Madhya Pradesh: Means Business

1
Madhya Pradesh Means Business
Agriculture/ Agro Processing Industry
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Overview
Overview
Madhya Pradesh (MP) State that means business

• MP is the second largest State in the Country
  stretching over 308,000 sq kms.
• The State is blessed with large mineral resources
  of coal, diamond, limestone, methane etc.
• MP is among the top 4 states of the Country for
  industrial investments.

Economic Snapshot
Madhya Pradesh is emerging as a key growth center
for the Country

• Per capita GSDP USD 369
• Manufacturing sector USD 8.5 bn
• (Registered Unregistered)

• Gross state domestic product (GSDP) USD
  23,983.63 Mn
• Average growth rate 5.5 per annum

Advantage MP
Madhya Pradesh has one of the upcoming industrial
base in India

• The State is centrally located
• Investor friendly Government policies

• Total electricity generation capacity
  6,449.25 MW
• Indias first greenfield SEZ
  Indore SEZ
• Industrial Centers 8

Power
Electricity generation capacity at present is
6,449.25 MW and estimated to rise to a surplus in
2008-09

• MP is rich in low grade coal suitable for power
  generation.
• Potential of hydro-energy generation.
• Installed power capacity (MPs share)
• Hydel Power Generation 852.7 MW
• Thermal Power Generation 2,147.5 MW

Ministry of Power (powermin.nic.in)
Source Indiastat.com (as on 23 Feb 2006)
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Enabling Infrastructure

• The State is well connected with the rest of
  India with almost 425 trains passing through the
  State on a daily basis. Of these 175 trains pass
  through the State capital Bhopal alone.

MP IS CENTRALLY LOCATED AND WELL CONNECTED WITH
ALL MAJOR CITIES IN INDIA
RAILWAY NETWORK

• 25 airstrips.
• Convenient air links from key Indian cities like
  Delhi Mumbai to Bhopal, Jabalpur, Gwalior,
  Indore and Khajuraho.
• 5 operational airports.
• Indore airport has the capability of handling
  international cargo.
• An international airport proposed in Bhopal.

GWALIOR
KHAJURAHO
AIRPORTS
INDORE
BHOPAL
JABALPUR

• The total length of roads spanning MP is 67,600
  kms.
• National highways of 5,200 kms run through the
  State.
• 18 National highways including trunk routes of
  Delhi-Mumbai, Delhi-Chennai, Delhi-Bangalore,
  Delhi- Hyderabad.
• The total length of State highways in the State
  is 9,885 kms.
• Convenient linkages to western ports i.e. Kandla
  Port, Jawahar Nehru Port Trust.

ROAD NETWORK
Source Department of Road Transport Shipping
(morth.nic.in)
Source www.destinationmadhyapradesh.com
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Madhya Pradesh A Preferred Investment Destination
31 of the State under forest cover with a
largely unexploited species of rare, valuable
medicinal- herbal plants
Over 2,000 kms of roads being developed with
Private Partnership (BOT)
Offers diverse tourists destinations catering to
various segments of tourism such as religious
(Bhojpur), eco/ adventure (Panchmari), heritage
(Sanchi, Khajuraho) tourism etc.
Indias 1st operational Greenfield SEZ at Indore
Third largest producer of cement in India
Over 100 agricultural farms with an area of over
20,000 acres is available on lease to investor
Favourable climatic conditions for cotton and
over 40,000 power-looms are driving the textile
industry
Various blocks available for power, cement, iron
and steel units
Largest producer of pulses and oilseeds in the
Country (75 of soyabean production)
Over 18,000 technical graduates and 230,000
graduates add to workforce each year
12 blocks with reserves totalling 2,585 million
tons of coal has been identified
Over 144 BCM of coal bed methane reserves
available
Availability of coal and natural gas (G.A.I.L
pipeline) along with support from Government to
make investment in Thermal Power Plants lucrative
Source www.mpsidc.org Brochure MP Means
Business
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MP The Right Place with the Right Environment
Savings in Office Space Rates (A comparison of
rates in Central Business Districts)
DESTINATION MADHYA PRADESH
Fastest mover in overall performance among the
big States in the Country.
Fastest mover in agriculture
Fastest mover in infrastructure development.
Bhopal and Indore have substantial cost
advantages, even when compared to other Tier III
and IV cities.
Savings in Land Cost
Ranks 2nd in terms of governance.
(Estimated Values for Multi-product SEZs)
Ranks 3rd in terms of law order
Cost of skilled labour is USD 2.4/day vis-a-vis
USD 3.5 USD 4.0/day in metros
The cost of land is one of the lowest in the
Country. Even central hubs such as Indore and
Bhopal fare well against other cities in terms of
low land cost.
MP is centrally located. The State is at an easy
distance from all the key consumer markets in the
Country.
Fastest mover is the State where the rate of
improvement between 2003 2006 was greater than
that between 1991 2003
Source (Reference RK Swamy)
- Distances rounded off
Source India Today (September 06 Issue)
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Industrial Policy Catalyst for the Investments

• The Government of MP has devised an investor
  friendly industrial policy, which is aimed at
  achieving global competitiveness. The policy
  emphasizes on industrial growth in the state
  through adopting cluster approach, establishing
  specialized infrastructure and offering
  favourable incentives.
• The main thrust of this policy is
• Establishment of a Madhya Pradesh Trade and
  Investment Facilitation Corporation which would
  take decisions about rationalization of taxes,
  facilities of mega projects and other related
  matters.
• Enacting an Industrial Facilitation Act and to
  change the rules of business with a view to make
  single window system decisive and result
  oriented.
• Developing infrastructure for supporting the
  identified industrial clusters
• Reviving closed down/ sick industrial units by
  granting special packages.
• Attractive incentive schemes.

SPECIAL INCENTIVES

• Special package for Mega Projects on project
  basis by apex level investment promotion
  empowered committee headed by the Chief Minister.
• Industrial investment promotion assistance 50
  to 75 of commercial tax for 3-10 years
• Concessional registration charges and stamp duty
  exemption for Term Loans.
• Interest subsidy on term loan for 5 years _at_ 3
  to 5.
• For thrust sector industries, 25 capital subsidy
  would be provided limiting up to a maximum of USD
  56,000
• Land on 75 concessive rate for Mega Projects
  limited to USD 4.4 million.
• Entry tax exemption for 5 years.
• 5 years electricity duty exemption on captive
  power generation
• 15 capital subsidy to SSI up to USD 33,000 in
  backward areas
• Infrastructure grant up to USD 0.22 million crore
  for developing private sector industrial parks
• Partial reimbursement for Project report, ISO
  Certification, Patent and Technology Purchase cost

• CLUSTER APPROACH
• Indore Pharmaceutical, Textile, Food
  Processing, IT, Auto Components
• Bhopal Engineering, Biotechnology, Herbal, IT,
  Food Processing
• Jabalpur Garment, Mineral, Forest Herbal,
  Food Processing
• Gwalior Electronics, IT, FMCG, Engineering,
  Food Processing
• Rewa Refractories, Lime Stone, Forest Based
• Sagar Mineral Processing

SPECIALIZED INFRASTRUCTURE
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Doing Business Made Easy Through MPAKVN
In a bid to build a competitive environment
industries and their ancillaries would be
promoted in clusters based on the availability of
raw materials, skilled labour and market
potential. Under this Industrial Policy through
Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd
(MPAKVNs) scheme, the State Government, has
identified industrial clusters. Many of the
industrial giants have their establishments in
these areas, however 44 of developed area is
still untapped and open for investment.
Area Developed 2,262 Hectares Allotted 800
Hectares Units established 326 Major Groups JK,
Surya Roshini, Godrej, Grasim, Cadbury, Hotline,
Crompton Greaves Special Infrastructure ICD,
Food Park
Area Developed 273 Hectares Allotted 115
Hectares Units established 121 Major Groups
Birla, Jaypee Special Infrastructure Integrated
infrastructure development centres (IIDC)
Area Developed 790 Hectares Allotted 125
Hectares Units established 52 Major Groups
Raymond, Hindustan Petroleum, PBM, Ayur Special
Infrastructure Stone Park, Food Park
Area Developed 1,330 Hectares Allotted 618
Hectares Units established 286 Major GroupsHEG,
Crompton Greaves, PG, Godrej, Lupin, IFB, Oswal,
Nahar Special Infrastructure ICD, Food Park
BHOPAL AKVN
GWALIOR AKVN
JABALPUR AKVN
REWA AKVN
Area Developed 2,492 Hectares Allotted 1431
Hectares Units established 575 Major Groups
Tata, Ranbaxy, Eicher, Bridgestone, Hindustan
Motors, Kinetic, SRF, S Kumars, Gajra, Nicholas
Piramal, Indorama, IPCA, Bhilwara Special
Infrastructure SEZ, Crystal IT Park, Food Park,
Apparel Park
Malanpur, Malanpur Phase II, Banmore, Chainpura,
Siddhgawan, Pratappura
Rewa, Waidhan
INDORE AKVN
Mandideep, Pillukhedi, Mandideep Phase II
Borgaon, Maneri, Purena
Pithampur, Kheda, Dewas, Maksi, Megh Nagar
Source MPSIDC
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Agriculture/ Agro-Processing
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Sector Profile Agriculture/ Agro Processing
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Agriculture Evolving Landscape

• Agriculture in India has always been the most
  important economic sector. The sector accounts
  for around 24 of the GDP, it plays a fundamental
  role in the Indian economy whereby it employs 65
  of the working population.
• Agriculture is fundamental to the Indian social
  structure, political stability and industrial
  growth.
• KEY FEATURES of INDIAN AGRICULTURE INDUSTRY
• Agriculture sector alone accounts for 18 of the
  total value of the country's exports.
• Apart from being the largest producer of pulses,
  tea and milk, 51 major crops of the world are
  also produced in India.
• India is also the second largest producer of
  wheat, rice, fruits, vegetables, ground nut and
  sugarcane.
• India is the world's second largest producer of
  food and agricultural produce after China and has
  the potential of being the largest agricultural
  Country.
• India is one of the worlds major food producers
  and accounts for almost 1.5 of international
  food trade.
• The Indian agriculture industry is on the brink
  of a second round of revolution. This will be
  driven by two key factors
• Modernization of the entire food chain
• Doubling the total food production in the next
  ten years

• Understanding the large social impact that
  agriculture has on the society, the Government
  has taken several initiatives to promote the
  growth of the sector.
• Over the next two decades, the National Policy on
  Agriculture aims to attain
• A growth rate in excess of 4 per annum in the
  agriculture sector
• Growth that is based on efficient use of
  resources and conserves soil, water and
  bio-diversity
• Growth with equity i.e. growth which is
  widespread across regions and farmers
• Growth that is demand driven and caters to
  domestic markets and maximizes benefits from
  exports of agricultural products.
• Growth that is sustainable technologically,
  environmentally and economically.

• Indias Competitive Advantage
• Diverse Agro climatic conditions
• Sufficiency of inputs/ raw materials
• Cost effective labour

• Agro Processing Sector in India
• Employs over 12 million persons
• Constitutes for 13 of manufacturing GDP.

• India has
• Total Geographical Area 328 Million Hectares
• Net Area Sown 142 Million Hectares
• Gross Cropped Area 190.8 Million Hectares

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MP Background of Agriculture

• MP is the second largest state in the Country
  with an estimated population of about 60 million.
  Agriculture is predominant sector in the state
  with 75 of rural population largely dependent on
  it. This results in wide availability of manpower
  at a reasonable cost.
• The agriculture sector forms almost one-third of
  the GSDP and forms the backbone of the MPs
  economy
• The State has 5 crop zones, 11 agro climatic
  regions and 4 soil types, which add to the
  biodiversity in the State and acts favourable for
  the production of various crop types.
• Madhya Pradesh is the largest producer of pulses
  and oilseeds in the country. The State also
  shares a major share of the National agriculture
  production. About 25 of pulses and 40 of grams
  are grown in the state.
• The State is the largest producer of soya bean
  and gram and the second largest producer of jowar
  and masoor in the Country
• The agricultural land in the district Narsinghpur
  is considered to be the most fertile land all
  over Asia. The district is famous for its rich
  agricultural production.

Table 1 Major Agriculture Horticultural Crops
in MP
Source www.mpmandiboard.com
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MP Background of Agriculture

• Out of the total gross cropped area 59 is sown
  in the Kharif season and 41 in the Rabi season.
• The statistical data about the position of MP
  with respect to the major crops in comparison to
  the other states is shown in Table 2. The
  percentage share refers to the contribution of
  the State towards the total national production
  of the respective commodity.
• It can be seen that state stands first in
  production of soyabean and gram, second in the
  production of jowar and masoor and is third for
  the production of arhar and masoor.

• Madhya Pradesh leads in spices production with
  the largest production of garlic, accounting for
  37 of the total national production
• The state is the second largest producer of
  Coriander in the country.
• Malwa potato grown in the western part of the
  State (malwa region) has a quality that has been
  proven useful for the potato chips processing.
• MPs share in the total national production of
  Pea is 15 .

In the State, the multiple cropped area is about
24 which can be exploited for cultivation at any
time of the year irrespective of the season
Source www.mpmandiboard.com
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Location Analysis - Soils of MP

• The State has 4 different soil types available in
  four distinct parts. The western and central
  regions are covered by medium and deep soils
  constituting 53 of the soil area. The eastern
  part of the State is primarily covered by black
  soils which comprises of 25-26 of the total
  geographical area.

• Most of the States potential in agriculture lies
  in the central and western zones. These zones are
  rich in medium and deep soils consisting of
  several agri export zones and would be ideal for
  setting up industrial ventures.

SOIL TYPES IN MP
Source www.mp.nic.in/agriculture/soils.htm
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Location Analysis - Crop Zones of MP

• Different crops can be grown in different parts
  of the State during different seasons, thereby
  having uninterrupted agricultural activities
  throughout the year.
• The distribution of different crop zones across
  whole of Madhya Pradesh reflects the bio
  diversity of the state.

COTTON/ JOWAR
Cotton/ Jowar crops can be grown in the western,
north-western and south-western part of MP. Such
crops are grown in the regions having medium
deep soils.
WHEAT/ JOWAR
Wheat/ Jowar crop zones are predominant in the
northern strip of the State. Some southern areas
of the State can also be tapped for such
commodities. It is evident that these crops have
the potential of growing in all the soil types
prevalent in the State.
RICE ZONE
This zone is confined to the eastern part of the
State where black soil type present. Only five
districts/ centers produce this crop.
WHEAT/ RICE ZONE
These crop zones are present in the eastern part
of MP where the soil type is black soil
WHEAT ZONE
This crop zone is in the central part of the
state. Again it is evident that these crops have
the potential of growing in diverse soil types.
Source www.mp.nic.in/agriculture/acr.htm
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Location Analysis - Agri Export Zones in MP

• To facilitate promotion and development of
  specific products, several AEZs (Agri Export
  Zones) have been identified in the State of
  Madhya Pradesh. These zones have been set up for
  facilitating export of specific products from a
  geographically contiguous area.
• The AEZs are present at such a location that it
  is easy to source the raw materials and hence
  developing the final product.
• The concentration of AEZs is more towards the
  Eastern and North eastern parts of the State and
  the investors can look forward to tap these
  regions of the State for their investments.
  Especially MNCs who have operations abroad and
  want to grow in terms of international trade can
  harness opportunities in these areas.
• The commodities that can have an immense
  potential are potato, spices (in the western
  parts), pulses (in the central part of the
  State), wheat (in the western and central
  regions) and oranges (south districts).

AGRI EXPORT ZONES IN MP FOR VARIOUS PRODUCTS/
CROPS

With the objective to promote agricultural
exports from the country and remunerative returns
to the farming community, the concept of the Agri
Export Zones (AEZ) has been initiated by the
Government under all aspects of efficient agri
practice such as production, RD, post harvest
management, packaging, leading to final exports.
Further market promotion and development are also
undertaken in the AEZs.
Source Brochure from MPSIDC
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Advantage MP

• MP is the most biodiverse state in the country
  with 11 agro climatic zones, 5 crop zones and 4
  zones varying in soil types.
• The soil and agro climatic conditions are
  suitable for rapid agricultural development.
• The state has a strong base in horticulture.
• The state is set in centre of the nations
  commercial activities. It is located at an easy
  distance from all the major agricultural markets
  in India.
• About 75 of the population of the state is
  largely dependent upon agriculture for their
  livelihood. This ensures easy availability of
  manpower at a relatively lower retention cost.
• The State has a large network of primary
  agricultural co-operative societies playing a
  crucial role in supplying agricultural inputs
  including seed, fertilizer and pesticides in the
  far flung areas.
• The State has sufficient notified agricultural
  market yards and sub market yards which provide
  facilities for sale of agricultural produce.

• Farm mechanization is being promoted in the state
  by the Directorate of Agricultural Engineering.
• Despite the potential the state has, the rate of
  prime land in the State is amongst the lowest in
  the country, thereby offering an advantage to the
  investor by reducing their capital investment
  cost.

Distances Rounded off
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Contract Farming. Future Trend in Agriculture

• Contract farming is an emerging concept in MP
  that provides vast opportunities for potential
  investors wherein the production and supply of
  agricultural/ horticultural produce are pre
  agreed under forward contracts between producers/
  suppliers and buyers. The contract details the
  type of agri commodity required at a time and a
  price, and in the required quantity.
• Contract farming provides a proper linkage
  between the farm and the market

• BASIC ELEMENTS OF CONTRACT FARMING
• Pre-agreed price
• Quality or acreage (minimum/maximum)
• Time

BASIC PROTOCOL FOR CONTRACT FARMING

• BENEFIT TO THE FARMER
• Assured market for their produce
• Adequate quality agri input supplies
• Free technical know-how

CONTRACT FARMING IN MP (A Case Study)
SPONSORS

• Hindustan Lever Ltd. (HLL), Rallis and ICICI have
  come together to undertake contract farming in
  MP. The role of each company is as follows
• Agri inputs and the technical know-how to the
  farmers are provided by Rallis
• The financial support to the farmers is provided
  by ICICI (farm credit).
• HLL is the buyback client as the farm produce is
  used as the raw material by the company for its
  food processing industry.

MANAGEMENT ADMINISTRATION
BENEFIT TO HLL Contract farming assures supply
chain efficiency and hence there are no delays or
obstacles in their food processing industry
operations
BENEFITS OF CONTRACT FARMING
TECHNICAL STAFF
BENEFIT TO RALLIS ICICI The two companies are
benefited through assured clientele for their
products and services

• Production determinants
• Climatic factors
• Farmers response
• Quality of management
• Quality of technology
• Financial incentives
• Government support
• External influences

THE PROJEC T
FARMERS
The consortium is now planning to rope in other
specialist partners including insurance,
equipment and warehousing companies.
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Way ForwardMP as an Investment Destination

• Presence of AEZs in the state provide favourable
  grounds for investors to tap the opportunities.
• The concept of contract farming is being
  recognized in MP as the most promising
  opportunity for an investor.
• The state has identified around 100 agricultural
  farms with an area of over 20,000 acres which is
  available on lease to investor.
• State has the potential to develop and increase
  the production of horticulture crops for each of
  the 11 Agro-climatic sub-zones.
• Many opportunities are also available at each
  part of the value chain in agro processing
  industries.

• Ministry of Food Processing Industries sanctions
  the projects within the Food Parks. Further to
  this, the monetary support from the Government of
  India is 50 of the proposed investment, limited
  to a maximum of USD 0.8 million.
• The State Government offers special incentives
  for the investors looking forward to invest in
  the State. The project clearance with approvals
  are granted within 15 days of application or
  submission of project reports and the Government
  also offers customized package of concessions on
  mega ventures.
• A green field Special Economic Zone (SEZ) has
  been developed as a globally competitive
  investment destination at Pithampur in Indore.
  Land allotment has already begun with several
  units starting commercial production. Again this
  SEZ may act as a single point investment
  destination for various agro processing
  companies. Indore, thereby facilitating their
  growth along with the growth of the State.

MP OFFERING SPECIFIC INCENTIVES

• The other facilities and concession offered by
  the government include-
• State capital subsidy for SSI up to USD 11,000
• Central Capital subsidy up to USD 100,000
• Entry tax exemption up to five years
• ISO-9000 certification cost reimbursement up to
  USD 17,000
• Project report cost reimbursement up to USD 6600
• Interest subsidy up to USD 89,000

• The sanction for 6 food parks for the state has
  already been obtained. The proposed food parks
  are coming up in Mandsaur, Khargone, Hoshangabad,
  Chhindwara, Mandla and Bhind. The main objective
  of the state and central government in setting up
  these parks is to help establishment of food
  processing industrial estates/ infrastructures by
  providing assistance for the common facilities
  such as research laboratories, cold storages,
  warehousing facilities etc.

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Way ForwardMP As An Investment Destination

• Eyeing the business opportunity in one of the
  most bio diverse and strategically located states
  the players in the agriculture sector will look
  forward to MP as the next haven for investment.
• A fair amount of leverage can also be gained by
  the identified Agri Export Zones across the
  state. Some of the key opportunities in the
  sector have been listed below.

20
Connecting Further
www.mpmandiboard.com
Madhya Pradesh State Agricultural Marketing Board
Department of Agriculture
www.mpkrishi.org
MARKFED
www.mp.nic.in/agriculture/markfed.htm
MPAgro
www.mp.nic.in/agriculture/mpagro2.htm
Directorate of Agricultural Engineering
www.mp.nic.in/agriculture/agengg.htm
MP State Seed Certification Company
www.mp.nic.in/agriculture/seed.htm