INDIAN STATES Economy and Business. Chhattisgarh.

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1 INDIAN STATES Economy and Business Chhattisgarh

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3 INDIAN STATES Economy and Business Chhattisgarh

4 CONTENTS Executive Summary 3 Economic Snapshot 5 The State Economy 7 Infrastructure 8 Social infrastructure 8 Access infrastructure 8 Communications infrastructure 10 Industrial infrastructure 10 Key industrial centres 11 State Policy 12 Vision & Mission 12 Industrial policy 12 Human resource policy 13 Mineral policy 13 IT policy 13 Tourism policy 14 Biotech policy 14 e-governance 14 Business Opportunities 15 Key industries 15 Exports 16 Investment 16 Potential hubs for investment 17 Key Players 18 Doing Business in Chhattisgarh 20 Obtaining approvals 20 Cost of setting up business 20 Contact for information 21 A report by PricewaterhouseCoopers for IBEF

5 CHHATTISGARH PAGE 3 Executive Summary Chhattisgarh came into being as a state of the Indian Federal Union on November 1, It was carved out of the sixteen south-eastern districts of undivided Madhya Pradesh. Geographically, it has an area of 135,191 sq km, which makes it the ninth largest state in India. With a Net State Domestic Product (NSDP) of over US$ 3.3 billion, Chhattisgarh s economy is the sixteenth largest in India. Being a newly created state, Chhattisgarh has the advantage of a responsive administration.the state government is committed to containing establishment costs to less than 40 per cent of its revenues, so as to make resources available for economically beneficial activities. The state government has undertaken various initiatives to curtail unproductive administrative overheads and encourage public-private partnership. The number of departments in the state government has been limited to 18 (compared to 52 in the undivided state). The state has recognised infrastructure provisioning as an industry and has drawn up an Infrastructure Development Action Plan to facilitate timely development of physical infrastructure in the state. Chhattisgarh is rich in minerals and natural resources. The state has a substantial share of India s coal, iron-ore, bauxite and limestone reserves. In all 28 varieties of minerals are found in the state. The key sectors of Chhattisgarh s economy are cement, mining, steel, aluminum and power. Chhattisgarh s large coal reserves present a large opportunity for electricity generation in the state. The state also offers opportunities for investment in infrastructure development.

6 Industrial Centres in Chhattisgarh

7 CHHATTISGARH PAGE 5 An Economic Snapshot Capital Raipur Area (sq km) 135,191 Population (2001) Literacy Rate (%) 65 NSDP (US$ billion) 3.3 NSDP growth (%) (10 years) 2 Per Capita Income (US$) 264 National highways length (km) 1,827 Rail length (km) 1,180 Domestic airport Key industries Industries with growth potential 20.8 million Raipur Cement Mining Iron & Steel Aluminium Power Infrastructure

8 Advantage Chhattisgarh A new state with an opportunity to adopt a modern model for economic development Large mineral resources to facilitate development of cement, steel, aluminium and electricity generation Single window clearance framework with statutory backing Electricity surplus state, with relatively low land and labour cost

9 CHHATTISGARH PAGE 7 THE STATE ECONOMY Between 1994 and 2003, the state s NSDP increased from US$ 2.7 billion to US$ 3.3 billion at a compounded annual growth rate of 2 per cent. Chhattisgarh - Sectoral Contribution to GDP US$ billion Chhattisgarh - NSDP Growth Year Services 36% 28% 36% Note: the figures are at prices, Source: Estimate of State GDP of Chhattisgarh, , Directorate of Economics & Statistics, Chhattisgarh Agriculture Industry During , Chhattisgarh s per capita income stood at US$ 264. Between and , the share of agriculture sector in the state declined from 40 per cent to 36 per cent and the industrial sector from 30 per cent to 28 per cent. Source: Estimate of State GDP of Chhattisgarh, , Directorate of Economics & Statistics, Chhattisgarh The contribution of the services sector registered an increase from 30 per cent to 36 per cent during the same period.

10 INFRASTRUCTURE Social infrastructure Since its creation in 2000, the state has laid particular emphasis on improving social infrastructure through a focus on poverty alleviation and rural development. Chhattisgarh has a population of over 20.8 million (Census 2001). Its population density stands at 154 persons per sq km, much lower than the all India-average of 324 persons per sq km. Population growth rate in Chhattisgarh stood at 18 per cent during , lower than the national growth rate of 21.3 per cent during the same period. Chhattisgarh s social performance (as measured through the Human Development Index in 2001) shows that certain parts of the state (Durg (0.62), Raipur (0.56) and Korba (0.56)) have a relatively well-developed social infrastructure as compared to other districts in the state.this may be attributed to industrialisation and better infrastructure network in these regions. The state has done well in terms of literacy, which increased from 43 per cent in 1991 to over 65 per cent in Chhattisgarh s education network consists of 4 universities, 116 colleges, over 31,600 primary and 8,930 secondary schools. Its college network includes 12 engineering colleges, with an annual intake of over 3,300 students, 69 technical training institutes and 2 medical colleges that offer 200 seats.this strong network of training institutes provides a pool of qualified professionals to businesses and industries located in the state. The state s network of health facilities comprises 27 hospitals, 23 dispensaries, 631 primary and community health centres and 3,818 sub-primary centres. Access infrastructure Chhattisgarh is a land locked state that is surrounded by six Indian states - Uttar Pradesh, Jharkhand, Orissa, Andhra Pradesh, Maharashtra and Madhya Pradesh. This makes its geographic location strategic. By developing its infrastructure the state can use its geographic location to develop a logistics and warehousing network to service the region. The total length of roads in Chhattisgarh stands at over 35,388 km.the state has 24,236 km of surfaced roads. Chhattisgarh s road density stands at 26.2 km per 100 sq km.the total length of national highways passing through the state is 1,827 km. National Highway 6, which connects the west to the east, passes through some of the most industrialised areas of the state. To meet state s growing transport requirements, the National Highways Authority of India (NHAI) is planning to develop five national highway projects aggregating 450 km through private sector participation.the state s highway network is being upgraded with funding from the Asian Development Bank.The project envisages improving 1,700 km of state roads by 2009 with an investment of US$ 286 million. Another five projects aggregating US$ 50 million of private investment are in various stages of implementation in the state. The existing industrial areas, industrial parks, export zones etc. and those to be set up in future, will be connected by excellent roads with the national / state highways and important railway stations. Given the significant presence of mineral-based industries in the state, availability of efficient railway links is critical. Currently, the total railway network in Chhattisgarh is 1,180 km. Of this, almost 861 km is electrified track.

11 CHHATTISGARH PAGE 9 All necessary efforts will be made and steps taken for early commencement of work on Dalli-Rajhara- Raoghat-Jagdalpur rail line project. Recognising the potential for mining and metal industry related traffic in the state, the Indian Railways has established a new zone named South-East Central Railway with its headquarters at Bilaspur. Indian Railways is also implementing projects for new railway lines in the state aggregating 235 km at a cost of approximately US$ 80 million. MW Chhattisgarh - Trend in installed capacity and electricity generation Installed capacity (MW) Electricity generation (MU) Million Units Source: Chhattisgarh State Electricity Board Expansion and capacity augmentation of the railway network in Chhattisgarh will provide impetus to movement of goods within and outside the state. It will also improve Chhattisgarh s integration with the national railway system and enhance the competitiveness of industries located in Chhattisgarh s hinterland. Chhattisgarh has one airport in Raipur, the state capital. Rapiur is connected by air to New Delhi, Mumbai, Kolkata etc.the state does have smaller airports / air strips helipads at a number of locations including Raigarh, Jashpur, Ambikapur, Bilaspur, Korba, Sarangarh, Jagdalpur, Bhilai etc. annual growth rate of 3 per cent. On a per capita basis, electricity consumption in Chhattisgarh stands at 284 kwh per annum. Industry represents the largest consumer category, followed by domestic and agriculture consumers. Chhattisgarh - Composition of electricity consumption 15% 5% Both domestic and foreign capital and public private partnership will be encouraged in the basic infrastructure projects. For this purpose, apart from the State Government implementing projects from its own resources, projects based on BOT, BOOT etc. will be permitted. Power Chhattisgarh has the unique distinction of being a power surplus state. The installed electricity generation capacity of Chhattisgarh is 1,401 MW. 96 per cent of Chhattisgarh s electricity generation capacity is based on thermal energy. Hydel generation accounts for the remaining 4 per cent of power. Electricity consumption in Chhattisgarh increased from 2,977 million units (MU) in to over 3,540 MU in , thus indicating a compounded Domestic 16% Agriculture Industrial Others 64% Source: Chhattisgarh State Electricity Board To meet the country s growing power requirements, the state government is planning and implementing several power projects with capacities aggregating 11,969 MW.The Chhattisgarh State Electricity Board (CSEB) plans to add another 2,000 MW capacity by 2007.

12 National Thermal Power Corporation (NTPC) is expanding its presence in the state through construction of 2,980 MW plant at Sipat with an investment of US$ 1,800 million. Jindal Power is implementing a 1,000 MW electricity generation project at Raigarh.The first phase of 500 MW shall cost US$ 500 million and is expected to be complete by 2007.The Lanco Group is setting up a 250 MW coal based project at Pathadi in Korba district. The plant is expected to be commissioned by The state proposes to make special efforts for the supply of uninterrupted and quality power to industries by the Chhattisgarh State Electricity Board To meet the requirement of power by industries, incentives will be given for captive power generation. Chhattisgarh - Electricity generation projects in the pipeline Project Capacity (MW) Under Implementation Thermal Bhaiyathan/Surguja 1,000 Korba West Extn Unit 5&6 2 X 250 Ratija Korba 25 Sipat NTPC/Bilaspur 2,980 Mandi/Raigarh 1,000 Raigarh 1,000 Sub-Total 6,505 Planning Thermal Balkunthpur/Kona 1,000 Premnagar/Bishrampur 1,000 Chhuri/Korba 2 X 260 Korba FCI/Korba 2 X 210 Korba East/Korba 2 X 210 Bhilai/Durg 2 X 287 Korba Risdi site/korba 2 X 535 Hydel Mahan HEP 4 X 10 Moran HEP 4 X 30 Rehar I HEP 3 X 50 Rehar II HEP 3 X 50 Sub Total 5464 Total 11,969 Source: Chhattisgarh State Electricity Board Communications infrastructure The number of fixed wire telephone subscribers in the state increased from 0.23 million in 2001 to 0.27 million in 2002.All districts in the state are linked with optical fibre cable and all district centres having internet facilities. Cellular mobile telephony has gained considerable ground in the state with the presence of private cellular players such as Reliance, Birla AT&T and Airtel. Chhattisgarh - Growth in fixed wire telephones Year Fixed wire telephones (in 000) Source: Chhattisgarh at a Glance, 2002 & 2003, Directorate of Economics & Statistics Industrial infrastructure Chhattisgarh has several industrial parks / growth centres, which act as hubs of industrial development in the state.these include industrial parks in Bhilai, Korba, Borai in Durg, Urla in Raipur city, Siltara, Sirgitti in Bilaspur, among others. These industrial estates are close to major cities and provide basic physical and social infrastructure facilities to industrial units.the Chhattisgarh State Industrial Development Corporation (CSIDC) manages these industrial estates.the state government has also set up a software technology park in Bhilai and another is being established at Korba. For planning and development of basic infrastructure for new industries, initiative will be taken for preparation of an Industrial Zoning Atlas. Development of private industrial areas will also be encouraged.the state plans to adopt cluster approach for setting up of new industries and suitable areas will be identified for development of herbal park, food park, aluminium park, metal park, cycle complex, apparel park, IT park, gem and jewelery park etc.

13 CHHATTISGARH PAGE 11 Provision of roads, water supply, power supply and other common facilities, their up-gradation and maintenance will be taken up from the State s own resources and through Special Purpose Vehicles (SPVs).The SPVs will be set up under the industrial infrastructure up-gradation scheme of the Government of India. To promote exports from the State, efforts will be made to set up special economic zone, agro export zone and air cargo complex. Efforts will also be made for upgradation of facilities in the existing inland container depot. A dry port has been established at Urla in Raipur city, to facilitate movement of international trade cargo from the state. Some of the infrastructure investment being planned in the state are: A second dry port to be established by the Container Corporation of India An industrial park on 750 acres of land at Raigarh with an investment of US$ 8 million to be developed by Jindal Steel and Power A new capital city, with an investment of US$ 1 billion.the concept plan for the city covering over 7000 hectares has been finalised and it will be implemented over three phases. Chhattisgarh State Industrial Development Corporation (CSIDC) has developed various Industrial Growth Centres & Industrial Areas namely Urla, Sarora, Bhanpuri, Rawabhata, Siltara in Raipur, Borai in Durg and Sirgitti,Tifra, Rani durgawati in Bilaspur. Key industrial centres Raipur region Rich reserves of minerals, limestone, and coal have made Raipur district one of the key industrial centres in the state. Raipur city is also the state capital and the government proposes to develop the city into a new world-class capital city. Raipur has 58 large and middle scale industries with prominent players such as Monnet Ispat, Century Cement, Lafarge and Ambuja Cement. Durg-Bhilai region The Durg-Bhilai region is rich in mineral deposits especially iron-ore, limestone and quartzite.the region is well connected by road and is just 50 km away from the Mana airport at Raipur. Major players located in the region include Bhilai Steel, the Steel Authority of India (SAIL) and Associated Cement Company (ACC).The Borai Industrial Growth Centre spread over 397 hectares is also in this region. Bilaspur region Bilaspur is a prominent industrial centre in Chhattisgarh.The district has a total population of 1.7 million.the presence of South Eastern Coalfields Ltd in the region has ensured thriving operations for ancillary industrial units in the area. National Thermal Power Corporation (NTPC) is building the state s largest thermal power plant at Sipat in Bilaspur district. The Sirgitti Industrial Growth Centre spread over 338 hectares is located in this region. Bilaspur is also the divisional headquarters for South Eastern Central Railways. Bilaspur s railway division is one of the most profitable in India, contributing about 17 per cent of the revenues of the Indian Railways. Korba region Korba district is known as the Electricity Capital of India.The region has rich reserves of coal and bauxite. It is connected to Bilaspur, the divisional headquarter for South-Eastern Central Railways by rail. It is about 200 km from Mana airport in Raipur. Major industries present in the region include mining (coal and bauxite), electricity generation and aluminum production.

14 STATE POLICY Vision & Mission The State Government endeavours to work towards rapid economic growth with regional balance to bring about prosperity in the state. One of the priority areas of the government is to create a favourable investment environment for increasing industrial production and to create employment oportunities. The New Industrial Policy ( ) proposes to add maximum value to state s abundant natural resources. The policy aims to provide necessary infrastructure for investment, reducing the cost of production for the investor and ensuring an investor friendly administration. Industrial policy To create additional employment opportunities by accelerating the process of industrialisation in the state To create enabling environment for ensuring maximum value addition to the abundant, locally available mineral and forest based resources To ensure balanced regional development by attracting industries in the economically backward areas of the state To make industrial investments in the state competitive vis-a-vis other states in the country To promote private sector participation for creation of industrial infrastructure in the state To create an enabling environment for increasing industrial production, productivity and quality upgradation to face the challenge of competition emerging from economic liberalisation Directed incentives will be provided for industrial investment in the State in the form of interest subsidy, infrastructure development / capital investment subsidy, exemption from electricity duty, exemption from stamp duty, exemption from entry tax, allotment of plots at concessional premium in industrial areas, reimbursement of project reports expenses, quality certification subsidy, technology patent subsidy, interest subsidy for technology upgradation etc. Directed incentives provided in this policy will be available to new industrial projects and to those industrial units which expand their production capacity. Public sector undertakings will be encouraged to form joint ventures, particularly in the area of mining, with the private companies making investment for value-addition within the State. Private sector participation in infrastructure building will be encouraged, particularly in basic infrastructure like roads, power, water supply, housing; industrial infrastructure such as development of industrial areas and parks, cluster development; logistics infrastructure like air-cargo complex, inland container depot, warehousing, logistics hub; and social infrastructure like health, education, tourism. An action plan will be prepared for promotion of export oriented units to be implemented by availing of the benefit of various export promotion schemes of the Government of India. Initiatives will be taken for creation of infrastructure necessary for promotion of exports. Assessment of state s export potential will be undertaken through a national level institute / agency. To attract investment by non-resident Indians, arrangements will be made for inviting them individually, and in groups, and organising their meetings / dialogue with the local entrepreneurs.

15 CHHATTISGARH PAGE 13 Financial incentives will made available to industrial units to encourage technology up-gradation, patent registration and R&D. Additional financial incentives will be provided for investment by non-resident Indians and for foreign direct investment. Monitoring of implementation of the Industrial Policy will be done by the State Industrial Investment Promotion Board and its high powered inter-departmental committee. Human resource policy An assessment will be made of the existing training facilities and the future requirement of skilled man power in the State and measures will be taken to meet the gap between the requirement and the actual availability.the State Government will provide incentives to increase the presently available specialties in the training institutions, both in the private and government sector. Efforts will be made to involve the private sector and the owners of existing industrial units to set up new technical institutions. For this purpose, in addition to concessional land, other necessary assistance will also be provided. Mineral policy The State s Mineral policy aims at creating a conducive business environment to attract private investment in the sector.the initiatives taken under the policy include: Simplification of mining laws and leases Preference in sanction of leases for minor minerals Implementation of Granite Conservation & Development Rules, 1999 Speedy addressal of infrastructure constraints for mining activity by Chhattisgarh Infrastructure Development Corporation Constitution of Chhattisgarh Mining Corporation IT policy The State s IT and ITES policy aims to leverage the potential of Information Technology for rapid social and economic development to significantly improve the quality of life for its citizens. It also aims to establish Chhattisgarh as the leading destination of choice for IT Investment and promote the growth of local IT industry in the state. Some of the key initiatives taken by the government are: Incentives to IT industry Constitution of high level committee for grant of No-Objection Certificate through single window system Creation of a distinct budgetary head of account for IT-related activities in the annual state budget Encourage public-private-partnership policy for e-governance The state government is also taking steps to promote IT in various aspects of governance.these include: Linking all districts with optical fibre cables and ensuring that all district centres have internet facilities Linking 63 treasuries and sub-treasury offices in the state A Memorandum of Understanding (MoU) with the Indian Institute of Technology, Kanpur to promote e-governance in the state and using IT for economic and technological development, and enhancing the skills of faculties at education institutes in the state Provided land at concessional rates to all universities imparting IT education Compiling data for a geographical information system with the help of the Indian Space Research Organisation at an estimated cost of US$ 4.5 million Computerising land records.till August 2003, land records of 19,466 villages of the state s 19,995 villages were computerised

16 The Government has also set up a nodal agency, CHiPS to propel IT growth and implementation in the state.the agency is headed by the chief minister and is responsible for implementing the state-wide Chhattisgarh Online Information for Citizen Empowerment (CHOiCE) e-governance project Tourism policy Chhattisgarh has a rich cultural heritage and attractive natural diversity.the state government has taken a conscious decision to create a unique image for the state and position it as an attractive destination for both domestic as well as foreign tourists. Some major objectives of this policy are: Integrated development of special tourism areas Promote private sector initiatives in developing tourism-related infrastructure Promote eco-tourism, adventure tourism, culture-heritage and ethno tourism Setting up the State Tourism Promotion Board as a nodal agency to promote tourism Biotech policy Biotechnology has been identified as a thrust sector in the State s Industrial Policy.The Bastar region is one of the richest biospheres in India.The state is endowed with about 22 varieties of forest and is extremely rich in aromatic plants used in herbal medicine.the state has vast land of virgin biosphere reserves. Its biotech policy has the following objectives: Focus on thrust areas viz. Agri-biotechnology, Health care, Bioinformatics, Industrial and Environment biotechnology Creation of a Biotechnology Fund with an initial corpus of US$ 7 million Providing infrastructure for biotechnology industry through setting up of biotechnology parks and bio-villages Human resource development through introduction of biotechnology in technical education institutions and industry partnered educational programmes Incentives for bio-technology industry e-governance The State Government proposes to put in place the system of single point contact for according approvals and clearances for investment. For this purpose, an administrative complex will be built in the State capital Raipur to house all the agencies connected with industrial investment promotion. With a view to create enabling environment for promotion of industrial investment, an institutional arrangement will be put in place by constituting a State Level Industry Advisory Board headed by the Chief Minister for periodic consultation and interaction with industrial associations, investors, subject experts etc. District Investment Promotion Committees and the State Industrial Promotion Board constituted under the Chhattisgarh Industrial Investment Promotion Act, 2002 will be strengthened for effectiveness. The system of deemed approvals in cases of failure of concerned government agencies to accord investment clearances within the specified time limit will be put in place. For giving various statuary and administrative clearances to investors, state and district level nodal agencies will be put in place to work as single point of investor contact which will be responsible for facilitating all necessary clearances. Necessary steps will also be taken for simplification of labour laws.

17 CHHATTISGARH PAGE 15 BUSINESS OPPORTUNITIES Key industries The economy of Chhattisgarh is largely natural resource driven and it leverages the state s rich mineral resources.the key sectors where Chhattisgarh has a competitive advantage include cement, mining, steel, aluminium and power. Cement Chhattisgarh is the fifth largest producer of cement in India.With a capacity of over 8.6 million tonnes per annum, Chhattisgarh accounts for over 10 per cent of India s cement production. The cement industry in India is witnessing significant growth in recent years.with the domestic demand for cement expected to grow at 8-9 per cent annually, cement production in India is projected to reach 160 million tonnes by Chhattisgarh s advantage in the sector lies in the fact that it has large limestone reserves. Limestone production stood at 13.7 million metric tonnes in At present, the state has 9 major cement plants and 12 mini cement plants. All the large cement producers have a significant presence in the state.these include AV Birla Group (Grasim Industries, Ultratech Cemco), Gujarat Ambuja Cement, ACC and Lafarge. Mining Chhattisgarh is rich in mineral resources and it is the only state in India with iron-ore reserves. One fifth of India s iron-ore reserves are located in the state. Other significant minerals found in the state include bauxite, dolomite and kaolin. In , Chhattisgarh produced minerals worth US$ 900 million, contributing to 13 per cent of the mineral production in India. The mining and quarrying sector contributed 12 per cent to the state s GSDP in The state government is facilitating proper exploitation of its mineral wealth by promoting mining and mineral based industries.the state government aims to double the contribution of minerals to the state s GDP by 2010.To encourage investment in the Mining sector, the state has formulated a Mineral policy, which seeks to simplify mining laws and leasing. Mineral Chhattisgarh - Mineral production, Production (million tonnes) Chhattisgarh India % share all India Coal Iron Ore Bauxite Dolomite Kaolin Source: Indian Bureau of Mines, Government of India, 2002 Several private players with captive mining operations in the state include Essar Steel, Jindal Steel and Power Ltd, South Eastern Coalfields Ltd, National Mineral Development Corporation (a Government of India undertaking) etc. Iron & Steel With over 20 per cent of India s iron-ore reserves, Chhattisgarh has a competitive advantage in iron and steel industry. Presently, iron-ore is being exported from the Bailadila iron-ore mines of Dantewara district. A number of prominent global and domestic players have also recently announced plans to set up steel plants in Chhattisgarh.These include SAIL, which plans to increase the proposed capacity of its plant at Bhilai from 4.9 million tonnes per annum to 7 million

18 tonnes per annum; Jindal Steel which plans to expand its finished steel making capacity by 1 million tonnes per annum by March 2006; and Monnet Ispat Ltd signed a memorandum of understanding (MoU) with CSIDC to implement projects worth US$ 260 million for steel products, sponge iron and coal washery in the state. Presently, a US$ 15 million project, to set up a ferro alloy production plant at Raipur is under execution.the Government has also signed an MoU with Visa Industries Ltd (US$ 225 million), Bhushan Ltd (US$ 500 million), and Sanvijay Rolling & Engineering Ltd (US$ 100 million) for investing in sponge iron & steel. Aluminum Chhattisgarh s share in India s bauxite and coal reserves stands at 3.5 per cent and 16 per cent respectively.this makes the state one of the leading producers of aluminium in India. In , it produced 100,000 tonnes of aluminium, representing around 15 per cent of India s total production. Some of the major projects under implementation in the state are a US$ 863 million expansion plan by BALCO, a part of the Vedanta Resources Group, to increase its aluminium production capacity from 100,000 tonnes per annum to 350,000 tonnes per annum by BALCO is also setting up a 540 MW electricity generation plant for captive consumption. Jindal Steel and Power too plans to set up a 50,000 tonnes capacity aluminium plant in the state with an envisaged investment of US$ 90 million.the state government is setting up an Aluminium Park in Bilaspur to encourage investment in the sector. Exports The value of the exports from Chhattisgarh stood at US$ 95 million in , accounting for less than 1 per cent of the exports from the India. Chhattisgarh exports iron-ore, cement, steel castings and equipment, railway tracks and wagon parts, rice products, handicraft items and tussar silk. Investment Till 2003, Chhattisgarh attracted industrial investment in sectors such as basic metals, other non-metallic mineral products, food products and manufacture of coke, petroleum products. Basic metals account for more than 85 per cent of the industrial investment in Chhattisgarh. Between 1996 and 2003, Chhattisgarh attracted over US$ 105 million of FDI. US$ billion Chhattisgarh - Distribution of investment Electricity 11% Services & Utilities Mining Manufacturing 8% 64% 17% Chhattisgarh - Cumulative FDI Source: Projects Today database, June Source: Secretariat for Industrial Assistance reports As in 2003, investment projects totalling over US$ 9.8 billion were in different stages of implementation.

19 CHHATTISGARH PAGE 17 Share of industries in net value addition 2.2% Food products Coke Basic metals 4.6% 6.6% 1.5% 85.1% Other non-metallic mineral products Others Within manufacturing, basic metals including aluminium and iron & steel accounted for the dominant share of investment. Potential hubs for investment Source: Annual Survey of Industries, Within three years of its formation, Chhattisgarh embarked on social and economic development through policy reforms, focus on infrastructure development and improving the investment climate in the state.the state is richly endowed with natural resources and has large untapped potential for development. Potential exists to substantially increase the pace of economic development in the state by appropriate exploitation of its mineral wealth. In addition to its present areas of strength in cement, mining and iron and steel, a number of sectors are emerging with substantial potential for private investment and business in Chhattisgarh.The most prominent among these are electricity generation and infrastructure development. Power Chhattisgarh has over 40 billion tonnes of coal reserves amounting to 16 per cent of India s total coal reserves. It therefore has an edge over other states as it can use these reserves for power generation. Chhattisgarh already has surplus electricity generation capacity. Being strategically located in central India, the electricity generated in the state can be easily transmitted to any of India s four regional electricity grids or to power deficient markets in India at competitive prices, particularly since with the enactment of the New National Electricity Sector Legislation, inter-state supply and trading of electricity is permitted. Chhattisgarh is considered the power hub of India and has the potential to produce up to 50,000 MW of power. Several power capacities are also under implementation currently. It is expected that the state will be the preferred destination for all power intensive industries. Infrastructure Recognising the need for development of infrastructure, the state has identified infrastructure provisioning as an industry in its Industry Policy.The state offers significant opportunities for infrastructure development through private sector participation. A comprehensive Infrastructure Development Plan Action has been prepared to identify infrastructure development needs of the state and the Chhattisgarh Infrastructure Development Board has been set up to catalyse investment in the state.the total investment requirement for infrastructure development in the state is estimated to be US$ 22 billion. Chhattisgarh has a track record of successful implementation of public-private partnership for infrastructure development. In fact, it was the first state in the country to have a public-private partnership in industrial water supply.the first phase of the Borai industrial water supply project is operational and it supplies 12 million litres of water every day.

20 PROFILE OF KEY PLAYERS IN CHHATTISGARH Associated Cement Companies Ltd (ACC) Associated Cement Companies is one of India s largest cement manufacturing companies, with a cement production capacity of 16 million tonnes per annum. Apart from cement, ACC is also India s largest refractory manufacturer and supplier, the largest research and consultancy organisation in the Indian cement sector, and a pioneer in the area of advanced materials. ACC has a cement plant with 1.58 million tonnes capacity at Jamul, at Korba district. ACC s revenues stood at US$ 1035 million ( ). Bharat Aluminium Company (BALCO) Bharat Aluminium Company is one of the largest producers of aluminium in India.Till 2001, the government divested 51 per cent of its equity and management control in favour of Sterlite Industries (I) Ltd at a cost of US$ 123 million.today, BALCO is an integrated aluminium company with captive bauxite mines, a captive power plant, refineries and smelters. BALCO s plant at Korba in Chhattisgarh produces 100,000 tonnes of aluminium every year. Its captive power plant has a capacity of 270 MW to meet its own requirement. Currently, BALCO is executing a US$ 863 million expansion plan to increase its aluminium production capacity from 100,000 tonne per annum to 345,000 tonne per annum. It is also setting up a 540 MW electricity generation plant for captive consumption.the expansion project shall be completed by De Beers De Beers is the flagship company of De Beers, South Africa, which is the largest diamond mining company worldwide. De Beers is committed to the discovery of new world-class diamond mines in India.The company was first granted reconnaissance permits in India at the end of 2000 and active exploration commenced in early 2001.To date this exploration work has led to the discovery of more than 20 new kimberlite deposits in four states, which are currently undergoing appraisal for diamond content. De Beers India s exploration investment in India to date has been approximately US$ 10 million with planned expenditure in 2005 budgeted at US$ 7.7 million. Chhattisgarh is one of the principal regions of interest for De Beers in India. Grasim Industries Ltd Grasim Industries is the flagship of the AV Birla Group, one of the most prominent Indian business houses. In , Grasim s revenues stood at US$ 1329 million. Grasim is the world's eighth largest cement producer, and the largest in a single location. The Group has cement operations spanning the length and breadth of India, with 11 composite plants, seven split grinding units, four bulk terminals and seven ready-mix concrete plants.with a combined capacity of million tonnes per annum, Grasim is among the largest producers of grey cement in India. Two of its units are located at Jawad and Raipur in Chhattisgarh. All of Grasim's units have earned ISO 9002 and certifications. Grasim's other businesses include Viscose Staple Fibre (VSF), sponge iron, chemicals and textiles. Gujarat Ambuja Cement Ltd (GACL) Gujarat Ambuja Cement Ltd is India s third largest cement producer, with a capacity of 12.5 million tonnes and revenue in excess of US$ 531 million. The company s plants are some of the most efficient in the world.they also have environment protection measures that are at par with the finest in the world. In Chhattisgarh, Gujarat Ambuja has a facility producing 1 million tonne of cement per annum in Bharatpura. Jindal Steel and Power Ltd (JSPL) Jindal Steel and Power Ltd, part of the Jindal group,

21 CHHATTISGARH PAGE 19 is among the largest coal-based sponge iron manufacturers in India. It has a 24 per cent market share in this product segment. JSPL also sells electricity to the Chhattisgarh State Electricity Board. In , JSPL s net sales stood at US$ 315 million. JSPL has the world s largest coal-based sponge iron plant at Raigarh in Chhatisgarh with an installed capacity of 6,50,000 MPTA. JSPL s growth plans include expanding the finished steel making capacity to 2.9 million tonne per annum by March A US$ 270 million project envisages setting up of a coke oven battery and a sinter plant as supporting facilities.the company also plans to set up a 1000 MW power plant. Lafarge India Lafarge India is a part of the Lafarge Group, the world s leading cement and construction material company. Lafarge India has a total cement manufacturing capacity of 5 million tonnes per annum. In Chhattisgarh, Lafarge has two cement manufacturing plants at Sonadih and Arasmeta with a capacity of 2 million tonnes per annum. Lafarge India plans to invest US$ 70 million for setting 50 MW coal-based captive power plants for two of its units. It also plans to set up a railway siding for its plant at Sonadih in Chhattisgarh, which will connect it with Bilaspur railway station. National Thermal Power Corporation (NTPC) National Thermal Power Corporation is India s largest power utility and the sixth largest thermal power generator in the world. In , the company had an installed capacity of 19.4 per cent in India and produced 27 per cent of total electricity generated in the country. One of its largest plants, with an installed capacity of 2,100 MW is located at Korba in Chhattisgarh. NTPC is currently implementing India s largest coal based electricity plant at Sipat in Chhattisgarh.The plant will have an installed capacity of over 3,000 MW and is expected to cost over US$ 1,800 million. Steel Authority of India (SAIL) Steel Authority of India is India s largest steel producer.the Government of India holds 86 per cent equity stake in the company. SAIL s operating income in 2003 stood at US $ 3.8 billion. SAIL has a steel plant at Bhilai with a capacity of manufacturing 3.6 million tonne per annum of saleable steel. It is India s sole producer of rails and heavy steel plates.the steel plant at Bhilai is an ISO 9001:2000 unit. It has also received the ISO certification for its environment management systems. In August 2004, SAIL announced plans to increase the capacity of Bhilai Steel Plant to over 7 million tonnes per annum.the company plans to invest US$ 5.5 billion up to 2012 in its integrated steel plants plans. SAIL also proposes to spend US$ 950 million on immediate priority schemes to be completed by National Mineral Development Corporation (NMDC) National Mineral Development Corporation is India s single largest iron-ore producer and exporter. It currently produces million tonnes of iron-ore from its three fully mechanised mines in Chhattisgarh. A public sector enterprise, NDMC currently operates two mines in Bailadila in Chhattisgarh. Iron-ore from this region is known to be super high grade having over 66 per cent iron content, free from sulphur and other deleterious material and the best physical properties needed for steel making.to meet the growing demand for iron-ore, the company is planning to open new mines in the Bailadila sector and a new iron-ore mine at Kirandul in Dantewada district. NDMC is the largest exporter of iron-ore in the country. In 2004, the company s revenues stood at US$ 326 million.

22 DOING BUSINESS IN CHHATTISHGARH Obtaining approvals An indicative list of approvals with timeframe for setting up business in Chhattisgarh Department Agency Timelines Industries / Land revenue District Investment Promotion Committee Land transfer: Government revenue land 45 working days from date of application Through private negotiations 30 working days Any clearances from local government/statutory requirements of state government 7 days Infrastructure- Electricity / Water District Investment Promotion Committee 45 working days or 75 working days from the identification of the site, whichever is earlier Central Government District Investment Promotion Committee Recommendations to Central Government, if required 45 working days or 75 working days from the identification of the site, whichever is earlier Cost of setting up business Source: PwC research An indicative table on cost of setting up business in Chhattisgarh Indicator Value (in US$) Industrial land (per sq mt) Office space rent (per sq ft per month) Residential rent (for a 2,000 sq mt house, per month) star hotel room (per night) Electricity (per kwh) Water (per 1000 litres) Source: PwC research Note: Exchange rate used is INR 47 per US$

23 CHHATTISGARH PAGE 21 Contact for information State Government Website Web The Chhattisgarh State Industrial Development Corporation (CSIDC) The Chhattisgarh State Industrial Development Corporation is the nodal agency that promotes setting up of industrial units in the state. CSIDC is entrusted with the work of industrial promotion and assistance, marketing, export promotion and maintenance of industrial areas & basic infrastructural facilities. It acts as a facilitator for development of medium and large industries in this region, provides ESCORT services and endeavours to remove bottlenecks in industrial development. The Chhattisgarh State Industrial Development Corporation LIC Campus, Pandri Raipur Chhattisgarh Tel / 90 Fax csidc.cg@nic.in Web Confederation of Indian Industry (CII) Information on markets and opportunities for investment in Chhattisgarh can also be obtained from Confederation of Indian Industry which works with the objective of creating a symbiotic interface between industry and government. Confederation of Indian Industry Eastern Region 6 Netaji Subhas Road Kolkata Tel Fax ciier@ciionline.org Confederation of Indian Industry State Office 193 Jabbal Building Civil Lines Raipur Chhattisgarh Tel Fax subhro.banerjee@ciionline.org Web

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25 The India Brand Equity Foundation is a public-private partnership between the Ministry of Commerce & Industry, Government of India and the Confederation of Indian Industry.The Foundation s primary objective is to build positive economic perceptions of India globally. India Brand Equity Foundation c/o Confederation of Indian Industry 249-F Sector 18 Udyog Vihar Phase IV Gurgaon Haryana INDIA Tel , Fax ajay.khanna@ciionline.org Web