INDIAN STATES Economy and Business Madhya Pradesh

INDIAN STATESEconomy and Business

Madhya Pradesh

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INDIAN STATESEconomy and Business

Madhya Pradesh

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CONTENTS

Executive Summary 5

Economic Snapshot 7

The State Economy 9

Infrastructure 10Social infrastructure 10Access infrastructure 10Communications infrastructure 12Industrial infrastructure 12

State Policy 13Industrial policy 13IT policy 13Tourism policy 14Biotech policy 14SEZ policy 14Infrastructure policy 14

Business Opportunities 16Key industries 16Exports 17Investment 17Potential hubs for investment 19

Key Players 20

Doing Business in Madhya Pradesh 23Indicative list of approvals and clearances 23Cost of setting up business 24Contact for information 24

A report by PricewaterhouseCoopers Pvt Ltd for IBEF

MADHYA PRADESH PAGE 5

Executive Summary

companies are investing in establishing/expanding their production base in the state.

The cost of basic infrastructure and skilled manpoweris relatively low in Madhya Pradesh.The state offersone of the lowest ratios of labour cost to sales ratioin the country.

The state government has developed a greenfieldSpecial Economic Zone at Indore. It has alsosuccessfully leveraged private investment in transportinfrastructure.The state government has been takingsteps to strengthen and reinforce a conduciveinvestment climate for potential investors throughprogressive policies, simplification of procedures andinvestment incentives.

Madhya Pradesh, in its present form, came intoexistence on November 1, 2000, following itsbifurcation to create the new state of Chhattisgarh.With a Net State Domestic Product of US$ 9.8 billion, Madhya Pradesh is the ninth largeststate economy in India.The state’s central locationgives it the unique advantage of being the hub in India’s national logistics network.

Key industry sectors in Madhya Pradesh are cement,textiles, mining and edible oils.The state is one of the largest producers of cement in the country and a leading producer of edible oils.

Industries with potential for significant developmentin the state are automobiles and pharmaceuticals.A number of automobile and pharmaceutical

Industrial Centres in Madhya Pradesh


An Economic Snapshot

Capital Bhopal

Area (sq km) 308,000

Population (2001) 60.3 million

Literacy rate (%) 64.1

Human Development Index 0.394 (All India rank 12th)

NSDP (US$ billion) 9.8

NSDP growth (%) (10 years) 2.6

Per capita income (US$) 254

Exports (US$ million) 667

National highways length (km) 4,664

Rail length (km) 5,992

Domestic airport Bhopal, Indore

Key industries CementTextilesMineralsEdible oil

Industries with growth potential AutomobilesPharmaceuticals

Advantage Madhya Pradesh

n Leading producer of cement, textiles and edible oils

n First state to develop a greenfield Special Economic Zone

n Track record of attracting private investment in transport infrastructure

n Potential for developing automobile and pharmaceutical industries

n Relatively low cost of labour and infrastructure

n Rapid improvement in social development indices

During the past decade (1993-2003), the share of agriculture in Madhya Pradesh’s economy reducedfrom 46 per cent to 24 per cent. In the same period,the share of industry and services increased by 7 per cent and 5 per cent respectively,indicating a positive trend in the state’s economicdevelopment.


The State Economy

Between 1994 and 2003, the compounded annualgrowth rate of bifurcated Madhya Pradesh’s realNSDP was 2.6 per cent, increasing from US$ 7.5billion to US$ 9.8 billion.

During 1993-94 to 2002-03 Madhya Pradesh’seconomy grew at average annual growth rate of 3.7per cent. In 2002-03, Madhya Pradesh’s per capitaincome stood at US$ 254.

Note: the figures are at 1993-94 prices for bifurcated Madhya Pradesh,Source: Department of Finance, Government of Madhya Pradesh

Madhya Pradesh - NSDP growth

1994 1995 1996 1997 1998 1999 2000 2001 2002 20030

2

4

6

8

10

12

US

$ bi

llion

Year

Madhya Pradesh - Sectoral Contribution to GDP

41%

24%

35%

Services

Agriculture

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

INFRASTRUCTURE

Institute of Forest Management, the Indian Institute of Hotel Management and International Institute of Professional Studies at Indore.

Madhya Pradesh’s network of health facilitiescomprises 145 hospitals, 343 community healthcentres, 1,705 primary health centres. It also has 34 Ayurvedic and 4 homoeopathic hospitals.The number of in-patient beds in Madhya Pradesh’shospitals is 20,839.

Access infrastructure

The total length of roads in Madhya Pradesh stands at over 160,000 km.

Madhya Pradesh - Growth in road network

Year 2000 2001

Total length (in km) 1,62,309 1,62,370

Surfaced length (in km) 79,135 79,575

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

Road density stands at 52.2 km per 100 sq km.The state has 18 national highways - a length of 4,664 km passing through it. Madhya Pradesh lies in central India and is a land locked state,which is why the state needs a good road network.Under the on-going National Highway DevelopmentProgramme (NHDP), a length of 634 km is beingconverted into 4-6 lane carriage-ways.Two moreprojects to upgrade 100 km of national highwaysthrough public private partnerships are beingplanned.

Under the Madhya Pradesh State Road SectorDevelopment Programme funded by the AsianDevelopment Bank, 1750 km of state roads will also be rehabilitated and upgraded by 2006 at a cost of US$ 150 million.

Social infrastructure

In recent years, Madhya Pradesh has taken initiativesthe social infrastructure of the state. It is ranked 12th on the Human Development Index. Its improvedranking can be attributed to the thrust on socialdevelopment through focus on rural development and self-employment schemes.

The state has a population of over 60.3 million(Census 2001), and is India’s seventh most populatedstate. Its population density is 196 persons per sq km.The population growth rate in the state was 24.3 percent between 1991-2001. Madhya Pradesh has anurban population of 16 million, representing over 26 per cent of the total.

Literacy levels in the state have improved from 44.2 per cent in 1991 to the current level of over64.1 per cent.

Madhya Pradesh - Growth in schools and enrolment

Year 2000-01 2001-02

Primary schools 81,942 87,620

Primary students

enrolment (thousand) 10,525 10,952

Secondary schools 7,943 8,481

Secondary students

enrolment (thousand) 1,359 1,516


Madhya Pradesh’s education network consists of 9 universities, over 250 colleges, along with 87,000 primary and 8,500 secondary schools.

The state has 45 engineering colleges, over 200 technical training institutes, 6 medical collegesand 43 management institutes including one of the six Indian Institutes of Management at Indore. Othernational institutes in the state include the Indian


of Madhya Pradesh’s electricity generation capacity is based on thermal energy with the remaining fromhydel generation.

Industry and agriculture represent the largestconsumer categories, followed by domesticconsumers.

On a per capita basis, electricity consumption in Madhya Pradesh stands at 352 kWh per annum,close to the national average of 355 kWh per annum.

The Madhya Pradesh government has accorded high priority to improve the road infrastructure in the state and has been successful in attractingprivate sector participation (PSP) in the developmentof highways. It has constructed 17 bridges andbypasses to four of its cities through PSP. Maintenanceof three state highways has been outsourced to the private sector. Currently, IJM Corporation of Malaysia is implementing two state highwayprojects aggregating 380 km with an investment of US$ 50 million.

Given the significant presence of mineral basedindustries in the state, availability of efficient railwaylinks is critical to fully exploit the potential.The totallength of the railway network in Madhya Pradesh is 5992 km. Of this, almost 1,880 km is electrifiedtrack. Currently, railway upgradation projects in the state include adding 1,151 km of railway lines at a cost of approximately US$ 460 millionand implementing a major track modernisationprogramme to convert about 285 km of the existingmetre gauge routes to broad gauge at an approximatecost of US$ 112 million.The completion of theseprojects will further strengthen the railway networkin the state.

Madhya Pradesh has two full-fledged domesticairports at Bhopal and Indore, it has smaller airports in Gwalior and Khajuraho - key touristdestinations, and 25 airstrips at a number of locationswith regular services.

Madhya Pradesh - Growth in air traffic

Airport 2001-02 2002-03 2003-04

Bhopal 71294 87784 113,700

Indore 170,963 195,072 226,900

Total 242,257 282,856 340,600


Power The installed electricity generation capacity of Madhya Pradesh is 3,008 MW. 95.66 per cent

Industrial

Domestic

Agriculture

Others

Madhya Pradesh - Composition of electricity consumption

30%

4%

42%

24%


Madhya Pradesh - Electricity generation


2000 2001 2002 2003M

W

Mill

ion

Uni

ts

2840

2860

2880

2900

2920

2940

2960

2980

3000

13500

14000

14500

15000

15500

16000

13000

Installed capacity (MW)

Electricity generation (MU)

(CONCOR).This is a well-developed dry port and is connected by rail and road transport to majordestinations in India.

Indore is also a potential destination for IT and ITESindustries coming to the state.

BhopalBhopal is the capital of Madhya Pradesh with a population of approximately 1.4 million. Bhopal is well connected to Mumbai, Delhi and other major cities across India.

The three industrial growth centres located close to Bhopal are at Pilukhedi, Satlapur and Mandideep.Most of the units in these centres belong to theengineering, fabrication, herbal and agro sectors.

GwaliorGwalior is located in the north of Madhya Pradesh.It has a population of about 0.8 million. It is linkedwell to Delhi and other major cities through rail androad links. Gwalior has industrial growth centreslocated at Malanpur, Ghirongi and Banmore.The mainindustries in these centres are solvent extractionunits, leather, food processing and rubber.

Food ParksTo provide a fillip to agro and food processingindustry in the state, six food parks are beingdeveloped across the state.The main advantage of these parks lies in the availability of commonfacilities such as analytical and quality controllaboratories, cold storages / modified atmospherecold storages, warehousing facilities andsupplementary pollution control facilities.The state government has also provided concessionsand subsidies to units locating in these parks.

Various electricity projects under implementation in the state aggregate to 790 MW.

Project Installed Capacity (MW)

Hydel Power Projects (2004)

Ban Sagar IV 20

Madhikheda 60

Thermal Power Projects (2007)

Sanjay Gandhi, Birsinghpur – Unit V 500

Amarkantak extension 210

Total 790

Source: Madhya Pradesh State Electricity Board

Communications infrastructure

In 2003, Madhaya Pradesh had 1.23 million fixed linetelephone subscribers. In June 2004, the state had490,000 mobile phone subscribers.

Madhya Pradesh – Growth in fixed wire telephones

Year 2000 2001 2002 2003

Fixed wire telephones

(in ‘000) 1,096 1,263 1,146 1,235


Industrial infrastructure

IndoreIndore is a prominent business and industrial centrein Madhya Pradesh. Considered the commercialcapital of the state, it is well connected by rail, road and airways. Indore has a population of 1.8 million.

Indore also has a Special Economic Zone (SEZ)spread over 1,038 hectares of land.The SEZ hasattracted investment of over US$ 200 million so far.The industries located in the SEZ include textile,pharmaceuticals, automobile & auto ancillary,metallurgy and leather.

The SEZ also intends to act as a trading and logisticshub. It has a fully operational Internal ContainerDepot managed by Container Corporation of India


STATE POLICY

exemption from stamp duty, registration charges,entry tax, etc. for a specified period.

Simplification of the approval processThe state government has established District Tradeand Industry Centres to facilitate new industrialinvestment in the districts.These centres will beresponsible for co-ordinating and following up withother government agencies in the state for speedy approvals and clearances.

The state government also proposes to simplify the approval process for setting up industrial units in the state by empowering committees at districtand state levels.

To promote a more conducive policy framework for various emerging sectors, Madhya Pradesh hasformulated sector-specific government policies forinformation technology, tourism and biotechnology.Given below are some of the salient features of these policies.

IT policy

n Setting up of ‘Madhya Pradesh Agency forPromotion of Information Technology’ to propelthe growth of IT

n Promotion of infrastructure and investmentthrough IT cities and by formulating specialpackage for providing financial assistance to the IT industry, promoting hardware technology parks

n Facilitate single window clearance system n Introduction of IT in all government departments n Manpower development in IT and setting

up of a virtual university

IT initiativesMadhya Pradesh has taken steps to promote IT in various aspects of governance. It has set

The government of Madhya Pradesh recognises theneed for faster economic development in the state.Its strategy for encouraging investment and achievinghigher levels of economic development hinges on thefollowing elements:

n Economic Development across all sectorsn Balance in both economic and social spheres n Focus on physical connectivity, virtual connectivity

and social connectivity n Focus on industries other than those where

it can leverage its abundant natural resourcesn Development of industrial infrastructure

in the state

With a view to attain a double digit economic growth the state government has implementedcertain policy and regulatory measures.

Industrial policy

To make Madhya Pradesh an attractive destination for industrial investment, the state government hasrecently adopted the Industrial Promotion Policy2004.The main thrust of the policy is:

n Effective implementation of single window systemthrough establishment of a Madhya Pradesh Tradeand Investment Facilitation Corporation

n Promotion of different industrial clusters in thestate, in view of availability of raw material, skilledlabour and market

n Enhancement of infrastructure in the identifiedindustrial clusters

n Revival of sick industrial units by granting special packages

n Setting up of an Industrial InfrastructureDevelopment Fund

The policy also provides incentives through

applications in agriculture, horticulture, livestock andpoultry, fisheries and forestry and health sectors

n Setting up integrated biotechnology parks withstate-of-the-art facilities for manufacturing unitsand research laboratories

n Establishing the State Biotechnology Council whichincludes eminent biotechnologists, educationists,industrialists and ex-officio members from variousdepartments of state government

Special Economic Zone policy

The Madhya Pradesh Government has a policy for developing Special Economic Zones (SEZ) in thestate.The SEZs, earmarked as duty-free enclaves,aim at promoting rapid industrial development and employment generation.The approved policyregime includes:

n Exemption of all state and local taxes and levies for transactions with the SEZ and for supply fromdomestic tariff areas to the SEZ

n Exemption from stamp duty and registration feesn Grant of labour, energy, environment, industrial

health and safety related permits and approvalsthrough a dedicated single window mechanism

n Exemption from electricity duty, cess and any othertax or levy on sale of electricity for self generatedand purchased power

n Expeditious process for land acquisition to set up SEZs

Infrastructure policy

To improve urban infrastructure and develop civicamenities, the state is implementing a US$ 330 millionproject at Indore, Bhopal, Gwalior, Ratlam, Jabalpur

up an optical fibre backbone of 20,000 kms to cover 313 development blocks across 45 districtsin the state.

The state government has prescribed variousguidelines/principles and general conditions forallowing private participation and investment in e-Governance projects for citizen services. All state treasuries and 86 per cent of the land recordsin the state are digitised.The state government plansto computerise the departments of land registration,commercial taxes and state transport.

The state has also started executing projects to leverage IT to offer value added services to thecommon man at the rural level.

As part of this initiative, information flows andservices like wholesale price, details of land records,registration of applications, public grievance redressal, etc. are made available online.

In another initiative, the government has signed a Memorandum of Understanding (MoU) with theReliance group for providing telecom connectivity to 7,800 kiosks across the state.

The government has also initiated changes in labourlaws to make them more favourable to IT industries.

Tourism policy

n Improvement and creation of adequate basicinfrastructure

n Special package of incentives for tourism industryincluding exemption from luxury tax, sales tax and entertainment tax for new projects for ten years

n Designation of 25 tourist circuits for commercialtax exemption for tourist vehicles

Biotech policy

n Promotion of community-based biotechnology

Special Economic Zones: Key advantages

n Tax incentives

n Faster approvals

n Single window zone administration

n Superior infrastructure


under the growth centres.They aim at facilitatingexports, promoting stronger linkages betweenagriculture and industry, providing basic infrastructureand common facilities and creating employmentopportunities.At present, eight IIDCs are undervarious stages of implementation.

and Ujjain.This is being done with help from the AsianDevelopment Bank.The project focuses on providingsustainable basic urban infrastructure and services to these six cities. It also supports comprehensiveurban governance and institutional reform to enhanceaccountability in municipal management, resourcemobilisation and cost recovery.

The project covers improvement and expansion of municipal infrastructure services viz. urban watersupply, sewerage and sanitation, storm water drainageand solid waste management.

The state government has set up the Madhya PradeshState Road Development Corporation (MPSRDC) to accelerate the development of transportinfrastructure in the state.The state has achievedsignificant success in implementing road projectsthrough private sector participation.

Integrated Infrastructure Development CentresPursuant to policy measures for promoting andstrengthening clusters of small scale and tiny units,Integrated Infrastructure Development Centres(IIDCs) are being promoted in the areas not covered

Madhya Pradesh Road Policy: Salient Features

n Encourage private sector participation rough

BOT contracts

n Amendment of Indian Tolls (Madhya Pradesh)

Act, 1932 to facilitate private sector

participation

n Enabling legislation for regulation and

development of the sector through the

proposed Madhya Pradesh Highway Bill

n Development of existing road network through

preparation of Master Plan, provide new links,

focus on highway safety

n Develop an efficient ‘Maintenance Management

System’ to make optimal use of the available

resources

n Setting up of State Road Maintenance Fund

n Incentives to ensure commercial viability

of road projects

BUSINESS OPPORTUNITIES

The state’s key competitive advantage in the textileindustry is the availability of raw material (cotton) and a skilled workforce. In 2002, the state produced390,000 bales of cotton, representing 4 per cent of India’s cotton production.The production of clothstood at 52 million metres in 2002-03.

The phasing out of export quota is expected toprovide a fillip to India’s textile industry.With theglobal trade in textile and clothing expected to growfrom US$ 356 billion at present to US$ 600 billion by 2010, Madhya Pradesh has an opportunity to leverage its existing strengths and capture a largershare of textile market.

The state government is taking steps to strengthenthe textile industry in the state by formulating a special package for the textile industry in theIndustrial Policy.The package includes establishingapparel parks and garment complexes in Indore andJabalpur, and setting up an Apparel Training Instituteand a national level institute of fashion technology.

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

MiningMadhya Pradesh is endowed with significant mineralresources.With 604,000 carats of proven diamondreserves it accounts for 99 per cent of India’s totalreserves. 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.

Key Industries

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

CementCement 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 seensignificant growth in recent years.With the domesticdemand for cement expected to grow at 8-9 per centannually, cement production in India is projected toreach 160 million tonnes by 2007. Madhya Pradesh’skey strength in cement industry is the presence of large limestone reserves, estimated to be over 2 billion tonnes.

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

Jaiprakash Associates is expanding the capacity of itsplant at Reva from 4.2 MTPA to 6.5 MTPA with aninvestment of US$ 35 million.While Century Textilesis expanding its capacity at Satna by 0.8 MTPA.

TextilesMadhya 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 Indiaproduction.


The state government has taken steps to facilitatefurther development of the food processing industryin the state.These include setting up Food Parks withprivate investment.At present, six Food Parks areunder implementation in various parts of the state.

Prominent investors in Madhya Pradesh’s edible oilindustry are Ruchi Soya, MP Glychem and VippiIndustries. Ruchi Soya is expanding the capacity of itsedible oil refinery at Indore from 600 tonnes per dayto 1,000 tonnes per day. Prosoya Foods, a subsidiaryof ProSoya Inc. Canada has set up a soya milkextraction plant in Madhya Pradesh.

Exports

Exports from Madhya mainly comprise agro-productssuch as soyabean extraction, minerals, textiles, leatherand cement.

Investment

Over the years, Madhya Pradesh has attractedindustrial investment in sectors such as non-metallicminerals, textiles, food products and chemicals.Thesefour sectors represent almost half of the existingindustrial investment in Madhya Pradesh.

The state has the country’s largest open cast coppermine 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 currentprices) in 2002-03.

Madhya Pradesh - Production of key minerals, 2003-04

Unit Production % share

- All India

Fuel Minerals

Coal ‘000 tonnes 45414 14

Metallic Minerals

Copper Ore ‘000 tonnes 2101 81

Manganese Ore tonnes 329265 21

Non-Metallic Minerals

Barium Carbonate tonnes 142285 23

Diamonds carats 62071 100

Diaspore tonnes 7847 59

Fire Clay tonnes 58105 12

Limestone ‘000 tonnes 21512 16

Other clays tonnes 164617 31

Pyrophylite tonnes 94351 63


To facilitate faster exploitation of its mineral wealthand promote mineral based industries, the stategovernment has formulated a Mining Policy whichprovides the framework for granting mining rights to private investors.

Prominent mining organisations operating in the state include the National Mineral DevelopmentCorporation, 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 stateproduced 3 million tonnes of oilseeds, representingover 20 per cent of India’s production.

Agro-products

Minerals

Cement

Textiles & leather

Others

Madhya Pradesh - Composition of exports

4%

8%6%

45%

35%

Source: Government of Madhya Pradesh, 2002-03

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

Principal industries in Madhya PradeshShare of industries in net value addition

42.3%

8.8%

16.6%

14.1%

12.2%9.0%

Source: Annual Survey of Industries, 2002-03

Food Products & Beverages

Textiles

Chemicals & Chemical Products

Other Non-Metallic Mineral Products

Rubber

Others

Irrigation

Manufacturing

Electricity

Service & Utilities

Mining

Distribution of investment

23%15%

38%

19%

5%

Source: Projects Today database, June 2004

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

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

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

Madhya Pradesh - Cumulative FDI

Source: SIA reports

1996

US$

mill

ion

Year

00200400600800

100012001400160018002000

1997 1998 1999 2000 2001 2002 2003

Fuels

Metallurgical industries

Textiles

Electrical equipment including software

Others

FDI - Sectoral break up

5%

15%

8%2%

70%

Source: SIA newsletter, Annual Issue 2002


to manufacture heavy and light commercial trucks in technical collaboration with MaschinenfabrikAugsburg-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 investaround US$ 16 million over a period of four years to manufacture and supply automobile engines andtransmission units to Ford India.

PharmaceuticalsBy leveraging the existing manufacturing base, alongwith a low cost resource pool Madhya Pradesh has a potential to further develop the pharmaceuticalindustry 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 investUS$ 22 million to expand its formulations capacity at Ratlam and invest US$ 14 million to set up a newexport oriented formulations unit in Indore.The plantwill 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 productsfacility at Pithampur. Biofill Pharma plans to investUS$ 25 million in Pithampur and Lupin Laboratories is expanding its manufacturing plant at Mandideepwith an investment of US$ 4.5 million.

Potential Hubs for Investment

As a result of the state’s aggressive incentive policies,a number of sectors are emerging with substantialpotential for private investment and business.Themost prominent among them are automobiles andauto ancillary products and pharmaceutical sectors.

Automobiles & auto componentsMadhya Pradesh’s location at the centre of India hasled to its emergence as an important destination for automobile and auto component industry.The industrial belt around Indore has productionfacilities 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 automobilemarket is over 10 per cent per annum; this presentssignificant opportunity to the state. Prominentautomobile 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

PROFILE OF KEY PLAYERS IN MADHYA PRADESH

The company is setting up a captive power plant of 27 MW in Satna in Madhya Pradesh with an investment of US$ 42 million. It is also investing US$ 62 million for various capital expenditureprogrammes across the country.

Cadbury India LtdCadbury India is a subsidiary of Cadbury Schweppes,the world’s largest confectionery and third largestsoft drinks company. Cadbury India had sales of overUS$ 150 million in 2003.The company employs nearly2000 people across India. Cadbury India has one of itsmain production plants at Malanpur, near Gwalior.

Century Textiles and Industries LtdCentury Textiles and Industries Ltd is the flagshipcompany of the B K Birla Group. Century is involvedin diversified businesses including cotton textiles andyarn, viscose filament yarn and rayon, tyre, industrialyarn, cement, paper and pulp. In 2004-05, it registeredsales were over US$ 500 million. Century haspresence in Madhya Pradesh through a cement plantat Satna.The company is expanding the productioncapacity of its cement plant at Satna by 0.8 milliontonne per annum. It also has a 100 per cent exportoriented cotton yarn and denim production plantnear Indore.The unit has an ISO-9002 certification.

Coca Cola India Coca-Cola India, one of the largest companies in the beverage market, has invested more than US$ 1 billion in India over the past decade.Coca-Cola is one of top international investors in India. In 2003, Coca-Cola India pledged to invest a further US$ 100 million in its operations.In Madhya Pradesh, Coca-Cola has a plant at Pilukhedi in Raisen district, near Bhopal.The company plans to invest US$ 6.7 million forexpanding the operations in its plant at Pilukhedi.

ACC LtdACC is one of the largest cement manufacturingcompanies in India, with a cement production capacity of 16 million tonnes per annum.In 2004-05,ACC revenues stood at US$ 1035 million.ACC is a pioneer in cement and RMC, a leader in refractories and one of the pioneers in the area of advanced materials.The company has acountrywide distribution network and manufacturesall types of cement. In Madhya Pradesh,ACC has a 1.7 MTPA cement plant at Kymore.The companyplans to invest US$ 3.3 million to expand itsmanufacturing capacity of roofing products at Kymore.This will increase its production from68,000 tonnes of asbestos roofing to 78,000 tonnes.

Bajaj Tempo LtdBajaj Tempo is a US$ 190 million manufacturer of utility and light commercial vehicles, agriculturaltractors and diesel engines. It has an automobilemanufacturing plant at Pithampur near Indore. BajajTempo plans to invest US$ 80 million to manufactureheavy and light commercial trucks in technicalcollaboration with Maschinenfabrik Augsburg-Nurnberg (MAN) of Germany at its existing site at Pithampur near Indore.

Birla Corporation LtdBirla Corporation Ltd is the flagship company of the MP Birla Group.The company’s main areas of business are jute, cement, synthetic yarn, calciumcarbide, industrial gases, PVC coated fabrics,PVC floor coverings, auto trims, healthcare andeducation. Birla Corporation has joint ventures and collaborations with world leaders like DLW AG of Germany, Rhone Poulenc of France, Sweden-basedEricsson Cables & AB and ABB, GE,Toshiba and AEI Cables. In 2003-04, the company’s revenues wasUS$ 276 million and profits over US$ 9 million.


in the state by providing support infrastructure formarketing and distribution of their products.

HLL also has an alliance with Rallis India, a Tata groupcompany, for a contract farming of wheat in MadhyaPradesh.This is mainly intended to help farmers growand sell wheat and for making basmati rice for export in Madhya Pradesh.

IPCA Laboratories LtdIPCA Laboratories is one of India’s leadingpharmaceutical companies with a strong thrust on exports.The Group's principal activities aremanufacturing and distributing drugs andpharmaceuticals. Its products include tablets, capsules,basic drugs, orals, liquids and injectables.The companyhas a bulk drugs and formulation unit at Ratlam and a bulk drug facility in Indore in Madhya Pradesh. IPCALaboratories plans to invest US$ 22 million to expandits formulations capacity at Ratlam. It also plans to invest US$ 14 million in the first phase to set up a new export oriented formulations unit in Indore.

Kinetic MotorsKinetic Motor Company Ltd is part of the Kineticgroup of companies, a leading manufacturer of twowheelers in India.The company has a state-of-the-artmanufacturing facility at Pithampur, near Indore.Thefacility is ISO-9001 certified. Kinetic Motors is settingup a production line for manufacturing the Italjetrange of scooters at Pithampur in Madhya Pradesh.

Nicholas Piramal India LtdNicholas Piramal India Ltd (NPIL) is one of India’sleading pharmaceutical and healthcare companies with sales of US$ 280 million. NPIL is ranked fourth in domestic formulations sales and second in totaldomestic pharmaceuticals sales. Its Pithampur plant in Madhya Pradesh is accredited by reputedorganisations like Allergan, Novartis, Solvay and IVAX, among others. Nicolas Piramal plans to investUS$ 45 million to enhance its research anddevelopment activities besides strengthening itsmanufacturing facilities.

Eicher Motors LtdEicher Motors, part of the US$ 355 million EicherGroup, is a significant player in the Indian automobileindustry. Eicher Motors manufactures and marketscommercial vehicles with Gross Vehicle Weight(GVW) ranging from 5 to 25 tonnes. It is one of the leading manufacturers of commercial vehiclesin India.The company has a manufacturing facility is Pithampur, Madhya Pradesh.This state-of-the-artplant has a total area of 72 acres with 18000 sq mt as the covered area. It houses some top-of-the-lineequipments, a robust infrastructure and has an annualproduction capacity of 30,000 vehicles.The companyhas a world-class R&D centre that has helped thecompany successfully developed a wide range of commercial vehicles including trucks and buses.The company recently invested US$ 22 million formanufacturing heavy commercial vehicles at itsPithampur plant.

Grasim Industries LtdGrasim Industries is the flagship of the AV BirlaGroup, one of the most prominent Indian businesshouses.With the recent acquisition of cementbusiness of L&T, Grasim has become the largestproducer of cement in India. Grasim is also thelargest producer of Viscose Staple Fibre (VSF) in Indiaand one of the largest textile and yarn manufacturers.In Madhya Pradesh, Grasim has a presence through a cement plant at Jawad, a VSF plant at Nagda andtextile & fabric manufacturing plants near Gwalior.

Hindustan Lever Ltd (HLL)Hindustan Lever Ltd is India’s largest fast movingconsumer goods company, with leadership in home & personal care products and foods & beverages.Its parent company, Unilever a Fortune 500transnational holds 51 per cent of the equity. HLL has a plant for synthetic detergents in Chindwaradistrict of Madhya Pradesh. In 2002, HLL launched the “Vindhya Valley” project in association with theMadhya Pradesh government to help increase theincome of the farmers and small town entrepreneursengaged in agro processing and cottage industries

Procter & GambleProcter & Gamble India is one of India’s fastestgrowing FMCG companies.The company has a turnover of over US$ 200 million.The company has a high technology detergent manufacturing plantin Raisen district in the state.

Ranbaxy Laboratories LtdRanbaxy Laboratories Ltd, India’s largestpharmaceutical company, manufactures and marketsworld-class generics, branded generic pharmaceuticalsand active pharmaceutical ingredients. It is rankedamongst the top ten generic companies worldwide.Ranbaxy has joint ventures/subsidiaries across theglobe and its products are sold in over 100 countries,it has manufacturing operations in 7 countries and ground presence in 44 countries. In 2004,the company’s global sales crossed US$ 1 billion.Ranbaxy has manufacturing facilities in sevencountries (including India), most of which are USFDA approved. Ranbaxy is investing US$ 100 million for expanding production capacity of Indian, Brazilian and US manufacturing utilities.In Madhya Pradesh, the company has a bulk drug and formulation plant at Dewas.

Ruchi Soya Industries LtdRuchi Soya Industries Ltd is the largest edible oilcompany in India engaged in refining and trading of edible oils, soybean oil extraction, and export of soybean meal. It has an annual turnover of overUS$ 550 million. In 2003, the company embarked on an expansion programme at its edible oil refineryat Indore.The plant capacity is being raised from 600 tonnes per day to 1000 tonnes per day.


DOING BUSINESS IN MADHYA PRADESHObtaining approvals

An indicative list of approvals with timeframe for setting up business in Madhya Pradesh

Agency

District Trade & IndustriesCentre / Madhya PradeshPollution Board

District Trade & IndustriesCentre



Timelines

No objection certificate for identifiedindustries: ImmediateApproval from Pollution ControlBoard: Immediate

Provisional Registration: ImmediatePermanent Registration: 7 daysLetter of Intent: ImmediateLand Allotment (after necessaryscrutiny): ImmediateProcessing of lease deed: 7 daysIssue of Entry Tax/ Sales tax exemption certificate: ImmediateApproval of capital subsidy: 30 daysApproval of interest subsidy: 7 days

Approval for electricity connection:Immediate

Approval of Bank loan: 30 days

Department

Environment/Industries

Industries

Industries/Electricity

Industries/ Finance

Source: PwC research

Contact for information

State Government Website www.mpgovt.nic.in/

Madhya Pradesh State Industrial DevelopmentCorporation (MPSIDC)Madhya Pradesh State Industrial DevelopmentCorporation is the nodal agency responsible fordevelopment of industrial estates and investmentpromotion in Madhya Pradesh. MPSIDC has fivesubsidiary companies located in Bhopal, Indore,Gwalior, Jabalpur and Rewa. Each of these subsidiariesdevelops and manages different industrial estateswithin their areas of jurisdiction.

Madhya Pradesh State Industrial Development Corporation

AVN Towers, 192 Zone-1MP NagarBhopal 462 011Tel +91 755 5270370Fax +91 755 5270280Email [email protected] www.mpsidc.org

Confederation of Indian Industry (CII)Information on markets and opportunities forinvestment in Madhya Pradesh can also be obtainedfrom Confederation of Indian Industry which workswith the objective of creating a symbiotic interfacebetween industry and government.

Confederation of Indian Industry State Office

17, Vaishali Nagar, Kotra Bhopal 462 003INDIATel +91 755 5293792Fax +91 755 2671461Email [email protected] www.ciionline.org

Cost of setting up business

An indicative table on cost of setting up business in Madhya Pradesh

Indicator Value (in US$)

Industrial land (per sq mt) 4.8 - 28.7

Office space rent (per sq ft per month) 0.48 - 0.96

Residential rent (for a 2,000 sq ft house, per month) 268 - 335

5-star hotel room (per night) 76.6 - 95.7

Electricity (per kWh) 0.086 - 0.124

Water (per 1000 litres) 0.19

Source: PwC researchNote: Exchange rate used is INR 47 per US$.

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is to build positive economic perceptions of India globally.

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