Industry - Madhya Pradesh Facilitation Centre for NRI's

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Madhya Pradesh: Means Business
Industries
1
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
Advantage MP
Madhya Pradesh is emerging as a key growth center for the Country
 Gross state domestic product (GSDP)
USD 23,983.63 Mn**
 Average growth rate
5.5% per annum
 Investor friendly Government policies
 Manufacturing sector
USD 8.5 bn**
(Registered & Unregistered)
 Total electricity generation capacity
6,449.25 MW*
 India’s first greenfield SEZ
Indore SEZ
 Industrial Centers
8
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)
USD 369**
Madhya Pradesh has one of the upcoming industrial base in India
 The State is centrally located
Power
 Per capita GSDP
**Source: Indiastat.com (as on 23 Feb 2006)
Enabling Infrastructure
MP IS CENTRALLY LOCATED AND WELL
CONNECTED WITH ALL MAJOR CITIES IN INDIA
RAILWAY NETWORK
• The State is well connected with the rest
of India with almost 425 trains passing
through the State on a daily basis. Of
these 175 trains pass through the State
capital Bhopal alone.
• 25 airstrips.**
• Convenient air links from key Indian
cities like Delhi & Mumbai to Bhopal,
Jabalpur,
Gwalior,
Indore
and
Khajuraho.
AIRPORTS
GWALIOR
KHAJURAHO
INDORE
• 5 operational airports.
• Indore airport has the capability of
BHOPAL
handling international cargo.
JABALPUR
• An international airport proposed in
Bhopal.
• The total length of roads spanning MP is
ROAD NETWORK
67,600 kms.**
• National highways of 5,200 kms run
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
Madhya Pradesh: A Preferred Investment Destination
31% of the State under forest
cover with a largely unexploited
species
of
rare,
valuable
medicinal- herbal plants
Over 2,000 kms of roads
being
developed
with
Private Partnership (BOT)
India’s
1st
operational
Greenfield SEZ at Indore
Third largest producer
cement in India*
Over 100 agricultural farms with
an area of over 20,000 acres is
available on lease to investor
Favourable
climatic
conditions for cotton
and over 40,000 powerlooms are driving the
textile industry
4
*Source: www.mpsidc.org & Brochure: MP Means Business
of
Various blocks available
for power, cement, iron
and steel units
Largest producer of pulses
and oilseeds in the Country
(~75%
of
soyabean
production)
Availability of coal and natural gas
(G.A.I.L pipeline) along with support
from Government to make investment
in Thermal Power Plants lucrative
Offers diverse tourists destinations
catering to various segments of
tourism such as religious (Bhojpur),
eco/ adventure (Panchmari), heritage
(Sanchi, Khajuraho) tourism etc.
Over
18,000
technical
graduates
and
230,000
graduates add to workforce
each year
Over 144 BCM of coal bed
methane reserves available
12 blocks with reserves
totalling 2,585 million tons
of coal has been identified
MP: The Right Place with the Right Environment
Savings in Office Space Rates
Fastest mover* in overall
performance among the
big States in the Country.
DESTINATION MADHYA PRADESH
(A comparison of rates in Central Business Districts)
Mum bai
150
Ahem adabad
Delhi
100
50
Bhopal
Bangalore
0
Fastest mover in agriculture
Indore
Delhi
(740 Kms)
(MPV - 789.5)
Fastest mover in
infrastructure development.
Ranks 2nd in terms of
governance.
Hyderabad
Bangalore
(1400 Kms)
(MPV - 254.52)
Savings in Land Cost
Kolkata
(1350 Kms)
(MPV - 613.19)
Mumbai
(780 Kms)
(MPV - 1000)
Ranks 3rd in terms of law &
order
Vishakapatnam
100%
Hyderabad
(840 Kms)
(MPV - 257.9)
Chennai
(1430 Kms)
(MPV - 362.84)
Key Markets
Indore
60%
20%
MPV – Market
Potential Value
0%
Jaipur
MP is centrally located. The State is at an easy distance from
all the key consumer markets in the Country.
5
Source: (Reference: RK Swamy)
- Distances rounded off
Chennai
40%
(Distance From
Bhopal)
Greater Noida
Chandigarh
**Source: India Today (September ‘06 Issue)
(Estimated Values for Multiproduct SEZs)
80%
Cost of skilled labour is USD
2.4/day vis-a-vis USD 3.5 –
USD 4.0/day in metros
* Fastest mover is the State where the rate of
improvement between 2003 & 2006 was greater
than that between 1991 & 2003
Pune
Bhopal and Indore have substantial cost
advantages, even when compared to other Tier
III and IV cities.
Ahmedabad
(570 Kms)
(MPV - 220.63)
Pune
(800 Kms)
(MPV - 206.51)
Chennai
The cost of land 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 land cost.
Industrial Policy: Catalyst for the Investments
The Government of MP has devised an investor friendly industrial policy,
which is aimed at achieving global competitiveness. The policy emphasizes
on industrial growth in the state through adopting cluster approach,
establishing specialized infrastructure and offering favourable incentives.
• Special package for Mega Projects on project basis by apex level
investment promotion empowered committee headed by the Chief
Minister.
The main thrust of this policy is:
• Industrial investment promotion assistance – 50% to 75% of commercial
tax for 3-10 years
• Establishment of a Madhya Pradesh Trade
Facilitation Corporation which would take
and Investment
decisions about
rationalization of taxes, facilities of mega projects and other related
matters.
• Enacting an Industrial Facilitation Act and to change the rules of
business with a view to make single window system decisive and result
oriented.
• Developing infrastructure for supporting the identified industrial
clusters
• Reviving closed down/ sick industrial units by granting special packages.
SPECIAL INCENTIVES
• Concessional registration charges and stamp duty exemption for
Term Loans.
• Interest subsidy on term loan for 5 – years @ 3% to 5%.
• For thrust sector industries, 25% capital subsidy would be provided
limiting up to a maximum of USD 56,000
• Land on 75% concessive rate for Mega Projects limited to USD 4.4
million.
• Entry tax exemption for 5 years.
• 5 years electricity duty exemption on captive power generation
• 15% capital subsidy to SSI up to USD 33,000 in backward areas
• Infrastructure grant up to USD 0.22 million crore for developing private
sector industrial parks
• Partial reimbursement for Project report, ISO Certification, Patent and
Technology Purchase cost
CLUSTER APPROACH
• Indore – Pharmaceutical, Textile,
Processing, IT, Auto Components
Food
• Bhopal – Engineering, Biotechnology, Herbal,
IT, Food Processing
• Jabalpur – Garment, Mineral, Forest & Herbal,
Food Processing
• Gwalior – Electronics, IT, FMCG, Engineering,
Food Processing
• Rewa – Refractories, Lime Stone, Forest Based
• Sagar – Mineral Processing
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SPECIALIZED INFRASTRUCTURE
• Attractive incentive schemes.
Crystal IT Park
Indore
Food Parks
Mandsaur, Khargone, Chhindwara,
Hoshagabad, Mandla and Bhind
Stone Park
Katni
Herbal Park
Rewa
Granite Park
Chhatarpur
Life Sciences Project
Bhopal
Apparel Park
Indore (SEZ)
Gems & Jewellery Park
Indore
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
Area Developed: 790 Hectares
Area Developed: 273 Hectares
Allotted: 618 Hectares
Allotted: 800 Hectares
Allotted: 125 Hectares
Allotted: 115 Hectares
Units established: 286
Major Groups:HEG, Crompton
Greaves, P&G, Godrej, Lupin, IFB,
Oswal, Nahar
Special Infrastructure: ICD, Food
Park
Units established: 326
Major Groups: JK, Surya Roshini,
Godrej, Grasim, Cadbury, Hotline,
Crompton Greaves
Special Infrastructure: ICD, Food
Park
Units established: 52
Major Groups: Raymond, Hindustan
Petroleum, PBM, Ayur
REWA AKVN
Area Developed: 2,262 Hectares
JABALPUR AKVN
Area Developed: 1,330 Hectares
GWALIOR AKVN
BHOPAL AKVN
developed area is still untapped and open for investment.
Units established: 121
Major Groups: Birla, Jaypee
Special Infrastructure: Integrated
Special Infrastructure: Stone Park,
infrastructure development centres
Food Park
(IIDC)
Area Developed: 2,492 Hectares
Malanpur, Malanpur
Phase II, Banmore,
Chainpura,
Siddhgawan,
Pratappura
INDORE AKVN
Allotted: 1431 Hectares
Units established: 575
Rewa, Waidhan
Major Groups: Tata, Ranbaxy, Eicher,
Total developed
area
7,147
Hectares
Total allotted area
3,089
Hectares
Total units
established
1,360
Growth centres
19
Bridgestone, Hindustan Motors, Kinetic,
Mandideep,
Pillukhedi,
Mandideep Phase II
SRF, S Kumars, Gajra, Nicholas Piramal,
Indorama, IPCA, Bhilwara
Special Infrastructure: SEZ, Crystal IT
Park, Food Park, Apparel Park
Pithampur, Kheda,
Dewas, Maksi,
Megh Nagar
Borgaon, Maneri,
Purena
7
Source: MPSIDC
Industries
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
MP: Attracting Investments
In US$ Million
• MP offers an unparallel locational advantage to companies as they
Location
incur lower transportation cost for transferring goods to every corner of
BORL
Bina
1,267
the country.
Bina Thermal
Bina
542
STI Power
Chainpura
261
HEG Ltd.
Mandideep
111
LG Hotline
Malanpur
111
Biofill Pharma
Pithampur
24
Eicher Group
Pithampur
24
Enbee
Pilukhedi
22
JK Industry
Banmore
22
Pratibha Syntex
Pithampur
19
Hindustan Copper
Balaghat
18
Escorts
Malanpur
9
Maral Overseas
Nimrani
7
Caparo
Engineering
Pithampur
7
Coca Cola
Pilukhedi
7
Lupin
Mandideep
4
MOIL
Balaghat
4
HP Bottling Plant
Maneri
4
• Further, cost of basic requirement such as land, water, skilled
manpower is less as compared to other states.
• State has peaceful & conducive atmosphere for industrialization, law
and order situation in the state is under control.
• State also allows the industrial units to have captive power plants to
produce power as per their requirement.
• The State Government desires to have a higher rate of economic
development through rapid industrialization. Some of the key
initiatives taken by government recently include:
•New Industrial Policy-2004
•Madhya Pradesh Trade and Investment Facilitation Corporation
(TRIFAC)
•Udyog Mitra Yojana- 2004
•Industrial Facilitation Council
•Industrial Projects – SEZ, Indore, Food Park, Apparel Parks, etc
•Modernization of Roads and other infrastructure
•Power Sector Reforms
10
Few Large & Medium Projects Under Implementation
Company
Investments
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 Khedi,
M.P.S.I.D.C.
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
issued by GOI in favour of
industrial groups who have
shown interest to invest in M.P. with a proposed investment
of US$ 14.43 billion.
11
Crystal IT Park
Integrated Infrastructure
Development Centers
Food Parks
SEZ Indore
Stone Park
PROPOSED
• 1978 Industrial Entrepreneurs Memorandum have been
ESTABLISHED
804 million are cleared by GOI for M.P.
Apparel Parks
Diamond Parks
Agri Export Zones
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
 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
which the SEZ is notified
for initial 5 years and 50% for the subsequent 5 years
50% of reinvested reserves for the balance 5 years
Other Benefits
 Duty free procurement of capital goods (including
second hand capital goods), raw materials and
consumable spares from domestic market
 Full freedom for sub-contracting labour
 Facility to realize and repatriate export proceeds
within 12 months
 Facility to retain 100% foreign exchange receipts in
the export earners foreign currency account
 Nil customs duty
 Nil excise duty
 Exemption from central sales tax
 Exempt from dividend distribution tax
 Exemption from service tax
 Long-term capital gains arising on transfer of shares
in developer company tax exempt
 Exemption from securities transaction tax
 No minimum alternate tax (MAT)
Other Benefits
 Full freedom in allocation of developed plots to
approved SEZ units on purely commercial basis
 Full authority to provide services like water, electricity,
security, restaurants and recreation centres on
commercial lines
 No net foreign
imposed
12
Source: Ministry of Commerce and Industry, Department of Commerce
exchange
earning
requirement
 SEZ units will be eligible to obtain clearances/
permissions from different departments under
single agency clearance system
 SEZ authority will ensure continuous and good
quality of power supply
 M.P. has liberal labor policy providing complete
flexibility in SEZs
 SEZ
Development
Committee
monitors
infrastructure development for each SEZ
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
Cement
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
Cement: Evolving Landscape
•India is the second largest producer of cement in the world after China.
The Indian cement industry’s capacity as on March 2005 was around 160 mn
India: A Major Consumer of Cement
2004
tonnes (including the mini cement plants). It consists of over 54 cement
players and more than 129 manufacturing plants and is highly fragmented and
Spain, 2%
Others, 37%
Korea, 3%
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
Japan, 3%
USA, 6%
China, 44%
Italy, 2%
Russia, 2%
India, 6%
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.
• Even though industry has huge potential, it faces certain challenges, for
instance, the high power and fuel costs and erratic power supply in most of the
states is affecting the companies.
• Strong housing demand
• High level of commercial construction activity
• Increased government focus on infrastructure
spending
• Higher investment in industrial projects
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
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
187 MT
chain cost, helping the cement companies to get a higher Return on Investment
(ROI).
160 MT
• At present several major groups such as Birla Corporation, Vikram Cement, Prism
70 Mt of
Capacity
required to
meet domestic
demand alone
130 MT
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
MP Is Naturally Strong
•Madhya Pradesh has a vast reserve of limestone. The total
Limestone Reserves
Coal Reserves
reserves of limestone is 3625.98 mn tonnes spread across
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.
•The industry is expected to witness a significant boom as
several project of similar profile are likely to mushroom near
the limestone reserves of the State.
Proportion of
Own Power To
Purchase
(India)
Captive Plants
43%
Electricity
Boards
57%
Likely To
Increase
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
Add-ons to Natural Advantage
•With land rates being as low as US$ 2 per sq mt in the industrial belts of
Madhya Pradesh Has Access To Key
Rewa, MP has the lowest cost of land in the Country.
•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
(580 Kms)
•Further, the largest cement consuming states of Maharashtra and Uttar
Pradesh are deficient in cement as they have only 1.9% and 1% of the total
limestone reserves of the country.
Ahmedabad
(570 Kms)
Lucknow
(680 Kms)
Kanpur
(600 Kms)
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
industrial and infrastructural activity expected to happen both within the state
and its surrounding regions, the state holds a huge potential for cement
Nagpur
(350 Kms)
Mumbai
(780 Kms)
Hyderabad
(840 Kms)
Cement Movement Across The Country 2004-05 (MT)
Destination
North
South
East
West
Central
0.2
3.4
Source
North
21.5
South
29.9
0.7
5.9
0.2
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
Bhubaneshwar
(1200 Kms)
Pune
(800 Kms)
manufacturers
Kolkata
(1350 Kms)
Bangalore
(1400 Kms)
Chennai
(1430 Kms)
Key Markets
(Distance From
Bhopal)
MP : A Preferred Investment Destination
• Most
of
manufacturers
the
of
leading
the
cement
Country
have
presence in MP. Seven major Cement
Installed Capacity
2 Mn
Tonnes
plants are operating in the State with the
4.2 Mn
Tonnes
annual installed capacity of 15.97 million
tonnes.
2 Mn
Tonnes
• Availability of raw material and investor
friendly
environment
has
facilitated
(Maihar
Cements Ltd.)
several leading players in setting up their
shops in the state. Eyeing the potential
opportunity, the existing players are
1.55 Mn
Tonnes
proposing to expand their operations in
the State. For instance, JP Cements and
ACC Ltd. have proposed expansion of
2.2 Mn
Tonnes
around 1.3 mn tonnes each in annual
capacity.
• Satna region of MP, has the most
number
of
cement
plants
in
the
Country.
3 Mn
Tonnes
(Vikram Cements Ltd.)
1.02 Mn
Tonnes
(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
Way Forward
Proposed Projects
Location
Player
Description
Sidhi
Jaiprakash
Associates Ltd.
Install Cement unit with installed capacity of 2 million tonnes
Satna
JV (SAIL & JAL)
Install Cement unit with installed capacity of 2.2 million tonnes
Satna
M/s Rewati
Investments
Install Cement unit with installed capacity of 2 million tonnes
New Limestone
Area
Grasim
Install a Cement plant with an investment commitment of US$ 111 million
•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
$2.5 bn* in this sector in the state.
21
Source: www.destinationmadhyapradesh.com
Auto & Auto Components
Sector Profile: Auto & Auto Components
Evolving Landscape
Madhya Pradesh : Auto Hub of India
Advantage Madhya Pradesh
M.P.: An Investment Destination
Offering Specific Incentives
Exploring the Opportunities: Project Profiles
23
Evolving Landscape
•The Indian automotive industry has flourished in the recent years. This extra-
Full Throttle- Car Sales Have Soared This Year
7.67
ordinary growth in the Indian automotive industry has been a result of the
17.65
increase in the per-capita disposable incomes which has resulted in
27.57
improvement in the living standards of the middle class.
1,061,500
902,100
4.75
•Car Companies in India have lined up more than US$ 6.67 Billion investments.
•Most automakers of the world either have active presence in the Country or they
1,143,000
707,200
675,100
20.58
519,800
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.
AprilAugust
•The growth of the industry is primarily driven by the cost advantage of
manufacturing components in India, which is typically lower by about 30% as
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
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
2,000
competitiveness both in terms of cost and quality.
1,800
•The Indian automotive component industry has grown at a staggering pace over
1,386
1,400
1,200
last year. The exports have increased from US$ 1 billion in 2003-04 to US$ 1.4
1,000
•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.
1,771
1,600
the last few years. The US$ 8.7 billion industry has registered a 30% jump over
billion in 2004-05.
US$ Million
1,027
780
800
602
600
400
333
350
616
407
200
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
24
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
workforce
industrial area. The Government of India will grant an amount of US$ 11 million for
the purpose. Local industrialists have agreed to contribute US$ 3 million for the
project.
The cluster would be equipped with the world’s largest testing facility,
with
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
Country and abroad.
25
 Presence of large number of players
across the value chain
 Proactive and professional approach of
State Government
 Quality network of educational
institutions
Automotive Proving Grounds - Pithampur
• Area of Land – 4,000 Acres
Project Implementation Schedule
Proposed Facilities-
•High speed circuit
• High Speed Test tracks
•Oval shaped test tracks at the outer boundary
•Buildings
•Braking test tracks
•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
•Sustainability track for
•Dry Handling Track
• Dynamic Platforms
•Dynamic Area of 150 meters radius
•Two acceleration lanes of 1000m
•Testing speed more than 200 km/hr
• Straight Line Braking
•Four different braking surfaces
•Low with basalt tiles 250 m long
•Low with ceramic tiles 250 m long
•High (Asphalt): 200 m long
•Acceleration lane length of 1000 m
26
•Gradient Test Tracks
trucks
•Comfort Track
Phase I:
August 2009
Exemptions• Registration Fees & Stamp Duty
• Sales Tax
• Entry Tax,
• Octroi,
• Works Contract Tax
• Property Tax
• Other Local taxes
Phase II:
October 2010
Automotive Proving Grounds - Pithampur
27
Advantage MP
World is looking at India
India- The Emerging Power
• The global automotive parts industry
has undergone a sea change over the
past decade. Consolidation and
restructuring have accelerated with the
opening of new and increasingly
important markets.
• The search for scale and scope
economies by large manufacturers and
the difficulty of smaller manufacturers
to sustain themselves in the
investment race have led to increased
outsourcing to countries like India
• Suppliers are diversifying
geographically, increasing research
and development, and entering into
joint ventures in an effort to seek more
module contracts.
• The world is also witnessing
mushrooming of OEMs in India, China,
Thailand etc.
• With cost reduction and precision
engineering being the mantra for
most OEMs India is all set-to
become the Auto component
supplier of the world.
• Following the Country’s WTO
commitments, the Government
announced the Auto Policy of
2002, aimed at developing India
as a manufacturing and export
base for small cars and auto
ancillaries.
28
Pithampur- The Auto-Auto
Component Hub of India
Madhya PradeshStrategically Placed For Auto
• Being centrally located and in
close proximity to key Indian
cities MP is the ideal location
for Auto-Auto Ancillary
industry.
• Specialised infrastructure in a
cluster and government
support have enabled MP to
surge ahead of other states.
• Pithampur is an industrial
estate spread over 5000
hectares of Madhya
Pradesh, India.
• Pithampur is a hub for the
automobile manufacturing
industry and in addition to
units such as Eicher
Motors, Kinetic Honda,
Hindustan Motors and Bajaj
Tempo Ltd.
• With 5 OEMs ( plus 2
proposed) and over 100
component manufacturers,
Pithampur is an ideal
location for Auto and Auto
component industry
Offering Specific Incentives
Following the Country’s WTO commitments, the GoI announced the Auto
Policy of 2002, aimed at developing India as a manufacturing and export
base for small cars and auto ancillaries. Accordingly, the policy enumerated
several measures to develop the automobile market, including:
There are several trends w.r.t government
legislations that are making Indian companies
increasingly competitive:
•Safety norms to be brought on par with that of
developed countries
National Policy
•Removal of earlier stipulations on indigenisation and import-balancing
requirements;
•Permitting foreign automobile manufacturers to set up wholly-owned
subsidiaries in India, without requiring approval from the Foreign
Investment Promotion Board;
•Specific fiscal incentives for cars less than 3.8 meters in length, to enable
India to emerge as the Asian base for the export of small cars and multiutility vehicles;
•Incentives to manufacture automobiles using alternative fuel technology,
such as CNG and electric batteries;
•Proposals to discourage the use of old vehicles by levying higher taxes on
older vehicles;
Regulatory Trends
•Removal of the clause on minimum foreign direct investment;
•Emission norms and environmental standards
in line with those in the developed world
•Fiscal duties have been significantly reduced
over the years
•Gradual de-reservation of items for small-scale
sector augurs well for the industry
•Value added tax (VAT), as a system of
taxation, aimed to harmonise the tax structure
across states
•Exports are virtually not subject to any taxes
on account of the various advance license
schemes, etc.
State Support
•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
other competing states.
•Entry tax rates on raw material such as steel being used by automobile
component industries shall be rationalized.
29
Government
initiatives would act
as a key driver for
growth of your
investments.
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
(1220)
2)Proximity to ports both in east coast and west coast
provides a vital linkage to the international markets.
Since, the auto industry is exports driven this linkage is
West
critical to the development of the cluster. Further, water
(28%) Kandla
East
Bhilai
(933)
linkages to both sides provides better linkages to
countries.
3)Proximity to Markets: Being centrally located and
Pune,
Mumbai Satara,
Ahmednagar, and
Raigad
(780)
(800)
being well connected to major cities such as Delhi,
reduce logistic costs.
South
the
country.
Being
centrally
located
the
auto
component manufacturers would have access to a
larger client base in the country.
30
Nagpur
(352)
Haldia
(1350)
Vishakapatnam
(1310)
Mumbai, Pune, Kolkatta etc. assists the companies to
Further, automobile manufacturers are spread across
(5%)
(25%)
Key Steel Plants
(Distance from Bhopal)
Key Ports
(Distance from Bhopal)
Region
(Share of Passenger Car Market)
MP: A Preferred Investment Destination
•Madhya Pradesh is one of the leading states in the Country for the auto and
Market Intensity Index ComparisonsA Reflection of Low Cost of Living
auto ancillary industry in the Country. To its advantage several units are
Delhi
150
149.18
cluttered around a small stretch of land which would enable both forward and
backward support to your business.
112.14
Pune
132.9
100
•The low set-up costs make business proposition one of the best in the world.
50
For example, cost of developed land in Pithampur industrial area is only US$
0
1.7- US$ 4 pr sq meter.
Kolkatta
147.66
Indore
102.88
Mum bai
•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
112.65
Hyderabad
136.5
Chennai
comparison to companies in Chennai, Mumbai, Pune etc. Manpower costs
are approximately 8-10% of the total costs.
•In terms of technical manpower as well the state is well placed with over
Investment Opportunities in MP
•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.
•Some of the other supporting factors assisting your business would be:
– Leverage the Proving Grounds @ Pithampur
- Leverage Embedded Software @ Bhopal
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
Textiles & Apparel
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
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
yarns.
India is one of the largest consumers of cotton in the world, ranking second to China
in production of cotton yarn and fabrics and first in installed spinning and weaving
capacity
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
billion in 2005-06.
The ready made garment sector is the biggest segment in the India’s textile export
basket contributing over 46% of the total textile exports.
Export of cotton based items continue to pre-dominate which is natural in view that
India is the world’s third-largest producer of cotton
Exports have grown at an average of 9.47% p.a over the last decade. Textile exports
in 2005-06 has gone up to USD 17 billion which is 23% higher than previous year.
Contribution of
Textile Sector
Indian textile industry has about 22% to the world spindleage and about 6% to the
world rotor capacity installed. It has second highest spindleage in the world after
China with an installed capacity of 38.60 Million
Production Of Fibers
(Mn Kgs)
Raw cotton
4122
Man-made fibre
1023
Production Of Yarn
Cotton yarn
2272
Filament yarn
1109
About 4% of Gross Domestic Product
About 14% of total industrial production
Employs 20% of work force
About 17% of gross export earnings
Commodities
India’s export of textiles
(2004-05)
India contributes to about 25% share in the world trade of cotton yarn. It is the world’s
third-largest producer of cotton and second-largest producer of cotton yarns and
textiles.
Indian Production
Statistics (2005)
Textile Evolving Landscape
(Million USD)
Readymade garments
6038.69
Cotton textiles
3290.31
Man-made textiles
1948.72
Wool & woolen textiles
Silk textile
Handicraft , Coir etc
Total
66.57
406.82
1314.13
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
MP: Emerging Textile Hub of India
•The industrial history of MP dates back to the later part of 19th
Century when in 1866, a cotton textile unit established by then
Maharaja Holkar at Indore.
Infrastructure at a glance
Spinning Units
40
Spindles
•Presently, the textile industry in the state is thriving in the
southwest (Malwa) region. A large number of cotton textile mills are
clustered around Indore, Ujjain, Burhapur etc.
•Easy availability of cotton, Ginning and Pressing units, skilled
manpower, developed education system, entrepreneur skills etc
are some of the reasons for rapid growth of the industry in the
State.
•Presence of major textile players such as Bhilwaras, Indo-Rama,
14,14,000
Export-Oriented Spinning Units
12
Rotors
14,348
Looms
6,500
Exclusive Weaving Units
8
Power Looms
43,290
Power Loom Units
17,524
Handlooms
47,000
Composite Mills
20
Bhaskar, Oswals, Parasrampuria, Maikal, S-Kumar’s etc and the
proposed expansion plans indicate the high investor confidence in
Bhaskar Industries Ltd.
the State.
•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
development.
35
products
are
excellent
examples
of
cluster
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
Madhya Pradesh
Advantage
Process
Raw Material
• Climatic Conducive
for cotton production
with large varieties
available within and
surrounding States
• Being centrally
located and well
connected the raw
material can also be
brought on short
notice from any part
of the Country
Spinning
• Over 40 spinning
units
• Over 1.4 million
spindles
• The manpower has
on the job
experience in latest
technology
• Several units are
available for
procurement by
investors
Weave/ Knit
• Over 47000
handlooms are
installed in MP
• Over 43,000 power
looms
• Rich tradition of
weaving and knitting
Processing
• Several export
oriented processing
units are present in
the state which can
be developed
further.
• The state has a
blend of both new
age and traditional
processing
capabilities essential
to promote Indian
products
internationally.
Stitching
(Garment/ Apparel)
• MP is renowned for
skills of its people in
stitching garments.
• Manpower is well
trained and is
capable of
producing worldclass garments/
apparels.
• Further, the states
strong leather
industry is likely to
complement the
textile industry.
Market
• Strategic central
location to develop
warehouse
• Well connected with
the entire Country
through railway
network
• Proximity to ports in
Maharashtra and
Gujarat provide cost
competitiveness
both for exports and
imports
•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
MP: A Preferred Investment Destination
•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
incentives to the units in the state.
•Some of the other supporting factors assisting your business
would be:
1. Central location
2. Low set-up costs (Land, building etc)
3. Availability of skilled manpower
4. Low operating cost
5. Co-operative Labour Unions (one of the best in the Country)
6. Government support etc.
37
Power-loom Clusters
Textile Clusters in The State
•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.
Handloom Clusters
Availability of Raw Material
•Madhya Pradesh is poised to become one of the leading states in
textile industry through its cluster development initiatives. To its
advantage several powerloom/ handloom units are cluttered
around a small stretch of land. To provide a kick start to your
business there is a significant opportunity to target and acquire
these units.
Proposed Apparel Parks
Malwa region is
a leading cotton
growing belt
Malwa
Region
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,
Mandi Board's fund would be taken up on priority basis.
using
•Units purchasing yarn produced within the State, would be given a "set off" of 2% (Two percent) on Commercial Tax would be given.
38
The Way Forward…
•With all the right ingredients in place, Madhya Pradesh has several locations
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.
Market Intensity Index ComparisonsA Reflection of Low Cost of Living
Delhi 149.18
150
Jaipur
97.57
•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.
100
Kolkatta
112.14
50
Surat
106.98
147.66
Mum bai
0
118
Ahem adabad
136.5
Chennai
102.88
Indore
98.1
Bhopal
Potential Projects
Segment
Investment Required
(US$ Million)
No. of Units
Spinning (1 mn Spindels)
489
Weaving (1000 looms)
Output
Employment
Quantity in Million
Value
(US$ Million)
10
131 Kgs
408
16,000
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
1,313
921
2,200
164,240
Total
39
Source: Madhya Pradesh Textile Report, MPSIDC
Pharmaceuticals
Sector Profile: Pharmaceuticals
Evolving Landscape
Madhya Pradesh : Gaining Momentum
M.P.: An Investment Destination
41
Evolving Landscape
 The global pharmaceuticals market generated total revenues of USD
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
largest pharmaceutical market in volume terms and the 13th largest
market in value terms.
 The significant difference in the value and volume wise rankings of
the Indian companies is largely attributed to the prices of drugs
manufactured in the Country, which rank among the lowest in the
Potential
Low-cost, high-quality production
Large and growing US FDA approved plant capacity
Synthetic Chemistry talent for early stage compound development
Low cost of research and world-class testing facilities
world. With the quality being maintained at par with international
Cost of a research scientist in India is only about 1/6th to 1/4th of
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
exports were approximately USD 3.17 billion.
 Projections of growth of Indian pharma market (exclusive of exports)
range from USD 11.9 bn in 2009 to USD 25bn by 2010
42
Challenges faced by Global Companies Today
Clinical Trials: Revenues to grow from $70 million (2002) to $1-1.5
billion by 2010 driven by a 60% cost advantage and large gene
pool for trials
Major opportunities in Biotechnology are in the areas of Bioinformatics, Bio-pharma etc.
Many international biotech companies like Chiron Corp, GSK and
Sigma Aldrich Corp have expressed interest especially in Biomanufacturinga
MP: Gaining Momentum
 Located at the very heart of India, Madhya Pradesh is
the second largest State and is easily accessible from
every corner of the Country.
 Madhya Pradesh has a made a lot of progress in the last
couple of years and is paving way to be at the forefront
of the Pharma industry.
 Major players such as Ranbaxy and IPCA already have
a foot hold in the State and are on the road to expansion
under the favourable industrial policies and initiatives by
the State Government.
 Madhya Pradesh is envisaging a pharma cluster at
Indore and has constituted a board for Biodiversity and
life sciences under the chairmanship of the Chief
Minister.
 Efforts are also being made to establish national level
training centres through support of large industrial
houses of MP. This would ensure that the State will
never be short of professional expertise. This is an
added advantage to the investors looking to invest in the
in the State as there would be a wide availability of
qualified and skilled professionals at a relative low
manpower investment cost.
43
 Ranbaxy is the largest Indian pharmaceutical company by sales. During 2005, its
revenue was US$ 813 million while net profit stood at US$ 50 million. Ranbaxy
has manufacturing facilities in seven countries (including India), most of which
are USFDA approved.
 Ranbaxy is investing US$ 100 million for expanding production capacity of
Indian, Brazilian and US manufacturing utilities.
 It has a bulk drug and formulation plant at Dewas in Madhya Pradesh. In the
current year Ranbaxy is investing US$ 100 million for expanding production
capacity of Indian, Brazilian and US manufacturing units.
IPCA Laboratories is one of India's leading pharmaceutical companies with a
strong thrust on exports. The Group's principal activities comprise manufacture
and distribution of drugs and pharmaceuticals. The products include tablets,
capsules, basic drugs, orals, liquids and injectables.
It has a bulk drugs and formulation unit at Ratlam and a bulk drug facility in Indore
in Madhya Pradesh.
IPCA Laboratories plans to invest US$ 22 million to expand its formulations
capacity at Ratlam in Madhya Pradesh. It also plans to invest US$ 14 million
in the first phase to set up a new export oriented formulations unit in Indore.
Nicholas Piramal India Limited (NPIL) is one of the leading pharmaceutical and
healthcare company with sales of US$ 290 million in 2005-05. NPIL is ranked
fourth in domestic formulations sales and second in total domestic
pharmaceuticals sales.
Its Pithampur plant in Madhya Pradesh is accredited by reputed organisations like
Allergan, Novartis, Solvay and IVAX, among others.
Nicolas Piramal is planning to invest US$ 45 million to enhance its research
and development activities besides strengthening its manufacturing facilities
MP: Offers The Right Blend
 By leveraging the existing manufacturing base, a strong
health care system along with a low cost resource pool
Madhya Pradesh has the potential to further develop the
pharmaceutical industry in the State.
 Madhya Pradesh’s network of health facilities comprises 145
hospitals, 343 community health centres, 1,705 primary
health centres. It also has 34 Ayurvedic and 4 homoeopathic
hospitals. The number of in-patient beds in Madhya
Pradesh’s hospitals is 20,839.
 MP has the right blend on freshers and laterals for the
pharmaceutical industry. The institutes across the State are
well equipped to provided to train manpower in each domain.
There are 9 key pharmacy colleges in the state supported by
6 medical colleges and 43 management institutes (including
one of the six Indian Institutes of Management at Indore). The
laterals have experience of working in India’s leading
pharmaceutical companies such as Ranbaxy, Lupin, NPIL,
Albert David etc.
Key Pharmacy Institutes Pass-out ~300 Students Each Year
• B. R. Natha College of Pharmacy, Mandsaur
• College of Pharmacy, Indore
• Department of Pharmacy, Bhopal
• Dr. Harisingh Gour Viswavidyalaya, Sagar
• Institute of Pharmacy, Gwalior
• R.K.D.F. Institute of Sciences & Technology, Mandideep
• Shri G.S. Institute of Technology & Science, Indore
• V.N.S. Institute of Pharmacy, Bhopal
44
Albert David is one of India's leading pharmaceutical companies in the
country with a strong thrust on exports. During the current fiscal year, the
company has achieved an excellent annual sales turnover of US$ 19.55
million) and ranks 58th out of 22,000 plus companies competing in the
Indian pharma market.
The Group's principal activities comprise manufacture and distribution of
drugs and pharmaceuticals, Disposable Syringes, Oral solids etc.
It has a syringes unit at Mandideep and a bulk drug facility in Indore in
Madhya Pradesh.
The company invested over US$ 222 million in the State and employs
over 175 people .
Lupin Laboratories is one of the leading pharmaceutical and healthcare
company with sales of US$ 290 million in 2005-06. Lupin is among the few
companies from India with global scale manufacturing facilities that
measure up to world's best quality standards.
The focus areas of the company includes anti-Tuberculosis,
cephalosporins, cardiovascular, anti-asthma, Non-steroidal anti-
inflammatory drugs
Its Mandideep plant in Madhya Pradesh manufactures cephalosporins,
lisinopril etc. .
The company invested over US$ 178 million in the State and employs
over 300 people .
Lupin Laboratories is expanding its manufacturing plant at Mandideep with
an investment of US$ 4.5 million.
MP: A Preferred Investment Destination
• Madhya Pradesh is all set to become the next pharma hub of India through its cluster development strategy and government support to
the investors. There are many significant avenues and areas that can be tapped for setting up and scaling up your business
operations.
• To further support your business endeavors Government of Madhya Pradesh is developing specialized infrastructure in the form of
SEZ Indore. Being an industry of economic importance, the Government also provides special fiscal and non fiscal incentives to
the units in the state.
Madhya Pradesh has strengths across the value chain
Drug Research
& Discovery
• Availability of skilled
manpower
Pre-clinical
Development
• Availability of skilled
manpower
• Low attrition rates
• Low attrition rates
• Government support
• Low cost of labour
Clinical
Development
• Availability of large
target population
• Target population
with
diverse
genetic set-up
Approval &
Launch
• Availability of skilled
manpower
• Low attrition rates
• Government support
Manufacturing
Marketing/
Exports
• Low set-up costs
(Land, building etc)
• Central location
• Specialized
infrastructure (SEZ)
• Specialized
infrastructure
(SEZ)
• Low operating cost
• Low operating cost
• Low cost of labour
Market Intensity Index Comparisons- A Reflection of Low Cost of Living
COST INDICATORS FOR ESTABLISHING AND OPERATING BUSINESS IN MP
160
INDICATOR
147.66
VALUE (US $)
132.9
140
120
108.17
Industrial land (per sq m)
112.65
102.88
Office space rent (per sq ft per month)
100
60
Residential rent (for a 2,000 sq ft
house, per month)
40
5-star hotel room (per night)
80
20
Electricity (per kWh)
5-30
0.5 - 1
280 - 350
80-100
0.09 - 0.13
0
Mumbai
45
Bangalore
Hyderabad
Indore
Pune
Water (per 1000 liters)
0.2
Engineering & Electrical Equipments
Sector Profile: Engineering & Electrical Equipments
Evolving Landscape
Madhya Pradesh : Gaining Momentum
M.P.: An Investment Destination
47
Evolving Landscape
 India has a strong engineering and capital goods base. The Indian engineering manufacturing sector has been growing at the rate of
about 5.9 per cent in the nineties. With a size of US $ 22 billion, the engineering sector exports stood at US $ 6.6 billion in 2001-02 and
imports at US$ 4.9 billion in the same year. The engineering manufacturing sector employs over 4 million skilled and semi-skilled
workers (direct and indirect).
 The range of machinery produced in India
Key developments observed during post liberalization period
is wide and includes heavy electrical
machinery, textile machinery, machine
tools,
earthmoving
and
handling
engines,
electric
equipment,
machinery,
motors,
railway
FDI
 36% of the total approvals went to the engineering industry
(1991-2005)
Foreign Technology
Agreements
 51% of foreign technology collaborations were approved in the
engineering industry
diesel
pumps,
instrumentation, oil & gas equipment,
sugar
 34% share in number of approvals and 40% share in investment
construction
equipment including mining equipment,
material
De-licensing
equipment,
metallurgical equipment etc.
 Many leading world class companies
such as GE, Ford, Caterpillar, Sony,
 34.4% share in total industrial production
Production
 Up by 5% share during last decade
Honda, LG, Hyundai, Siemens, Philips,
Daimler Chrysler, Fiat, Lafarge, ABB,
Electrolux, Volvo have manufacturing
base in India.
 8% share in 1990s
Exports
 14% share in 1999-2000
 21% share in 2004-05 (USD 16.4 billion)
“Better profitability, spruced up manufacturing setups, aggressive implementation of quality initiatives marked by
higher growth and better returns on capital employed…the hallmark of Industrial India – the engineering & capital
goods sector is back with a bang” – ET 500
48
MP: Gaining Momentum
•Located at the very heart of India, Madhya Pradesh is the second
largest and the most easily accessible states in the Country. The State
is blessed with natural wealth, and abundant supply of power and
people.
•The state has the largest plant of India’s leading engineering company,
Bharat Heavy Electricals Limited, (BHEL). The plant had recorded a
turnover of US$ 341 million in 2004-05. The profit before tax was also
high at around US$ 33.78 million
•An Engineering Cluster is proposed to be established at a cost of US$
15 million at Govindpura Industrial Estate near BHEL, Bhopal. This will
benefit about 445 industrial units in the Estate.
•A common facility and necessary infrastructure will be developed for
Bhopal
• Established in the late 50’s, Bharat Heavy Electricals
Limited ( BHEL ) is, the largest engineering and
manufacturing enterprise in India, and one of the leading
international companies.
• BHEL’s Bhopal plant is the company’s oldest unit with
updated & state-of-the-art manufacturing facilities.
• The product range at Bhopal includes Hydro, Steam,
Marine & Nuclear Turbines, Hydro & Turbo Generators,
Transformers, Switchgears, Controlgears, Transportation
Equipments, Capacitors, Bushings, Electrical Motors,
Rectifiers,Oil Drilling Rig Equipments, Battery Powered
Vehicles and Diesel Generating sets.
• This unit have been recommended for ISO-14001
certificate for its Environment Management System.
industries. Industries will have special facilities pertaining to engineering
works and power sector related specialization since the site will be in
the vicinity of Bharat Heavy Electricals Limited.
•The project will be developed with an estimated cost of US$ 1.53 billion
Some Of The Supporting Factors Assisting Your Business
Would Be:
• Skilled Manpower
• Competitive Labour Cost
with Central government share of US$ 10.67 million. The project has
• English Speaking Population
been given 'in principle' sanction. A company namely Bhopal Clusters of
• Managerial Excellence To Deliver Quality Goods On Time.
Engineering Organization Pvt Ltd has been formed.
• Indigenous Availability Of Raw Materials
• Strategic Location Allowing Exports To Near And Far
Countries
• Diversified Industrial Base With Supporting Ancillary Industries
49
MP: An Investment Destination
•Madhya Pradesh is emerging as a Engineering hub of India. There are many significant avenues and areas that can be tapped for setting
up and scaling up your business operations.
•To further support your business endeavors Government of Madhya Pradesh has is developing specialized infrastructure in the form of
SEZ Indore and Engineering Cluster.
•Being an industry of economic importance, the Government also provides special fiscal and non fiscal incentives to the units in the tate.
MP’s Position Across Offshoring Value Drivers
Value Proposition
MP’s
Discussion
MP’s
Position
Position
(2006)
(2010)
Labour Cost
MP has one of the lowest labour costs
Talent Pool
MP dominates the talent pool needed to support engineering and auto sector
Quality of Talent
MP’s talent pool is capable of meeting global standards
Delivery Capabilities
ITO helped develop delivery model and vendor base to support offshoring
Supply Base
MP has a vibrant and expanding supply base to support offshoring
Local Market
MP is one of the fastest growing market
Time to Market
MP’s geographic position offers the possibility of 24-hour cycle
Growing Capacity
MP offers an economic of scale for capacity
Productivity
MP offers highly skilled labour pool
Support Customer
Corporations are setting operations for offshoring, and local markets
Government Incentives
Government of MP is working on incentives to attract FDI
Strong
50
Weak
Chemicals
Sector Profile: Chemicals
Evolving Landscape
Madhya Pradesh : The Land of Opportunity
M.P.: An Investment Destination
52
Evolving Landscape
 The chemicals and petrochemicals industry is referred to as the "keystone" industry as the rest of the manufacturing sector
relies on it.
 The global chemicals and petrochemicals market generated total revenues of USD 1.8 trillion in 2004, representing a
compound annual growth rate (CAGR) of 0.2% for the five-year period spanning 2000-2004.
 The Indian chemicals and petrochemicals market grew by 10.1% in 2004 to reach a value of USD 32.4 billion
 The industry is expected to continue its growth performance with a CAGR of 9.2% in the period of 2004-09, as against the
global projected CAGR of 3.4% for the same period
 India has a robust base of chemicals and petrochemicals-driven businesses. Though the industry has undergone drastic
changes, Indian chemicals and petrochemicals share has been continuously increasing on a constant basis.
 Indian chemical growth would be primarily driven by specialty chemicals and knowledge chemicals
Specialty Chemicals
Adhesive sealants
Catalyst
Industrial gasses
Plastic adhesives
Knowledge Chemicals
Agro-chemicals
Pharmaceuticals
Biotechnology
India ranks twelfth in the world for production of chemicals and petrochemicals by volume.
53
Source: Global Chemicals and Petrochemicals Industry Report, April 2006, Data monitor
MP: Land of Opportunity
 Being in the center of the Country MP form the heart of logistic
backbone of the Country, which makes it the most preferred location
for chemical business.
 Madhya Pradesh has a made a significant progress in the last couple
of years and is paving way to be at the forefront of the chemical
industry.
Industry Potential
 Large and growing domestic market potential due to low
per capita consumption of key petrochemical derivatives
3 kgs. against global average of 17 kgs. for plastics
4 kgs. against global average of 23 kgs. for
polymers
 The state currently produces around 350,000 MT of basic chemicals.
 Good R&D base with access to low-cost, high-quality
human resources
 Chemicals is one of the principal industries in Madhya Pradesh in
 Proven capability for chemical process development
term of net value addition with 14.1% share
 The Potential growth of chemical industry in MP is envisaged at 5
billion in next 10 years.
 The industry is likely to witness a surge in investment once US$ 2.5
billion Refinery is setup at Bina by Bharat Oman Refinery & The
Reliance Group.
 With a plant capacity of 6 million tonnes, the project would enable
substantial growth of downstream chemical units.
 The government is likely to improve the infrastructure facilities in the
area and is also likely to provided fiscal and non fiscal incentives in
order to promote the industry.
54
 Major raw materials are available within the Country or
readily importable
 SEZs have no import tariffs and provide income tax
concessions
 Strategic location: In the heart of the high-growth markets
of India, Asia and the Middle East
 Vibrant downstream industry and a large number of
manufacturers provide options for joint ventures, alliances
and acquisitions
 Major opportunities lie in all segments: Basic, Specialty
and Knowledge Chemicals
 A strong global presence in the export of dyes,
pharmaceuticals and agrochemicals
MP: An Investment Destination
•Madhya Pradesh is poised to become the next Chemical
Tata Chemicals Limited is India's leading manufacturer of inorganic
destination of India through its infrastructure development
chemicals. It also manufactures fertilizers and food additives. Incorporated
strategy and government support to the investors. There are
in 1939, the company has an annual turnover of over US$ 667 mn and is
many significant avenues and areas that can be tapped for
part of the US$ 14.25 bn Tata Group, India's foremost business
setting up and scaling up your business operations.
conglomerate
•To further support your business endeavors Government of
TCL manufactures a wide range of high-quality and competitively priced
Madhya Pradesh has is developing specialized infrastructure
products, including soda ash, sodium bicarbonate, salt, caustic soda and
in the form of SEZ Indore. Being an industry of economic
urea.
importance, the Government also provides special fiscal and
non fiscal incentives to the units in the state.
•Growing investor confidence and down stream industries of
the Bina Refineries are likely to result in mushrooming of
chemical units in the state.
•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.
Some of the other supporting factors assisting your business:
• Central location
• Low set-up costs (Land, building etc)
• Specialized infrastructure
• Availability of skilled manpower
• Low operating cost
• Government support etc.
55
It has a 36,000 MPTA unit at Pithampur in Madhya Pradesh.
The company invested over US$ 69 million in the State and employs
over 200 people .
Nirma is one of the leading chemical company with sales of US$ 458
million in 2005-06. Nirma is among the few companies from India with
global scale manufacturing facilities.
The focus areas of the company includes soaps, detergents, soda ash
Alkyle Benzene etc.
Its Pithampur plant in Madhya Pradesh is the largest plant in the country
which controls 38% market share .
The company invested over US$ 94 million in the State and employs
over 600 people .
Connecting Further
56
Department of Industries
www.mpindustry.org
Indore SEZ
www.sezindore.com
Madhya Pradesh State Industrial Developmental Corporation
www.mpsidc.com
Government of Madhya Pradesh
www.mpgovt.nic.in
Madhya Pradesh State Electronics Development Corporation
www.mpsedc.com
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