Business Opportunities

Key Industries

The economy of Madhya Pradesh is largely natural resource driven, leveraging the state’s advantage in agriculture and mineral resources.The key industries and sectors where Madhya Pradesh has competitive strength include cement, textiles, mining and food-processing.

Cement
Cement production in Madhya Pradesh reached 15.1 million metric tonnes during 2003-04, accounting for 13 per cent of the national production. There are seven major cement plants in the state.

The cement industry in the country has seen significant growth in recent years.With the domestic demand for cement expected to grow at 8-9 per cent annually, cement production in India is projected to reach 160 million tonnes by 2007. Madhya Pradesh’s key strength in cement industry is the presence of large limestone reserves, estimated to be over 2 billion tonnes.

Prominent cement companies present in the state include ACC, Grasim Industries, Jaiprakash Associates, Century Textiles and Mysore Cements.

Jaiprakash Associates is expanding the capacity of its plant at Reva from 4.2 MTPA to 6.5 MTPA with an investment of US$ 35 million. While Century Textiles is expanding its capacity at Satna by 0.8 MTPA.

Textiles
Madhya Pradesh produces 157,000 tonnes of spun yarn representing 6 per cent of India’s total production and 38.6 million sq mt of fabric (mill made) accounting for 4 per cent of all India production.

The state’s key competitive advantage in the textile industry is the availability of raw material (cotton) and a skilled workforce. In 2002, the state produced 390,000 bales of cotton, representing 4 per cent of India’s cotton production.The production of cloth stood at 52 million metres in 2002-03.

The phasing out of export quota is expected to provide a fillip to India’s textile industry.With the global trade in textile and clothing expected to grow from US$ 356 billion at present to US$ 600 billion by 2010, Madhya Pradesh has an opportunity to leverage its existing strengths and capture a larger share of textile market.

The state government is taking steps to strengthen the textile industry in the state by formulating a special package for the textile industry in the Industrial Policy.The package includes establishing apparel parks and garment complexes in Indore and Jabalpur, and setting up an Apparel Training Institute and a national level institute of fashion technology.

Mahavir Spinning Mills plans to invest US$ 160 million in an integrated textile unit near Bhopal. The unit is to be developed in two phases in a span of five years.The unit will produce 50 million metric tonnes of processed fabric.

Mining
Madhya Pradesh is endowed with significant mineral resources.With 604,000 carats of proven diamond reserves it accounts for 99 per cent of India’s total reserves. It is the sole producer of diamonds in the country.

It also leads the country in the production of copper ore, slate, pyrophillite, diaspore, and is second in production of rock phosphate, clay and laterite.

The state has the country’s largest open cast copper mine at Balaghat and the thickest coal seam of Asia at Singrauli coalfield in Sidhi district.

The mining and quarrying sector contributed to 4.5 per cent of the state’s GSDP (at current prices) in 2002-03

Madhya Pradesh - Production of key minerals, 2003-04

Source: Review of Madhya Pradesh Economy, CMIE,August 2004

To facilitate faster exploitation of its mineral wealth and promote mineral based industries, the state government has formulated a Mining Policy which provides the framework for granting mining rights to private investors.

Prominent mining organisations operating in the state include the National Mineral Development Corporation, Coal India and Hindustan Copper Ltd.

Edible oils
Madhya Pradesh is among the leading producers of edible oils in India and the largest producer of oilseeds among the states. In 2002-03, the state produced 3 million tonnes of oilseeds, representing over 20 per cent of India’s production.

The state government has taken steps to facilitate further development of the food processing industry in the state.These include setting up Food Parks with private investment.At present, six Food Parks are under implementation in various parts of the state.

Prominent investors in Madhya Pradesh’s edible oil industry are Ruchi Soya, MP Glychem and Vippi Industries. Ruchi Soya is expanding the capacity of its edible oil refinery at Indore from 600 tonnes per day to 1,000 tonnes per day. Prosoya Foods, a subsidiary of ProSoya Inc. Canada has set up a soya milk extraction plant in Madhya Pradesh.

Exports

Exports from Madhya mainly comprise agro-products such as soyabean extraction, minerals, textiles, leather and cement.

Source: Government of Madhya Pradesh, 2002-03

Investment

Over the years, Madhya Pradesh has attracted industrial investment in sectors such as non-metallic minerals, textiles, food products and chemicals.These four sectors represent almost half of the existing industrial investment in Madhya Pradesh.

Source: Annual Survey of Industries, 2002-03

In 2004, investment projects totalling over US$ 17 billion were in different stages of implementation in the state.A sector-wise breakup of these projects indicates a wide distribution of investment across infrastructure, manufacturing, mining and services.

Source: Projects Today database, June 2004

Within manufacturing, key sectors include chemicals, machinery, transport equipment, non-metallic mineral products, metals and rubber.Among services, transport and community services including hospitals and tourism have the dominant share of investment.

Foreign Direct Investment
Between 1996 and 2003, Madhya Pradesh attracted over US$ 1,800 million of foreign direct investment.

Source: SIA reports

The key sectors attracting FDI in the state are fuels, metallurgical industries, textiles, among others.

Source: SIA newsletter, Annual Issue 2002

Potential Hubs for Investment

As a result of the state’s aggressive incentive policies, a number of sectors are emerging with substantial potential for private investment and business.The most prominent among them are automobiles and auto ancillary products and pharmaceutical sectors.

Automobiles & auto components
Madhya Pradesh’s location at the centre of India has led to its emergence as an important destination for automobile and auto component industry. The industrial belt around Indore has production facilities for a number of automobile manufacturers. A network of vendors supplying auto components to these plants is being established.

While Madhya Pradesh’s current share in India’s total automobile sector output is relatively small, it is expected to witness a significant increase. The projected growth rate for Indian automobile market is over 10 per cent per annum; this presents significant opportunity to the state. Prominent automobile and auto component players present in Madhya Pradesh are Kinetic Motors, Eicher Motors, Bajaj Tempo and Hindustan Motors.

Some investment in the pipeline in this sector are Baja Tempo’s plans to invest US$ 80 million to manufacture heavy and light commercial trucks in technical collaboration with Maschinenfabrik Augsburg-Nurnberg (MAN) of Germany at Pithampur; Kinetic Motors new production line for manufacturing the Italjet range of scooters at Pithampur and Hindustan Motors plan to invest around US$ 16 million over a period of four years to manufacture and supply automobile engines and transmission units to Ford India.

Pharmaceuticals
By leveraging the existing manufacturing base, along with a low cost resource pool Madhya Pradesh has a potential to further develop the pharmaceutical industry in the state.

Ranbaxy, India’s leading pharmaceuticals company, has a bulk drug and formulation plant at Dewas in Madhya Pradesh. IPCA Laboratories plans to invest US$ 22 million to expand its formulations capacity at Ratlam and invest US$ 14 million to set up a new export oriented formulations unit in Indore. The plant will come up in the SEZ and will be built according to USFDA specifications. Nicolas Piramal is investing US$ 7 million to invest in its opthalmology products facility at Pithampur. Biofill Pharma plans to invest US$ 25 million in Pithampur and Lupin Laboratories is expanding its manufacturing plant at Mandideep with an investment of US$ 4.5 million. Potential Hubs for Investment

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