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There are several factors that affect evolution of an industry in a region. Some of the major factors are:
The policy that a state government adopts
towards a sector directly affects its attractiveness for further investment.
For example, the State Government has given many concessions for the
establishment of industries. This has prompted many industry players to
establish their manufacturing facilities in the state.
Availability of natural resources: Certain industries like agro-based
industries have a high dependence on the availability of natural resources. The
availability of high quality limestone spurred the growth of the cement
industry in the state.
Capability: Availability of good quality manpower is essential for
industries to flourish. High literacy rates and good quality workforce are
added assets for the state.
Based on an assessment of the above factors, some of the industries with
potential for investment and growth in the state are illustrated below:
This is a qualitative assessment to highlight relative attractiveness of
different sectors.
A case by case analysis is necessary before investment is made.
Source: KPMG analysis
Key industries
Agro-basedThe diverse agro-climatic conditions and fertile soil enable the growth of horticulture produce in the state. Himachal Pradesh recorded a total fruit production of 0.56 million tonnes in 2003-04.
Apple, the dominant fruit crop, constitutes about 42 per cent of the total
area under fruit crops and 84 per cent of the total fruit production in the
state. Other fruit crops include mango and litchi. Vegetable production
in the state increased from 25,000 tonnes in 1951-52 to 731,000 tonnes in
2003-04. Animal husbandry and dairy are key contributors to the state's income.
Source: www.indiastat.com
A network of rivers, reservoirs, natural lakes and ponds facilitates the
growth of aquaculture in the state. In 2003-04, cumulative fish production stood
at 6,465 tonnes and was worth US$ 6.5 million.
TourismTourism is one of the most important sectors in the state. The major
attractions include tribal areas, pilgrim centres, mountaineering and winter
sports.
The state has more than 2,000 temples attracting thousands of devotees from
all over the country.
Source: www.indiastat.com
The state ranks second in total tourism projects sanctioned during 2001-2004
in the country. The state ranks fifth in domestic tourist visits. It enjoyed a
14 per cent growth in tourist visits against the national average of 6 per cent
in 2001.
Source: www.indiastat.com
Mineral-based
Minerals constitute a fundamental component of the state’s economic base. The
state has considerable mineral resources including rock salt, limestone, gypsum,
silica-sand and baryte. The high availability of quality limestone, a key raw
material has made the cement industry flourish. Many domestic companies and MNCs
have established their manufacturing facilities in the state.
The cement plants of ACC and Ambuja Cements have a total capacity of over 4
million tonnes with plans of future expansion. Jai Prakash Associates plans to
set up a unit with an investment of US$ 1 10 million. Besides these, there are
many other mineral-based units like stone crushing, calcium carbonate units,
hydrated lime units etc.
PharmaceuticalsPharmaceutical units set up in the state enjoy an income tax holiday for five
years till 2007 and a concessional rate of income tax for the next five
years. The cost of production is also considerably lower. It is becoming a hub
for pharmaceuticals manufacturing, with over 300 pharmaceutical firms.
With a proactive policy of the Government, the state has managed to attract
significant investment in the recent past. The investment, particularly from the
pharmaceuticals sector has been impressive, clearly vindicating the special
incentives policy pursued by the Government. The Government plans to introduce a
special package of incentives exclusively for the pharmaceuticals sector by
2007.
Ranbaxy, Torrent, Indoco Pharma, Nectar Life Sciences, Indo-Swift Pharma, Dr
Reddy's Laboratories and Cipla are some of the pharmaceutical companies that
have manufacturing facilities in the state. UniChem plans to invest over US$ 8.7
million in its third formulation manufacturing facility. Indoco plans a
formulation facility and Pulse Pharma plans its second plant for therapeutic
nutrition in Baddi. Torrent and Zydus.
Cadila are also planning to set up formulation facilities in Baddi.
TextilesIn addition to handloom and handicrafts, sericulture is one of the key
cottage industries in the state. In 2003-04, 1 14,000 kg reeling cocoons
were produced. There are about 50,000 handloom units primarily based on
wool. The main products of the textile industry in the state are shawls, tweeds
& blankets, woollen carpets, traditional dresses and other handicrafts.
The Baddi-Barotiwala-Nalagrah belt in Solan district near Chandigarh is fast
emerging as a textile belt. The valley has a dozen units with a total capacity
of about 600,000 spindles. Another five units with an additional capacity of 200,000
spindles are in the pipeline.
Exports
The total exports from the registered industries in the state stood at US$ 72
million approximately in 2002. With a strong traditional industry base,
the state is a large exporter of textiles that contributes around 65 per cent to
its total exports. The chemicals exports rank second in the state.
Source: CMIE Prowess Database; size of the circle is indicative
of the size of the exports Machinery
Investment*
The aggressive policy pursued by the State Government to attract investment
has paid off. Several MNCs from various sectors have set up their facilities in
the state. Spice Communications, India and TCL Mobiles, China have initiated the
process of setting up a manufacturing facility for mobile handsets in the state.
Besides catering to the domestic market the facility would also export to the
Middle East and South African countries.
Source: Projects Today
The state enjoyed a good investment climate in the recent past. Many projects
in the power sector are in the pipeline, constituting about 99 per cent of the
total proposed projects in the state.
MG Rover, UK has signed a joint venture to set up a manufacturing facility at
Baddi with an investment of US$ 45 million and production capacity of 24,000
units. Compact International plans to shift its cosmetic products manufacturing
facility from Noida to Baddi. FMCG majors such as Johnson and Johnson and
Hindustan Lever as well as other corporate majors like Titan are also in the
process of setting up manufacturing facilities in the state.
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