Business Potential of a State
A REPORT
ON
BUSINESS POTENTIAL OF A STATE IN INDIA
( MADHYA PRADESH )
PREPARED BY
JYOTI KAPOOR
BABLU SINGH CHUAHAN
VIRENDER GREWAL
A report submitted in partial fulfillment of the requirements of 2 Year Full Time Post Graduate Programme in Management (PGPM) at
INSTITUTE OF MANAGEMENT AND DEVELOPMENT NEW DELHI
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Business Potential of a State
AKNOWLEDGEMENT
Exchange of ideas generates a new objective to work in a better way. Whenever a person is helped and cooperated by others, his heart is bound to pay gratitude to them. Every work requires some assistance and support, devoid of which nothing could be realized. In completing the Business Potential of a State, we were also looking for help and support from different people & was supported by all. Now, we would like to thank all those people who directly and indirectly helped us in completing this project. we thank our honorable Vice-Chairman Mr. Abhishek Chaudary, IMD, who guided us authentically and provided us every single facility & support. In completion of the project report many times we had to face several dilemma and stress but with the help of our our teachers, guides & friends who guided us with all their knowledge and experience so that we could complete this project before the deadline.
Our cordials thank would go to Mr. D.V Sardana. We are grateful to him for providing all the necessary facilities and for their continuous advice time to time. Now, in the end we would sincerely like to thank to all those people whose contribution is immense but their names couldn’t be mentioned.
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Business Potential of a State
Table of Contents
Project Introduction Purpose Madhya Pradesh - An Introduction Demographic profile Employment distribution across sectors Physical infrastructure Social infrastructure Telecommunications State Policies And Incentives Business Opportunities Textiles Cement Forest Based Industries Minerals Key Players Major Exports Key SEZ themes Madhya Pradesh Laghu Udyog Nigam Ltd. Doing Business . Investment Climate Expanding Industrial Infrastructure Average cost of doing business in the state
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Business Potential of a State
Project Introduction
We were assigned to study any particular state of our a choice and finding various Business opportunities in the state by emphasizing as an Investor with keeping in mind four important following factors in a state. • Regulatory framework • Resources/Input • Incentives to industry • Physical & social infrastructure
Geography
Range at Pachmarhi Madhya Pradesh in Hindi can be translated to Central Province, and it is located in the geographic heart of India. The state straddles the Narmada River, which runs east and west between
the Vindhya and Satpura ranges; these ranges and the Narmada are the traditional boundary between the north and south of India. The state is bordered on the west by Gujarat, on the northwest by Rajasthan, on the northeast by Uttar Pradesh, on the east by Chhattisgarh, and on the south by Maharashtra. Madhya Pradesh comprises several linguistically and culturally distinct regions, including: Malwa: a plateau region in the northwest of the state, north of the Vindhya Range, with its distinct language and culture. Indore is the major city of the region, while Bhopal lies on the edge of Bundelkhand region. Ujjain is a town of historical importance. Nimar (Nemar): the western portion of the Narmada River valley, lying south of the Vindhyas in the southwest portion of the state. Bundelkhand: a region of rolling hills and fertile valleys in the northern part of the state, which slopes down toward the Indo-Gangetic plain to the north. Gwalior is a historic center of the region.
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Business Potential of a State
Chambal: the north-western region. A mountainous region rich in red, soft, and fragile sandstone. The climate is harsh, and the area is known for murderous pirates who were active in hundreds in the late 1900s. Baghelkhand: a hilly region in the northeast of the state, which includes the eastern end of the Vindhya Range. Mahakoshal (Mahakaushal): the southeastern portion of the state, which includes the eastern end of the Narmada river valley and the eastern Satpuras. Jabalpur is the most important city in the region. Central Vindhya and Satpura region. Which has most of the central Narmada river valley and watershed, and has the highest point in the state - Dhupgarh in Pachmarhi.
Rivers
The Bansagar Dam on Sone River
Sharda Temple Maihar
Madhya Pradesh represents great river basins and the watershed of a number of rivers. Catchments of many rivers of India lie in Madhya Pradesh. The Narmada (originating from Amarkantak)
and Tapti (originating from Multai of Betul District) rivers and their basins divide the state in two, with the northern part draining largely into the Ganga basin and the southern part into
the Godavari and Mahanadi systems. The Vindhyas form the southern boundary of the Ganga basin, with the western part of the Ganga basin draining into the Yamuna and the eastern part directly into the Ganga itself. All the rivers, which drain into the Ganga, flow from south to north, with the Chambal, Sipra, Kali Sind, Parbati, Kuno, Sind, Betwa, Dhasan and Ken rivers being the main tributaries of the Yamuna. The land drained by these rivers is agriculturally rich, with the natural vegetation largely consisting of grass and dry deciduous forest types, largely thorny. The eastern part of the Ganga basin consists of the Son, the Tons and the Rihand Rivers, with the Son being the major tributary. This is also the junction point of the Satpura and the Vindhya ranges, with
the Maikal and Kaimur Hills being the fulcrum. The forests here are much richer than the thorn forests of the northwestern part of Madhya Pradesh. The Son is of great significance in that it is the largest tributary going into the Ganga on the south bank and arising out of the hills of Madhya Pradesh rather than from
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Business Potential of a State
the Himalayas. This river and its tributaries contribute the bulk of the monsoon flow into Ganga, because the north bank tributaries are all snow fed. The major tributary of the Ganga, the Son, arises in one of the most important watersheds in India, the Maikal hills around Amarkantak. Three of the great rivers of India, Narmada, Mahanadi and Son, are given birth to by these hills. This is also one of the few ranges in the State having a north south configuration. The Mahanadi itself, together with its tributaries such as Hasdeo, Mand and Kharun flows southeast into Orissa and converts that State into a green rice bowl. The upper Mahanadi catchment contains some of the finest forests in the State, ranging from mixed deciduous to teak, bamboo and Sal. Just as the Mahanadi flows east from the Maikal hills and the Son flows north, the mighty Narmada charts a westerly course from these very hills. The Narmada flows through a rift valley, with the Vindhyas marching along its northern bank and the Satpuras along the southern. Its tributaries include the Banjar, the Tawa, the Machna, the Denwa and the Sonbhardra rivers. Taken in combination with its parallel sister river, the Tapti, which also flows through a rift valley, the Narmada - Tapti systems carry and enormous volume of water and provide drainage for almost a quarter of the land area of Madhya Pradesh. The Satpuras, in the Gawilgarh and Mahadeo Hills, also contain a watershed, which is south facing. The Indrawati, the Wainganga, the Wardha, the Pench, the Kanhan and Penganga rivers, discharge an enormous volume of water into the Godavari system. The Godavari is the lifeline of Andhra Pradesh, but the water which feeds it is a gift of the Central India watershed. Some of the finest subtropical, semi moist forests in India are to be found in the Godavari basin, mainly in the valley of the Indrawati. There are very few virgin forests left in the country, but very fine examples of these are to be found in Bastar area along the Indrawati and in the Kanger valley in Chhattisgarh. The importance of Central India watershed was first noted by Captain Forsyth and remarked upon in his book, "The Highlands of Central India", first published in 1889. This is what he has to state in the introductory chapter to his book, "Yet in the very center of India there exists a considerable region to which the term highlands — is strictly applicable; and in which are enormous peaks and ranges, for which the term mountain would, in any other country, be used. Several of the great rivers of India have their first source in this elevated region. And pour their water into the sea on either side of the peninsula – to the north the Son commingling with the Ganges, to the east the Mahanadi, flowing independently to the Bay of Bengal, to the south some of the principal feeders of the Godavari, and to the west the Narmada and the Tapti taking parallel courses to the Arabian Sea. There are many important multi-state irrigation projects in development, including Godavari River Basin Irrigation Projects.
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Climate
Madhya Pradesh has a subtropical climate. Like most of north India it has a hot dry summer(April-June) followed by monsoon rains (July-September) and a cool and relatively dry winter. The average rainfall is about 137mm. It decreases from east to west. The south-eastern districts have the heaviest rainfall, some places receiving as much as 215mm, while the western and north-western districts receive 10mm or less.
Flora and fauna Forest
Mixed forests at Amarkantak Madhya Pradesh is endowed with rich and diverse forest resources. Lying between lat. 21°04'N and long. 74°02' and 82°49' E, it is a reservoir of biodiversity. The geographical area of the state is 308,144 km² which constitutes 9.38% of the land area of the country. The forest area of the state is 95,221 km² constituting 31% of the geographical area of the state and 12.44% of the forest area of the country. Legally this area has been classified into "Reserved Forest, Protected Forest and Unclassified Forest", which constitute 61.7%, 37.4% and 0.9% of the forest area respectively. Per capita forest area is 2,400 m² as against the national average of 700 m² Central, eastern and southern parts of the state are rich, whereas northern and western parts are deficient in forest. Variability inclimatic and edaphic conditions brings about significant difference in the forest types of the state. There are four important forest types viz. Tropical Moist, Tropical Dry, Tropical Thorn , Subtropical broadleaved Hill forests. The forest area can also be classified based on the composition of forest and terrain of the area. Based on composition, there are three important forest formations namely Teak forest , Sal forest and Miscellaneous
Forests. Bamboo bearing areas are widely distributed in the state. To obviate pressure on the natural forests , plantations have been undertaken in forest and non forest areas to supplement the availability of fuel wood , small timber , fodder etc. MP lost a good amount of forest recently when Chattisgarh was carved out of it, as that region was the richest reserve of forrests in MP. The total growing stock (volume of timber / wood) is 50,000,000 m³ valued worth Rs 2.5 lakh Crores.
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Natural areas
Bandhavgarh National Park Madhya Pradesh is home to several National Parks, including Bandhavgarh National Park, Kanha National Park, Satpura National Park, Sanjay National Park, Madhav National Park, Van Vihar National Park, Mandla Plant Fossils National Park, Panna National Park, and Pench National Park, Madhya Pradesh. There are also a number of natural preserves, including Amarkantak, Bagh Caves, Bhedaghat, Bori Natural Reserve, Ken Gharial, Ghatigaon, Kuno Palpur, Narwar, Chambal, Kukdeshwar, Narsinghgarh, Nora Dehi, Pachmarhi, Panpatha, Shikarganj, Patalkot [1]and Tamia.
Government and politics Madhya Pradesh has a 230-seat state Legislative Assembly. The state also sends 40 members to the Parliament of India: 29 are elected to the Lok Sabha (Lower House) and 11 to theRajya Sabha (Upper House). The dominant political parties in the state are the Bharatiya Janata Party and the Indian National Congress. Unlike many of its neighbours, Madhya Pradesh has largely a two-party system with small or regional parties not having had much success in recent elections. In the November 2003 state elections, the BJP won an absolute majority of 173 seats, defeating the governing Congress who won just 38 seats. Other parties in the state legislature include the Samajwadi Party with 7 seats. The current chief minister is Shivraj Singh Chauhan, who succeeded Babulal Gaur and Uma Bharti. Before the BJP won in 2003, the longtime Congress Chief Minister was Digvijay Singh. In the 2004 Indian General Election the BJP swept the state by winning 25 of the 29 seats, while the Congress won the remaining four.
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Business Potential of a State
Madhya
Pradesh
state
is
made
up
of
50
districts,
which
are
grouped
into
ten
divisions: Bhopal, Chambal, Gwalior, Indore, Jabalpur, Rewa, Sagar and Ujjain.Shahdol Division,Narmdapuram Division Districts: Anuppur, Alirajpur, Ashoknagar, Balaghat, Barwani, Betul, Bhind, Bhopal, Burhanpur, Chhatarpu r, Chhindwara, Damoh, Datia, Dewas, Dhar, Dindori, Guna, Gwalior, Harda,Hoshangabad, Indore, Jabalp ur, Jhabua, Katni, Khandwa, Khargone, Mandla, Mandsaur, Morena, Narsinghpur, Neemuch, Panna, Rai sen, Rajgarh, Ratlam, Rewa, Sagar, Satna, Sehore,Seoni, Shahdol, Shajapur, Sheopur, Shivpuri, Sidhi, Singrauli, Tikamgarh, Ujjain, Umaria, Vidisha.
Purpose & Scope of Study
This project and analysis is a part of the two years MBA program, and is to be submitted to the institute. But more importantly it is aimed at our individual betterment, and through this project we get the platform to know about different states and their business potential, their strengths and weaknesses, from an investors’ point of view. After our research we came across many facts which are very important to know as an investor and as a management student also.
We got here a vast scope of study. In this report we have tried to include everything we could, based on the scope we had, such as basic facts about Madhya Pradesh, its’ business potential, economic status, leading industries, and many other details.
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Sources of Data
The data collected for the purpose of study has been via various sources on reliable grounds. The major sources are mentioned here below:
Non-web sources State Guide – Madhya Pradesh Population Census of India – 2001 Government Data Web sources Google Search Engine www.wikipedia.org www.mapsofindia.com www.india.gov.in www.india.stat.com www.mpgov.nic.in www.planning.mp.nic.in
Limitations of Study
This project gave us chance to know about the state of Madhya Pradesh and its business potential but it has its own limiting factors. The time period provided to us is one of those. In a very short period of time, we could not collect the whole data and look into the minute details of the business potential of the state. Further there is no guarantee that the project will be of significant help in the near future as the business potential of a state is a subject to change. What holds true now may become obsolete in the near future.
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Business Potential of a State
Madhya Pradesh as its name implies, lies in the heart of India. It covers an area of 4,43,406 sq. km, making it the biggest state in the country, bordering seven other states - Uttar Pradesh, Bihar, Orissa, Andhra Pradesh, Maharashtra, Gujarat and Rajasthan. Madhya Pradesh consists largely of a plateau streaked with the hill ranges of the Vindhyas and the Satpuras with the Chhattisgarh plains to the east. The hills give rise to the main river systems - the Narmada and the Tapti, running from east to west, and the Chambal, Sone, Betwa, Mahanadi, and the Indravati west to east. Intersected by these meandering rivers and dotted with hills and lakes, the state has a varied natural setting of great beauty. Madhya Pradesh, as the Modern state, came into being in 1956, its cultural heritage is ancient and chequered. Innumerable monuments, exquisitely carved temples, stupas, forts and palaces on hilltops, raise in the visitor's mind visions of empires and kingdoms, of great warriors and builders, poets and musicians, saints and philosophers; of Hinduism, Buddhism, Jainism and Islam.. India's immortal poet-dramatist Kalidasa and the great musician of the Mughal court, Tansen, were from these parts. One third of the state is forested and offers a unique and exciting panorama of wildlife. In the national parks of Kanha, Bandhavgarh, Shivpuri and many others one has the rare opportunity to see the tiger, as such, Madhya Pradesh is often referred to as the Tiger state of India. A wide variety of deer, antelope and bison are also the attractions of these parks. Customs and beliefs in each area have added colour to the fairs and festivals. Dussehra in Bastar; Shivratri in Khajuraho, Bhojpur, Pachmarhi and Ujjain; Ramnaumi in Chitrakoot and Orchha, Bhagoriya in Jhabua and the annual festival of dances at Khajuraho are events for the tourists to remember. The Malwa Festival in Indore, Mandu and Ujjain, and the Pachmarhi Festival bring alive the rich folk and tribal culture of the state in colourful celebrations.
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A monumental splendor In the light and shadow of stone is writ the history of empires and kingdoms, warriors and builders, saints and philosophers. A giant fort of Gwalior evokes memories of a momentous past. Orchha.. where a legacy of temples and forts touches life with a medieval wand. Mandu recalls the time when the Afghans marched in and crafted its stone in a 'City of Joy'.At Khajuraho , there is poetry in stone created by warrior race of Chandella Rajputs. The oldest Buddhist shrines at Sanchi reflect the serenity and glory of Ashokan times. Sanctuary of a hundred gods Exquisite temples. Enchanting mosques. Bathing ghats sanctified with faith. Steeped in divinity, the holy shrines of Madhya Pradesh reflect the triumph of tolerance. Pilgrims come in endless eddies to venerate the gods at Ujjain, Omkareshwar and Maheshwar, the abodes of peace and tranquillity. To pay homage at the awe-inspiring mosque at Bhopal. And to seek solace at Chitrakoot - the legendary birthplace of Brahama, Vishnu and Mahesh, where Ram sought shelter during the long years of exile. A tryst with adventure Kipling country. Where the tiger prowls. And the barasingha and the spotted deer, the wild boar and gaur roam free. The bamboo and sal forests of Kanha, Shivpuri, Panna & Bandhavgarh are teeming with all kinds of wildlife and many hundred species of birds. A colourful tradition Festival follows festival in a zestful celebration of life. Dusshera at Bastar. Simhastha at Ujjain. Ramnaumi at Chitrakoot. Bhagoriya at Jhabua. And the annual festival of dances at Khajuraho. Craftsmen keep alive a vibrant tradition that goes back many hundred years. Handwoven brocades of Chanderi and Maheshwar, the Kosa silk of Raigarh, leather toys, exquisitely wrought bell-metal...there's a whole treasury of handicrafts. Come close to nature Bridal-paths lead to tranquil retreats, sought in the past by poets and saints. Hills and ravines beckon the adventurous. Nestling in the plateau, girdled by hills, are many verdant jewels ... Pachmarhi,Amarkantak, Chitrakoot & Marble Rocks of Bhedaghat. Azure waterfalls, emerald forest glades, rocks and cliffs in a myriad shades. Here is nature in all its splendour, its blissful solitude. Access to State • Railways: Trunk Rail route connecting nothern India passes through Madhya Pradesh. Main junctions in the state are Bhopal, Bilaspur, Bina, Gwalior, Indore, Itarsi, Jabalpur, Katni, Ratlam, Ujjain & Khandwa. Aviation: Major airports linking Delhi, Bombay, Varanasi & Nagpur are Bhopal, Raipur, Indore, Khajuraho & Gwalior. Stations linked by Vayudoot are Bhopal, Khajuraho, Stana, Rewa, Guna,Indore, Bilaspur, Raipur, Jagdalpur & Jabalpur. Bhopal is also connected to Jaipur & Nagpur by Vayudoot.
•
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State Demographics Population The population density is 196 persons per sq km, compared to the all-India average of 313 persons per sq km. The state has an urban population of 15.99 million and rural population of 44.33million. The ratio of rural to urban population is 74:26. Out of the total population, 31.44 million are males and 28.9 million females. The sex ratio stands at 920 females per 1,000 males as against the all-India average of 933 females per 1,000 males. The demographic scenario is still characterised by high birth and death rates. In 2005, the crude birth rate in the state was 29.4 as against the all-India average of 23.8, whereas the crude death rate was 9.0 as against the all-India average of 7.6. With a total area of 308,000 sq km, Madhya Pradesh is divided into 48 districts, nine commissioner divisions, 272 tehsils and 313 community development blocks, including 89 tribal development blocks. Literacy rate The literacy rate in 2001 was 64.1 per cent, as against 64.8 percent at the national level. The female literacy rate (50.3 per cent) was lower as compared to the male literacy rate (76.1 per cent); the all-India literacy rate for males was 75.3 and 53.7 per cent for females. The rural and urban literacy rate in the state was 57.8 and 79.4 per cent, respectively, against 58.7 per cent and 79.9 percent, respectively, at the national level. Economic Growth Trends Gross State Domestic Product The Net State Domestic Product (NSDP) of Madhya Pradesh at current prices in 2004-05 was $9.8 billion.
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Per Capita Income The per capita income as approximated from the per capita GSDP is a vital indicator of the standard of living. The per capita income in Madhya Pradesh stood at $369 in 2004-05.
Sectoral Contribution to GSDP The sectoral composition clearly indicates that the economy is gradually shifting from the primary sector to secondary (industry) and tertiary (service) sectors. The contribution of the primary sector to the total NSDP fell drastically from 45.7 per cent in 1993-94 to 35.94 per cent in 2005-06. This is mainly attributed to lower growth in agriculture, including animal husbandry and forestry sub-sectors. Due to uncertainties related to monsoons in a largely rain-fed area, and due to faster growth in the industry and service sectors, the contribution of agriculture (including animal husbandry) has come down from 39.98 percent to 28.42 per cent and that of the forestry sector from 2.85 per cent to 2.62 per cent during the last decade.
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INFRASTRUCTURE
Physical Infrastructure Transportation Roads Roads carry 80 per cent of the goods and passenger traffic in Madhya Pradesh. Hence, systematic development of the road network is a pre-requisite for the overall development of the state. The total length of roads spanning MP is 67,600 km. About 5,200 km of national highways (NH) run through the state. The road network provides convenient linkages to ports on the west coast, including Kandla and Jawahar Nehru Port Trust. There are 18 national highways in the state, including trunk routes of DelhiMumbai, Delhi-Chennai, Delhi-Bangalore and Delhi-Hyderabad. The total length of state highways (SH) is 9,885 km.Under the Madhya Pradesh State Road Sector Development Programme funded by the Asian Development Bank, 1,750 km of state roads were also upgraded by 2006 at a cost of $150 million. The Madhya Pradesh government has accorded high priority to improve the road infrastructure and has been successful in attracting private sector participation (PSP) in the development of highways. It has constructed 17 bridges and bypasses to four of its cities through PSP. Maintenance of three state highways has been outsourced to the private sector. Currently, IJM Corporation of Malaysia is implementing two SH projects totalling 380 km with an investment of $50 million. Registered Vehicles The number of registered vehicles rose to 4.6 million in 2005-06. The highest increase has been in the number of motorcycles, scooters and mopeds in the Tenth Plan period (2002-2007). The number of commercial vehicles like taxi cabs and three wheelers, buses and trucks increased substantially during this period. There were 500,000 such vehicles in 2005-06, constituting 10.83 per cent of the total registered vehicles Railways The state is well connected with the rest of India through a vast railway network. Almost 425 trains pass through the state daily, with Bhopal, the state capital, alone accounting for 175. The significant presence of mineral-based industries in the state and availability of effi cient railway links is critical to fully exploit the potential. The total length of the railway network in Madhya Pradesh is 5,992 km. Of this, almost 1,880 km is electrifi ed. Currently, railway upgradation projects include adding 1,151 km of railway lines at a cost of $460 million and implementing a major track modernisation programme to convert 285 km of existing metre gauge routes to broad gauge at a cost of $112 million. The completion of these projects will further strengthen the railway network in the state.
Airports To provide a boost to the tourism sector, the state aims at positioning air transport as a reliable all-weather, low-cost transport option. The state has fi ve operational airports and 25 airstrips with regular services. There are convenient fl ights from Delhi and Mumbai to Bhopal, Jabalpur, Gwalior, Indore and Khajuraho. Indore airport has the capability to handle international cargo. An international airport is being proposed for Bhopal.
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Water Supply The state has several major rivers including Mahi, Narmada, Tapti, Chambal, Betwa, Wainganga, Ken, Sindh and Pench, which offer 56.85 MAF (million acre feet) of water. Of this, 69.74 per cent has the potential to be harnessed for irrigation purposes. Besides, 23.55 MAF of ground water is also available, of which 50 per cent can be utilised for irrigation purposes. The net irrigated area in the state in 2005-2006 was 5.68 million ha, which was 37.69 per cent of the net area sown. The state has developed an irrigation potential of 2.4 million ha; the utilisation, however, is only about 50 per cent. Besides this, the Narmada Valley Development Authority (NVDA) has developed a potential of 230,000 ha. The Rural Development and Agriculture departments are also contributing to water harvesting and creation of irrigation potential
State policies
Power The installed capacity of the Madhya Pradesh State Electricity Board (MPSEB) as on March 31, 2006 was 2,990.45 MW. Further, the state has a share of 1,665.85 MW in Central Sector Projects and additional allocation of 50 MW is available from Eastern Region Electricity Board (EREB). Apart from the above, 1,000 MW from Indira Sagar HEP and 712.5 MW from Sardar Sarovar HEP (Interstate) is also available. A total capacity of 1,094 MW is likely to be added from the state sector, Narmada Projects and the central sector by March 2007, resulting in a total installed capacity of 3,570.45 MW. Thermal energy accounts for 95.66 per cent of Madhya Pradesh’s electricity generation capacity, and the rest is based on hydel generation. On a per capita basis, electricity consumption in Madhya Pradesh stands at 352 kWh per annum, close to the national average of 355 kWh per annum. Various electricity projects under implementation in the state aggregate to 790 MW. The percentage of villages electrified to total inhabited villages was 97.43 per cent as on 31st March 2006. There were 1.34 million pump-sets and tube-wells in 2005-06.
Social Infrastructure Education In recent years, Madhya Pradesh has taken concerted initiatives to develop the social infrastructure. It ranks 12th on the Human Development Index and its improved ranking can be attributed to the thrust on social development through focus on rural development and self-employment schemes. Literacy levels in the state have improved from 44.2 per cent in 1991 to the current level of 64.1 per cent. Madhya Pradesh’s education network consists of nine universities, over 250 colleges, 87,000 primary and 8,500 secondary schools. The state has 45 engineering colleges, over 200 technical training institutes, six medical colleges and 43 management institutes, including one of the six Indian Institutes of Management (IIM) at Indore. Other national institutes in the state include the Indian Institute of Forest Management, the Indian Institute of Hotel Management and International Institute of Professional Studies at Indore.
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Health
Health Infrastructure in Public & Private Sector The state government has launched several welfare and health care programmes to improve the overall health standing of the state. In line with the National Health Policy goal of Health for All, the state has formulated strategies for the development of the three-tier health infrastructure facilities. Besides these, there are three private sector medical colleges and 11 dental colleges. The state has been effectively implementing programmes of reproductive and child health along with other national programmes. Health care in the public sector: • 54 civil hospitals and 92 dispensaries • 48 district hospitals, 267 community health centres. • 1,152 primary health centres. • 313 rural and 96 urban family welfare centres. • 6 T-B hospitals and 8,835 sub-health centres, along with facilities of Indian System of Medicine.
Telecommunications
Madhya Pradesh has a well-developed telecommunication network, with 2,791 telephone exchanges operating in the state. There were 8,335 post offi ces in 2005-06, each serving a population of 7,951.
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Business Potential of a State
Industrial Infrastructure
The State Government, through the Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd (MPAKVN) scheme, has identifi ed several industrial clusters. Many industrial giants have their establishments in these areas; however, 44 per cent of the developed area is still untapped and open for investment. BHOPAL AKVN • Area Developed: 1,330 hectares • Allotted: 618 hectares • Units established: 286 • Major groups: HEG, Crompton Greaves, P&G, Godrej, Lupin, IFB, Oswal, Nahar • Special Infrastructure: ICD, Food Park GWALIOR AKVN • Area Developed: 2,262 hectares • Allotted: 800 hectares • Units established: 326 • Major Groups: JK, Surya Roshini, Godrej, Grasim, Cadbury,Hotline, Crompton Greaves • Special Infrastructure: ICD, Food Park JABALPUR AKVN • Area Developed: 790 hectares • Allotted: 125 hectares • Units established: 52 • Major Groups: Raymond, Hindustan Petroleum, PBM, Ayur • Special Infrastructure: Stone Park, Food Park REWA AKVN • Area Developed: 273 hectares • Allotted: 115 hectares • Units established: 121 • Major Groups: Birla, Jaypee • Special Infrastructure: Integrated infrastructure development centres (IIDC) INDORE AKVN • Area Developed: 2,492 hectares • Allotted: 1,431 hectares • Units established: 575 • Major Groups: Tata, Ranbaxy, Eicher, Bridgestone, Hindustan Motors, Kinetic, SRF, S Kumar’s, Gajra, Nicholas Piramal, Indorama, IPCA, Bhilwara • Special Infrastructure: SEZ, Crystal IT Park, Food Park, Apparel Park.
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STATE POLICIES AND INCENTIVES
The Government of Madhya Pradesh recognises the need for faster economic development. Its strategy for encouraging investment and achieving higher levels of economic development hinges on the following elements: • Economic development across all sectors • Balance in both economic and social spheres • Focus on physical connectivity, virtual connectivity and social connectivity • Focus on industries other than those where it can leverage its abundant natural resources • Development of industrial infrastructure Growth Oriented Concessions • • • • • Sales/Commercial Tax exemption upto 250% of capital investment in fixed assets for a period of 7 years or deferment upto 300% for a period of 9 years. No capping on quantum of tax concessions for Thrust Sector industries having at least Rs. 1 crore investment in plant & machinery Units set up in 'No Industry Blocks' to get same concessions as units in category 'C' districts. Additional investment on expansion by existing units is eligible for commercial tax concessions as available to new units Additional concessions are available for certain categories of units : Those in MPAKVN Growth Centres. o Units set up by women entrepreneurs, SC & STs and OBCs. o New units in cooperative sector with plant and machinery investment of at least Rs. l crore and membership of at least l00 persons. o l00% EOUs. o Units being set up by NRIs with investment of at least Rs. 2 crores and NRI investment at least 50% of promoter's equity.
Tax Concessions Exemption from Sales/Commercial Category of the tax OR District Maximum Eligibility amount of Period benefit Advanced 125 % 3 years Backward A 150 % 5 years 200 % 6 years B 250 % 7 years C
Deferment from Payment of Sales / Commercial tax Maximum Eligibility amount of Period benefit 175 % 4 years 200 % 7 years 250 % 8 years 300 % 9 years
Maximum benefit is limited to percentage of capital investment in fixed assets. There is no capping on quantum of tax concessions for Thrust Sector industries with at least Rs. one crore investment in plant & machinery • • • Units set-up in "No Industry Blocks" in any district of the State will get the same commercial tax concessions as those set-up in category 'C' districts Concessions are available on finished products, by-products, waste products, raw materials, incidental goods and packing material. Payment of tax is deferred for a period of five years.
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Business Po otential of a State e
Entry Tax Industrial Units to exempt from payment o entry tax o raw mater o of on rial, incidenta and capital al good for 5 years from the date of first purchase. Such concessions are available for 11 years ds s e s in ca of units se up by NRIs and 100 % E ase et s EOU's Additional Co A oncessions Spec cial concessi ions in terms of exemptio s ons or defer rment are fur rther availabl for certain le n categories. A un can get spe nit ecial concess sions upto an additional 5 y years. Pa articulars No Industry Blo in categor 'C' districts o ock ry Additional A Concession C Period P 1 Year
Un in Madhy Pradesh A nits ya Audhyogik Ken ndra Vikas Growth 2 years Nig gam (MPAKV VN) Ce entres Un nits set u up by women entrepreneurs, pe ersons belong ging to scheduled castes, scheduled 1 year trib besand backw ward classes Ne ew industria units in cooperative sector, al wit investment of at least Rs. one crore in th t pla & machinery and hav ant ving a membe ership of at lea one hundr persons ast red 10 00% Export Oriented Units s Co ommercial Ta ax En Tax ntry 2 Years 8 Years
**U Units being set up by N NRIs with inv vestment of a atleast Rs. tw crores and NRI investm wo ment being a atleast 50% of promoter f eq quity can also avail similar concessions) ). Addi itional invest tment on exp pansion by existing units will be eligible for com s mmercial tax x conc cessions Ad as available to new units . This facility i available to units with in a o is o nvestments of f more than Rs.10 lakhs and is c e conditional on extent of ad n dditional inves stment being made. The new policy contains m many other s special incen ntive packag ges. For larg ger projects, custo omized incen ntive packages can be deve eloped. Enhanced Po E ower Availibility All p possible step are being taken to redu both the quantitative and qualitativ shortfall in ps uce ve n the s supply of pow wer. Here too the private sector is to b greatly en o be ncouraged to participate in n incre easing the generation capa acity. • • Grant permission with 45 days to entrepreneu for captive generating units upto 25 hin o urs e 5 MW capa acity For units of higher cap pacity, permis ssion from Ce entral Electrici Authority is necessary ity s
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Business Po otential of a State e
• • •
New indu ustries to be given a po e ower connect tion within 3 days of c 30 completing all formalitie and comple es etion of line ex xtension work k. l00% EOUs and conti inuous process units to be exempted f e from power c cuts as far as s possible. Special fa acilities for en ntrepreneurs setting up po ower units ba ased on hydro (upto 3 MW o W capacity) or non-conve entional sourc of energy ces y Power Generation n
Incentives For (Thr rough Non-co onventional Sources of E Energy)
Any organisation installing a p power generat ting unit base on non-con ed nventional en nergy sources s like m mini-micro hy ydel projects, wind energy, bio-energy, s , solar energy etc. in Madhy Pradesh is ya s eligib for incentives briefly ex ble xplained here The unit may be set up in the private sector or as e. e s a joint sector project. The highlights of the scheme a as follows are s: • • • • • • • No restriction on gen neration capa acity except mini-micro hy ydel projects upto 3 MW s W capacity Power may be used a the point of generation o at any othe place by th generating at f or er he g party or it may be sold to M P Elec t d ctricity Board @ Rs. 2.25 p unit or to a third party per. o y (on mutua agreed ra ally ates) provided it is already a H.T consum of the Bo d mer oard. Power may be wheele from the p ed point of gener ration to any other place fo proprietary or y use or for selling to the third party through MPEB transmiss r e B's sion/ distributio system on on n payment of two percen wheeling charges. nt Electricity duty exemption for five ye y ears Demand - cut up to 30 percent of th installed ca 0 he apacity of non n-conventiona energy unit al t if the gen nerating party is a consum of MPEB and establis y mer shes the Non-conventional unit for its own use s The trans smission/distr ribution lines and equipm ment required till the near rest grid substation will be maintain by MPEB at cost, but w need to be provided by the party. ned B will y Governm ment land will be given on lease to th party. In c n he case of non-availability of f governme land, private land will be acquired b the govern ent by nment and made available e to the par at the acquisition cost rty
Sales Tax Ben nefits (on p power projec using no cts on-conventional resource es) • • Plant and Machinery installed for generation of power shall be exempte from State d f l ed e sales tax The gene erating party or any of its industrial uni or the third party user will get sales its d s tax exem mption or defe erment or com mposite benef on goods m fit manufactured and sold up d p to the eligible investm ment on the non-convent tional power generation s system for a maximum period of s years from the date of commencem m six m f ment of gene eration at the e non-conv ventional pow generatio system o the date o which the cumulative wer on or on e e quantum is achieved, w whichever is earlier. Under the scheme of sales tax de e eferment or composite ben nefit, the amo ount deferred d will be re ecovered in e equal annual installments beginning fro the next f om financial year r after the unit has exha austed its eligible amount.
•
Such power gene h erating units w be treated as industrie and all the concessions available to will es e s o new industrial uni will be app its plicable.
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Business Potential of a State
Special Subsidies for Small Scale Industries In addition to general tax concessions & other benefits, special subsidies exist for SSIs-
1. Capital Subsidy The following Capital subsidies will be available to the SSIs:Category of District Advanced Backward "A" "B" "C" Growth of MPAKVN Maximum Limit (Ceiling) Rate of Subsidy General Thrust (%age of fixed Capital) Industrial (in Sector lakhs) (in lakhs) 5.0% 1.00 7.5 % 10.0 % 10.0 % Centres 15.0 % 1.50 2.00 2.50 5.00 2.00 2.50 3.00 5.00
2.Interest Subsidy Subsidy amounting to 4% of the interest rate subject to a ceiling of Rs.25,000 per annum on the loan taken from Banks/Financial Institutes available to all industrial units set up in backward districts. SC / ST entrepreneurs entitled to 6% subsidy on the interest rate without any ceiling
3.Reimbursment of the Project Report Cost Reimbursement upto 0.5% to 1% of the total expenditure occured on the preparation of the Project report of industries will be provided. Maximum reimbursement will be upto Rs.3.0 lakhs. With a view to attain a double-digit economic growth, the state government has implemented certain policy and regulatory measures. Industrial Promotion Policy 2004 The Industrial Promotion Policy is effective for fi ve years from 1st April 2004.The new policy envisages creating an industry friendly administration, maximising employment opportunities, tackling industrial sickness, rationalising rates of commercial taxes and bolstering private sector participation Objectives of the Policy • To make the state administration industry friendly by simplifying rules and procedures. • To accelerate the pace of industrialisation and make Madhya Pradesh a leading industrial state. • To maximise employment prospects. • To attract NRI and foreign investment by developing worldclass infrastructure. • To create a congenial environment for the development of small, medium and large industries. • To ensure balanced regional development by generating employment in the non-farm sector.
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Business Potential of a State
• To chalk out special packages for removing industrial sickness. • To integrate the different employment-oriented schemes to provide employment opportunities on a sustainable basis.
IT Policy – 2006
The state government aims to transform MP from a resource based to a knowledge-based economy and improve the life of the common man by leveraging the strengths of e-Governance. Increased investment in the sector would enable educated youth to contribute to development and create a pool of highly skilled professionals.
Biotechnology Policy – 2003
• Conservation of the state’s biodiversity and the sustainable use of its biotic resources. • Production of high-yielding, drought and pest-resistant seeds for agriculture and horticulture crops suited to different agro-climatic zones. • Improvement of the quality of livestock and poultry, especially breeds indigenous to the state. • Enhancement of the productive potential of the aquatic ecosystem. • Promotion and cultivation of medicinal and aromatic plants and their processing and value-addition. • Production of cost-effective drugs that help counter diseases common in the tropical and sub-tropical regions. • Promote environmentally safe technologies for pollution abatement, especially treatment of urban waste and industrial effluents. • Afforestation, especially for the quick revival of species, which have shown a tendency to decline.
Tourism Policy
The policy aims at improvement and creation of adequate basic infrastructure. It proposes a special package of incentives for the tourism industry, including exemption from luxury tax, sales tax and entertainment tax for new projects for 10 years. It also designates 25 tourist circuits for commercial tax exemption for tourist vehicles.
Special incentives offered to new and existing businesses
• Special package for mega projects on project-to-project basis by apex level investment promotion empowered committee headed by the chief minister. • Industrial investment promotion assistance of 75 per cent of commercial tax for 3-10 years. • Concessional registration charges and stamp duty exemption for Term Loans. • Interest subsidy on term loans for fi ve years at three per cent to fi ve per cent. • For thrust sector industries, 25 per cent capital subsidy would be provided up to a maximum of $56,000. • Land on 75 per cent concessional rate for mega projects limited to $4.4 million. • Entry tax exemption for fi ve years. • Electricity duty exemption for fi ve years on captive power generation. • 15 per cent capital subsidy to SSI units up to $33,000 in backward areas. • Infrastructure grant up to $220,000 for developing private sector industrial parks. • Partial reimbursement for Project report, ISO Certification Patent and Technology Purchase cost.
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Business Potential of a State
BUSINESS OPPORTUNITIES
Madhya Pradesh is an emerging industrial powerhouse, home to around 1,800 companies and 19 industrial growth centres (located across 7,147 ha) that are close to major cities. This makes good social infrastructure accessible to industrial units. There are around 171,000 SSI units that contribute significantly to the economy. MNCs like Cadbury, Bridgestone, Unilever, Coca Cola and renowned Indian companies like Ranbaxy, Tata, Grasim, Hindustan Motors, Eicher, Kinetic, Hotline, Raymond’s, Lupin, Crompton Greaves, Surya Roshni, Nahar Spinning, Anant Spinning, Godrej and HEG have their presence in Madhya Pradesh. These companies not only meet local requirements, but also export a variety of products and services to both developed and developing countries.
Attractive Sectors
Auto & Auto Components The size of the auto component industry in the state is $306 million. Sixty per cent of the auto industry in Madhya Pradesh is dominated by auto component players. The state has developed a 5,000-ha industrial cluster at Pithampur, which provides readily available infrastructure for companies willing to set up manufacturing facilities. The Government of India has sanctioned $11 million for an auto cluster in the Pithampur industrial area. Textiles A large number of cotton textile mills are clustered around Indore, Ujjain and Burhapur. Major textile players are Bhilwaras, Indo-Rama, Bhaskar, Oswals, Parasrampuria, Maikal and S Kumar’s. The state government has also created Apparel Parks to support the industry. Madhya Pradesh is poised to emerge as a leading textile state because of its cluster development initiatives. The clusters also have signifi cant location advantages. For instance, Malwa near the Indore cluster is a leading cotton-growing belt and a textile hub. The government also provides special fiscal and non-fiscal incentives to apparel units. Cement The state has 3,625.98 million tonnes of limestone reserves spread across the districts of Damoh, Hoshangabad, Mandsaur, Narsinghpur, Rewa, Satna, Panna, Katni, Sagar, Dhar, Khargone,Jhabua, Balaghat, Sidhi and Morena. Seven major cement plants, with an annual installed capacity of 15.97 million tonnes, are operating in the state. The MP State Industrial Development Corporation has estimated that Damoh-Panna area and Bela-Pagra of Rewa have limestone deposits of eight million tonnes and 20 million tonnes, respectively. Considering the availability of raw material, there is a potential of attracting an additional $2.5 billion in investment in this sector. Madhya Pradesh has several locations that offer limestone and coal, providing an excellent opportunity to set-up captive power plants. The industry is expected to witness signifi cant growth as several projects are likely to come up near the limestone reserves. Tourism Tourism has been identifi ed as one of the key drivers of growth by the government. Eight million domestic tourists and 160,000 foreigners visited the state in 2005-06. The government has approved $12.2 million for development of 17 tourist locations across the state and is also making concrete efforts to improve air connectivity to other states. It has taken initiatives to promote eco and adventure tourism and is keen on promoting medical/ herbal tourism in association with private parties.
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Business Potential of a State
Agriculture
Several AEZs (Agri Export Zones) have been set up for facilitating export of specifi c products from a geographically contiguous area. The concentration of AEZs is higher towards the eastern and northeastern parts of the state. Commodities that have immense potential include potato, spices (in the western part), pulses (central part), wheat (western and central) and oranges (southern part). Of the total gross cropped area, 59 per cent is sown in the Kharif season and 41 per cent in the Rabi season. Madhya Pradesh is a leading producer of garlic and accounts for 37 per cent of the total national production. It accounts for 15 per cent of the national production of peas, is the largest producer of soya bean and gram and the second-largest producer of lentils, oilseeds and jowar. The government has initiated the concept of AEZs by addressing all aspects of effi cient agri-practices such as production, R&D, post-harvest management and packaging. Market promotion and development are also being undertaken at the AEZs. The objective is to promote agricultural exports from the state and ensure remunerative returns to the farming community.
IT/ITES Sector
The state has set up an over 24,000 km optic fibre backbone to cover all its 313 developmental blocks across 45 districts. Four Software Technology Parks of India (STPI) units will be set up in Bhopal, Indore and Gwalior. These will be equipped with all modern facilities (including high-speed data connectivity), which are required for smooth operations of software export units. The state boasts of 38 IT engineering colleges and the country’s fi rst Indian Institute of Information Technology and Management (IIITM) at Gwalior. IT players like HCL and Genpact India have shown interest in setting up facilities in the state. Genpact India, which has proposed setting up a $34 million, 7,000-seat BPO facility, has been allotted 50 acres of prime land near the Bhopal airport.
Forest-based Industries
Madhya Pradesh has a forest area of 94,689.38 sq km, constituting nearly 31 per cent of the state’s total land mass. With a share of nearly 13 per cent of the total forest area of the country, MP has the largest forest-covered area among all states. The four key types of forests are tropical moist, tropical dry, tropical thorn and sub-tropical broad-leaved hill forests. Forest-based industries are key contributors to the state’s economy and provide employment to a large part of the population. In 2004-05, forests and logging contributed 2.1 per cent to the SGDP. The total growing stock (volume of timber/ wood) in MP is 50 million cum, valued at $55.5 billion. The average annual production of tendu leaves is around 2.5 million standard bags.MP’s forest reserves are a rich source of timber, fuel wood and bamboo. They are also a key source of minor forest products such as tendu, harra, sal seed and gums. MP is the largest producer of tendu leaves, which is the key raw material used for the production of ‘biddi’. MP accounts for nearly 25 per cent of the total tendu leaf production in India. Sales of forest products generated revenues of $109 million in 2005-06.
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Business Potential of a State
Minerals
The state has rich and vast mineral deposits, which include diamonds, slate, pyrophyllite, diaspore, coal, limestone, copper ore and manganese, among others. Besides, it also has favourable geological and geotectonic settings. Active mining generates revenues of over $118.65 million per annum. MP is the sole producer of diamonds in India. The state has 41.36 per cent of the total national reserves of copper ore. It has the thickest coal seam (135 m) in Asia at the Singrauli coalfi eld in Sidhi district. It is also a major producer of coal, diaspore, pyrophyllite, manganese, dolomite, glass and fire clay. The land parcels in the eastern, southeastern and western belts of MP are rich in various mineral reserves. Most of these are supplied to other states in crude or semi-processed forms for commercial use and further processing. Several mineralbased industries have come up in and around these areas, including cement, thermal power and coal washeries. The mining industry along with the downstream/ allied industries has been the ajor source of employment in the state.
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Business Potential of a State
Key Players
The state has around 1,800 companies and 19 industrial growth centres, which are close to major cities. This makes good social infrastructure accessible to industrial units. There are around 171,000 SSI units that contribute signifi cantly to the economy. These companies not only meet local requirements, but also export a variety of products and services.
ACC Ltd ACC is one of the largest cement manufacturing companies in India, with a production capacity of 16 million tonnes per annum. A pioneer in cement and ready-mix concrete (RMC), it has a countrywide distribution network. In Madhya Pradesh, ACC has a 1.7 million tonnes per annum (MTPA) plant at Kymore and plans to invest $3.3 million to expand its manufacturing capacity of roofing products. This will increase its production from 68,000 tonnes of asbestos roofi ng to 78,000 tonnes. Coca Cola India Coca-Cola India, one of the world’s largest beverage companies, has invested more than $1 billion in India over the past decade. It has a plant at Pilukhedi in Raisen district, near Bhopal, and plans to invest $6.7 million for expanding the operations. Cadbury India Ltd Cadbury India is a subsidiary of Cadbury Schweppes, the world’s largest confectionery and third-largest soft drinks company. Cadbury India, which recorded sales of over $150 million in 2003 and employs nearly 2,000 people, has one of its main production plants at Malanpur near Gwalior.
Nicholas Piramal India Ltd (NPIL) Nicholas Piramal India Ltd (NPIL) is one of India’s leading pharmaceutical and healthcare companies, ranked fourth in domestic formulation sales and second in total domestic pharmaceuticals sales. Its Pithampur plant in Madhya Pradesh is accredited by reputed organizations like Allergan, Novartis, Solvay and VAX. Nicholas Piramal plans to invest $45 million to enhance its research and development activities besides strengthening its manufacturing facilities. Birla Corporation Ltd Birla Corporation Ltd is the flagship company of the MP Birla Group. Its main areas of business are jute, cement, synthetic yarn, calcium carbide industrial gases, PVC coated fabrics, PVC floor coverings, auto trims, healthcare and education. Birla Corporation has joint ventures and collaborations with world leaders like DLW AG of Germany, Rhone Poulenc of France, Swedenbased Ericsson Cables and ABB, GE, Toshiba and AEI Cables.
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Business Potential of a State
Procter & Gamble Procter & Gamble India is one of the fastest growing FMCG companies in India. The company has a turnover of over $200 million and has a high technology detergent manufacturing plant in Raisen district in the state. Eicher Motors Ltd Eicher Motors, part of the $355 million Eicher Group, is a signifi cant player in the Indian automobile industry. It manufactures and markets commercial vehicles with Gross Vehicle Weight (GVW) ranging from 5 to 25 tonnes. It is one of the leading manufacturers of commercial vehicles. The company has a 72-acre manufacturing facility in Pithampur; it has top-of-the line equipment, a robust infrastructure and an annual production capacity of 30,000 vehicles. The company has a world-class R&D centre that has helped it successfully develop a wide range of commercial vehicles including trucks and buses. The company recently invested $22 million for manufacturing heavy commercial vehicles at its Pithampur plant.
‘
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Business Potential of a State
Apart from meeting local requirements, Madhya Pradesh exports a variety of products and services to both developed and developing countries. The details of exports of products surveyed by IIFT which do not include iron, steel, cotton yarn are furnished below: Products Exports (Rs.in Crores) 1344 20 98 30 10 116 170 34 8 10 40 5 17 1000 30 2,927 Export Markets
Soybean Extractions Soya Products Castings Auto Parts Pharmaceuticals Cement Leather Products Computer Software Handicrafts Silk Goods Readymade Garments Medicinal Plants Tendu Leaves/Bidi Diamond Manganese Ore Total
Indonesia, South Korea, Japan, Singapore, Malaysia, China, Iran, Thailand. Saudi Arabia, Turkey, Malaysia, Russia USA, UK, Italy, Middle East USA,Iran, UK, Italy, Middle East Australia, Sri Lanka, USA, UK, Germany, Middle East Nepal, Bangladesh, Bhutan UK,Germany USA, Europe USA, Europe USA, Europe USA, France, Germany, Kuwait, UAE USA, Canada, West Europe, Japan, Indonesia Pakistan, Sri Lanka, UAE, USA USA, Western Europe Japan, China
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Business Potential of a State
Exports indicated in the above table covering 22 products valued at Rs.2,927 crore, represent around 75 per cent of the total exports from the State. It may be seen that soybean extractions, contributing 44 per cent of the total exports, dominate the external sector of the State. Export from the State which is currently valued at Rs.4,000 crore is expected to touch Rs. 14,000 crore by 2005-2006 is given below : Product Soybean Extractions Products Castings, Forgings & Auto Parts Cement Leather Products Pharmaceuticals Computer Software Readymade Garments Silk Goods Handicrafts Forest Products Diamond Manganese Ore IT Enabled Services Cotton Handlooms Total Grand total (incl. Survey products) Exports2005-06 (Rs. in crores) 5000 150 120 200 50 50 60 20 5 150 1200 50 2900 20 10,985 14,000
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Business Potential of a State
Compound Animal” Feed Complex : • • • • • • Soya meal is key raw material in animal feed Presently, India exports because domestic industry does not feed expensive feed to cattle Feed mills require large capacities - 0.2 mn t pa India is a major non - GM soya producer, high demand after EU’s mad cow disease Soya meal price $ 170/ MT; feed $ 800/MT Meal shipped in bulk loose; feed in branded packs, container cargo
Indore SEZ as Trading & Logistics Hub : • • • Most of India’s branded electronic hardware imports are by air- Delhi / Mumbai airport Foreign companies not allowed trading, and appoint for warehousing agents SEZ policy allows FDI, sales to bonded warehouses inside India, defers duty payment till last point, and control of goods
Metallugrical Exports : (complimented with Strategic Offshore Warehousing) • • • • MP has good raw material mix for primary conversion - metallurgy, cement, copper aluminum / hot rolling mills, casting and forging industries Globally, these industries are not necessarily port-located; but they are exported worldwide Trading in these goods is warehouse-to-warehouse, not factory to consumer Stocks need to be close to points of demand
Power Complex : • • • • Power is the most critical input in many of MP’s metallurgy industries SEZ framework is positive for power generation and distribution, (duty-free item) Offers low capital and operational costs for metallurgy, cement, casting and forging, supports the international warehousing concept (offsets storage costs partly) Potentially benefits even non SEZ exporters in state, and other neighbouring states
Granite Semi-Finishing – Stone Park : • • • • • India’s exports : Rs 1200 crore Forms : Polished tiles (55%); Blocks (30%) South India : major exporting region MP has good reserves of important (black and red) variety, lacks processing facilities Mining policy links blocks export to processing capacity, thus negligible export from MP International practice - gang sawing and polishing equipment, relocated from buyer countries (Italy, Taiwan)- long lease, adjusted from exports SEZ model suits MP policy of value added and also lowers investment costs, finance costs
Fine Cotton Yarn, Fabric Complex : • • • India : a competitive player in textiles & garments; India’scompetitiveness in garments will be under pressure Quota exports will end in 2005 (WTO)
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Business Potential of a State
• • •
Small countries will still enjoy duty privileges of RTAs and treaties ; India’s new focus - on fabrics and yarns, which are imported by several small exporting countries Yarn, fabrics processing - a large scale industry, benefits from SEZ policy; facilitates storage of imported fiber (fine cotton); supports clustering of MP’s garment export units as well
Automobile and Automobile Ancillary : • • • • Existing base of local resources to support automobile manufacturing and assembly, can also be integrated with international companies. Indore, Pithampur is an important hub of automobile production. Self sufficient industrial cluster consisting of metallurgical, heavy engineering, metal working and assembly activity. Existing players like Hindustan Motors, Eicher Motors, Bajaj Tempo, Kinetic Engineering along with the potential theme partners like Ford, General Motors, Harley Davidson (USA), Mitsubishi,Suzuki (Japan), Peugeot (French), Benelli Fiat (Italian) can play major role.
Other important planks for SEZ Indore : • • • • • • As a hub for offshore banking units Textile / apparel cluster Electronic / Computer / Hardware Gem and Jewellery / Diamonds Leather and Leather Accessories Pharmaceuticals
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Business Potential of a State
Madhya Pradesh Laghu Udyog Nigam Limited
Sarees Reflects tradition Indian
Kurta
A Traditionally dress Metals
worn
Bell
An exotic tribal art from Bastar and Tikamgarh.. Iron Crafts
Leather
Crafts
Wonderful craft made from real leather
A craft from traditionally extracted Iron from Iron Ore.
Furnishings A state government undertaking, the corporation is devoted to development of small scale and cottage industry. It encourages, promotes and directs their orderly and planned growth. Besides catering to the needs of small and cottage industry, the corporation helps in innovating the latest designs, and market their products. It extends assistance to talented craftsmen and artisans, providing them the much needed encouragement.
Magic with colours, wooden blocks, paint brush and wax.
Running Cloths
Sculpture
Magic of Vegetable dyes.
Unique carvings in Papier Machie and marble dust castings
Wood Carvings
Tradition reflects in teak wood carvings
Carpets
Hand Knotted carpets carrying a culture.
Paintings Scarves Reflection of Cultural Heritage Exotic creation in pure silk and tussar fabric. Jewellery White Metal
Traditionally Crafted Jewellery
Crafts made out of white metal with a shine & glair.
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Business Potential of a State
DOING BUSINESS
Investment Climate Abundance of Natural Resources The state has an abundance of natural resources. The presence of many water bodies in the form of rivers and lakes has positioned it as a leading hydropower generator. Ample irrigation facilities, coupled with favourable geographical and climatic conditions, ensure that agro-based industries flourish in the state. The large forest cover in the state provides scope for development of forest-based industries. Many species of herbs and medicinal plants are found in the state. Other natural resources include mineral deposits, and rare species of plants and animals. Favourable Policies and Incentives Apart from the Concessional Industrial Package, the state offers additional benefits through its Industrial Policy of 2003. The thrust sectors, identified by the state based on the need and potential for development, enjoy added benefits in terms of fiscal and non-fiscal advantages. The policies offer benefits for establishing industries, as well as for expanding existing ones, allocating different incentives to industries based on their size. There are additional benefits for revival and rehabilitation of sick industries in the state as well. The benefits offered include tax exemptions, reimbursements on loans, interest incentives, financial assistance, subsidies and concessions. In addition to common policies, sector-specific policies make automobiles, cement, forest-based industry, tourism, IT/ ITES and agroprocessing ideal industries to invest in. Location Advantage Situated in central India, the state has access to the nation’s leading markets. Madhya Pradesh is also well connected by road, rail and air to all its neighboring states. It offers diverse tourists destinations catering to various segments of tourism such as religious (Bhojpur), eco/ adventure (Panchmari) and heritage (Sanchi, Khajuraho). High literacy rates and developing skills The state has an above average literacy rate and is host to many reputed educational institutes. Over 18,000 technical graduates and 23,000 graduates are added to the workforce each year. Facilities aside, the initiatives taken by the government to develop a talented pool of human resources is providing additional support to industries in terms of skilled manpower.
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Business Potential of a State
Expanding Industrial Infrastructure The state has seen considerable overall development since its inception. This includes the various industrial estates set up in the state. It has incorporated modern technology to plan and implement these projects, and has attempted to provide all necessary facilities to industrial regions. The state has India’s first operational Greenfield SEZ. The cost of land in Madhya Pradesh is one of the lowest in the country. Even central hubs such as Indore and Bhopal fare well against other cities in terms of low cost of land. Apart from basic amenities like water, power, connectivity and transport linkages, industrial estates also have access to leisure, education, health and other service facilities. These estates also have quality manpower at their disposal. OVERALL STATE COMPETITIVENESS The state’s competitiveness has been formulated after considering the various parameters including the opportunities in the types of industries, policy incentives available for the industries and the presence of industrial infrastructure. Attractive policy incentives give Madhya Pradesh an edge over the other states for investment.
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Business Potential of a State
3.0 Findings and Conclusions
ITEMS POPULATION Population ( million ) 1991 66.18 YEAR M.P.
Geographical Area ('000 Sq. Km.)
1991
443
Density ( No. per Sq. Km.)
1991
149
Sex Ratio (Females per 1000 1991 Males) Decennials Growth Rate ( % ) Urban Population ( % ) Schedule Caste Population ( % ) Schedule Tribe Population ( % ) Main workers ( % ) 1981-91 1991 1991 1991 1991
931
26.8 23.2 14.5 23.3 37.7
BIRTH & DEATH RATE ( Registration scheme) Birth Rate ( per 1000 persons ) Death Rate ( per 1000 persons ) 1995(P.) 1995 33.0 11.1
Infants Mortality Rate ( per 1000 1995 live births) INCOME Per Capita Income a. At Current Prices (Q.)Rs. 1994-95 5926
99
b. At Constant Prices(Q.) 1980-81 AGRICULTURE
1994-95
1749
Net irrigated area as percentage of 1991-92 net area sown ( % )
23.8
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Business Potential of a State
Consumption of Fertilizers per hectare of gross cropped area 1993-94 (Kg.) Forest to total Geographical area ( 1992-93 %) ELECTRICITY Per capita consumption electricity ( Kwh. ) of
32
30.5
1996-97
313
Per capita industrial consumption 1996-97 of electricity ( Kwh. )
132
Per capita domestic consumption 1996-97 of electricity ( Kwh. )
50
Electrified villages ( % ) BANK
1996-97
94.37
Number of commercial bank 1995-96 branches per lakh of population
7
Per capita deposits ( Rs. ) Per capita credit ( Rs. ) Credit-Deposit Ratio ( % ) EDUCATION
1995-96 1995-96 1995-96
2364 1350 57.1
Teacher - Student ratio at Primary 1993-94 School level ( % ) LITERACY Male literacy ( % ) Female literacy ( % ) Total literacy ( % ) 1991 1991 1991
1:46
58.4 28.8 44.2
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Business Potential of a State
HEALTH Population per Government 1995-96 hospitals and dispensaries Population served by each bed in Government hospitals and 1995-96 dispensaries Average Rural population served 1995-96 by each primary health centre Average Rural population served 1995-96 by each sub primary health centre Percentage of Villages with water supply to problem villages 1988-89 identified ( % ) TRANSPORT & COMMUNICATION Total roads length per 100 Sq. Km. 1995-96 of area ( Km. ) Surfaced roads length per 100 Sq. 1995-96 Km. of area ( Km. ) Percentage of Villages connected 1987-88 to all weather roads ( % ) Railway route length per 1000 Sq. 1989-90 Km. of area ( Km. ) Population served by per post1993-94 office No. of telephones per 1000 of 1993-94 population Area coverage by Doordarshan ( % April '92 ) 22 17 23.4 13 5901 7 48.1 80711 2610 27616 4343 3.0
Aggriclture & Land Use Pattern : Land Use Pattern ( % ) Area Under Forest Net Area Sown Area Sown More than Once Gross Cropped Area Land not available for Cultivation 1995-96 32.82 44.80 11.92 56.72 9.54
Other un-cultivated Land (Including Permanent Pastures, land under 12.84 miscellaneous tree crops, fallow land etc )
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AGRICULTURE Gross Irrigated Area (000'Hect.) % of Irrigation
1995-96 6178 24.6
Area Under High Yielding Varieties (000' Hect.) Paddy Wheat Maize Jowar Bajra Distribution of Seed ( 000' Qtls.) Distribution of Tonnes)(NPK) Fertiliser (000' 3442 2966 471 814 93 601.23 825.80
Per Hectare Consumption of Fertilser 32.84 (NPK) Area Under Main Crops (000' Hect.) Paddy Wheat Gram Soyabean Rape & Mustard Cotton Average Yield (Kg./Hect.) Paddy Wheat Gram Soyabean Rape & Mustard Cotton 1151 1730 748 1011 843 420 5344 4020 2660 3849 696 514
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4.0 References
The reference in the study and the report writing are as under: Non-web sources State Guide – Madhya Pradesh Population Census of India – 2001 Government Data Web sources Google Search Engine www.wikipedia.org www.mapsofindia.com www.india.gov.in www.india.stat.com www.mpgov.nic.in www.planning.mp.nic.in www.ibef.org
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doc_286633613.pdf
A REPORT
ON
BUSINESS POTENTIAL OF A STATE IN INDIA
( MADHYA PRADESH )
PREPARED BY
JYOTI KAPOOR
BABLU SINGH CHUAHAN
VIRENDER GREWAL
A report submitted in partial fulfillment of the requirements of 2 Year Full Time Post Graduate Programme in Management (PGPM) at
INSTITUTE OF MANAGEMENT AND DEVELOPMENT NEW DELHI
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AKNOWLEDGEMENT
Exchange of ideas generates a new objective to work in a better way. Whenever a person is helped and cooperated by others, his heart is bound to pay gratitude to them. Every work requires some assistance and support, devoid of which nothing could be realized. In completing the Business Potential of a State, we were also looking for help and support from different people & was supported by all. Now, we would like to thank all those people who directly and indirectly helped us in completing this project. we thank our honorable Vice-Chairman Mr. Abhishek Chaudary, IMD, who guided us authentically and provided us every single facility & support. In completion of the project report many times we had to face several dilemma and stress but with the help of our our teachers, guides & friends who guided us with all their knowledge and experience so that we could complete this project before the deadline.
Our cordials thank would go to Mr. D.V Sardana. We are grateful to him for providing all the necessary facilities and for their continuous advice time to time. Now, in the end we would sincerely like to thank to all those people whose contribution is immense but their names couldn’t be mentioned.
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Table of Contents
Project Introduction Purpose Madhya Pradesh - An Introduction Demographic profile Employment distribution across sectors Physical infrastructure Social infrastructure Telecommunications State Policies And Incentives Business Opportunities Textiles Cement Forest Based Industries Minerals Key Players Major Exports Key SEZ themes Madhya Pradesh Laghu Udyog Nigam Ltd. Doing Business . Investment Climate Expanding Industrial Infrastructure Average cost of doing business in the state
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Project Introduction
We were assigned to study any particular state of our a choice and finding various Business opportunities in the state by emphasizing as an Investor with keeping in mind four important following factors in a state. • Regulatory framework • Resources/Input • Incentives to industry • Physical & social infrastructure
Geography
Range at Pachmarhi Madhya Pradesh in Hindi can be translated to Central Province, and it is located in the geographic heart of India. The state straddles the Narmada River, which runs east and west between
the Vindhya and Satpura ranges; these ranges and the Narmada are the traditional boundary between the north and south of India. The state is bordered on the west by Gujarat, on the northwest by Rajasthan, on the northeast by Uttar Pradesh, on the east by Chhattisgarh, and on the south by Maharashtra. Madhya Pradesh comprises several linguistically and culturally distinct regions, including: Malwa: a plateau region in the northwest of the state, north of the Vindhya Range, with its distinct language and culture. Indore is the major city of the region, while Bhopal lies on the edge of Bundelkhand region. Ujjain is a town of historical importance. Nimar (Nemar): the western portion of the Narmada River valley, lying south of the Vindhyas in the southwest portion of the state. Bundelkhand: a region of rolling hills and fertile valleys in the northern part of the state, which slopes down toward the Indo-Gangetic plain to the north. Gwalior is a historic center of the region.
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Chambal: the north-western region. A mountainous region rich in red, soft, and fragile sandstone. The climate is harsh, and the area is known for murderous pirates who were active in hundreds in the late 1900s. Baghelkhand: a hilly region in the northeast of the state, which includes the eastern end of the Vindhya Range. Mahakoshal (Mahakaushal): the southeastern portion of the state, which includes the eastern end of the Narmada river valley and the eastern Satpuras. Jabalpur is the most important city in the region. Central Vindhya and Satpura region. Which has most of the central Narmada river valley and watershed, and has the highest point in the state - Dhupgarh in Pachmarhi.
Rivers
The Bansagar Dam on Sone River
Sharda Temple Maihar
Madhya Pradesh represents great river basins and the watershed of a number of rivers. Catchments of many rivers of India lie in Madhya Pradesh. The Narmada (originating from Amarkantak)
and Tapti (originating from Multai of Betul District) rivers and their basins divide the state in two, with the northern part draining largely into the Ganga basin and the southern part into
the Godavari and Mahanadi systems. The Vindhyas form the southern boundary of the Ganga basin, with the western part of the Ganga basin draining into the Yamuna and the eastern part directly into the Ganga itself. All the rivers, which drain into the Ganga, flow from south to north, with the Chambal, Sipra, Kali Sind, Parbati, Kuno, Sind, Betwa, Dhasan and Ken rivers being the main tributaries of the Yamuna. The land drained by these rivers is agriculturally rich, with the natural vegetation largely consisting of grass and dry deciduous forest types, largely thorny. The eastern part of the Ganga basin consists of the Son, the Tons and the Rihand Rivers, with the Son being the major tributary. This is also the junction point of the Satpura and the Vindhya ranges, with
the Maikal and Kaimur Hills being the fulcrum. The forests here are much richer than the thorn forests of the northwestern part of Madhya Pradesh. The Son is of great significance in that it is the largest tributary going into the Ganga on the south bank and arising out of the hills of Madhya Pradesh rather than from
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the Himalayas. This river and its tributaries contribute the bulk of the monsoon flow into Ganga, because the north bank tributaries are all snow fed. The major tributary of the Ganga, the Son, arises in one of the most important watersheds in India, the Maikal hills around Amarkantak. Three of the great rivers of India, Narmada, Mahanadi and Son, are given birth to by these hills. This is also one of the few ranges in the State having a north south configuration. The Mahanadi itself, together with its tributaries such as Hasdeo, Mand and Kharun flows southeast into Orissa and converts that State into a green rice bowl. The upper Mahanadi catchment contains some of the finest forests in the State, ranging from mixed deciduous to teak, bamboo and Sal. Just as the Mahanadi flows east from the Maikal hills and the Son flows north, the mighty Narmada charts a westerly course from these very hills. The Narmada flows through a rift valley, with the Vindhyas marching along its northern bank and the Satpuras along the southern. Its tributaries include the Banjar, the Tawa, the Machna, the Denwa and the Sonbhardra rivers. Taken in combination with its parallel sister river, the Tapti, which also flows through a rift valley, the Narmada - Tapti systems carry and enormous volume of water and provide drainage for almost a quarter of the land area of Madhya Pradesh. The Satpuras, in the Gawilgarh and Mahadeo Hills, also contain a watershed, which is south facing. The Indrawati, the Wainganga, the Wardha, the Pench, the Kanhan and Penganga rivers, discharge an enormous volume of water into the Godavari system. The Godavari is the lifeline of Andhra Pradesh, but the water which feeds it is a gift of the Central India watershed. Some of the finest subtropical, semi moist forests in India are to be found in the Godavari basin, mainly in the valley of the Indrawati. There are very few virgin forests left in the country, but very fine examples of these are to be found in Bastar area along the Indrawati and in the Kanger valley in Chhattisgarh. The importance of Central India watershed was first noted by Captain Forsyth and remarked upon in his book, "The Highlands of Central India", first published in 1889. This is what he has to state in the introductory chapter to his book, "Yet in the very center of India there exists a considerable region to which the term highlands — is strictly applicable; and in which are enormous peaks and ranges, for which the term mountain would, in any other country, be used. Several of the great rivers of India have their first source in this elevated region. And pour their water into the sea on either side of the peninsula – to the north the Son commingling with the Ganges, to the east the Mahanadi, flowing independently to the Bay of Bengal, to the south some of the principal feeders of the Godavari, and to the west the Narmada and the Tapti taking parallel courses to the Arabian Sea. There are many important multi-state irrigation projects in development, including Godavari River Basin Irrigation Projects.
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Climate
Madhya Pradesh has a subtropical climate. Like most of north India it has a hot dry summer(April-June) followed by monsoon rains (July-September) and a cool and relatively dry winter. The average rainfall is about 137mm. It decreases from east to west. The south-eastern districts have the heaviest rainfall, some places receiving as much as 215mm, while the western and north-western districts receive 10mm or less.
Flora and fauna Forest
Mixed forests at Amarkantak Madhya Pradesh is endowed with rich and diverse forest resources. Lying between lat. 21°04'N and long. 74°02' and 82°49' E, it is a reservoir of biodiversity. The geographical area of the state is 308,144 km² which constitutes 9.38% of the land area of the country. The forest area of the state is 95,221 km² constituting 31% of the geographical area of the state and 12.44% of the forest area of the country. Legally this area has been classified into "Reserved Forest, Protected Forest and Unclassified Forest", which constitute 61.7%, 37.4% and 0.9% of the forest area respectively. Per capita forest area is 2,400 m² as against the national average of 700 m² Central, eastern and southern parts of the state are rich, whereas northern and western parts are deficient in forest. Variability inclimatic and edaphic conditions brings about significant difference in the forest types of the state. There are four important forest types viz. Tropical Moist, Tropical Dry, Tropical Thorn , Subtropical broadleaved Hill forests. The forest area can also be classified based on the composition of forest and terrain of the area. Based on composition, there are three important forest formations namely Teak forest , Sal forest and Miscellaneous
Forests. Bamboo bearing areas are widely distributed in the state. To obviate pressure on the natural forests , plantations have been undertaken in forest and non forest areas to supplement the availability of fuel wood , small timber , fodder etc. MP lost a good amount of forest recently when Chattisgarh was carved out of it, as that region was the richest reserve of forrests in MP. The total growing stock (volume of timber / wood) is 50,000,000 m³ valued worth Rs 2.5 lakh Crores.
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Natural areas
Bandhavgarh National Park Madhya Pradesh is home to several National Parks, including Bandhavgarh National Park, Kanha National Park, Satpura National Park, Sanjay National Park, Madhav National Park, Van Vihar National Park, Mandla Plant Fossils National Park, Panna National Park, and Pench National Park, Madhya Pradesh. There are also a number of natural preserves, including Amarkantak, Bagh Caves, Bhedaghat, Bori Natural Reserve, Ken Gharial, Ghatigaon, Kuno Palpur, Narwar, Chambal, Kukdeshwar, Narsinghgarh, Nora Dehi, Pachmarhi, Panpatha, Shikarganj, Patalkot [1]and Tamia.
Government and politics Madhya Pradesh has a 230-seat state Legislative Assembly. The state also sends 40 members to the Parliament of India: 29 are elected to the Lok Sabha (Lower House) and 11 to theRajya Sabha (Upper House). The dominant political parties in the state are the Bharatiya Janata Party and the Indian National Congress. Unlike many of its neighbours, Madhya Pradesh has largely a two-party system with small or regional parties not having had much success in recent elections. In the November 2003 state elections, the BJP won an absolute majority of 173 seats, defeating the governing Congress who won just 38 seats. Other parties in the state legislature include the Samajwadi Party with 7 seats. The current chief minister is Shivraj Singh Chauhan, who succeeded Babulal Gaur and Uma Bharti. Before the BJP won in 2003, the longtime Congress Chief Minister was Digvijay Singh. In the 2004 Indian General Election the BJP swept the state by winning 25 of the 29 seats, while the Congress won the remaining four.
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Madhya
Pradesh
state
is
made
up
of
50
districts,
which
are
grouped
into
ten
divisions: Bhopal, Chambal, Gwalior, Indore, Jabalpur, Rewa, Sagar and Ujjain.Shahdol Division,Narmdapuram Division Districts: Anuppur, Alirajpur, Ashoknagar, Balaghat, Barwani, Betul, Bhind, Bhopal, Burhanpur, Chhatarpu r, Chhindwara, Damoh, Datia, Dewas, Dhar, Dindori, Guna, Gwalior, Harda,Hoshangabad, Indore, Jabalp ur, Jhabua, Katni, Khandwa, Khargone, Mandla, Mandsaur, Morena, Narsinghpur, Neemuch, Panna, Rai sen, Rajgarh, Ratlam, Rewa, Sagar, Satna, Sehore,Seoni, Shahdol, Shajapur, Sheopur, Shivpuri, Sidhi, Singrauli, Tikamgarh, Ujjain, Umaria, Vidisha.
Purpose & Scope of Study
This project and analysis is a part of the two years MBA program, and is to be submitted to the institute. But more importantly it is aimed at our individual betterment, and through this project we get the platform to know about different states and their business potential, their strengths and weaknesses, from an investors’ point of view. After our research we came across many facts which are very important to know as an investor and as a management student also.
We got here a vast scope of study. In this report we have tried to include everything we could, based on the scope we had, such as basic facts about Madhya Pradesh, its’ business potential, economic status, leading industries, and many other details.
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Sources of Data
The data collected for the purpose of study has been via various sources on reliable grounds. The major sources are mentioned here below:
Non-web sources State Guide – Madhya Pradesh Population Census of India – 2001 Government Data Web sources Google Search Engine www.wikipedia.org www.mapsofindia.com www.india.gov.in www.india.stat.com www.mpgov.nic.in www.planning.mp.nic.in
Limitations of Study
This project gave us chance to know about the state of Madhya Pradesh and its business potential but it has its own limiting factors. The time period provided to us is one of those. In a very short period of time, we could not collect the whole data and look into the minute details of the business potential of the state. Further there is no guarantee that the project will be of significant help in the near future as the business potential of a state is a subject to change. What holds true now may become obsolete in the near future.
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Madhya Pradesh as its name implies, lies in the heart of India. It covers an area of 4,43,406 sq. km, making it the biggest state in the country, bordering seven other states - Uttar Pradesh, Bihar, Orissa, Andhra Pradesh, Maharashtra, Gujarat and Rajasthan. Madhya Pradesh consists largely of a plateau streaked with the hill ranges of the Vindhyas and the Satpuras with the Chhattisgarh plains to the east. The hills give rise to the main river systems - the Narmada and the Tapti, running from east to west, and the Chambal, Sone, Betwa, Mahanadi, and the Indravati west to east. Intersected by these meandering rivers and dotted with hills and lakes, the state has a varied natural setting of great beauty. Madhya Pradesh, as the Modern state, came into being in 1956, its cultural heritage is ancient and chequered. Innumerable monuments, exquisitely carved temples, stupas, forts and palaces on hilltops, raise in the visitor's mind visions of empires and kingdoms, of great warriors and builders, poets and musicians, saints and philosophers; of Hinduism, Buddhism, Jainism and Islam.. India's immortal poet-dramatist Kalidasa and the great musician of the Mughal court, Tansen, were from these parts. One third of the state is forested and offers a unique and exciting panorama of wildlife. In the national parks of Kanha, Bandhavgarh, Shivpuri and many others one has the rare opportunity to see the tiger, as such, Madhya Pradesh is often referred to as the Tiger state of India. A wide variety of deer, antelope and bison are also the attractions of these parks. Customs and beliefs in each area have added colour to the fairs and festivals. Dussehra in Bastar; Shivratri in Khajuraho, Bhojpur, Pachmarhi and Ujjain; Ramnaumi in Chitrakoot and Orchha, Bhagoriya in Jhabua and the annual festival of dances at Khajuraho are events for the tourists to remember. The Malwa Festival in Indore, Mandu and Ujjain, and the Pachmarhi Festival bring alive the rich folk and tribal culture of the state in colourful celebrations.
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A monumental splendor In the light and shadow of stone is writ the history of empires and kingdoms, warriors and builders, saints and philosophers. A giant fort of Gwalior evokes memories of a momentous past. Orchha.. where a legacy of temples and forts touches life with a medieval wand. Mandu recalls the time when the Afghans marched in and crafted its stone in a 'City of Joy'.At Khajuraho , there is poetry in stone created by warrior race of Chandella Rajputs. The oldest Buddhist shrines at Sanchi reflect the serenity and glory of Ashokan times. Sanctuary of a hundred gods Exquisite temples. Enchanting mosques. Bathing ghats sanctified with faith. Steeped in divinity, the holy shrines of Madhya Pradesh reflect the triumph of tolerance. Pilgrims come in endless eddies to venerate the gods at Ujjain, Omkareshwar and Maheshwar, the abodes of peace and tranquillity. To pay homage at the awe-inspiring mosque at Bhopal. And to seek solace at Chitrakoot - the legendary birthplace of Brahama, Vishnu and Mahesh, where Ram sought shelter during the long years of exile. A tryst with adventure Kipling country. Where the tiger prowls. And the barasingha and the spotted deer, the wild boar and gaur roam free. The bamboo and sal forests of Kanha, Shivpuri, Panna & Bandhavgarh are teeming with all kinds of wildlife and many hundred species of birds. A colourful tradition Festival follows festival in a zestful celebration of life. Dusshera at Bastar. Simhastha at Ujjain. Ramnaumi at Chitrakoot. Bhagoriya at Jhabua. And the annual festival of dances at Khajuraho. Craftsmen keep alive a vibrant tradition that goes back many hundred years. Handwoven brocades of Chanderi and Maheshwar, the Kosa silk of Raigarh, leather toys, exquisitely wrought bell-metal...there's a whole treasury of handicrafts. Come close to nature Bridal-paths lead to tranquil retreats, sought in the past by poets and saints. Hills and ravines beckon the adventurous. Nestling in the plateau, girdled by hills, are many verdant jewels ... Pachmarhi,Amarkantak, Chitrakoot & Marble Rocks of Bhedaghat. Azure waterfalls, emerald forest glades, rocks and cliffs in a myriad shades. Here is nature in all its splendour, its blissful solitude. Access to State • Railways: Trunk Rail route connecting nothern India passes through Madhya Pradesh. Main junctions in the state are Bhopal, Bilaspur, Bina, Gwalior, Indore, Itarsi, Jabalpur, Katni, Ratlam, Ujjain & Khandwa. Aviation: Major airports linking Delhi, Bombay, Varanasi & Nagpur are Bhopal, Raipur, Indore, Khajuraho & Gwalior. Stations linked by Vayudoot are Bhopal, Khajuraho, Stana, Rewa, Guna,Indore, Bilaspur, Raipur, Jagdalpur & Jabalpur. Bhopal is also connected to Jaipur & Nagpur by Vayudoot.
•
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State Demographics Population The population density is 196 persons per sq km, compared to the all-India average of 313 persons per sq km. The state has an urban population of 15.99 million and rural population of 44.33million. The ratio of rural to urban population is 74:26. Out of the total population, 31.44 million are males and 28.9 million females. The sex ratio stands at 920 females per 1,000 males as against the all-India average of 933 females per 1,000 males. The demographic scenario is still characterised by high birth and death rates. In 2005, the crude birth rate in the state was 29.4 as against the all-India average of 23.8, whereas the crude death rate was 9.0 as against the all-India average of 7.6. With a total area of 308,000 sq km, Madhya Pradesh is divided into 48 districts, nine commissioner divisions, 272 tehsils and 313 community development blocks, including 89 tribal development blocks. Literacy rate The literacy rate in 2001 was 64.1 per cent, as against 64.8 percent at the national level. The female literacy rate (50.3 per cent) was lower as compared to the male literacy rate (76.1 per cent); the all-India literacy rate for males was 75.3 and 53.7 per cent for females. The rural and urban literacy rate in the state was 57.8 and 79.4 per cent, respectively, against 58.7 per cent and 79.9 percent, respectively, at the national level. Economic Growth Trends Gross State Domestic Product The Net State Domestic Product (NSDP) of Madhya Pradesh at current prices in 2004-05 was $9.8 billion.
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Per Capita Income The per capita income as approximated from the per capita GSDP is a vital indicator of the standard of living. The per capita income in Madhya Pradesh stood at $369 in 2004-05.
Sectoral Contribution to GSDP The sectoral composition clearly indicates that the economy is gradually shifting from the primary sector to secondary (industry) and tertiary (service) sectors. The contribution of the primary sector to the total NSDP fell drastically from 45.7 per cent in 1993-94 to 35.94 per cent in 2005-06. This is mainly attributed to lower growth in agriculture, including animal husbandry and forestry sub-sectors. Due to uncertainties related to monsoons in a largely rain-fed area, and due to faster growth in the industry and service sectors, the contribution of agriculture (including animal husbandry) has come down from 39.98 percent to 28.42 per cent and that of the forestry sector from 2.85 per cent to 2.62 per cent during the last decade.
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INFRASTRUCTURE
Physical Infrastructure Transportation Roads Roads carry 80 per cent of the goods and passenger traffic in Madhya Pradesh. Hence, systematic development of the road network is a pre-requisite for the overall development of the state. The total length of roads spanning MP is 67,600 km. About 5,200 km of national highways (NH) run through the state. The road network provides convenient linkages to ports on the west coast, including Kandla and Jawahar Nehru Port Trust. There are 18 national highways in the state, including trunk routes of DelhiMumbai, Delhi-Chennai, Delhi-Bangalore and Delhi-Hyderabad. The total length of state highways (SH) is 9,885 km.Under the Madhya Pradesh State Road Sector Development Programme funded by the Asian Development Bank, 1,750 km of state roads were also upgraded by 2006 at a cost of $150 million. The Madhya Pradesh government has accorded high priority to improve the road infrastructure and has been successful in attracting private sector participation (PSP) in the development of highways. It has constructed 17 bridges and bypasses to four of its cities through PSP. Maintenance of three state highways has been outsourced to the private sector. Currently, IJM Corporation of Malaysia is implementing two SH projects totalling 380 km with an investment of $50 million. Registered Vehicles The number of registered vehicles rose to 4.6 million in 2005-06. The highest increase has been in the number of motorcycles, scooters and mopeds in the Tenth Plan period (2002-2007). The number of commercial vehicles like taxi cabs and three wheelers, buses and trucks increased substantially during this period. There were 500,000 such vehicles in 2005-06, constituting 10.83 per cent of the total registered vehicles Railways The state is well connected with the rest of India through a vast railway network. Almost 425 trains pass through the state daily, with Bhopal, the state capital, alone accounting for 175. The significant presence of mineral-based industries in the state and availability of effi cient railway links is critical to fully exploit the potential. The total length of the railway network in Madhya Pradesh is 5,992 km. Of this, almost 1,880 km is electrifi ed. Currently, railway upgradation projects include adding 1,151 km of railway lines at a cost of $460 million and implementing a major track modernisation programme to convert 285 km of existing metre gauge routes to broad gauge at a cost of $112 million. The completion of these projects will further strengthen the railway network in the state.
Airports To provide a boost to the tourism sector, the state aims at positioning air transport as a reliable all-weather, low-cost transport option. The state has fi ve operational airports and 25 airstrips with regular services. There are convenient fl ights from Delhi and Mumbai to Bhopal, Jabalpur, Gwalior, Indore and Khajuraho. Indore airport has the capability to handle international cargo. An international airport is being proposed for Bhopal.
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Water Supply The state has several major rivers including Mahi, Narmada, Tapti, Chambal, Betwa, Wainganga, Ken, Sindh and Pench, which offer 56.85 MAF (million acre feet) of water. Of this, 69.74 per cent has the potential to be harnessed for irrigation purposes. Besides, 23.55 MAF of ground water is also available, of which 50 per cent can be utilised for irrigation purposes. The net irrigated area in the state in 2005-2006 was 5.68 million ha, which was 37.69 per cent of the net area sown. The state has developed an irrigation potential of 2.4 million ha; the utilisation, however, is only about 50 per cent. Besides this, the Narmada Valley Development Authority (NVDA) has developed a potential of 230,000 ha. The Rural Development and Agriculture departments are also contributing to water harvesting and creation of irrigation potential
State policies
Power The installed capacity of the Madhya Pradesh State Electricity Board (MPSEB) as on March 31, 2006 was 2,990.45 MW. Further, the state has a share of 1,665.85 MW in Central Sector Projects and additional allocation of 50 MW is available from Eastern Region Electricity Board (EREB). Apart from the above, 1,000 MW from Indira Sagar HEP and 712.5 MW from Sardar Sarovar HEP (Interstate) is also available. A total capacity of 1,094 MW is likely to be added from the state sector, Narmada Projects and the central sector by March 2007, resulting in a total installed capacity of 3,570.45 MW. Thermal energy accounts for 95.66 per cent of Madhya Pradesh’s electricity generation capacity, and the rest is based on hydel generation. On a per capita basis, electricity consumption in Madhya Pradesh stands at 352 kWh per annum, close to the national average of 355 kWh per annum. Various electricity projects under implementation in the state aggregate to 790 MW. The percentage of villages electrified to total inhabited villages was 97.43 per cent as on 31st March 2006. There were 1.34 million pump-sets and tube-wells in 2005-06.
Social Infrastructure Education In recent years, Madhya Pradesh has taken concerted initiatives to develop the social infrastructure. It ranks 12th on the Human Development Index and its improved ranking can be attributed to the thrust on social development through focus on rural development and self-employment schemes. Literacy levels in the state have improved from 44.2 per cent in 1991 to the current level of 64.1 per cent. Madhya Pradesh’s education network consists of nine universities, over 250 colleges, 87,000 primary and 8,500 secondary schools. The state has 45 engineering colleges, over 200 technical training institutes, six medical colleges and 43 management institutes, including one of the six Indian Institutes of Management (IIM) at Indore. Other national institutes in the state include the Indian Institute of Forest Management, the Indian Institute of Hotel Management and International Institute of Professional Studies at Indore.
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Health
Health Infrastructure in Public & Private Sector The state government has launched several welfare and health care programmes to improve the overall health standing of the state. In line with the National Health Policy goal of Health for All, the state has formulated strategies for the development of the three-tier health infrastructure facilities. Besides these, there are three private sector medical colleges and 11 dental colleges. The state has been effectively implementing programmes of reproductive and child health along with other national programmes. Health care in the public sector: • 54 civil hospitals and 92 dispensaries • 48 district hospitals, 267 community health centres. • 1,152 primary health centres. • 313 rural and 96 urban family welfare centres. • 6 T-B hospitals and 8,835 sub-health centres, along with facilities of Indian System of Medicine.
Telecommunications
Madhya Pradesh has a well-developed telecommunication network, with 2,791 telephone exchanges operating in the state. There were 8,335 post offi ces in 2005-06, each serving a population of 7,951.
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Business Potential of a State
Industrial Infrastructure
The State Government, through the Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd (MPAKVN) scheme, has identifi ed several industrial clusters. Many industrial giants have their establishments in these areas; however, 44 per cent of the developed area is still untapped and open for investment. BHOPAL AKVN • Area Developed: 1,330 hectares • Allotted: 618 hectares • Units established: 286 • Major groups: HEG, Crompton Greaves, P&G, Godrej, Lupin, IFB, Oswal, Nahar • Special Infrastructure: ICD, Food Park GWALIOR AKVN • Area Developed: 2,262 hectares • Allotted: 800 hectares • Units established: 326 • Major Groups: JK, Surya Roshini, Godrej, Grasim, Cadbury,Hotline, Crompton Greaves • Special Infrastructure: ICD, Food Park JABALPUR AKVN • Area Developed: 790 hectares • Allotted: 125 hectares • Units established: 52 • Major Groups: Raymond, Hindustan Petroleum, PBM, Ayur • Special Infrastructure: Stone Park, Food Park REWA AKVN • Area Developed: 273 hectares • Allotted: 115 hectares • Units established: 121 • Major Groups: Birla, Jaypee • Special Infrastructure: Integrated infrastructure development centres (IIDC) INDORE AKVN • Area Developed: 2,492 hectares • Allotted: 1,431 hectares • Units established: 575 • Major Groups: Tata, Ranbaxy, Eicher, Bridgestone, Hindustan Motors, Kinetic, SRF, S Kumar’s, Gajra, Nicholas Piramal, Indorama, IPCA, Bhilwara • Special Infrastructure: SEZ, Crystal IT Park, Food Park, Apparel Park.
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Business Potential of a State
STATE POLICIES AND INCENTIVES
The Government of Madhya Pradesh recognises the need for faster economic development. Its strategy for encouraging investment and achieving higher levels of economic development hinges on the following elements: • Economic development across all sectors • Balance in both economic and social spheres • Focus on physical connectivity, virtual connectivity and social connectivity • Focus on industries other than those where it can leverage its abundant natural resources • Development of industrial infrastructure Growth Oriented Concessions • • • • • Sales/Commercial Tax exemption upto 250% of capital investment in fixed assets for a period of 7 years or deferment upto 300% for a period of 9 years. No capping on quantum of tax concessions for Thrust Sector industries having at least Rs. 1 crore investment in plant & machinery Units set up in 'No Industry Blocks' to get same concessions as units in category 'C' districts. Additional investment on expansion by existing units is eligible for commercial tax concessions as available to new units Additional concessions are available for certain categories of units : Those in MPAKVN Growth Centres. o Units set up by women entrepreneurs, SC & STs and OBCs. o New units in cooperative sector with plant and machinery investment of at least Rs. l crore and membership of at least l00 persons. o l00% EOUs. o Units being set up by NRIs with investment of at least Rs. 2 crores and NRI investment at least 50% of promoter's equity.
Tax Concessions Exemption from Sales/Commercial Category of the tax OR District Maximum Eligibility amount of Period benefit Advanced 125 % 3 years Backward A 150 % 5 years 200 % 6 years B 250 % 7 years C
Deferment from Payment of Sales / Commercial tax Maximum Eligibility amount of Period benefit 175 % 4 years 200 % 7 years 250 % 8 years 300 % 9 years
Maximum benefit is limited to percentage of capital investment in fixed assets. There is no capping on quantum of tax concessions for Thrust Sector industries with at least Rs. one crore investment in plant & machinery • • • Units set-up in "No Industry Blocks" in any district of the State will get the same commercial tax concessions as those set-up in category 'C' districts Concessions are available on finished products, by-products, waste products, raw materials, incidental goods and packing material. Payment of tax is deferred for a period of five years.
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Business Po otential of a State e
Entry Tax Industrial Units to exempt from payment o entry tax o raw mater o of on rial, incidenta and capital al good for 5 years from the date of first purchase. Such concessions are available for 11 years ds s e s in ca of units se up by NRIs and 100 % E ase et s EOU's Additional Co A oncessions Spec cial concessi ions in terms of exemptio s ons or defer rment are fur rther availabl for certain le n categories. A un can get spe nit ecial concess sions upto an additional 5 y years. Pa articulars No Industry Blo in categor 'C' districts o ock ry Additional A Concession C Period P 1 Year
Un in Madhy Pradesh A nits ya Audhyogik Ken ndra Vikas Growth 2 years Nig gam (MPAKV VN) Ce entres Un nits set u up by women entrepreneurs, pe ersons belong ging to scheduled castes, scheduled 1 year trib besand backw ward classes Ne ew industria units in cooperative sector, al wit investment of at least Rs. one crore in th t pla & machinery and hav ant ving a membe ership of at lea one hundr persons ast red 10 00% Export Oriented Units s Co ommercial Ta ax En Tax ntry 2 Years 8 Years
**U Units being set up by N NRIs with inv vestment of a atleast Rs. tw crores and NRI investm wo ment being a atleast 50% of promoter f eq quity can also avail similar concessions) ). Addi itional invest tment on exp pansion by existing units will be eligible for com s mmercial tax x conc cessions Ad as available to new units . This facility i available to units with in a o is o nvestments of f more than Rs.10 lakhs and is c e conditional on extent of ad n dditional inves stment being made. The new policy contains m many other s special incen ntive packag ges. For larg ger projects, custo omized incen ntive packages can be deve eloped. Enhanced Po E ower Availibility All p possible step are being taken to redu both the quantitative and qualitativ shortfall in ps uce ve n the s supply of pow wer. Here too the private sector is to b greatly en o be ncouraged to participate in n incre easing the generation capa acity. • • Grant permission with 45 days to entrepreneu for captive generating units upto 25 hin o urs e 5 MW capa acity For units of higher cap pacity, permis ssion from Ce entral Electrici Authority is necessary ity s
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Business Po otential of a State e
• • •
New indu ustries to be given a po e ower connect tion within 3 days of c 30 completing all formalitie and comple es etion of line ex xtension work k. l00% EOUs and conti inuous process units to be exempted f e from power c cuts as far as s possible. Special fa acilities for en ntrepreneurs setting up po ower units ba ased on hydro (upto 3 MW o W capacity) or non-conve entional sourc of energy ces y Power Generation n
Incentives For (Thr rough Non-co onventional Sources of E Energy)
Any organisation installing a p power generat ting unit base on non-con ed nventional en nergy sources s like m mini-micro hy ydel projects, wind energy, bio-energy, s , solar energy etc. in Madhy Pradesh is ya s eligib for incentives briefly ex ble xplained here The unit may be set up in the private sector or as e. e s a joint sector project. The highlights of the scheme a as follows are s: • • • • • • • No restriction on gen neration capa acity except mini-micro hy ydel projects upto 3 MW s W capacity Power may be used a the point of generation o at any othe place by th generating at f or er he g party or it may be sold to M P Elec t d ctricity Board @ Rs. 2.25 p unit or to a third party per. o y (on mutua agreed ra ally ates) provided it is already a H.T consum of the Bo d mer oard. Power may be wheele from the p ed point of gener ration to any other place fo proprietary or y use or for selling to the third party through MPEB transmiss r e B's sion/ distributio system on on n payment of two percen wheeling charges. nt Electricity duty exemption for five ye y ears Demand - cut up to 30 percent of th installed ca 0 he apacity of non n-conventiona energy unit al t if the gen nerating party is a consum of MPEB and establis y mer shes the Non-conventional unit for its own use s The trans smission/distr ribution lines and equipm ment required till the near rest grid substation will be maintain by MPEB at cost, but w need to be provided by the party. ned B will y Governm ment land will be given on lease to th party. In c n he case of non-availability of f governme land, private land will be acquired b the govern ent by nment and made available e to the par at the acquisition cost rty
Sales Tax Ben nefits (on p power projec using no cts on-conventional resource es) • • Plant and Machinery installed for generation of power shall be exempte from State d f l ed e sales tax The gene erating party or any of its industrial uni or the third party user will get sales its d s tax exem mption or defe erment or com mposite benef on goods m fit manufactured and sold up d p to the eligible investm ment on the non-convent tional power generation s system for a maximum period of s years from the date of commencem m six m f ment of gene eration at the e non-conv ventional pow generatio system o the date o which the cumulative wer on or on e e quantum is achieved, w whichever is earlier. Under the scheme of sales tax de e eferment or composite ben nefit, the amo ount deferred d will be re ecovered in e equal annual installments beginning fro the next f om financial year r after the unit has exha austed its eligible amount.
•
Such power gene h erating units w be treated as industrie and all the concessions available to will es e s o new industrial uni will be app its plicable.
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Business Potential of a State
Special Subsidies for Small Scale Industries In addition to general tax concessions & other benefits, special subsidies exist for SSIs-
1. Capital Subsidy The following Capital subsidies will be available to the SSIs:Category of District Advanced Backward "A" "B" "C" Growth of MPAKVN Maximum Limit (Ceiling) Rate of Subsidy General Thrust (%age of fixed Capital) Industrial (in Sector lakhs) (in lakhs) 5.0% 1.00 7.5 % 10.0 % 10.0 % Centres 15.0 % 1.50 2.00 2.50 5.00 2.00 2.50 3.00 5.00
2.Interest Subsidy Subsidy amounting to 4% of the interest rate subject to a ceiling of Rs.25,000 per annum on the loan taken from Banks/Financial Institutes available to all industrial units set up in backward districts. SC / ST entrepreneurs entitled to 6% subsidy on the interest rate without any ceiling
3.Reimbursment of the Project Report Cost Reimbursement upto 0.5% to 1% of the total expenditure occured on the preparation of the Project report of industries will be provided. Maximum reimbursement will be upto Rs.3.0 lakhs. With a view to attain a double-digit economic growth, the state government has implemented certain policy and regulatory measures. Industrial Promotion Policy 2004 The Industrial Promotion Policy is effective for fi ve years from 1st April 2004.The new policy envisages creating an industry friendly administration, maximising employment opportunities, tackling industrial sickness, rationalising rates of commercial taxes and bolstering private sector participation Objectives of the Policy • To make the state administration industry friendly by simplifying rules and procedures. • To accelerate the pace of industrialisation and make Madhya Pradesh a leading industrial state. • To maximise employment prospects. • To attract NRI and foreign investment by developing worldclass infrastructure. • To create a congenial environment for the development of small, medium and large industries. • To ensure balanced regional development by generating employment in the non-farm sector.
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Business Potential of a State
• To chalk out special packages for removing industrial sickness. • To integrate the different employment-oriented schemes to provide employment opportunities on a sustainable basis.
IT Policy – 2006
The state government aims to transform MP from a resource based to a knowledge-based economy and improve the life of the common man by leveraging the strengths of e-Governance. Increased investment in the sector would enable educated youth to contribute to development and create a pool of highly skilled professionals.
Biotechnology Policy – 2003
• Conservation of the state’s biodiversity and the sustainable use of its biotic resources. • Production of high-yielding, drought and pest-resistant seeds for agriculture and horticulture crops suited to different agro-climatic zones. • Improvement of the quality of livestock and poultry, especially breeds indigenous to the state. • Enhancement of the productive potential of the aquatic ecosystem. • Promotion and cultivation of medicinal and aromatic plants and their processing and value-addition. • Production of cost-effective drugs that help counter diseases common in the tropical and sub-tropical regions. • Promote environmentally safe technologies for pollution abatement, especially treatment of urban waste and industrial effluents. • Afforestation, especially for the quick revival of species, which have shown a tendency to decline.
Tourism Policy
The policy aims at improvement and creation of adequate basic infrastructure. It proposes a special package of incentives for the tourism industry, including exemption from luxury tax, sales tax and entertainment tax for new projects for 10 years. It also designates 25 tourist circuits for commercial tax exemption for tourist vehicles.
Special incentives offered to new and existing businesses
• Special package for mega projects on project-to-project basis by apex level investment promotion empowered committee headed by the chief minister. • Industrial investment promotion assistance of 75 per cent of commercial tax for 3-10 years. • Concessional registration charges and stamp duty exemption for Term Loans. • Interest subsidy on term loans for fi ve years at three per cent to fi ve per cent. • For thrust sector industries, 25 per cent capital subsidy would be provided up to a maximum of $56,000. • Land on 75 per cent concessional rate for mega projects limited to $4.4 million. • Entry tax exemption for fi ve years. • Electricity duty exemption for fi ve years on captive power generation. • 15 per cent capital subsidy to SSI units up to $33,000 in backward areas. • Infrastructure grant up to $220,000 for developing private sector industrial parks. • Partial reimbursement for Project report, ISO Certification Patent and Technology Purchase cost.
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Business Potential of a State
BUSINESS OPPORTUNITIES
Madhya Pradesh is an emerging industrial powerhouse, home to around 1,800 companies and 19 industrial growth centres (located across 7,147 ha) that are close to major cities. This makes good social infrastructure accessible to industrial units. There are around 171,000 SSI units that contribute significantly to the economy. MNCs like Cadbury, Bridgestone, Unilever, Coca Cola and renowned Indian companies like Ranbaxy, Tata, Grasim, Hindustan Motors, Eicher, Kinetic, Hotline, Raymond’s, Lupin, Crompton Greaves, Surya Roshni, Nahar Spinning, Anant Spinning, Godrej and HEG have their presence in Madhya Pradesh. These companies not only meet local requirements, but also export a variety of products and services to both developed and developing countries.
Attractive Sectors
Auto & Auto Components The size of the auto component industry in the state is $306 million. Sixty per cent of the auto industry in Madhya Pradesh is dominated by auto component players. The state has developed a 5,000-ha industrial cluster at Pithampur, which provides readily available infrastructure for companies willing to set up manufacturing facilities. The Government of India has sanctioned $11 million for an auto cluster in the Pithampur industrial area. Textiles A large number of cotton textile mills are clustered around Indore, Ujjain and Burhapur. Major textile players are Bhilwaras, Indo-Rama, Bhaskar, Oswals, Parasrampuria, Maikal and S Kumar’s. The state government has also created Apparel Parks to support the industry. Madhya Pradesh is poised to emerge as a leading textile state because of its cluster development initiatives. The clusters also have signifi cant location advantages. For instance, Malwa near the Indore cluster is a leading cotton-growing belt and a textile hub. The government also provides special fiscal and non-fiscal incentives to apparel units. Cement The state has 3,625.98 million tonnes of limestone reserves spread across the districts of Damoh, Hoshangabad, Mandsaur, Narsinghpur, Rewa, Satna, Panna, Katni, Sagar, Dhar, Khargone,Jhabua, Balaghat, Sidhi and Morena. Seven major cement plants, with an annual installed capacity of 15.97 million tonnes, are operating in the state. The MP State Industrial Development Corporation has estimated that Damoh-Panna area and Bela-Pagra of Rewa have limestone deposits of eight million tonnes and 20 million tonnes, respectively. Considering the availability of raw material, there is a potential of attracting an additional $2.5 billion in investment in this sector. Madhya Pradesh has several locations that offer limestone and coal, providing an excellent opportunity to set-up captive power plants. The industry is expected to witness signifi cant growth as several projects are likely to come up near the limestone reserves. Tourism Tourism has been identifi ed as one of the key drivers of growth by the government. Eight million domestic tourists and 160,000 foreigners visited the state in 2005-06. The government has approved $12.2 million for development of 17 tourist locations across the state and is also making concrete efforts to improve air connectivity to other states. It has taken initiatives to promote eco and adventure tourism and is keen on promoting medical/ herbal tourism in association with private parties.
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Business Potential of a State
Agriculture
Several AEZs (Agri Export Zones) have been set up for facilitating export of specifi c products from a geographically contiguous area. The concentration of AEZs is higher towards the eastern and northeastern parts of the state. Commodities that have immense potential include potato, spices (in the western part), pulses (central part), wheat (western and central) and oranges (southern part). Of the total gross cropped area, 59 per cent is sown in the Kharif season and 41 per cent in the Rabi season. Madhya Pradesh is a leading producer of garlic and accounts for 37 per cent of the total national production. It accounts for 15 per cent of the national production of peas, is the largest producer of soya bean and gram and the second-largest producer of lentils, oilseeds and jowar. The government has initiated the concept of AEZs by addressing all aspects of effi cient agri-practices such as production, R&D, post-harvest management and packaging. Market promotion and development are also being undertaken at the AEZs. The objective is to promote agricultural exports from the state and ensure remunerative returns to the farming community.
IT/ITES Sector
The state has set up an over 24,000 km optic fibre backbone to cover all its 313 developmental blocks across 45 districts. Four Software Technology Parks of India (STPI) units will be set up in Bhopal, Indore and Gwalior. These will be equipped with all modern facilities (including high-speed data connectivity), which are required for smooth operations of software export units. The state boasts of 38 IT engineering colleges and the country’s fi rst Indian Institute of Information Technology and Management (IIITM) at Gwalior. IT players like HCL and Genpact India have shown interest in setting up facilities in the state. Genpact India, which has proposed setting up a $34 million, 7,000-seat BPO facility, has been allotted 50 acres of prime land near the Bhopal airport.
Forest-based Industries
Madhya Pradesh has a forest area of 94,689.38 sq km, constituting nearly 31 per cent of the state’s total land mass. With a share of nearly 13 per cent of the total forest area of the country, MP has the largest forest-covered area among all states. The four key types of forests are tropical moist, tropical dry, tropical thorn and sub-tropical broad-leaved hill forests. Forest-based industries are key contributors to the state’s economy and provide employment to a large part of the population. In 2004-05, forests and logging contributed 2.1 per cent to the SGDP. The total growing stock (volume of timber/ wood) in MP is 50 million cum, valued at $55.5 billion. The average annual production of tendu leaves is around 2.5 million standard bags.MP’s forest reserves are a rich source of timber, fuel wood and bamboo. They are also a key source of minor forest products such as tendu, harra, sal seed and gums. MP is the largest producer of tendu leaves, which is the key raw material used for the production of ‘biddi’. MP accounts for nearly 25 per cent of the total tendu leaf production in India. Sales of forest products generated revenues of $109 million in 2005-06.
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Business Potential of a State
Minerals
The state has rich and vast mineral deposits, which include diamonds, slate, pyrophyllite, diaspore, coal, limestone, copper ore and manganese, among others. Besides, it also has favourable geological and geotectonic settings. Active mining generates revenues of over $118.65 million per annum. MP is the sole producer of diamonds in India. The state has 41.36 per cent of the total national reserves of copper ore. It has the thickest coal seam (135 m) in Asia at the Singrauli coalfi eld in Sidhi district. It is also a major producer of coal, diaspore, pyrophyllite, manganese, dolomite, glass and fire clay. The land parcels in the eastern, southeastern and western belts of MP are rich in various mineral reserves. Most of these are supplied to other states in crude or semi-processed forms for commercial use and further processing. Several mineralbased industries have come up in and around these areas, including cement, thermal power and coal washeries. The mining industry along with the downstream/ allied industries has been the ajor source of employment in the state.
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Business Potential of a State
Key Players
The state has around 1,800 companies and 19 industrial growth centres, which are close to major cities. This makes good social infrastructure accessible to industrial units. There are around 171,000 SSI units that contribute signifi cantly to the economy. These companies not only meet local requirements, but also export a variety of products and services.
ACC Ltd ACC is one of the largest cement manufacturing companies in India, with a production capacity of 16 million tonnes per annum. A pioneer in cement and ready-mix concrete (RMC), it has a countrywide distribution network. In Madhya Pradesh, ACC has a 1.7 million tonnes per annum (MTPA) plant at Kymore and plans to invest $3.3 million to expand its manufacturing capacity of roofing products. This will increase its production from 68,000 tonnes of asbestos roofi ng to 78,000 tonnes. Coca Cola India Coca-Cola India, one of the world’s largest beverage companies, has invested more than $1 billion in India over the past decade. It has a plant at Pilukhedi in Raisen district, near Bhopal, and plans to invest $6.7 million for expanding the operations. Cadbury India Ltd Cadbury India is a subsidiary of Cadbury Schweppes, the world’s largest confectionery and third-largest soft drinks company. Cadbury India, which recorded sales of over $150 million in 2003 and employs nearly 2,000 people, has one of its main production plants at Malanpur near Gwalior.
Nicholas Piramal India Ltd (NPIL) Nicholas Piramal India Ltd (NPIL) is one of India’s leading pharmaceutical and healthcare companies, ranked fourth in domestic formulation sales and second in total domestic pharmaceuticals sales. Its Pithampur plant in Madhya Pradesh is accredited by reputed organizations like Allergan, Novartis, Solvay and VAX. Nicholas Piramal plans to invest $45 million to enhance its research and development activities besides strengthening its manufacturing facilities. Birla Corporation Ltd Birla Corporation Ltd is the flagship company of the MP Birla Group. Its main areas of business are jute, cement, synthetic yarn, calcium carbide industrial gases, PVC coated fabrics, PVC floor coverings, auto trims, healthcare and education. Birla Corporation has joint ventures and collaborations with world leaders like DLW AG of Germany, Rhone Poulenc of France, Swedenbased Ericsson Cables and ABB, GE, Toshiba and AEI Cables.
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Business Potential of a State
Procter & Gamble Procter & Gamble India is one of the fastest growing FMCG companies in India. The company has a turnover of over $200 million and has a high technology detergent manufacturing plant in Raisen district in the state. Eicher Motors Ltd Eicher Motors, part of the $355 million Eicher Group, is a signifi cant player in the Indian automobile industry. It manufactures and markets commercial vehicles with Gross Vehicle Weight (GVW) ranging from 5 to 25 tonnes. It is one of the leading manufacturers of commercial vehicles. The company has a 72-acre manufacturing facility in Pithampur; it has top-of-the line equipment, a robust infrastructure and an annual production capacity of 30,000 vehicles. The company has a world-class R&D centre that has helped it successfully develop a wide range of commercial vehicles including trucks and buses. The company recently invested $22 million for manufacturing heavy commercial vehicles at its Pithampur plant.
‘
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Business Potential of a State
Apart from meeting local requirements, Madhya Pradesh exports a variety of products and services to both developed and developing countries. The details of exports of products surveyed by IIFT which do not include iron, steel, cotton yarn are furnished below: Products Exports (Rs.in Crores) 1344 20 98 30 10 116 170 34 8 10 40 5 17 1000 30 2,927 Export Markets
Soybean Extractions Soya Products Castings Auto Parts Pharmaceuticals Cement Leather Products Computer Software Handicrafts Silk Goods Readymade Garments Medicinal Plants Tendu Leaves/Bidi Diamond Manganese Ore Total
Indonesia, South Korea, Japan, Singapore, Malaysia, China, Iran, Thailand. Saudi Arabia, Turkey, Malaysia, Russia USA, UK, Italy, Middle East USA,Iran, UK, Italy, Middle East Australia, Sri Lanka, USA, UK, Germany, Middle East Nepal, Bangladesh, Bhutan UK,Germany USA, Europe USA, Europe USA, Europe USA, France, Germany, Kuwait, UAE USA, Canada, West Europe, Japan, Indonesia Pakistan, Sri Lanka, UAE, USA USA, Western Europe Japan, China
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Business Potential of a State
Exports indicated in the above table covering 22 products valued at Rs.2,927 crore, represent around 75 per cent of the total exports from the State. It may be seen that soybean extractions, contributing 44 per cent of the total exports, dominate the external sector of the State. Export from the State which is currently valued at Rs.4,000 crore is expected to touch Rs. 14,000 crore by 2005-2006 is given below : Product Soybean Extractions Products Castings, Forgings & Auto Parts Cement Leather Products Pharmaceuticals Computer Software Readymade Garments Silk Goods Handicrafts Forest Products Diamond Manganese Ore IT Enabled Services Cotton Handlooms Total Grand total (incl. Survey products) Exports2005-06 (Rs. in crores) 5000 150 120 200 50 50 60 20 5 150 1200 50 2900 20 10,985 14,000
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Business Potential of a State
Compound Animal” Feed Complex : • • • • • • Soya meal is key raw material in animal feed Presently, India exports because domestic industry does not feed expensive feed to cattle Feed mills require large capacities - 0.2 mn t pa India is a major non - GM soya producer, high demand after EU’s mad cow disease Soya meal price $ 170/ MT; feed $ 800/MT Meal shipped in bulk loose; feed in branded packs, container cargo
Indore SEZ as Trading & Logistics Hub : • • • Most of India’s branded electronic hardware imports are by air- Delhi / Mumbai airport Foreign companies not allowed trading, and appoint for warehousing agents SEZ policy allows FDI, sales to bonded warehouses inside India, defers duty payment till last point, and control of goods
Metallugrical Exports : (complimented with Strategic Offshore Warehousing) • • • • MP has good raw material mix for primary conversion - metallurgy, cement, copper aluminum / hot rolling mills, casting and forging industries Globally, these industries are not necessarily port-located; but they are exported worldwide Trading in these goods is warehouse-to-warehouse, not factory to consumer Stocks need to be close to points of demand
Power Complex : • • • • Power is the most critical input in many of MP’s metallurgy industries SEZ framework is positive for power generation and distribution, (duty-free item) Offers low capital and operational costs for metallurgy, cement, casting and forging, supports the international warehousing concept (offsets storage costs partly) Potentially benefits even non SEZ exporters in state, and other neighbouring states
Granite Semi-Finishing – Stone Park : • • • • • India’s exports : Rs 1200 crore Forms : Polished tiles (55%); Blocks (30%) South India : major exporting region MP has good reserves of important (black and red) variety, lacks processing facilities Mining policy links blocks export to processing capacity, thus negligible export from MP International practice - gang sawing and polishing equipment, relocated from buyer countries (Italy, Taiwan)- long lease, adjusted from exports SEZ model suits MP policy of value added and also lowers investment costs, finance costs
Fine Cotton Yarn, Fabric Complex : • • • India : a competitive player in textiles & garments; India’scompetitiveness in garments will be under pressure Quota exports will end in 2005 (WTO)
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Business Potential of a State
• • •
Small countries will still enjoy duty privileges of RTAs and treaties ; India’s new focus - on fabrics and yarns, which are imported by several small exporting countries Yarn, fabrics processing - a large scale industry, benefits from SEZ policy; facilitates storage of imported fiber (fine cotton); supports clustering of MP’s garment export units as well
Automobile and Automobile Ancillary : • • • • Existing base of local resources to support automobile manufacturing and assembly, can also be integrated with international companies. Indore, Pithampur is an important hub of automobile production. Self sufficient industrial cluster consisting of metallurgical, heavy engineering, metal working and assembly activity. Existing players like Hindustan Motors, Eicher Motors, Bajaj Tempo, Kinetic Engineering along with the potential theme partners like Ford, General Motors, Harley Davidson (USA), Mitsubishi,Suzuki (Japan), Peugeot (French), Benelli Fiat (Italian) can play major role.
Other important planks for SEZ Indore : • • • • • • As a hub for offshore banking units Textile / apparel cluster Electronic / Computer / Hardware Gem and Jewellery / Diamonds Leather and Leather Accessories Pharmaceuticals
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Business Potential of a State
Madhya Pradesh Laghu Udyog Nigam Limited
Sarees Reflects tradition Indian
Kurta
A Traditionally dress Metals
worn
Bell
An exotic tribal art from Bastar and Tikamgarh.. Iron Crafts
Leather
Crafts
Wonderful craft made from real leather
A craft from traditionally extracted Iron from Iron Ore.
Furnishings A state government undertaking, the corporation is devoted to development of small scale and cottage industry. It encourages, promotes and directs their orderly and planned growth. Besides catering to the needs of small and cottage industry, the corporation helps in innovating the latest designs, and market their products. It extends assistance to talented craftsmen and artisans, providing them the much needed encouragement.
Magic with colours, wooden blocks, paint brush and wax.
Running Cloths
Sculpture
Magic of Vegetable dyes.
Unique carvings in Papier Machie and marble dust castings
Wood Carvings
Tradition reflects in teak wood carvings
Carpets
Hand Knotted carpets carrying a culture.
Paintings Scarves Reflection of Cultural Heritage Exotic creation in pure silk and tussar fabric. Jewellery White Metal
Traditionally Crafted Jewellery
Crafts made out of white metal with a shine & glair.
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Business Potential of a State
DOING BUSINESS
Investment Climate Abundance of Natural Resources The state has an abundance of natural resources. The presence of many water bodies in the form of rivers and lakes has positioned it as a leading hydropower generator. Ample irrigation facilities, coupled with favourable geographical and climatic conditions, ensure that agro-based industries flourish in the state. The large forest cover in the state provides scope for development of forest-based industries. Many species of herbs and medicinal plants are found in the state. Other natural resources include mineral deposits, and rare species of plants and animals. Favourable Policies and Incentives Apart from the Concessional Industrial Package, the state offers additional benefits through its Industrial Policy of 2003. The thrust sectors, identified by the state based on the need and potential for development, enjoy added benefits in terms of fiscal and non-fiscal advantages. The policies offer benefits for establishing industries, as well as for expanding existing ones, allocating different incentives to industries based on their size. There are additional benefits for revival and rehabilitation of sick industries in the state as well. The benefits offered include tax exemptions, reimbursements on loans, interest incentives, financial assistance, subsidies and concessions. In addition to common policies, sector-specific policies make automobiles, cement, forest-based industry, tourism, IT/ ITES and agroprocessing ideal industries to invest in. Location Advantage Situated in central India, the state has access to the nation’s leading markets. Madhya Pradesh is also well connected by road, rail and air to all its neighboring states. It offers diverse tourists destinations catering to various segments of tourism such as religious (Bhojpur), eco/ adventure (Panchmari) and heritage (Sanchi, Khajuraho). High literacy rates and developing skills The state has an above average literacy rate and is host to many reputed educational institutes. Over 18,000 technical graduates and 23,000 graduates are added to the workforce each year. Facilities aside, the initiatives taken by the government to develop a talented pool of human resources is providing additional support to industries in terms of skilled manpower.
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Business Potential of a State
Expanding Industrial Infrastructure The state has seen considerable overall development since its inception. This includes the various industrial estates set up in the state. It has incorporated modern technology to plan and implement these projects, and has attempted to provide all necessary facilities to industrial regions. The state has India’s first operational Greenfield SEZ. The cost of land in Madhya Pradesh is one of the lowest in the country. Even central hubs such as Indore and Bhopal fare well against other cities in terms of low cost of land. Apart from basic amenities like water, power, connectivity and transport linkages, industrial estates also have access to leisure, education, health and other service facilities. These estates also have quality manpower at their disposal. OVERALL STATE COMPETITIVENESS The state’s competitiveness has been formulated after considering the various parameters including the opportunities in the types of industries, policy incentives available for the industries and the presence of industrial infrastructure. Attractive policy incentives give Madhya Pradesh an edge over the other states for investment.
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3.0 Findings and Conclusions
ITEMS POPULATION Population ( million ) 1991 66.18 YEAR M.P.
Geographical Area ('000 Sq. Km.)
1991
443
Density ( No. per Sq. Km.)
1991
149
Sex Ratio (Females per 1000 1991 Males) Decennials Growth Rate ( % ) Urban Population ( % ) Schedule Caste Population ( % ) Schedule Tribe Population ( % ) Main workers ( % ) 1981-91 1991 1991 1991 1991
931
26.8 23.2 14.5 23.3 37.7
BIRTH & DEATH RATE ( Registration scheme) Birth Rate ( per 1000 persons ) Death Rate ( per 1000 persons ) 1995(P.) 1995 33.0 11.1
Infants Mortality Rate ( per 1000 1995 live births) INCOME Per Capita Income a. At Current Prices (Q.)Rs. 1994-95 5926
99
b. At Constant Prices(Q.) 1980-81 AGRICULTURE
1994-95
1749
Net irrigated area as percentage of 1991-92 net area sown ( % )
23.8
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Consumption of Fertilizers per hectare of gross cropped area 1993-94 (Kg.) Forest to total Geographical area ( 1992-93 %) ELECTRICITY Per capita consumption electricity ( Kwh. ) of
32
30.5
1996-97
313
Per capita industrial consumption 1996-97 of electricity ( Kwh. )
132
Per capita domestic consumption 1996-97 of electricity ( Kwh. )
50
Electrified villages ( % ) BANK
1996-97
94.37
Number of commercial bank 1995-96 branches per lakh of population
7
Per capita deposits ( Rs. ) Per capita credit ( Rs. ) Credit-Deposit Ratio ( % ) EDUCATION
1995-96 1995-96 1995-96
2364 1350 57.1
Teacher - Student ratio at Primary 1993-94 School level ( % ) LITERACY Male literacy ( % ) Female literacy ( % ) Total literacy ( % ) 1991 1991 1991
1:46
58.4 28.8 44.2
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HEALTH Population per Government 1995-96 hospitals and dispensaries Population served by each bed in Government hospitals and 1995-96 dispensaries Average Rural population served 1995-96 by each primary health centre Average Rural population served 1995-96 by each sub primary health centre Percentage of Villages with water supply to problem villages 1988-89 identified ( % ) TRANSPORT & COMMUNICATION Total roads length per 100 Sq. Km. 1995-96 of area ( Km. ) Surfaced roads length per 100 Sq. 1995-96 Km. of area ( Km. ) Percentage of Villages connected 1987-88 to all weather roads ( % ) Railway route length per 1000 Sq. 1989-90 Km. of area ( Km. ) Population served by per post1993-94 office No. of telephones per 1000 of 1993-94 population Area coverage by Doordarshan ( % April '92 ) 22 17 23.4 13 5901 7 48.1 80711 2610 27616 4343 3.0
Aggriclture & Land Use Pattern : Land Use Pattern ( % ) Area Under Forest Net Area Sown Area Sown More than Once Gross Cropped Area Land not available for Cultivation 1995-96 32.82 44.80 11.92 56.72 9.54
Other un-cultivated Land (Including Permanent Pastures, land under 12.84 miscellaneous tree crops, fallow land etc )
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AGRICULTURE Gross Irrigated Area (000'Hect.) % of Irrigation
1995-96 6178 24.6
Area Under High Yielding Varieties (000' Hect.) Paddy Wheat Maize Jowar Bajra Distribution of Seed ( 000' Qtls.) Distribution of Tonnes)(NPK) Fertiliser (000' 3442 2966 471 814 93 601.23 825.80
Per Hectare Consumption of Fertilser 32.84 (NPK) Area Under Main Crops (000' Hect.) Paddy Wheat Gram Soyabean Rape & Mustard Cotton Average Yield (Kg./Hect.) Paddy Wheat Gram Soyabean Rape & Mustard Cotton 1151 1730 748 1011 843 420 5344 4020 2660 3849 696 514
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4.0 References
The reference in the study and the report writing are as under: Non-web sources State Guide – Madhya Pradesh Population Census of India – 2001 Government Data Web sources Google Search Engine www.wikipedia.org www.mapsofindia.com www.india.gov.in www.india.stat.com www.mpgov.nic.in www.planning.mp.nic.in www.ibef.org
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