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  Rajasthan
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Rajasthan
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Rajasthan

 

Business Opportunities

 

Key industries

Based on the competitive strengths of Rajasthan, industries and businesses in a wide range of sectors enjoy strong domestic and international position, as well as excellent growth prospects. Some of the key sectors in Rajasthan are agro Industry, cement products, ceramic, food processing, hand tools, tourism & hospitality, handicraft, handmade paper, gems & jewellery, marble, oil industry, stone quarrying and mining & metals.

Cement

Rajasthan has a capacity of over 13 million tonnes production capacity of cement per annum. The state accounts for more than 15 per cent of cement production in India. Rajasthan has more than 2,500 MT reserves of cement grade limestone. The state ranks third in the list of largest cement producing states in India after Madhya Pradesh and Andhra Pradesh.

The cement industry in Rajasthan is witnessing significant growth in recent years. Fresh capacity aggregating over 10 MMTPA is under various stages of implementation. 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.

The key strength of Rajasthan's cement industry is the presence of large limestone reserves, estimated to be over 2.5 billion tonnes. All the large cement producing companies have significant presence in Rajasthan. These include AV Birla Group / Grasim Industries, Gujarat Ambuja Cement and ACC..

Mineral and Mining
Rajasthan is a mineral rich state. The state produces about 25 minerals including calcite, clay, copper ore, dolomite, emeralds, fluoride, garnets, granite, gypsum, marble, phosphate, phosphate, phosphorite, rock, sandstone, silver, zinc. Rajasthan is the second largest mineral producing state in India, accounting for 30 per cent of national production. Rajasthan ranks fifth in terms of value of major mineral production.

The mineral industry is also an important source of revenue for the state government. Rajasthan government earns annual revenue of over USD 100 million as mineral royalty. To facilitate faster exploitation of its mineral wealth, the state government has reduced the royalty rates on several minerals. Prominent mining / metal industries in Rajasthan include Hindustan Zinc, a part of the Vedanta Resource group and Hindustan Copper Ltd, a GoI enterprise. The projects in mining / metal industries in Rajasthan include capacity expansion by Hindustan Zinc, India's largest producer of zinc.

Tourism Industry

Rajasthan has a developed tourism infrastructure, with over 6,000 hotel rooms in more than 150 hotels. Of these, over 1,400 rooms (54 hotels) belong to the heritage category. The state runs the "Palace on Wheels' luxury train, which is a famous attraction for foreign tourists.

Popular tourist destinations in the state include historic cities (Jaipur, Udaipur), wildlife centuries (Sariska, Ranthambore) and desert locations (Jodhpur, Jaisalmer). India has been identified by the World Tourism Organization and World Travel and Tourism Council as a country with high growth potential. Domestic tourism has been growing at over 10 per cent per annum over the last decade. The number of foreign tourists visiting India is expected to grow by over 7 per cent per annum over the next decade.

To provide further fillip to tourism industry in the state, Rajasthan government has reduced the luxury tax applicable to the tourism industry from 10 per cent to 8 per cent.

The Tourism Department has estimated that investment of over US$ 600 million is required in the tourism industry in Rajasthan over the next ten years. It is estimated that the private sector's share of investment can be upto US$ 200 million.

Area Investment upto 2020
(US$ million)
Hotels and restaurants 230
Tourism related transport infrastructure / services 260
Other facilities / services 145
Total 635

Source: Government of Rajasthan

Tourism has a significant multiplier effect on the economy. It is estimated that every rupee spent by a tourist changes hands 13 times, and that every hotel room generates direct employment to three persons and indirect employment to eight persons. In Rajasthan, tourism is the third largest employer after agriculture and textiles sector.

Prominent tourism industry players with strong presence in Rajasthan include The Indian Hotels, ITC-Sheraton, The Oberoi and Holiday Inn.

Gems and jewellery

Jaipur and Jodhpur have emerged as the leading centres for the export of gems and jewellery. Rajasthan contributes substantially to India's total export of cut and polished stones aggregating over US$ 10 billion. Rajasthan is a leader in the coloured stones segment of the gems and jewellery sector.

The key advantage offered by Rajasthan is the availability of skilled personnel. Jaipur has also traditionally been a centre for jewellery making for the domestic market. The industry's competitive position will further strengthen with the setting up on a dedicated Special Economic Zone in Jaipur.

Investment

To facilitate the investment process, Rajasthan has set up an office in New Delhi. The senior officials of state government are available in this office so that the investors need not visit the state for obtaining approvals.

With an objective of accelerating private investment in the state, the state government recently adopted an Investment Policy. The policy provides tax incentives and financial support for industries with high growth and employment generation potential, including tourism and information technology. In the past, Rajasthan has attracted industrial investment in sectors such as minerals & mining, textiles and chemicals. These three sectors represent almost three-quarter of the existing industrial investment in Rajasthan.

Potential hubs for investment

In addition to its present areas of strength, a number of sectors are emerging with substantial potential for private investment and business. The most prominent among them are oil & gas, electricity generation and distribution, IT and IT enabled services and roads & highways..

Oil & gas

The recent discovery of oil & gas reserves in Rajasthan provides a significant business opportunity to establish a number of upstream and downstream businesses in the state. The Scotland-based Cairn Energy has recently announced two discoveries aggregating in place reserves between 580 and 1570 million barrels.

At present, the exploration activity in Rajasthan is limited to the following four blocks.

Basin Block No. Area
(sq. km)
Allotted to
Barmer-Sanchore RJ-ON-90\1 4970 Cairn Energy
Bikaner-Nagaur RJ-ON-90\5 3967 Essar Oil -Polish Oil
& Gas Co.
Shahgarh RJ-ON-6 5390 Phoenix Overseas consortium
Bangewala area RJ-ONJ-94\1 1572 Oil India-PDVSA (Venezuela)

Source: Government of Rajasthan

The area currently under exploration aggregates just 15,899 square km. This represents around 13 per cent of the area in the Rajasthan basin (aggregating around 126,000 square km).

A large part of Rajasthan's geographical area still remains unexplored. It is anticipated that in the upcoming rounds of bidding for exploration rights, the level of interest of global oil & gas majors should substantially increase. This bodes well for the prospects of developing the oil & gas based industry in the state in coming years.

The availability of oil & gas in the state will also provide opportunities for oil refining, gas based power stations, gas distribution (including city gas distribution networks), petrochemicals and other downstream chemicals.

This is expected to complement the existing industrial base of Rajasthan and also enhance the competitiveness of industries located in Rajasthan, with access to cheaper sources of energy and raw materials.

IT and IT enabled services

With the decision of GE Capital Corporation to establish its latest contact centre in Jaipur, Rajasthan is set to emerge as the latest destination for IT and ITES industries.

Jaipur and other cities in the state offer the benefits of qualified talent pool (annual addition of over 11,500 engineers and over 200,000 graduates across the state) and lower costs.The cost of comparable office space is estimated to be upto 20 per cent lower in Jaipur, compared to other IT/ITES destinations such as, say, Gurgaon.

Easy access and availability of ready business infrastructure are some of the added advantages enjoyed by Rajasthan's leading cities. The state government is taking steps to provide a competitive policy framework to potential investors in the sector. A review of the existing IT policy has been announced to attract more IT/ITES organizations to Rajasthan.

Rajasthan has two Software Technology Parks at Jaipur and Jodhpur, established by Government of India. These STPs offer the necessary infrastructure for IT/ITES units, including high speed data communication facilities.

RIICO has also developed IT Parks at Jaipur, Kota, Udaipur and Jodhpur, with proposal to develop new IT park at Bhiwadi (Alwar). These IT parks offer fully developed infrastructure by way of developed plots, continuous power and High speed data communication facilities through Satellite Earth Station, Roads etc.

Incentives available to IT industry in Rajasthan include

  • Land charges rebate upto 60 per cent
  • Exemption from stamp duty for land registration
  • 50 per cent Exemption from electricity duty for 7 years
  • Simplified labour regulations and procedures

Electricity generation and distribution

Rajasthan has over 1.5 billion tonnes of lignite reserves suitable for electricity generation. It is estimated that these reserves can support over 2,000 MW of electricity generation.

With the enactment of new national electricity sector legislation, inter-state supply and trading of electricity has been permitted. Lignite based electricity generation plants in Rajasthan can supply electricity to power deficient markets in north and west India.

Neyveli Lignite Corporation has announced its plans to set up a 250 MW lignite based power generation unit in Barmer district. Rajasthan Vidyut Utpadan Nigam is also setting up a lignite based electricity generation plant in Bikaner district.

Rajasthan is also preparing for introduction of private participation in distribution of electricity. The draft of an enabling legislation for facilitating this process is already under discussion. This move is expected to throw open the electricity market in the state to competitive supply, thus offering significant business opportunities for private companies.

Roads and highways

Rajasthan provides an opportunity for private enterprises to develop and maintain highways, bridges and bypasses. The state has a successful track record in implementing such projects through Build-Operate-Transfer (BOT) approach.

The state government has identified a number of road projects aggregating USD 100 million to be implemented through private sector participation. The recent government announcement to establish a dedicated road fund for financing of road projects is expected to give a fillip to similar projects.

Chemicals

Chemical industry in Rajasthan accounts for 15 per cent of the total investment. Major chemical produced in Rajasthan include fertilizers, caustic soda and pesticides. The principal industrial complexes for chemicals are at Jaipur, Kota, Udaipur and Bhilwara.

With its backward and forward linkages with other industries, the chemical industry plays a significant role in providing the necessary inputs for other key sectors of Rajasthan's economy, particularly textiles.

Prominent players having presence in Rajasthan include DCM Shriram Group, KK Birla Group and Kajaria Ceramics. DCM Shriram Group has recently announced the expansion of its chemical complex at Kota. Other chemical projects under implementation include ceramics plant expansion by Kajaria Ceramics, Glass shell project of Samcor Glass and speciality chemicals plant of SRF Ltd.

 

Content Source: www.ibef.org

 
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