promoted industrial

infrastructuredevelopment, in

addition to the

incentives, in the

state thus attracting

various new

industries to set up

within the state.


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IND IAREPORT



commencement and expansion and Tamil NaduIndustrial Guidance & Export Promotion Bureau

- which provides comprehensive information,

guidance and support to investors. These

agencies along with other government initiatives

such as single window clearance and incentives

which are sector and location specific and often

customised to the investor depending upon their

needs and the quantum of investment have

contributed to the growth of industrialisation

and investment in the state.

Tamil Nadu has historically been a prominentstate for trading and manufacturing which can be

attributed to the locational benefits of the state.

It is the only state that houses three major ports

- Chennai Port, Ennore Port and Tuticorin Port,

in addition to 14 minor ports. Further

governments infrastructural initiatives have

ensured that the state remains a strong

competitor in investment and presence of

manufacturing and industrial units. Some of the

more prominent industries in the state are

textiles, automobiles and heavy vehicles, auto

components, railway coaches, power pumps,

leather tanning industries, cement, paper etc.

While currently the government is promoting

other industrial sectors such as rubber,

floriculture, biotechnology, and agriculture.

Chennai

Chennai also referred to as the 'Detroit of India'

due to the existence of large auto and auto

auxiliary cluster in and around the city, has also

recently attracted the electronic hardware

manufacturing sector in a large way withcompanies like Nokia, Samsung, Motorola,

Foxconn, Dell, Flextronics etc., setting up their

manufacturing facilities in and around the city.

The development of the IT/ITeS sector has also

brought about large migrant population from

neighbouring cities and states. Chennai is a very

attractive location for industries due to

excellent connectivity through road, rail and sea,

additionally availability of skilled manpower and

presence of international air transport makes it

an ideal location for exporters.

Sriperumbudur

Sriperumbudur, situated just a little over 40 km

from Chennai, gained prominence due to the

setting up of manufacturing units by companies

like Saint Gobain and Hyundai in the area and is

now being showcased as an ideal location for

future development due to the establishment of

various telecom manufacturers such as Nokia,

Motorola, and Samsung.

Emerging locations such as Oragadam, Ennore

and the NH 5 corridors are also gainingprominence due to the availability of large land

parcels, availability of land subsidised by the state

government and robust infrastructure

development. Industries are biased towards

certain locations due to their advantages that

can be leveraged in order to make the

operations more efficient and develop a viable

business model as seen with various export

oriented firms being attracted to Ennore due to

the existing port. Industries like logistical firms

prefer to be located on the NH 5 due to the

already existing goods warehousing facility andthe excellent connectivity through the golden

quadrilateral to east India.

Tiruchirappalli

Tiruchirappalli with the presence of BHEL,

ordnance factory, Dalmia Cement and other

prominent corporations is a major engineering,

manufacturing and fabrication hub. There are also

smaller agricultural and food processing based

industries on the peripheries of Tiruchirappalli

and towards Coimbatore which is expected togrow in the future due to its logistical advantage

of being connected to large cities such as

Chennai, Madurai, Nagappattinam and

Coimbatore. With multiple national highways

(NH 45, NH 45B, NH 67, NH 210, NH 227)

running through it and multiple railway stations

such as Tiruchirapalli Junction, Tiruchirapalli

Town, Tiruchirapalli Fort, Tiruchirapalli Palakkarai

etc. and an international airport that is being

upgraded, the city is expected to transform itself

as not only a manufacturing centre but also as a

logistical trading hub.

Tamil Nadu hashistorically been a

prominent state for

trading and

manufacturing this

can be attributed to

the locational

benefits of the state.


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IND IAREPORT



Coimbatore

Coimbatore district's primary industries are

engineering, textiles, hosiery and poultry with

the city having headquarters of corporates such

as Pricol, LMW, ELGI, Suguna and Bromark

Pioneer Poultry. It is also known as the

Manchester of South India due to the strong

presence of textile industry especially seen in

the town of Tiruppur - the largest garment

manufacturing and exporting cluster in India. The

cotton fields in the district helps to keep input

costs low thus making it a highly competitivemarket. Investment from Suzlon and Hansen

transmission could transform the area to a

major player in the alternative energy and

manufacturing components arena.

Karur

Karur is an established hub for the bus body

building industries where most of the private

buses used in south India are manufactured in

this region. The state government owned Tamil

Nadu Newsprint and Papers which is the world's

biggest bagasse based paper mills is also present

here. There are other industries such as textiles,

sugar and cement that are prevalent in this

region. Although the region is centrally located

within the state it offers limited connectivity

through rail and other means of transport thushampering the growth in this region.

The government is also concentrating on certain

corridors such as the Chennai-Manali-Ennore

corridor and the Chengalpattu-Sriperumbudur-

Ranipet corridor currently and at a later stage

the Madurai-Thoothukkudi and Coimbatore -

Salem Corridors will also be developed.

Coimbatoredistrict's primary

industries are

engineering, textiles,

hosiery and poultry

with the city having

headquarters of

corporates such as

Pricol, LMW, ELGI,

Suguna and Bromark

Pioneer Poultry.


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IND IAREPORT



Some key policies and incentives offered by the

state that have helped the industrial sector are:

Waiver in electricity duty for 5 years

50% refund on stamp duty and registration

Subsidy on interest, employment generation

and investment capital

Guidance in identification, allotment,

conversion of land and other infrastructural

facilities

Subsidy for quality improvement in the Small

Scale sector

West Bengal government has identified four

major industrial centers namely Kolkata, Haldia,

Asansol-Durgapur and Kharagpur. Salt Lake is an

exclusive centre for IT/ITeS. The state already

has good connectivity through the golden

quadrilateral and is currently the gateway to the

north eastern states. Good support

infrastructure such as power, communication,

ports and waterways also add to the

attractiveness of the state. The east -west freight

corridor is also expected to provide the

required impetus to the overall industrial growth

of the state.

Kolkata

The state capital is the major hub for the IT/ITeS

sector in locations of Salt Lake and Rajarhat. The

city was forced to expand to the peripheries due

a shortage of land and has since emerged as the

technology centre catering to the growing

requirements of the services industry. Theadjoining districts of South and North 24

Parganas and Howrah are major manufacturing

hubs for industries like jute, steel, leather and

textiles industries.

Haldia

A city on the Haldi River is the home to many

national and international oil and petro -

chemical companies. It is the chemical hub of the

state where the existing industrial base, social

infrastructure and transport linkages make it afavorable choice for further growth of industries

Eastern Corridor

Automobile

Machine Tools

Textile



EASTERN CORRIDOR

West Bengal

West Bengal has traditionally been the centre

for manufacturing and trading. It continues to be

a leading industrial state in the eastern region

with availability of skilled manpower which has

provided the required stimuli for growth.

According to the CMIE -Centre for Monitoring

Indian Economy - estimates in March 2007 the

outstanding investments in the state was US$ 50

billion registering a growth in excess of 100%

over the year. This exceptional growth was

mainly driven by investments in the construction,

manufacturing and power sectors. Traditionally

the state has been the home to several

industries like tea, steel and foundry, leather,

chemicals, coal and textiles to name a few. The

state's initiative to offer a cordial environment to

the investors has resulted in the formation of

"Shilpa Bandhu" a single window agency for

providing investors with every possible

assistance in setting up industrial units within the

state. This has resulted in greater interest from

new industries that are now planning to enter

the state such as metals, ceramics, foodprocessing and automotives.

West Bengal hasindustrial areas in

many districts but

the government has

identified four major

industrial centers

namely Kolkata,

Haldia, Asansol-

Durgapur and

Kharagpur.


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IND IAREPORT



bauxite, manganese, limestone, china clay, fire clay,graphite, kainite, chromite, asbestos, thorium,

sillimanite and uranium. The state holds the

distinction of having the first iron and steel plant

at Jamshedpur, the largest fertilizer factory at

Sindri and the biggest explosives factory at

Gomia. The industrial sector has shown

impressive growth over the years. As per the

Annual Survey of industries, the number of

factories increased from 1,382 in 1999 to over

1,600 in 2007.

The Jharkhand Industrial InfrastructureDevelopment Corporation (JIIDCO) facilitates

and develops infrastructure for industrial

development. Currently, the state has three

Industrial Area Development Authorities

(IADAs) headquartered at Adityapur, Bokaro and

Ranchi. These authorities are responsible for

acquisition of land, development of support

infrastructure facilities like road, drainage, water

supply and public utilities within their

jurisdiction. To provide a boost to the industrial

development in the state, several initiatives of

the government are listed below:

Single Window Clearance for all industries

Assistance in land acquisition

Investment and Interest subsidy at growth

centres

Priority in power allocation in growth centre

The state is mainly dependent on mining and

agriculture, however industrialisation in some

pockets has been the key drivers of the state

economy. The main industrial centres in

Jharkhand are Ranchi, Jamshedpur, Dhanbad and

Bokaro. The government also plans to promote

Ranchi and Jamshedpur as key centres for

IT/ITeS sector. Steel plants, automotives, power,

mining and engineering are the key industries

that are already dominant in the state.

Strengthening of the transport infrastructure has

become a priority for economic, industrial and

social development of Jharkhand. The state is

planning to develop expressways along the main

high-density corridors. It is also in the process of

starting inter state and intra state bus terminals.

The state has an extensive and well developed

of petrochemicals products, fertilizers, oilrefineries, chemicals, ship building and breaking.

A mega petro - chemical industrial estate is

expected soon which will add a new dimension

to the up stream and down stream oil

industries. Another project for Purified

Terephthalic Acid (PTA) is also on the anvil.

Asansol - Durgapur

Located in the western part of the Burdwan

District in South Bengal, Asansol - Durgapur

region has been a prominent industrial belt ofthe state due to the presence of major steel

plants in Burnpur and Durgapur. The coal belt in

the Raniganj area along with many chemical and

engineering industries in the vicinity have helped

the region to be established as a preferred

destination for industrial and mining activities.

Biotech and automobile SEZs are planned at

Kanksha near Panagarh and Andal which is also

expected to have the first Aerotropolis in the

sate. Bankura and Purulia have also successfully

attracted industrialists keen on setting up steel

and cement plants in the region due to thepresence of cost effective land and labour. All

these locations have large land parcels along

with the availability of skilled work force.

Kharagpur

Situated in the prime railway junction

approximately 120 kms from Kolkata, Kharagpur

shares the borders of Jharkhand. Several

engineering industries are already present and

are projected to be the home for steel and auto

components industry. Proposed biotech andiron and steel parks will add significantly to the

industrial prominence of the sector.

Jharkhand, by virtue of being in the Chhota

Nagpur area, is rich in natural resources. The

area was one of India's first industrial locations

to be developed by the government. Many

public- private partnership endevours were set

up in Jharkhand through the first phase of

industrialisation of modern India. The state haslarge reserves of iron ore, coal, copper, mica,

Jharkhand

The JharkhandIndustrial

Infrastructure

Development

Corporation

(JIIDCO) facilitates

and develops

infrastructure for

industrial

development.


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IND IAREPORT



railway system providing vital links to the miningindustry with important cities and ports of the

country.

Ranchi

The capital city of Jharkhand is also an important

industrial location housing several heavy

engineering companies within its vicinity along

with various coal mines. Due to the rapid pace

of urbanisation and the lack of space, the state

aims to develop a technology park in the

suburbs to attract the growing services sector.The industrial area around the city is dotted

with companies engaged in the production of

heavy engineering, automobiles, steel rods,

aluminium, electric equipment, transformer oil,

paraffin and petroleum jelly.

Jamshedpur

Tata Nagar at Jamshedpur is the first iron and

steel city in India and is located in East

Singhbhum district. The city was founded by late

Jamshedji Nusserwanji Tata. The areassurrounding Jamshedpur has abundant natural

resources like iron ore, coal and lime, which

form raw materials for the steel industry.

Adityapur, located in close proximity to the steel

plants of Jamshedpur and Bokaro, Heavy

Engineering Corporation in Ranchi, Uranium

Corporation in Ghatsila and Hindustan Copper

Limited in Jadugoda are fast emerging as the

industrial centre of the east. This forms the heart

of the Chhotanagpur belt which has transformed

to an industrial hub. To provide the necessary

impetus to the development of sectors likeautomobile and auto components. A SEZ is also

notified in Adityapur. These areas have the

advantage of being in the area richest in natural

resources.

Dhanbad and Bokaro

This district sharing borders with West Bengal

and Bihar is the coal capital of the nation. The

metallurgical coal of the Jharia coalfield has given

Dhanbad an important place in the industrial

map of the nation. Coal has attracted andbrought about a concentration of numerous

other industries. This region is home to severalmines, coal washeries, engineering, fertilizer and

cement industries. This area is ideally suited for

coal products and small engineering industries.

Bokaro Steel City is located in the eastern part

of the state and is home to one of the largest

steel plants in India, Bokaro Steel Plant, which is

a part of Steel Authority of India Limited. The

first blast furnace was started in 1972. The first

methane gas well was also established here at

Parwatpur. The Damodar Valley Corporation

(DVC) runs two thermal power plants in thedistrict. There are other industries like LPG

bottling plants as well as oil and gas companies in

the district.

Orissa is the second most mineralised states in

India with vast mineral deposits of coal, iron ore,

manganese ore, bauxite and chromites. Several

well known mineral-based industries have been

attracted to the state. Traditionally an industrial

state, due to its proximity to the Chhota Nagpurarea, in recent times, Orissa has once again

started to attract attention of national and

international investors as a prominent

destination for industrial investment. Rourkela

Steel Plant was a major initiative to provide the

required momentum to this state. Metals and

mining has been the key industries in the state

along with the traditional textiles industry.

The state government has taken several steps to

improve industrial infrastructure and promote

investments in the state. Significant among themare:

Development of industrial and social

infrastructure in steel and mining corridors,

including setting up of railway corridors,

upgrading ports, creating expressways

Major expansion of Paradeep Port underway

through public private partnership (PPP);

Land allocation at subsidised rates

Exemption of electricity duty for 5 years

The state government has reaffirmed itscommitment to transform Orissa into a vibrant

Orissa

Orissa has onceagain started to

attract attention of

national and

international

investors as a

prominent

destination for

industrial

investment.


20/32

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IND IAREPORT



industrial state and has reformulated theIndustrial Policy in March 2007 which aims at

creating a more conducive business environment

that will raise income, employment and

economic growth. The Industrial Promotion and

Investment Corporation of Orissa Ltd (IPICOL)

is a key promotional institution that was

incorporated in 1973 with the main objective of

accelerating the pace of industrial development

by promoting large and medium scale industries.

An efficient network of roads, railways, ports

and aviation provide the necessary impetus forthe development of the industrial zones. Power

and telecom also form a part of the robust

physical infrastructure of the state and is the

binding force for the key industrial locations of

Angul and Bolangir, Cuttack, Jharsugda and

Jagatsinghpur.

Angul and Bolangir

Due to the availability of rich mineral deposits,

this locations is dotted with several mining and

metal based industries, power generation andengineering industries. These locations have

many small scale industries that help generate

significant investments and employment.

Cuttack

Famous for its the traditional textiles and

handicrafts, Cuttak also houses several other

industries such as paper mills, metal work and

food processing industries. Hosiery and knit

wear are the key industries that are instrumental

in the industrial development of the region.

Jharsugda and Jagatsinghpur

The districts of Jharsugda and Jagatsinghpur are

known for the manufacturing of steel and related

products. Availability of the requisite talent pool

has helped this location to emerge as a

preferred industrial centre. Shipping and food

processing are some new age industries that

have gained importance in the past.


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IND IAREPORT



Simplification of rules and procedures by theexisting state level "Single Window Clearance

and Monitoring Authority"

The above incentives from state and central

government have attracted fruitful investments

and major industrial players (like Blue Star, TVS,

Cadbury, Pidilite, Hindustan Unilever Limited,

Nestle, and Mahindra & Mahindra). Locations like

Baddi in Salon, Sirmour, Kangra, Una and Mandi

are key industrial locations in Himachal.

Uttrarakhand is one of the latest states carved

out of Uttar Pradesh in November 2000. Since

its inception, the state government has taken

rapid strives in development of industrial hubs in

the state. High literacy rate of over 72%,

availability of rich mineral deposits and

availability of uninterrupted power are key

advantages available to state of Uttarakhand.

Agro food, pharmaceuticals and electronic

sectors and their allied industries have

registered their presence in Uttarakhand. Thestate's share of the total investment proposals in

the country has more than doubled since its

inception in 2000. Approximately US$ 2 billion

worth of investment is expected to be made in

the automobile, pharmaceuticals, processed food,

and fast moving consumer goods sectors in the

near future.

Major fiscal and non fiscal incentives being made

available by state government of Uttrakhand

includes:

100% relief in Excise duty for 10 years and100% income tax exemption for first 5 years

Central Sales Tax levied at concessional rate

of 1%.

Stamp duty concessions to be provided for

land in identified areas.

Capital investment subsidy of 15% and

interest subsidy of 3-5% for small scale

industries.

Simplification and rationalisation of labour

laws and single window clearance to reduceproject delays.

Uttarakhand

Promote private sector participation indevelopment of infrastructure projects.

Pant Nagar and Haridwar have emerged as

attractive industrial locations in the state.

Currently 3 integrated industrial corridors have

been developed at Haridwar. Sitarganj and

Siggadi are other prominent locations in

Uttarakhand which have witnessed major

industrial development in the state.

In Punjab small scale industries dominate the

industrial scene with approximately 47% of the

total manufacturing sector in Punjab. The other

thrust sectors for the state are chemicals, metals

and pharmaceuticals. The state's key industries

include automotive and auto components,

bicycles and bicycle parts, food products, light

engineering goods, paper and paper products,

sports goods and textiles. The established

industrial locations are Ludhiana, Patiala, Roop

Nagar, Amritsar, Bathinda and Jalandar. Industrial

infrastructure, roadways as well as housingprojects and commercial complexes have seen

the maximum investment inflow in the recent

past. The state is also focused on sector-specific

infrastructure for food, apparel, biotech, IT and

electronics sectors. In terms of SEZ space,

Quark City, Mohali, has been granted SEZ status

to promote IT/electronics industries, as well as

to the Ranbaxy SEZ at SAS Nagar, also in Mohali.

The Industrial Policy of Punjab is aimed at

developing infrastructure and speedy clearance

of new projects. Key highlights of industrialpolicy are as follows:

Replace Octroi and entry tax with a single

Local Area Development Tax (LADT)

Infrastructure development though private

sector participation by setting up of Special

Purpose Vehicles (SPVs)

Freight subsidy for exports

Customised sector specific policies for

biotech and apparel sector and proposed

industries in border areas.

Punjab

Agro food,pharmaceuticals and

electronic sectors

and their allied

industries have

registered their

presence in

Uttarakhand.


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IND IAREPORT



Project of upto 3 crores to be cleared by theDistrict level committee under the

Chairmanship of the District Collector

2% interest subsidy at documented rate of

interest of Financial Institutions to an SSI

project having plant & machinery worth not

exceeding INR 100 lakhs.

25% of the cost of DG Set limited to INR

250,000 is granted to SSI units for the

purchase of DG Set.

SSI units are eligible to get INR 10,000 perproduct to get BIS certification mark

To encourage cottage industries amongst

women entrepreneurs to motivate them to

opt for self employment women are being

provided training through DICs and NGOs.

To promote and help in marketing the

products of Handicrafts, Handlooms and SSI

Sector, Udyog Mela/ Exhibitions are

organised at Naitonal, State and District

Level.

Major existing industrial belts of Rajasthan

include Jaipur, Alwar, Kota, Bhilwara and Jodhpur.

The proposed development of DMIC is likely to

further develop industrial areas in Jaipur, Dausa

and Bhilwara. Alwar and Bharatpur are other

prominent industrial hubs which have presence

of industries like cement, chemicals, dyes,

electronics, engineering machines and food

processing. Prominent industrial hubs such as

Kota, Jaipur, Bikaner and Bhilwara have the

presence of textile, leather, engineering goods,

and electronics. Bawal, located on the Haryana

border, provides a link between Jaipur and Delhi

thus allowing goods to move both upstream and

downstream into neighbouring states.

The National Capital Region (NCR) is the focal

point for many commercial and IT/ITeS activities

in North India and has historically been an

attractive location for industrial activities such as

automobiles, light engineering, textiles,

The National Capital Region (NCR)

Upcoming industrial infrastructure in Punjabincludes:

Electronics Township (ELTOP), Mohali, which also

includes a Software Technology Park, is jointly

promoted by Punjab InfoTech Corp and the

Department of Information Technology.

Food Park Project, Sirhind spread over 25 acres,

which is a joint initiative between an Non-

Resident Indians group and Punjab Agro

Industries Corporation. One of India's largest

and most sophisticated integrated foodprocessing complex, it has an annual capacity of

over 5,000 MT.

Apparel Park, Doraha, is an Integrated Textile

Park, with 115 plots, jointly developed by the

Punjab Small Industry and Export Corporation

Limited and the Association of Textile Industry.

Biotech Park, Dera Bassi, a Public Private

Partnership initiative between the Punjab State

Council for Science and Technology and Beckons

Industries, it would comprise 10-15 industrial

units in agri-biotech and health care sectors.

Industrial performance of Rajasthan has been

driven largely by small scale industries

dominated by key industries like food processing,

agro industries, engineering products, cement,

ceramic and marble and handicrafts. The state's

proactive role in developing skilled and semi-

skilled work force has helped in increasing the

attractiveness of this region, in establishing it as a

preferred industrial location for food processingand engineering products. State is focusing on

developing sector specific infrastructure for

food, apparel and electronic sector. While the

export promotion industrial park near Jaipur is

one of the largest parks in north India, similar

industrial parks are being developed at Alwar

and Jodhpur. Theme parks with facilities for a

particular industry and upcoming SEZs are other

major infrasture developments currently

underway in Rajasthan. Some of the incentives

offered by the state are:

Rajasthan

Alwar and Bharatpurare other prominent

industrial hubs

which have presence

of major industries

like cement,

chemicals, dyes,

electronics,

engineering

machines and food

processing.


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pharmaceuticals etc. Various companies haveestablished their corporate headquarters as well

as production units in the NCR mainly because

of good connectivity through land and air, its

large existing consumer markets and robust

infrastructure initiatives. The North Western

Freight Corridor, Golden Quadrilateral, Eastern

and Western Peripheral Roads and the North

South Corridor have all helped increase

connectivity to this region. The proposed airport

in Greater Noida along with the expansion of

the cargo hub in the existing Delhi international

airport will be added advantages of this location.

Traditional industrial locations of Okhla, Mohan

Cooperative Area and NOIDA have been

saturated especially with the entry of IT/ITeS

companies which have preferred these locations

as they are situated in the heart of the city.

Additionally the Delhi Government's drive to

relocate polluting units outside of the city has

further helped peripheral locations to develop

into industrial locations while maintaining the

advantage of being close to the national capital.

This move has increased rentals due to high

demand, forcing industrial facilities to relocate to

peripheral locations of NCR in U.P and Haryana

such as Rohtak, Bhiwadi and Greater Noida etc.

Uttar Pradesh offers easy availability of land in

239 fully developed industrial areas, spread over

37,388 acres. Its industrial infrastructure also

includes several Industrial Infrastructure

Development Centres (IIDCs) and

approximately eight notified SEZs. There arevarious prevalent industries in this state which

enables it to achieve the title of the 2nd largest

economy in the country. Agriculture continues

to remain the most prevalent sector after this

the cottage industries of handlooms and

handicrafts would be the most prevalent in this

state providing employment to the large skilled

and unskilled worker base.

The UP government or the governing body (in

the case of NOIDA, Greater NOIDA etc.) offer

attractive incentives which are customised to

Uttar Pradesh (UP)

the investors needs depending upon theinvestment quantum, employment opportunity,

region and type of industry being established.

UP's thrust industries include sectors like

Biotech, IT/ITeS, Food and agro-processing units,

and textiles. Varanasi has attracted a proposal

for a Textile Park and SEZ. Integrated Logistics

Hubs/Free Trade Warehousing Zones have been

proposed in collaboration with IL&FS, Mineral &

Mining Trading Corporation and Mitsui (Japan).

An Integrated Agro/Food Processing Zones has

been proposed at Hapur.

Ghaziabad, NOIDA & Greater NOIDA:

Ghaziabad is already home to several small and

medium industries and with the upcoming Taj

and Ganga Expressway the attention is steadily

moving away from the established corridors of

NOIDA towards Greater NOIDA. Apart from

IT/ITeS, there are several other industries that

are also evaluating possible opportunities of

foraying into the newly planned developments of

Greater NOIDA, along with developers who

have already begun developing commercial, retailand residential projects to cater to these

industrial pockets.

Haryana is one of the leading industrialised

states with an inclination towards the

automobile industry. The state has the presence

of various manufacturing corporations such as

Maruti Udyog, Honda, Escorts, Hero Honda.

Already existing locations of Gurgaon and

Faridabad constitute towards the bulk ofproduction and revenue generation for the state.

Industries are considering other locations in

order to avail cheaper rentals, incentives and

robust infrastructure that is being provided by

the government.

Some incentives include:

Interest free loan, quantified at 50% of tax

paid on sale of goods sold and 75% for food

processing units, repayable after a period of

5 years

Haryana

Traditional industriallocations of Okhla,

Mohan Cooperative

Area and NOIDA

have been saturated

especially with the

entry of IT/ITeS

companies which

have preferred these

locations as they are

situated in the heart

of the city.


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Subsidy up to 1% of FOB of export unitssubject to a maximum of INR 1 Million P.A.

Exemption from electricity duty for 5 years

Manesar, Dharuhera & Rewari:

Located in Haryana (along NH 8) and in close

proximity to Delhi and Gurgaon, these regions

have availability of large land parcels and lower

cost of labour which has provided the necessary

The focus ofdevelopment is

gradually shifting

from the peripheries

of major

metropolitan

centres to the

emerging locations

along highways,

railway corridors

and Tier II and III

cities, which are fast

emerging as thefuture growth

centres.

impetus to transform the area into industrialzones. Haryana State Industrial Development

Corporation (HSIDC) has successfully

developed an Industrial Model Township in

Manesar and is planning to develop an additional

2 IMT's. Companies like Hero Honda and Maruti

Udyog are some of the major automobile giants

already present here, along with several auto

ancillary units in the pipeline.


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eager to set up such units. The western and

southern states of Maharashtra and Tamil Nadu

have successfully attracted various domestic and

global automobile manufacturers and numerous

auto ancillary units. In the north, the automobile

sector is limited to NCR, while the eastern

states have a major focus on steel and heavy

engineering.

State governments have also geared up in their

own ways to develop themselves as facilitators.

They have proactively announced many

incentives and are developing areas to cater to

the growing demand from the industrial sectors.

The Central Government has in turn eased

certain regulatory requirements to further the

cause pioneered by the state government. States

such as Himachal Pradesh, Jharkhand and Andhra

Pradesh have initiated single window clearance

in an attempt to accelerate and ease the

processes. Similarly the eastern states of

Jharkhand and Orissa have assured assistance

and subsidy in land acquisition. Uttaranchal,Gujarat, Jharkhand and Tamil Nadu have provided

tax holidays and concessions on investments

industrial development. There are also special

subsidies for employment generation in West

Bengal and capital investment and fixed assets in

Uttaranchal and Maharashtra.

Our studies have revealed that various industrial

growth centres have been developed across the

country, covering a total development of

approximately 363,263 acres. The southern zone

being the frontrunner, has the largest shareamounting to approximately 236,656 acres

spread across the three major states of Tamil

Nadu, Karnataka and Andhra Pradesh, followed

by the west. The government acknowledges the

role of SMEs and their growth has been

exemplary, particularly of industries like

automobile, steel products, machine tools,

textiles and apparels, chemical and

pharmaceuticals.

Several international corporations continue to

exhibit their confidence in India for outsourcingtheir manufacturing facilities and backend

OUTLOOK

To maintain an accelerated growth of the

economy, which is triggered mainly by the

booming services sector, the government has

taken a keener interest in the country's

industrial sector. Various state governments have

also taken major initiatives to attract industries

and generate revenue as well as employment in

their respective states by promoting existing or

new industrial sectors. It is observed that certain

industries prefer certain specific geographical

locations due to their inherent attributes andclassical factors of economies of scale and

benefit from the synergies due to the presence

of other industries in the vicinity. However, this

scenario is rapidly undergoing a transformation

and industrialists are now willing to explore

newer horizons and leverage incentives offered

by the various state governments and ease of

operations. The state governments have been

conscious in assessing their states both in terms

of the traditional benefits enjoyed states enjoy as

well as evaluating their regions for setting up of

new age industrial activities which would

enhance their state's revenue flows and

economic growth.

New age sectors like food processing,

pharmaceuticals and biotechnology, along with

IT/ITeS are some of the industries are being

preferred for promotion by most state

governments due to their non-polluting and high

return nature. However, the western and

southern zones have been the principal hubs,

where most of the major players of the new age

sectors are already present. Whilst there is notexactly an equitable distribution of industries

across the country with clear pockets of

development of a certain kind of industry in

certain specific states, however, most states are

trying to attract more and more industries from

different sectors.

The northern states of Himachal Pradesh and

Uttaranchal have been promoting their industrial

locations to attract industries like food

processing and pharmaceutical units. Similarly,

the textiles and apparel industry is also spreadacross the country, with most state governments


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activities. Industrial segments like retail, telecom,banking, logistics and IT are expected to sustain

their performance, leading to increased demand

for land in and around key growth centres. The

clustering of industries will continue to take

place resulting in greater efficiency and lower

costs for manufactures. Encouraging the growth

of sector-specific industries in suitable locations.

This in turn will add to the unique dynamics

prevalent in the distribution of land holdings,

town planning and developments in each

location.

North* East** West*** South****

Food Processing

Pharmaceutical andBiotechnology

Textiles and Garments

Gems and Jewellery

Single windowclearance

Subsidy on capitalinvestment

Exemption on exciseduty and

C&W Industrial Sector in India

Documents