BIHAR - IBEF · Bihar has a steady inflow of investments across sectors • As of December 2008,...
Transcript of BIHAR - IBEF · Bihar has a steady inflow of investments across sectors • As of December 2008,...
BIHARSeptember 2009
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Investment climate of a state
• Skilled and cost-effective labour
• Labour market flexibility
• Labour relations
• Availability of raw materials and natural
resources
• Tax incentives and exemptions
• Investment subsidies and other incentives
• Availability of finance at cost-effective terms
• Incentives for foreign direct investment
(FDI)
• Profitability of the industry
• Procedures for entry and exit of firms
• Industrial regulation, labour regulation,
other government regulations
• Certainty about rules and regulations
• Security, law and order situation
• Condition of physical infrastructure such as
power, water, roads, etc.
• Information infrastructure such as telecom,
IT, etc.
• Social infrastructure such as educational
and medical facilities
Resources/Inputs
Incentives to industryPhysical and social
infrastructure
Regulatory framework
Investment climate of a state is determined by a
mix of factors
BIHAR September 2009
Bihar‘s performance on key socio-economic indicators
Availability of social and physical infrastructure in the state
Policy framework and investment approval mechanism
Cost of doing business in Bihar
Key industries and players
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BIHAR September 2009
The focus of this presentation is to discuss…
10.211.5 11.0
12.9 12.8 13.7 13.5
17.219.1 18.6
0
5
10
15
20
25
1999-0
0
2000-0
1
2001-0
2
2002-0
3
2003-0
4
2004-0
5
2005-0
6
2006-0
7
2007-0
8
2008-0
9
• The gross state domestic product (GSDP) has
grown at a compound annual growth rate
(CAGR) of 6.9 per cent between 1999–2000 and
2008–09 to reach US$ 18.6 billion; growth has
been driven mainly by the services sector.
• The structural composition of the state‘s
economy has transformed over the years-
namely, there has been significant growth in the
tertiary sector.
• The state‘s primary sector currently accounts for
30.1 per cent of the GSDP, having fallen from a
share of 35.4 per cent in 1999–2000.
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Source: Economic Survey of Bihar, 2008–09
GSDP of Bihar (US$ billion)
Bihar September 2009
PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORS
CAGR 6.9%
Significant improvement in Bihar‘s economic performance in
recent years
• The secondary sector accounts for 5.5 per cent
share, having grown at a CAGR of 2.8 per cent
between 1999–2000 and 2008–09.
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Source: Economic Survey of Bihar, 2008–09
35.4% 30.1%
7.8%5.5%
56.9%64.4%
0%
20%
40%
60%
80%
100%
1999-00 2008-09
Primary Secondary Tertiary
Percentage distribution of GSDP
PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORS
CAGR
5.0%
2.8%
8.4%
Significant improvement in Bihar‘s economic performance in
recent years
Bihar September 2009
4.1
11.8
40.7
43.5
5.0
14.6
30.5
49.9
0 20 40 60
R1
R2
R3
R4
Bihar All IndiaIn percent
Households in the state have medium to low consuming
potential
• The per capita income of Bihar was US$ 236 in
2007–08 as compared to US$ 850 for all-India.
• Distribution of households by socio-economic
classification (SEC) shows that a significantly
large portion of Bihar‘s population falls in the
low education and unskilled categories, although
there is some concentration at the self-
employed and junior employee levels.
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Percentage distribution of households in urban areas
by SEC*
Rural
Source: BW Marketing Whitebook, 2009–10
* See Annexure for SEC categories
Percentage distribution of households in rural areas
by SEC*
3.5
6.7
8.0
8.3
19.9
23.4
11.5
18.6
3.4
6.8
8.5
9.3
16.9
20.3
9.3
25.4
0 10 20 30
A1
A2
B1
B2
C
D
E1
E2
Bihar All India
In percent
Urban
PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORS
Bihar September 2009
• In ownership of household goods and basic
amenities such as sewing machines, in-house
toilets, clocks and ceiling fans, rural Bihar lags
as compared to all-India levels.
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Households in the state have low disposable incomes
Source: BW Marketing Whitebook, 2009–10
Percentage of rural population owning household goods and basic
amenities
PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORS
Bihar September 2009
Industrial performance has been driven by unregistered units
• The unorganised sector accounts for around 65 per cent of the manufacturing output of the state; unregistered units dominate the overall industrial sector in the state, accounting for one-third of total units.
• There are 263 large and medium industries, a majority of which are located in Patna division, followed by Tirhut.
8 Source: Economic Survey of Bihar, 2008–09
PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORS
Key industries in Bihar
• Food and beverages
• Rubber and plastics
• Transport equipment
• Chemicals
• Tobacco
• Textiles
• Leather
• Wood
• Paper/printing and publishing
• Mines and minerals
• Dairy
• Tea
• Sugar
Sector-wise industry representation in Bihar
Bihar September 2009
Bihar has a steady inflow of investments across sectors
• As of December 2008, outstanding investments* in Bihar stood at US$ 22.8 billion with a potential for employment of 120,000.
• Out of 164 investments approved in the last three years, until December 2008, 15 have been implemented, one is ready to commence operations and 49 are at advanced stages of implementation.
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Source: CMIESource: Economic Survey of Bihar, 2008–09
SIPB = State Investment Promotion Board
YearNumber of proposals
approved by SIPBCumulative
Up to January 2007 72
2007 43 115
2008 49 164
9.0%
0.7%
71.3%
13.8% 4.9%
0.3%
Break up of investment by sector
Manufacturing
Mining
Electricity
Services
Irrigation
Construction
*Outstanding investments include new projects and those under implementation,
but not projects shelved
PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORS
Bihar September 2009
Patna, Tirhut, Muzaffarpur, Barauni, Bhagalpur and Gaya are the
major industrial centres in Bihar
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Centres Industries
Patna
Major agricultural centre of trade exporting grain, sugarcane, sesame and medium-
grained rice; has also emerged as a manufacturing hub in Bihar, with the highest
number of industrial units
Tirhut Has the second-highest number of units in the state; food/beverage processing and
manufacturing units located here
MuzaffarpurImportant trade centre for cloth; famous for exporting fruits, particularly, mango
and litchi
BarauniHas major industrial units including those of Indian Oil Corporation‘s refinery; a
thermal power station has been proposed to be set up
Bhagalpur
Famous worldwide for silk; trading of agricultural produce and cloth is an important
economic activity. Other major industries include rice, sugar milling and wool
weaving
GayaMajor weaving centre having around 8,000 operational powerlooms; important
tourist hub
Source: Economic Survey of Bihar, 2008–09
PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORS
Bihar September 2009
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BIHAR September 2009
Bihar‘s performance on key socio-economic indicators
Availability of social and physical infrastructure in the state
Policy framework and investment approval mechanism
Cost of doing business in Bihar
Key industries and players
The focus of this presentation is to discuss…
Labour in Bihar is mostly unskilled and predominantly involved in
agriculture
• Of the total population of 82.9 million, roughly 28 million or 34 per cent form the workforce of the
state.
• Though Bihar is the third-most populated state in India, it accounts for only about 7 per cent of the
total organised sector employment in the public sector; in the private sector, the share of Bihar is still
lower at about 3 per cent.
• There has been a large increase of subsidiary status workers in the state, pointing to the presence of
a high degree of disguised unemployment as well as temporary or casual labour.
• The major percentage of the workers is in the agriculture sector as cultivators or agricultural
labourers.
• The women worker participation rate is poor in Bihar.
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AVAILABILITY OF SOCIAL AND PHYSICAL INFRASTRUCTURE IN THE STATE
Bihar September 2009
Social infrastructure in the form of educational institutes and
medical institutions has scope for improvement … (1/2)
• As per Census 2001, the literacy rate in Bihar is
47 per cent, much lower than national average
of 65.4 per cent.
• The state government constituted the
Common Schooling System Commission in
August 2006. The commission has started
working towards making available elementary,
secondary and senior secondary education to
all.
• The state government has also decided to
provide single-window clearance to facilitate
private sector participation in institutions of
higher education.
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Status of educational institutes
• 13 universities/deemed/open universities
• 11 research institutions
• 259 government-aided colleges
• 245 private colleges
• 7 engineering colleges
• 23 medical colleges
• 15 teacher training colleges
• 63 other educational institutions
Educational infrastructure
AVAILABILITY OF SOCIAL AND PHYSICAL INFRASTRUCTURE IN THE STATE
Bihar September 2009
Social infrastructure in the form of educational institutes and
medical institutions has scope for improvement … (2/2)
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Medical infrastructure
• There are about 121 hospitals, 1,648 primary health centres, 101 community centres and 10,337 sub-centres in the state.
• The penetration of medical facilities is lower as compared to the rest of the country.
Comparison of health indicators
*Per thousand persons
** Per thousand live births
Source: Census 2001
All-India Bihar
Population served per
doctor1,607 2,364
Birth rate* 24.8 31.0
Death rate* 8.1 10.5
Infant mortality rate** 63.0 61.0
Life expectancy at birth (years)
Male 64.1 61.6
Female 65.4 59.7
AVAILABILITY OF SOCIAL AND PHYSICAL INFRASTRUCTURE IN THE STATE
Bihar September 2009
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Infrastructure for collection of savings and disbursal of
credit in place, but credit disbursement is low
• As of March 2008, Bihar‘s credit-deposit ratio was
28.2 per cent, far below the national average of 74.4
per cent.
• As on March 31, 2008, Bihar accounted for 2.1 per
cent and 0.8 per cent of total deposits and credits,
respectively, in the country; these figures are one of
the lowest among the major Indian states.
• Low credit reflects risk aversion on part of banks
and impacts the profitability of enterprises, which
are forced to go to private, often, more expensive
lenders.
• The National Bank for Agriculture and Rural
Development (NABARD) manages the rural
infrastructure development fund for the state.
Financial institutions in Bihar
Co-operative societies* 293
Regional rural banks** 1,465
Indian commercial bank branches* 3,769
*2007-08
** 2006-07
Source: Reserve Bank of India
AVAILABILITY OF SOCIAL AND PHYSICAL INFRASTRUCTURE IN THE STATE
Bihar September 2009
Transport infrastructure is inadequate, but it is being ramped up
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• Bihar has a total road length of 83,000 km, of which
76.3 per cent are village roads, the remaining being
district and state roads, and national highways.
• While 5.3 per cent of the total length of national
highways run through Bihar, some of the districts
such as Banka, Jamui and Kishenganj are devoid of
national highways; about 57 per cent of habitations
in Bihar are accessible by road.
• Bihar has 88 km of roads per 100 sq km Less than
50 per cent of the roads in Bihar are surfaced as
against a national average of 60 per cent.
• The East-West four-lane, high-speed corridor
passes through Bihar.
• Patna and Gaya have domestic airports.
• Most district headquarters have
airstrips/aerodromes; small air taxi/charter services
are available at Patna.
• Patna is connected to Delhi, Kolkata, Mumbai,
Lucknow and Ranchi by air service.
AVAILABILITY OF SOCIAL AND PHYSICAL INFRASTRUCTURE IN THE STATE
Roads Civil aviation
Bihar September 2009
Rail infrastructure is adequate, inland waterways are being
developed
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• The river Ganga between Allahabad and Haldia (1,620 km) has been declared as ‗National Waterway 1‘ and is being developed for navigation by the Inland Waterways Authority of India.
• Patna is planned to be a permanent terminal and cargo handling facilities are being developed.
• The National Inland Navigation Institute has been set up in Patna to train vessel crews.
• Bihar‘s railway network is fairly well developed; the total rail length in the state is more than 5,400 km
• Hajipur in Bihar is the headquarters of the East Central Railway; the state‘s main rail junctions are at Patna, Gaya, Muzaffarpur, Katihar and Samastipur.
• More than US$ 1.4 billion of estimated investment has been planned for the modernisation of railways in Bihar — including gauge conversion, doubling of lines and electrification.
• Several link lines, such as Muzaffarpur-Samastipur-Barauni-Katihar and Muzaffarpur-Chapra-Siwan, have been converted into broad gauge.
AVAILABILITY OF SOCIAL AND PHYSICAL INFRASTRUCTURE IN THE STATE
Railways Waterways
Bihar September 2009
Power infrastructure is being developed; telecommunications
infrastructure is adequate
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Power
• After the bifurcation of the state, 70 per cent of the generation capacity of Bihar fell under the jurisdiction of the new state, Jharkhand.
• As of March 2009, Bihar had 1,970 MW of installed power capacity, of which 1,846.6 MW was contributed by state-owned thermal power plants, 73 MW was generated from hydel power sources, while 50.4 MW was generated by renewable sources.
• About 41 per cent of villages are electrified.
• Two thermal and six hydel power plants have been proposed to be set up with a total installed capacity of 4,146 MW.
• The state government has initiated reforms in the power sector and reorganisation of the state electricity board.
AVAILABILITY OF SOCIAL AND PHYSICAL INFRASTRUCTURE IN THE STATE
Bihar September 2009
Power infrastructure is being developed; telecommunications
infrastructure is adequate
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Telecommunications
• As of March 2009, Bihar had 3.2 million direct exchange lines (DEL), less than 4 per cent of the total exchange lines in the country.
• However, the number of DELs grew by about 40.8 per cent over the previous year, surpassing the national average growth of 12.6 per cent.
• Bihar has a teledensity of 22.2 per cent as compared to the national average of 36.9 per cent.
• As of March 2008, there were 11.8 million subscribers/connections, of which 10.8 million were wireless subscribers and 1 million were wireline subscribers. As of March 2009, there were 21.1 million subscribers/connections, of which 20.1 million were wireless subscribers and 1 million were wireline subscribers.
• The state has 9,057 post offices.
AVAILABILITY OF SOCIAL AND PHYSICAL INFRASTRUCTURE IN THE STATE
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Bihar is aggressive on building industrial infrastructure ... (1/2)
Infrastructure Details
Export Promotion
Industrial Park (EPIP),
Hajipur
A 94-acre area is being developed, with an investment of US$ 2.6 million, as a
multi-product export processing zone by the Union Ministry of Commerce and
Industry, Government of India, and the Bihar government.
Food parks at Hajipur and
Begusarai
The food parks have been sanctioned by the Union Ministry of Food Processing
Industry, Government of India, and will include infrastructure such as cold storage,
cold chain, refrigerated vehicles, effluent treatment plants, etc.
Air cargo complex, Patna The complex is proposed to be set up adjacent to the Patna airport at an
investment of US$ 1.65 million; it is being promoted by the Bihar Industrial Area
Development Authority and the Airports Authority of India to facilitate exports
of fruits, vegetables, horticulture products, silk and other items.
Software technology parks
(STP)
Being set up on the campus of the New Government Polytechnic Complex in
Patna, the project involves payment of US$ 0.2 million as grants-in-aid and
provision of three acres of land for construction of 5,000 sq ft of built-up space
with requisite facilities; construction is in progress.
AVAILABILITY OF SOCIAL AND PHYSICAL INFRASTRUCTURE IN THE STATE
Bihar September 2009
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Bihar is aggressive on building industrial infrastructure ... (2/2)
Infrastructure Details
Inland Container
Depot, Sitalpur
One of the mega infrastructure project sanctioned and financed by
the Union Ministry of Commerce and Industry, Government of
India, at a projected cost of US$ 5.1 million to facilitate exports;
land acquisition is in process.
Its salient features include two full train-length rail lines, substantial
covered warehouse space for import and export cargo, container
space, etc.
Agro-export zone The zone is expected to cover 12 districts at a cost of US$ 2
million for exporting litchi, vegetables and honey; it is expected to
benefit 10,000 farmers.
AVAILABILITY OF SOCIAL AND PHYSICAL INFRASTRUCTURE IN THE STATE
Bihar September 2009
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BIHAR September 2009
Bihar‘s performance on key socio-economic indicators
Availability of social and physical infrastructure in the state
Policy framework and investment approval mechanism
Cost of doing business in Bihar
Key industries and players
The focus of this presentation is to discuss…
Key nodal agencies in Bihar ... (1/2)
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Industry Department,
Government of Bihar
• State-level nodal body under the single-window regime for investments of above
US$ 2.17 million; primary functions involve coordinating applications from
investors, and processing and facilitating the process of getting clearances from
various departments.
• Industry Department, headed by the Principal Secretary, supervises district industry
centres (DIC), industrial area development authorities and industrial premises in the
state.
District Industry
Centre (DIC)
• District-level nodal agency for investments below US$ 2.17 million.
• DIC to support entrepreneurs in identifying local resources, supply of raw materials
and equipment, arrangement of credit facilities, marketing, quality control, etc.
Bihar Industrial Area
Development
Authority (BIADA)
• BIADA develops infrastructure for industries in segments such as roads, drainage,
water, power, etc.
• Supports entrepreneurs in setting up industries and in availing incentives offered by
the government.
POLICY FRAMEWORK AND INVESTMENT APPROVAL MECHANISM
Bihar September 2009
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Bihar State Finance
Corporation
• The main state-level institution that provides term lending facilities to
industrial entrepreneurs.
• The corporation has been revived to supplement the role of banks in
lending to industries.
Bihar State Electricity
Board (BSEB)
• The board is responsible for the synchronised development of
generation, transmission and distribution of power in the state.
Bihar State Pollution
Control Board
• The purpose of the organisation is prevention and control of pollution
through inspection of treatment plants, laying down standards,
conducting research and development, etc.
• Headquartered at Patna, the organisation has seven zonal offices.
POLICY FRAMEWORK AND INVESTMENT APPROVAL MECHANISM
Key nodal agencies in Bihar ... (1/2)
Bihar September 2009
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Industrial Policy, 2006 … (1/2)
Aims to achieve the following:
• Establish new industries and revive sick units, as far as practically possible
• Provide conducive environment to attract internal and foreign investment
• Bring in balanced development of the state
Key initiatives under this policy include the following:
• Stamp duty and registration fee exemption of 100 per cent; provision of reimbursement of value-added tax
• Reimbursement of project report preparation cost up to US$ 1,667
• Incentives on purchase of land and sheds, up to a maximum of US$ 33,300
• Incentive grant of up to 50 per cent for expenditure on plant and machinery for captive power generation units
• Electricity duty exemption for five years
• Exemption from luxury tax, electricity duty, conversion charge and market fee for seven years
POLICY FRAMEWORK AND INVESTMENT APPROVAL MECHANISM
Attractive investment climate through investment friendly and
sector specific policies ... (1/5)
Bihar September 2009
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Industrial Policy, 2006 … (2/2)
• Single-window clearance system
• Infrastructure Development Enabling Act, 2006, for development of infrastructure through private participation
• Enhancement of competitiveness of industrial units through pre- and post-production incentives
• Incentives to handloom sector industries
• Provision of self-certification to simplify inspection of factories
• Establishment of land bank to meet requirements of industries and development schemes
• To develop handicrafts, handloom, khadi, silk and village industries
POLICY FRAMEWORK AND INVESTMENT APPROVAL MECHANISM
Attractive investment climate through investment friendly and
sector specific policies ... (2/5)
Bihar September 2009
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Food Processing: Policy and Schemes
To address the infrastructure, technology, skills and marketing constraints being faced by rice,
maize, pulses, honey, makhana, fruits and vegetables, and other food processing units in the state by
facilitating the setting up of new food processing units, and also aid in expansion and upgradation of
existing units.
Scheme for food parks:
• Grant of US$ 3.25 million or up to 20 per cent of the total project cost, whichever is less, will
be given for setting up food parks.
Scheme for integrated development of the food processing sector:
• Grant up to 40 per cent of the project cost, subject to a maximum of US$ 2.17 million, for a
special purpose vehicle (SPV) in case of common cluster infrastructure and up to 35 per cent of
the project cost, subject to a maximum US$ 1.08 million, in case of an individual investor.
• For expansion and capacity increase of existing units, the benefits of the scheme will only be
available if the expansion project leads to capacity addition of at least 50 per cent.
POLICY FRAMEWORK AND INVESTMENT APPROVAL MECHANISM
Attractive investment climate through investment friendly and
sector specific policies ... (3/5)
Bihar September 2009
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Sugar Incentive Package
The package aims at reviving the sugar industry by building on the factor advantages of the state.
Key initiatives under the incentive package include the following:
• Re-imbursement of central excise duty on sugar for five years
• Exemption from purchase tax on sugarcane for five crushing years
• Exemption from stamp duty and registration fees for land transfer
• Subsidy of 10 per cent on capital investment or a maximum of US$ 2.2 million, whichever is less, on
machinery after completion of first year of commercial production
• Incentive package for distillery and ethanol as well as co-generation of power
POLICY FRAMEWORK AND INVESTMENT APPROVAL MECHANISM
Attractive investment climate through investment friendly and
sector specific policies ... (4/5)
Bihar September 2009
29
Bihar Single Window Clearance Act, 2006
The act aims at speedy processing of clearances for implementation of industrial and other projects.
• Each district has a single-window clearance committee with the District Commissioner as the Chairman
and five other members; the committee receives applications for all clearances for setting up industrial
units, reviews and monitors the processing of applications, and informs the applicant of the deemed
approval date.
• Similar state-level committees constituted under the chairmanship of the Industrial Development
Commissioner; the State Investment Promotion Board (SIPB) has been notified as the empowered
committee. The state board reviews and monitors the disposal of applications by the district committees,
state-level committees and other authorities.
• The state government notifies nodal agencies at the state level, which are headed by the Director
Technical, Industry Department; at the district level, the DIC acts as the nodal agency. Nodal agencies to
provide secretarial support to district committees, state-level committees and SIPB, the empowered
committee.
POLICY FRAMEWORK AND INVESTMENT APPROVAL MECHANISM
Attractive investment climate through investment friendly and
sector specific policies ... (5/5)
Bihar September 2009
Single-window clearance mechanism for speedy implementation
of industrial projects
• The Bihar Industrial Policy, 2006, has
revamped the single-window clearance
mechanism set up in the state through the
Bihar Single Window Clearance Act, 2006.
• The Industries Department of the state
and the DIC act as nodal agencies for
investments.
• Proposals for investment greater than US$
21.7 million are routed through Chief
Minister and the Cabinet for approval.
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Investment
handled
Body Chairman Nodal agency
Between US$
2.17 million and
US$ 21.7 million
State-level
investment
promotion
board
Industries
Development
Commissioner
Industries
Development
(Udyog Mitra) —
state level
Below US$ 2.17
million
District-level
committee
District
Collector
DIC — district
level
POLICY FRAMEWORK AND INVESTMENT APPROVAL MECHANISM
Bihar September 2009
Estimated time for approvals and agencies concerned
... (1/2)
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List of approvals and clearances required Departments to be consulted Estimated time in days
Incorporation of company Registrar of companies N/A
Registration, Industrial Entrepreneurs
Memorandum (IEM), industrial licensesNodal agency (Industry Department) N/A
Allotment of land Bihar Industrial Area Development Authority
Seven to 21 days (up to 90
days for acquisition of non-
industrial land)
Permission for land useRevenue and Land Reforms Department,
Government of Bihar
30 days (45 days for
conversion of non-industrial
land for use)
Registration under Factories Act and
Boilers Act
Offices of Inspector of Factories, Inspector of
BoilersUp to 120 days
Site environmental approval, NOC and
consent under water and pollution control
acts
Bihar State Pollution Control Board and
Ministry Of Environment And Forests,
Government of Bihar
60 days
Approval of construction activity and
building plan
Urban Development and Housing Department,
Government of BiharSeven days
POLICY FRAMEWORK AND INVESTMENT APPROVAL MECHANISM
Bihar September 2009
Estimated time for approvals and agencies concerned
... (2/2)
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List of approvals and clearances
requiredDepartments to be consulted Estimated time in days
Sanction of power Bihar State Electricity Board Up to 30 days
Sanction of waterWater Resources Department,
Government of BiharUp to 30 days
Fire service clearanceState Fire Service Headquarters,
Government of BiharUp to 15 days
Registration under state‘s sales tax act,
and central and excise acts
Sales tax department, central and state
excise departmentsSeven days
POLICY FRAMEWORK AND INVESTMENT APPROVAL MECHANISM
Bihar September 2009
33
BIHAR September 2009
Bihar‘s performance on key socio-economic indicators
Availability of social and physical infrastructure in the state
Policy framework and investment approval mechanism
Cost of doing business in Bihar
Key industries and players
The focus of this presentation is to discuss…
Cost of doing business in Bihar
34
Cost parameter Cost estimate Source
Industrial land (per acre)Government land: US$ 245,000 in
Hajipur; US$ 76,000 in Muzzaffarpur
Bihar Industrial Area
Development Authority
Office space rent (per sqft, per
month)20-35 cents Discussions with property dealers
Residential rent (2,000 sqft, per
month)US$ 145-280 Discussions with property dealers
Five-star hotel room (per
night)US$ 100-180 Leading hotels in the state
Commercial and industrial
electricity
Industrial
8.8-9.2 cents per kWh
Commercial
9.1-10.5 cents per kWh
Bihar State Electricity Board
COST OF DOING BUSINESS
Bihar September 2009
35
BIHAR September 2009
Bihar‘s performance on key socio-economic indicators
Availability of social and physical infrastructure in the state
Policy framework and investment approval mechanism
Cost of doing business in Bihar
Key industries and players
The focus of this presentation is to discuss…
Key industries that have developed because of policy thrust and
factor advantages
36
Low
High
High
Minerals
TourismTextiles/
Handlooms
Leather
Food
Processing
Sugar
Industry Attractiveness Matrix
Factor advantage
Po
licy t
hru
st
*Factor advantages include benefits due to geographical location and availability of factors such as talent
pool, natural resources and capital
KEY INDUSTRIES AND PLAYERS
Bihar September 2009
Overview of food processing industry in Bihar
Overview
• Bihar is ideally placed to capitalise on food processing opportunities given its factor advantages; the state is one of the largest producers of vegetables in the country.
• The state is the leading producer of litchis, honey and makhanas, as well as the fourth-largest producer of mangoes in the country.
• Owing to its climatic conditions, Bihar has the potential to farm medicinal and herbal tea.
• Food processing is a priority sector for the state government; up to 40 per cent of the project cost for setting up food processing units is subsidised by the government.
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Key Player
COMPFED
KEY INDUSTRIES AND PLAYERS
Bihar September 2009
Key player in the food processing industry
38
COMPFED — Bihar
State Cooperative
Milk Producer‘s
Federation
• COMPFED is a success story of organised milk processing — it supports
members with interventions across technology, supply chain, marketing,
training, etc.
• In 2006–07, COMPFED procured 0.61 million litres of milk per day.
KEY INDUSTRIES AND PLAYERS
Bihar September 2009
Overview
• Sugar plays a prominent role in Bihar‘s economy; the north of the state is climatically well-suited to producing good quality sugarcane with minimum inputs as compared to other states.
• About 250,000 hectares is under sugarcane production and Bihar produces about 336,000 tonnes of sugar, annually; it is estimated that about 500,000 farmers are engaged in sugarcane cultivation.
• Existing facilities run on old technologies, but many are expanding to tap the ethanol market.
• Tobacco is another important agro-based, cash crop; the availability of tendu leaves and cheap labour has helped Bihar to become the country's sixth-largest tobacco producing state.
39
Overview of agro-based industry in Bihar ... (1/2)
Key Players
K K Birla Group
ITC
KEY INDUSTRIES AND PLAYERS
Bihar September 2009
40
K. K. Birla Group• The K K Birla Group‘s sugar company, Upper Ganges Sugar (UGSIL), has
two units in Bihar — Bharat Sugar Mills at Sidhwalia with a crushing
capacity of 5,500 tonnes/day and Hasanpur Sugar Mills at Hasanpur with
a crushing capacity of 3,000 tonnes/day.
• The Sidhwalia unit has a 18 MW co-generation power plant.
ITC• ITC is India‘s largest cigarette manufacturer and a leading diversified
business conglomerate.
• ITC has cigarette-manufacturing plants at Munger and Saharanpur in
Bihar; in 2007, ITC adopted the Munger district for development.
KEY INDUSTRIES AND PLAYERS
Overview of agro-based industry in Bihar ... (2/2)
Bihar September 2009
Overview of manufacturing industry in Bihar ... (1/2)
Overview
• Consequent to the bifurcation of Bihar, the state lost most of its large units (mostly mining and engineering units) to Jharkhand.
• Currently, the state has leather, and textile and handloom industries as its prominent sectors, apart from a few engineering units.
• The state has 90 leather units and tanneries, both in the private sector as well as under the Bihar State Leather Industries Development Corporation.
• Petroleum remains a huge contributor to its GSDP as the state has one of the largest public sector refineries, that of Indian Oil Corporation (IOC).
41
Key Players
Bata Industries
Bharat Wagon and Engineering Company
Indian Oil Corporation (IOC)
KEY INDUSTRIES AND PLAYERS
Bihar September 2009
Key players in manufacturing industry ... (2/2)
42
Bata Industries• Promoted by the Toronto-based Bata Shoes, Bata is India‘s largest manufacturer
and marketer of footwear products.
• The company has a tannery at Mokamehghat in Bihar and a leather footwear
factory at Bataganj in Patna.
Bharat Wagon and
Engineering Company
• Part of Bharat Bhari Udyog Nigam — a Government of India undertaking — the
Bharat Wagon and Engineering Company has a rich experience of over half a
century in heavy steel fabrication.
• It has two units at Mokama and Muzaffarpur, which are ISO 9001 certified for
manufacture of wagons; a third unit at Muzaffarpur manufactures gas cylinders.
Indian Oil Corporation• IOC is India‘s leading petroleum refinery and a Fortune 500 company. It has a
refinery at Barauni with an annual capacity of 6 million metric tonnes.
• Secondary processing facilities, such as a resid fluidised catalytic cracker, diesel
hydrotreating and a sulphur recovery unit, have been added to the main
refinery.
• The 498-km long Haldia-Barauni crude oil pipeline (HBCPL) receives crude oil
at the Haldia oil jetty and transports it to the Barauni Refinery.
KEY INDUSTRIES AND PLAYERS
Bihar September 2009
Overview of tourism industry
• The state has a rich cultural heritage as it is associated with pilgrimages related to Buddha, Mahavir, Guru Gobind Singh, as well as historical monuments.
• Monuments of historical and religious significance present tremendous potential for attracting both domestic and foreign tourists.
• The state‘s tourism policy stresses on developing infrastructure and financing for tourism.
• Conservation of heritage sites, promotion of tour packages, publicity, etc., are also focus areas of the policy.
• The Bihar government is preparing a 20-year master plan for the future projection and development of tourism in the state.
• The state is also developing the Buddhist tourist circuit (Bodh-Gaya-Rajgir-Nalanda) with an assistance of US$ 4.6 million from the Central government.
43
KEY INDUSTRIES AND PLAYERS
Bihar September 2009
Annexure
Socio-economic classification (SEC) of urban and rural households
4444
Source: Market Research Society of India
Education/Occupation
Illit
era
te
School up t
o four
year
s/ litera
te,
but
no form
al
schoolin
g
School up t
o fiv
eto
nin
e
year
s
SSC
/HSC
Cert
ific
ate c
ours
e,
but
not
grad
uat
e
Gra
duat
e/p
ost
gr
aduat
e
genera
l
Gra
duat
e/p
ost
gr
aduat
epro
fess
ional
Unskilled workers E2 E2 E1 D D D D
Skilled workers E2 E1 D C C B2 B2
Petty traders E2 D D C C B2 B2
Shop owners D D C B2 B1 A2 A2
Entrepreneurs: employee none D C B2 B1 A2 A2 A1
Entrepreneurs: employee < 10 C B2 B2 B1 A2 A1 A1
Entrepreneurs: employee > 10 B1 B1 A2 A2 A1 A1 A1
Self-employed professionals D D D B2 B1 A2 A1
Clerical/salesman D D D C B2 B1 B1
Supervisory level D D C C B2 B1 A2
Officers/executives: junior C C C B2 B1 A2 A2
Officer/executive: middle/senior B1 B1 B1 B1 A2 A1 A1
Urban SEC grid
BIHAR September 2009
4545
Source: Market Research Society of India
Rural SEC grid
Education
Type of house
PuccaSemi-pucca Kuccha
Illiterate R4 R4 R4
Literate but no formal school
R3 R4 R4
Up to fourth standard R3 R3 R4
Fifth to ninth standard R3 R3 R4
SSC/HSC R2 R3 R3
Some college but not graduate
R1 R2 R3
Graduate/post-graduate (general)
R1 R2 R3
Graduate/post-graduate (professional)
R1 R2 R3
BIHAR September 2009
Annexure
Socio-economic classification (SEC) of urban and rural households
46
Year INR equivalent of one US$
2000 46.6
2001 48.3
2002 48.0
2003 45.6
2004 43.7
2005 45.2
2006 45.0
2007 42.0
2008 40.2
2009 46.0
Annexure
Exchange rate
BIHAR September 2009
BIHAR September 2009
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