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.
Cement
Rajasthan is the largest producer of cement in India. With a capacity of over 13 million tonnes per annum, Rajasthan accounts for over 15% of India's cement production.
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 producer companies have significant presence in
Rajasthan. These include AV Birla Group / Grasim Industries, Gujarat Ambuja
Cement and ACC.
The proposed projects in cement industry include the
following:
| Company / Location |
Investment (US$ million) |
| Grasim Industries / Kotputli |
75 |
| Shree Cement / Pali |
100 |
| Gujarat Ambuja Cement / Nagaur |
75 |
Source: Government of Rajasthan
Mining and metals
Rajasthan is the second largest mineral producing state in India. It has a
share of over 90 per cent in minerals such as zinc ore, copper ore, gypsum,
phosphorite, asbestos, rock phosphate, calcite and dolomite.
The following table shows Rajasthan's position in terms of reserves and
annual production of key minerals.
| Mineral |
Proven reserves
(million tonnes)
|
Production
(million tonnes)
|
| Rajasthan |
India |
Rajasthan |
India |
| Copper ore |
35 |
185 |
0.98 |
3.50 |
| Lead & Zinc ore |
75 |
89 |
2.64 |
2.74 |
| Gypsum |
70 |
89 |
2.86 |
2.89 |
| Limestone |
1,990 |
21,861 |
21.19 |
129.77 |
| Rock phosphate |
60 |
89 |
1.18 |
1.29 |
Source:
Indian Bureau of Mines, Reserves as on 2000, Production in
2001-02
Rajasthan is the largest producer of non-ferrous metals such as copper and
zinc in India. It accounts for 40 per cent of India's copper production, 100 per
cent of the zinc production and 85% of lead production.
In 2001-02, the total production of these metals in Rajasthan was as follows.
| Metal |
Production (Tonne |
| Copper concentrate |
63,865 |
| Zinc concentrate |
398,600 |
| Lead concentrate |
44,230 |
The mineral industry is also an important source of revenue for the state
government. Rajasthan government earns annual revenue of over US$ 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.
TourismIn 2002, Rajasthan attracted over 620,000 foreign and over 7 million domestic
tourists. Rajasthan's share in India's foreign and domestic tourist arrivals
stands at 11.2 per cent and 3.3 per cent respectively. (Source: Department of
Tourism, Government of India)
Popular tourist destinations in the state include historic cities (Jaipur,
Udaipur), wildlife centuries (Sariska, Ranthambore) and desert locations
(Jodhpur, Jaisalmer).
Rajasthan has a developed tourism infrastructure, with over 6,000 hotel rooms
spread over more than 150 hotels. Of these, over 1,400 rooms (54 hotels) belong
to the heritage category.
Rajasthan also runs the "Palace on Wheels' luxury train, which is well known
attraction for foreign tourists.
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 jewelleryJaipur 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.
TextilesTextile is an important industry for Rajasthan, representing over 20 per cent
of the investment made in the state.
Rajasthan contributes over 7.5 per cent of India's production of cotton and
blended yarn (235,000 tonnes in 2002-03) and over 5 per cent of fabrics (60
million sq meters).
The key factor responsible for development of textile industry in Rajasthan
is availability of cotton and wool in the state. Production of cotton in
Rajasthan has, however, declined from over 1.4 million bales in 1996-97 (approx.
10 per cent of India's production) to 0.7 million bales 2003-04.
Wool production in Rajasthan has grown from 16 million kg in 1992-93 to
around 20 million kg currently, representing over 40 per cent of India's wool
production.
Abundant availability of this key raw material has prompted many textile
units to locate in the state. With a network of backward and forward linkage,
Rajasthan's textile industry offers significant competitive advantage to the
industry.
Availability of trained labour is another factor contributing to the success
of the industry in the state.
Prominent players in the textile industry with presence in Rajasthan include
Rajasthan Spinning &Weaving Mills, JK Synthetics, Nahar International and
BSL Group.
ChemicalsChemical 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.
Exports
Between 1994 and 2002, exports from Rajasthan have more than doubled from US$
450 million to over US$ 960 million.
The main components of Rajasthan's exports include textiles, gems &
jewellery, agro & food products and handicrafts.
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.
As on 2003, investment projects totalling over US$ 6 billion were in
different stages of implementation. A sector-wise breakdown of these projects
indicates a wide distribution of investment across infrastructure,
manufacturing, mining and services.
Within manufacturing, key sectors include cement, metals, chemicals and
electronics. Among services, transport and construction have the dominant share
of investment
Foreign Direct InvestmentBetween 1996 and 2003,
Rajasthan attracted over US$ 670 million of foreign direct investment. Rajasthan
stands 12th among the Indian states. Its share in India's total FDI in 2002
stood at 3.2 per cent.
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 & gasThe 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 highwaysRajasthan 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 US$
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.
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