Investment Climate in Madhya Pradesh

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1 Investment Climate in Madhya Pradesh

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3 MADHYA PRADESH PAGE 3 Table of Contents Madhya Pradesh - An Introduction... 4 Demographic profi le... 5 Employment distribution across sectors... 6 Physical infrastructure... 7 Social infrastructure... 8 Telecommunications... 9 State Policies And Incentives...10 Business Opportunities...11 Textiles...11 Cement...11 Forest Based Industries...12 Minerals...13 Key Players...14 Doing Busienss...15 Investment Climate...15 Expanding Industrial Infrastructure...16 Average cost of doing business in the state...16 An Ernst & Young report for IBEF

4 Madhya Pradesh An Introduction Madhya Pradesh (MP), in its present form, came into existence on November 1, 2000, following its bifurcation and the creation of the new state of Chhattisgarh. Spread across an area of 308,000 sq km, MP is the second largest state of the country, constituting 9.4 per cent of the total geographical area. It is bordered by Rajasthan, Uttar Pradesh, Chhattisgarh, Maharashtra and Gujarat. The state government has initiated steps to strengthen and reinforce a conducive investment climate for potential investors through progressive policies, simplifi cation of procedures and investment incentives. It is promoting a Greenfi eld Special Economic Zone (SEZ) at Indore. Key industry sectors in Madhya Pradesh are cement, textiles, mining and edible oil. The state is one of the largest producers of cement and a leading producer of edible oil. Many automobile and pharmaceutical companies have also shown interest to establish/ expand their production base in the state. Key sectors include mineral and stores, forest-based industries, IT/ITeS sector, agriculture, cement, auto and auto components, textiles, tourism and power generation. These sectors present opportunities and form the core of investments fl owing into the state. Some of the leading companies having a presence in the state include ACC, Aditya Birla Group, Cadbury India Ltd, Coca Cola India, Nicholas Piramal India Ltd, Eicher Motors Ltd, Procter & Gamble (P&G), Hindustan Motors, and Bharat Heavy Electricals Ltd. The state straddles the Narmada River, which runs east to west between the Vindhya and Satpura ranges. The mountains and the Narmada are the traditional boundary between north and south India. According to Census 2001, the state had a population of million, which is about six per cent of the country s total population. With a Net State Domestic Product (NSDP) of $9.8 billion, Madhya Pradesh is the ninth largest economy in India. The cost of basic infrastructure and skilled manpower is relatively low as compared to other states. Madhya Pradesh offers one of the lowest labour cost-to-sales ratios in the country. It has also successfully leveraged private investment in transport infrastructure.

5 MADHYA PRADESH PAGE 5 SOCIO-ECONOMIC PROFILE State Demographics Population The population density is 196 persons per sq km, compared to the all-india average of 313 persons per sq km. The state has an urban population of million and rural population of 44.33million. The ratio of rural to urban population is 74:26. Out of the total population, million are males and 28.9 million females. The sex ratio stands at 920 females per 1,000 males as against the all-india average of 933 females per 1,000 males. Economic Growth Trends Gross State Domestic Product The Net State Domestic Product (NSDP) of Madhya Pradesh at current prices in was $9.8 billion. Per Capita Income The per capita income as approximated from the per capita GSDP is a vital indicator of the standard of living. The per capita income in Madhya Pradesh stood at $369 in Population (Census 2001) Population (2001) 60.3 million Density (2001) 196 per sq km Sex Ratio (Census 2001) 920/1000 males Principal Languages Hindi Literacy Rate (Census 2001) 64.1% Major Minerals Copper ore, Lime stone, Manganese Ore, etc. Major Industries Cement, Textiles, Minerals, Edible Oil Major Crops Soyabean,Gram, Pulses like Masoor, Arhar GSDP at current prices in US$ 23, million NSDP at current prices in US$ 9.8 billion Annual Per Capita Income at current prices in US$ 254 Domestic Airports Bhopal, Indore Source: Official website of Government of India, Department of Rural Development, Government of Madhya Pradesh The demographic scenario is still characterised by high birth and death rates. In 2005, the crude birth rate in the state was 29.4 as against the all-india average of 23.8, whereas the crude death rate was 9.0 as against the all-india average of 7.6. With a total area of 308,000 sq km, Madhya Pradesh is divided into 48 districts, nine commissioner divisions, 272 tehsils and 313 community development blocks, including 89 tribal development blocks. Literacy rate The literacy rate in 2001 was 64.1 per cent, as against 64.8 per cent at the national level. The female literacy rate (50.3 per cent) was lower as compared to the male literacy rate (76.1 per cent); the all-india literacy rate for males was 75.3 and 53.7 per cent for females. The rural and urban literacy rate in the state was 57.8 and 79.4 per cent, respectively, against 58.7 per cent and 79.9 percent, respectively, at the national level. Sectoral Contribution to GSDP The sectoral composition clearly indicates that the economy is gradually shifting from the primary sector to secondary (industry) and tertiary (service) sectors. The contribution of the Madhya Pradesh - Sectoral Contribution to GDP 41% 35% 24% Agriculture Industries Services Source: Review of Madhya Pradesh Economy, CMIE, August 2004

6 primary sector to the total NSDP fell drastically from 45.7 per cent in to per cent in This is mainly attributed to lower growth in agriculture, including animal husbandry and forestry sub-sectors. Due to uncertainties related to monsoons in a largely rain-fed area, and due to faster growth in the industry and service sectors, the contribution of agriculture (including animal husbandry) has come down from per cent to per cent and that of the forestry sector from 2.85 per cent to 2.62 per cent during the last decade. Other Services Employment Distribution across Sectors The sectoral composition of the economy reveals that although there has been a substantial decline in the share of the primary sector in the past (particularly due to poor performance of agriculture and allied activities) and increase in the share of secondary and tertiary sectors, there has not been a corresponding decline in the proportion of people dependent on agriculture. According to the 2001 census, of the state s total population of million, the number of total workers was 25.7 million, comprising million males and 9.5 million females. Of the total workers, 20.9 million were in rural areas and 4.8 million in urban areas. Of the total number of workers, 19.1 million were classifi ed as main workers and 6.6 million as marginal workers. The work participation rate in the state is Of the total workers, per cent were cultivators, per cent were agricultural labourers, 4.01 per cent were engaged in household industry and the rest in other services. During , employment in the state government (regular) declined by 3.08 per cent. The number of persons on the live registers of Employment Exchanges in the state was 2.1 million on 31st November, 2006; the number of educated job-seekers was 1.7 million

7 MADHYA PRADESH PAGE 7 INFRASTRUCTURE Physical Infrastructure Transportation Roads Roads carry 80 per cent of the goods and passenger traffi c in Madhya Pradesh. Hence, systematic development of the road network is a pre-requisite for the overall development of the state. The total length of roads spanning MP is 67,600 km. About 5,200 km of national highways (NH) run through the state. The road network provides convenient linkages to ports on the west coast, including Kandla and Jawahar Nehru Port Trust. There are 18 national highways in the state, including trunk routes of Delhi-Mumbai, Delhi-Chennai, Delhi-Bangalore and Delhi-Hyderabad. The total length of state highways (SH) is 9,885 km. Under the Madhya Pradesh State Road Sector Development Programme funded by the Asian Development Bank, 1,750 km of state roads were also upgraded by 2006 at a cost of $150 million. The Madhya Pradesh government has accorded high priority to improve the road infrastructure and has been successful in attracting private sector participation (PSP) in the development of highways. It has constructed 17 bridges and bypasses to four of its cities through PSP. Maintenance of three state highways has been outsourced to the private sector. Currently, IJM Corporation of Malaysia is implementing two SH projects totalling 380 km with an investment of $50 million. Registered Vehicles The number of registered vehicles rose to 4.6 million in The highest increase has been in the number of motorcycles, scooters and mopeds in the Tenth Plan period ( ). The number of commercial vehicles like taxi cabs and three wheelers, buses and trucks increased substantially during this period. There were 500,000 such vehicles in , constituting per cent of the total registered vehicles Railways The state is well connected with the rest of India through a vast railway network. Almost 425 trains pass through the state daily, with Bhopal, the state capital, alone accounting for 175. The signifi cant presence of mineral-based industries in the state and availability of effi cient railway links is critical to fully exploit the potential. The total length of the railway network in Madhya Pradesh is 5,992 km. Of this, almost 1,880 km is electrifi ed. Currently, railway upgradation projects include adding 1,151 km of railway lines at a cost of $460 million and implementing a major track modernisation programme to convert 285 km of existing metre gauge routes to broad gauge at a cost of $112 million. The completion of these projects will further strengthen the railway network in the state. Airports To provide a boost to the tourism sector, the state aims at positioning air transport as a reliable all-weather, low-cost transport option. Madhya Pradesh - Growth in air traffic Airport Bhopal 71,294 87, ,700 Indore 170, , ,900 Total 242, , ,600 Source: Review of Madhya Pradesh Economy, CMIE, August 2004 The state has fi ve operational airports and 25 airstrips with regular services. There are convenient fl ights from Delhi and Mumbai to Bhopal, Jabalpur, Gwalior, Indore and Khajuraho. Indore airport has the capability to handle international cargo. An international airport is being proposed for Bhopal. Water Supply The state has several major rivers including Mahi, Narmada, Tapti, Chambal, Betwa, Wainganga, Ken, Sindh and Pench, which offer MAF (million acre feet) of water. Of this, per cent has the potential to be harnessed for irrigation purposes. Besides, MAF of ground water is also available, of which 50 per cent can be utilised for irrigation purposes. The net irrigated area in the state in was 5.68 million ha, which was per cent of the net area sown. The state has developed an irrigation potential of 2.4 million ha; the utilisation, however, is only about 50 per cent. Besides this, the Narmada Valley Development Authority (NVDA) has developed a potential of 230,000 ha. The Rural Development and Agriculture departments are also contributing to water harvesting and creation of irrigation potential

8 State policies Power The installed capacity of the Madhya Pradesh State Electricity Board (MPSEB) as on March 31, 2006 was 2, MW. Further, the state has a share of 1, MW in Central Sector Projects and additional allocation of 50 MW is available from Eastern Region Electricity Board (EREB). Apart from the above, 1,000 MW from Indira Sagar HEP and MW from Sardar Sarovar HEP (Interstate) is also available. A total capacity of 1,094 MW is likely to be added from the state sector, Narmada Projects and the central sector by March 2007, resulting in a total installed capacity of 3, MW. Thermal energy accounts for per cent of Madhya Pradesh s electricity generation capacity, and the rest is based on hydel generation. Power Fact File for Madhya Pradesh Power generation installed capacity Power Generation Total Power Available Per capita power consumption Source: On a per capita basis, electricity consumption in Madhya Pradesh stands at 352 kwh per annum, close to the national average of 355 kwh per annum. Various electricity projects under implementation in the state aggregate to 790 MW. The percentage of villages electrifi ed to total inhabited villages was per cent as on 31st March There were 1.34 million pump-sets and tube-wells in Social Infrastructure Education 6, MW MU MU 352 kwh/annum In recent years, Madhya Pradesh has taken concerted initiatives to develop the social infrastructure. It ranks 12th on the Human Development Index and its improved ranking can be attributed to the thrust on social development through focus on rural development and self-employment schemes. Literacy levels in the state have improved from 44.2 per cent in 1991 to the current level of 64.1 per cent. Madhya Pradesh s education network consists of nine universities, over 250 colleges, 87,000 primary and 8,500 secondary schools. The state has 45 engineering colleges, over 200 technical training institutes, six medical colleges and 43 management institutes, including one of the six Indian Institutes of Management (IIM) at Indore. Other national institutes in the state include the Indian Institute of Forest Management, the Indian Institute of Hotel Management and International Institute of Professional Studies at Indore. Educational Institution Number Primary Schools 87,620 Higher Secondary Schools 8,481 Degree Colleges 250 Universities 9 Polytechnic Institutes 79 Industrial Training Institutes 200 Engineering Colleges 45 Medical Colleges 6 Source: Health Health Institution Number District Hospitals 145 Sub-centre 20,521 Primary Health Centre 1,705 Community Health 343 Centre Ayurvedic Hospitals 34 Unani Hospitals 204 Homeopathic Hospitals 4 Source: Ministry of Health and Family Welfare, GoI, March 2006 Health Infrastructure in Public & Private Sector The state government has launched several welfare and health care programmes to improve the overall health standing of the state. In line with the National Health Policy goal of Health for All, the state has formulated strategies for the development of the three-tier health infrastructure facilities. Besides these, there are three private sector medical colleges and 11 dental colleges. The state has been effectively implementing programmes of reproductive and child health along with other national programmes.

9 MADHYA PRADESH PAGE 9 Health care in the public sector: 54 civil hospitals and 92 dispensaries 48 district hospitals, 267 community health centres. 1,152 primary health centres. 313 rural and 96 urban family welfare centres. 6 T-B hospitals and 8,835 sub-health centres, along with facilities of Indian System of Medicine. Telecommunications Madhya Pradesh has a well-developed telecommunication network, with 2,791 telephone exchanges operating in the state. There were 8,335 post offi ces in , each serving a population of 7,951. No. of Cellular Mobile Subscribers 8,87,990 No. of Telephone Exchanges 2,791 Tele-Density 3.9 Working DELs 23,57,660 ( Wired-12,03,458, WLL 2,66,212 & GSM 8,87,990) OFC Route Length in Km 27,222.7 Working Internet Connections 1,51,999 Working Broadband Connections 34,096 Source: Industrial Infrastructure The State Government, through the Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd (MPAKVN) scheme, has identifi ed several industrial clusters. Many industrial giants have their establishments in these areas; however, 44 per cent of the developed area is still untapped and open for investment. JABALPUR AKVN Area Developed: 790 hectares Allotted: 125 hectares Units established: 52 Major Groups: Raymond, Hindustan Petroleum, PBM, Ayur Special Infrastructure: Stone Park, Food Park REWA AKVN Area Developed: 273 hectares Allotted: 115 hectares Units established: 121 Major Groups: Birla, Jaypee Special Infrastructure: Integrated infrastructure development centres (IIDC) INDORE AKVN Area Developed: 2,492 hectares Allotted: 1,431 hectares Units established: 575 Major Groups: Tata, Ranbaxy, Eicher, Bridgestone, Hindustan Motors, Kinetic, SRF, S Kumar s, Gajra, Nicholas Piramal, Indorama, IPCA, Bhilwara Special Infrastructure: SEZ, Crystal IT Park, Food Park, Apparel Park BHOPAL AKVN Area Developed: 1,330 hectares Allotted: 618 hectares Units established: 286 Major groups: HEG, Crompton Greaves, P&G, Godrej, Lupin, IFB, Oswal, Nahar Special Infrastructure: ICD, Food Park GWALIOR AKVN Area Developed: 2,262 hectares Allotted: 800 hectares Units established: 326 Major Groups: JK, Surya Roshini, Godrej, Grasim, Cadbury, Hotline, Crompton Greaves Special Infrastructure: ICD, Food Park

10 STATE POLICIES AND INCENTIVES The Government of Madhya Pradesh recognises the need for faster economic development. Its strategy for encouraging investment and achieving higher levels of economic development hinges on the following elements: Economic development across all sectors Balance in both economic and social spheres Focus on physical connectivity, virtual connectivity and social connectivity Focus on industries other than those where it can leverage its abundant natural resources Development of industrial infrastructure With a view to attain a double-digit economic growth, the state government has implemented certain policy and regulatory measures. Industrial Promotion Policy 2004 The Industrial Promotion Policy is effective for fi ve years from 1st April 2004.The new policy envisages creating an industryfriendly administration, maximising employment opportunities, tackling industrial sickness, rationalising rates of commercial taxes and bolstering private sector participation Objectives of the Policy To make the state administration industry friendly by simplifying rules and procedures. To accelerate the pace of industrialisation and make Madhya Pradesh a leading industrial state. To maximise employment prospects. To attract NRI and foreign investment by developing worldclass infrastructure. To create a congenial environment for the development of small, medium and large industries. To ensure balanced regional development by generating employment in the non-farm sector. To chalk out special packages for removing industrial sickness. To integrate the different employment-oriented schemes to provide employment opportunities on a sustainable basis. IT Policy 2006 The state government aims to transform MP from a resourcebased to a knowledge-based economy and improve the life of the common man by leveraging the strengths of e-governance. Increased investment in the sector would enable educated youth to contribute to development and create a pool of highly skilled professionals. Biotechnology Policy 2003 Conservation of the state s biodiversity and the sustainable use of its biotic resources. Production of high-yielding, drought and pest-resistant seeds for agriculture and horticulture crops suited to different agro-climatic zones. Improvement of the quality of livestock and poultry, especially breeds indigenous to the state. Enhancement of the productive potential of the aquatic ecosystem. Promotion and cultivation of medicinal and aromatic plants and their processing and value-addition. Production of cost-effective drugs that help counter diseases common in the tropical and sub-tropical regions. Promote environmentally safe technologies for pollution abatement, especially treatment of urban waste and industrial effl uents. Afforestation, especially for the quick revival of species, which have shown a tendency to decline. Tourism Policy The policy aims at improvement and creation of adequate basic infrastructure. It proposes a special package of incentives for the tourism industry, including exemption from luxury tax, sales tax and entertainment tax for new projects for 10 years. It also designates 25 tourist circuits for commercial tax exemption for tourist vehicles. Special incentives offered to new and existing businesses Special package for mega projects on project-to-project basis by apex level investment promotion empowered committee headed by the chief minister. Industrial investment promotion assistance of 75 per cent of commercial tax for 3-10 years. Concessional registration charges and stamp duty exemption for Term Loans. Interest subsidy on term loans for fi ve years at three per cent to fi ve per cent. For thrust sector industries, 25 per cent capital subsidy would be provided up to a maximum of $56,000. Land on 75 per cent concessional rate for mega projects limited to $4.4 million. Entry tax exemption for fi ve years. Electricity duty exemption for fi ve years on captive power generation. 15 per cent capital subsidy to SSI units up to $33,000 in backward areas. Infrastructure grant up to $220,000 for developing private sector industrial parks. Partial reimbursement for Project report, ISO Certifi cation, Patent and Technology Purchase cost.

11 MADHYA PRADESH PAGE 11 BUSINESS OPPORTUNITIES Madhya Pradesh is an emerging industrial powerhouse, home to around 1,800 companies and 19 industrial growth centres (located across 7,147 ha) that are close to major cities. This makes good social infrastructure accessible to industrial units. There are around 171,000 SSI units that contribute signifi cantly to the economy. MNCs like Cadbury, Bridgestone, Unilever, Coca Cola and renowned Indian companies like Ranbaxy, Tata, Grasim, Hindustan Motors, Eicher, Kinetic, Hotline, Raymond s, Lupin, Crompton Greaves, Surya Roshni, Nahar Spinning, Anant Spinning, Godrej and HEG have their presence in Madhya Pradesh. These companies not only meet local requirements, but also export a variety of products and services to both developed and developing countries. Attractive Sectors Auto & Auto Components The size of the auto component industry in the state is $306 million. Sixty per cent of the auto industry in Madhya Pradesh is dominated by auto component players. The state has developed a 5,000-ha industrial cluster at Pithampur, which provides readily available infrastructure for companies willing to set up manufacturing facilities. The Government of India has sanctioned $11 million for an auto cluster in the Pithampur industrial area. Textiles A large number of cotton textile mills are clustered around Indore, Ujjain and Burhapur. Major textile players are Bhilwaras, Indo-Rama, Bhaskar, Oswals, Parasrampuria, Maikal and S Kumar s. The state government has also created Apparel Parks to support the industry. Textile Infrastructure at a Glance: Spinning Units 40 Spindles 14,14,000 Export-Oriented Spinning Units 12 Rotors 14,348 Looms 6,500 Exclusive Weaving Units 8 Power Looms 43,290 Power Loom Units 17,524 Handlooms 47,000 Composite Mills 20 Madhya Pradesh is poised to emerge as a leading textile state because of its cluster development initiatives. The clusters also have signifi cant location advantages. For instance, Malwa near the Indore cluster is a leading cotton-growing belt and a textile hub. The government also provides special fi scal and non-fi scal incentives to apparel units. Cement The state has 3, million tonnes of limestone reserves spread across the districts of Damoh, Hoshangabad, Mandsaur, Narsinghpur, Rewa, Satna, Panna, Katni, Sagar, Dhar, Khargone, Jhabua, Balaghat, Sidhi and Morena. Seven major cement plants, with an annual installed capacity of million tonnes, are operating in the state. The MP State Industrial Development Corporation has estimated that Damoh- Panna area and Bela-Pagra of Rewa have limestone deposits of eight million tonnes and 20 million tonnes, respectively. Considering the availability of raw material, there is a potential of attracting an additional $2.5 billion in investment in this sector. Madhya Pradesh has several locations that offer limestone and coal, providing an excellent opportunity to set-up captive power plants. The industry is expected to witness signifi cant growth as several projects are likely to come up near the limestone reserves. Tourism Tourism has been identifi ed as one of the key drivers of growth by the government. Eight million domestic tourists and 160,000 foreigners visited the state in The government has approved $12.2 million for development of 17 tourist locations across the state and is also making concrete efforts to improve air connectivity to other states. It has taken initiatives to promote eco and adventure tourism and is keen on promoting medical/ herbal tourism in association with private parties. Agriculture Several AEZs (Agri Export Zones) have been set up for facilitating export of specifi c products from a geographically contiguous area. The concentration of AEZs is higher towards the eastern and northeastern parts of the state. Commodities that have immense potential include potato, spices (in the western part), pulses (central part), wheat (western and central) and oranges (southern part). Of the total gross cropped area, 59 per cent is sown in the Kharif season and 41 per cent in the Rabi season.

12 AGRI EXPORT ZONES IN MP FOR VARIOUS PRODUCTS/ CROPS These will be equipped with all modern facilities (including high-speed data connectivity), which are required for smooth operations of software export units. The state boasts of 38 IT engineering colleges and the country s fi rst Indian Institute of Information Technology and Management (IIITM) at Gwalior. IT players like HCL and Genpact India have shown interest in setting up facilities in the state. Genpact India, which has proposed setting up a $34 million, 7,000-seat BPO facility, has been allotted 50 acres of prime land near the Bhopal airport. Wheat Seed Spices, Coriander & Fenugreek Forest-based Industries Pulses Oranges Potato, Onion & Garlic Madhya Pradesh is a leading producer of garlic and accounts for 37 per cent of the total national production. It accounts for 15 per cent of the national production of peas, is the largest producer of soya bean and gram and the second-largest producer of lentils, oilseeds and jowar. The government has initiated the concept of AEZs by addressing all aspects of effi cient agri-practices such as production, R&D, post-harvest management and packaging. Market promotion and development are also being undertaken at the AEZs. The objective is to promote agricultural exports from the state and ensure remunerative returns to the farming community. Madhya Pradesh has a forest area of 94, sq km, constituting nearly 31 per cent of the state s total land mass. With a share of nearly 13 per cent of the total forest area of the country, MP has the largest forest-covered area among all states. The four key Classification of MP land mass 69% Forest 31% Non Forest Reserved 65.36% Protected 32.84% Unclassified 1.7% IT/ITES Sector PROPOSED/ EXISTING PROJECTS IN M.P. 9.38% IT Park STP Indore Crystal IT Park Hardware & Technology Park 92.62% India MP The state has set up an over 24,000 km optic fi bre backbone to cover all its 313 developmental blocks across 45 districts. Four Software Technology Parks of India (STPI) units will be set up in Bhopal, Indore and Gwalior. types of forests are tropical moist, tropical dry, tropical thorn and sub-tropical broad-leaved hill forests. Forest-based industries are key contributors to the state s economy and provide employment to a large part of the population. In , forests and logging contributed 2.1 per cent to the SGDP. The total growing stock (volume of timber/ wood) in MP is 50 million cu m, valued at $55.5 billion. The average annual production of tendu leaves is around 2.5 million standard bags. MP s forest reserves are a rich source of timber, fuel wood and bamboo. They are also a key source of minor forest products such as tendu, harra, sal seed and gums.

13 MADHYA PRADESH PAGE 13 MP is the largest producer of tendu leaves, which is the key raw material used for the production of biddi. MP accounts for nearly 25 per cent of the total tendu leaf production in India. Sales of forest products generated revenues of $109 million in Minerals Reserves of Important Minerals of Madhya Pradesh v/s India Pyrophyllite & Diaspore Diamond carats Copper Ore Dolomite Manganese Ore Coal Limestone Coal Bed Methane 0 MP mn tons mn tons mn tons mn tons mn tons mn tons bcm India The state has rich and vast mineral deposits, which include diamonds, slate, pyrophyllite, diaspore, coal, limestone, copper ore and manganese, among others. Besides, it also has favourable geological and geotectonic settings. Active mining generates revenues of over $ million per annum. MP is the sole producer of diamonds in India. The state has per cent of the total national reserves of copper ore. It has the thickest coal seam (135 m) in Asia at the Singrauli coalfi eld in Sidhi district. It is also a major producer of coal, diaspore, pyrophyllite, manganese, dolomite, glass and fi re clay. The land parcels in the eastern, southeastern and western belts of MP are rich in various mineral reserves. Most of these are supplied to other states in crude or semi-processed forms for commercial use and further processing. Several mineral-based industries have come up in and around these areas, including cement, thermal power and coal washeries. The mining industry along with the downstream/ allied industries has been the major source of employment in the state. Source: Directorate of Geology & Mining, MP Thrust Areas of the State Mineral-based Industry No. of Units Location Cement 7 Rewa, Satna, Damoh, Katni, Neemuch Thermal Power 10 Shahdol, Umaria, Sidhi, Satna, Betul, Damoh, Katni, Rewa, Ujjain Hydrated Lime 25 Katni & Satna Slate Pencil 155 Mandsaur Roofing (Manglore)Tiles 8 Hoshangabad, Balaghat Madhya Pradesh s Mineral-wise Revenue ( ) Minerals US$ 00 Minerals US$ 00 Coal 118,656 Ocher 4 Limestone 26,500 Bauxite 280 Copper ore 2,044 Rock phosphate 144 Manganese 927 Pyrophillite/ Diaspore Diamond 929 Calcite 4 Dolomite 229 Shale Slate 2 Laterite 89 Kaolin 7 Fire Clay 116 Other Minerals 1,562 Total Minor Minerals US$ million Total Major Minerals US$ million Source: Directorate of Geology & Mining, MP

14 Key Players The state has around 1,800 companies and 19 industrial growth centres, which are close to major cities. This makes good social infrastructure accessible to industrial units. There are around 171,000 SSI units that contribute signifi cantly to the economy. These companies not only meet local requirements, but also export a variety of products and services. ACC Ltd ACC is one of the largest cement manufacturing companies in India, with a production capacity of 16 million tonnes per annum. A pioneer in cement and ready-mix concrete (RMC), it has a countrywide distribution network. In Madhya Pradesh, ACC has a 1.7 million tonnes per annum (MTPA) plant at Kymore and plans to invest $3.3 million to expand its manufacturing capacity of roofi ng products. This will increase its production from 68,000 tonnes of asbestos roofi ng to 78,000 tonnes. Coca Cola India Coca-Cola India, one of the world s largest beverage companies, has invested more than $1 billion in India over the past decade. It has a plant at Pilukhedi in Raisen district, near Bhopal, and plans to invest $6.7 million for expanding the operations. Cadbury India Ltd Cadbury India is a subsidiary of Cadbury Schweppes, the world s largest confectionery and third-largest soft drinks company. Cadbury India, which recorded sales of over $150 million in 2003 and employs nearly 2,000 people, has one of its main production plants at Malanpur near Gwalior. Birla Corporation Ltd Birla Corporation Ltd is the fl agship company of the MP Birla Group. Its main areas of business are jute, cement, synthetic yarn, calcium carbide industrial gases, PVC coated fabrics, PVC fl oor coverings, auto trims, healthcare and education. Birla Corporation has joint ventures and collaborations with world leaders like DLW AG of Germany, Rhone Poulenc of France, Swedenbased Ericsson Cables and ABB, GE, Toshiba and AEI Cables. Procter & Gamble Procter & Gamble India is one of the fastest growing FMCG companies in India. The company has a turnover of over $200 million and has a high technology detergent manufacturing plant in Raisen district in the state. Eicher Motors Ltd Eicher Motors, part of the $355 million Eicher Group, is a signifi cant player in the Indian automobile industry. It manufactures and markets commercial vehicles with Gross Vehicle Weight (GVW) ranging from 5 to 25 tonnes. It is one of the leading manufacturers of commercial vehicles. The company has a 72-acre manufacturing facility in Pithampur; it has top-of-theline equipment, a robust infrastructure and an annual production capacity of 30,000 vehicles. The company has a world-class R&D centre that has helped it successfully develop a wide range of commercial vehicles including trucks and buses. The company recently invested $22 million for manufacturing heavy commercial vehicles at its Pithampur plant. Nicholas Piramal India Ltd (NPIL) Nicholas Piramal India Ltd (NPIL) is one of India s leading pharmaceutical and healthcare companies, ranked fourth in domestic formulation sales and second in total domestic pharmaceuticals sales. Its Pithampur plant in Madhya Pradesh is accredited by reputed organisations like Allergan, Novartis, Solvay and VAX. Nicholas Piramal plans to invest $45 million to enhance its research and development activities besides strengthening its manufacturing facilities.

15 MADHYA PRADESH PAGE 15 DOING BUSINESS Key approvals required Following are some of the key approvals needed and procedures to be completed before commencing operations in Madhya Pradesh: List of Approvals and Clearances Required Departments to be Consulted Prior to Setting up the Unit Registration District Trade & Industries Centre Allotment of Land/ Shed District Trade & Industries Centre Permission for land Use District Authorities No Objection Certificate under Water & Air Act Madhya Pradesh Pollution Board Approval for Construction Activity and Building Plan Development Authority No Objection Certificate Fire Department Provisional Trade Tax Registrations Central and State Excise Departments Registration under Central Sales Tax Act Central and State Excise Departments Before commencement of Production No Objection Certificate under of Water & Air Act Madhya Pradesh Pollution Board No Objection Certificate Fire Department Permanent Trade Tax Registration under Central and State Excise Departments Registration under Central Sales Tax Act 1956 Central and State Excise Departments After Commencement of Production /Activity Registration Industries Department Investment Climate Abundance of Natural Resources The state has an abundance of natural resources. The presence of many water bodies in the form of rivers and lakes has positioned it as a leading hydropower generator. Ample irrigation facilities, coupled with favourable geographical and climatic conditions, ensure that agro-based industries fl ourish in the state. The large forest cover in the state provides scope for development of forest-based industries. Many species of herbs and medicinal plants are found in the state. Other natural resources include mineral deposits, and rare species of plants and animals. Favourable Policies and Incentives Apart from the Concessional Industrial Package, the state offers additional benefi ts through its Industrial Policy of The thrust sectors, identifi ed by the state based on the need and potential for development, enjoy added benefi ts in terms of fi s- cal and non-fi scal advantages. The policies offer benefi ts for establishing industries, as well as for expanding existing ones, allocating different incentives to industries based on their size. There are additional benefi ts for revival and rehabilitation of sick industries in the state as well. The benefi ts offered include tax exemptions, reimbursements on loans, interest incentives, fi nancial assistance, subsidies and concessions. In addition to common policies, sector-specifi c policies make automobiles, cement, forest-based industry, tourism, IT/ ITES and agro-processing ideal industries to invest in. Location Advantage Situated in central India, the state has access to the nation s leading markets. Madhya Pradesh is also well connected by road, rail and air to all its neighbouring states. It offers diverse tourists destinations catering to various segments of tourism such as religious (Bhojpur), eco/ adventure (Panchmari) and heritage (Sanchi, Khajuraho).

16 High literacy rates and developing skills The state has an above average literacy rate and is host to many reputed educational institutes. Over 18,000 technical graduates and 23,000 graduates are added to the workforce each year. Facilities aside, the initiatives taken by the government to develop a talented pool of human resources is providing additional support to industries in terms of skilled manpower. Expanding Industrial Infrastructure The state has seen considerable overall development since its inception. This includes the various industrial estates set up in the state. It has incorporated modern technology to plan and implement these projects, and has attempted to provide all necessary facilities to industrial regions. The state has India s fi rst operational Greenfi eld SEZ. The cost of land in Madhya Pradesh is one of the lowest in the country. Even central hubs such as Indore and Bhopal fare well against other cities in terms of low cost of land. Apart from basic amenities like water, power, connectivity and transport linkages, industrial estates also have access to leisure, education, health and other service facilities. These estates also have quality manpower at their disposal. OVERALL STATE COMPETITIVENESS The state s competitiveness has been formulated after considering the various parameters including the opportunities in the types of industries, policy incentives available for the industries and the presence of industrial infrastructure. Attractive policy incentives give Madhya Pradesh an edge over the other states for investment. Average cost of doing business in the state Sr. No. Sector Cost* 1 Manufacturing A Land Price (US$/sq mt) Electricity (US cents) Office space rent (US$/sq mt/month) Residential rent (US$/3 bedroom flat/month) star hotel room (US$ per night) * These costs are merely indicative

17 MADHYA PRADESH PAGE 17 DISCLAIMER This publication has been prepared for the India Brand Equity Foundation ( IBEF ). All rights reserved. All copyright in this publication and related works is owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication), modifi ed or in any manner communicated to any third party except with the written apporval of IBEF. This publication is for information purposes only. While due care has been taken during the compilation of this publication to ensure that the information is accurate to the best of IBEF s knowledge and belief, the content is not to be construed in any manner whatsover as a substitute for professional advice. IBEF neither recommends nor endorses any specifi c products or services that may have been mentioned in this publication and nor does it assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this publication. IBEF shall in no way, be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed guidance taken from any portion of this publication.

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