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The recent liberalisation of the country's economy has pitch-forked Punjab
into the mainstream of global business. Punjab's inherent strengths and efforts
to attract private investment make it a land of opportunities. Its rich
agricultural base has the potential to add significant value to the food
processing sector. Commercial agriculture can also assist the state leverage its
competitive advantage in the sector.
Similarly, the existing industrial base of the state can be encouraged to go
in for forward integration in a variety of sectors such as textiles, light
engineering goods, IT, chemicals and biotechnology.
Key industries
Agro processing
Punjab is the second largest producer of wheat contributing 21.5 per cent to
the total production in the country. In 2002-03, Punjab produced 14.5 million
tonnes of wheat. It is also the fourth largest producer of rice in the country,
contributing 9 per cent to the total production. In 2002-03, Punjab produced 8
million tonnes of rice.
The annual production of food products in Punjab stood at US$ 1.95 billion in
2001-02. Between 1990-91 and 2001 -02, the same increased by over 300 per cent.
Punjab's share in India's output of food products stands at 3 per cent. The
statistics clearly indicate a potential for further developing the state's agro
processing industry.
The Government of Punjab has introduced policies to modernise agriculture
infrastructure in the state and promote agro-based industries. An outlay of US$
4.4 million has been assigned to improve agriculture infrastructure and set up a
cold chain infrastructure.
Source: Annual Survey of Industries, 2002-03
Recently the Government permitted contract farming on 20,000 hectares for
basmati rice and 80,000 hectares for wheat. This includes agreements with private
sector companies like the Tata Group and the UB Group for contract farming of
basmati rice and barley respectively.
Prominent players present in the agro processing industry in Punjab are Pepsi
Foods and Nestle. Germany-based Metro Cash and Carry International have also
signed a Memorandum of Understanding (MoU) with the Punjab Agro Industries
Corporation for identifying and sourcing food products from the state.
Textiles, hosiery and woollensPunjab’s key competitive advantage in the textile industry is the abundance
of raw material (cotton), presence of several textile and woollen clusters and
skilled labour. Punjab has a US$ 2.34 billion textile industry. It is the
second largest producer of cotton and blended yarn contributing 10 per cent to
the country's total industrial output in 2003-04.The production of cotton and
blended yarn in the state stood at 280,000 tonnes in the same year. Punjab is
the third largest producer of mill made fabrics in the country with a share of
8.1 per cent. In 2003-04, production of mill made fabric increased by 21 per
cent over the previous year to 82.6 million sq mt. 40 per cent of the country's
wool units are also located in Punjab.
With the global trade in textile and clothing expected to grow from the
current US$ 356 billion to US$ 600 billion by 2010, the state has seen a spurt
of capacity enhancements and some ambitious scale ups in anticipation of the
quota-free regime. Clearly, Punjab has an opportunity to boost its existing
strengths to capture a larger share of the textile market.
Light engineering goods
Light engineering goods, which include bicycle and bicycle parts, tractors,
auto components and hand tool industries, is another key area of strength for
Punjab.
Punjab produces 1.8 million bicycles per annum, accounting for 15 per cent of
the total bicycle production in the country, which stood at 12.3 million
bicycles in 2003-04.
Punjab also holds an 80 per cent share in India's production of bicycle
parts. India produced 48 million bicycle tubes and 50 million bicycle tyres in
2003-04.Two of the country's main bicycle producers, Avon and Hero Group, are
based in Punjab. Punjab has a share of 7 per cent in the total tractor
production in the country, which stood at 177,834 units in 2003-04.The two major
tractor manufacturers in the state are Punjab Tractors Ltd and International
Tractors.
Exports
Between 1995 and 2003, exports from
Punjab increased from US$ 463 million to
over US$ 1,588 million. These largely
constituted yarn and textiles, apparels,
cycles and cycle parts, rice,
engineering goods and food products. In
the first half of 2004-05, exports stood
at US$ 1,175.74 million.
Source: Punjab Statistical Abstract 2003
Source: Punjab Statistical Abstract 2003
Investment
Punjab has attracted industrial investment in sectors such as food & food
products, textiles and apparel, chemicals and chemical products and transport
equipment.
Uptil 2003, there were 633 industrial enterprises in Punjab with investment
of over US$ 3.9 billion. In 2003-04, an additional 14 projects were implemented
with an investment of US$ 15.2 million.
Source: CMIE, state report
In 2004, there were 62 projects with a total investment of over US$ 2.87
billion at various stages of implementation in the state. Of these, the
manufacturing segment, which includes textiles and chemicals, attracted the
maximum investment.
Source: Secretariat for Industrial Assistance reports
Source: Secretariat for Industrial Assistance newsletter, Annual
Issue 2002
Between 1996 and 2003, Punjab attracted US$ 370 million of FDI in sectors
like textiles, paper, paper products and pulp, chemicals other than fertilisers,
telecommunications, drugs and pharmaceuticals.
Potential hubs for investment
Agri business
Punjab has tremendous opportunity for the agro-based industry. With 4.2
million hectares of sown area, 186 per cent cropping intensity and 100 per cent
assured irrigation, Punjab is the granary of India. Apart from food grains, the
state also has large quantity of fruits and vegetables available for processing.
IT and electronicsIs expected to employ four million people
accounting for 7 per cent of the country's GDP and 30 per cent of its foreign
exchange inflows.
Punjab possesses distinct competitive advantages that should
facilitate further development of the IT sector in the state. These include:
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Persistent efforts by the Government to implement IT at all levels
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A large number of engineering colleges and other educational
institutions to create high-tech manpower resources
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Development of IT parks to encourage software exports from the
state
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Punjab Infotech has developed Mohali as a hub
for
electronics and IT in the state
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Incentives for electronics units
Of the 192 software export units registered, 20 started operations in
2003-04. Software exports through the Software Technology Park in Mohali
increased from US$ 22.4 million in 2002-03 to US$ 37.8 million in 2003-04.
IT companies based in Mohali include Quark Inc, Dell and
Infosys. Others to have evinced interest in setting up facilities at Mohali
include IBM, Intel, Samsung, TCS, I-Flex, Satyam and Wipro.
InfrastructurePunjab offers significant opportunities for
infrastructure development through public private partnership. The state has
been investing steadily in improving its roads. In 2003, Punjab Infrastructure
Development Board (PIDB) spent US$ 71 million to upgrade 65 km of roads and
opened three high-level bridges.
The PIDB has taken up over a dozen road and bridge projects and will be
investing over US$ 100 million in the same. In addition, it is also supporting
the road upgradation programme of the Public Works Department with
an investment of US$ 33 million. It is in the process of selecting private
partners for road stretches, aggregating 900 km.
The Government decided to invest US$ 10 million to reconstruct and modernise
bus terminals at Amritsar, Jalandhar and Ludhiana through private sector
participation. The projects are to be implemented on a Build-Operate-Transfer (BOT)
basis.
BiotechnologyPunjab's strong agricultural base presents an opportunity for leveraging it
to develop the biotechnology industry in the state. The Government of Punjab has
taken significant initiatives to promote biotechnology related R&D in the
state.
Two centres which form the nucleus of the biotech research in the region are
the Institute for Microbial Technology (IMTECH) in Chandigarh which takes up
research in microbial bio-processing and the Central same. In addition, it is
also supporting the Scientific and Industrial Organisation (CSIO) which has been
developing a number of biotech based diagnostic kits.
The state is developing a biotechnology park in the suburbs of Chandigarh to
nurture commercially viable leads through companies. The park, a public-private
partership between Beckons Industries Ltd and Punjab State Council for Science
and Technology, is being set up at an estimated cost of US$ 22 million. Its
facilities will include a biotech incubator for research and development, pilot
testing and other validation facilities. The park aims to attract Small and
Medium Enterprises (SMEs) to the cluster and contribute to overall R&D in
the sector.
The Punjab State Council for Science and Technology will act as the single
window agency for setting up business in the biotech park. Major players to have
shown an interest in the park include Ranbaxy, Dr Morepen, Panacea Biotech,
among others.
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