Maharashtra Growth through Balanced Development

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1 Maharashtra Growth through Balanced Development

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3 Maharashtra Growth through Balanced Development

4 TITLE Maharashtra : Growth through Balanced Development AUTHORS Strategic Initiatives Government & Advisory (SIGA) Team, YES BANK YEAR December 2011 COPYRIGHT No part of this publication may be reproduced in any form by photo, photoprint, microfilm or any other means without the written permission of YES BANK Ltd. and FICCI. DISCLAIMER The information and opinions contained in this document have been compiled or arrived at from sources believed to be reliable, but no representation or warranty expressed is made to their accuracy, completeness or correctness. This document is for information purpose only. The information contained in this document is published for the assistance of the recipient but is not to be relied upon as authoritative or taken in substitution for the exercise of judgment by any recipient. This document is not intended to be a substitute for professional, technical or legal advice. All opinions expressed in this document are subject to change without notice Neither YES BANK Ltd. nor FICCI or any other legal entities in the group to which it belongs, accept any liability whatsoever for any direct or consequential loss howsoever arising from any use of this document or its contents or otherwise arising in connection herewith. CONTACT ADDRESS YES BANK Ltd Federation of Indian Chambers Registered and Head Office of Commerce and Industry (FICCI) 9th Floor, Nehru Centre, Federation House, Dr. Annie Besant Road, Tansen Marg, Worli, Mumbai , INDIA New Delhi Tel: Tel: , Fax: Fax: , Website: Website: Northern Regional Office Regional Office 48, Nyaya Marg, 33-B, Krishnamai, Chanakyapuri Sir Pochkhanwala Road, Worli, New Delhi Mumbai Tel: Tel: Fax : Fax: / 32 tushar.pandey@yesbank.in drvpandit@ficci.com

5 FOREWORD MAHARASHTRA has been the powerhouse of industrial growth in India since independence. Widely considered to be the richest and most progressive state in India, MAHARASHTRA has been the driving force for the country s economy, and a favored destination for foreign investment. It is the second largest state with 9.3% of India s population and third largest in terms of area accounting for 9.4% of India s geography. However, with less than 10% of land area and population of the country, MAHARASHTRA contributes about 14.4% of the National Gross Domestic Product (GDP). MAHARASHTRA has also been a key contributor to the agriculture sector in India. It remains predominantly an agrarian economy, with about two-third of the population engaged in agriculture accounting for 12.4% of the net sown area of India. However, agriculture contributes only about 11% to the GSDP, while the industry and services sector jointly contribute about 89% of the State s Domestic Product. This has been reflected with growth being concentrated in some regions, particularly in the Mumbai-Pune-Thane belt; more than in others. Maharashtra is also witnessing a strong trend of urbanization, with about 42.4% of the population residing in urban areas. PROGRESSIVE MAHARASHTRA has been conceptualized in this context, as a first-of-itskind effort to bring together key stakeholders particularly from the Government and Industry to deliberate on building sustainable competitive advantage in the state of Maharashtra; while at the same time ensuring inbuilt strategies for balanced and equitable growth across regions of the state. This report titled Maharashtra Growth through Balanced Development has therefore been conceptualized and highlights the industrial growth and investment attractiveness, and provides an overview of specific sectors that can deliver a more equitable model of growth for the state including Food & Agribusiness, Tourism, Education & Skill Development, Manufacturing amongst others. Foreword.. The Government of Maharashtra has also been proactive, and is one the leaders in adopting progressive concepts. Based on their belief, they have been among the pioneers in adopting the Public Private Partnership (PPP) approach for augmenting infrastructure in the state by attracting private sector participation and investments. The report also discusses the proposed Mumbai-Delhi Industrial corridor (DMIC), and the Dedicated Freight Corridor (DFC) which is likely to be a game-changer and along which significant growth is expected to emerge. We firmly believe that this report presents a comprehensive overview of the state, and demonstrates the tremendous potential and growth opportunities within MAHARASHTRA that can be unlocked. FICCI & YES BANK remain committed to assisting stakeholders in developing sustainable and commercially viable projects in the state. We trust that this document will catalyze new ideas for inclusive development of the State sponsored by the State government and private sector, and will be instrumental in designing the interventions necessitated. Sincerely, Dr. Rajiv Kumar Secretary General Dr. Rana Kapoor Founder, Managing Director & CEO

6 CONTENTS 1. MAHARASHTRA: AN OVERVIEW Geographic Administrative Demographic Economic Foreign Investment Export INFRA READINESS OF THE STATE Roads/Highways Railway Airports Ports Electricity Communications Irrigation Special Economic Zones IT Parks Industrial Estates 19 Contents.. 3. POLICY ENVIRONMENT Industrial policy (2006) Tourism & Entertainment Policy (2006) Wine Policy (2001) IT/ ITeS Policy (2009) Biotech Policy (2001) KEY GROWTH SECTORS OF MAHARASHTRA Food & Agribusiness Tourism Education & Skill Development Manufacturing Power & Renewable Energy Gems & Jewelry Rural Development MAHARASHTRA: Growth through Balanced Development 53

7 TABLES List of Figures Figure 1 : Maharashtra Contribution in GDP ( ) 8 Figure 2 : Growth Trend (percent) in India and in Maharashtra State 9 Figure 3 : Sector wise Growth Rates in Maharashtra 9 Figure 4 : GSDP v/s Industrial Sector Growth 10 Figure 5 : GSDP v/s Agricultural Sector Growth 10 Figure 6 : GSDP v/s Service Sector Growth 10 Figure 7 : Contribution of various sectors in Maharashtra GSDP 11 Figure 8 : Top 6 FDI Destinations in India 12 Figure 9 : Export Trends in Maharashtra & India 12 Figure 10 : Contribution of Maharashtra in Total Export in India 13 Figure 11 : Mobile Phone users v/v Landline users Growth 17 Figure 12 : Contribution of various sectors in Maharashtra GSDP 18 Figure 13 : Trend of State Income & Share of Agriculture 25 Figure 14 : Trend in Percentage of Gross Irrigated Area to Gross Cropped Area in Maharashtra 26 Figure 15 : Sources of Credit 27 Figure 16 : Percentage of Top 10 States in no. of Foreign Tourist Arrivals (2010) 28 Figure 17 : Domestic and Foreign Tourist Visits to Maharashtra during 2008 to Figure 18 : Literacy in State v/s India 32 Figure 19 : Literacy Rate Disparity in Maharashtra 32 Figure 20 : No. of Schools (Primary & Secondary) 33 Figure 21 : Enrolment 33 Tables.. Figure 22 : Installed Capacity - Based on Source 43 Figure 23 : Power Consumption Snapshot 44 Figure 24 : Consumption Pattern as on December 31st, Figure 25 : Peak Demand-Supply Gap for Electricity 45 Figure 26 : Potential and Utilization of Electricity Generation from 47 Renewable Sources in Maharashtra Figure 27 : Trend of Total Installed Capacity of Electricity Generation 47 from Renewable Sources Figure 28 : Composition of India's Export Basket 48 Figure 29 : Gems & Jewelry Export Trend 49 Figure 30 : Government Expenditure on Rural Sector 51

8 CHARTS.. List of Tables Table 1 : Maharashtra Snapshot 7 Table 2 : Population - Key Indicators 8 Table 3 : FDI Inflow & Investment 11 Table 4 : Statistics on Roads/Highways 14 Table 5 : Maharashtra Power Scenario 17 Table 6 : Irrigation in the State 18 Table 7 : Established Tourist Circuits in Maharashtra 30 Table 8 : Incentives and Scholarships Opportunities for Students in Maharashtra 34 Table 9 : Institutions and their Intake Capacity 35 Table 10 : Operational Scope for PPP 36 Table 11 : IIP for Manufacturing Sector as a Whole 37 Table 12 : Maharashtra - Contribution of Manufacturing to GSDP 38 Table 13 : The Time-Series Data Showing Growth in Past 5 Years 38 Value of Output and Net Value Added in Manufacturing Table 14 : No. of Institutions and Capacities in Maharashtra 42 Charts..

9 1. MAHARASHTRA: AN OVERVIEW 1.1. Geographic Located in the north centre of Peninsular India, Maharashtra is one of the highly industrialized states of India, occupying the western and central parts of the country and extending over the Sahyadri mountains. Maharashtra shares borders with states of Gujarat, Madhya Pradesh, Chhattisgarh, Andhra Pradesh, Karnataka, Goa and the Union Territory of Dadra and Nagar Haveli and on its west is the Arabian Sea. It has the benefit of a long coastline stretching nearly 720 kilometers along the Arabian Sea. With a geographical area of 3.08 lakh sq. km., Maharashtra is the second largest state in terms of population and third largest terms of area accounting for 9.29 percent and 9.36 percent of the total for India respectively. Dadr a & a Nag r Haveli Gujrat Daman (D.&D) Thane 51 Bandra Greater Mumbai Pune 43 Raigad 45 Ratnagiri Arabian 46 Sea Nandurbar 39 Nashik 40 Satara 48 Ahmadnagar 19 Sangli 47 Kolhapur 34 Sindhudurg 49 Goa Beed 24 Osmanabad 41 Solapur 50 Karnataka Madhya Pradesh Dhule Jalgaon Amravati Akola Buldhana Washim Aurangabad Jalna 33 Hingol Parbhani Latur 35 Nanded 38 Bhandara Gondia 36 Nagpur 30 Wardha Chandrapur 27 Yavatmal 54 Andhra Pradesh Gadchiroli 29 Chhattisgarh Table 1: Maharashtra Snapshot Population Density Sex Ratio Principal Languages million 365 persons per sq. km 925 females per 1000 males Marathi, Hindi and English Literacy Rate Major Minerals Major Crops Major Industries GSDP at current prices in Domestic Airports Coal, Manganese and Iron Groundnut, Cotton, Sugarcane Financial Services, Textiles, Auto ancillaries, Chemical and Allied products, Electrical and Non-Electrical Machinery, Petroleum and Allied Products, Wine, Jewelery, Pharmaceuticals, Engineering Goods, Media and Entertainment, etc ` 9,01,330 Crore 10 the major airports are Mumbai, Pune, Nagpur and Nasik Source: Census2011 and Economic Survey, Maharashtra

10 1.2. Administrative The State of Maharashtra is divided into six revenue divisions for administration viz. Amravati Division, Aurangabad Division, Konkan Division, Nagpur Division, Nasik Division, Pune Division which are further divided into 35 administrative districts. Maharashtra has 535 towns. Mumbai is the capital city. Other major cities of Maharashtra are Pune, Nagpur, Thane, Nasik, Solapur, Kolhapur, Sangli, Aurangabad, Amravati and Ratnagiri. The State has a long tradition of having statutory bodies for district level planning. For local self-governance in rural areas, there are 33 Mumbai Suburban M u m b a i City Thane R ai g a d Sinh du dr u g R at n agir i Nandurbar Zilla Parishads, 355 Panchayat Samitis and 27,993 Gram Panchayats. The urban areas are governed through 26 Municipal Corporations, 222 Municipal Councils and 7 Cantonment Boards. Nashik Pune Dhule Ahmadnagar Satara Sangli Kolhapur Jalgaon Jalna Beed Solapur Buldhana Parbhani Akola Washim H ingol i Latur Osmanabad A m ravat i Nanded Wardha Yavatmal Nagpur B ha nd a r a Aurangabad Chandrapur Gondia Gadchiroli Konkan Region Pune Region Nagpur Region Nashik Region Aurangabad Region Amravati Region 1.3. Demographic Maharashtra is the second largest state in terms of population. The State has a population of around Crore (2011 Census provisional) which is about 9.29 percent of the total population of India. The distribution across the state also reflects a highly urbanized populace with about 45 percent people residing in urban areas whereas at national level it is around 30 percent. The state is 22nd in sex ratio with 925 females per 1000 males as against 940 at the national level. However, the state is also ranked 12th in the country with its literacy rate at percent as per provisional estimates of Census 2011, compared to the national average of 74 percent. Table 2: Population - Key Indicators Total Population of Maharashtra Cr Share of Total for India 9.29% % Urban Population 45% % Population between 0-6 yrs age 11.43% Literacy Rate 82.91% Sex Ratio (Females per Thousand Males) 925 Density (per sq.km.) 365 Source: Census 2011(Provisional) Economic The Gross State Domestic Product (GSDP) at current prices for is at ` 9,01,330 Crore and contributes about 14.7 percent of the National GDP. The GSDP has been witnessing strong and sustained growth. The states contribute to about 14.7 percent of the Figure 1: Maharashtra Contribution in GDP ( ) 14.70% Maharashtra India 85.30% Source: Economic Survey, Maharashtra

11 national GDP. A comparative view of the national GDP and the state GSDP shows that over the last decade when India has achieved very strong GDP growth, Maharashtra has almost steadily contributed to this with a growth rate higher than the national figure by 1-2 percent. This growth has been achieved by strong growth in services building on the vibrant industrial sector that Maharashtra boasts of in addition to a robustly growing services sector. Figure 2: Growth Trend (percent) in India and in Maharashtra State GSDP 6 GDP Source: Economic Survey, Maharashtra The GSDP growth in was 10.5 percent against 8.7 percent in the previous year ( ) as per provisional estimates. Figure 3: Sector wise Growth Rates in Maharashtra GSDP Services Industry Agriculture & Allied Activities Source: Economic Survey, Maharashtra

12 10 Industry: Maharashtra has been India's leading industrial state through out the history. Maharashtra has had an immense history in textiles and Mumbai city was the original home of India's textile mills. Over time some of the regions have been known for the textile industry like Ichalkaranji, Malegaon and Bhiwandi. Today the major industries in the State include chemical & allied products, electrical & non-electrical machinery, textiles, petroleum & allied products. Other important industries include Metal Products, Wine, Food Processing, Jewellery, Electronics, Pharmaceutical, Engineering goods, Machine tools, Steel & Iron castings, Heavy metals, Plastic wares and synthetic fibers, cold rolled products and industrial alcohol. Prominent Indian and foreign automobile makers such as Tata Motors, Mahindra & Mahindra, Mercedes Benz, Audi, Skoda Auto, Fiat, General Motors and Volkswagen are either based in or have manufacturing presence in Maharashtra. Maharashtra is also well-known for production of three wheelers, jeeps, commercial vehicles and cars. Sugar industry has also made considerable progress in the state, especially in the co-operative sector. Maharashtra is well recognized for the development of sugar industry on cooperative lines in which the farmers acquire share in the sugar mills. Agriculture: Agriculture continues to be the main occupation of the state. Principal crops include Rice, Jowar, Bajra, Wheat, Pulses, Turmeric, Onions, Cotton, Sugarcane and several Oil Seeds including groundnut, sunflower and Soya bean. The state has huge areas under fruit cultivation of which mangoes, bananas, grapes, and oranges are the main ones. Of the gross cropped area, only 18 percent is irrigated. Agriculture in Maharashtra is therefore still vulnerable to the uncertainties of the monsoon which in turn has an impact on the state's growth as well. The government has already undertaken several initiatives to augment irrigation facilities to reduce dependency on rainfall and the implementation of these will lead to a positive impact on the sector % 20.00% 15.00% 10.00% 5.00% 0.00% Figure 4: GSDP v/s Industrial Sector Growth Source: Economic Survey, Maharashtra % 15.00% 10.00% 5.00% 0.00% -5.00% % Industry Services: Services sector has been the engine of economic growth in Maharashtra accounting for Source: Economic Survey, Maharashtra about 61 percent of the State GSDP. The tertiary sector is driven mainly by trade, hotels, restaurants, communication, IT/ITES, banking and insurance. GSDP Figure 5: GSDP v/s Agricultural Sector Growth Source: Economic Survey, Maharashtra % 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Agriculture & Allied Activities GSDP Figure 6: GSDP v/s Service Sector Growth Services GSDP

13 Maharashtra is one of the largest exporters of software services among states in India. The Service Sector remains the primary contributor to the state GSDP. Figure 7: Contribution of various sectors in Maharashtra GSDP Together the industrial and services sector contribute about 89 percent of the state's domestic product. Agriculture and allied activities contribute to only 11 percent of the GSDP however it continues to account for employment to more than half of the state's population. 61% 11% 28% Agriculture & Allied Activities Industry Services 1.5. Foreign Investment Source: Economic Survey, Maharashtra Maharashtra's economy is the most globally connected in India. Since the start of de-licensing in 1991, the state has attracted about a quarter of the country's FDI approvals. Maharashtra was the destination of choice for as much as 53 percent of the FDI inflows into India in the last financial years. Detailed sector wise FDI approved in the States since March 2009 to Aug 2011 (` Crore) is provided in Table 3 beloqw. Table 3: FDI Inflow & Investment S. NO. STATE CUMULATIVE %age to (April total Aug 2011) Inflow 1 MAHARASHTRA 39,409 27,669 28, , % 2 DELHI 46,197 12,184 22, , % 3 KARNATAKA 4,852 6,133 3,844 40, % 4 GUJARAT 3,876 3,294 1,908 33, % 5 TAMIL NADU 3,653 6,115 3,177 34, % 6 ANDHRA PRADESH 5,710 5,753 1,836 28, % 7 WEST BENGAL ,393 7, % 8 PUNJAB & CHANDIGARH 1,038 1, , % 9 MADHYA PRADESH 255 2, , % 10 GOA 808 1, , % 11 RAJASTHAN , % 12 KERALA , % 13 UTTAR PRADESH , % 14 ORISSA , % 15 ASSAM % 16 BIHAR % 17 Regions not Indicated 15,056 20,543 13, , % TOTAL 123,120 88,519 77, , % Source: Fact Sheet on FDI, Department of Industrial Policy & Promotion 11

14 Figure 8: Top 6 FDI Destinations in India 6.15% 5.10% 5.17% 4.31% 34.86% MAHARASHTRA DELHI KARNATAKA GUJARAT TAMIL NADU, ANDHRA 20.64% Source: Department of Industrial Policy & Promotion Maharashtra is ranked first in total share of FDI in India Export Maharashtra's total exports were ` 228,184 Crore as against ` 845,125 Crore from India as a whole in The main products exported from the State are gems & jewelry, software, textiles, readymade garments, cotton yarn, made-up fabrics, metal & metal products, agro-based products, engineering items, drugs and pharmaceuticals and plastic & plastic items. Figure 9: Export Trends in Maharashtra & India ` Crore 12 Source: Economic Survey, Maharashtra Year

15 Maharashtra is one of the leaders in exports from India accounting for 27 percent of total exports from the country. It also boasts of the largest number of special export promotion zones being set up in the country. To boost the exports, Government is taking initiatives like giving 'The Best Export Award' and organization of exhibition of products in foreign countries. During the year , six international exhibitions were organized in various countries. The State Government has identified the IT and ITeS, biotechnology and food processed industries for export promotion and facilitation. Figure 10: Contribution of Maharashtra in Total Export of India % Rest of India Maharashtra % 80.00% Percentage 60.00% 40.00% 20.00% 33.23% 30.24% 24.57% 44.56% 25.00% 27.00% 25.00% 27.00% 27.00% 0.00% Year Source: Economic Survey, Maharashtra & YES BANK Analysis 13

16 2. INFRA READINESS OF THE STATE Infrastructure is a key driver of economic growth and its development has the potential to fuel the economy. Creation and maintenance of physical infrastructure facilities is also a pre-requisite to attract foreign funds and boost the growth pace. The key components of physical infrastructure viz. power, roads, railways, ports, airports and telecommunications were traditionally in the exclusive domain of the Government. However, due to constraints in public finances, the Government is encouraging more private participation through Public Private Partnership (PPP) concept, since last few years. The PPP concept is fast evolving in all aspects of Infrastructure development since it involves the strength of the Government and the efficiency of the private sector Roads/Highways The State's road network consists of National Highways, State Highways, Major District Roads, Other District Roads and Village Roads. The total road length in the State was 2.40 lakh km at the end of March, 2010, of which the village road length was 1.04 lakh km As on 31st March, 2010, 97.1 percent villages were connected by allweather roads, 2.2 percent villages were connected by fair weather roads and remaining 0.7 percent villages (275) did not have road connectivity. Table 4: Statistics on Roads/Highways Category As on 31st March National Highways 4,367 4,367 4,376 State Highways 33,800 33,933 34,102 Major District Roads 49,393 49,621 49,901 Other District Roads 45,886 46,143 46,817 Village Roads 1,02,149 1,03,604 1,04,844 Total 2,35,595 2,37,668 2,40,040 Source: Economic Survey, Maharashtra The Golden Quadrilateral (GQ) is a highway network connecting India's four largest metropolises: Delhi, Mumbai, Chennai and Kolkata, thus forming a quadrilateral of sorts. The largest highway project in India is the first phase of the National Highways Development Project (NHDP), and consists of building 5,846 km of four/six lane express highways at a cost of ` 60,000 Crore. The GQ project establishes better and faster transport networks between many major cities and ports. It provides an impetus to smoother movement of products and people within India. It enables industrial and job development in smaller towns through access to markets. It provides opportunities for farmers through better transportation of produce from the agricultural hinterland to major cities and ports for export, through lesser wastage and spoils. Finally, it drives economic growth directly through construction as well as through indirect demand for cement, steel and other construction materials.

17 2.2. Railway The rail network in Maharashtra is very well developed. The Central Railways and Western Railways have their HQs at Chhatrapati Shivaji Terminus and Churchgate respectively. Gujarat Madhya Pradesh Jalna Parbhani The railway route length in the State as on Thane Ahmadnagar Mumbai 31st March, 2009 was km Beed Pune Nanded Alibag (including 382 km of Konkan Railway), Dharashiv Raigad Latur Andhra Pradesh which is 9.2 percent of the total railway Satara Arabian Solapur route length of 64, km in the Sea country. The data of total railway route Ratnagiri Sangli length in the State shows that the increase in the length is hardly about 18.3 percent over last 50 years. This increase is mainly due to Konkan Railway. The railway route length Sindhudurg Kolhapur Karnataka per 1,000 sq. km of geographical area as on 31st March, 2009 was km (including Konkan Railway) in the State as against km in the country. Nashik Nandurbar Dhule Jalgaon Akola Amravati Aurangabad Buldhana Washim Yavatmal Nagpur Wardha Bhandara Gadchiroli Chandrapur The Delhi-Mumbai Industrial Corridor (DMIC) is a mega infra-structure project of USD 90 billion with the financial & technical aids from Japan, covering an overall length of 1,483 km between the political capital and the business capital of India, i.e. Delhi and Mumbai. The project also envisages establishing of a Multi-modal High Axle Load Dedicated Freight Corridor (DFC) between Delhi and Mumbai. This corridor will be equipped with an array of infrastructure facilities Arabian Sea Gujarat Ratnagiri Nashik DMIC Nandurbar Dhule Sangli Kolhapur Sindhudurg Jalgaon Aurangabad Madhya Pradesh DMIC INFLUENCE Zone Amravati Akola Buldhana Washim Chandrapur Thane Ahmadnagar Jalna Parbhani Mumbai Beed Nanded Pune Alibagh Osmanabad Raigad Latur Andhra Pradesh Satara Solapur Established Industrial Area Proposed Investment Zone Karnataka Yavatmal Wardha Nagpur Bhandara Gadchiroli State Capital State Boundary District Boundary District Headquarter such as power facilities, connectivity to ports en route among others. Approximately 180 million people, 14 percent of the population, will be affected by the corridor's development. In Maharashtra, the alignment of DFC passes through Dahanu Road, Virar, Vasai Road, Diva and terminal at the Jawaharlal Nehru Port in Navi Mumbai, with about 18 percent of area of the state within the influence area of DMIC. Based on the strengths of specific regions in the influence area, four development nodes have been identified in the 15

18 influence area of DMIC. These include two invest-ment regions and two industrial areas. State Government agencies have already been involved to ensure that adequate land is available for the envisaged developments. Proposed project components in each of the nodes are discussed briefly hereafter: Node No.17: Dhule-Nardhana Investment Region Node No.18: Igatpuri-Nashik-Sinnar Investment Region Node No.19: Pune-Khed Industrial Area Node No.20: Industrial Area with Greenfield Port at Dighi Further, the draft National Manufacturing policy that has been cleared by the Union Cabinet in October 2011 has proposed the development of seven large integrated areas called National Investment and Manufacturing Zones (NIMZ) with a regional alignment along the DMIC. It is envisaged that two of these NMIZs will be in Maharashtra state Airports There are three international and five domestic airports in the State. The three international airports are at Mumbai, Pune and Nagpur which as on 31st March 2010 have carried lakh passengers and lifted 408,731 tonnes of cargo. The five domestic airports are at Mumbai, Pune, Nagpur, Aurangabad and Kolhapur, which as on 31st March 2009 have carried lakh passengers and lifted 197,993 tonnes of cargo. To reduce congestion in Mumbai International Airport, an additional airport has been proposed at Navi Mumbai, the first phase of which will be functional by The Government has also taken a decision of setting up new airports at Yavatmal, Nanded, Latur, Osmanabad, Baramati, Bhandara Nandurbar Dhule Jalgaon Amravati Nagpur Gondia Akola Wardha Buldhana Yavatmal Washim Gadchiroli Nashik Aurangabad Jalna Chandrapur Thane Ahmadnagar Parbhani Hingoli Mumbai (Bombay) Bid Nanded Raigardh (Beed) Pune Latur A R A Satara Osmanabad B I Solapur A Sangli Ratnagiri N Kolhapur S E Sindhudurg A Kolhapur, Ratnagiri and Sindhudurg. The work of setting up airport at Kolhapur has been handed over to Airports Authority of India and is expected to be completed by February, The proposal of setting up airport at Ratnagiri has been handed over to the Coast Guard Ports The State has a 720 km long coastal line with two major ports, namely Mumbai Port Trust (MbPT) and Jawaharlal Nehru Port Trust (JNPT). The Jawaharlal Nehru Port is India's largest container traffic port. MbPT and JNPT handled and lakh tonnes cargo traffic respectively during (upto December 2009), which were 4.6 percent and 1 percent more than that during the corresponding period of the previous year respectively. 16 The State Government has taken a policy-decision to develop all 48 minor ports in the State with participation of private sector under control of Maharashtra Maritime Board. In the phase-i, it has been decided to develop seven

19 minor ports viz. Dighi, Rewas-Aware, Jaigad, Vijaydurg, Redi, Anjanwel (Dabhol) and Alewadi. Anjanwel (Dabhol) Port has been developed with the help of M/s Ratnagiri Gas and Power Project Ltd. The construction work of first berth at Dighi is in progress and is expected to commence cargo operations in April The port at Jaigad (Dhamankhol Bay) has become operational in August, The minor ports together handled lakh tonnes cargo traffic and lakh passenger traffic during (upto September, 2009) Electricity The total generation of electricity in Maharashtra in was 81,345 million KWH and total consumption was 79,139 million KWH. About 39 percent of the consumption was industrial followed by Domestic and Agriculture. A snapshot of the Electricity status in Maharashtra is provided in Table 5 below. Table 5: Maharashtra Power Scenario Item Total Generation 3,268 7,925 17,864 36,430 61,209 81,345 Total Consumption 2,720 7,650 14,034 29,971 47,289 79,139 Industrial Consumption 1,853 5,312 8,130 14,706 18,363 30,866 Agricultural Consumption ,723 6,604 9,940 13,925 Domestic Consumption ,779 5,065 11,172 18,171 Source: Economic Survey, Maharashtra Communications The communication system that comprises of posts, telegraphs, telephones and voice, video & data telecommunication is an integral part of the development process and is growing rapidly after liberalization and privati-zation policies implemented since 1990s. The telecommunication system in the State is operated both by the private operators and public sector undertakings. Along with Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL), eight private companies are providing telecommunication services in the State. The total number of landline connections at the end of December, 2010 in the State was lakh. The number of cell phone users at the end of December, 2010 in the State were lakh. Further, according to the TRAI, Maharashtra has around 40 percent of the total Internet users in India. Figure 11: Mobile Phone users v/s Landline users Growth In Lakh * Mobile phones LandLines In Lakh 17

20 2.7. Irrigation Various major, medium and minor irrigation projects have been taken up by the State Government to create maximum possible irrigation potential. However, there is a wide gap between potential created and utilized in major, medium and minor projects. The details of irrigation projects taken up and the irrigation potential created from them are given in Table 6 below: Table 6: Irrigation in the State Item Major Medium Minor Minor Total TOTAL (State (Local Minor Sector) Sector) (A) No. of Projects upto June 2010 Completed Ongoing (B) Irrigation Potential (lakh ha.) Created upto June Actual Utilization during Additional area under irrigation by wells in command area Source: Economic Survey, Maharashtra Currently, Maharashtra has various major, medium and minor irrigation projects at different stages of development to facilitate the agriculture in state. However, there is a wide gap between potential created and utilized. The total irrigation potential utilized in the State during was 30.5 lakh ha of which, lakh ha was from major irrigation projects, 3.67 lakh ha was from medium irrigation projects and remaining 9.12 lakh ha was from minor irrigation projects (State sector and Local sector) Special Economic Zones The State has adopted the Special Economic Zone (SEZ) Policy with effect from 10th February, Upto December, 2010, in all 233 SEZ proposals were received in the State, of which 143 were approved by the Central Government (105 formal and 38 in-principle approvals) and 63 proposals were notified. Out of 144 approved SEZs, 59 are Figure 12: Contribution of various sectors in Maharashtra GSDP 2% 5% 8% 5% 51% 29% Konkan Pune Nashik Aurangabad Amravati Nagpur 18 information technology / Source: Maharashtra Industrial Development Corporation

21 information technology enabled services, 57 are single-product, 16 are multi-product and 12 are multi services IT Parks Emergence of IT parks has triggered development of integrated infrastructure needed for this industry. These parks are envisaged to be the centers of excellence with reference to various infrastructure facilities and overall ambience required for industry. In view of this, 36 public IT parks are established by Maharashtra Industrial Development Corporation (MIDC) and City and Industrial Development Corporation of Maharashtra Limited (CIDCO). For getting private participation in creating world-class infrastructure for IT industry, 396 private IT parks have been approved, out of which 70 IT parks have started functioning. These IT parks with investments of `1,036 Crore, have created 1.38 lakh jobs. The remaining 326 IT parks with investments of ` 6,454 Crore have been given Letters of Intent and are expected to generate 8.6 lakh job opportunities. The private IT Parks are mainly concentrated in Greater Mumbai (123), Pune (117), Thane (80), Nasik (4) and Nagpur (2) Industrial Estates In order to achieve planned and systematic industrial growth throughout the State, MIDC has developed industrial areas with essential infrastructure like internal roads, water, electricity and other internal services for entrepreneurs. As on 31st March 2009, there were a total of 63,028 developed IDIs and 55,831 allotted IDIs employing 865,067 people. The State Government has also undertaken a program of developing industrial estates in areas other than MIDC on a co-operative basis with the view to generate more employment opportunities in rural areas. The State Government is providing several facilities in terms of contribution to share capital and technical guidance for establishing industries in co-operative industrial estates. As on 30th November 2009, there were a total of 6,097 cooperative industrial estates employing 117,322 people with the maximum concentration being in Pune and Nasik. It is thus evident that the State Government has a strong focus on developing and maintaining the infrastructure in the state, across all sectors, so as to provide a conducive environment for the development of agriculture, industry and services. 19

22 3. POLICY ENVIRONMENT To accord top priority to the industrial sector for the vital role it plays in a balanced and sustainable economic growth, employment generation, mobilization of capital, and contribution to exports, the Government of Maharashtra has introduced an industrial policy common to all industries and a few sector-specific policies. Some of them have been covered in the sections below: 3.1. Industrial policy (2006) Policy Objective: To achieve higher and sustainable economic growth with emphasis on balanced regional development and employment generation through greater private and public investment in industrial and infrastructure development. Policy Targets: Industrial Sector growth rate of 10 percent Service Sector growth rate of 12 percent Additional Employment Generation of 20 lakh Strategies: Industrial Policy objectives will be realized through the following strategies: a) Identification of thrust sectors b) Building up of quality infrastructure c) Incentivizing investments for employment generation in districts low on Human Development Index d) Attracting mega investments both foreign and domestic e) Commercial exploitation of local resources and local economic potential. f) Strengthening the SME sector through promotion of quality competitiveness, research and development and technology up gradation g) Nurturing industrial clusters h) Prevention of industrial sickness and revival of viable sick units i) Smooth exit option for industries j) Streamlining procedures, debottlenecking and creation of hassle free industry friendly environment k) Strengthening institutional support Thrust Areas: The State will identify key thrust areas for according greater importance to sectors keeping in mind their potential in contributing to the socio-economic development of the State. 20 These sectors will be provided comprehensive support through specific policy initiatives. Following are the thrust areas, which would be offered priority status: a) Infrastructure Power, Roads, Rail, Communication, Connectivity, Airports, Ports. b) Manufacturing - Agro- based Industries, Textiles, Auto and Auto components, Electronic products, Pharmaceuticals and Gems and Jewelry.

23 c) Services Sunrise Technology and Service Sectors including Information Technology, I.T. enabled services, Biotechnology, Nano technology, (Retail, Tourism, and Entertainment) d) Mumbai- Pune - Nasik Aurangabad Quadrilateral will be provided greater infrastructure support to develop its full potential for knowledge-based, manufacturing and agro-based industries. e) Establishment of Gas distribution networks in major industrial areas in the State to improve availability of cleaner and cost effective fuel. This Industrial Policy was introduced in the year 2006 and was valid upto 31st March Currently a new Industrial Policy is being drafted by the State Tourism & Entertainment Policy (2006) Maharashtra introduced its first Tourism Policy in The Policy has identified few action plans that would help the State tap into its tourism potential and enhance income from the sector. Some of the action plans are as follows: Development of infrastructure at tourist destinations Accessibility to tourism destinations and wayside amenities Development Control Regulation at destinations Strengthening of Bed and Breakfast scheme Recreational facilities at destinations Public-Private-Partnership New Products: World Heritage Sites, Cultural Tourism, Pilgrimage Circuits, Rural Tourism, Fort /Fort Circuits Crafts Application of Information Technology for tourism Information Kiosks Creating Awareness Safety & Security Training and Capacity Building Single window clearance system Some of the incentives offered under this policy are as follows: Total exemption from Luxury Tax (as applicable to Hotels) for a period of 7 & 10 years depending on the location of the tourism project in the B and C zones respectively & 50 percent exemption for a period of 5 years in A zone. Total exemption from Entertainment Tax/Amusement Tax for a period of 5, 7 and 10 years depending on the location of the tourism project in the A, B, and C zones respectively. Total exemption from Stamp Duty for the projects located in B and C zones and 50 percent exemption from stamp duty for projects located in A zone. Electricity duty will be levied at industrial rates for the respective period 75 percent exemption from registration charges and 50 percent concession from payment of permit charges for sightseeing buses registered as such and approved by the transport authority, having minimum seating capacity of 25 seats and operating in Municipal Corporation areas and hill stations. 21

24 Total exemption from Property Tax & Non-Agriculture Tax to all tourism projects run/owned/ by MTDC The water rate/ tariff, shall be levied at maximum Industrial Rate Property Tax shall be charged at Residential Rate Improved Budgetary support of at least `25 Crore will be ensured in the State budget of the Tourism Department for marketing and promotion with a 5 percent increase in the budget allocation every year during the span of this policy 3.3. Wine Policy (2001) To give impetus to the grape processing and wine industry in the state, Government of Maharashtra declared 'Maharashtra Grapes Processing Industry Policy, 2001'. Some of the salient features of this Policy are as follows: Declaration as a Preferential Area for Winery Industries Declaration as a Small Scale Industry Concessions in Excise Duty Concessions in Sales Tax Wine will be permitted for sale by Beer Bars and also licenses will be given to Wine Bars to sell wine on the basis of Beer Bars An amount of ` 5000/- per year will be charged for License Fee for the sale of wine and this rate will not be changed for next 10 years Simplification in the system of License/Permission for Wine Production Establishment of Wine Institute For Winery Industry, essential license, plot, electricity supply, telephone etc. infrastructure will be made available with One Window System Establishment of Grapes Board Taxation on Imported Wine 3.4. IT/ ITeS Policy (2009) Objective: To promote investments in the field of IT across the state, particularly in Nagpur, Nasik, and Aurangabad and in districts with low human development index (HDI) to exploit potential of these locations and generate employment. To promote development of special fields of application of IT such as animation, visual effects, gaming and comics. To ensure growth of the IT sector in an environmentally sustainable and responsible manner. To promote the establishment of knowledge / resource centers and incubation centers across the state. 22 To position Maharashtra as a rewarding destination for IT investment.

25 Some of the fiscal incentives introduced in the Policy are as follows: Allowance for 100 percent additional floor space index shall be made available to all registered IT and ITeS units, including telecom manufacturing units in public and private IT / ITES parks approved by the Directorate of Industries with premium as follows: o o o A 10 percent premium for Nashik, Aurangabad, Nagpur. For no premium for districts with low human development index With premium as determined by the Empowered Committee in other areas of the state. IT / ITeS units will be supplied power at industrial rates applicable under themaharashtra Electricity Regulatory Commissioner's tariff orders. Exemption from stamp duty to all IT and ITeS units in public IT parks. Exemption of 75 percent of stamp duty to all IT and ITeS units in private IT parks. Exemption from stamp duty to all IT and ITeS units in C, D, D+ and no-industry districts. Exemption of 90 percent of stamp duty payment for mergers, de-mergers and reconstruction of IT and ITeS units all over the state. Exemption of 90 percent of stamp duty to assignment leases under Section 60 and leave and licences under Section 36 A of the Bombay Stamp Act, IT and ITeS units shall be exempt from octroi/ entry tax or other cessor tax levied in lieu of these. Property tax will be levied on IT and ITeS units at par with residential rates at applicablein the relevant jurisdictions. IT and ITeS units (except IT and telecom hardware manufacturing units willbe allowed in any zone including residential and no-development zones, etc Biotech Policy (2001) Objective: To develop the Biotechnology industry in the State in order to: Provide to the farmers of the State better, high-yielding, drought and pest-resistant crops suited to the agro-climatic conditions of the State; Help develop affordable and more cost-effective drugs and devices to counter diseases common to India and to tropical and sub-tropical areas, and to reduce the disease burden; Develop cheaper and effective technologies to purify water sources and to deal with industrial effluents and urban wastes, etc.; Improve the livestock in the State in order to increase the earning capacity in rural areas; Improve the marine stock to improve the productivity of the fishing industry; Enhance the value and utility of medicinal plants and traditional systems of medicine by developing new products with global potential; Develop and promote utilization of animal diagnostics and vaccines for preventing losses and increasing realization from livestock and poultry; Augment feed and fodder availability and processing; Improve the overall nutritional security in the State; Improve the quality of life through better health and better environment 23

26 To lead the biotechnology industry in the State to a growth path from where it can become globally competitive, the following steps would be taken: Providing the appropriate policy framework which will smoothen its path; Providing adequate infrastructure, especially in the form of Biotechnology Parks; Providing an appropriate package of incentives; Developing a world-class higher education and research base to serve the needs of a growing Biotechnology industry and for creating high quality employment in the State; Creating supporting institutions for the Biotechnology industry for the development of human resource as well as for the applications of Biotechnology; Simplifying the application of labour and other laws and procedures to accelerate the development and growth of the biotechnology industry; Facilitating new ventures and innovations Establish a Maharashtra Biotechnology Board and Maharashtra Biotechnology Commission Set up of a special Biotechnology Development Fund Create biotech parks and biotech resource centre Fiscal incentives would include stamp duty and electricity duty exemptions and other incentives available to IT units Establish a Grape Processing Industry Board Create a wine institute and wine parks at Nashik/ Sangli Excise exemptions and other fiscal benefits 24

27 4. KEY GROWTH SECTORS OF MAHARASHTRA 4.1. Food & Agribusiness Overview: The growth of agriculture sector is the key for achieving sustainable higher rates of growth not just in Maharashtra, but for the country as whole. While in the 1960's agriculture contributed to about 31 percent to the GSDP of Maharashtra, its contribution has significantly reduced to 21 percent in and is about 11 percent for During this period, the net sown area has witnessed little change and stands at 17,422 thousand hectares in with gross cropped area at 22,454 thousand hectares. Figure 13: Trend of State Income & Share of Agriculture ` Crore Year State Income (NSDP) Year Share of Agriculture & Allied Ativities Source: Economic Survey, Maharashtra Irrigation: With about 3,970 thousand hectares being the gross irrigated area about 17.7 percent of the gross cropped area is irrigated. Although this is significantly higher than the 6.6 percent in , larger proportion of area being rainfed, this is a key priority which can significantly reduce vulnerability of farmers to increasing uncertainties associated with the monsoons and the economic growth in the state and the country as a whole being defined by these uncertainties. The State Government has initiated many reforms in irrigation sector, which include declaration of water policy, enactment of Water Resources Regulatory Authority, Management of Irrigation System by Farmers and Water Users Associations (WUA). Various major, medium and minor irrigation projects have been undertaken to create maximum irrigation potential. 25

28 Figure 14: Trend in Percentage of Gross Irrigated Area to Gross Cropped Area in Maharashtra % area irrigated Year Percentage Source: Economic Survey, Maharashtra Horticulture: Last few years have seen a healthy shift towards horticulture crops and today Maharashtra is the country's largest horticultural producer. It is well known for its Alphonso mangoes, grapes, bananas, pomegranates and oranges. The State has also made rapid strides in the production of cash crops like sugarcane, soyabean, cotton, oilseeds and onions. Animal Husbandry: It is an important agriculture related activity and has been growing in demand given the changing food basket with increased consumption of meats. The share of Animal Husbandry in GSDP of Agriculture & allied activities sector during was 7.8 percent. As per Live Stock Census 2007, the total livestock in the State was about 360 lakh and livestock per lakh population was 37,152 while, at All-India level, the total livestock was about 5,297 lakh and livestock per lakh population was 46,385. The State's share in livestock and poultry population of India was 6.8 percent and 9.9 percent respectively. The State ranks sixth in India in livestock and poultry population. Dairy: Maharashtra is one of the leaders in dairy, ranking sixth in the country, with an extensive chain of production, supply and retailing from farm to consumer, and large livestock wealth. Average daily collection of milk by the Government and co-operative dairies (excluding Greater Mumbai) was lakh litres upto October, 2010 which was lakh litres during Milk production stands at 78 lakh MT during Fisheries: The state has a 720 km coastline with great potential for fisheries and its products. Estimated marine and inland fish production was 3.26 lakh MT and 0.95 lakh MT respectively by the end of December 2010 whereas it was 4.16 lakh MT and 1.23 lakh MT respectively during Agriculture Credit: Financial assistance is provided to farmers by way of short-term loans, credits, among other instruments by Government and through various banks and co-operative agencies. National Bank for Agriculture

29 and Rural Development (NABARD), the apex bank for agricultural & rural development in the country performs a pivotal role in development of agriculture. During , short-term credit limit sanctioned for Seasonal Agriculture Operations (SAO) by NABARD to Maharashtra State Co-operative Bank (MSCB) and Regional Rural Banks (RRBs) was ` 1,766 Crore as compared to ` 1, 365 Crore during the previous year. For supporting SAOs during (up to November, 2010), NABARD had sanctioned credit limit of `1, 713 Crore to MSCB and RRBs, which is 10.8 percent higher than the corresponding period of the previous year. Apart from short term credit, NABARD has also sanctioned a long term refinance assistance of about ` Crore to various credit agencies in the State during , which was less by 26 percent than that during the previous year. Figure 15: Sources of Credit 43% 53% Scheduled Commercial Banks Regional Rural Banks MSCB/DCCB/LDB 4% Source: Economic Survey, Maharashtra & YES BANK Analysis Progress of Agriculture in Maharashtra: Maharashtra has achieved this distinctive feat in the agriculture and allied sectors on account of various growth oriented innovative and sustainable initiatives undertaken by Maharashtra Government which include: Increased focus on transition from subsistence to high value agriculture. Developing Agribusiness and the necessary Agri-Infrastructure Identifying Agro-based (including food-processing) Industries as a thrust area and the need to evolve a separate comprehensive Agro Processing Policy with special focus on food processing and preservation. Formulation of Grape Processing Policy in 2001 which has resulted in a ten-fold increase in the production of wine, and Maharashtra now produces more than 90 percent of the country's wine. Reforms in the State APMC Act paving the way for the establishment of Modern Terminal Market Complexes for perishables and increased area under contract farming. As much as 100,000 hectares in Maharashtra are under contract farming, mainly for organic cotton, castor seeds, hybrid seeds, and organic fruits and vegetables. 27

30 External Borrowings from WB, ADB & IFAD to establish end-to-end projects in agriculture, agricultural marketing and food processing to achieve global competitiveness and competence in the sector. Building entrepreneurial capacity, various training programs & technical institutes at micro level in food processing and allied fields. The challenge however is that although comprehensive agriculture development has been achieved in Konkan & Western Maharashtra, the immense opportunities existing in Marathwada and Vidarbha region in agriculture and allied sectors including dairy, horticulture, poultry, among others have not been tapped to their fullest on account of constraints such as inadequate infrastructural facilities, use of traditional and outdated methods of production, lack of market access and insufficient credit availability apart from adverse climatic conditions. To eliminate such regional disparities, a holistic and integrated approach with the regulatory reforms, infrastructure development, credit availability and innovative business structuring is the need of the hour to achieve sustainable development across the agri value chain to maximize the stakeholder benefit and transform Maharashtra into a leading agro economy of the country. This would call for the formulation of the multi-pronged strategy which would drive agriculture in these regions towards maximum value and efficiency Tourism Overview: Maharashtra is the most visited state in India by foreign tourists with more than 50 lakhs foreign tourist arrival in It accounted to almost 32 percent of the total share in the country. Figure 16: Percentage of Top 10 States in no. of Foreign Tourist Arrivals (2010) Tamil Nadu 17% Maharashtra 32% Delhi 12% Goa 3% Uttar Pradesh 10% Rajasthan 8% West Bengal 7% Kerala 4% Bihar 4% Himachal Pradesh 3% Source: Ministry of Tourism, Government of India (2010) 28

31 Figure 17: Domestic and Foreign Tourist Visits to Maharashtra during 2008 to in Lakhs (Foreign Tourists) in Lakhs (Foreign Tourists) 0 Domestic Foreign Source: MTDC Statistics As per the World Tourism Organization, tourism by the year 2020 will grow at a sustained growth rate of 6.7percent; and South Asia will grow at a rate of 6.1 percent during this period. Maharashtra is a tourist's paradise with flavors for the sense and sensibilities for one and all. It is home to the famous Ajanta and Ellora caves on one hand and offers opportunities for enjoying underwater adventure sports on the other. Running north to south, throughout its length are the steeply rising Western Ghats and these Ghats are home to some of the most picturesque and scenic hill stations such as Mahabaleshwar, Matheran and Panchgani. A nature enthusiast has the option of hill stations and beautiful beaches. Last but not the least the state has a large number of religious monuments and festival noteworthy among which is the Temple of Lord Vithhala, Pandharpur. N Gujarat Anardan Wildlife Sanctuary Raja Dinkar Kelkar Museum Seetha Khali Yashwant Lake Wanna Lake Pratapgarh Jail Lingmala jail Ganesha Temple omkareshwar temple Alana Cove Bibi Ka Maqbara Ellora Cover Panchakki Ghrishneshwar Temple Regional Museum nashik National Defense Academy Devgiri Shirdi Lohagad Lonavala loka Mumbai Bhushi dam Gatewa of Inida The Aga Khan Palace elephanta caves Bund Garden Mahalaxmi Parvati Hill and Temple Temple Passion Lok Panaji Dohc Alandi Panchgani Sanja y Gandhi Nationa l Park Abortion Sea Ganpati Pule Jalgod Lan sanghi temple Sangolli Mugam, Sangolli Karnataka The Rajipur Bhon Sanctuary Madhya Pradesh Ram Sagar Lake Samodha Lake Mahur munovm, nagpur Melghat Tiger Project Paunar Ashram Mango Body The Loboda Miliana Tranquil lake Syed shah turabul haq dargah Soml Jana Bal Mandir Sachkhand gurudwara Andhra Pradesh Tulja Bhavani Temple The district wise distribution of tourism attractions throws light on the fact that most State Capital State Boundary Tourist Attraction 29

32 of the tourism attractions are concentrated in the districts of Ahmednagar, Pune, Aurangabad and Satara district. There is another convenient option to witness the diverse tourist attractions of this region through the luxury train- Deccan Odyssey which in a short span of seven days takes one through Sindhu Durg where one can see the famous fort and pristine beaches. The next on the itinerary is Goa where one can soak in beaches and temples. Moving from Goa to Kolhapur, Aurangabad and further on gives the tourist a glimpse into the dynasties that have been here in the past and the rich architectural heritage of this region including the Ajanta and Ellora caves. Mumbai is the gateway for the world to enter Maharashtra. It has its own tourism potential with the presence of beaches, world famous amusement parks and rich archeological heritage. The development of the city with a focus on showcasing the city to the outside world will require definite steps to make it tourist friendly. A remarkable example to learn from is the makeover that Delhi was given before the onset of the Commonwealth Games. Apart from Mumbai, cities such as Aurangabad, Pune, Nagpur, Nanded and Nasik need tourism centric development of infrastructure facilities. Tourism Circuits: The tourism circuits in Maharashtra are formed by grouping of important destinations in a particular region of Maharashtra like Konkan, Marathwada, Vidarbha etc. Such a grouping essentially enables a variety of tourist themes within a single circuit e.g. South Konkan circuit includes beaches of Malvan & Tarkarli, Amboli hillstation, sea forts of Sindhudurg and Vijaydurg and pilgrimage sites. It is due to this characteristic of these tourist circuits of Maharashtra that makes it important to allocate resources towards integrated development based on prioritization of destinations rather than prioritization of tourism themes. Table 7: Established Tourist Circuits in Maharashtra Circuit Destination Covered Themes Mahabaleshwar Mahabaleshwar, Panchgani, Pratapgad, Wai. Leisure, Eco, Fort Ashtavinayak 8 Ganesh Temples around Pune district Pilgrimage Nasik Nashik, Wani, Trimbakeshwar, Shirdi Pilgrimage, Eco Central Konkan Kolhapur, Panhala, Ratnagiri, Pavas,Ganapatipule, Pilgrimage, Leisure Dervan, Chiplun Heritage, Beach North Konkan Alibag, Murud Janjira, Harihareshwar, Srivardhan, Beach, Leisure, Heritage Dapoli South Konkan Kolhapur, Amboli, Sawantwadi, Vengurla, Malvan, Pilgrimage, Leisure, Sindhudurg, Vijaydurg Heritage Entire Konkan Major attractions in Sindhudurg, Ratnagiri and Pilgrimage, Heritage Raigad districts Amravati Amravati, Chikhaldara, Semadoh, Muktagiri Eco, Leisure Vidarbha Vidarbha Ashtavinayak Pilgrimage 30 Source: MTDC website, Maharashtra

33 Developing Tourism Infrastructure: Focusing on development of infrastructure especially to boost tourism in the state will require a separate plan of action for each of them. A viable option to move ahead in this direction will be Public Private Partnership (PPP) in development of tourism infrastructure and ensuring its sustainability in the long run. This PPP can be in the form of development of local transport infrastructure, development of sites replicating rich cultural heritage, improvement of air connectivity including the expansion of airports and addressing other important issues such as building foot over bridges on major cross sections and junctions, improving the water drainage system to prevent flooding of roads and improving the quality of highways linking major tourist cities. Tourism also has a very strong linkage to the socio-economic progress of a country. Besides Urban Renewal, Tourism can contribute towards inclusive growth especially in a state like Maharashtra which in spite of being an economically progressive state faces inequalities within. Some of the steps that can initiate tourism development can be: Infrastructural Development and Connectivity within states need to improve as many roads connecting cities are poor and the national highways are not properly maintained. ~ Maharashtra must create awareness or promote tourism in India and abroad.an aggressive marketing and branding approach need to be taken for promoting Tourism inside and outside India Education & Skill Development Overview: Importance of education in facilitation of economic and social growth is well recognized. It opens gateway for new opportunities for individual and establishments. It is the most efficient tool for empowerment of youth and giving them access to diverse and productive employment. Social development, especially education plays a significant role in an emerging and dynamic state like Maharashtra. Maharashtra is a progressive state with literacy rates higher than the country's average. The literacy rate in the state has increased from 65 percent in 1991, to 77 percent in 2001 to 82 percent estimated in 2011 as per the census 2011data. 31

34 Figure 18: Literacy in State v/s India Percentage India Maharashtra Year Source: Census 2011 Gender disparity is the important hurdle in achieving targeted literacy level. Maharashtra has been always proactive in encouraging women's education. The gap between the male and female literacy rates is fast closing which shows the overall progress of the state. 100 Figure 19: Literacy Rate Disparity in Maharashtra 32 Percentage Source: Census Year Male Female Maharashtra Disparity

35 School Education There are more than 73,000 primary schools and over 21,000 secondary schools in Maharashtra. The state has been very proactive in achieving the universal education in the state. Maharashtra State during , made budget provision of `1,600 Crore and major achievements are: Dropout rate reduced from 15percent in to 2.7 percent in at primary level while that of upper primary level reduced from 24 percent in to 7.6 percent in During in all 610 computer laboratories and 351 Model Computer Application Laboratories were established and free text books were distributed to 1.39 Crore students. During , upto December, 2010 number of classrooms constructed was 56,919 and training was imparted to 1,54,389 teachers to upgrade their skills & capacity building. Figure 20: No. of Schools (Primary & Secondary) 100,000 90,000 80,000 CAGR 16 % 70,000 50,000 40,000 30,000 20,000 10,000 No. of School (Primary & Secondary) * Figure 21: Enrolment (in thousands) CAGR 27 % Enrolment (in thousands) * Source: Economic Survey, Maharashtra *Provisional 33

36 The CAGR of student enrolment is much higher than the CAGR of new schools. Higher Education The state has an excellent record in the education sector for the last five decades; Universities and the education sector in Maharashtra are highly rated globally. Moreover, Mumbai University, Pune University, SNDT Women's University and Gokhale Institute of Politics and Economy, Pune are rated amongst the best universities in the country. Maharashtra has 19 universities which are more than any other state in the country. Maharashtra has over 696 engineering colleges having intake capacity of 2,61,625 engineering graduates. Apart from this, there are 54 architecture colleges with enrolment capacity of 2487 students as per figures from Economic Survey, Maharashtra, Students from all over the country prefer to come to Maharashtra for pursuing higher education and better career prospects. Mumbai & Pune are already the Education Hubs of the state. As per figures in the Economic Survey , overall there are 24,03,881 graduates enrolled every year in Maharashtra. Maharashtra is one of the most dynamic states in the country and with globalization; there is growing demand for higher education from the secondary educated students and who are easily absorbed given the growing demand from industry. Funding for Education: During , the State Government's expenditure on primary, secondary and higher secondary education was ` 10,095 crore, ` 7,670 crore and ` 1,283 crore respectively. Apart from this Maharashtra is also making proactive initiatives in girl education with implementation of various schemes. The total expenditure on education in is ` 26,570 crore as per figures from the Economic Survey of Maharashtra (Budgetary estimates including sports, art & culture) Further, Maharashtra is also encouraging participation of children by providing incentives and scholarships to the students. Table 8: Incentives and Scholarships Opportunities for Students in Maharashtra Free education to the students belonging to economically weaker section Providing free uniform and writing material to poor children of standard I to IV Fee concession to students of standard I to X studying in government aided and unaided schools Attendance allowance to tribal students Students benefited during was 3.11 lakh and total expenditure incurred was ` 2.5 crore. students benefited during were 10 lakh and total expenditure incurred was ` 10.5 crore. During number of students benefited were lakh and total expenditure incurred was ` 4.6 crore. On an average ` 500 per annum is given as stipend. During , number of students benefited were 2.21 lakh and total expenditure incurred was ` 7.9 crore. Source: Economic Survey, Maharashtra

37 Vocational Education & Skill Development Maharashtra is an industrialized state. With huge industrial activity in the state and higher rate of urbanization, preference for employment in traditional sectors like Agriculture reduces. In such scenario, ITIs/vocational training/skill development centres can play a pivotal role to equip young ones to explore opportunities in emerging sectors. Maharashtra has around 726 ITIs having enrolment capacity of more than 1,49,156 students, with enrollment of 1,34,712 till December Details of vocational and technical education programs in the state are included below: Table 9: Institutions and their Intake Capacity Stream * General Education No. of Intake Enrollment No. of Intake Enrollment Institutions Capacity Institutions Capacity Vocational per 42, per 49,378 education division division Technical Education Industrial Training 681 1,19,574 1,04, ,49,156 1,34,712 Institute Source : Economic Survey of Maharashtra With newer industries setting up their business in the state, there will be continuous need for people with specific skills sets and abilities. Government initiatives for skill development in Maharashtra have included the Formation of APEX Committees including a State Skill Development Apex Committee under the chairmanship of Chief Minister and a Executive Committee under the chairmanship of Chief Secretary. Separate Sectoral Skill Committees have also been constituted to focus on focus sectors such as Construction, IT & ITEs, Production & Manufacturing, Automobile, Hospitability, Banking Finance & Insurance, Retail Sector, Textile etc. Similar committees have also been constituted at the district and regional level. A scheme for training to Rural Youth for Self Employment has been implemented under which the State Government will train 100 youth per taluka to increase Human Index. Trainees are being offered ` 100/day as a stipend & tool kits costing ` 2500/-. The Government has been focusing on expansion of it is and started second & third shift in all Govt. ITIs & corporation areas. Similar expansion is also happening for Vocational Education. Further there is also effort to involve the corporate sector to attract investment and deliver industry oriented skill development programs with an emphasis on developing these through Public Private Partnerships (PPP). Public Private Partnerships (PPP): In general, the role of the Government both Central and State is important in developing a project. This role increases in importance if the project is an infrastructure project. 35

38 The Government has also realized that the private sector in addition to bringing in the required funds brings in greater efficiencies (called private sector efficiencies) which ensure superior service delivery to the end consumer with the objective of Maximizing Service to the common man at an affordable price with the minimum use of government funds. Therefore, PPP offers a twofold advantage: Enable the de-risking of projects Help promote new concepts wherein the private sector is unable to take the lead. There has been a paradigm shift in government strategy towards more involvement of the private sector involvement. The government is facilitating private sector participation through the following- Creating an enabling legal and regulatory framework for private sector participation in the sector Providing land (or some other strategic resource) along with some seed capital and leveraging the same by inviting private sector funds. Monitoring and regulating the performance of the private sector participant to ensure service standards are met. Table 10: Operational Scope for PPP PPP Type EDUCATION SERVICE DELIVERY INITIATIVES VOUCHER INITIATIVES PROFESSIONAL & SUPPORT SERVICES INFRASTRUCTURE INITIATIVES Operational Area Contracting with private schools for delivery of education services in line with general public education curricula Contracting with private provider for delivery of specialist curricula Provision of tutorial services Private management of schools Targeted government scholarships to disadvantaged students in private schools Provision of subsidies to private schools that accept students who cannot access public education Education tax credits and / or tax assistance to private education providers Teacher training & training of school managers Curriculum design School review/inspection/evaluation services Ancillary services such as food and transportation services Education testing and school rating services Private finance initiatives: financing, construction, and maintenance of educational facilities Private leasing of public schools Equipping of ICT facilities in schools Source: ADB Report on Education To leverage the benefits of private sector participation in education, steps towards building an effective implementation mechanism need to be initiated. 36

39 4.4. Manufacturing Overview: The manufacturing sector is an important part of the industrial sector of Maharashtra. The index of industrial production (IIP) for manufacturing, increased by 11.0 percent, highest increase in last 10 years during over the previous year reflecting the remarkable recovery of manufacturing sector. This has helped industry sector to maintain a growth rate at 8.5 percent. The table below gives the IIP for manufacturing sector as a whole as well as for the sectors identified as important contributors to the manufacturing sector and the economy as a whole. S. No Weight Manufacturing Food Products Cotton Textiles Jute & other veg fiber textiles (except cotton) Textile products (including wearing apparels) Chemicals and chemical products (except products of petroleum and coal) Petroleum, coal, plastic & rubber products Source: Central Statistical Organization (CSO) Table 11: IIP for Manufacturing Sector as a Whole The table above shows that textiles taken as a whole contributes immensely to the manufacturing sector. Chemicals and petrochemicals also contribute a large portion to the manufacturing sector. These include registered and unregistered manufacturing units across the state. The Manufacturing sector (registered and unregistered) contributed about 21.4 percent of the GSDP of the state. The contribution of Manufacturing to the GSDP is depicted in the table below. 37

40 Table 12: Maharashtra - Contribution of Manufacturing to GSDP at factor cost by industry of origin at Current Prices Sector Manufacturing Manufacturing Total Total Registered unregistered manufacturing GSDP Manufacturing (`.lacs) (%) Source: MoSPI, State Domestic Product; As on The state has demonstrated noteworthy growth during the period to in terms of Value of Output and Net Value Added. Growth has also been observed in terms of Number of Manufacturing Units but it stands quite low when compared with the other two parameters. This is largely on account of negative growth between and , trend which seems to have reversed in subsequent years with the growth of 12 percent between and The table below provides time-series data trends for these select characteristics. Table 13: The Time-Series Data Showing Growth in Past 5 Years Value of Output and Net Value added in Manufacturing 38 Year Characteristics Number of Factories Value of Output Net Value Added AGR * AGR* AGR* AGR* AGR* ACGR** (in %) Source: MoSPI, State Domestic Product

41 While it is clearly established that manufacturing sector holds a paramount position in industry in the state of Maharashtra, it is interesting to identify which sectors within manufacturing contribute the most. These sectors are automobile, food processing, textile, chemicals and petrochemicals and engineering goods. The following section captures these sectors, their performance and contribution. Automobile The Auto sector has played a key role in the industrialization of Maharashtra. Every single segment of the sector including two and three wheelers, passenger cars and commercial vehicles is represented in the State. Maharashtra has strength along the entire automotive industry value chain. This value chain covers engineering research and design, auto parts production, supply of auto parts, assembly of auto parts, marketing and exports. The only area where Maharashtra faces a little weakness is the availability of raw materials for the automobile sector. The major automobile centres in the State include Pune, Nasik, Aurangabad and Nagpur. Pune is home to large players like Bajaj Auto Ltd, Daimler Chrysler Ltd, TELCO, etc. while Nasik is home to India's largest multi-utility vehicle manufacturer, Mahindra & Mahindra. Auto and auto ancillary contributes 9 percent of Maharashtra's manufacturing strength. The State accounts for approximately 38 percent of the country's output of automobiles by value. Around 40 percent of the workforce engaged in the automobile industry is employed in the State. From 1991 to August 2010 there have been a total of 112 projects under FDI with a total investment of ` 895 Crore. The key competitive strength of the State in the automobiles and auto components industries is the presence of established manufacturers. Besides, the strong presence of the engineering sector is an additional advantage to the State, along with its large skilled labour base. The good transport infrastructure in the State is also a positive factor for the logistics-intensive auto industry. Maharashtra also has a number of research institutes, suppliers and infrastructure players that contribute immensely to the success of the automobile sector in Maharashtra. Automotive Research Association of India (ARAI) is a premier research and certification institution for the automotive industry in India. There are also world class design and manufacturing centres like Tata Auto Components and automation firms like PARI Robotics & Automation. IBM has set up a Global Delivery Centre in Pune to provide auto majors business consulting and application services. There are Centres of excellence like Vehicles Research & Development Establishment, Ahmednagar and Automotive Research Association of India, Pune that add to the automotive strength of the state. Emerging opportunities exist in vehicle retailing, low cost vehicles; design centres, diversification into two wheeler segment, auto financing, etc Food Processing The food processing sector is an important contributor to the national economy. The importance of the food processing industry is further underscored by the fact that it contributes to direct employment of approximately 13 million people and has the propensity to generate 2.4 times more indirect employment than direct employment. Although the industry continues to be dominated by the small & unorganized players, it is fast transforming into an organized sector with increased investments in processing technologies, equipment and skill development 39

42 being brought in by large corporate. Of late, the sector has been witnessing increased participation from reputed global as well as domestic players. Maharashtra has 9 agro climatic zones and soil type of all varieties thus making it a haven for agriculture and hence food processing industries. Horticulture also finds an important position in the State s economy with more than lakh hectares under horticulture and 4 lakh hectares under vegetables. Maharashtra is the largest producer of seedless grapes (78 percent), bananas (75 percent), Mandarin oranges (75 percent), onion (63 percent) and tomatoes (42 percent). Maharashtra has the highest gross value addition to food products in the country at 16.18percent. The export of processed food from Maharashtra accounts for almost 50percent of the country s total exports. As on March 2010, Maharashtra has 6,512 small and medium and 322 large scale food processing units. From 1991 to August 2010 there have been a total of 173 projects under FDI with a total investment of ` 1039 Crore. The food processing industry in Maharashtra has a strong and skilled manpower. The state has six national research centres and one of its kind Post Harvest Training centre at Talegaon, Pune. There is also a Horticulture Training Centre set up in collaboration with Maharashtra State Agricultural Marketing Board and Practical Training Centre, Netherlands. Maharashtra also has 118 soil testing labs, 2 residual testing labs, 10 bio-control labs, 4 pesticide testing labs, 231 agro polyclinics and 1373 horticulture nurseries. Opportunities exists in value added processing, export oriented processing, agri/horticulture infrastructure projects, development of food parks and investment in infrastructure through public private partnerships. Textile The sector also has policy and regulatory support from the government that gives further boost to the sector. Chief among them are: Reimbursement of 50 percent of the net VAT paid, instead of 25 percent of the previous years 5 percent interest subsidy on term loans for fixed capital investment for 5 years World Bank, ADB and IFAD to assist in establishing end-to-end projects in the field of agriculture marketing and food processing sectors Support to MSE-CDP clusters in backward areas of Maharashtra to the extent of 10 of the project cost, in addition to Central funding Reimburse 50 of the space rent, etc with a ceiling of ` 1 lakh per year, to small scale agro industrial units participating in national/ international exhibitions in India MoFPI is supporting the development of a few larger Mega Food Parks through SPVs formed industries with financial assistance up to 50 of the project with a ceiling of `50 Crore Maharashtra contributes around 10.4 percent to India s textile and apparels output. Maharashtra has a large production of cotton across the state, especially the Vidarbha region. The western region is known for its spinning mills. From 1991 to August 2010 there have been a total of 122 projects under FDI with a total investment of `1,051 Crore. 40 The major clusters for the textile industry are Mumbai, Nagpur, Nashik, Kohlapur, Pune, Sangli, Satara, Thane and Sholapur. The major textile hubs in Maharashtra are Mumbai, Bhiwandi, Amaravati, Malegaon and Solapur. Bhiwandi, Solapur, Malegaon, Nagpur and Ichalkarangi are major hubs for powerloom sector in Maharashtra.

43 Maharashtra is strong all along the textile value chain, from raw m a t e r i a l s t o g a r m e n t manufacturing. It has abundant raw material availability, cost effective labour pool, growing domestic market and presence across the entire value chain. Maharashtra produces world class t e c h n o c r a t s a n d b u s i n e s s managers to support the industry and aid it its growth. Along with this, the State also has a strong skilled workforce to support the sector. Premier institutions like Indian Institute of Technology (IIT) Mumbai, National Institute of Fashion Technology (NIFT) and Veermata Jijabai Technological Institute (VJTI) impart world class technical education. There are four more textile colleges in the state. Apart from these there are a number of research institutes across the state catering specifically to the requirements of the textile industry. Some of them include Bombay Textile Research Institution, Mumbai, Central Institute for Cotton Research, Nagpur, Wool Research Association, Thane, Synthetic and Art Silk Mills Research Association, Mumbai. Chemicals & Petro-chemicals The sector also has policy and regulatory support from the government that gives further boost to the sector. Chief among them are: Providing technological upgradation support to the textile sector under the Technological Upgradation Fund (TUF) scheme A new and first ever Textile Policy for the State being drafted Plans to provide an interest subsidy up to 12.5 percent for the developer of spinning mills, power looms and other textilerelated businesses in the state Aims to attract an investment of ` 37,000 Crore to process 4.5 million bales and create 1.1 million jobs in the textile sector in the next five years. Ensure that cotton is processed entirely in the State Special subsidies for Vidarbha and Marathwada districts In cotton growing areas, nearly 7.5 percent subsidy will come from both the state and the center under the Technology Upgradation Financing Scheme while 5 percent will have to be borne by the developer. In case of non-cotton growing areas, 5 percent each interest subsidy will come from the state and the centre while the promoter will have to bear the two interest burden. Maharashtra is one of the prime chemical belts of India. The State contributes 27.4percent of the country s chemicals, petrochemicals, oil and gas output. It contributes around 15 percent of total production of basic petrochemical products in the country. The state also contributes 18.2 percent of India s employment in the sector. The sector also employs 15 percent of the total industrial workforce in the state. From 1991 to August 2010 there have been a total of 197 projects under FDI with a total investment of ` 2,666 crore. All major domestic and a number o f g l o b a l c h e m i c a l a n d petrochemical players have their presence in the state. Mumbai, Nagothane, Rabale and Patalganga are major petrochemical hubs The sector also has policy and regulatory support from the government that gives further boost to the sector. Chief among them are: Licensing requirement has been removed, except for hazardous chemicals and a few special drugs. Entrepreneurs also allowed to set up chemical industries following the Industrial Entrepreneurs Memorandum (IEM) route. Under the automatic route 100 FDI is allowed for all chemicals except certain hazardous chemicals. The peak of customs duty on most chemicals is 7.5 percent The excise duty on most chemicals in 16 percent To mitigate the impact of anti dumping, the government has imposed 20 safeguard on soda ash 41

44 while Thane, Mumbai, Pune and Wardha are chemical hubs. The chemical sector has been traditionally strong in Maharashtra with specific strengths in raw materials, building block production, value addition and processing with clusters located in the Mumbai-Thane-Pune belt. On the skill front too Maharashtra has an inherent advantage as it has a strong skilled labour base supporting the chemical industry. The state offers a strong educational infrastructure with technical institutions providing Chemical Engineering courses across the state. National Chemical Laboratory (NCL) Pune, Institute of Oil & Gas Production Technology (IOGPT) Navi Mumbai, Institute of Engineering & Ocean Technology (IEOT) Navi Mumbai and Regional Training Institutes (RTIs) Navi Mumbai are some of the premier institutes catering to this sector. The table below gives a snapshot of the number of institutions and their capacities: Table 14: No. of Institutions and Capacities in Maharashtra Sector Institutions Capacity Admitted Students Engineering , ,648 Management Sciences ,585 20,649 Industrial Training Institutes , Source: Economic Survey, Maharashtra Engineering M a h a r a s h t r a o c c u p i e s a n important place in both the production and export of engineering goods from the country. The engineering industry in the state is highly diversified and produces a large range of parts, from industrial machinery to industrial castings and forgings. Maharashtra has the highest contribution to the engineering s e c t o r w i t h 2 4 p e r c e n t The sector also has policy and regulatory support from the government that gives further boost to the sector. Chief among them are: Removal of tariff protection on capital goods De-licensing of heavy electrical industry and allowance of 100 percent FDI Reduction of custom duties on various equipments Incentives for R&D activities SEZ policy and industrial corridor development across centres of development Initiatives to increase power generation and improve quality of power supply contribution to India s total output. The industry, which was initially concentrated in the Mumbai-Pune belt, has spread all over the state with the major production centers being Nagpur, Aurangabad, Nashik and Kolhapur. The major engineering items of production and export in Maharashtra are textile mill machinery, machinery for sugar, cement and chemical plants, food processing machinery, construction machinery, tractors, electric power machinery, transmission line towers, automobiles and ship building. Maharashtra has long established itself as the leader in the Industrial and Manufacturing sector. It has been the most sought after destination for domestic as well as foreign investors. Maharashtra needs to sustain its leadership position and also spread the investment in other less developed areas. 42

45 4.5. Power & Renewable Energy Overview: Power is a critical infrastructure required for the socio-economic development of a state. The growth of the economy and its competitiveness hinges on the availability of quality power at competitive rates. Therefore, it is imperative that electricity is made available at globally competitive cost. Installed Capacity & Generation The total installed capacity in the State as on 31st December, 2010 was about 19,166 MW, an increase of percent as compared to 31st March, This significant increase in capacity may be attributed to new private power projects and an increase of capacity at Ratnagiri. Figure 22: Installed Capacity - Based on Source Thermal 10,065 MW Captive Power 1051 MW Hydro 3066 MW Renewable 3348 MW Natural Gas 2147 MW Source: Economic Survey, Maharashtra The State Government had signed various agreements with eight private companies to generate a total of 12,168 MW of electricity. JSW Energy has power generation projects of 1410 MW in the construction or implementation phase. Other companies except Spectrum Technology (500 MW) and Essar Power (1,500 MW) have started the works related to the project. There was also a central allocation of 5,268 MW available for the State during , whereas for , upto December, 2010 it was 5,376 MW. 43

46 The total generation of electricity (including renewable sources) in the State was 81,345 Million Kilo Watt Hours (MKWH) during which was higher by 6,150 MKWH compared to previous year. MAHAGENCO accounted for 62.8 percent followed by Tata Power 14.5 percent, RGPPL 10.8 percent and Reliance Infrastructure 5.5 percent of the total generation. During the central sector receipt of electricity generated was 30,156 MKWH. During upto the end of December, the total electricity generated in the State was 55,077 MKWH, less by 154 MKWH than that for the corresponding period of During upto December, 2010 the central sector receipt of electricity generated was 22,901 MKWH. Consumption Pattern The aggregate consumption of electricity in the State during has increased by 8.9 percent over the previous year to 79,139 MKWH. Over the last decade the consumption has outpaced the growth in power generation and the State is currently facing power shortages. Figure 23: Power Consumption Snapshot MKWH 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, Total Genaration Industrial Consumption Domestic Consumption Total Consumption Agricultural Consumption Source: Economic Survey, Maharashtra As on 31st December, 2010 the industrial sector (43 percent ) was the largest consumer of electricity, followed by domestic (26 percent) and commercial sectors (15 percent). These three sectors together accounted for 84 percent of the total electricity consumed. During , the per capita total, industrial and domestic consumption of electricity was KWH, KWH and KWH respectively. 44

47 Figure 24: Consumption Pattern as on December 31st, % 3% 9% 26% 43% 15% Domestic Commercial Industrial Agriculture Public Services Railways Source: Economic Survey, Maharashtra The graph below depicts the peak demand-supply gap in the availability of power in the state over the previous ten years and the gap has widened particularly in The deficit has increased to 16.6 percent and the peak deficit to 21.7 percent until February, Figure 25: Peak Demand-Supply Gap for Electricity 18,000 16,000 14,000 12,000 10,000 8,000 6,000 Demand Supply 4,000 2, Source: Economic Survey, Maharashtra * 45

48 Renewable Energy Maharashtra Energy Development Agency (MEDA) is the nodal agency for the state of Maharashtra under the Ministry of New and Renewable Energy (MNRE). It has been set up with the objective to undertake development of renewable energy and facilitate energy conservation in the State. As on 31st December, 2010, the total installed capacity from renewable sources stood at 2,936 MW against potential generation capacity of about 5,719 MW. The graph below depicts the installed capacity and existing potential capacity from various renewable sources. Wind Energy The State Government has already identified about 40 sites with an Annual Mean Wind Density of above 200 W/m2 that are suitable for wind power projects. As on December, 2010 the total installed capacity is about 2,194 MW, of which MEDA has installed a demonstration wind power project with a capacity of MW and about 2,194 MW through private investment of about `10,900 Crore. Solar Energy The State has huge potential for power generation from Solar Energy. The state receives about days of clear sun with an available average radiation of 4 to 6 kwh/sq.mts over a day. There is a capacity to generate 1.5 million units/mw/year through solar photovoltaic systems & up to 2.5 million units/mw/year through solar thermal systems. Maharashtra is already in process to boost this enormous source and interested solar project developers can submit their proposals to MEDA. MAHAGENCO has already installed a Photovoltaic Solar Energy project of 1 MW at Chandrapur. Small Hydro Projects (SHP) The State Government has laid maximum emphasis on developing the hydro potential and has formulated a Hydro Policy to boost the participation of private developers in the development of small hydroelectric projects in the State. This policy is applicable to Captive Power Producers (CPP) through hydropower projects up to 25 MW installed capacity through BOT mode for a period of 30 years. Seven small hydroelectric projects have been set up under this policy with a total installed capacity of 74 MW. New and unidentified SHP sites proposed by the developers for development of CPP/IPP will also be governed by this policy. Bagasse Co-generation - Bagasse is a byproduct of sugar cane that is used as fuel in boilers to produce process steam. Maharashtra has nearly 202 sugar factories with a total potential of generating about 1250 MW. MEDA has been promoting Bagasse co-generation in sugar mills for surplus power generation with attractive schemes. The prevailing regulated tariff declared by the commission on 29th April, 2011 for Cogeneration projects is ` 4.79 per unit with no escalation or revision up to the year Biomass Power Biomass is one of the most important renewable resources that have long-term social, economical and environmental benefits. There is a potential of power generation of about 781 MW in Maharashtra. 46

49 Figure 26: Potential and Utilization of Electricity Generation from Renewable Sources in Maharashtra 6,000 5,000 MW 4,000 3,000 2,000 1,000 Potential Utilized 0 Wind Bagass ec o-generation Biomass Sm all Hydr o Projects Urban Waste Industria l Waste Source: Economic Survey, Maharashtra Figure 27: Trend of Total Installed Capacity of Electricity Generation from Renewable Sources MW 3,000 2,500 2,000 1,500 1, Urban Waste Biomass Bagasse cogeneration Wind Small Hydro Projects (upto Dec 2010) 0 Industrial Waste Source: Economic Survey, Maharashtra The state of Maharashtra has been facing a power deficit. By the end of the Eleventh Five Year Plan, it is expected to touch 11,000 MW. In spite of this Maharashtra remains the preferred destination for investment. Maharashtra GSDP is growing at 9 percent every year and to sustain the growth, Maharashtra needs to add more capacity. 47

50 As per the World Bank observations on India s Power Sector, there is a need to run on commercial basis and not with a social objective. Thus, private participation in generation, transmission and distribution of power can be leveraged in this regard. Maharashtra also needs to tap the unutilized potential in New & Renewable Energy sources. Presently Maharashtra is tapping only 34 percent of the potential and the state needs to take proactive steps in tapping the potential to the optimum Gems & Jewelry Overview: Traditionally, a fragmented industry with approximately over 300,000 players across the country, Gems & Jewelry very interestingly represents one of India s strongest export segments. The exports from India, the largest supplier of the world, rose by 39 percent in the April 2010-January 2011 period, according to the Gems & Jewelry Export Promotion Council (GJEPC). In the domestic market also as the income pattern is changing and individuals are empowered with higher purchasing power,slowly organized branded Jewelry have started making their presence felt. 30 Figure 28: Composition of India's Export Basket Engineering Goods Petroleum Products Source: Economic Survey Gems & Jewellery Agriculture & Allied.. Chemicals & Related.. Textiles incl readymade.. Ores & Minerals Other Manufactured Goods Other commodities As the Indian market is maturing and the sector is earning foreign exchange to the tune of $36.6 billion, (as of up from $15.5 billion in ), it needs a serious positioning in India s industrial focus. 48 Among, a few states which plays a very important role in demand and supply of gems and jewelry segment, Maharashtra is one of the most prominent ones --- as it receives most of the imports of gold stock and raw

51 diamond. The state is the leading trader of cut and polished diamond in the country. While Mumbai has an increasing number of modern semi-automatic factories and laser-cutting units, Indian merchants are export focused and have good international reach with offices in Antwerp, New York, Los Angeles, etc. Infrastructure Maharashtra boasts of the two dedicated Special Economic Zones dedicated to Gems and Jewelry along with six other multi-commodity trading zones. A state of the art diamond trading centre is recently inaugurated in Mumbai, which has all the major diamond trading houses of India. As in , the export of diamonds from Mumbaiwas worth of ` 61,000 Crore. Zaveri Market in Mumbai is one of the most well known trading centers for diamonds located in the heart of the city. Specifically to Maharashtra, as the state is trying to supply quality infrastructure, the need for security and good governance is glaring in this sector. The state needs to keep working at making the sector more resilient and competitive especially in the wake of rising competition from countries such as China. According to FICCI- YES BANK report titled Gems & Jewelry- Financing Growth, the Indian gems and jewellery market is estimated at US $ 48 billion and it will have share of 27percent of the global market. Gems and jewelry exports from India in the year was US $ 43 billion. Also, the sector accounted for 14 percent of India s total merchandise exports in the year Given the fragmented nature of the business it is very difficult to estimate the exact range. With per capita consumption almost 1/10th that of any matured market India presents a very large potential market. More importantly there is a significant opportunity to create additional value through higher margins possible through differentiation and branding. Figure 29: Gems & Jewelry export trend Annual growth Rate in Exports Source: Gems & Jewellery Export Promotion Council, India Export ($ billion) 49

52 The industry needs to modernize itself from a highly fragmented state with minimal benefits of economies of scale to latest production techniques and design centers. All of these are critical for the industry to move towards the high end of the value chain. The Indian industry needs to focus on modern flexible production techniques, supreme craftsmenship, excellent quality and immense variety. We need more design departments in the universities and vocational design institutes. Finance: A good funding instrument has one or more of the following characteristics: - Easy to access Friendly terms (interest, collateral, repayment etc) Tailored to specific needs of the borrower There is a dearth of innovative financing options at the retail end though good options are available to the remaining value chain. Imparting industry status to the sector can help a long way in facilitating the flow of much needed finances to retail. A few steps for the Gems and Jewelry segment to go forward: The Gems & Jewelry industry needs to systematically and collectively invest in upgradation of the skill sets of its workforce through increased training and manpower development programs. The industry needs to participate with universities for introduction of designing and development of new ideas. The industry needs to invest in retailing and brands to capture the imagination of the new urban earning segment. The industry need to evolve contemporarily.a mix of traditional jewelry with daily wear definition needs to be targeted. Industry wide accepted standards, manufacturing quality and delivery needs to be streamlined. To bring down cost of operation and investments in the sector, industry players should adopt co-operative use of technology and marketing. Even retail space can be hired by co-operatives when foraying into international markets. The industry accounts for approximately 14 percent of the total merchandise exports in the country and the industry being mostly concentrated in Mumbai, it need to be supported with fiscal and other incentives Rural Development Overview: 50 The number of rural poor outweighs the urban poor by a large margin and poverty is still prevalent in a number of districts in the rural areas in Maharashtra. This is confirmed by the poverty estimates such as Headcount Ratio and Below Poverty Line Households. The Headcount ratio ( ) according to revised estimates is 47.9 percent for rural areas and 25.6 percent in the urban areas. BPL census 2002 was carried out, wherein a score based ranking of each household indicating quality of life was prescribed. There were 13 score-able socio-economic items with a score ranging from zero to four. Some of the items were land under cultivation of the family, type of dwelling, availability of clothing, food security, sanitation, etc. In 1997, 34.6 percent of the total families in the rural areas were below poverty line and this figure had increased to 35.7 percent in the year Policies to promote agricultural and rural development play an important role in the process of poverty reduction in rural areas. The state government is making a conscious effort to improve the status and condition of rural poor and this

53 is evident from the increase in the government expenditure on rural development. The Government Expenditure has increased from ` 2,234 Crore to ` 3,956 Crore reflecting an increase of 77 percent. The increase has been steep especially in the period post Figure 30: Government Expenditure on Rural Sector ` Crore Year Source: Economic Survey, Maharashtra Rural development encompasses a number of facets related to the overall development of rural areas. These include schemes for development of rural housing, improving the water supply and sanitation facilities and even include schemes pertaining to women empowerment. Initiatives taken under different schemes of rural development Water Supply and Sanitation The Rural Water Supply (RWS) sector emphasized on ensuring sustainability of water availability in terms of potability, adequacy, convenience, affordability and equity while also adopting decentralized approach involving Panchayati Raj Institutions (PRIs) and community organizations. Based on these considerations, the ARWSP was modified as National Rural Drinking Water Programme (NRDWP) for the XIth FYP period. This programme is now implemented under Bharat Nirman, a programme launched by the Government of India in 2005 for building infrastructure and basic amenities in rural areas. Comprehensive Action Plan is being implemented under Bharat Nirman since The main objective of this plan is to provide water to those villages/wadis which received less than 184 litres of drinking water per person. In the State, 9,745 villages/wadis were identified as facing problem of drinking water as per comprehensive action plan for the year and 5,181 villages/wadis were provided solutions with an expenditure of ` Crore upto the end of November, A Scarcity Programme is implemented every year during the period from October to June in villages and wadis affected from water shortage. During , due to inadequate rainfall in the State, this scarcity programme was extended upto 31st July. 51

54 Social Justice- The concept of Social Justice demands that all individuals in the society enjoy equal rights and opportunities. A strategic policy has been initiated to secure an overall development of Scheduled Castes (SC) and Scheduled Tribes (ST) through plan programs, such as Scheduled Caste Sub-Plan (SCSP) for SCs and Tribal Sub- Plan (TSP) for STs. The basic aim of SCSP/TSP programs is to channelize the flow of funds and benefits, over and above the funds and benefits made available through general programmes, exclusively to respective community in proportion to their population.under the SCSP, 132 schemes are being implemented for the benefit of SC population. Of which, 56 are State level and 76 are District level schemes. The outlay for rural development under this scheme was ` Crore. Under the Tribal Sub Plan (TSP), some of the major schemes under TSP are Khawati loan, Kanyadan Yojana, different scholarship schemes, Swabhiman Yojana, etc. The outlay for rural development under the Tribal Sub plan was ` Crore. Housing-Indira Awas Yojana (IAY) is being implemented in the State since April, 1989 as a subscheme of Jawahar Rojgar Yojana to construct the houses for homeless BPL families in the rural areas. It is a centrally sponsored scheme with Central and State share in the ratio 75:25. The Government of India has given an independent status to this scheme since 1st January As per the guidelines of IAY, nearly 60 percent grants are made available for SC/ST beneficiaries and 40 percent for non SC/ST beneficiaries. Some of the other schemes under rural development include Rajiv Gandhi Gramin Niwara Yojana I, Rajiv Gandhi Gramin Niwara Yojana II etc. Women Empowerment- Maharashtra is the first state in India to formulate a women policy in the year 1994, which was subsequently revised in the year 2001.The focus of this policy is formulation of a program relating to agriculture and rural development with focus on women. Mahila Aarthik Vikas Mahamandal (MAVIM) has been empowered as an apex body and the coordinating agency in Maharashtra. The Tejaswini Maharashtra Rural Women Empowerment Programme is being implemented in the State with the help of International Agricultural Development Fund. Around 62,675 SHGs from 12,243 villages will be covered under this programme through which more than 10 lakh women will be benefited. The overall goal of the programme is to enable poor women to make use of choices, spaces and opportunities in the economic, social and political sphere for their improved well being. The main objectives of this programme are to build grassroot institution of SHGs and provide micro finance to SHG and to develop entrepreneurship and achieve women empowerment & social equality. Various other schemes like Ramai Mahila Sakshamikaran Yojana (RSY), Krushi Saptak Yojana, Mahila Swawalamban Nidhi (MSN) and Swayamsidhha Yojana for empowerment of women are being implemented through MAVIM. Besides these schemes, many Central Government schemes are also being implemented in the State. Some important schemes are Support to Training and Employment Programme (STEP) and Swadhar. Besides this the state has also been focused on increasing women s participation in local self government, and reducing their vulnerability to crime and domestic violence. 52

55 MAHARASHTRA: Growth through Balanced Development A TEN-POINT ROAD MAP 1. Redistributing growth for all regions in Maharashtra: Maharashtra has been at the forefront of growth among various states of the country, and one of the most industrialized, however, this growth has been concentrated more in specifc regions than in other, particularly, in the Mumbai, Thane and Pune belt. While growth in the state will continue to be driven from Mumbai, the government is also focusing on the key objective of ensuring that this growth is more equitable, balanced and better distributed. It has been seen that beyond Mumbai, Pune and Nasik, cities like Aurangabad and Nagpur are also witnessing strong growth. Development needs to be decentralized by developing other centres like Sangli, Miraj, Kolhapur, Amravati, Buldhana, Solapur, Chandrapur, Jalgaon among others. Further given the high rate of urbanization, there is need for an emphasis on development of urban amenities in rural areas. Maharashtra has also been the pioneer in the co-operative movement which can be an important enabler in terms of creating innovative structures for communities to organize themselves. 2. Focus on becoming a model for Governance and strengthening of institutional Mechanisms: It is widely acknowledged that the decision to invest in the state is primarily driven by ease of doing business, and the presence of a conducive environment to foster efficiency and transparency. Maharashtra can sustain this as its competitive advantage. Maharashtra was early to set up a Udyog Mitra as a committee within the department of industries as single point of interface. This initiative can be further scaled-up into a full fledged Single-Window agency. To maximize convenience and access of information to potential investors, hand-holding and further easing of administrative processes can be achieved effectively through this agency. In the focus on reducing uncertainties and the costs of the same for business there is also a need for continued demonstration that political convenience will not erode economic convenience. Technology can be an important enabler for this. Given the limitations of public-funding this can be leveraged by attracting Private sector investments. Public Private Partnerships are one such institutional innovation mechanism that can draw on the strengths the public and private sectors for delivery of quality public services. Similarly there is tremendous value that can be unlocked in the form of state owned property and state has already announced its plans to raise ` 1 trillion over the next decade. This can be institutionalized to be undertaken in a professional and transparent manner that meets expectation of all stakeholders and the resources can be utilized in infrastructure and other development. 3. Further Strengthening of Connectivity & Industrial Infrastructure: Creation of infrastructure and connectivity is a key determinant for how growth emerges in the state. The Delhi-Mumbai Industrial Corridor (DMIC) and the Dedicated Freight Corridor (DFC) are likely to be a game changers and significant future growth for the Indian economy is envisaged to emerge along this corridor. Maharashtra is strategically positioned to capitalize on this with about 10 percent of the DMIC passing through Maharashtra and about 18 percent of area of the state is within its area of influence. The state needs a comprehensive strategy to maximize the benefits and extend these beyond the area of influence even into the hinterland. The state needs to further draw benefits from developing integrated townships with comprehensive industrial and social infrastructure. From a long term planning perspective there is also potential for the state to consider the development of similar infrastructure through the hinterland with a Mumbai-Bangalore and Mumbai- Hyderabad industrial corridor. There is need to further develop world 53

56 class industrial zones aligned with this connectivity infrastructure. All this will require coordinated action from the Centre and the States. 4. Manufacturing as an engine of Growth & Employment: It has been witnessed world over that with economic growth there is a declining trend with the population to take up agriculture as the preferred source of employment and income. While services have been making important and growing contributions to the state s economy; it requires education to a relatively advanced level. Manufacturing has emerged as the best channel to combine economic growth with creation of employment opportunities in numbers that the state will require for the future. The draft new manufacturing policy has proposed the development of seven large integrated areas called National Investment and Manufacturing Zones (NIMZ) along the DMIC which has been discussed earlier. With two of these being in Maharashtra, the state is well positioned to usher in a new wave to growth through manufacturing. 5. Development of the Micro, Small & Medium Enterprise (MSME) Segment: MSMEs play an integral role in employment creation, innovation and ultimately of sustaining the future growth of the industry. The new Industrial Policy of Maharashtra rightly envisages specific emphasis on this segment. The MSME sector typically faces constraints of stiff competition from larger industry as well as multinational companies. Given the importance of this segment to employment creation, a specific emphasis on MSMEs should focus on addressing key challenges they face which includes access to technology, credit availability, provision of business/ technical advisory and support, access to new markets in a globalizing environment and development of appropriate marketing mechanisms. The government can also support the development of MSME clusters towards creation of congregations of industry. However, to emerge successful in the long run, SMEs need to be empowered to align their offerings to the demands of the market, by equipping themselves to meet emerging challenges. 6. Emphasis on Skill Development to deliver employment and meet the needs of industry: Growing industrialization and globalization needs to be complemented by availability of work force with skills being sought by industry. Maharashtra has been focused on development of such capabilities and has already witnessed an overall increase in the number of schools at primary, secondary and higher secondary levels which is a positive sign. Further, the Right to Education (RTE) Act has envisaged free education to every child aged between 6 & 14 and Maharashtra can take a lead in demonstrating this as the way forward. But more importantly, there is a need for a focus on industry oriented skill development and therefore to encourage stronger university-industry engagement and partnerships. Vocational training programs can be designed to meet the specific needs of industry based on a skill-gap analysis. The robust infrastructure of Public Universities, institutions can be leveraged, through Public Private Partnerships enabling highest levels of efficiency in utilization of these facilities Leveraging Agribusiness & Tourism Development as enablers of equitable growth: Maharashtra remains a predominantly agrarian population with over 60 percent dependent on agriculture & allied businesses. However given the challenges of declining sustainability of incomes from agriculture, the state needs to focus on a transition from subsistence to high-value agriculture particularly horticulture. This requires an emphasis on changing mindsets including practical training and capacity building programs designed with this objective. Further there is a need to develop robust agro-infrastructure to connect farmers to markets. Tourism is another sector that can complement these socio-economic objectives of employment creation, together with more equitable growth. Agro tourism for example draws on the synergies of both agriculture and tourism sectors thereby enhancing sustainability of incomes from farming. Besides this Maharashtra has significant untapped potential in both these sectors across its regions.

57 8. Developing Geographic Appellations and trust marks that are associated with the regions and their strengths: Maharashtra is a unique state with variety of trust marks of each region such as that of Pune as an Automobile Hub or the success of grapes from Nashik. There is need for a dedicated effort to identify some of these key strengths that can be associated with its geographical origin. Some of these can be developed to represent the quality from specific region of Maharashtra and developed to create new global benchmarks. This should represent some specific regional characteristics besides quality such as skill levels, design capabilities, cost advantage, or climate. This can also strengthen efforts for marketing and branding strategy for the state and its regions to create brand equity and separate identity of their own. 9. Developing Mumbai into an International Financial Centre: Mumbai is the financial capital of the country and epitomizes the financial prowess of the country. Industry in Maharashtra as in particular has been able to significant benefit from its easy access to financial services. Mumbai has all the potential characteristics to emerge as an International Financial Centre. This will require a combined effort of the Union Government and the State Government on one hand to initiate necessary financial sector reforms and on the other hand to create an image of Mumbai which can offer a very high quality of life for its residents so as to attract the best talent for the financial services industry globally that is necessary to develop such an International Financial hub. With significant competition from other financial centers in Asia including emerging ones like Shanghai and Tai Pei besides Hong Kong & Singapore; Mumbai has the benefit of riding on the strong India Growth story and being governed in a stable democracy. 10. Strengthening capabilities in Research and Development: There is need for a strategic policy focus to encourage innovation and incentivize firms to develop new ideas and cost effective methodologies to sustain their competitiveness. The Government has a key role to play in encouraging the strengthening of R&D capabilities and industry engagement with research/educational bodies, to particularly drive growth of indigenous technology, products, processes and patents. The state must develop frameworks to recognize & nurture innovation with a vision of achieving and setting new global benchmarks; this will be key to the state s continued leadership. 55

58 About YES BANK YES BANK, India's new age private sector Bank, is the outcome of the professional & entrepreneurial commitment of its Founder, Dr. Rana Kapoor and his top management team, to establish a high quality, customer centric, service driven, private Indian Bank catering to the Future Businesses of India. YES BANK has adopted international best practices, the highest standards of service quality and operational excellence, and offers comprehensive banking and financial solutions to all its valued customers. YES BANK has a knowledge driven approach to banking, and a superior customer experience for its Branch Banking (Individuals and SMEs) and Corporate clients. As a part of this knowledge driven approach, YES BANK focuses on key growth sectors like Infrastructure, Lifesciences, Food & Agribusiness, Telecommunications, Information Technology, Renewable Energy, Media & Entertainment, Manufacturing and Textiles, among others. YES BANK's differentiated approach to banking provides industry specific financial solutions which facilitate superior structuring and tailored financial solutions. YES BANK is steadily evolving as the Professionals Bank of India with the long term mission of Building the Best Quality Bank of the World in India

59 About FICCI Established in 1927, FICCI is the largest and oldest apex business organization in India. Its history is closely interwoven with India's struggle for independence and its subsequent emergence as one of the most rapidly growing economies globally. FICCI has direct membership from the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over 83,000 companies from regional chambers of commerce. With a Membership of over 500 Chambers of Commerce, Trade Associations Industry bodies, the Chamber speaks directly and indirectly for over 2, 50,000 small, medium and large business units employing around 20 million people. FICCI is committed to change the economic landscape of India through reforms that expand the space for private sector and public partnerships. FICCI is the rally point for free enterprises in India. It has empowered Indian businesses, in the changing times, to shore up their competitiveness and enhance their global reach. FICCI plays a leading role in policy debates that are at the forefront of social, economic and political change. Through its 600 professionals, FICCI is active in 44 Sectors, 8 Forums and 13 Task Forces/Working Groups of the economy. FICCI's stance on policy issues is sought out by think tanks, Governments and academia. Its publications are widely read for their in-depth research and policy prescriptions. FICCI has joint business councils with 79 countries around the world. The Joint Business Council, run by FICCI is the rallying point for Indian businessman, investors, and technology suppliers. FICCI works closely with the Government on policy issues, enhancing efficiency, competitiveness and expanding business opportunities for industry through a range of specialized services and global linkages. It also provides a platform for sector specific consensus building and networking. Partnerships with countries across the world carry forward our initiatives in inclusive development, which encompass health, education, livelihood, governance, skill development, etc. FICCI serves as the first port of call for Indian industry and the international business community. The Head Office is located in Delhi. It has 8 State offices and 6 International Offices. FICCI-western Regional Council is the western regional arm of the Federation of Indian Chambers of Commerce & Industry,. In addition to supporting FICCI, New Delhi, FICCI- WRC organizes its own conference, seminars, workshops, and Networks with visiting delegations from several developed and developing countries. FICCI-WRC actively provides sectoral services in Business matching, Gems and Jewellery, Nutraceuticals, Progressive Maharashtra, Textiles, Technical Textiles and Wellness.

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