HIMACHAL PRADESH - IBEF · Southwest, Jammu and Kashmir to the North, ... Advantage Himachal Pradesh … (2/2) Source: ... Domestic Product

HIMACHAL PRADESHApril 2010

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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 industry Physical and social infrastructure

Regulatory framework

Investment climate of a state is determined by a mix of factors

HIMACHAL PRADESH April 2010

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Contents

Advantage Himachal Pradesh

State economy and socio-economic profile

Infrastructure status

State policies and incentives

Business opportunities

Doing business in Himachal Pradesh

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Himachal Pradesh – State profile

• Located in the Northern region of India, Himachal Pradesh has a population of 6.1 million (Census 2001).

• The state has an area of 55,673 sq km and accounts for 5.8 per cent of total land area in India.

• As its borders, the state has Punjab to the West and Southwest, Jammu and Kashmir to the North, Haryana to the South, Uttar Pradesh to the Southeast, and China to the East.

• Himachal Pradesh’s administrative capital is Shimla. The state is divided into 12 districts.

• Being a sub-Himalayan state, Himachal Pradesh has a varied climate that changes with altitude. The climate ranges from warm and sub-humid tropical at low altitudes to cold and icy at high altitudes. There are three main seasons: winter/cold from October to February, hot from March to June and rainy from July to September.

• The common languages spoken are Hindi, Pahari, and Punjabi. Source: Maps of India

Himachal Pradesh April 2010ADVANTAGE HIMACHAL PRADESH

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Pharmaceuticals and food processing hub

Policy and fiscal incentives

Himachal Pradesh has attracted investments in the pharmaceuticals, IT and engineering industries. Agriculture also plays a significant role in the state’s economy. The state has a a robust food processing sector.

The state offers a wide range of fiscal and policy incentives for businesses under the Industrial Policy, 2004. Additionally, the state has well-drafted sector-specific policies for the biotechnology and IT.

Rich labour poolThe state has a large base of skilled labour, making it an favourable destination for knowledge-based sectors. Further, the state has a large pool of semi-skilled and unskilled labour.

Advantage Himachal Pradesh … (1/2)

Source: Maps of India


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Facilitating infrastructure The state has well-developed social, physical and industrial

infrastructure and virtual connectivity. It has a strong hydro-

power base because of its water resources and topography. It is

supported by enabling policies.

High economic growthHimachal Pradesh is targeting 8.5 per cent annual economic

growth rate during the Eleventh Five-Year Plan period (2007–12).

Stable political environmentThe state has a stable political environment with a single-party government. The State Government is committed towards creating a progressive business environment.

Advantage Himachal Pradesh … (2/2)



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Himachal Pradesh in figures … (1/2)

Parameter Himachal Pradesh All-states Source

Economy

GSDP as a percentage of all states’ GSDP 0.84 100.0 CMIE, as of 2007-08, current prices

Average GSDP growth rate (%) 12.94 7.5 CMIE, as of 2007-08

Per capita GSDP (US$) 1,168.0 998.1 CMIE, 2007-08

Physical Infrastructure

Installed power capacity (MW) 964.9 98,996.4 Central Electricity Authority, as of March 2009

GSM cellular subscribers (No) 3,764,522 367,328,179 Cellular Operators Association of India, as of November 2009

Broadband subscribers (No) 20,981 4,981,976 As of October 2008:

National Highway length (km) 1,409 70,548 Ministry of Road Transport & Highways, 2007-08

Major and minor ports (No) 0 12+ 187 Ministry of Shipping

Airports (No) 3 133 Industry sources

Social Indicators

Literacy rate (%) 76.53 64.59 Census of India, 2001

Birth rate (per 1,000 population) 17.4 23.1 Central Bureau of Health Intelligence, 2007


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Himachal Pradesh in figures … (2/2)

Parameter Himachal Pradesh All-states Source

Investment

FDI inflows (US$ billion) 0.39* 102.1 Department of Industrial Policy & Promotion, April 2000 to October 2009

Outstanding investments (US$ billion) 55.7 1,709.7 As of December 2008

Industrial Infrastructure

PPP projects (No) 1 460 www.pppindiadatabases.com

SEZ (No) 3 146 In-principle approval as of June 2009, www.sezindia.nic.in

Parameter Himachal Pradesh Government

Policy support

Sector-specific policies Industry (overall) , power, IT, biotechnology

Availability of labour Ample skilled and unskilled labour available.

*Includes Chandigarh, Punjab and HaryanaPPP: public-private partnership; SEZ: special economic zone


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Key industries with policy thrust and factor advantages

Medium HighLow

Medium

High

Textiles

Food processing

IT and electronics

Biotechnology

Chemicals

Auto ComponentsLight engineering

Industry attractiveness matrix

Metals

Construction

*Factor advantage

Polic

y th

rust

*Factor advantages include benefits due to geographical location and availability of factors like talent pool, natural resources and capital

PharmaceuticalsTourism


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Contents







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Socio-economic snapshot of Himachal Pradesh

Parameters Himachal Pradesh

Capital Shimla

Geographical area (sq km) 55,673

Administrative districts (No) 12

Population density (persons per sq km) 109

Total population (million) 6.08

Male population (million) 3.08

Female population (million) 2.99

Population growth rate 1991-2001 (%) 17.53

Sex ratio (females per 1,000 males) 970

Literacy rate (%) 76.5

Male (%) 85.4

Female (%) 67.4

Average life expectancy (years) 64 .0

Himachal Pradesh April 2010

STATE ECONOMY AND SOCIO-ECONOMIC PROFILE

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Himachal Pradesh’s GSDP

• In 2007-08, Himachal Pradesh’s Gross State Domestic Product (GSDP) was US$ 8.01 billion. It grew at a CAGR of 12.9 per cent between 1999-2000 and 2007-08.

• The secondary sector has been the fastest growing; largely driven by growth in construction and manufacturing.

Himachal Pradesh’s GSDP (US$ billion)

Source: CMIE



3.03

3.24

3.57

4.15

4.74

5.09

5.65

6.81

8.01

0 1 2 3 4 5 6 7 8 9

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

CAGR:12.94%

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Himachal Pradesh’s NSDP

• The Net State Domestic Product (NSDP) of Himachal Pradesh was about US$ 6.85 billion in 2007-08.

• The average NSDP growth rate between 2000-01and 2007-08, was about 12.47 per cent.

Himachal Pradesh’s NSDP (US$ billion)

Source: CMIE



2.68

2.87

3.17

3.67

4.15

4.49

5.00

5.90

6.85

0 1 2 3 4 5 6 7 8 9

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

CAGR:12.47%

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The secondary sector has an increasing share in Himachal Pradesh’s economy

Percentage Distribution of GSDP

Source: Economic Survey of Himachal Pradesh 2008-09, CMIE

CAGR

• The secondary sector’s share in the state economy has increased from 32.8 per cent in 1999-2000 to 41.7 per cent in 2007-08. It grew significantly, between 2006-07 and 2007-08 at the cost of the primary and tertiary sectors. It was driven by high growth of manufacturing (8.2 per cent) and construction (10.1 per cent) sectors.

• Community and personal services are the primary constituents of the state’s tertiary sector.

• In terms of share within the primary sector, agriculture still continues to be a significant contributor to the state economy.



26.1 21.8

32.8 41.7

41.1 36.5

0%

20%

40%

60%

80%

100%

1999-2000 2007-2008

Primary Secondary Tertiary

-2.3%

3.1%

-1.5%

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Per capita GSDP

• The state’s per capita GSDP in 2007-08 was US$1,168. It increased at a CAGR of 11.0 per cent between 1999-2000 and 2008-09.

• District-wise distribution of per capita income is quite varied. Districts such as Lahaul and Spitiand Solan have a relatively higher per capita income (US$ 1,626 and US$ 1,228 respectively in 2005-06), due to their high value-added cash crops and the presence industrial areas. On the other hand, districts such as Chamba have a significantly lower per capita income (US$ 522 in 2005-06).

• The technology and energy sectors have been the key drivers of increase in per capita income.

Source: CMIE

Per capita GSDP



505.4 533.6 577.3659.0

741.1 784.2862.0

1,010.11,168.0

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

(US$

)

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Distribution of households by income … (1/2)• The per capita income of Himachal Pradesh was

US$ 1,168 in 2007-08 as compared to US$ 850 for all-India.

• Distribution of households by Socio-Economic Classification (SEC) indicates that majority of households in the state fall in the educated and self-employed or medium-to-high income salary classes.

Percentage distribution of urban households by SEC*

Percentage distribution of rural households by SEC*

Source: BW Marketing Whitebook, 2009-10;*See Annexure for SEC classification of households



3.5

6.6

7.9

8.3

20

23.6

11.7

18.5

3.1

9.5

10.6

11.5

23.1

18.4

10.2

13.5

0 5 10 15 20 25

A1

A2

B1

B2

C

D

E1

E2

Himachal Pradesh All-India

Urban

4.1

11.8

40.6

43.4

5.2

31

43.1

20.7

0 10 20 30 40 50

R1

R2

R3

R4


Rural

(%)

(%)

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• Himachal Pradesh has a higher level of ownership of televisions, and higher electricity consumption as compared to the all-India average.

• In terms of ownership of household goods and basic amenities like sewing machine, in-house toilet, clock and ceiling fan, rural Himachal Pradesh is ahead as compared to all-India levels.

Percentage ownership of households goods, vehicles and electricity consumption

Percentage of rural population owning household goods and basic amenities

Source: BW Marketing Whitebook 2009-10

Distribution of households by income … (2/2)



3%13%

68%

98%

4%

18%

41%

64%

0%

20%

40%

60%

80%

100%

120%

Four-wheelers Two-wheelers Televisions Electricity


50%

37%

73%

43%

10%

28%

61%

36%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Sewing machines

In-house toilets Time clocks Ceiling fans


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Key industries in Himachal Pradesh

Key industries in Himachal Pradesh

• Textiles

• Pharmaceuticals

• Food procurement and processing

• Light engineering

• IT and electronics

• Cement

• Tourism

• The rich natural resources of the state are favourably suited for investments in major sectors such as procurement of agricultural produce, hydro-electric power, cement and tourism.

• The districts of Solan, Sirmour, Kangra and Una lead in terms of investments attracted.



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Maize, wheat and apples are the key agricultural products

Crop Annual production (‘000 tonnes)

Wheat 562

Maize 683

Rice 121

Fruit 713

Vegetables 1,060

Potato 155

• In 2007-08, the total production of the major crops of the state (food grains, vegetables and fruit) was 3.2 million metric tonnes.

• Of the food grains, maize was the major crop. It was followed by wheat and rice.

• The state has a prominent horticulture industry. Apple production stood at 593,000 metric tonnes in 2007-08 and accounted for approximately 83 per cent of the state’s total fruit production.

• Other major fruits grown in the state include peach, apricot and cherry, mango and litchi.

Source: Himachal Pradesh Economic Survey, 2008-09



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Himachal Pradesh’s exports trends

• Himachal Pradesh’s exports increased by and estimated 15.6 per cent in 2008-09 as compared to the previous year.

• Major exports from the state were from the pharmaceuticals, textiles and ferrites industries.

• The state had an export growth of over 100 per cent in 2003-04 over the previous year.

Growth in exports (%)

54.1

13.6

-32.0

128.8

22.6

-4.215.1

4.115.6

-50.0 0.0 50.0 100.0 150.0

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09E

Source: Capital Markets



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Investments and FDI inflows

• Himachal Pradesh had outstanding investments of US$ 13.64 billion as of December 2008.

• FDI inflows from April 2000 to October 2009 amounted to US$ 394.97 million (Himachal Pradesh, Punjab, Chandigarh and Haryana).

• The bulk of the investments are in the power (60 per cent) and manufacturing (25 per cent) sectors.

Break up of investments by sector

Source: CMIE



25%

1%

60%

2%

2%

10%Manufacturing

Mining

Electricity

Services

Irrigation

Construction

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Contents







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• Ample workforce availability makes Himachal Pradesh an attractive investment destination.

• About 32 per cent of the workforce is classified as main workers, 16.9 per cent marginal workers and 50.8 per cent as non-workers.

• Agriculture still remains the largest employer with 69 per cent of the workforce engaged in it.

• The unemployment rate is high, with 820,000 registered on the employment exchange; although all may not be un-employed.

• Labour relations are cordial with few strikes, lockouts and lost man-days due to industrial disputes.

• The state also has six engineering colleges and 13 polytechnic colleges with an annual intake of 3,020 and 5,390 students, respectively.

Labour availability


INFRASTRUCTURE STATUS

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Road network

• Since much of the state is hilly, roads play a vital role in transportation.

• Of the total road length of 31,778 km, National Highways account for 1,409 km.

• Roads have been assigned a high priority by the Government of Himachal Pradesh. In 2008-09, the government outlay for road development and related activities was US$ 66 million.




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Airports

Domestic airport

• There are tree airports – at Kullu(Bhuntar), Kangra (Gaggal) and Shimla (JubbarHatti).

• In addition, there are 57 operational helipads and another 12 new helipads being planned.

• An airport has been proposed for Sundernagar, to match international standards (which can accommodate landing of an Airbus A-320 or a Boeing 747 aircraft).

• Night landing facilities to be given for all the three existing airports.



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Railways

• Himachal Pradesh falls under the Northern Railways network.

• Two narrow gauge lines connect Kalka with Shimla and Jogindernagar with Pathankot; route length of 96 and 113 km, respectively.

• A 33 km broad-gauge line connects the Nangal Dam to Charuru.




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Power … (1/2)

Installed state and private capacity (MW)

Source: Central Electricity Authority, March 2009

• Himachal Pradesh is naturally suited for hydro-power generation and accounts for around 25 per cent of India’s total hydro-power potential.

• In 2008-09, the state had a power generation installed capacity of 965 MW.

• It has a high level of village electrification; about 17,183 of 17,495 villages had been electrified by the end of December 2008.

• In order to provide electricity to all the households in the state, the Rajiv Gandhi VidyutikaranYojna (RGGVY) scheme has sanctioned US$ 41.6 million.



412

612709 709 758

921 926 965

0

200

400

600

800

1000

1200

28

Power … (2/2)

• State-owned power generation in Himachal Pradesh is managed by the Himachal Pradesh Power Corporation Limited (HPPCL) .

• Power transmission is overseen by the Himachal Pradesh Power Transmission Corporation Limited.

• Himachal Pradesh’s power sector was ranked seventh in the country, by the State Power Sector Performance Ratings study conducted by the Power Ministry of India in 2006.

• It is one of the few states in India where power delivered to consumers is 100 per cent metered, and its distribution system has 97.4 per cent availability.

Source: Himachal Pradesh Economic Survey 2008-09, Asian Development Bank report on “India, Capacity Building for Himachal Pradesh Power Sector Agencies,” November 2008



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Telecom

• As of March 2009, the state had 3.32 million wireless subscribers and 379,854 wire-line subscribers.

• The state has a high tele-density of 55.5 per cent (as of March 2009), compared to the all-India average of 36.9 per cent.

• Himachal Pradesh has a high density of optical-fibre cable (OFC) per unit area with a 8,500 km network.

Telecom infrastructure

GSM cellular subscribers: 3,764,522

Broadband subscribers: 20,981

Post offices: 9,826

Telephone connections provided: 1.27 million

Telephone exchanges: 1,095

Sources: Cellular Operators of India, November 2009Department of Telecommunications, March 2009



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• Named the “Queen of hill stations”, Shimlahas in the last 200 years developed into an unplanned concrete jungle with growing problems related to environment, heritage, transport, infrastructure, tourism, housing and institutions.

• Shimla is one of the 63 cities that have been identified under the Jawaharlal Nehru Urban Renewal Mission (JNNURM) for local infrastructure development.

Urban infrastructure

Source: JNNURM project details, Ministry of Urban Development, www.urbanindia.nic.in, Municipal Corporation, Shimla

• Under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), three projects costing US$20.63 million have been sanctioned for Shimla.

• The projects have been sanctioned for completion between 2007-08 and 2008-09. The key areas of development are roads and flyovers, water supply, and solid-waste management.

• The Government of Himachal Pradesh has constituted a state-level steering committee under the chairmanship of the Chief Minister and nominated Himachal Pradesh Housing and Urban Development Authority (HIMUDA) and state-level nodal agency for implementing the planned projects under JNNURM.



http://www.urbanindia.nic.in/�

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Public-private partnership projects

Contract authority Project Investment(US$ million) PPP type Status

Roads

National Highway Authority of India Zirakpur-Parwanoo road 64.13 BOT- Toll Under

construction

Source: www.projectstoday.comBOT: build-operate-transfer

• Himachal Pradesh has one project being implemented under the public-private partnership (PPP) mode; it has a project cost of US$ 64.13 million.



http://www.projectstoday.com/�

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• The male literacy rate is 85.3 per cent and female literacy rate stands at 67.4 per cent. The Government is taking several initiatives to bridge this gap.

• At an all-India level, the Eleventh Five-Year Plan has set targets to reduce the gender gap in literacy from 17.9 per cent in 2001 to 1.6 per cent by 2012.

• With the introduction of new industrial training institutes/centres (ITI/ITC), annual seats for vocational training stand at over 7,000 in the state.

Education sector … (1/2)

Educational infrastructure

• Engineering colleges: 6• Medical colleges: 6• MBA colleges: 5• Law institutions: 3• Polytechnics: 13• ITI/ITC: 110



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Literacy rates (%)

Literacy rate 76.5

Male literacy 85.4

Female literacy 67.4

Source: Economic Survey 2008-09, VII All-India Education Survey, 2007-08

• Roughly 686,706 students join primary schools every year.

• Private participation is being encouraged in technical and vocational education.

Himachal Pradesh primary education statistics

Number of schools* (2007–08) Primary: 10,181Middle: 2,318High/higher and senior secondary schools: 1,886

Pupil-teacher ratio (2007–08) 22:1 (primary)28:1 (upper primary)16:1 (secondary)

Net enrolment ratio in primary schools (2007–08) 99

Education sector … (2/2)



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• Himachal Pradesh has better health indicators than the all-India average.

• The State Government has launched Health Mission, 2008, to provide effective and efficient health services.

Himachal Pradesh’s health indicators

Population served per medical institution

23,287

Population served per hospital bed

1,124.3

Birth rate* 17.4

Death rate* 7.1

Infant mortality rate** 47

Life expectancy at birth (years)

MaleFemale

65.765.4

Source: Ministry of Health and Family Welfare*Per thousand persons**Per thousand live births

Health infrastructure

Health Infrastructure

• Civil hospitals: 52• Community health centres: 73• Primary health centres: 452• Sub-centres: 2,069• Dispensaries: 23



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Financial infrastructure

• The average population served by a bank office in the state is 9,425 persons; it is among the healthiest in the country in comparison with the all-India average of 16,000 persons.

• Credit disbursement of district central co-op banks registered a CAGR of 19.7 per cent between 2003-04 and 2005-06, while state co-op banks registered 18.2 per cent CAGR during this period.

• The financial infrastructure coverage in rural areas is fairly vast.

Financial institutions in Himachal Pradesh

Co-operative societies 4,382

Commercial bank branches 889

Regional rural bank branches 147

State cooperative bank branches 175

Central cooperative bank branches 182

Source: Reserve Bank of India, Economic Survey, 2008-09



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Cultural infrastructure

• The Himachal Pradesh Sports Council oversees the sports-related activities of the state.

• The Indira Gandhi State Sports Complex provides training for judo, badminton, volleyball, gymnastics, table tennis, boxing, wrestling, martial arts, as well as a fitness and an aerobics facilities.

• The state is also constructing another stadium in Dharamsala, with an investment of almost US$ 1 million.

• Adventure sports, such as river rafting, para-gliding and trekking are also popular, given the climate and topography of Himachal Pradesh.

• The key hotels in Shimla are East Bourne & Spa, Wildflower Hall and the Oberoi Cecil. In Dharamshala, the key hotels are the Clubhouse and Asia Health Resorts, while the Hotel KulluValley, the Ambassador in Manali are the most popular hotels at Kullu-Manali.

• KangraValley is considered the cultural capital of Himachal Pradesh; its is home to Dharamshala and Mcleodganj, a hub for Buddhist-Tibetan culture. The district has several Buddist monasteries and Hindu temples.

• The S.M. Convention Centre in Palampur, is one of the largest of its kind in the state; it has 25 rooms, five banquet halls, seminar rooms, and a board room.



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Infrastructure Description

Industrial areas Set up at Baddi, Barotiwala, Parwanoo, Kala Amb, Paonta Sahib, Mehatpur, Tahliwal, Amb, Sansarpur Terrace and Golthai.

Baddi Barotiwala NalagarhIndustrial Area

The industrial area has been promoted by the Ministry of Commerce and Industries, Government of India. It has emerged as a favoured hub for the textiles, pharmaceuticals and packaging industries.

Biotechnology Park The Government has proposed setting up a Biotechnology Park at Solan; feasibility report has been submitted and all clearances have been received; Cabinet approval is awaited.

Nanotechnology Park Proposed to come up on a 400-acre area near the Biotechnology Park.

Special Economic Zones (SEZ) SEZs approved in Kangra, Una and Solan at an estimated cost of US$ 1.8 billion;Kangra and Solan to have multi-product SEZs; Una to have an airport-based SEZ

Inland container depot (ICD) Development of an ICD at Baddi for the benefit of exporting industries through Container Corporation of India; Memorandum of Understanding (MoU) signed between Himachal Pradesh Government and Container Corporation of India.

Industrial infrastructure … (1/2)



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Industrial infrastructure … (2/2)

Name and location Primary industry Description

Baddi TextilesLocated in the Solan district, the Baddi industrial area has several pharmaceutical firms, textile spinning units, auto ancillary manufacturers, and paper and printing companies.

Barotiwala Multi-industry Located in the Solan district; hub for small scale industries.

Parwanoo Light Engineering Located in the Solan district; the city is an industrial cluster for high-density polyethylene (HDPE) pipe companies.

Chambaghat ElectronicsLocated on the Shimla-Kalka highway in the Solan district, the industrial area has prominent companies such as Himachal Futuristic Communications Limited and Shivalik Bimetal Controls Limited.

Paonta Sahib Pharmaceuticals/ chemicals

Located in the Sirmour district, the industrial area is has a number of pharmaceutical and chemical companies.

Tahliwal and Gagret Electronics Located in the Una district, it has prominent telecommunications companies.

Amb Industrial Area Engineering/ auto Amb has prominent companies engineering and automotive companies such as International Cars and Motors Limited.

Sansarpur Terrace Engineering Located in the Kangra district, it has one of the leading engineering companies of North India.

Golthai Multi-industry Located in the Bilaspur district, it has been identified as a mini growth centre.

• In an effort to provide infrastructure support to entrepreneurs, the Himachal Pradesh Government has developed 38 industrial areas and 15 industrial estates.



39

SEZs and industrial estates

Source: www.sezindia.nic.in

Industry Location SEZ (No)

Multi-product Kangra and Solan district 2

Airport-based Una 1

• There were three in-principle approved SEZs in Himachal Pradesh as of 2009.

• In an effort to provide infrastructure support to entrepreneurs, the Himachal Pradesh Government has developed 38 industrial areas and 15 industrial estates.

• Industrial areas have been set up at Baddi, Barotiwala, Parwanoo, Kala Amb, PaontaSahib, Mehatpur, Tahliwal, Amb, SansarpurTerrace and Golthai.

• Further, the state is focusing on sector-specific infrastructure for biotechnology, IT and tourism.



40

Major infrastructure projects being implemented

Infrastructure Type Investments (US$ million)

Power* 6,578.98

Road 2.96

Airport 2.17

Total 6,584.13

• Over US$ 6.58 billion of investment have been made in ramping up Himachal Pradesh’sindustrial infrastructure as of December 2008.

• Over 99 percent of investments in infrastructure have been made in the areas of power generation and distribution.

*Generation and distributionSource: CMIE



41


Contents







42

Sector-specific policies … (1/11)Industrial Policy, 2004

Aim: To develop infrastructure with lesser number of regulations and provision for speedy clearance of new projects.

Key targets and initiatives:• To increase installed capacity addition in power by 6,100 MW by 2010.

• Special priority for providing power connections to 100 per cent export-oriented units, IT, biotechnology, FDI projects and tourism sector.

• No electricity duty to be charged on power generated from captive diesel-power plants.

• Permission requirements for captive generating sets to be time bound and simplified; provision for third-party sale of power.

• Supplementing the special package of incentives given to the state by the Central Government with specific concessions and facilities to ensure sustainable industrial development.

• Setting up of single-window clearance and monitoring agency under the chairmanship of the Chief Minister, along with single-window agencies at major industrial towns of Parwanoo, Baddi, Paonta Sahib, Goalthai and Sansarpur Terrace.

• Evolving a ‘best practices’ standard in government departments at the delivery end, such as the state power utilities, labourdepartment and department of excise.

• Setting up of activity-specific industrial areas such as food parks, electronics city, export processing zones and biotechnologyparks.

• Reforms in the labour department regarding annual inspections and maintenance of registers.

• The State Government, in February 2009, amended the Incentive Rules, 2004, to include biotechnology process-based industrial and non-industrial products, processing laboratories and research and development facilities as thrust industries.

• Also liberalised the process of transfer of industrial plots and sheds in the industrial areas.


STATE POLICIES AND INCENTIVES

43

Industrial Policy, 2004 (continued)

Incentives and concessions:

The Central Government has formulated the “Special Package of Incentives” for the states of Uttarakhand and Himachal Pradesh:

• New and existing industrial units that are set up in growth centres, industrial infrastructure development centres, industrial estates, export processing zones, theme parks (food processing parks, software technology parks, etc.), are entitled to the following:

• 100 per cent excise duty exemption for a period of 10 years from the date of commencement of commercial production.

• 100 per cent income tax exemption for initial period of five years, and thereafter, 30 per cent for companies and 25 per cent for others for a period of five years from the date of commencement of commercial production.

• All new industries that are set up in notified locations are eligible for a 15 per cent capital investment subsidy of their investment in plant and machinery, subject to a ceiling of US$ 65,217.

• Thrust sector industries are entitled to the same concessions as listed above, without any area restrictions.

• The Central Government gave an in-principle approval to extend the package by one year, after its expiry in March 2010.

Sector-specific policies … (2/11)



44

Industrial Policy, 2004 (continued)

The Industrial Policy identifies the following “thrust industries” for Himachal Pradesh:

• Floriculture

• Medicinal herbs and aromatic herbs

• Honey

• Horticulture and agro-based industries

• Food processing industry

• Sugar and its by-products

• Silk and silk products

• Wool and wool products

• Woven fabrics

• Sports goods

• Paper and paper products

• Pharmaceutical products

• Information and communication technology (includes computer hardware call centres)

• Bottling of mineral water

• Eco-tourism

• Industrial gases

• Handicrafts

• Non-timber forest products

The Central Government’s special package of incentives for the above sectors have contributed significantly to the industrialgrowth of the state, especially, in the areas of pharmaceuticals and tourism.




45

IT Policy, 2001

Aim: Action plan to harness the potential benefits offered by IT

Key initiatives:

• Department of Information Technology (DoIT) acts as a single-point interface for setting up an IT unit in the state.

• To provide incentives for the industry in line with the approved policy of the Government of India, IT software and services aredeemed to be manufacturing activity.

• All IT units with a connected load exceeding 100 KW to be charged a concessional rate of electricity duty at the rate of 10 paisa per unit for a period of five years from the date of commencement of commercial production.

• Provision of tax-related incentives.

• Accredited training institutions to be eligible for claiming industry status (subject to norms) to benefit from industry concessions.

• Special packages for investment proposals above US$ 2.5 million or if the company is a Fortune 500 company.

• Continuous power supply to the IT industry, in consideration of it being treated as a “continuous process” industry.

• Registered IT units within the declared Software Technology Park (STP), IT habitats and hi-tech cities to be eligible for relaxation of floor area ratio (FAR) to the extent of 50 per cent.

• Exemption from land and building tax within the declared STP, IT habitats and hi-tech cities.

• Creation of a venture capital fund of US$ 5 million in association with SIDBI.




46

IT Policy, 2001(continued)


• IT and related services are considered a part of manufacturing; the companies are eligible for the same incentives and concessions as other industries under the Industry Policy, 2004.

• Under the Industrial Policy, 2004, IT and IT Services is defined as ‘thrust industry” and is eligible for a special package of central incentives such as income tax exemption/concession, central excise exemption and capital subsidy.

• Companies within this sector are already eligible for industrial power tariff and other power-related incentives and concessions, which are applicable to other industrial consumers.

• Tax-related incentives:

• Exemption of Central Sales Tax (CST) for new IT industrial units until March 2013. Existing units who have availed of this exemption for less than six years and eight months are also eligible.

• 100 per cent income tax exemption for initial five years of operation, and thereafter a 30 per cent rebate is given for another five years.




47

Hydro Power Policy, 2007

Aim: To focus on capacity addition, energy security, access and availability, affordability, efficiency, environment and local employment.

Key initiatives and stipulations:

• Projects up to 2 MW have been earmarked for the investors in Himachal Pradesh and for projects between 2 MW and 5 MW; first preference to be given to the residents of Himachal Pradesh.

• Projects above 5 MW and up to 100 MW to be allotted to the independent power producers (IPP) via the MoU route and for those above 100 MW via international competitive bidding: the State Government retains the right to equity participation in private sector projects above 100 MW, up to a maximum limit of 49 per cent.

• Release of 15 per cent of minimum discharge downstream of the dam/diversion structure to be ensured during the lean season.

• In order to ensure employment to local people, a minimum of 70 per cent of total employees, officers, executives engaged by the companies should be from the state.

• The concept of involving local people in the development of the “Project Affected Area” has been specially devised, wherein local area development committees (LADC) have been formed; also, 1.5 per cent of the project cost to be earmarked by the developers for the development of local areas through the LADCs.

• Promote activities such as construction of hydro-power projects, strengthening of transmission and distribution networks to facilitate transmission of power from these projects and its distribution for utilisation within the state.




48

Hydro Power Policy, 2007(continued)


• 100 per cent foreign equity permitted on the automatic approval route, as long as it does not exceed US$ 326 million.

• Waiver of 40 per cent financing limit from Indian financial institutions.

• Himachal Pradesh Power Corporation Limited to purchase power at US$ 0.05 per kWh for projects up to 5 MW.

• Banking and wheeling facilities are permitted at 2 per cent, which includes transmission losses.

• Five-year moratorium on payment of electricity duty for companies which consume electricity that they produce.




49

Biotechnology Policy, 2001

Aim: To focus on developing new technologies in the areas of biotechnology for agriculture, animal husbandry and healthcare.

Key initiatives:

• Upgrade infrastructural support to research and development (R&D) institutions for skill development in biotechnology.

• Intensify R&D work in potential areas of biotechnology including agriculture, animal husbandry and human health.

• Conserve and commercially exploit bio-resources of the state for sustainable development.

• Attract entrepreneurs for setting up of biotechnology-based industries.

• Provide suitable institutional framework to achieve objectives.




50

Biotechnology Policy, 2001 (continued)


• Biotechnology is identified as a “thrust sector” under the Industrial Policy, 2004 and is eligible for incentives and concessions under the policy.

• The State Government proposes to establish two separate biotechnology parks, one between Solan and Shimla and another between Shahpur and Jogindernagar in the PPP mode; land will be made available to prospective entrepreneurs.

• The entrepreneurs will also be free to set up their units in other established industrial areas in the state.

• For registered biotechnology units within the declared biotechnology park or industrial area, relaxation of up to 50 per cent offloor-area-ratio (FAR) norms. For units that are in the other areas, relaxation of up to 25 per cent is permissible, subject to population density, infrastructure availability and local geology.

• Biotechnology units will be considered on par with fruit, vegetable and maize-based units and shall enjoy the same concessions such as GST exemption, CST concessions, procurement of raw materials at 1 per cent GST, allotments of plots/sheds at reasonable prices in industrial areas/estates, etc.

• Power will be supplied at industrial rates; biotech units will be exempt from routine power cuts, load shedding, and peak time restrictions.




51

Tourism Policy, 2005

Aim: To make tourism the prime engine of economic growth by positioning the state as a leading global destination by the year2020.

Key elements and future strategy:

• Create a tourism sub-plan, which is integrated and coordinated with other state departments such as public works, urban development, irrigation and public health, horticulture, forest, power, etc.

• Upgrade civil infrastructure in major tourist destinations, such as Shimla, Manali, Dalhousie, etc. This would include setting up of hill stations, spas and resorts, ski slopes, airports, tourist centres and entertainment complexes, luxury hotels, etc.

• Invest in developing a skilled workforce, in order to deliver high quality professional services, for instance, by developing more Food Craft Institutes in Kangra and Kullu.

• Develop a new marketing strategy to raise awareness of the Himachal Pradesh as a brand and increase the inflow of tourists.

• Facilitate authorisations and permissions for film makers interested in shooting in the state, by creating a single-point authority, i.e., the commissioner-cum-director of tourism.

• Improve connectivity to and within the state, including by road, rail and air.

• Strengthen the Tourism Development Board so that it can carry out various developmental and tourism promotional activities.

• Encourage private sector investment by simplifying procedures for clearances, etc.




52

Tourism Policy, 2005 (continued)

Thrust areas:

• Rural tourism• Eco-tourism• Pilgrimage tourism• Adventure tourism• Promoting ‘unexplored Himachal’• Health tourism• Arts, crafts and souvenirs

Incentives and concessions as per the “Special Package of Incentives” scheme of 2003.




53

Company logos cited in this section are registered trademarks of the respective companies


Contents







54

Agro-based industry

• Agriculture is the main occupation of the state and a major source of employment, though its share in the GSDP has been declining.

• Food processing industry is mainly in the areas of traditional processing of agricultural and horticulture raw material.

• Agri-procurement has lately been an investment area for corporate entities.

• The area under fruit cultivation increased from 792 hectares in 1950-51 to about 200,502 hectares in 2007-08.

• Apple is one of the most important crops in the state, constituting about 83 per cent of the total fruit production. The state produced 593,000 metric tonnes of apples in 2008-09.

Key players

• Adani Agri fresh

• Reliance

• Dharampal Satyapal Group

• Himachal Pradesh Horticulture Produce

Processing and Marketing Corporation (HPMC)

• Nestle India

• Dabur

• Mahaan Group

• Himalayan Organics


BUSINESS OPPORTUNITIES

55

Cremica Group Cremica Group is a prominent player in both the Indian food retail as well as the food services industry; recorded a revenue of US$ 90 million in 2008-09. The business activities of the company includes Cremica Frozen Foods, EBI Foods, Mrs Bector’s Desserts and Cremica Agro India. The company is commissioning a plant at Tahliwal Industrial Area, Una, for manufacturing biscuits and Indian snack foods; it is a 100 per cent automated facility with a monthly manufacturing capacity of 5,000 tonnes of biscuits.

Adani Agri Fresh Adani Agri Fresh, a 100 per cent subsidiary of Adani Enterprises, which had revenue of US$ 2.52 billion in 2008-09, has set up three controlled-atmosphere storage units at an investment of US$ 33 million and capacity of 6,000 metric tonnes each; involved in procurement, storage and transportation of apples, apricots and vegetables. It procured about 24,000 metric tonnes of apples in 2007-08 for storage as well as spot sales; the company plans to procure 25,000 tonnes of applies from the Shimla and Kinnaur belt in 2009-10.

Reliance Reliance Retail is a subsidiary of the Indian conglomerate, Reliance Group; had revenue of US$ 28 billion; has created a supply chain for procurement of apples, peaches, apricots and vegetables in the state.

Dharampal Satyapal Group

Diversified conglomerate with presence in chewing tobacco, spices, beverages and hospitality; group revenue of US$ 340 million in 2008-09; the group has two plants in Baddi, Himachal Pradesh. Produces the “Catch” brand of mineral water at its Kullu facility and “Pass Pass” mouth freshener.

Food procurement and processing – company profiles … (1/2)



56

Food procurement and processing – company profiles … (2/2)

Nestle India Nestle has had a presence in India for almost a century with seven production facilities across the country; produces chocolate and confectionaries, prepared dishes and cooking aids, beverages and milk products and nutrition. Had revenues from the Indian operations of US$ 972 million in 2008-09. In December 2009, Nestle India announced that it had received approval to set up a US$ 54.3 million food and beverage manufacturing facility in the Una district to provide direct employment to 650 people.

Dabur Dabur is one of the country’s largest consumer goods companies; had revenue of US$ 600 million in 2008-09; the company manufactures several of its products in Himachal Pradesh, including honey and amla.

Mahaan Group Delhi-based Mahaan Group specialises in dairy products as well as in other food products, such as bakery items, beverages, confectionary items, salad dressing, sauces and soups; it has a dairy plant based in Paonta Sahib, which manufactures dairy whitener, skim milk powder, and other milk-based products, as well as a processing facility for skim milk.

Himalayan Organics Himachal Organics is a Kullu-based exporter and supplier of organic food products; their product range spans fruits and vegetables such as lettuce, brussels sprouts, broccoli, plums and apples as well as cereals such as red rice.



57

Pharmaceuticals

• Among the fastest growing regions for the pharmaceutical industry in India, driven by the incentives announced by the State Government in its Industrial Policy, 2004.

• Around 300 pharmaceutical companies have set up operations, including Ranbaxy, Dr Reddy’s, Morepen and Torrent Pharmaceuticals.

Key players

• Ranbaxy Laboratories

• Cipla

• Torrent Pharmaceuticals

• Dr Reddy’s Laboratories

• Panacea Biotec

• Gopal Lifesciences

• Morepen

• Mankind Pharmaceuticals

• FemCare Pharma Limited

• Indoco Remedies

• Promed

• Alkem

• Ozone Ayurvedics

• Abyss Pharma Private Limited

• Dabur

• Zydus Cadila



58

Pharmaceuticals – company profiles … (1/4)

Ranbaxy Laboratories Limited

Ranbaxy is one among India’s leading pharmaceutical companies with business operations in 40 countries and manufacturing facilities in six countries; has a manufacturing facility at Paonta Sahib, district Sirmaur; manufactures fermentation-based products such as Lovastatin and Pravastatin. In 2008, Japanese conglomerate Daiichi Sankyo became the largest shareholder in Ranbaxy. In July 2009, Ranbaxy announced that it would set up another plant in Solan district with an outlay of US$ 7.3 million.

Cipla Cipla has one of the largest product portfolios with over 1,000 products; established a manufacturing facility at Baddi with an investment of roughly US$ 11 million in 2005; the unit manufactures bulk drugs, tablets and capsules, creams, aerosols/inhalation devices and injections/sterile solutions.

Torrent Pharma Limited Torrent Pharma is one of the largest pharmaceutical players in the domestic market. Commissioned a new formulation manufacturing facility at Baddi in November 2005 with an investment of US$ 30.6 million; has a capacity to manufacture 3,600 million tablets, 400 million capsules and 18 million oral liquid bottles per annum. Recently, the manufacturing capacity at the Baddi facility has been increased by around 30 per cent to meet the increased export demand.



59


Panacea Biotec Panacea is one of India’s prominent pharmaceutical and biotech companies involved in research, manufacturing and marketing of pharmaceutical formulations; had revenue of US$ 168.4 million in 2008-09; filed 1,158 patents as of 2009-10, of which 325 have been granted; has over 3,200 employees. Its pharmaceutical and vaccine formulations facility is located in Baddi, with a production capacity of 900 million tablets, 120 million hard-gelatin capsules, 150 million soft-gelatin capsules, 60 million herbal capsules and 600 million doses of vaccines per annum.

Dr Reddy’s Laboratories (DRL)

Established in 1984, Dr Reddy’s ranks among the top 15 generics players in the world; is the first pharmaceutical company in Asia-Pacific (outside Japan) to be listed on the NYSE. It has presence in 35 countries with operations in over 115 countries; overseas business contributes around 86 per cent to the total revenue. Company aspires to become a discovery-led global pharmaceutical company and one of the top 10 generic companies in the world. Present therapeutics categories of anti-infectives, cardio-vascular (CVS), diabetes, dermatological, pain management, nutritional, dental, urological and oncology; the company has a finished dosage facility in Baddi.

Gopal Lifesciences Gopal Lifesciences is a Himachal Pradesh-based pharmaceutical firm, located in Baddi; it manufactures tablets, capsules and liquid medication; the company is involved in both contract manufacturing as well as its own manufacturing.

Morepen Set up in 1984, Morepen Laboratories is an Indian pharmaceutical firm specialising in active pharmaceutical ingredients as well as formulations manufacturing; had revenue of US$ 40.2 million in 2008-09; the company has three manufacturing facilities in the state at Masulkhana, Parwanoo and Baddi.



60


Mankind Pharmaceuticals Manking Pharmaceuticals is a prominent Indian pharmaceutical company specialising in drugs such as prescription antibiotics, antifungals, gastrointestinals, etc.; had revenue of US$ 200 million in 2008-09; has a US Food & Drug Administration (USFDA)-approved manufacturing unit at PaontaSahib, which has a production capacity of 60 million ampoules and 30 million vials in a single shift.

FemCare Pharma Limited FemCare Pharma is an Indian company that operates in the personal care, pharmaceutical and specialty chemicals businesses; had revenue of US$ 34.4 million in 2008-09, of which the pharmaceutical division comprised US$ 2.7 million. The pharmaceutical division is located in Nalagarh and specialises in dermatological products. In November 2008, 72.15 per cent of the company was acquired by Dabur.

Indoco Remedies Indoco Remedies is an Indian pharmaceutical formulations and active pharmaceutical ingredients (API) manufacturing and marketing firm; had revenue of US$ 64.3 million in 2007-08. The company has a US$ 9 million manufacturing facility in Baddi, which has an annual production capacity of 1.5 billion tables, 3,000 kilolitres of liquid orals, 200 tonnes of creams and ointments and 1,500 tonnes of toothpaste.

Promed Set up in 1990, the company manufactures and exports pharmaceutical formulations; the firm has a manufacturing facility in Nalagarh and manufactures products such as nasal drops, eye drops, inhalation products, wound care products and injectibles.



61


Alkem Laboratories Founded in 1974, Alkem is one of the prominent pharmaceutical companies in India; it has a Baddifacility with a built-up area of 220,000 sq ft, which produces tablets, capsules, dry powder injectiblesand oral suspensions.

Ozone Ayurvedics Ozone Ayurvedics is a division of Ozone Group; it manufactures and supplies personal care products such as anti-acne and anti-blemish creams, soaps, face wash, face packs, as well as herbal and Ayurvedicproducts; had revenue of US$ 34.3 million in 2007-08; the company has a manufacturing facility in Baddi.

Abyss Pharma Private Limited

Abyss Pharma is an Indian pharmaceutical formulations company, which began operations in 1985; it produces a variety of products ranging from tablets and capsules to ear drops, injectibles and sunscreens.

Dabur Dabur is one of the country’s largest consumer goods companies; had revenue of US$ 600 million in 2008-09; the company manufactures several of its products in Himachal Pradesh, including its throat lozenges brand Honitus, glucose, and digestive brand, Hajmola.

Zydus Cadila Zydus Cadila is a pharmaceutical company, which manufactures both formulations as well as active pharmaceutical ingredients (API); it is headquartered in Ahmedabad; had revenue of US$ 630 million in 2008-09. The company employs over 10,000 people worldwide; it has a formulations manufacturing facility at Baddi.



62

Textiles

• The textiles Industry in Himachal Pradesh is, mainly, focussed on spinning yarns; some companies such as Vardhman are also engaged in weaving and dyeing.

• Textile industry grew at a CAGR of 2.78 per cent between 2002 and 2005.

• Handloom and carpet weaving have developed as small-scale industries.

• SEL Manufacturing Company announced in September 2008 that it would be setting up a technical textile park in the state, at a cost of US$ 124.4 million. The park will be spread across 100 acres of land and is estimated to create over 10,000 jobs.

Key players

• Birla Textile Mills

• Winsome

• Vardhman

• Malwa Cotton

• Himtex Textiles Private Limited

• Sara Textiles Limited

• Himachal Fibre Limited

• Nirmal Furnishing Fabrics

• GPI Textiles



63

Textiles – company profiles … (1/2)

Malwa Cotton Spinning Mills Subsidiary of VSO Group; facility at Paonta Sahib, which manufactures cotton, acrylic, polyester and viscose

Vardhman Group Group revenue of US$ 512 million in 2006-07; the group has three state-of-the-art spinning facilities at Baddi with a combined installed capacity of over 240,000 spindles, and a daily capacity of 150,000 metres; products include yarns, fabrics, sewing threads and fibre; amongst the largest producers and exporters of yarns and grey woven fabrics, tyre cord yarns and sewing threads; the company also set up a finishing operation in Baddi, under the name Auro Textiles, which has a production capacity of 160,000 metres per day

Winsome Group The group has a spinning facility at Baddi; the yarns are produced in a variety of shades in melange, package dyed, and fibre-dyed yarns; plans to expand its spinning capacity by 13,000 spindles and dyeing capacity by 10 tonnes per day; expansion plans announced in August 2009 involve expenditure of about US$ 31 million

Birla Textile Mills Division of Chambal Fertilizers and Chemicals Limited, a flagship company of the KK Birla Group of companies; Baddi plant has an installed capacity of more than 80,000 spindles



64

Textiles – company profiles … (2/2)

Himtex Textiles Private Limited. Established in 2007, Himtex produces cotton yarn; it has a rotor capacity of 1,040; its spinning facilities are located in Una; the company plans to double its number of rotors in 2009-10.

Sara Textiles Limited It is the textile arm of the Sara Group, which specializes in textile manufacturing and sales; the company has a modern terry towel manufacturing unit in Nalagarh, besides a textile export unit and a spinning unit.

Himachal Fibre Limited Established in 1982, the company is a manufacturer of multiple types of yarn, such as cotton yarn, melange yarn, open-end yarn, blended yarn, etc; had revenue of US$ 16.9 million in 2008-09; it has a manufacturing unit in the Barotiwala industrial area, Solan.

Nirmal Furnishing Fabrics Nirmal Furnishing Fabrics was set up in 1982; it is a 100 per cent subsidiary of Nirmal Spinning Mills Private Limited and specialises in shawl manufacturing; it has a composite textile mill in Baddi, with the latest shuttle-less looms.

GPI Textiles Limited GPI Textiles is a part of the Ispat Group and is one of the largest and most modern spinning plants in the country, with over 84,000 spindles and 960 rotors, producing over 23,000 metric tonnes of yarn per annum; the company is based in Nalagarh.



65

Light engineering goods

• The light engineering goods industry in Himachal Pradesh includes precision engineering components, automotive components, steel and fabrication units, and cylinder manufacturing.

• Kala Amb in Paonta Sahib has a large number of steel fabrication mills.

• Auto-component units are, mainly, based in Parwanoo (Solan district).

• International Cars and Motors Limited has a factory at Una.

Key players

• Gabriel

• Purolator

• International Cars and Motors Limited

• Blue Star India

• Spray Engineering Devices Limited

• TVS Motor Company

• Deepak Power Storage Enterprises



66

Light engineering industry – company profiles … (1/2)

Gabriel India Gabriel is a flagship company of the US$ 400 million Anand Automotive Group; it manufactures ride -control systems and engine bearings; supplies to all three segments of the market: original equipment, aftermarket and exports; it produces 20 million units per annum.

In November 2008, the company started operations at the Parwanoo plant; manufactures shock absorbers and components for two-wheelers; it has an annual capacity of 2.4 million shock absorbers and 400,000 struts.

Mahle Filter Systems India Limited

Purolator is a joint venture between Anand Group and Arvin Meritor (US); it is one of the largest producers and exporters of air, oil and hydraulic filters in the country; has clients are from automotive, railways and aviation industries. The company is setting up its second plant at Parwanoo and production will begin in February 2010; the plant will have annual capacity of 22 million filters.

International Car and Motors Limited (ICML)

ICML is US$ 285 million company of the Sonalika Group; it sells multi-utility vehicles under the brand name Rhino; has an installed capacity of 2,000 vehicles per month, a state-of-the-art facility at Una and technical collaboration agreement with MG Rover of the UK.



67

Light engineering industry – company profiles … (2/2)

Blue Star India Blue Star is one of India’s largest air conditioning companies; had revenues of US$ 599 in 2008-09; employs 2,600 people the five manufacturing facilities across the country. In 2005, the company set up a 14,000 sq m manufacturing unit at Kala Amb.

Spray Engineering Devices Limited

Spray Engineering Devices was established in 1992 and is a flagship company of Spray Engineering Devices (SED) group; it is an engineering company, with focus on redesign and engineering of processes and equipment; had revenue of US$ 38 million in 2008-09. The company has a sheet metal manufacturing unit in Baddi, which was set up in 1996; a second unit was set up in Baddi in 2001 and a third unit to process sheet metal (capacity of 35 tonnes per day) in 2006 was also set up in Baddi.

TVS Motor Company TVS Motor is one of the largest two-wheeler manufacturers in India; had revenues of USD 1 billion in 2008-09 and over 4,000 employees. In 2007-08, the company began operations at its new Nalagarh plant.

Deepak Power Storage Enterprises

Established in 1940, Deepak Power Storage Enterprises is part of the Deepak Group of Companies, it is a prominent two-wheeler and four-wheeler battery manufacturer in North India; it has a modern fully-automated manufacturing facility in Sansarpur Terrace, Kangra.



68

Cement industry

• Himachal Pradesh has ample availability of quality limestone; the state supplies almost half of its cement produced to other states.

• Three new cement plants are being operated by Larsen and Toubro, Grasim Industries and Harish Chandra Limited.

• MoUs have been signed by India Cement Limited, Lafarge India Limited and JP Industries to establish three additional cement plants.

Key players

• ACC

• Ambuja Cements

• UltraTech Cements

• Jaypee Cements



69

Cement – company profilesACC ACC is one of India’s foremost manufacturers of cement and concrete with 14 factories; set up plants at

Gagal, Bilaspur; clinker and cement grinding augmentation completed and capacity of 4.4 million tonnes per annum (MTPA). In September 2009, the state allowed ACC to generate electricity using the waste exhaust from kiln gases, an environmentally-friendly method.

Ambuja Cements Ambuja Cements is one among the large cement companies in India with annual combined capacity of 16 million tonnes; installed capacity of 2 MTPA in Darlaghat (Solan district). At the end of 2008, the company announced a US$ 760 million expansion program; capacity of the company’s Nalagarh grinding plant to be expanded by 1.5 million tonnes and a new clinker unit to be set up in Rauri with a capacity of 2.2 million tonnes.

UltraTech Cement Limited

UltraTech Cement is a subsidiary of Grasim Industries Limited, which is the flagship company of the Aditya Birla Group; had an annual capacity of 45.7 million metric tonnes in June 2009; it specialises in grey cement. The group revenue was US$ 4 billion in 2008-09. The company is setting up a US$ 217 million cement plant in Mandi, which would provide employment to 1,000 people.

Jaypee Cement Jaypee Cement is a company with an aggregate annual capacity of 14.7 million metric tonnes and is the third largest producer of cement in the country; it company has aggressive expansion plans and is targeting an annual capacity of 23 and 30 million metric tonnes by 2010 and 2011 respectively. Jaypee has a cement blending unit in Nalagarh, which has a production capacity of 2.5 million metric tonnes.



70

IT and electronics industry

• Himachal Pradesh’s IT policy and the incentives offered to the IT industry are aimed at promoting the state as an attractive destination for the industry.

• The state has proposed to set up software technology parks; several incentives are being offered to IT firms; attractive packages for investment proposals above US$ 2.5 million.

• The state has launched a venture capital fund dedicated to the IT industry with a corpus of roughly US$ 4.8 million; it is funded jointly by Small Industries Development Bank of India (SIDBI) and other State Government agencies.

Key players

• Himachal Futuristic Communication Limited

• Microtek International

• Luminous TeleInfra Limited

• WeP Peripherals Limited

• Spice Mobile



71

IT and electronics industry – company profiles … (1/2)

Himachal Futuristic Communications Limited

HFCL is a leading telecom equipment manufacturer, particularly, transmission equipment, optical fibre cables, accessories and terminal equipment; has two facilities at Solan with 1,500 professionals; is among the first Indian telecommunication companies to have successfully subscribed a global depository receipts (GDR) issue. The company is working on product development in areas such as Internet Protocol Digital Subscriber Line Access Multiplexer (IPDSLAM), Wi-Max, Gigabit-capable Passive Optical Network (GPON), high-speed IP infrastructure, mobility and system integration.

Microtek International Microtek International is an IT peripherals and power products company; it has set up a motherboard manufacturing facility at Parwanoo with a capacity of 50,000 motherboards per month.



72

IT and electronics industry – company profiles … (2/2)

Luminous Teleinfra Limited Luminous is a company of the SAR Group; it provides telecom application solutions, which aim to bring about a reduction in energy consumption and operating expenses. The group revenue was US$ 124.4 million in 2007-08. In November 2008, the company announced plans to set up a US$ 32.6 million 50,000 unit (per annum) manufacturing plant in Una, which would produce telecom batteries, power management units and conversion devices.

WeP Peripherals Limited Established in 2000, WeP Peripherals started manufacturing dot-matrix printers; it has now diversified into power solutions – uninterrupted power supply (UPS); the company has a state-of-the-art manufacturing facility in Baddi, where it has the capacity to produce more than 650,000 products per annum.

Spice Mobile Spice Mobile, a subsidiary of the Spice group is the third-largest mobile handset maker in India; it has a manufacturing facility in Baddi, which it proposes to expand and begin production of mobile handsets from March 2010. The company has made a US$ 21.7 million investment for this expansion.



73

Tourism industry … (1/2)

• Tourism is one of the most important sectors for the state economy, in terms of foreign exchange earnings as well as creation of employment opportunities.

• The state is endowed with topographic diversity as well as with historical monuments and religious shrines.

• As of December 2008, there were 1,992 registered hotels and guest houses in the state.

Source: Directorate of Tourism, Himachal Pradesh*As of December 2008

Top tourist destinations

Registered hotels and guest houses* (No)

Kullu 562

Shimla 377

Kangra 294

Solan 165

Chamba 150



74

Total tourists arrivals in Himachal Pradesh

Source: Himachal Pradesh Economic Survey 2008-09 *Up to December 2008

No

of t

ouri

sts

( m

illio

n)

Tourism industry … (2/2)

• The tourist inflow in the state has increased from 5.71 million in 2003-04 to 9.75 million in 2008-09, representing a CAGR of 11.3 per cent.

Destination No of tourists (in million)

Shimla 2.17

Kullu 2.11

Kangra 1.34

Bilaspur 0.68

Chamba 0.65



5.716.55

7.147.95

8.829.75

0

2

4

6

8

10

12

2003 2004 2005 2006 2007 2008

75

Major industrial projects being implemented

Promoter Project Investment(US$ million) Location

Pharmaceuticals

Ankur Drugs & Pharma Limited Drug formulations project 43.5 Solan

Torrent Pharmaceuticals Limited Drug formulations project 21.7 Solan

Dabur India Limited Drug formulations project 28.3 Solan

Venus Remedies Limited Drug formulations expansion 21.7 Solan

Fresenius Kabi Oncology Drug formulations project 21.7 Solan

Cement

Jaiprakash Associates Limited Cement grinding project 201.1 Solan

Lafarge India Limited Cement plant 195.7 Mandi

Textiles

Cannon Industries Private Limited Spandex yarn project 34.6 Kangra

Jindal Specialty Textiles Limited Technical textile products project 32.6 Una

Vardhman Polytex Limited Textiles project 22.8 Solan

Source: www.projectstoday.com



76

Key industrial projects being planned

Promoter Project Investment(US$ million) Location

Pharmaceutical

Ankur Drugs & Pharma Limited Drug formulations project 43.5 Solan

Cement

Jaiprakash Associates Limited Cement plant 434.8 Solan

Grasim Industries Limited Cement plant 217.4 Mandi

Coromandel Cements Limited Cement plant 195.7 Shimla

India Cements Limited Cement plant 163.0 Shimla

J K United Cements Private Limited Cement plant 847.8 Chamba

Steel

Steel Authority of India Limited Steel processing project 21.7 Kangra

IT/ITeS

Government of Himachal Pradesh IT/ITeS SEZ 43.5 Shimla

Cement

Steel Authority of India Limited Limestone mining project 56.5 Solan

Source: www.projectstoday.com



77


Contents







78

Key approvals required

Approvals and clearances required Departments to be consulted

Prior to setting up the unit

Registration District Industry Centre for SSI, or large and medium industries

Allotment of land/ shed State Department of Industries /Infrastructure corporation

Permission for land use District authorities, Department of Town and Country Planning

No objection certificate under the Water and Air Act Himachal Pradesh State Pollution Control Board

Approval for construction activity and building plan Town and Country Planning Authority

Site environmental approval State Pollution Control Board and Ministry of Environment and Forests

Provisional Trade Tax registrations Central and state excise departments

Registration under Central Sales Tax act Central and state excise departments

Before commencement of production

No-objection certificate under of Water and Air Act State Pollution Control Board

No objection certificate Fire department and directorate of factories and boiler

Permanent trade tax registration Central and state excise departments

Registration under Central Sales Tax Act Central and state excise departments

After commencement of production /activity

Registration Department of Industries and respective sector departments such as IT/BT etc.


DOING BUSINESS IN HIMACHAL PRADESH

79

Key nodal agencies

Single Window Clearance Agency

• Agency for speedy clearance and in-principle approval to large-and medium-scale projects.

• Time frame for approval is 30 days.

• Since inception in January 2004, 36 meetings have been held and 753 projects with an investment of US$ 5.37 billion have been approved up to March 2009.

Directorate of Industries

• Registration of small scale industries (SSI) and recommendation of medium-and large-scale industries to the appropriate authority.

• Technical and general consultancy.

• Recommendation for financial assistance to financial institutions/banks for margin money and loans.

• Industrial infrastructure development.

• Collection and maintenance of data relating to industrial units.

• Allotment of industrial plots, sheds and shops in districts.

• Liaison with and provide feedback to the Central and State Governments.

• Administration of all incentives to industries given by both Central and State Governments.

Himachal Pradesh Small Industries and Export Corporation

• To supply raw material through appropriate depots.

• To supply machinery on hire-purchase.

• To provide assistance in export and marketing.



80

Contact list

Key agency Contact information

HP Industries Department

Udyog BhawanShimlaPhone: 91-177-2812613E-mail: [email protected]: http://himachal.nic.in/industry/welcomelat.htm

Himachal Pradesh Small State Industries and Export Corporation Limited

Kishore Bhawan, The MallShimlaHimachal Pradesh - 171001Phone: 91-177 2656713/ 2658266/ 2653070E-mail: [email protected] Website: http://hpssiec.com/

Himachal Pradesh State Industrial Development Corporation Limited

New Himrus Building Circular Road ShimlaPhone: 91-177-2624751, 2624752, 2624754, 2625422Fax: 91-177-2624278E-mail: [email protected]: http://www.hpsidc.nic.in/tele.htm



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81

Cost of doing business in Himachal Pradesh

Cost parameter Cost estimate

Industrial land (per sq ft) Baddi industrial area: US$ 15 to US$ 50 Other industrial areas: US$ 12 to US$ 35

Office space rent (per sq ft per month) US 10 cents to US$ 8

Residential rent (1,600 to 2,500 sq ft house) US$ 250 to US$ 900 per month*

Hotel costs (per room, per night) US$ 20 to US$ 45

Power# (per kWh) Small and medium industries: US 8.4 cents to US$ 8.9 centsLarge industries: US 7.4 cents

Labour (minimum wage per month) US$ 48 to US$ 54

Water (per KL) Non-industrialised areas: US 12 centsIndustrialised areas: US 19 cents

Source: Directorate of Industries and Department of Labour, Industry sourcesSimla or Kulu Manali#Commercial and industrialKL: kilolitre



82

Single-window clearance mechanism … (1/2)

• Single window clearance mechanism (SWM), established under the Himachal Pradesh Industrial Facilitation Act, 2005; it has two-tier structure to grant exemption or relaxation from any of the provisions or rules of the Act.• District Single Window Clearance

Committee for each district in the state; chaired by the General Manager/Member Secretary, with senior-most officers of departments concerned in the district as members.

• State-level agency with the Chief Minister of Himachal Pradesh as its Chairman and various heads of departments as its members.

• Approvals for proposals with investments of over US$ 1.2 million, power requirement of above 5 MW and industries in the negative list such as forest-based, mining, etc., as defined by the Central and State Government – are decided by the state-level Single Window Clearance Agency.

State Level Single Window Clearance and

Monitoring Authority

Chief Minister ofHimachal Pradesh

District level Single Window Clearance

Agency

GM-DIC/Member

Secy.

SWM structure in Himachal Pradesh



83

Purpose:

• Provide first approval to medium-and large-scale investment proposals within 30 days of submission

• Projects above US$ 1.2 million, power requirements above five MW, forest-based and industries indicated in the negative list by Central and State Governments –approved by the agency

Single Window Clearance and Monitoring Agency: state-level nodal agency

Purpose:

• Provides sanctions and clearances for setting up small-scale industrial units.

District Industry Centre (DIC): district-level committee for single window clearance

Composition:

• The Chief Minister of Himachal Pradesh is the Chairman of the agency; other members include heads of the departments of town and country planning, labour, electricity, water, director of industries, industrial adviser

Composition:

• Convened by the general manager, DIC or member secretary, Single Window Clearance and Monitoring Agency

Single-window clearance mechanism … (2/2)



84

Source: Market Research Society of India

Education/Occupation

Illite

rate

Scho

ol u

p to

4

year

s/ li

tera

te,

but n

o fo

rmal

sc

hool

ing

Scho

ol u

p to

5-9

year

s

SSC

/HSC

Cer

tific

ate

cour

se, b

ut n

ot

grad

uate

Gra

duat

e/Po

st

Gra

duat

e ge

nera

l

Gra

duat

e/Po

st

Gra

duat

ePr

ofes

siona

l

Unskilled Workers E2 E2 E1 D D D DSkilled Workers E2 E1 D C C B2 B2Petty Traders E2 D D C C B2 B2Shop 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 A2A2 A1 A1 A1

Self-Employed Professionals D D D B2 B1 A2 A1Clerical/Salesman D D D C B2 B1 B1Supervisory 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

AnnexureSocio-Economic Classification of urban and rural households: urban grid



85

Education

Type of house

Pucca Semi pucca Kuccha

Illiterate R4 R4 R4

Literate, but no formal school R3 R4 R4

Upto 4th standard R3 R3 R4

5th to 9th standard R3 R3 R4

S.S.C./H.S.C. 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

Source: Market Research Society of India

Annexure … (1/2)

Socio-Economic Classification of urban and rural households: rural grid



86

Year INR equivalent of one US$

2000 46.60

2001 48.30

2002 48.04

2003 45.60

2004 43.70

2005 45.20

2006 45.00

2007 42.00

2008 40.20

2009 46.00

Annexure … (2/2)Exchange rates

Average for the year



87


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HIMACHAL PRADESH - IBEF · Southwest, Jammu and Kashmir to the North, ... Advantage Himachal Pradesh … (2/2) Source: ... Domestic Product