advantage vidarbha 2

7/28/2019 Advantage Vidarbha 2

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AdvantageVidarbha

An Emerging

Business Destination

kpmg.com/in


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2013 KPMG, an Indian Registered Partnership and a member rm o the KPMG network o independent member rms aliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.

Vidarbhas latent potential becomes evident as one travels along the regions vast land mass,

which occupies 31.6 percent1 of the State of Maharashtra. The regions richness in terms

forest and mineral wealth is complimented by its central location, uninterrupted quality

power supply and developing social infrastructure. The Government of Maharashtra

is keen on leveraging Vidarbhas inherent strengths and facilitate the regions

transformation into a premium investment destination for a host of industries.

The regions economic development is a top priority for the Government of

Maharashtra. State Government driven major infrastructure projects, such as the

Multi Modal International Cargo Hub (MIHAN) and Butibori Industrial Area, are at

an advanced stage of completion. In addition, recent policy initiatives in the formof the States New Industrial Policy and the New Textile Policy have been aimed

at providing a further thrust to industrial investments in the region. Furthermore,

the State Government is also collaborating with key stakeholders i.e. State level

authorities such as MIDC, Urban Local Bodies (ULBs) and industry associations

such as VIA and FICCI to ensure holistic and inclusive development of the

region.

The initial steps in the right direction have been taken and Vidarbha stands

on the cusp of industrial and economic development. I hope that Advantage

Vidarbha 2013 can shed further light and provide investors a firsthand

view of the untapped opportunities that exist in this emerging region of

Maharashtra.

Hon'ble Chief MinisterGovernment of Maharashtra

Message by

1. Census o India 2011

Shri. Prithviraj Chavan

Hon'ble Chief Minister

Government of Maharashtra


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Over the years, the State of Maharashtra has been a vanguard of Indias

economic development. As a result, it has been able to attract industrial

investments from every major sector. However, there is a perception that

the investments have been limited to certain key regions of the State. The

Government of Maharashtra is intent on rectifying this anomaly and facilitate

the economic transformation of the entire State.

The same is evident in the States New Industrial Policy and the New Textile

Policy, both of which have been aimed at providing an impetus to industrial

investments in regions such as Vidarbha. The policy support offered is

praiseworthy as it will certainly benefit the regions key existing industries most

notably, Textiles. However, it is imperative to realise that Vidarbhas investment

potential extends beyond a few sectors and region has much more to offer.

To highlight a few, Vidarbha can be potentially developed into an Auto and Auto

ancillary Hub given the large industrial land bank available and its established

engineering background. Similarly, eco tourism can flourish in region by provision

of adequate policy support and undertaking of marketing initiatives to promote its

national parks and other attractive tourist destinations.

Given this backdrop, the study Advantage Vidarbha, is aimed at providing investors a

brief overview of the investment potential within the region. In addition to highlighting

the key positives of Vidarbha, the study identifies the improvement areas by undertaking

a SWOT analysis for the region. It further deliberates on the regions potential for 8 key

industries namely Textiles, Logistics, Agro & Food processing, Tourism, Mining, Power

and Farm equipment, Auto & Auto ancillary, IT/BPM, and Pharma & Fine Chemicals. Finally,

the study dwells on the existing regulatory scenario and suggests possible measures for

stakeholders who are keen on ensuring the integrated and holistic development of Vidarbha.

Foreword by

KPMG in India


Pradeep Udhas

Partner and Head

Markets


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01VidarbhaAn emerging investment destination

VidarbhaAt a glance

SWOT analysis for VidarbhaBased on Investment drivers

04

06

Sector analysis for potentialinvestors

10

Conclusion

Regulatory ScenarioGovernment Policy and Support

13

14

Table of

Contents


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2. Economic Survey o Maharashtra 2011-12

Source: Economic Survey o Maharashtra 2011-12; Inrastructure Statistics o Maharashtra State, Directorate o Economics and Statistics, GoM; Census o India 2011; KPMG in India analysis

VidarbhaAt a glance

The Vidarbha region, located in the eastern part of Maharashtra, is traditionally

known across the country for its oranges. Located in the center of India, the

region is now transforming itself into a center of industry and business.

Vidarbha is made up of Nagpur and Amaravati divisions which comprise of

11 districts namely, Buldhana, Akola, Washim, Amravati, Yavatmal, Wardha,

Nagpur, Bhandara, Gondia, Chandrapur and Gadchiroli. Nagpur is the

largest district in terms of population and contribution to the regionsGDP2.

Vidarbha at a glance

Indicator Value

Area (sq.km.) 97,404

Contribution to Maharashtras area 31.6%

Population (mn, 2011) 23.0

Contribution to Maharashtras population 20.5%

GDP at current prices (INR bn., 2010-11) 1,670.0

Contribution to Maharashtras GDP 15.6%

Per capita income (INR, 2010-11) 65,368

GDP growth (CAGR, 2008-10) 6.7%

Major crops Orange, Cotton, Soyabean

Mineral resources

2/3rd of Maharashtras Mineral resources. The region is rich in minerals such as Coal, Limestone,

Manganese and Iron Ore.

Forest resources 3/4th of Maharashtras Forest Cover

Major industrial sectors. Natural & Man-made fibre Textile, Agro and food processing, Engineering sectors, Cement, Steel

Major tourist destinations

Chikhaldara, Melghat Tiger reserve (Amravati); Tadoba Andhari Tiger reserve (Chandrapur); Nagzira

wildlife sanctuary, Navegaon National Park (Gondia); Lonar lake (Buldhana); Khindsi Lake, Ramtek

(Nagpur)

Main economic cities of Vidarbha Akola, Amrawati, Chandrapur & Nagpur

Advantage Vidarbha 01


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3. Economi c Survey o Maharashtra 2011-12 and 2010-11; KPMG in India analysis

4. Greens aye Vidarbha with orests intact, The Times o India, 18 December, 2009


DistrictGDP at current prices

(INR bn, 2010-11)Contribution to

Maharashtras GDP (%)Per capita income (INR,

2010-11)GDP growth* (CAGR,2008-09 to 2010-11)

Buldhana 121.9 1.1 45,699 4.3%

Akola 117.7 1.1 58,627 7.2%

Washim 62.4 0.6 52,075 16.3%

Amravati 201.3 1.9 63,270 10.0%

Yavatmal 188.6 1.8 63,469 2.7%

Wardha 91.9 0.9 61,391 3.8%

Nagpur 513.4 4.8 96,458 9.6%

Bhandara 77.5 0.7 57,094 1.6%

Gondia 70.9 0.7 50,042 -2.3%

Chandrapur 175.9 1.6 67,641 7.3%

Gadchiroli 48.5 0.5 43,058 0.6%

Vidarbha 1,670.0 15.6 65,368 6.7%

Vidarbhas economy: A disaggregated picture

Source: Economic Survey o Maharashtra 2011-12 and 2010-11

* GDP growth: GDP gures taken at constant (2004-05) prices in (INR bn)

Vidarbha constitutes 15.6 percent of Maharashtras GDP3,

while Nagpur and Amravati are the two economically

important cities of the region. The GDP of these two districts

together accounts for, approximately 42.8 percent of

Vidarbhas GDP and 6.7 percent of the Maharashtras GDP4.

However, in comparison to the rest of Maharashtra, the

region is considered to be economically backward4.

Konkan

4,107.3

1,25,527

Nashik

1,409.6

72,209

GDP at current prices(INR bn, 2010-11)

Per capita income (INR, 2010-11)

Vidarbha

1,670

65,368

Marathwada

1,142.6

60,013

Pune

2,353.8

93,626

Advantage Vidarbha02


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From a social development perspective, Vidarbha ares well in terms o the

literacy rate. However as per the Maharashtra State Development Report

(2005), the region needs to improve on social development indicators. With

the exemption o Nagpur, no other district o Vidarbha scored higher than

Maharashtras average on Human Development Index (HDI)5.

5. HDI 2000, Maharashtra State Development Report 2005, State Plan Division, Planning Commission, Government o India

6. Vidarbha getting highest investment', The Times o India, 31 July 2010

District Population (mn, 2011) Literacy rate (%, 2011) Urban population as % of total population

Buldhana 2.6 82.09 21.2

Akola 1.8 87.55 39.7

Washim 1.2 81.70 17.7

Amravati 2.9 88.23 35.9

Yavatmal 2.8 80.70 21.6Wardha 1.3 87.22 32.5

Nagpur 4.7 89.52 68.3

Bhandara 1.2 85.14 19.5

Gondia 1.3 85.41 17.1

Chandrapur 2.2 81.35 35.1

Gadchiroli 1.1 70.55 11.0

Vidarbha 23.0 83.6 35.1

Maharashtra 112.4 82.91 45.2

Vidarbhas demography: A disaggregated picture

Source: Census o India 2011

Despite this, it is believed that

the region has substantial

potential or industrial

development. In recent times,

the Government o Maharashtra

(GoM) has made eorts to tap

the economic potential o the

region. Out o 169 mega projects

sanctioned in Maharashtra,

56 entailing an investmento INR 350bn are coming up

in Vidarbha6. Furthermore, in

2010, the Maharashtra Industrial

Development Corporation (MIDC)

allotted INR 2bn or development

o industrial areas in Vidarbha.

More recently, the GoM through

its Industrial and Textile policies

is providing special impetus or

increasing industrial investments

in various sectors which can be

potentially developed in the region.


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VidarbhaAn emerging investment destination

Source: Maharashtra Industrial Development Corporation (MIDC)


Vidarbha Industrial Estates

Vidarbha Crop Production


Vidarbhas latent potential

As the region accounts for nearly one-thirds of the States cotton production7, Vidarbhas potential for

the textile industry is well known. However, there are various latent opportunities in other sectors as

well.

Land availability and industrial infrastructure to support Engineering industries

Establishment of several industrial estates throughout the region has meant that adequate land

bank is available at an affordable cost.

Further, as of 2011, the region accounts for 48.7 percent8 of the installed thermal power generation

capacity of the State. The region has a total water reservoir capacity of 5,607 mn cubic meters (m3)9.

Thus, quality power and water is available on demand.

These factors make it a favourable destination for engineering industries such as Auto and Auto

ancillary units and Power Equipment.

Raw material availability for Agro and Food Processing

players

Agro and Food Processing players can also set up base in

the Vidarbha as it is rich in agriculture produce. In addition

to being the largest producer of oranges in the State10, the

region also produces 5.5 mn metric tonnes per annum

(MTPA) of Soyabean, 1.9 mn MTPA of Pulses, 1.1 mn MTPA

of Paddy and a variety of other fruits and vegetables11. The

central location could also enable ease of distribution which

is key determinant for Agro and Food processing industries.

Category Number ofEstates

Area Developed(ha.)

No. of UnitsEstablished

Investment(INR Cr)

Employment

MIDC Estate 87 15,148 3,900 11,900 45,550

Co-op.Estates 11 231 510 120 4,150

Total 98 15,379 4,410 12,020 49,700

Crop Average Production (MTPA)

Cotton 6.2

Soya bean 5.5

Pulses 1.9

Paddy 1.1

Oranges 0.7

7. Department o Agriculture; GoM, KPMG in India analysis

8. Inrastructure Statistics o Maharashtra State, Directorate o Economics and Statistics, GoM; KPMG in

India analysis

9. MIDC

10. Vidarbha Economic Development Council (VED)

11. MIDC


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Vidarbha Education Profile

Vidarbha Mineral Deposits

Central location acts as a fillip for Logistics players

Further, given its central location, Vidarbha could also be an ideal place for logistics operations.

The region is well connected to all the corners of the country through rail, road and air. In addition,

Nagpurs international airport, presence of the Container Corporation of India (CONCOR) depot and

the completion of the MIHAN project could potentially make it an international cargo hub.

Knowledge-based sectors can benefit from the educational and institutional base

Sectors such as IT/BPM and Pharmaceuticals which are heavily dependent on their human resource

assets can tap the regions educational and institutional base.

Tourism potential in emerging and niche areas

Vidarbha also holds the potential to become one of the most popular eco tourism destinations in the

country. Known as the Tiger Country, the region dotted with scenic locations has three quarters of

Maharashtras forest resources12 and is home to 4 out of the 5 National Parks of the State13.

In addition, medical tourism has emerged as a business possibility in districts such as Nagpur,

Ramtek, Sevagram, Amravati. The region also has considerable scope for religious and spiritual

tourism14.

Mineral resource base for Mining related sectors

Endowed with mineral resources such as coal, limestone, iron ore and manganese, Vidarbha holds

approximately two-thirds of Maharashtra's mineral resources15. Chandrapur district alone accounts

for about 29 percent of the value of total mineral production in the Maharashtra15. Hence, there

exists an investment potential for mining related sectors which is yet to be tapped.

Category Number of Institutes Intake Capacity

Engineering 220 57,990

Vocational Skills 470 70,700

Management 68 5,850

Minerals Deposits (mn tonnes) Key Districts

Coal 5,530 Chandrapur, Nagpur, Yavatmal, Wardha

Lime Stone 1,368 Chandrapur, Yavatmal, Gadchiroli, Nagpur

Granite 207 Bhandara, Chandrapur, Nagpur, Gadchiroli

Iron Ore 185 Gadchiroli, Gondia, Chandrapur

Dolomite 61 Yavatmal, Nagpur, Gadchiroli

Manganese 21 Bhandara, Nagpur

Kainite, Selimanite 3 Bhandara

Pyrofilate 4 Chandrapur, Bhandara

12. Inrastructure Statistics o

Maharashtra State, Directorate

o Economics and Statistics,

GoM; Annual Administration

Report 2010-11, Forest

Department, GoM; KPMG in

India analysis

13. Vidarbha EconomicDevelopment Council (VED)

14. MIDC

15. Inrastructure Statistics o

Maharashtra State, Directorate

o Economics and Statistics,

GoM; KPMG in India analysis


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SWOT analysis for VidarbhaBased on Investment drivers

Source: KPMG in India analysis


Investment Drivers: Determinants of Economic Development

Investment drivers Rationale

Government policy

support

Strategic Government support in the form of investorfriendly policies helps in creation of an adequate business

environment.

Investments made Government as well as private investments made in the past define the economic significance of a region.

Land and PhysicalInfrastructure

Due note has to be taken that adequate land is available for setting up industrial units in the region.

In addition, facilitation of physical infrastructure services which includes power, transportation/logistics and

telecommunication is also vital.

Social Infrastructure Social infrastructure which covers education, healthcare and entertainment facilities have a direct impact on the

quality of life and hence determine a regions competitiveness.

Material resources

availability

The available material resources (mineral, forest and agriculture resources) have an impact on the cost of

production and consequently the profitability of the business.

Human resources

availability

Optimum utilization of the available material resources is dependent on the quality of human resources available

in the region.

It is also important that the manpower is available at competitive rates.

Consumption factors Economic indicators such as GDP and per capita income are key factors for consumption oriented industries such

as agro and food processing.

Developing a conducive atmosphere for industrial development is the key for

any region looking to fulfill its economic potential. The following Investment

drivers are the key determinants which are sought after by investors:


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Source: KPMG in India analysis

SWOT Analysis: Vidarbha

A SWOT analysis of Vidarbha undertaken by KPMG in India on the aforementioned aspects outlines why Vidarbha offers

adequate investment opportunities for various industries.

SWOT

STRENGTH

THREAT

WEAKNESS

OPPOR

TUNITY

Specificpoliciestargetedatattracting

valueaddingindustries

Migrationofskilledmanpower

Improvingroad,rail&airconnectivity

CargohubatNagpur

Developingsocialinfrastructure

Ag

gressive

policies

ofneigh

boring

State

sand

comp

etitionfrom

develop

ed

areas

ofMahara

shtra

Availabilityo

fland

andw

aterfo

rindustrial

usage

Gove

rnments

upport

Adequate

powe

rgenerationc

apacity

EducationalandInstitu

tionalb

ase

Rich

natur

alres

ource

sYetto

betapped

Strengths

1. Availability of land and water for industrial usage16

Given the dearth of industrial land with basic infrastructure facilities

at affordable prices in Mumbai, Pune and other developed areas of

the State, Vidarbha could be considered as an ideal destination on this

point.

The region has over 3000 ha. of ready industrial land having

necessary infrastructure facilities like roads, water supply, etc.

90 Industrial areas 38 Major Industrial Areas and 52 Mini

Industrial Areas.

Industrial estates under development Additional Butibori,

Additional Amravati, Chandrapur.

The region has a total water reservoir capacity of 5,607 mn m3.

2. Government support The State Government is taking several initiatives to support

economic and industrial development of Vidarbha region.

Number of special incentives for industries that invest in

Vidarbha under the States New Industrial Policy, 2013.

45 percent equity support for new cooperative spinning mills in

Vidarbha17

Driving IT investments through the States IT/ ITES policy 2009which focuses on tier-II cities.

GoM has earmarked about 9300 ha. for the development of

industrial township18.

The Central Government has proposed to set up National

Investment and Manufacturing Zone (NIMZ) in Kuhi and Umred

Taluka of Nagpur district. The proposed NIMZ is third of its kind

in Maharashtra19.

Under a scheme of the Union Ministry of Agriculture (National

Horticulture Mission), Maharashtra State Agriculture Marketing

Board (MSAMB) will develop a terminal market yard in Nagpur20.

3. Adequate power generation capacityIndustries setting up units in the region would be able to benefit

owing to the availability of adequate electricity in Vidarbha.

Vidarbha has adequate power generation capacity. As of FY2011,

the region accounted for 48.7 percent of the installed thermal

power generation capacity of the State. However, the total

power consumption for the region was about 13 percent21.

Additional capacity of 86,400 megawatt (MW) is under

installation22.

16. MIDC

17. Textile Policy 2011-2017, GoM

18. Vidarbha Industries Association

19. Ministry o Commerce and Industry, GoI

20. Set up Terminal market at Nagpur: VEDC, The Economic Times, 16 January 2012

21. Inrastructure Statistics o Maharashtra State, Directorate o Economics and Statistics, GoM; KPMG in India

analysis

22. 132 power units to turn Vidarbha into environmental graveyard, The Economic Times, 5 June 2012


12/20


23. MIDC

24. Phronesis Strategies; KPMG in India analysis

25. Inrastructure Statistics o Maharashtra State, Directorate o Economics and Statistics, GoM; Annual

Administration Report 2010-11, Forest Department, GoM; KPMG in India analysis

26. MIDC


28. Vidarbha Industries Association; KPMG in India analysis

29. Govt neglected village roads in Vidarbha, The Times o India, 5 January 2013

30. Inrastructure Statistics o Maharashtra State, Directorate o Economics and Statistics, GoM; Emergent

Nagpur: An IT/ITES Destination, pManiold, February, 2012; KPMG in India analysis

31. Airports Authority o India

32. Economic Survey o Maharashtra 2011-12, Directorate o Economics and Statistics, GoM

33. Boeing's MRO to become operational by Q2 next year, The Hindu Business Line, 17 March, 2012

34. Inrastructure Statistics o Maharashtra State, Directorate o Economics and Statistics, GoM; KPMG in

India analysis

4. Educational and Institutional base Presence of several educational institutes in the region ensures

adequate availability of fresh talent in the region

Vidarbha has 220 Engineering, 470 Vocational Skills and 68

Management institutes with an aggregate student intake

capacity of ~0.14 mn23

. Literacy rate of Nagpur as well as Amravati divisions are above

the State average of 82.9 percent.

Presence of numerous Government and private research &

training institutions like NEERI, CICR, NPTI training institutions,

etc24.

5. Rich natural resources - Yet to be tapped Vidarbhas inherent strengths, in terms of natural resources, could

result in lower costs of production and increased profitability for

certain industries that can use these resources as input material.

Vidarbha holds approximately two-third of Maharashtra's

mineral resources and three quarters of its forest resources25

. The districts of Bhandara, Chandrapur, Gadchiroli, Nagpur and

Yavatmal are well endowed with mineral resources such as coal,

manganese, iron ore, limestone, granite etc26.

Vidarbha accounts for nearly 1/3rd of the 7.5 mn bales of cotton

produced in the State in FY201127.

The region is the largest producer of oranges in the State23.

The region also produces 5.5 mn MTPA of Soyabean, 1.9 mn

MTPA of Pulses and 1.1 mn MTPA of Paddy26.

1. Specific policies targeted at attracting valueadding industries28

The dearth of value-adding industries and employment opportunities

has hindered Vidarbhas further economic development.

Vidarbha has been unable to attract industries like Automobiles

and Pharmaceuticals that have considerable vender-

development possibilities.

In addition to employment, development of value-added

industries will have a spiral effect and lead to development of

ancillary industries which can further create opportunities for

Micro, Small and Medium Enterprises (MSMEs).

2. Migration of skilled labour28

Skilled labour migration can prove to be a hindrance to the economic

prospects of the region.

Talent is available in the region. However, experienced

managerial and skilled talent is in relatively short supply as

people prefer to migrate to larger cities in Maharashtra and

other adjoining States.

Weakness

1. Improving road, rail and air connectivityEfforts are being made to attract investors by improvement of the

regions transport infrastructure.

Vidarbha regions road connectivity has improved during the

last decade. During 2000-2011, it met 75.15 percent of its road

construction target as compared to the target achievement of

64.96 percent during 1981-200029.

As of FY2011, Vidarbha has 32.93 percent of total railwaynetwork of the State. All major train routes pass through Nagpur

which is well connected to almost all the cities in the country.

Other urban centers of the region such as Amravati and Akola

are also well connected by rail30.

In terms of total passenger traffic, Nagpur International Airport

is the 17th busiest in India. While domestic passenger traffic

increased by 14.8 percent per annum in FY2012, international

passenger traffic witnessed an increase of 4.1 percent31. The

Maharashtra Airport Development Company Limited (MADC)

is also developing airports at Gadchiroli, Chandrapur and

Amravati32.

2. Cargo hub at NagpurThe impending GST regime, and central location has the potential to

transform Vidarbha into a cargo hub for the country.

MIHAN project is aimed at developing the existing airport of

Nagpur as an international passenger and cargo hub airport.

A Multi product Special Economic Zone (SEZ) abutting the

boundary of the airport is also being developed.21 MIHAN

project would open new opportunities for domestic, exportoriented industries and IT sector.

A USD 100 million maintenance repair overhaul (MRO) project of

aircraft major Boeing is underway in MIHAN33.

As of FY2011, 284 godowns are present in the Vidarbha region.

These account for 26.4 percent of the total capacity of the

State34.

Opportunity



13/20


35. Tourism Survey o Maharashtra, Ministry o Tourism, GoI; KPMG in India analysis

36. Top 10 Emerging Business Destination in India, Cushman and Wakeeld, October, 2012

37. Emergent Nagpur: An IT/ITES Destination , pManiold, February, 2012


39. MIDC; KPMG in India Analysis

40. Economic Survey o Maharashtra or 2007-08 and 2011-12; KPMG in India analysis

3. Developing social infrastructure

The region has potential to attract industries and the necessary talent

given its fast developing social infrastructure base.

The region has 20 percent of States hospitals with a capacity of

29732 beds i.e. 17 percent of the States total capacity.

The region has close to 270 accommodation units with 5,094

rooms accounting for 7.4 percent of the States total room

inventory35. The region also has a few luxury hotels.

In terms of commercial real estate, Nagpur city has been rated

among the top 10 emerging business destinations in India36.

Prominent developers like Kalpataru and Rustomjee, and

pan-India developers such as Mantri Realty, Godrej Properties,

Mahindra Lifespaces, L&T, Tata Realty and DLF have launched

various real estate projects in Nagpur37.

Vidarbha is home to 4 out of the 5 National Parks in

Maharashtra38.


1. Aggressive policies of neighboring States and competition from developed areas of MaharashtraVidarbhas investment prospects could also be hindered if investors

perceive that neighboring regions/States offer a better cost effective

environment for the industry to flourish in.

Despite being rich in cotton, only 30 percent of cotton produced

in Maharashtra is processed locally and rest is sold outside the

State or exported39.

The competitive and aggressive policies of neighboring States

have elevated their position in the textile industry value chain.

Furthermore, investments in MIDC industrial units of Vidarbha

have grown at a CAGR of 6.4 percent during FY07-FY11. In

comparison, the State has witnessed a CAGR of 26.3 percent40.

Threats

Despite its inherent strengths and a rich resource base, it is elt that Vidarbha

has not been able to attain its ull potential. Major inrastructure projects such as

MIHAN Butibori and Amravati Industrial Estates were expected to deliver the thrust

or industrial transormation. As per latest reports many companies are at various

stages o development. Some have taken land but are yet to start construction

while many have invested but are uncertain o their uture plans. An argument

against this is the current economic cycle. Many newer investments here are rom

the Aviation and IT/ ITeS space which are acing economic headwinds.

The question arises Why are such projects proceeding by ts and starts?

Are investments shiting to neighboring States/regions?

Is skilled labour migration a deterrent or investors?

Is the economic slowdown to be blamed or dampened investments?

Is it a case o lack o co-ordination between the concerned stakeholders?

Perhaps, the cumulative impact o the above mentioned actors have to an

extent, hindered the regions growth prospects in the past. However, economic

transormation o Vidarbha could take place provided the concerned stakeholders

come together to develop an integrated and cohesive approach to support the

sectors/industries which can be potentially developed in Vidarbha.


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Based on the above mentioned investment accelerators, the industry attractiveness could be mapped or Vidarbha region as ollows:

The ratings are done on a scale of 1 to 5. With 5 being the highest and 1 being the lowest rating.

InvestmentDrivers

GovernmentPolicies

Investmentsmade

PhysicalInfrastructure

Availability &Access to raw

material

Labour SocialInfrastructure

Sectors

Textile

45 percent of

equity support for

new cooperative

spinning mills41.

10 percent capital

subsidy for new

textile units41.

Presence of

textile players

such as Raymond,

Indorama,

Indoworth,

Gimatex, PeeVee

Textiles, Mohata

Mills, etc42.

500+ ha. of land is

been sanctioned

for textile zones

in Vidarbha43.

The region

accounts for

nearly one-

thirds of the

States cotton

production44.

Availability of

adequate skilled

labour.

Low cost of living

Logistics

MIHAN has

the potential to

transform the

region into a cargo

hub.

GST regime will

open further

opportunities.

USD 100 mn

MRO center

is being built

by Boeing at

Nagpur45.

Region is well

connected

through road, rail

and air.

Nagpur is the

geographical

center of the

country (Zero

mile city)43.

Availability of

unskilled labour

at reasonable

wage levels

Low cost of living

Agro & Foodprocessing

Necessary policy

and regulatory

support provided

by the Government

for agro & food

processing

industries.

Presence of

players such

as Ruchi Soya,

Haldiram, Murli

Agro, Dinshaw,

etc43.

United Nations

Industrial

Development

Organisation

has identified 6

food processing

clusters in the

region46.

The region is the

largest producer

of oranges in the

State47.

The region also

produces 5.5

mn MTPA of

Soyabean, 1.9

mn MTPA of

Pulses and 1.1

mn MTPA of

Paddy43.

Availability of

skilled labour

impacted by

migration

Low cost of living

Sector analysis for potential investors


41. Textile Policy 2011-2017, GoM


43. MIDC


45. Boeing's MRO to become operational by Q2 next year, The Hindu Business Line, 17 March, 2012

46. United Nations Industrial Development Organisation (UNIDO)



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InvestmentDrivers

GovernmentPolicies

Investmentsmade



material


Sectors

Tourism

Government hasmade Nagpur asthe Tiger gatewayand promotedwildlife andeco-tourism in theregion.

However, thereis room forimprovement inthese policies.

Large luxuryhotels have beenplanned in MIHAN.

Additionally,leisure hospitalitycompanies areeyeing touristspots such asTadoba for settingup resorts andholiday homes.

The region iswell connectedthrough road, railand air.

Three-quarters ofthe States totalforest cover lies in

the region48.

The region boasts4 out of 5 NationalParks in the

State49.

Availability ofunskilled labourat reasonablewage levels

The regionaccounts for7.4 percent ofStates total room

inventory50.

CIDCO isdeveloping new9300 ha. township

near Nagpur51.

Mining& Powerequipments

Necessary policysupport provided byState Governmentand regionalauthorities.

132 power plantsare likely to be

added52.

Vidarbha has thesizable powerequipment(transmissionrelated)manufacturing

capacity53.

Well connectedlogistics network.

Availability ofcommercial realestate space atNagpur.

Vidarbha holdstwo-thirdsof Statestotal mineral

resources54.

The regionaccounts for nearlyhalf of thermalpower capacity of

the State54.

Availability ofunskilled labourat reasonablewage levels.

Low cost of living

Auto & Autoancillary

State Policyinitiatives topromote Auto andAuto ancillaryindustries need tobe strengthened.

Mahindra andAshok Leylandhave set up works(Tractor and

trucks)55.

Availabilityof developedindustrial land.

Engineering skillsavailable.

Availability ofunskilled labourat reasonablewage levels.

Availability ofskilled labourimpacted bymigration.

Low cost of living

48. Inrastructure Statistics o Maharashtra State, Directorate o Economics

and Statistics, GoM; Annual Administration Report 2010-11, Forest

Department, GoM; KPMG in India analysis


50. Tourism Survey o Maharashtra, Ministry o Tourism, GoI; KPMG in India

analysis

51. Vidarbha Industries Association

52. 132 power units to turn Vidarbha into environmental graveyard, The

Economic Times, 5 June 2012


54. Inrastructure Statistics o Maharashtra State, Directorate o Economics

and Statistics, GoM; KPMG in India analysis

55. Maharashtra IT/ITES Policy (2009)


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Source:KPMG in India analysis

Very Low

Low

Average

High

Excellent


InvestmentDrivers

GovernmentPolicies

Investmentsmade



material


Sectors

IT/BPM

States IT/ITeSPolicy (2009)could drive ITinvestments inNagpur.

Additional FSIfor IT/ITES unitswith 10 percent

premium56.

Three IT parks inNagpur. Threemore in process of

setting up55.

600 hectares ofspace reserved inMIHAN for the IT

sector57.

Central locationand connectivityby air, rail androad.

Commercial officespace available ataffordable rates.

Limited availabilityof experiencedmanagerial talent.

Availability ofskilled labourimpacted bymigration.

Good literacy rate.

Availability ofaffordable housesand Qualityhealthcarefacilities.

Lower attrition ratethan Tier-1/Tier-2cities in India.

Pharma &Fine chemical

MIDC to develop2800+ ha. of

chemical zone in

Amaravati55.

No significantinvestment

Well connectedlogistics network

Limited rawmaterial

availability

Availability ofskilled labour

impacted bymigration

Low cost of living

55. Maharashtra IT/ITES Policy (2009)

56. MIDC

57. KPMG Global Frontiers: Nagpur ; April, 2010



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Regulatory ScenarioGovernment Policy and Support

Maharashtras new industrial policy (2013-18) Incentives for Vidarbha

Economically less developed regions such as Vidarbha have

received interest in the New Industrial Policy of Maharashtra

announced in the first week of January, 2013. Some of the

key benefits offered will be58:

Waiver on electricity duty, stamp duty, and local taxes like

octroi.

Micro, small and medium industries (MSMI) will be

offered a concession of one rupee per unit in electricity

tariff if they set up units in backward regions such as

Vidarbha and Marathwada.

MSMIs will also be given a subsidy of 5 percent on capital

investment in talukas which are classified as C and D for

development purposes.

Incentive up to 90 percent of permissible capitalinvestment limits to MSMEs in Naxal areas.

Refund equivalent to VAT payable as well as input tax

credit.

Additionally, the policy will also permit the setting up of

Integrated Industrial Areas (IIAs). These will be set up in the

SEZs which have been de-notified. This move will likely make

more land available for investments.

Incentives to boost Vidarbhas textile industry

As per the textile policy of Maharashtra for 2011-17, thegovernment will provide 45 percent of equity support for

new cooperative spinning mills in Vidarbha/Marathwada

and North Maharashtra.

10 percent capital subsidy scheme for new textile project

in Vidarbha, Marathwada and North Maharashtra.

Interest rate on capital projects will be zero percent for

eligible textile units in Vidarbha, Marathwada, North

Maharashtra, Konkan and D+ Industrial Areas.

Policy and regulatory support to the agro andfood processing sector

As per the Agricultural policy o Maharashtra (2010), the state

provides the ollowing incentives or the industry:

Reimbursement o 50 percent o VAT, instead o 25percent

5 percent interest subsidy on term loans or xed capital

investment or 5 years

Encouraging IT investments in Nagpur

IT investments in Nagpur

As per the ITES policy 2009 o the Maharashtra

government59:

There will be a ocus on driving IT investments in Nagpur,

Nashik, Aurangabad and low Human Development Index

(HDI) districts to build on their potential and generate

employment.

Additional foor space (FSI) will be provided to all

registered IT/ITES units with 10 percent premium in Nasik,

Aurangabad and Nagpur Districts and without premium in

Low HDI Districts.

Other key initiatives

The Government o Maharashtra has earmarked area

or the development o industrial townships. City

and Industrial Development Corporation (CIDCO)

is developing a 9,300 ha. industrial township called

Meghdoot oering investment opportunities or housing,

commercial complexes, hospitals and hotels60.

MIDC has taken possession o nearly 60 percent61 o the

area in the Amravati region or the development o a special

chemical zone to attract investments rom chemical industry

players which will be provided with all the acilities and

amenities.

58. Sops or units in Vid, Naxal areas, The Times o India, 4 January 2013

59. Maharashtra IT/ITES Policy 2009

60. New state industrial policy to acilitate townships in SEZs, The Economic Times, 4 January 2013

61. MIDC


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Conclusion

Given the economic, social, educational and administrative base, it is evident

that Vidarbha is a case of unmet potential. Domestic as well as foreign investors

could eye making investments in various sectors. Its rich resource base makes

it a prospective destination for manufacturing sectors such as Textiles, Mining,

Power, Agro & Food Processing and Pharmaceuticals and Fine Chemicals. At thesame time, service sectors such as Logistics, Tourism and IT/ITES also have the

potential to flourish in the region.

The following are some small yet vital aspects which need to be considered

towards the achievement of the economic transformation goal. By encompassing

these into Vidarbhas vision document, the stakeholders could ensure integrated

and holistic development.

Set up a dedicated agency which provides a llip to Vidarbhas economic

development.

District level panels should set up or each o the potential sectors/industries

identied.

Single-window clearance system or companies belonging potential sectors/

industries identied.

Establishment o comprehensive backward and orward linkages or the

identied sectors/industries will enable them to become the key drivers o

industrial and economic development o the region.

In addition to the industrial incentives oered on a State level, the region

should provide special incentives targeted at investments the identied

sectors/industries to acilitate value-added employment generation and social

inrastructure development.

Address the issues aced by major inrastructure projects such as MIHAN to

bring them back on track at the earliest. Ensure timely completion o such

projects in the uture.

The Government must harness the vast potential o the Textile industry by

ensuring that the availability o viability gap unding required towards industrial

unit set up and initial operations.

All stakeholders i.e. the State Government, ULBs, industrial associations

should work in unison to bring economic prosperity to Vidarbha.

A variety o reasons have hindered Vidarbhas prospects in the past. It is about

time that the region gets its due rom the concerned stakeholders. The rst step

towards this has been taken in the orm o Advantage Vidarbha 2013. However,

a Vision Document speciying the road map or economic development o the

region, and the specic role that Government and other stakeholders need to play,

is an immediate necessity.



19/20




20/20

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