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Investment Opportunities in Bihar

19th Oct. 2007

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CHALLENGES

Development of Bihar has been a matter of concern since independence.

Low Human Development Indices.

Problem areas are:-Stagnant Economic GrowthPersistent PovertyComplex Social StratificationVery poor infrastructure

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Declining level of investment in Bihar has led to low growth performance.Bihar ranks very low in industrial investment proposals. (0.32% for the period May 2006 with reference to IEMS filed)In Statewise IEMS implemented also Bihar ranks very low. (0.11%).In generating employments also Bihar’s position is low.In FDI flows for the period 2000-05, among states, Bihar’s percentage is zero. Absence of new projects, major reason for lack of impact in creation of sizeable fresh employment.

(Source:www.siadipp.nic.in)

BIHAR INDUSTRY:A RELATIVE ANALYSIS

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RESOURCE MAPPING OF BIHARStudy conducted to provide : -

Linkage for farm & non farm produce with industry for imparting rural masses and artisans;For aiding value to the primary produce; Identification of major resources and facilitating in bringing in anchor industries;Creation of core infrastructure;Adoption of pragmatic policy Promotion of rural business hubs.

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Agriculture & Horticulture.

Animal husbandry & allied sectors.

Handicrafts.

Handloom.

Chemicals.

Tourism.

IDENTIFIED SECTORS

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IMPORTANT FACTORS FOR STIMULATION OF PRIVATE SECTOR INVESTMENT

Safe & Congenial Environment

Improvement in Infrastructure both Physical & Social.

Reform measures

Good governance.

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SAFE & CONGENIAL ENVIRONMENTLaw & order situation vastly improved.

Conviction rate gone up.

Special Auxiliary Police Force created.

Police infrastructure being strengthened.

Close coordination between judiciary & executive for speedy trial.

More than 30% of the old closed units have initiated action for restarting the operation.

Increased investment & employment per unit in the last two years, compared to previous years.

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SAFE & CONGENIAL ENVIRONMENT

101 investment proposals cleared by the State Investment Promotion Board.

Investment involved more than Rs.38,078cr.

Direct employment is nearly 94,280.

Institutional structure being strengthened for skill up-gradation.

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“RECENT REFORMS GIVE A RAY OF HOPE TO BIHAR”

“A slew of fiscal & legislative reforms implemented.”

Silent transformation is taking place.

First state to abolish Agriculture Product Marketing Control Act.

Urban Land Ceiling Act repealed.

Model Municipal Act adopted, 2007.

Bihar Apartment Ownership Act, 2006 adopted.

Implementing Comprehensive Flood Management Information System to support flood control and management through early warning & emergency response system.

(Source : The World Bank in India, Sept.07)

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OTHER IMPORTANT REFORM MEASURES

VAT implementation.

FRBM Act enacted.

New pension scheme introduced.

Economic survey published for the first time.

Full budget presented & passed.

Tax rate rationalised.

Action on the Administrative Reforms Commission’s report.

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Concrete action to stimulate private investment–

Single Window Clearance Act, 2006

Creation of State Investment Promotion Board.

Passing of Infrastructure Development (Enabling) Act, 2006.

The Bihar Sugarcane (Regulation of supply & Purchase) Act, 1981amended is awaiting presidential ascent.

Industrial Promotion Policy, 2006.

RECENT INITIATIVES

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Policy for setting up Higher Technical Institutions.

Initiatives in PSU reforms.

State Sugarcane Corporation is under revival through privatisation.

Leather sector is under revamp process – CLRI and CLE assistance to attract private sector in Bihar for setting up leather units.

Footwear Design & Development Institute to set up a branch in Bihar.

Recent Initiatives

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Central Institute of Plastic Engineering and Technology (CIPET) has started M.Tech Course.

CIPET to establish three branches in Purnia, Bhagalpur and Chapra.

Tool Room to be set up in Patna.

Mini Tool Rooms to be set up in Bhagalpur, Biharsharif and Chapra.

National Institute of Fashion Technology to be set up a centre at Patna.

MEASURES FOR INSTITUTIONAL STRENGTHING

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National Institute of Pharmaceutical Education & Research (NIPER) to be opened in Hajipur, Bihar.

Centres of excellence for skill up-gradation through ITIs

FICCI to create more such centres in Bihar through private sector efforts.

CIDC branch to be established in Patna.

CIDC to help in training and in up gradation of manuals.

MEASURES FOR INSTITUTIONAL STRENGTHING

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GOOD GOVERNANCEQuick grienvance redressal system in place.Access to informationSteps taken to implement Right to Information Act.Janta Ke Darbar Me Mukhya Mantri. E-governance measures.More intensive use of information technology.‘Aapki Sarkar Aapke Dwar’ scheme for Naxalaffected areas.Higher plan outlay and expenditure.Total investment during the 11th Plan to go up to 1,67,000 cr.

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Promotion of PRIs and women SHGs for increasing the community participation in service delivery system.

Increased growth targets for plan.

GOOD GOVERNANCE

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HIGHER TECHNICAL INSTITUTIONS

19 proposals have been cleared, which

include 3 Medical college cum Super

Speciality Hospital, Engineering Colleges,

Management Institutes. Communication

Institutes and Entrepreneurs Training

Institute.

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OTHER IMPORTANT PROPOSALS

2 LPG Bottling Plants are being set up at Muzaffarpur and Bhagalpur with capacity of 22 TMT and investment of about Rs.40.00 crore each.Bokaro Steel Ltd. Is setting up CRM at Hajipur and rods & wires unit at Bettiah at an estimated cost of 300 cr. & 160 cr. respectively.

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PROJECTS UNDER FOOD PROCESSING

Total project cost - Rs.1,670 croreTotal period - 5 yearsIL&FS appointed as Project Management Agency.In the first phase, Integrated Food Zone, Rural Agri Business Centre/Primary Processing Centre, Air Cargo Complex, Quality Assurance Centre with R & D facilities and development of rice mills cluster will be taken up.

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HANDLOOM PROJECTS

Total Project cost around Rs.68 crore

Project duration – 2 years

IL&FS appointed as a Project Management Agency.

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Salient features of the projectTextile ParkHandloom ParkPrivatisation of 3 cooperative spinning mills and dyeing and processing plants.Up gradation of training institutions.Designing and product development.Handloom sector project would generate atleast 50,000 direct employment in the State.

HANDLOOM PROJECTS

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ETHANOL PLANTS4 Ethanol plants from Maize at Hajipur, Begusarai, Khagaria and Bhagalpur.

10 plants for Ethanol from Sugarcane juice at Araria, Katihar, Bhagalpur, Jamui, Munger, Nalanda Aurangabad, Rohtas and Buxar.

The total investment is around 4.00 billion USD.

The firms has signed up the non disclosure and other legal agreements.

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REVIVAL OF THE CLOSED UNITS OF THE SUGAR CORPORATION LTD.

SBI Caps have submitted the diagnostic study report.

Only 8 out of 17 units are viable for revival.

In other cases, sale of assets for other industrial purposes is suggested.

Cabinet approval taken.

NIT to be published.

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ASSETS

Total Assets

Land (3387.08 Acres.) 364.90 cr.

Plant & Machinery 52.84 cr.

Scrap 38.16 cr.

Total 455.90 cr.

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AREAS OF OPPORTUNITY FOR RIL

Sugarcane

Skill Centres

Bio Fuels

Solar Energy / Renewal Energy

Fertilizer Complex / Gas Based Power Project

City Gas Supply

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SUGARCANE

15 sugarcane units & 2 distillery units of the Sugar Corporation Ltd. are being put on sale.

The required reserve areas / villages for sugarcane supply are already available.

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SugarcaneThe Bihar Sugarcane (Regulation of supply & Purchase) Act, 1981amended: -

promoting production of Ethanol directly from sugarcane juice and for co-generation.

No liability of the corporation will devolve on the purchaser.

Plant & Machinery and land assets would be transfer on lease basis.

Successful bidder has to deposit the total amount in 2 years.

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SKILL CENTRES

Selected ITIs are to be handed over to private sector for up-gradation and for skill up-gradation and management.

FICCI is to set up Centres of Excellence.

With the large requirement of manpower, skill centres / Centres of Excellence can be set up by RIL.

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BIO - FUEL

With the availability of large reserve areas, bio-fuel production can be taken up to meet the requirements of Ethanol for blending purpose with petrol and for Bio-Diesel.

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SOLAR ENERGY / RENEWABLE ENERGY

With the proposed increase in coverage in sugarcane areas from 2.3 lakh hec. To 15 lakh hec. for meeting the energy requirement for irrigation. Solar energy / renewable energy sources (co-generation) would be another possibility for investment.

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FERTILIZER COMPLEX / GAS BASED POWER PROJECT

State is buying power from NTPC.

With the large demand for power, there is a need to set up power plants in private sector.

With the proposed gas pipeline from the Krishna-Godawari Basin to the west cost, there is a possibility of setting up a large Fertilizer Complex and also a gas based power plant in Bihar in Aurangabad/ Gaya/ Barauni.

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PETROCHEMICAL COMPLEX / CHEMICAL HUB

With the production of Ethanol from sugarcane, petrochemical complex is also possible with Ethylene feed stock to be made from Ethanol.

Government of India planning to set up a Chemical Hub in Barauni.

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CITY GAS SUPPLY

Large scope for covering urban areas such

as Patna, Gaya, Muzaffarpur, Bhagalpur &

Barauni for City Gas Supply.

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