2. Overview
Overview Madhya Pradesh (MP) – State that means business
MP is the second largest State in the Country stretching over 308,000 sq kms.
The State is blessed with large mineral resources of coal, diamond, limestone, methane etc.
MP is among the top 4 states of the Country for industrial investments.
Economic Snapshot Madhya Pradesh is emerging as a key growth center for the Country
Per capita GSDP USD 369**
Gross state domestic product (GSDP) USD 23,983.63 Mn**
Manufacturing sector USD 8.5 bn**
Average growth rate 5.5% per annum
(Registered & Unregistered)
Advantage MP Madhya Pradesh has one of the upcoming industrial base in India
Total electricity generation capacity 6,449.25 MW*
The State is centrally located
India’s first greenfield SEZ Indore SEZ
Investor friendly Government policies
Industrial Centers 8
Power Electricity generation capacity at present is 6,449.25 MW and estimated to rise to a surplus in 2008-09
MP is rich in low grade coal suitable for power generation.
Potential of hydro-energy generation.
Installed power capacity (MP’s share)
Hydel Power Generation: 852.7 MW*
Thermal Power Generation: 2,147.5 MW*
2
*Ministry of Power (powermin.nic.in) **Source: Indiastat.com (as on 23 Feb 2006)
3. Enabling Infrastructure
• The State is well connected with the rest
RAILWAY NETWORK
of India with almost 425 trains passing
MP IS CENTRALLY LOCATED AND WELL
through the State on a daily basis. Of
CONNECTED WITH ALL MAJOR CITIES IN INDIA
these 175 trains pass through the State
capital Bhopal alone.
• 25 airstrips.**
• Convenient air links from key Indian
GWALIOR cities like Delhi & Mumbai to Bhopal,
Jabalpur, Gwalior, Indore and
AIRPORTS
Khajuraho.
KHAJURAHO • 5 operational airports.
• Indore airport has the capability of
INDORE BHOPAL
handling international cargo.
JABALPUR
• An international airport proposed in
Bhopal.
• The total length of roads spanning MP is
67,600 kms.**
• National highways of 5,200 kms run
ROAD NETWORK
through the State.*
• 18 National highways including trunk
routes of Delhi-Mumbai, Delhi-
Chennai, Delhi-Bangalore, Delhi-
Hyderabad.
• The total length of State highways in the
State is 9,885 kms.**
• Convenient linkages to western ports i.e.
Kandla Port, Jawahar Nehru Port Trust.
3
*Source: Department of Road Transport & Shipping (morth.nic.in) **Source: www.destinationmadhyapradesh.com
4. Madhya Pradesh: A Preferred Investment Destination
31% of the State under forest Over 2,000 kms of roads India’s 1st operational Offers diverse tourists destinations
cover with a largely unexploited being developed with Greenfield SEZ at Indore catering to various segments of
species of rare, valuable Private Partnership (BOT) tourism such as religious
medicinal- herbal plants (Bhojpur), eco/ adventure
(Panchmari), heritage
(Sanchi, Khajuraho) tourism etc.
Over 100 agricultural farms with Third largest producer of
an area of over 20,000 acres is cement in India*
available on lease to investor
Favourable climatic Various blocks available
conditions for cotton for power, cement, iron
and over 40,000 power- and steel units
looms are driving the
textile industry
Largest producer of pulses Over 18,000 technical
and oilseeds in the Country graduates and 230,000
(~75% of soyabean graduates add to workforce
production) each year
Availability of coal and natural gas Over 144 BCM of coal bed 12 blocks with reserves
(G.A.I.L pipeline) along with support methane reserves available totalling 2,585 million tons
from Government to make investment of coal has been identified
in Thermal Power Plants lucrative
4
*Source: www.mpsidc.org & Brochure: MP Means Business
5. MP: The Right Place with the Right Environment
Savings in Office Space Rates
(A comparison of rates in Central Business Districts)
Fastest mover* in overall DESTINATION MADHYA PRADESH
performance among the
big States in the Country.
Fastest mover in agriculture
Delhi
(740 Kms)
(MPV - 789.5)
Fastest mover in
Ahmedabad Bhopal and Indore have substantial cost
infrastructure development. (570 Kms)
advantages, even when compared to other Tier
(MPV - 220.63)
III and IV cities.
Savings in Land Cost
Ranks 2nd in terms of Kolkata
(1350 Kms) (Estimated Values for Multi-
governance. Mumbai (MPV - 613.19) product SEZs)
(780 Kms)
(MPV - 1000) Pune
(800 Kms)
(MPV - 206.51) Hyderabad
(840 Kms) Key Markets
Ranks 3rd in terms of law & (MPV - 257.9) (Distance From
Bhopal)
order Chennai MPV – Market
Bangalore (1430 Kms) Potential Value
(1400 Kms) (MPV - 362.84)
(MPV - 254.52)
Cost of skilled labour is USD
2.4/day vis-a-vis USD 3.5 –
USD 4.0/day in metros
The cost of land is one of the lowest in the Country.
MP is centrally located. The State is at an easy distance from
Even central hubs such as Indore and Bhopal fare
* Fastest mover is the State where the rate of all the key consumer markets in the Country. well against other cities in terms of low land cost.
improvement between 2003 & 2006 was greater
than that between 1991 & 2003
5
**Source: India Today (September ‘06 Issue) Source: (Reference: RK Swamy) - Distances rounded off
6. Industrial Policy: Catalyst for the Investments
The Government of MP has devised an investor friendly industrial policy,
SPECIAL INCENTIVES
which is aimed at achieving global competitiveness. The policy emphasizes
• Special package for Mega Projects on project basis by apex level
on industrial growth in the state through adopting cluster approach,
investment promotion empowered committee headed by the Chief
establishing specialized infrastructure and offering favourable incentives. Minister.
• Industrial investment promotion assistance – 50% to 75% of commercial
The main thrust of this policy is: tax for 3-10 years
• Concessional registration charges and stamp duty exemption for
• Establishment of a Madhya Pradesh Trade and Investment Term Loans.
Facilitation Corporation which would take decisions about • Interest subsidy on term loan for 5 – years @ 3% to 5%.
rationalization of taxes, facilities of mega projects and other related • For thrust sector industries, 25% capital subsidy would be provided
limiting up to a maximum of USD 56,000
matters.
• Land on 75% concessive rate for Mega Projects limited to USD 4.4
• Enacting an Industrial Facilitation Act and to change the rules of million.
• Entry tax exemption for 5 years.
business with a view to make single window system decisive and result
• 5 years electricity duty exemption on captive power generation
oriented.
• 15% capital subsidy to SSI up to USD 33,000 in backward areas
• Developing infrastructure for supporting the identified industrial • Infrastructure grant up to USD 0.22 million crore for developing private
sector industrial parks
clusters
• Partial reimbursement for Project report, ISO Certification, Patent and
Technology Purchase cost
• Reviving closed down/ sick industrial units by granting special packages.
• Attractive incentive schemes.
CLUSTER APPROACH Crystal IT Park Indore
SPECIALIZED INFRASTRUCTURE
• Indore – Pharmaceutical, Textile, Food Mandsaur, Khargone, Chhindwara,
Processing, IT, Auto Components Food Parks
Hoshagabad, Mandla and Bhind
• Bhopal – Engineering, Biotechnology, Herbal,
IT, Food Processing Stone Park Katni
• Jabalpur – Garment, Mineral, Forest & Herbal, Herbal Park Rewa
Food Processing
Granite Park Chhatarpur
• Gwalior – Electronics, IT, FMCG, Engineering,
Food Processing Life Sciences Project Bhopal
• Rewa – Refractories, Lime Stone, Forest Based
Apparel Park Indore (SEZ)
• Sagar – Mineral Processing
Gems & Jewellery Park Indore
6
7. Doing Business Made Easy Through MPAKVN
In a bid to build a competitive environment; industries and their ancillaries would be promoted in clusters based on the availability of raw materials,
skilled labour and market potential. Under this Industrial Policy through Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd (MPAKVNs)
scheme, the State Government, has identified industrial clusters. Many of the industrial giants have their establishments in these areas, however 44% of
developed area is still untapped and open for investment.
Area Developed: 1,330 Hectares Area Developed: 2,262 Hectares Area Developed: 790 Hectares Area Developed: 273 Hectares
Allotted: 618 Hectares Allotted: 800 Hectares Allotted: 125 Hectares Allotted: 115 Hectares
JABALPUR AKVN
GWALIOR AKVN
BHOPAL AKVN
REWA AKVN
Units established: 286 Units established: 326
Units established: 52 Units established: 121
Major Groups:HEG, Crompton Major Groups: JK, Surya
Major Groups: Raymond, Hindustan Major Groups: Birla, Jaypee
Greaves, P&G, Godrej, Lupin, IFB, Roshini, Godrej, Grasim, Cadbury, Hotl
Petroleum, PBM, Ayur
Oswal, Nahar ine, Crompton Greaves Special Infrastructure: Integrated
Special Infrastructure: ICD, Food Special Infrastructure: ICD, Food Special Infrastructure: Stone Park, infrastructure development centres
Park Park Food Park (IIDC)
Area Developed: 2,492 Hectares
Malanpur, Malanpur
Allotted: 1431 Hectares Phase II, Banmore,
Chainpura,
Siddhgawan,
Units established: 575 Pratappura
INDORE AKVN
Total developed 7,147
Major Groups: Tata, Ranbaxy, Eicher, Rewa, Waidhan area Hectares
Bridgestone, Hindustan Motors, Kinetic, 3,089
Total allotted area
SRF, S Kumars, Gajra, Nicholas Piramal, Mandideep, Hectares
Pillukhedi,
Indorama, IPCA, Bhilwara Mandideep Phase II Total units
Borgaon, Maneri, 1,360
established
Special Infrastructure: SEZ, Crystal IT Pithampur, Kheda, Purena
Dewas, Maksi,
Park, Food Park, Apparel Park Megh Nagar Growth centres 19
7
Source: MPSIDC
9. MP: The Emerging Power
• Madhya Pradesh is an emerging industrial powerhouse of
the country.
• The State houses around 1,800 companies and 19
industrial growth centers (located across 7147 Hectares.)
that are close to major cities. This makes good social
infrastructure accessible to industrial units.
• Further, there are around 171,000 small-scale industries
that contribute significantly to the economy.
• MNCs like Cadbury, Bridgestone, Hindustan Lever, Coke
and renowned Indian companies like Ranbaxy, Tata,
Grasim, Hindustan Motors, Eicher, Kinetic, Hotline,
Raymonds, Lupin, Crompton Greaves, Surya Roshni,
Nahar Spinning, Anant Spinning, Godrej, HEG and
several other big groups have presence in Madhya
Pradesh.
• These companies not only meet local requirements, but
also export a variety of products and services to both
developed and developing countries.
9
10. MP: Attracting Investments
In US$ Million
• MP offers an unparallel locational advantage to companies as they Company Location Investments
incur lower transportation cost for transferring goods to every corner of BORL Bina 1,267
the country. Bina Thermal Bina 542
Few Large & Medium Projects Under Implementation
• Further, cost of basic requirement such as land, water, skilled STI Power Chainpura 261
manpower is less as compared to other states. HEG Ltd. Mandideep 111
• State has peaceful & conducive atmosphere for industrialization, law LG Hotline Malanpur 111
and order situation in the state is under control. Biofill Pharma Pithampur 24
• State also allows the industrial units to have captive power plants to Eicher Group Pithampur 24
produce power as per their requirement. Enbee Pilukhedi 22
JK Industry Banmore 22
• The State Government desires to have a higher rate of economic
development through rapid industrialization. Some of the key Pratibha Syntex Pithampur 19
initiatives taken by government recently include: Hindustan Copper Balaghat 18
Escorts Malanpur 9
•New Industrial Policy-2004
Maral Overseas Nimrani 7
•Madhya Pradesh Trade and Investment Facilitation Corporation
Caparo
(TRIFAC) Engineering Pithampur 7
•Udyog Mitra Yojana- 2004 Coca Cola Pilukhedi 7
Lupin Mandideep 4
•Industrial Facilitation Council
MOIL Balaghat 4
•Industrial Projects – SEZ, Indore, Food Park, Apparel Parks, etc
HP Bottling Plant Maneri 4
•Modernization of Roads and other infrastructure
•Power Sector Reforms
10
11. Enabling Infrastructure
• State Government is committed to support the investors & M.P. – SPECIALIZED INFRASTRUCTURE
provide them a hassle free atmosphere in the Government
machinery. The state has taken several initiatives to promote
investments in the state by creating enabling infrastructure.
Some of the key initiatives are highlighted below.
• A Special Economic Zone at Indore is being established in
1038 hectares of land with the investment of US$ 222
million, has become operational.
• 8 IIDs (Integrated Infrastructure Development Centre) are
being setup at Nandantola, Nimrani, Jagga
M.P.S.I.D.C.
Khedi, Lamtara, Naogaon, Sindiya, Pratappura, Jaderua
• 165 Industrial Areas with basic infrastructure facilities are
functional.
Investment Highlights
• 217 proposals of foreign direct investment with an
investment of US$ 1.3 billion are cleared by GOI for M.P.
• 207 letter of Intent with a proposed investment of US$
Growth Centres
804 million are cleared by GOI for M.P.
Integrated Infrastructure Crystal IT Park
ESTABLISHED
• 1978 Industrial Entrepreneurs Memorandum have been Development Centers
Apparel Parks
PROPOSED
issued by GOI in favour of industrial groups who have Food Parks
Diamond Parks
shown interest to invest in M.P. with a proposed investment SEZ Indore
Agri Export Zones
of US$ 14.43 billion. Stone Park
11
12. SEZ Advantage
Madhya Pradesh Government has adopted the SEZ policy for developing Special Economic Zones in the state. The SEZs, earmarked as duty-free
enclaves, aim at promoting rapid industrial development and employment generation. The approved policy regime includes:
• Exemption of all state and local taxes
• Exemption from stamp duty and registration fees
• Grant of labour, energy, environment, industrial health and safety related permits and approvals through a dedicated single window mechanism
• Exemption from electricity duty; cess and any other tax or levy on sale of electricity for self generated and purchased power.
• Expeditious process for land acquisition to set up SEZs
Common Incentives
FOR SEZ UNITS FOR DEVELOPERS OF SEZ S
Indirect Tax Incentives
Income Tax Incentives Income Tax Incentives
Nil customs duty
15 year corporate tax holiday on export profit – 100% 100% tax holiday for a period of any 10 consecutive
years out of 15 years beginning from the year in Nil excise duty
for initial 5 years and 50% for the subsequent 5 years
50% of reinvested reserves for the balance 5 years
which the SEZ is notified Exemption from central sales tax
Exempt from dividend distribution tax Exemption from service tax
Long-term capital gains arising on transfer of shares Exemption from securities transaction tax
Other Benefits in developer company tax exempt
No minimum alternate tax (MAT)
Duty free procurement of capital goods (including
second hand capital goods), raw materials and SEZ units will be eligible to obtain clearances/
consumable spares from domestic market Other Benefits permissions from different departments under
Full freedom in allocation of developed plots to single agency clearance system
Full freedom for sub-contracting labour
approved SEZ units on purely commercial basis SEZ authority will ensure continuous and good
Facility to realize and repatriate export proceeds Full authority to provide services like quality of power supply
within 12 months water, electricity, security, restaurants and recreation M.P. has liberal labor policy providing complete
Facility to retain 100% foreign exchange receipts in centres on commercial lines flexibility in SEZs
the export earners foreign currency account No net foreign exchange earning requirement SEZ Development Committee monitors
imposed infrastructure development for each SEZ
12
Source: Ministry of Commerce and Industry, Department of Commerce
13. Thrust Areas
• Industry in Madhya Pradesh is largely resource driven, leveraging the state’s natural wealth in the form of limestone, coal,
soya, cotton, bauxite, iron-ore, silica etc. Therefore the state has a strong industrial base in sectors like textile, cement,
steel, soya processing and optical fibers.
• However, there have been a few exceptions to the resource driven industrialisation and the State as a result of its
aggressive incentive policies and strong solicitation/facilitation is developing into a strong base in the Auto, auto ancillary
and textile sectors.
• Substantial opportunity would emerge in following sectors.
Cement
Auto & Auto Components
Textiles & Apparels
Pharmaceuticals
Engineering & Electrical Equipment
Chemicals
13
15. Sector Profile: Cement
Cement: Evolving Landscape
MP: The Cement Production Powerhouse
MP is Naturally Strong
MP: A Preferred Investment Destination
Exploring the Opportunities: Project Profiles
Way Forward
15
16. Cement: Evolving Landscape
•India is the second largest producer of cement in the world after China.
India: A Major Consumer of Cement
The Indian cement industry’s capacity as on March 2005 was around 160 mn
tonnes (including the mini cement plants). It consists of over 54 cement 2004
players and more than 129 manufacturing plants and is highly fragmented and
regional in nature.
•Its estimated market size in value terms is around US$ 8.89 billion and
around 130 mn tonnes per annum (mtpa) in volume terms. It owes its regional
nature to the concentration of cement plants near the clusters of limestone
reserves, located only in few states. This has led to a surplus situation in some
regions and shortages in others.
•India is one of the fastest growing markets for cement ~7.2% CAGR (2000-01
to 2004-05). The demand in the Country is riding high on the continuing growth Key Drivers of Growth
in all the sectors especially in the IT/ITeS, Hospitality industries which in turn
has driven the retail, real-estate and infrastructure boom. • Strong housing demand
• High level of commercial construction activity
• Even though industry has huge potential, it faces certain challenges, for • Increased government focus on infrastructure
spending
instance, the high power and fuel costs and erratic power supply in most of the
• Higher investment in industrial projects
states is affecting the companies.
Hence, most companies have opted to set up their own captive power units to get a regular supply of power and optimise costs.
The industry is not only looking for locations with availability of limestone for production of cement, but also for
availability of coal for their captive power plants
16
17. MP: The Cement Production Powerhouse
• M.P. is the third largest producer of cement in the Country. It caters to 13% of the Installed Capacity Requirements: India
national demand. The State’s rich limestone reserves and the logistical
220 MT
advantages of these sites reduces the overall cement manufacturing & supply 70 Mt of
187 MT
Capacity
chain cost, helping the cement companies to get a higher Return on Investment required to
(ROI). meet domestic
demand alone
160 MT
130 MT
• At present several major groups such as Birla Corporation, Vikram Cement, Prism
Cement, J.P. Rewa, Diamond Cements, & ACC cement are present in Madhya
Pradesh. Out of these units J.P. Rewa & ACC are in process of investing US$
244 million for expanding their production capacities.
• The State also has the appropriate knowledge pool to operate the cement plants. 2005 2009
•Being centrally located and in proximity to key cement consuming states such as Maharashtra, Uttar Pradesh, Gujarat, Andhra
Pradesh etc, cement plants in MP can cater to different regions of the state. Apart from access to large market the centrally located plants
benefit in terms of stable market demand. Further as a result of constant demands the state has one of the highest capacity utilisation
rates in the Country (around 94%).
•It is estimated that India needs an additional capacity of around 70 MT to meet its domestic demand by 2009. With its inherent advantages
in terms of availability of raw material and its cost competitiveness, MP is likely to continue as a leader in cement industry.
With the expected demand projection and the inherent advantages, MP is likely to attract significant investment in
the sector to become the Cement Production Powerhouse of the Country
17
18. MP Is Naturally Strong
•Madhya Pradesh has a vast reserve of limestone. The total
Limestone Reserves
reserves of limestone is 3625.98 mn tonnes spread across
Coal Reserves
the districts of Damoh, Hoshangabad, Mandsaur,
Narsinghpur, Rewa, Satna, Panna, Katni, Sagar, Dhar,
Khargone, Jhabua, Balaghat, Sidhi and Morena.
•In India, energy costs account for 35 per cent of the total
production costs. Further, the power costs are high in India
and are growing at a rapid rate. The industry is trying to
insulate itself against this by setting up captive thermal
power plants. The share of energy costs can be reduced to
16-20% if captive power plants are set-up.
•Madhya Pradesh has a several locations (marked in circle)
that offer limestone and coal. This provides an excellent
opportunity to set-up a captive power plant to ensure
regular and cost competitive supply of power. Proportion of
•The industry is expected to witness a significant boom as Own Power To
Purchase
several project of similar profile are likely to mushroom near
(India) Likely To
Increase
the limestone reserves of the State. Further
Availability of high quality limestone for cement production and coal for captive power plants makes Madhya Pradesh
an ideal location for cement production.
18
19. Add-ons to Natural Advantage
•With land rates being as low as US$ 2 per sq mt in the industrial belts of
Rewa, MP has the lowest cost of land in the Country. Madhya Pradesh Has Access To Key
•The key cement markets are in close proximity to MP and are well connected Cement Markets Across The Country.
through railway lines and roads. This ensures high and sustained demand of
cement produced in these plants.
•MP also has a strategic locational advantage; as some of the key cement
consuming centers like Kanpur, Nagpur, Patna, Nasik etc are in close
proximity to its limestone reserves. Since, freight expenses form 16-22% of the
operating costs the proximity to these markets would serve as an edge in the Delhi
(740 Kms)
long run.
Jaipur Lucknow
•Further, the largest cement consuming states of Maharashtra and Uttar (580 Kms) (680 Kms)
Pradesh are deficient in cement as they have only 1.9% and 1% of the total Ahmedabad
Kanpur
(600 Kms)
(570 Kms)
limestone reserves of the country. Patna
(910 Kms)
•Even today around 25% of the cement produced in the central India is
exported in surrounding regions of North, East and West. With the rising
Kolkata
industrial and infrastructural activity expected to happen both within the state Nagpur (1350 Kms)
Mumbai (350 Kms)
Bhubaneshwar
and its surrounding regions, the state holds a huge potential for cement (780 Kms)
(1200 Kms)
Pune
manufacturers (800 Kms)
Hyderabad
Cement Movement Across The Country 2004-05 (MT) (840 Kms)
Destination
North South East West Central
Source
Chennai
North 21.5 0.2 3.4 Bangalore (1430 Kms) Key Markets
(1400 Kms) (Distance From
South 29.9 0.7 5.9 0.2 Bhopal)
East 0.1 0.1 16.8 0.3 1.3
West 0.2 0.7 0.3 17.3 1.1
Central 2.5 2.5 0.1 14.4
19
20. MP : A Preferred Investment Destination
Installed Capacity
• Most of the leading cement
manufacturers of the Country have
2 Mn
presence in MP. Seven major Cement 4.2 Mn
Tonnes
plants are operating in the State with the Tonnes
annual installed capacity of 15.97 million
tonnes.
2 Mn
• Availability of raw material and investor
Tonnes
friendly environment has facilitated
(Maihar
several leading players in setting up their
Cements Ltd.)
shops in the state. Eyeing the potential
opportunity, the existing players are
1.55 Mn
proposing to expand their operations in
Tonnes
the State. For instance, JP Cements and
ACC Ltd. have proposed expansion of
2.2 Mn
around 1.3 mn tonnes each in annual Tonnes
capacity.
• Satna region of MP, has the most 3 Mn 1.02 Mn
number of cement plants in the Tonnes Tonnes
Country.
(Vikram Cements Ltd.) (Diamond Cements Ltd.)
Presence of leading cement manufacturers and their expansion plans, are true reflection of investor confidence and
the huge potential the State holds for the cement manufacturers.
20
21. Way Forward
Proposed Projects
Location Player Description
Sidhi Jaiprakash Install Cement unit with installed capacity of 2 million tonnes
Associates Ltd.
Satna JV (SAIL & JAL) Install Cement unit with installed capacity of 2.2 million tonnes
Satna M/s Rewati Install Cement unit with installed capacity of 2 million tonnes
Investments
New Limestone Grasim Install a Cement plant with an investment commitment of US$ 111 million
Area
•M.P. State Industrial Development Corporation has prospected that Damoh-Panna area, and Bela-Pagra of
Rewa have limestone deposits of 8 mn tonnes and 20 mn tonnes respectively.
•Besides these areas, the area around Raghurajnagar and Nagod Tehsil of Satna district also have deposits of
limestone.
Considering the present scenario & the availability of raw material, there is a scope of further investment of
$2.5 bn* in this sector in the state.
21
Source: www.destinationmadhyapradesh.com
23. Sector Profile: Auto & Auto Components
Evolving Landscape
Madhya Pradesh : Auto Hub of India
Advantage Madhya Pradesh
M.P.: An Investment Destination
Offering Specific Incentives
Exploring the Opportunities: Project Profiles
23
24. Evolving Landscape
•The Indian automotive industry has flourished in the recent years. This extra- Full Throttle- Car Sales Have Soared This Year
ordinary growth in the Indian automotive industry has been a result of the 7.67
17.65
increase in the per-capita disposable incomes which has resulted in
27.57
improvement in the living standards of the middle class.
4.75
•Car Companies in India have lined up more than US$ 6.67 Billion investments.
•Most automakers of the world either have active presence in the Country or they 20.58
source components from Indian component manufacturers. The leading global
players such as Hyundai, Ford, Mercedes, Toyota, Suzuki and GM have set up
base in India.
April-
•The growth of the industry is primarily driven by the cost advantage of August
manufacturing components in India, which is typically lower by about 30% as
compared to developed countries.
•As the automobile industry has grown and matured, the Indian auto components India’s Auto Ancillary Exports
industry has also grown tremendously, and is rapidly achieving global
US$ Million
competitiveness both in terms of cost and quality.
•The Indian automotive component industry has grown at a staggering pace over
the last few years. The US$ 8.7 billion industry has registered a 30% jump over
last year. The exports have increased from US$ 1 billion in 2003-04 to US$ 1.4
billion in 2004-05.
•Industry observers believe that while Indian automobile market is likely to grow at
a measured pace, the auto components industry is poised for a take-off and is
one of the handful of industries where India has a distinct competitive advantage.
24
25. MP: Auto Hub of India
•MP has been actively promoting the development of the engineering industry in the Key Players
state. The state is one of the leaders in auto and auto ancillary industry with around 5
Original Equipment Manufacturers (OEMs) and over 100 auto component
manufacturers.
•Madhya Pradesh has an auto component industry of around US$ 306 million.60% of
the auto industry in Madhya Pradesh is controlled by Auto component players.
•The State has developed an industrial cluster at Prithampur which provides readily
available infrastructure for companies willing to set up manufacturing facilities in the
State. The estate is spread over an area of 5,000 hectares. The proposed multi
product SEZ is in the vicinity of the industrial estate.
•The state is witnessing an upsurge in investments in the sector. The strategic
location, Government cluster development initiatives, skilled workforce are some of
the factors that are providing the state a competitive edge over other states.
Madhya Pradesh: Competitiveness
Pithampur Auto Cluster Development Strategic location
The Union government of India has sanctioned an auto cluster in the Pithampur Highly productive & disciplined
industrial area. The Government of India will grant an amount of US$ 11 million for workforce
the purpose. Local industrialists have agreed to contribute US$ 3 million for the Presence of large number of players
project. across the value chain
Proactive and professional approach of
The cluster would be equipped with the world’s largest testing facility, with
State Government
capabilities of testing various category of vehicles in different climatic conditions at
different stages. The track would also issue certificates for vehicles produced in the Quality network of educational
institutions
Country and abroad.
25
26. Automotive Proving Grounds - Pithampur
• Area of Land – 4,000 Acres Project Implementation Schedule
Proposed Facilities-
•High speed circuit
• High Speed Test tracks
•Gradient Test Tracks
•Oval shaped test tracks at the outer boundary •Braking test tracks
•Buildings
•Two straights of 3500 meters & Curves of radius •General Roads •External noise test track
100m each •Vehicle Dynamics Lab •Accelerated fatigue
•Maximum testing speed of 350 Km/ hr •Power train lab •Gravel track
•Wet skid pad •Off road track
• Dynamic Platforms
•Sustainability track for •Dry Handling Track
•Dynamic Area of 150 meters radius
trucks •Comfort Track
•Two acceleration lanes of 1000m
•Testing speed more than 200 km/hr Phase I: Phase II:
August 2009 October 2010
• Straight Line Braking
Exemptions-
•Four different braking surfaces
• Registration Fees & Stamp Duty
•Low with basalt tiles 250 m long • Sales Tax
•Low with ceramic tiles 250 m long • Entry Tax,
• Octroi,
•High (Asphalt): 200 m long
• Works Contract Tax
•Acceleration lane length of 1000 m • Property Tax
• Other Local taxes
26
28. Advantage MP
World is looking at India India- The Emerging Power
• The global automotive parts industry • With cost reduction and precision
has undergone a sea change over the engineering being the mantra for
past decade. Consolidation and most OEMs India is all set-to
restructuring have accelerated with the become the Auto component
opening of new and increasingly supplier of the world.
important markets. • Following the Country’s WTO
• The search for scale and scope commitments, the Government
economies by large manufacturers and announced the Auto Policy of
the difficulty of smaller manufacturers 2002, aimed at developing India Pithampur- The Auto-Auto
to sustain themselves in the as a manufacturing and export Component Hub of India
investment race have led to increased base for small cars and auto • Pithampur is an industrial
outsourcing to countries like India ancillaries.
estate spread over 5000
• Suppliers are diversifying
geographically, increasing research hectares of Madhya
and development, and entering into Pradesh, India.
joint ventures in an effort to seek more • Pithampur is a hub for the
module contracts. automobile manufacturing
Madhya Pradesh-
• The world is also witnessing Strategically Placed For Auto industry and in addition to
mushrooming of OEMs in India, China, units such as Eicher
Thailand etc. • Being centrally located and in
Motors, Kinetic Honda,
close proximity to key Indian
Hindustan Motors and Bajaj
cities MP is the ideal location
Tempo Ltd.
for Auto-Auto Ancillary
• With 5 OEMs ( plus 2
industry.
proposed) and over 100
• Specialised infrastructure in a
component manufacturers,
cluster and government
Pithampur is an ideal
support have enabled MP to
location for Auto and Auto
surge ahead of other states.
component industry
28
29. Offering Specific Incentives
Following the Country’s WTO commitments, the GoI announced the Auto
There are several trends w.r.t government
Policy of 2002, aimed at developing India as a manufacturing and export
legislations that are making Indian companies
base for small cars and auto ancillaries. Accordingly, the policy enumerated
increasingly competitive:
several measures to develop the automobile market, including:
•Safety norms to be brought on par with that of
•Removal of the clause on minimum foreign direct investment;
developed countries
•Removal of earlier stipulations on indigenisation and import-balancing
Regulatory Trends
•Emission norms and environmental standards
requirements;
National Policy
in line with those in the developed world
•Permitting foreign automobile manufacturers to set up wholly-owned
•Fiscal duties have been significantly reduced
subsidiaries in India, without requiring approval from the Foreign
over the years
Investment Promotion Board;
•Gradual de-reservation of items for small-scale
•Specific fiscal incentives for cars less than 3.8 meters in length, to enable
sector augurs well for the industry
India to emerge as the Asian base for the export of small cars and multi-
utility vehicles; •Value added tax (VAT), as a system of
taxation, aimed to harmonise the tax structure
•Incentives to manufacture automobiles using alternative fuel technology,
across states
such as CNG and electric batteries;
•Exports are virtually not subject to any taxes
•Proposals to discourage the use of old vehicles by levying higher taxes on
on account of the various advance license
older vehicles;
schemes, etc.
•Proposal for a terminal life policy for commercial vehicles (CVs) along with
incentives for the replacement of such vehicles.
•Commercial tax rates levied on automobile components industries and trade
are being rationalized and will be brought at par with the rates prevalent in Government
State Support
other competing states. initiatives would act
•Entry tax rates on raw material such as steel being used by automobile as a key driver for
component industries shall be rationalized. growth of your
investments.
29
30. MP: A Strategic Location
• The cluster at Pithampur also has significant
locational advantages on following three aspects.
1)Proximity to steel plants of Bhilai, Nagpur etc is
likely to result in reduction raw material costs. The
cost of raw material is around 60% of the total North
production costs of which steel is the key component (42%)
within the raw material.
Jamshedpur
2)Proximity to ports both in east coast and west coast
(1220)
provides a vital linkage to the international markets.
Since, the auto industry is exports driven this linkage is West East
critical to the development of the cluster. Further, water (28%) Kandla Bhilai (5%)
(933)
linkages to both sides provides better linkages to Haldia
Nagpur
Mumbai Satara, Pune, and (1350)
countries. Ahmednagar,
Raigad
(352)
(780)
(800)
3)Proximity to Markets: Being centrally located and
being well connected to major cities such as Delhi, Vishakapatnam
(1310)
Mumbai, Pune, Kolkatta etc. assists the companies to
reduce logistic costs. Key Steel Plants
South (Distance from Bhopal)
Further, automobile manufacturers are spread across
(25%)
the country. Being centrally located the auto Key Ports
(Distance from Bhopal)
component manufacturers would have access to a
Region
larger client base in the country.
(Share of Passenger Car Market)
30
31. MP: A Preferred Investment Destination
Market Intensity Index Comparisons-
•Madhya Pradesh is one of the leading states in the Country for the auto and A Reflection of Low Cost of Living
auto ancillary industry in the Country. To its advantage several units are
cluttered around a small stretch of land which would enable both forward and
backward support to your business.
•The low set-up costs make business proposition one of the best in the world.
For example, cost of developed land in Pithampur industrial area is only US$
1.7- US$ 4 pr sq meter.
•The city of Indore also fairs well in terms of low cost of living index. Hence,
the companies in Indore can expect manpower costs savings of upto 30% in
comparison to companies in Chennai, Mumbai, Pune etc. Manpower costs
are approximately 8-10% of the total costs. Investment Opportunities in MP
•In terms of technical manpower as well the state is well placed with over
•Information Technology Based Designing & Testing
18,000 technical graduates and an overall and an overall figure of 230,000
graduates add to the workforce every year. – Leverage the Proving Grounds @ Pithampur
- Leverage Embedded Software @ Bhopal
•Some of the other supporting factors assisting your business would be:
1. Central location •Research & Development Center
2. Availability of skilled manpower •Manufacturing Hub For South-East Asia
3. Low operating cost
•Auto- Component Manufacturing Facility
4. Co-operative Labour Union etc.
•Offshoring/ Outsourcing Auto Components
31
33. Sector Profile: Textiles
Textile: Evolving Landscape
Madhya Pradesh : Emerging Textile Hub of India
Madhya Pradesh’s Inherent Advantages
M.P.: An Investment Destination
Offering Specific Incentives
Exploring the Opportunities: Project Profiles
33
34. Textile Evolving Landscape
India contributes to about 25% share in the world trade of cotton yarn. It is the world’s Production Of Fibers (Mn Kgs)
Indian Production
Statistics (2005)
third-largest producer of cotton and second-largest producer of cotton yarns and Raw cotton 4122
textiles. Man-made fibre 1023
Indian textile industry has about 22% to the world spindleage and about 6% to the Production Of Yarn
world rotor capacity installed. It has second highest spindleage in the world after Cotton yarn 2272
China with an installed capacity of 38.60 Million
Filament yarn 1109
It has the highest loomage (including handlooms) in the world and contributes with a
share of 61%. It contributes about 12% to the world production of textile fibers and
About 4% of Gross Domestic Product
Contribution of
yarns.
Textile Sector
India is one of the largest consumers of cotton in the world, ranking second to China About 14% of total industrial production
in production of cotton yarn and fabrics and first in installed spinning and weaving Employs 20% of work force
capacity
About 17% of gross export earnings
Through export friendly government policies and positive efforts by the exporters,
textile exports have more than doubled from USD 7.55 billion in 1993-94 to USD 17 Commodities (Million USD)
billion in 2005-06.
India’s export of textiles
Readymade garments 6038.69
The ready made garment sector is the biggest segment in the India’s textile export Cotton textiles 3290.31
(2004-05)
basket contributing over 46% of the total textile exports.
Man-made textiles 1948.72
Export of cotton based items continue to pre-dominate which is natural in view that Wool & woolen textiles 66.57
India is the world’s third-largest producer of cotton
Silk textile 406.82
Exports have grown at an average of 9.47% p.a over the last decade. Textile exports Handicraft , Coir etc 1314.13
in 2005-06 has gone up to USD 17 billion which is 23% higher than previous year. Total 13065.24
The industry is poised to play an increasingly important role in global cotton and textile markets as a result of
domestic and multilateral policy reform.
34
35. MP: Emerging Textile Hub of India
•The industrial history of MP dates back to the later part of 19th Infrastructure at a glance
Century when in 1866, a cotton textile unit established by then Spinning Units 40
Maharaja Holkar at Indore.
Spindles 14,14,000
•Presently, the textile industry in the state is thriving in the Export-Oriented Spinning Units 12
southwest (Malwa) region. A large number of cotton textile mills are
Rotors 14,348
clustered around Indore, Ujjain, Burhapur etc.
Looms 6,500
•Easy availability of cotton, Ginning and Pressing units, skilled Exclusive Weaving Units 8
manpower, developed education system, entrepreneur skills etc
Power Looms 43,290
are some of the reasons for rapid growth of the industry in the
Power Loom Units 17,524
State.
Handlooms 47,000
•Presence of major textile players such as Bhilwaras, Indo-Rama,
Composite Mills 20
Bhaskar, Oswals, Parasrampuria, Maikal, S-Kumar’s etc and the
proposed expansion plans indicate the high investor confidence in
the State. Bhaskar
Industries Ltd.
•The state is focussing on cluster development around sectors of
strategic advantage by developing infrastructure in and around
these clusters. Growth of export oriented spinning and large scale
knitted garment units near Indore, and growth of Chanderi &
Maheshwari products are excellent examples of cluster
development.
35
36. MP Making Businesses Work
•Madhya Pradesh is poised to become the next destination for leading textile companies, who would find market environment conducive
to park their investments.
•The state presents a tremendous opportunity by providing significant advantages across the value chain.
•The state has several units in a cluster, which could be acquired and refurbished to provide a quick start to your business.
•In terms of technical manpower as well the state is well placed with over 18,000 technical graduates and an overall and an overall
figure of 230,000 graduates add to the workforce every year.
Madhya Pradesh Has Strengths Across The Value Chain
Process Raw Material Stitching Market
Spinning Weave/ Knit Processing
(Garment/ Apparel)
• Climatic Conducive • Over 40 spinning • Over 47000 • Several export • MP is renowned for • Strategic central
for cotton production units handlooms are oriented processing skills of its people in location to develop
with large varieties • Over 1.4 million installed in MP units are present in stitching garments. warehouse
available within and spindles • Over 43,000 power the state which can • Manpower is well • Well connected with
Madhya Pradesh
surrounding States • The manpower has looms be developed trained and is the entire Country
• Being centrally on the job further. capable of through railway
• Rich tradition of
Advantage
located and well experience in latest • The state has a producing world- network
connected the raw technology weaving and knitting blend of both new class garments/ • Proximity to ports in
material can also be • Several units are age and traditional apparels. Maharashtra and
brought on short available for processing • Further, the states Gujarat provide cost
notice from any part procurement by capabilities essential strong leather competitiveness
of the Country investors to promote Indian industry is likely to both for exports and
products complement the imports
internationally. textile industry.
•Availability of skilled manpower at competitive costs
•Government initiatives in terms of proposed apparel parks, fiscal incentives etc would benefit the investors.
•Success Stories: S Kumars, Bhilwaras, Oswals, Maikal, Indo-Rama etc.
36
37. MP: A Preferred Investment Destination
•Madhya Pradesh is poised to become one of the leading states in Handloom Clusters
textile industry through its cluster development initiatives. To its
Power-loom Clusters
advantage several powerloom/ handloom units are cluttered
Textile Clusters in The State
around a small stretch of land. To provide a kick start to your Proposed Apparel Parks
business there is a significant opportunity to target and acquire
these units.
•The clusters also have significant locational advantages. For
instance, Malwa region near Indore cluster is a leading cotton
growing belt and a textile hub in the Country providing the
competitive edge to your company. The material costs account for
nearly 55-60% of the costs of production in India. Even a 10% of
savings due to proximity to Malwa region could result in ~5%
increase in operating margins.
•To further support your business endeavours Government of
Madhya Pradesh has created specialised infrastructure in the
form of Apparel parks. Being an industry with social importance,
the Government also provides special fiscal and non fiscal
Availability of Raw Material
incentives to the units in the state.
•Some of the other supporting factors assisting your business
would be:
1. Central location
Malwa region is
2. Low set-up costs (Land, building etc) a leading cotton
3. Availability of skilled manpower growing belt
Malwa
4. Low operating cost Region
5. Co-operative Labour Unions (one of the best in the Country)
6. Government support etc.
37
38. Offering Specific Incentives
For ensuring maximum value addition in utilizing available resources and strengthening the different components of the Madhya Pradesh
offers special incentives to units present in the state. This has further increased the competency of the units in the state and has made
investments more lucrative.
Highlights of Special Incentives Given to Textile Industry
•Special Incentives to Readymade Garment, Powerlooms and Made-up Garment industries:
• Benefits under Government of India’s schemes such as Apparel Park Scheme, Textile Centre Infrastructure Development
Scheme (TCIDS)
• Modernization of units of this sector through Technology Upgradation Fund Scheme (TUFS), Group Work Shed Scheme.
• Exempted from the binding of minimum wage fixation on a daily basis.
•An Apparel Training Institute would be set up with the assistance of Apparel Export Promotion Council in the State, so that maximum
number of trained worker could get employment in the Ready-made Garment industry.
•Efforts to establish a national level fashion designing technology institute in the State in order to facilitate textile industry of the State
regarding the information for design development and to provide forecasts.
•In order to accelerate the pace of modernization of the unorganized power-loom sector, modern power loom clusters would be
developed at Burhanpur, Indore and Ujjain with financial assistance sought under Government of India’s Group Shed Scheme.
•Development of the process house through private participation by providing necessary facilities and if required their cases would be
considered by the committee for Mega Projects.
•The provision related to labour laws declared for Special Economic Zone will be made applicable to the projects / special areas
established such as Apparel Park, Garment Complex and unit established/being transferred under Group Work Shed Scheme.
•Cotton ginning and pressing units would be provided high quality cotton and they would be encouraged for modernization under centrally
sponsored schemes with the help of their recognized associations.
•Construction of tar roads for smooth transportation to Cotton Mandi and construction of cement platform for storage of cotton, using
Mandi Board's fund would be taken up on priority basis.
•Units purchasing yarn produced within the State, would be given a "set off" of 2% (Two percent) on Commercial Tax would be given.
38
39. The Way Forward…
Market Intensity Index Comparisons-
•With all the right ingredients in place, Madhya Pradesh has several locations
A Reflection of Low Cost of Living
which are suited for developing textile units. Investments are likely to flow in
the next few years. The state is likely to witness the resurgence of textile
industry, which would play a significant role even at national level. The
improving infrastructure and rising standard of living are likely to infuse capital
into the state.
•The state could attract investments of around US$ 1.3 billion thereby
generating direct employment for over 0.16 million people. Further, with the
mordenization initiatives undertaken by the Government the states
competitiveness in the textile industry is likely to rise.
•MP also fairs well in terms of low cost of living index. Hence, the companies in
Indore can expect manpower costs savings of 20-30% in comparison to
companies in Chennai, Mumbai, Surat, Ahmedabad etc. The manpower costs
in India typically form 8-10% of the total costs.
Potential Projects
Segment Investment Required No. of Units Output Employment
(US$ Million) Quantity in Million Value
(US$ Million)
Spinning (1 mn Spindels) 489 10 131 Kgs 408 16,000
Weaving (1000 looms) 171 21 117 Kgs 104 2984
Processing 102 4 120 Kgs 200 1,600
Circular Knitting (1000) 111 33 127 Kgs 378 1,700
Garment Woven 254 520 130 pcs 722 107,000
Knitwear 185 333 100 Pcs 389 35,000
Total 1,313 921 2,200 164,240
39
Source: Madhya Pradesh Textile Report, MPSIDC
42. Evolving Landscape
The global pharmaceuticals market generated total revenues of USD Challenges faced by Global Companies Today
534.8 billion in 2005, representing a compound annual growth rate Reduced growth rate
(CAGR) of 7.7% for the five year period spanning 2001-2005. Market Increasing cost of R&D
size expected to reach USD 767.2 billion by the end of 2010. Shorter time span for exclusivity
With an estimated market value of USD 8.2 billion (at consumer Fewer block busters
prices, inclusive of exports) in 2004, India accounts for 2% of the Price pressure from Generics
world market for pharmaceuticals. Higher complexity through more number of smaller revenue drugs
According to the global ranking estimates, India ranks as the 4th Potential
largest pharmaceutical market in volume terms and the 13th largest
Low-cost, high-quality production
market in value terms.
Large and growing US FDA approved plant capacity
The significant difference in the value and volume wise rankings of Synthetic Chemistry talent for early stage compound development
the Indian companies is largely attributed to the prices of drugs
Low cost of research and world-class testing facilities
manufactured in the Country, which rank among the lowest in the
Cost of a research scientist in India is only about 1/6th to 1/4th of
world. With the quality being maintained at par with international that in USA
standards, India exports drugs to more than 200 countries across the Contract Research and Manufacturing (CRAM)
world. IT enabled services including clinical/market data analysis
With formulations contributing to 50% of the exports, India’s pharma Clinical Trials: Revenues to grow from $70 million (2002) to $1-1.5
billion by 2010 driven by a 60% cost advantage and large gene
exports were approximately USD 3.17 billion. pool for trials
Major opportunities in Biotechnology are in the areas of Bio-
Projections of growth of Indian pharma market (exclusive of exports) informatics, Bio-pharma etc.
range from USD 11.9 bn in 2009 to USD 25bn by 2010 Many international biotech companies like Chiron Corp, GSK and
Sigma Aldrich Corp have expressed interest especially in Bio-
manufacturinga
42
