himachal pradesh - ibef4 himachal pradesh –state profile • located in the northern region of...

HIMACHAL PRADESHNovember 2010

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Investment climate of a state

• Skilled and cost-effective labour

• Labour market flexibility

• Labour relations

• Availability of raw materials and natural

resources

• Tax incentives and exemptions

• Investment subsidies and other incentives

• Availability of finance at cost-effective terms

• Incentives for foreign direct investment, (FDI)

• Profitability of the industry

• Procedures for entry and exit of firms

• Industrial regulation, labour regulation, other

government regulations

• Certainty about rules and regulations

• Security, law and order situation

• Condition of physical infrastructure such as

power, water, roads, etc.

• Information infrastructure such as telecom, IT,

etc.

• Social infrastructure such as educational and

medical facilities

Resources/Inputs

Incentives to industryPhysical and social

infrastructure

Regulatory framework

Investment climate of a state is determined by a mix of factors

HIMACHAL PRADESH November 2010

3

Contents

Advantage Himachal Pradesh

State economy and socio-economic profile

Infrastructure status

State policies and incentives

Business opportunities

Doing business in Himachal Pradesh


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Himachal Pradesh – State profile• Located in the Northern region of India, Himachal

Pradesh has a population of 6.1 million (as per Census 2001).

• The state has an area of 55,673 sq km and accounts for 5.8 per cent of the total land area in India.

• As its borders, the state has Punjab to the West and Southwest, Jammu and Kashmir to the North, Haryana to the South, Uttar Pradesh to the Southeast and China to the East.

• Himachal Pradesh‟s administrative capital is Shimla. The state is divided into 12 districts.

• Being a sub-Himalayan state, Himachal Pradesh has a varied climate that changes with altitude. The climate ranges from warm and sub-humid tropical at low altitudes to cold and icy at high altitudes. There are three main seasons: winter from October to February, summer from March to June and rainy from July to September.

• The common languages spoken are Hindi, Pahari, and Punjabi.

Source: Maps of India

Himachal Pradesh November 2010

ADVANTAGE HIMACHAL PRADESH

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Pharmaceuticals and food processing hub

Policy and fiscal incentives

Himachal Pradesh has attracted investments in the pharmaceuticals,

IT and engineering industries. Agriculture also plays a significant role

in the state‟s economy. The state has a robust food processing

sector.

The state offers a wide range of fiscal and policy incentives for

businesses under the Industrial Policy, 2004. Additionally, the state

has well-drafted sector-specific policies for the biotechnology and IT.

Rich labour poolThe state has a large base of skilled labour, making it a favourable

destination for knowledge-based sectors. Further, the state has a

large pool of semi-skilled and unskilled labour.

Advantage Himachal Pradesh … (1/2)




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Facilitating infrastructure

The state has well-developed social, physical and industrial

infrastructure and virtual connectivity. It has a strong hydro-

power base because of its water resources and topography. It is

supported by enabling policies.

High economic growth

Himachal Pradesh is targeting 8.5 per cent annual economic

growth rate during the Eleventh Five-Year Plan period (2007-

2012).

Stable political environment

The state has a stable political environment with a single-party

government. The State Government is committed towards

creating a progressive business environment.

Advantage Himachal Pradesh … (2/2)




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Himachal Pradesh in figures … (1/2)

Parameter Himachal Pradesh All-states Source

Economy

GSDP as a percentage of all states‟ GSDP 0.6 100.0 CMIE, as of 2007-08, current prices

Average GSDP growth rate* (%) 7.4 11.8 CMIE, 2000-01 to 2007-08, current prices

Per capita GSDP (US$) 899.0 992.5 CMIE, as of 2007-08, current prices

Physical infrastructure

Installed power capacity (MW) 2,030.2 159,398.49Central Electricity Authority, as of March

2010

GSM cellular subscribers (No) 4,790,604 456,586,162Cellular Operators Association of India, as

of June 2010

Broadband subscribers (No) 20,981 4,981,976 As of October 2008

National highway length (km) 1,409 70,548Ministry of Road Transport & Highways,

Annual Report 2008-09

Airports (No) 3 133 Airport Authority of India

Social indicators

Literacy rate (%) 76.5 64.8 Census of India, 2001

Birth rate (per 1,000 population) 17.7 22.8Ministry of Health & Family Welfare, RHS

Bulletin, March 2008


*Calculated in Indian rupee terms


8

Himachal Pradesh in figures … (2/2)

Parameter Himachal Pradesh All-states Source

Investment

FDI inflows (US$ billion) 0.8* 120.2Department of Industrial Policy &

Promotion, April 2000 to May 2010

Outstanding investments (US$

billion)16.3 1,972.6 As of March 2010

Industrial infrastructure

PPP projects (No) 1 515 www.pppindiadatabase.com

SEZ (No) 3 155In-principle approval as of August 2010,

www.sezindia.nic.in

Parameter Himachal Pradesh Government

Policy support

Sector-specific policies Industry (overall), power, IT, biotechnology

Availability of labour Ample skilled and unskilled labour available.

*Includes Chandigarh, Punjab and Haryana

PPP: public private partnership; SEZ: special economic zone



http://www.pppindiadatabase.com/

9

Key industries with policy thrust and factor advantages

Medium HighLow

Medium

High

Textiles

Food

processing

IT and

electronics

Biotechnology

Chemicals

Auto

componentsLight engineering

Industry attractiveness matrix

Metals

Construction

*Factor advantage

Polic

y th

rust

*Factor advantages include benefits due to geographical location and availability of factors like talent pool, natural resources and capital

PharmaceuticalsTourism



10

Contents








11

Socio-economic snapshot of Himachal Pradesh

Parameters Himachal Pradesh

Capital Shimla

Geographical area (sq km) 55,673

Administrative districts (No) 12

Population density (persons per sq km)* 109

Total population (million)* 6.1

Male population (million) 3.1

Female population (million) 3.0

Population growth rate 1991-2001 (%) 17.5

Sex ratio (females per 1,000 males)* 968

Literacy rate (%)* 76.5

Male (%) 85.4

Female (%) 67.4

Life expectancy at birth (years)

Male 65.7

Female 65.4

STATE ECONOMY AND SOCIO-ECONOMIC PROFILE

Sources: Economic Survey 2009-2010, Ministry of Health and Family Welfare, 2008

*Census 2001


12

3.0

3.1

3.3

3.6

4.1

4.3

4.6

5.4

6.2

5.8

0.0 2.0 4.0 6.0 8.0

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

Himachal Pradesh‟s GSDP

• In 2008-09, Himachal Pradesh‟s Gross State Domestic Product (GSDP) was US$ 5.8 billion. It grew at a CAGR of 7.5 per cent between 1999-2000 and 2008-09.

• The secondary sector has been the fastest growing sector; largely driven by growth in construction and manufacturing.

Himachal Pradesh‟s GSDP (US$ billion)

Source: CMIE


CAGR

7.5%


13

Himachal Pradesh‟s NSDP

• The Net State Domestic Product (NSDP) of Himachal Pradesh was about US$ 6.7 billion in 2008-09.

• The average NSDP growth rate between 1999-2000 and 2008-09, was about 10.8 per cent.

Himachal Pradesh‟s NSDP (US$ billion)

Source: CMIE


2.7

2.9

3.2

3.7

4.1

4.5

5.0

5.9

6.8

6.7

0.0 2.0 4.0 6.0 8.0

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

CAGR

10.8%


14

The secondary sector has an increasing share in Himachal

Pradesh‟s economy

Percentage distribution of GSDP

Source: CMIE

CAGR

• The secondary sector‟s share in the state economy has increased from 36.6 per cent in 1999-2000 to 42.5 per cent in 2008-09. It was driven by high growth of electricity (15 per cent) and construction (9 per cent) sectors.

• Community and personal services are the primary constituents of the state‟s tertiary sector.

• In terms of share within the primary sector, agriculture continues to be a significant contributor to the state economy.


4.8%

6.9%

18.6 23.1

42.5 36.6

38.9 40.3

0%

20%

40%

60%

80%

100%

2008-09 1999-00

Primary Secondary Tertiary

9.1%


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Per capita GSDP

• The state‟s per capita GSDP in 2008-09 was US$ 834.3. It increased at a CAGR of 5.3 per cent between 1999-2000 and 2008-09.

• District-wise distribution of per capita income is quite varied. Districts such as Lahaul, Spiti and Solanhave a relatively higher per capita income, because of their high value-added cash crops and the presence of industrial areas. On the other hand, districts such as Chamba have a significantly lower per capita income.

• The technology and energy sectors have been the key drivers of increase in per capita income.

Source: CMIE

Per capita GSDP


US$ 505.4 511.2 531.9

578.1641.1 655.6 701.8

806.7899.0 834.3

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

1000.0

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09


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Distribution of households by income

• Distribution of households by socio-economic classification (SEC) indicates that majority of households in the state fall in the educated and self-employed or medium-to-high income classes.

Percentage distribution of urban households by SEC*Percentage distribution of rural households by SEC*

Source: BW Marketing Whitebook, 2009-2010;

*See Annexure for SEC classification of households


3.5

6.6

7.9

8.3

20

23.6

11.7

18.5

3.1

9.5

10.6

11.5

23.1

18.4

10.2

13.5

0.0 5.0 10.0 15.0 20.0 25.0

A1

A2

B1

B2

C

D

E1

E2

Himachal Pradesh All-India

Urban4.1

11.8

40.6

43.4

5.2

31

43.1

20.7

0.0 10.0 20.0 30.0 40.0 50.0

R1

R2

R3

R4

Himachal Pradesh All-India

Rural

In per cent In per cent


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Consumer expenditure on household goods and services

Source: Household Consumer Expenditure in

India, 2007-08 NSS 64th Round

Share of average monthly per capita expenditure on

household goods and other services • Himachal Pradesh is ahead compared to all-India

in share of per capita expenditure on education, medical services and durable goods.


52.3%

3.7% 6.3% 3.6%

45.8%

4.4% 6.6% 5.3%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Food Education Medical Durable goods

All-India Himachal Pradesh

Rural


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Key industries in Himachal Pradesh

Key industries in Himachal Pradesh

• Textiles

• Pharmaceuticals

• Food procurement and processing

• Light engineering

• IT and electronics

• Cement

• Tourism

• The rich natural resources of the state are favourably suited for investments in major sectors such as procurement of agricultural produce, hydroelectric power, cement and tourism.

• The districts of Solan, Sirmour, Kangra and Unalead in terms of investments attracted.



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Maize, wheat and apples are the key agricultural products

CropAnnual production

(„000 tonnes)

Wheat 531

Maize 677

Rice 118

Fruit 874

Vegetables 1,090

Potato 145

• In 2008-09, the total production of the major crops of the state (food grains, vegetables and fruit) was 3.4 million metric tonnes.

• Maize was the major crop among the food grains, followed by wheat and rice.

• The state has a prominent horticulture industry. Apple production stood at 510,000 metric tonnes in 2008-09 and accounted for approximately 81 per cent of the state‟s total fruit production.

• Other major fruits grown in the state include peach, apricot, cherry, mango and litchi.

Source: Economic Survey 2009-2010

As of 2008-09



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Himachal Pradesh‟s exports trends

• Himachal Pradesh‟s exports increased by an estimated 18.6 per cent in 2009-2010 over the previous year.

• Major exports from the state were from pharmaceuticals, textiles and power industries.

Growth in exports (%)

Source: Capital Markets


54.1

13.6

-32

128.8

22.6-4.2

15.1

4.1

15.6

18.6

-50.0 0.0 50.0 100.0 150.0

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10


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64%

15%

10%0.4%

7%

2%

Electricity

Manufacturing

Services

Mining

Construction

Irrigation

Investments and FDI inflows

• Himachal Pradesh had outstanding investments of US$ 16.3 billion as of March 2010.

• FDI inflows from April 2000 to May 2010 amounted to US$ 772 million.

• The bulk of the investments were in the power (64 per cent) and manufacturing (15 per cent) sectors.

Break up of investments by sector

Source: CMIE, as of March 2010


*Includes Himachal Pradesh, Punjab, Chandigarh and Haryana


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Contents








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• Ample workforce availability makes Himachal Pradesh an attractive investment destination.

• About 32 per cent of the workforce is classified as main workers, 16.9 per cent as marginal workers and 50.8 per cent as non-workers.

• Agriculture still remains the largest employer, engaging over 65 per cent of the workforce.

• Labour relations are cordial with few strikes, lockouts and lost man-days because of industrial disputes.

Labour availability

INFRASTRUCTURE STATUS


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Road network

• Since much of the state is hilly, roads play a vital role in transportation.

• Of the total road length of 32,926 km, National Highways account for 1,409 km.

• Roads have been assigned a high priority by the Government of Himachal Pradesh. In 2009-2010, the government outlay for road development and related activities was US$ 101 million.




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Airports

Domestic airport

• There are three airports – at Kullu (Bhuntar), Kangra (Gaggal) and Shimla (Jubbar Hatti).

• In addition, there are 57 operational helipads and another 12 new helipads being planned.

• An airport has been proposed for Sundernagar, to match international standards (which can accommodate landing of an Airbus A-320 or a Boeing 747 aircraft).

• Night landing facilities are proposed to be given for all the three existing airports.



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Railways

• Himachal Pradesh falls under the Northern Railways network.

• Two narrow gauge lines connect Kalka with Shimla and Jogindernagar with Pathankot; with a route length of 96 km and 113 km, respectively.

• A 33 km broad-gauge line connects the Nangal Dam to Charuru.




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Power … (1/2)

Installed power capacity (MW)

Sources: Economic Survey 2009-2010 , Central Electricity

Authority, as of March 2010

• In 2009-2010, the state had a power generation installed capacity of 2,030.2 MW.

• Himachal Pradesh is naturally suited for hydro-power generation and accounts for around 25 per cent of India‟s total hydro-power potential.

• It has a high level of village electrification; about 17,183 of 17,495 villages had been electrified by the end of December 2009.

• In order to provide electricity to all the households in the state, the Rajiv Gandhi VidyutikaranYojna (RGGVY) scheme has sanctioned US$ 72.1 million.


1,687.3

1,866.0 1,858.0 1,896.5 2,030.2

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

2005-06 2006-07 2007-08 2008-09 2009-10


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Power … (2/2)

• State-owned power generation in Himachal Pradesh is managed by the Himachal Pradesh Power Corporation Limited (HPPCL) .

• Power transmission is overseen by the Himachal Pradesh Power Transmission Corporation Limited.

• Himachal Pradesh‟s power sector was ranked seventh in the country by the State Power Sector Performance Ratings study conducted by the Power Ministry of India in 2006.

• It is one of the few states in India where power delivered to consumers is 100 per cent metered and its distribution system has 97.4 per cent availability.

Source: Asian Development Bank report on “India, Capacity Building for Himachal Pradesh Power Sector Agencies,” November 2008



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Telecom

• As of March 2010, the state had 4.99 million wireless subscribers and 360,000 wire-line subscribers.

• The state has a high tele-density of 79.4 per cent (as of March 2010), compared to the all-India average of 52.7 per cent.

• Himachal Pradesh has a high density of optical-fibre cable (OFC) per unit area with a 8,500 km network.

Telecom infrastructure

GSM cellular subscribers: 4,790,604^

Broadband subscribers: 20,981*

Post offices: 2,777#

Sources: Cellular Operators of India, November 2009,

Department of Telecommunications, March 2010 ,

Himachal Pradesh in Figures, 2009

*As of October 2008

^As of June 2010#As of 2008-09



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• Shimla is one of the 65 cities that have been identified under the Jawaharlal Nehru Urban Renewal Mission (JNNURM) for local infrastructure development.

• Under JNNURM, four projects costing US$ 32.3 million have been sanctioned for Shimla.

• The projects have been sanctioned for completion between 2007-08 and 2009-2010. The key areas of development are roads and flyovers, water supply, solid-waste management and sewerage.

• The Government of Himachal Pradesh has constituted a state-level steering committee under the chairmanship of the Chief Minister and has nominated Himachal Pradesh Housing and Urban Development Authority (HIMUDA) as the state-level nodal agency for implementing the planned projects under JNNURM.

Urban infrastructure

Sources: JNNURM, Ministry of Urban Development, www.urbanindia.nic.in; Municipal Corporation, Shimla



http://www.urbanindia.nic.in/

31

Public private partnership projects

Contract authority ProjectInvestment

(US$ million)PPP type Status

Roads

National Highway

Authority of IndiaZirakpur-Parwanoo road 100.2 BOT-Toll

Under

construction

Source: www.projectstoday.com

BOT: Build-operate-transfer

• Himachal Pradesh has one project being implemented under the public-private partnership (PPP) mode;

it has a project cost of US$ 100.2 million.



http://www.projectstoday.com/

32

• The male literacy rate is 85.3 per cent and female literacy rate stands at 67.4 per cent. The Government is taking several initiatives to bridge this gap.

• Sarva Shiksha Abhiyan, a programme to ensure universalisation of elementary education, is being implemented in the state on priority basis.

• The state is also planning to establish 16 new universities, in an effort to give a boost to higher education.

• With the introduction of new industrial training institutes/centres (ITI/ITC), annual seats for vocational training stand at over 18,750 in the state.

Education sector … (1/2)

Educational infrastructure

• Engineering colleges: 14

• Medical colleges: 2

• Dental colleges: 5

• Polytechnics: 25

• ITI/ITC: 139



As of December 2009


33

Literacy rates (%)

Literacy rate 76.5

Male literacy 85.4

Female literacy 67.4

Sources: Economic Survey 2009-2010, VII All-India Education Survey, 2007-08

*As of December 2009

• Private participation is being encouraged in technical and vocational education.

Himachal Pradesh primary education statistics

Number of schools (2009-2010)* Primary: 10,748

Middle: 2,338

High/higher and senior secondary schools:

2,100

Pupil-teacher ratio (2007-08) 22:1 (primary)

28:1 (upper primary)

16:1 (secondary)

Net-enrolment ratio in primary schools (2007-08) 99

Education sector … (2/2)



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• Himachal Pradesh has better health indicators than the all-India average.

• The State Government has launched Health Mission, 2008, to provide effective and efficient health services.

Himachal Pradesh‟s health indicators

Birth rate* 17.7

Death rate* 7.4

Infant mortality rate** 44

Life expectancy at birth (years)

Male

Female

65.7

65.4

Source: Ministry of Health & Family Welfare, 2008

*Per thousand persons

**Per thousand live births

Health infrastructure

Health infrastructure

• Civil hospitals: 52

• Community health centres*: 73

• Primary health centres*: 449

• Sub-centres: 2,071

• Dispensaries: 23



As of 2008-09

*As of December 2009


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Financial infrastructure

• Himachal Pradesh has 20 commercial banks operating in the state, of which eight are private sector banks.

• Deposits and advances of all banks in the state have increased significantly over the period from September 2008 to September 2009, registering a growth rate of 22.5 per cent and 15.4 per cent, respectively.

Financial institutions in Himachal Pradesh

Co-operative societies 4,382

Commercial bank branches 776

Regional rural bank branches 152

State cooperative bank branches 407

Central cooperative bank branches 183


As of September 2009



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Cultural infrastructure

• The Himachal Pradesh Sports Council oversees the sports-related activities of the state.

• The Indira Gandhi State Sports Complex provides training for judo, badminton, volleyball, gymnastics, table tennis, boxing, wrestling, and martial arts. The complex also has a fitness and an aerobics facility.

• The state is also constructing another stadium in Dharamsala, with an investment of almost US$ 1 million.

• Adventure sports, such as river rafting, para-gliding and trekking are also popular given the climate and topography of Himachal Pradesh.

• The key hotels in Shimla are East Bourne & Spa, Wildflower Hall and the Oberoi Cecil. In Dharamshala, the key hotels are the Clubhouse and Asia Health Resorts, while the Hotel KulluValley, the Ambassador in Manali are the most popular hotels at Kullu-Manali.

• KangraValley is considered the cultural capital of Himachal Pradesh; its is home to Dharamshala and Mcleodganj, a hub for Buddhist-Tibetan culture. The district has several Buddist monasteries and Hindu temples.

• The S.M. Convention Centre in Palampur, is one of the largest of its kind in the state; it has 25 rooms, five banquet halls, seminar rooms and a board room.



37

Infrastructure Description

Industrial areas Set up at Baddi, Barotiwala, Parwanoo, Kala Amb, Paonta Sahib, Mehatpur, Tahliwal, Amb,

Sansarpur Terrace and Golthai.

Baddi Barotiwala Nalagarh

industrial area

The industrial area has been promoted by the Ministry of Commerce and Industries,

Government of India. It has emerged as a hub for textiles, pharmaceuticals and packaging

industries.

Biotechnology park

The Government has proposed to set up a biotechnology park at Nalagarh. The process for

selection of promoters has been finalised in April 2010 and necessary infrastructure will be

procured by 2010-11.

Nanotechnology parkThe nanotechnology park is proposed to come up on a 400-acre area near the biotechnology

park.

Special economic zones (SEZ)

SEZs have been approved in Kangra, Una and Solan at an estimated cost of US$ 1.8 billion. It is

proposed that Kangra and Solan will have multi-product SEZs and Una will have an airport-

based SEZ.

Inland container depot (ICD)

An ICD is being developed at Baddi for the benefit of exporting industries through Container

Corporation of India. A memorandum of understanding (MoU) has been signed between

Himachal Pradesh Government and Container Corporation of India.

Industrial infrastructure … (1/2)



38

Industrial infrastructure … (2/2)

Name and location Primary industry Description

Baddi TextilesLocated in the Solan district, the Baddi industrial area has several pharmaceutical,

textile, auto ancillary, paper and printing units.

Barotiwala Multi-industry Located in the Solan district; hub for small scale industries.

Parwanoo Light engineeringLocated in the Solan district; the city is an industrial cluster for high-density

polyethylene (HDPE) pipe companies.

Chambaghat Electronics

Located on the Shimla-Kalka highway in the Solan district, the industrial area has

prominent companies such as Himachal Futuristic Communications Limited and

Shivalik Bimetal Controls Limited.

Paonta SahibPharmaceuticals/

chemicals

Located in the Sirmour district, the industrial area has a number of

pharmaceutical and chemical companies.

Tahliwal and Gagret Electronics Located in the Una district, it has prominent telecommunications companies.

Amb industrial area Engineering/autoAmb has prominent engineering and automotive companies such as International

Cars and Motors Limited.

Sansarpur Terrace EngineeringLocated in the Kangra district, it has some of the leading engineering companies

of North India.

Golthai Multi-industry Located in the Bilaspur district, it has been identified as a mini growth centre.

• In an effort to provide infrastructure support to entrepreneurs, the Himachal Pradesh Government has developed 38 industrial areas and 15 industrial estates.



39

Industry Location SEZ (No)

Multi-product Kangra and Solan district 2

Airport-based Una 1

SEZs and industrial estates

Source: www.sezindia.nic.in

• There are three in-principle approved SEZs in Himachal Pradesh as of August 2010.

• In an effort to provide infrastructure support to entrepreneurs, the Himachal Pradesh Government has developed 38 industrial areas and 15 industrial estates.

• Industrial areas have been set up at Baddi, Barotiwala, Parwanoo, Kala Amb, Paonta Sahib, Mehatpur, Tahliwal, Amb, SansarpurTerrace and Golthai.

• Further, the state is focusing on sector-specific infrastructure for biotechnology, IT and tourism.



40

Major infrastructure projects being implemented

Infrastructure typeInvestments

(US$ million)

Power* 6,871.4

Road 236.1

Minerals 8.0

Total 7,115.5

• Over US$ 7.1 billion of investments have been made in ramping up Himachal Pradesh‟sindustrial infrastructure as of March 2010.

• Over 95 percent of the investments in infrastructure have been made in the areas of power generation and distribution.

*Generation and distribution

Source: CMIE



41

Contents








42

Hydro Power Policy, 2007

Aim: To focus on capacity addition, energy security, access and availability, affordability, efficiency, environment and local

employment.

Key initiatives and stipulations:

• Projects up to 2 MW have been earmarked for the investors in Himachal Pradesh and for projects between 2 MW and 5 MW,

first preference to be given to the residents of Himachal Pradesh.

• Projects above 5 MW and up to 100 MW to be allotted to the independent power producers (IPP) via the MoU route and for

those above 100 MW via international competitive bidding. The State Government retains the right to equity participation in

private sector projects above 100 MW, up to a maximum limit of 49 per cent.

• Release of 15 per cent of minimum discharge downstream of the dam/diversion structure to be ensured during the lean season.

• In order to ensure employment to local people, a minimum of 70 per cent of total employees, officers, executives engaged by

the companies should be from the state.

• The concept of involving local people in the development of the “project affected area” has been specially devised, wherein local

area development committees (LADC) have been formed. Developers are supposed to earmark 1.5 per cent of the project cost

for the development of local areas through the LADCs.

• Promote activities such as construction of hydro-power projects, strengthening of transmission and distribution networks to

facilitate transmission of power from these projects and its distribution for utilisation within the state.

Sector-specific policies … (1/11)

STATE POLICIES AND INCENTIVES


43

Hydro Power Policy, 2007(continued)

Incentives and concessions:

• 100 per cent foreign equity permitted on the automatic approval route, as long as it does not exceed US$ 326 million.

• Waiver of 40 per cent financing limit from Indian financial institutions.

• Himachal Pradesh Power Corporation Limited to purchase power at US$ 0.05 per kWh for projects up to 5 MW.

• Banking and wheeling facilities are permitted at 2 per cent, which includes transmission losses.

• Five-year moratorium on payment of electricity duty for companies which consume electricity that they produce.




44

Tourism Policy, 2005

Aim: To make tourism the prime engine of economic growth by positioning the state as a leading global destination by the year

2020.

Key elements and future strategy:

• Create a tourism sub-plan, which is integrated and coordinated with other state departments such as public works, urban

development, irrigation and public health, horticulture, forest, power, etc.

• Upgrade civil infrastructure in major tourist destinations, such as Shimla, Manali, Dalhousie, etc. This would include setting up of

hill stations, spas and resorts, ski slopes, airports, tourist centres and entertainment complexes, luxury hotels, etc.

• Invest in developing a skilled workforce, in order to deliver high quality professional services, for instance, by developing more

food craft institutes in Kangra and Kullu.

• Develop a new marketing strategy to raise awareness of the Himachal Pradesh as a brand and increase the inflow of tourists.

• Facilitate authorisations and permissions for film makers interested in shooting in the state, by creating a single-point authority,

i.e., the commissioner-cum-director of tourism.

• Improve connectivity to and within the state, including by road, rail and air.

• Strengthen the Tourism Development Board so that it can carry out various developmental and tourism promotional activities.

• Encourage private sector investment by simplifying procedures for clearances, etc.




45

Tourism Policy, 2005 (continued)

Thrust areas:

• Rural tourism

• Eco-tourism

• Pilgrimage tourism

• Adventure tourism

• Promoting „unexplored Himachal‟

• Health tourism

• Arts, crafts and souvenirs

Incentives and concessions as per the “Special Package of Incentives” scheme of 2003.




46


Industrial Policy, 2004

Aim: To develop infrastructure with lesser number of regulations and provision for speedy clearance of new projects.

Key targets and initiatives:• To increase installed capacity addition in power by 6,100 MW by 2010.

• Special priority for providing power connections to 100 per cent export-oriented units, IT, biotechnology, FDI projects and tourism sector.

• No electricity duty to be charged on power generated from captive diesel-power plants.

• Permission requirements for captive generating sets to be time bound and simplified; provision for third-party sale of power.

• Supplementing the special package of incentives given to the state by the Central Government with specific concessions and facilities to ensure sustainable industrial development.

• Setting up of single-window clearance and monitoring agency under the chairmanship of the Chief Minister, along with single-window agencies at major industrial towns of Parwanoo, Baddi, Paonta Sahib, Goalthai and Sansarpur Terrace.

• Evolving a „best practices‟ standard in government departments at the delivery end, such as the state power utilities, LabourDepartment and Department of Excise.

• Setting up of activity-specific industrial areas such as food parks, electronics city, export processing zones and biotechnologyparks.

• Reforms in the Labour Department regarding annual inspections and maintenance of registers.

• The State Government, in February 2009, amended the Incentive Rules, 2004, to include biotechnology process-based industrial and non-industrial products, processing laboratories and research and development facilities as thrust industries.

• Also liberalised the process of transfer of industrial plots and sheds in the industrial areas.



47

Industrial Policy, 2004 (continued)


The Central Government has formulated the “Special Package of Incentives” for the states of Uttarakhand and Himachal Pradesh:

• New and existing industrial units that are set up in growth centres, industrial infrastructure development centres, industrial

estates, export processing zones, theme parks (food processing parks, software technology parks, etc.), are entitled to the

following:

• 100 per cent excise duty exemption for a period of 10 years from the date of commencement of commercial

production.

• 100 per cent income tax exemption for initial period of five years, and thereafter, 30 per cent for companies and 25 per

cent for others for a period of five years from the date of commencement of commercial production.

• All new industries that are set up in notified locations are eligible for a 15 per cent capital investment subsidy of their investment

in plant and machinery, subject to a ceiling of US$ 65,217.

• Thrust sector industries are entitled to the same concessions as listed above, without any area restrictions.

• The Central Government gave an in-principle approval to extend the package by one year, after its expiry in March 2010.




48

Industrial Policy, 2004 (continued)

The Industrial Policy identifies the following “thrust industries” for Himachal Pradesh:

• Floriculture

• Medicinal herbs and aromatic herbs

• Honey

• Horticulture and agro-based industries

• Food processing industry

• Sugar and its byproducts

• Silk and silk products

• Wool and wool products

• Woven fabrics

• Sports goods

• Paper and paper products

• Pharmaceutical products

• Information and communication technology (including

computer hardware call centres)

• Bottling of mineral water

• Eco-tourism

• Industrial gases

• Handicrafts

• Non-timber forest products

The Central Government‟s special package of incentives for the above sectors have contributed significantly to the industrial

growth of the state, especially, in the areas of pharmaceuticals and tourism.




49

IT Policy, 2001

Aim: Action plan to harness the potential benefits offered by IT

Key initiatives:

• Department of Information Technology (DoIT) acts as a single-point interface for setting up an IT unit in the state.

• IT software and services are deemed to be manufacturing activity.

• All IT units with a connected load exceeding 100 KW to be charged a concessional rate of electricity duty at the rate of 10 paisa

per unit for a period of five years from the date of commencement of commercial production.

• Provision of tax-related incentives.

• Accredited training institutions to be eligible for claiming industry status (subject to norms) to benefit from industry concessions.

• Special packages for investment proposals above US$ 2.5 million or if the company is a Fortune 500 company.

• Continuous power supply to the IT industry, in consideration of it being treated as a “continuous process” industry.

• Registered IT units within the declared Software Technology Park (STP), IT habitats and hi-tech cities to be eligible for relaxation

of floor area ratio (FAR) to the extent of 50 per cent.

• Exemption from land and building tax within the declared STP, IT habitats and hi-tech cities.

• Creation of a venture capital fund of US$ 5 million in association with Small Industries Development Bank of India (SIDBI).




50

IT Policy, 2001(continued)


• IT and related services are considered as a part of manufacturing; the companies are eligible for the same incentives and

concessions as other industries under the Industry Policy, 2004.

• Under the Industrial Policy, 2004, IT and IT services is defined as „thrust industry” and is eligible for a special package of

incentives such as income tax exemption/concession, central excise exemption and capital subsidy.

• Companies within this sector are eligible for industrial power tariff and other power-related incentives and concessions, which

are applicable to other industrial consumers.

• Tax-related incentives:

• Exemption from central sales tax (CST) for new IT industrial units until March 2013. Existing units who have availed of this

exemption for less than six years and eight months are also eligible.

• 100 per cent income tax exemption for initial five years of operation, and thereafter a 30 per cent rebate for another five

years.




51

Biotechnology Policy, 2001

Aim: To focus on developing new technologies in the areas of biotechnology for agriculture, animal husbandry and healthcare.

Key initiatives:

• Upgrade infrastructural support to research and development (R&D) institutions for skill development in biotechnology.

• Intensify R&D work in potential areas of biotechnology including agriculture, animal husbandry and human health.

• Conserve and commercially exploit bio-resources of the state for sustainable development.

• Attract entrepreneurs for setting up of biotechnology-based industries.

• Provide suitable institutional framework to achieve the objectives.




52

Biotechnology Policy, 2001 (continued)


• Biotechnology is identified as a “thrust sector” under the Industrial Policy, 2004 and is eligible for incentives and concessions

under the policy.

• The State Government proposes to establish two separate biotechnology parks, one between Solan and Shimla and another

between Shahpur and Jogindernagar in the PPP mode; land will be made available to prospective entrepreneurs.

• The entrepreneurs will be free to set up their units in other established industrial areas in the state.

• For registered biotechnology units within the declared biotechnology park or industrial area, relaxation of up to 50 per cent of

floor-area ratio (FAR) norms. For units that are in the other areas, relaxation of up to 25 per cent is permissible, subject to

population density, infrastructure availability and local geology.

• Biotechnology units will be considered at par with fruit-, vegetable- and maize-based units and shall enjoy the same concessions

such as goods and service tax (GST) exemption, CST concessions, procurement of raw materials at 1 per cent GST, allotments

of plots/sheds at reasonable prices in industrial areas/estates, etc.

• Power will be supplied at industrial rates; biotech units will be exempt from routine power cuts, load shedding, and peak time

restrictions.




53

Company logos cited in this section are registered trademarks of the respective companies

Contents








54

Agro-based industry

• Agriculture is the main occupation of the state and a major source of employment, though its share in the GSDP has been declining.

• Food processing industry is mainly in the areas of traditional processing of agricultural and horticulture raw material.

• Agri-procurement has lately been an investment area for corporate entities.

• The area under fruit cultivation increased from 792 hectares in 1950-51 to about 204,629 hectares in 2008-09.

• Apple is one of the most important crops in the state, constituting about 81 per cent of the total fruit production. The state produced 510,000 metric tonnes of apples in 2008-09.

Key players

• Adani Agri fresh

• Reliance

• Dharampal Satyapal Group

• Himachal Pradesh Horticulture Produce

Processing and Marketing Corporation (HPMC)

• Nestle India

• Dabur

• Mahaan Group

• Himalayan Organics

BUSINESS OPPORTUNITIES


55

Cremica Group Cremica Group is a prominent player in both the Indian food retail and the food services industry;

the company recorded a revenue of US$ 90 million in 2008-09. The business activities of the

company include Cremica Frozen Foods, EBI Foods, Mrs Bector‟s Desserts and Cremica Agro India.

The company is commissioning a plant at Tahliwal Industrial Area, Una, for manufacturing biscuits

and Indian snack foods. It is a 100 per cent automated facility with a monthly manufacturing capacity

of 5,000 tonnes of biscuits.

Adani Agri Fresh Adani Agri Fresh, a 100 per cent subsidiary of Adani Enterprises, which had revenue of US$ 2.45

billion in 2009-2010, has set up three controlled-atmosphere storage units at an investment of US$

33 million and capacity of 6,000 metric tonnes each; involved in procurement, storage and

transportation of apples, apricots and vegetables. It procured about 24,000 metric tonnes of apples in

2007-08 for storage as well as spot sales; the company plans to procure 35,000 tonnes of apples

from the Shimla and Kinnaur belt in 2010-11.

Reliance Reliance Retail is a subsidiary of the Indian conglomerate, Reliance Group. It recorded revenues of

US$ 28 billion and has created a supply chain for procurement of apples, peaches, apricots and

vegetables in the state.

Dharampal Satyapal

Group

Diversified conglomerate with presence in chewing tobacco, spices, beverages and hospitality. The

group recorded revenues of US$ 340 million in 2008-09. The group has two plants in Baddi,

Himachal Pradesh. The company produces the “Catch” brand of mineral water at its Kullu facility and

“Pass Pass” mouth freshener.

Food procurement and processing – company profiles … (1/2)



56

Food procurement and processing – company profiles … (2/2)

Nestle India Nestle has a presence in India for almost a century with seven production facilities across the

country. The company produces chocolate and confectionaries, prepared dishes and cooking aids,

beverages and milk products and nutrition. It had revenues of US$ 1.1 billion in 2009-2010 from its

Indian operations . In December 2009, Nestle India announced that it had received approval to set

up a US$ 54.3 million food and beverage manufacturing facility in the Una district which will provide

direct employment to 650 people.

Dabur Dabur is one of the country‟s largest consumer goods companies. It had revenues of US$ 600 million

in 2008-09; the company manufactures several of its products in Himachal Pradesh, including honey

and amla.

Mahaan Group Delhi-based Mahaan Group specialises in dairy products as well as in other food products, such as

bakery items, beverages, confectionary items, salad dressing, sauces and soups. It has a dairy plant

based in Paonta Sahib, which manufactures dairy whitener, skim milk powder and other milk-based

products, as well as a processing facility for skim milk.

Himalayan Organics Himachal Organics is a Kullu-based exporter and supplier of organic food products. The company‟s

product range includes fruits and vegetables such as lettuce, brussel sprouts, broccoli, plums and

apples as well as cereals such as red rice.



57

Pharmaceuticals

• Himachal Pradesh is among the fastest growing regions for the pharmaceutical industry in India, driven by the incentives announced by the State Government in its Industrial Policy, 2004.

• Around 300 pharmaceutical companies have set up operations in the state, including Ranbaxy, Dr Reddy‟s, Morepen and Torrent Pharmaceuticals.

Key players

• Ranbaxy Laboratories

• Cipla

• Torrent Pharmaceuticals

• Dr Reddy‟s Laboratories

• Panacea Biotec

• Gopal Lifesciences

• Morepen

• Mankind Pharmaceuticals

• FemCare Pharma Limited

• Indoco Remedies

• Promed

• Alkem

• Ozone Ayurvedics

• Abyss Pharma Private Limited

• Dabur

• Zydus Cadila



58

Pharmaceuticals – company profiles … (1/4)

Ranbaxy Laboratories

Limited

Ranbaxy is among India‟s leading pharmaceutical companies with business operations in 40 countries

and manufacturing facilities in six countries. It has a manufacturing facility at Paonta Sahib, district

Sirmaur. The company manufactures fermentation-based products such as Lovastatin and Pravastatin.

In 2008, Japanese conglomerate Daiichi Sankyo became the largest shareholder in Ranbaxy. In July

2009, Ranbaxy announced that it would set up another plant in Solan district with an outlay of US$ 7.3

million. In 2009-2010, the company‟s revenue crossed US$ 1 billion.

Cipla Cipla has one of the largest product portfolios with over 1,000 products and revenue of US$ 1.2 billion

in 2009-2010. The company established a manufacturing facility at Baddi with an investment of roughly

US$ 11 million in 2005. The unit manufactures bulk drugs, tablets and capsules, creams,

aerosols/inhalation devices and injections/sterile solutions.

Torrent Pharma Limited Torrent Pharma is one of the largest pharmaceutical players in the domestic market. The company

commissioned a new formulation manufacturing facility at Baddi in November 2005 with an investment

of US$ 30.6 million, which has a capacity to manufacture 3,600 million tablets, 400 million capsules and

18 million oral liquid bottles per annum. The manufacturing capacity at the Baddi facility has been

increased by around 30 per cent to meet the increased export demand.



59


Panacea Biotec Panacea is one of India‟s prominent pharmaceutical and biotech companies involved in research,

manufacturing and marketing of pharmaceutical formulations. It recorded revenues of US$ 186.7

million in 2009-2010. The company filed 1,158 patents as of 2009-2010, of which 325 have been

granted. It employs over 3,200 people. Its pharmaceutical and vaccine formulations facility is located in

Baddi, with a production capacity of 900 million tablets, 120 million hard-gelatin capsules, 150 million

soft-gelatin capsules, 60 million herbal capsules and 600 million doses of vaccines per annum.

Dr Reddy‟s Laboratories

(DRL)

Established in 1984, Dr Reddy‟s ranks among the top 15 generics players in the world. It is the first

pharmaceutical company in Asia-Pacific (outside Japan) to be listed on the New York stock exchange

(NYSE). It has presence in 35 countries with operations in over 115 countries; overseas business

contributes around 86 per cent to the total revenue. The company aspires to become a discovery-led

global pharmaceutical company and one of the top 10 generic companies in the world. It has a

presence in therapeutic categories such as anti-infectives, cardio-vascular, diabetes, dermatological,

pain management, nutritional, dental, urological and oncology. The company has a finished dosage

facility in Baddi.

Gopal Lifesciences Gopal Lifesciences is a Himachal Pradesh based pharmaceutical firm, located in Baddi, which

manufactures tablets, capsules and liquid medication. The company is involved in both contract

manufacturing as well as its own manufacturing.

Morepen Set up in 1984, Morepen Laboratories is an Indian pharmaceutical firm specialising in active

pharmaceutical ingredients as well as formulations manufacturing. It had revenues of US$ 33 million in

2009-2010. The company has three manufacturing facilities in the state at Masulkhana, Parwanoo and

Baddi.



60


Mankind Pharmaceuticals Mankind Pharmaceuticals is a prominent Indian pharmaceutical company specialising in drugs such

as prescription antibiotics, antifungals, gastrointestinals, etc. It had revenues of US$ 200 million in

2008-09. The company has a US Food & Drug Administration (USFDA)-approved manufacturing

unit at Paonta Sahib, which has a production capacity of 60 million ampoules and 30 million vials in

a single shift.

Fem Care Pharma Limited Fem Care Pharma is an Indian company that operates in the personal care, pharmaceutical and

specialty chemicals businesses. It recorded revenues of US$ 34.4 million in 2008-09, of which the

pharmaceutical division contributed US$ 2.7 million. The pharmaceutical division is located in

Nalagarh and specialises in dermatological products.

Indoco Remedies Indoco Remedies is an Indian pharmaceutical formulations and active pharmaceutical ingredients

(API) manufacturing and marketing firm. It had revenues of US$ 85 million in 2009-2010. The

company has a US$ 9 million manufacturing facility in Baddi, which has an annual production

capacity of 1.5 billion tablets, 3,000 kilolitres of liquid orals, 200 tonnes of creams and ointments

and 1,500 tonnes of toothpaste.

Promed Set up in 1990, the company manufactures and exports pharmaceutical formulations. It has a

manufacturing facility in Nalagarh and manufactures products such as nasal drops, eye drops,

inhalation products, wound care products and injectibles.



61


Alkem Laboratories Founded in 1974, Alkem is one of the prominent pharmaceutical companies in India; it has a Baddi

facility with a built-up area of 220,000 sq ft, which produces tablets, capsules, dry powder injectibles

and oral suspensions.

Ozone Ayurvedics Ozone Ayurvedics is a division of Ozone Group. It manufactures and supplies personal care products

such as anti-acne and anti-blemish creams, soaps, face wash, face packs, as well as herbal and Ayurvedic

products. The company had revenues of US$ 34.9 million in 2008-09. It has a manufacturing facility in

Baddi.

Abyss Pharma Private

Limited

Abyss Pharma is an Indian pharmaceutical formulations company, which began operations in 1985. It

produces a variety of products ranging from tablets and capsules to ear drops, injectibles and

sunscreens.

Dabur Dabur is one of the country‟s largest consumer goods companies. It had revenues of US$ 607.7 million

in 2009-2010. The company manufactures several of its products in Himachal Pradesh, including its

throat lozenges brand Honitus, glucose and digestive brand, Hajmola.

Zydus Cadila Zydus Cadila is a pharmaceutical company, which manufactures both formulations as well as active

pharmaceutical ingredients (API). It is headquartered in Ahmedabad. The company had revenues of

US$ 762 million in 2009-2010. The company employs over 10,000 people worldwide. It has a

formulations manufacturing facility at Baddi.



62

Textiles

• The textiles industry in Himachal Pradesh is mainly focussed on spinning, however, some companies such as Vardhman are also engaged in weaving and dyeing.

• Handloom and carpet weaving have developed as small scale industries.

• SEL Manufacturing Company announced in September 2008 that it would be setting up a technical textile park in the state, at a cost of US$ 124.4 million. The park will be spread across 100 acres of land and is estimated to create over 10,000 jobs.

Key players

• Birla Textile Mills

• Winsome

• Vardhman

• Malwa Cotton

• Himtex Textiles Private Limited

• Sara Textiles Limited

• Himachal Fibre Limited

• Nirmal Furnishing Fabrics

• GPI Textiles



63

Textiles – company profiles … (1/2)

Malwa Cotton Spinning Mills Malwa Cotton Spinning Mills is a subsidiary of VSO Group. The company has a

manufacturing facility at Paonta Sahib, which manufactures cotton, acrylic, polyester and

viscose.

Vardhman Group The group recorded revenues of US$ 2.1 billion in 2009-2010. It has three state-of-the-art

spinning facilities at Baddi with a combined installed capacity of over 240,000 spindles, and a

daily capacity of 150,000 metres. Its products include yarns, fabrics, sewing threads and fibre.

The company is among the largest producers and exporters of yarns and grey woven fabrics,

tyre cord yarns and sewing threads. The company also set up a finishing operation in Baddi,

under the name Auro Textiles, which has a production capacity of 160,000 metres per day.

Winsome Group The group has a spinning facility at Baddi. It produces yarns in a variety of shades in melange,

package dyed, and fibre-dyed yarns. The company plans to expand its spinning capacity by

13,000 spindles and dyeing capacity by 10 tonnes per day. Expansion plans announced in

August 2009 involve expenditure of about US$ 31 million.

Birla Textile Mills Division of Chambal Fertilizers and Chemicals Limited, a flagship company of the KK Birla

Group of companies. The company‟s Baddi plant has an installed capacity of more than

80,000 spindles.



64

Himtex Textiles Private Limited. Established in 2007, Himtex produces cotton yarn. It has a rotor capacity of 1,040. The

company‟s spinning facilities are located in Una. It plans to double its number of rotors in

2009-2010.

Sara Textiles Limited It is the textile arm of the Sara Group, which specialises in textile manufacturing and sales. The

company has a modern terry towel manufacturing unit in Nalagarh, besides a textile export

unit and a spinning unit.

Himachal Fibre Limited Established in 1982, the company is a manufacturer of multiple types of yarn, such as cotton

yarn, melange yarn, open-end yarn, blended yarn, etc. It had revenue of US$ 16.9 million in

2008-09. It has a manufacturing unit in the Barotiwala industrial area, Solan.

Nirmal Furnishing Fabrics Nirmal Furnishing Fabrics was set up in 1982. It is a 100 per cent subsidiary of Nirmal Spinning

Mills Private Limited and specialises in shawl manufacturing. It has a composite textile mill in

Baddi, with the latest shuttle-less looms.

GPI Textiles Limited GPI Textiles is a part of the Ispat Group and is one of the largest and most modern spinning

plants in the country, with over 84,000 spindles and 960 rotors, producing over 23,000 metric

tonnes of yarn per annum. The company is based in Nalagarh.

Textiles – company profiles … (2/2)



65

Light engineering goods

• The light engineering goods industry in Himachal Pradesh includes precision engineering components, automotive components, steel and fabrication units and cylinder manufacturing.

• Kala Amb in Paonta Sahib has a large number of steel fabrication mills.

• Auto component units are, mainly, based in Parwanoo (Solan district).

• International Cars and Motors Limited has a factory at Una.

Key players

• Gabriel

• Purolator

• International Cars and Motors Limited

• Blue Star India

• Spray Engineering Devices Limited

• TVS Motor Company

• Deepak Power Storage Enterprises



66

Light engineering industry – company profiles … (1/2)

Gabriel India Gabriel is a flagship company of the US$ 400 million Anand Automotive Group; it manufactures

ride-control systems and engine bearings. The company supplies to all three segments of the

market: original equipment, aftermarket and exports. It produces 20 million units per annum.

In November 2008, the company started operations at the Parwanoo plant. The plant manufactures

shock absorbers and components for two-wheelers. It has an annual capacity of 2.4 million shock

absorbers and 400,000 struts.

Mahle Filter Systems India

Limited

Purolator is a joint venture between Anand Group and Arvin Meritor (US). It is one of the largest

producers and exporters of air, oil and hydraulic filters in the country. The company has clients

from automotive, railways and aviation industries. It has set up its second plant at Parwanoo and

production began in February 2010. The plant has an annual capacity of 22 million filters.

International Car and

Motors Limited (ICML)

ICML is a US$ 285 million subsidiary of the Sonalika Group. It sells multi-utility vehicles under the

brand name Rhino. The company has an installed capacity of 2,000 vehicles per month, a state-of-

the-art facility at Una and technical collaboration agreement with MG Rover of the UK.



67

Light engineering industry – company profiles … (2/2)

Blue Star India Blue Star is one of India‟s largest air conditioning companies. It had revenues of US$ 540 million in

2009-2010. The company employs 2,600 people in five manufacturing facilities across the country. In

2005, the company set up a 14,000 sq m manufacturing unit at Kala Amb.

Spray Engineering Devices

Limited

Spray Engineering Devices was established in 1992 and is a flagship company of Spray Engineering

Devices (SED) group. It is an engineering company, with focus on redesign and engineering of

processes and equipment. The company had revenues of US$ 38 million in 2008-09. The company

has a sheet metal manufacturing unit in Baddi, which was set up in 1996. A second unit was set up in

Baddi in 2001 and a third unit to process sheet metal (capacity of 35 tonnes per day) was also set

up in Baddi in 2006.

TVS Motor Company TVS Motor is one of the largest two-wheeler manufacturers in India. It had revenues of US$ 1

billion in 2008-09 and had over 4,000 employees. In 2007-08, the company began operations at its

new Nalagarh plant.

Deepak Power Storage

Enterprises

Established in 1940, Deepak Power Storage Enterprises is a part of the Deepak Group of

Companies. It is a prominent two-wheeler and four-wheeler battery manufacturer in North India. It

has a modern fully-automated manufacturing facility in Sansarpur Terrace, Kangra.



68

Cement industry

• Himachal Pradesh has ample availability of quality limestone; the state supplies almost half of its cement produced to other states.

• Three new cement plants are being operated by Larsen and Toubro, Grasim Industries and Harish Chandra Limited.

• MoUs have been signed by India Cement Limited, Lafarge India Limited and JP Industries to establish three additional cement plants.

Key players

• ACC

• Ambuja Cements

• UltraTech Cements

• Jaypee Cements



69

Cement – company profiles

ACC ACC is one of India‟s foremost manufacturers of cement and concrete with 14 factories. It has plants at

Gagal, Bilaspur. The company has completed augmentation of its clinker and cement grinding unit with a

capacity of 4.4 million tonnes per annum (MTPA). In September 2009, the state allowed ACC to generate

electricity using the waste exhaust from kiln gases, an environmentally-friendly method.

Ambuja Cements Ambuja Cements is among the large cement companies in India with annual combined capacity of 16

million tonnes. It has an installed capacity of 2 MTPA in Darlaghat (Solan district). At the end of 2008, the

company announced a US$ 760 million expansion program. The capacity of the company‟s Nalagarh

grinding plant is to be expanded by 1.5 million tonnes and a new clinker unit to be set up in Rauri with a

capacity of 2.2 million tonnes.

UltraTech Cement

Limited

UltraTech Cement is a subsidiary of Grasim Industries Limited, which is the flagship company of the

Aditya Birla Group. It had an annual capacity of 45.7 million metric tonnes in June 2009. It specialises in

grey cement. The group revenue was US$ 4 billion in 2008-09. The company is setting up a US$ 217

million cement plant in Mandi, which would provide employment to 1,000 people.

Jaypee Cement Jaypee Cement has an aggregate annual capacity of 14.7 million metric tonnes and is among the largest

cement producers in the country. The company has aggressive expansion plans and is targeting an annual

capacity of 23 million metric tonnes and 30 million metric tonnes by 2010 and 2011 respectively. Jaypee

has a cement blending unit in Nalagarh, which has a production capacity of 2.5 million metric tonnes.



70

IT and electronics industry

• Himachal Pradesh‟s IT policy and the incentives offered to the IT industry are aimed at promoting the state as an attractive destination for the industry.

• The state has proposed to set up software technology parks and several incentives are being offered to IT firms.

• The state has launched a venture capital fund dedicated to the IT industry with a corpus of around US$ 4.8 million. It is funded jointly by Small Industries Development Bank of India (SIDBI) and other state government agencies.

Key players

• Himachal Futuristic Communication Limited

• Microtek International

• Luminous TeleInfra Limited

• WeP Peripherals Limited

• Spice Mobile



71

IT and electronics industry – company profiles … (1/2)

Himachal Futuristic

Communications Limited

HFCL is a leading telecom equipment manufacturer, particularly, transmission equipment,

optical-fibre cables, accessories and terminal equipment. It has two facilities at Solan with 1,500

professionals. The company is among the first Indian telecommunication companies to have

successfully subscribed a global depository receipts (GDR) issue. The company is working on

product development in areas such as Internet Protocol Digital Subscriber Line Access

Multiplexer (IPDSLAM), Wi-Max, Gigabit-capable Passive Optical Network (GPON), high-speed

IP infrastructure, mobility and system integration.

Microtek International Microtek International is an IT peripherals and power products company. It has set up a

motherboard manufacturing facility at Parwanoo with a capacity of 50,000 motherboards per

month.



72

IT and electronics industry – company profiles … (2/2)

Luminous Teleinfra Limited Luminous is a company of the SAR Group; it provides telecom application solutions, which

aim to bring about a reduction in energy consumption and operating expenses. The group

revenue was US$ 124.4 million in 2007-08. In November 2008, the company announced plans

to set up a US$ 32.6 million 50,000 unit (per annum) manufacturing plant in Una, which would

produce telecom batteries, power management units and conversion devices.

WeP Peripherals Limited Established in 2000, WeP Peripherals started manufacturing dot-matrix printers; it has now

diversified into power solutions – uninterrupted power supply (UPS); the company has a

state-of-the-art manufacturing facility in Baddi, where it has the capacity to produce more

than 650,000 products per annum.

Spice Mobile Spice Mobile, a subsidiary of the Spice group is among the largest mobile handset makers in

India; it has a manufacturing facility in Baddi, in which it began production of mobile handsets

in March 2010. The company proposes to increase its local production and has made a US$

21.7 million investment for this expansion.



73

Tourism industry … (1/2)

• Tourism is one of the most important sectors for the state economy in terms of foreign exchange earnings as well as creation of employment opportunities.

• The state is endowed with topographic diversity as well as with historical monuments and religious shrines.

• As of December 2009, there were 1,992 registered hotels and guest houses in the state.

Source: Directorate of Tourism, Himachal Pradesh

As of December 2008

Top tourist

destinations

Registered hotels and

guest houses (No)

Kullu 562

Shimla 377

Kangra 294

Solan 165

Chamba 150



74

Total tourist arrivals in Himachal Pradesh

Source: District-level Economic Indicators, 2008

^As of 2008

No

of to

uri

sts

( m

illio

n)

Tourism industry … (2/2)

• The tourist inflow in the state has increased from 5.7 million in 2003-04 to 11.4 million in 2009-2010, representing a CAGR of 12.2 per cent.

DestinationNo of tourists ^

(in million)

Shimla 2.2

Kullu 2.1

Kangra 1.3

Bilaspur 0.7

Chamba 0.7


5.716.55

7.147.95

8.829.75

11.4

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2003 2004 2005 2006 2007 2008 2009



75

Major industrial projects being implemented

Promoter ProjectInvestment

(US$ million)Location

Pharmaceuticals

Ankur Drugs & Pharma Limited Drug formulations project 43.5 Solan

Torrent Pharmaceuticals Limited Drug formulations project 21.7 Solan

Dabur India Limited Drug formulations project 28.3 Solan

Venus Remedies Limited Drug formulations expansion 21.7 Solan

Fresenius Kabi Oncology Drug formulations project 21.7 Solan

Cement

Jaiprakash Associates Limited Cement grinding project 201.1 Solan

Lafarge India Limited Cement plant 195.7 Mandi

Telecom

Luminous Teleinfra Limited Telecom batteries project 42.2 Una

Textiles

Cannon Industries Private Limited Spandex yarn project 34.6 Kangra

Jindal Specialty Textiles Limited Technical textile products project 32.6 Una

Vardhman Polytex Limited Textiles project 22.8 Solan




76

Key industrial projects being plannedPromoter Project Investment (US$ million) Location

Airport

Airports Authority of India Expansion of runway 22.1 Shimla

Pharmaceutical

Ankur Drugs & Pharma Limited Drug formulations project 43.5 Solan

Education

Employees‟ State Insurance Corporation Medical college 126.6 Mandi

Cement

Jaiprakash Associates Limited Cement plant 434.8 Solan

Grasim Industries Limited Cement plant 217.4 Mandi

Coromandel Cements Limited Cement plant 195.7 Shimla

J K United Cements Private Limited Cement plant 847.8 Chamba

Steel

Steel Authority of India Limited Steel processing project 21.7 Kangra

IT/ITeS

Government of Himachal Pradesh IT/ITeS SEZ 43.5 Shimla

Cement

Steel Authority of India Limited Limestone mining project 56.5 Solan




77

Contents








78

Key approvals required

Approvals and clearances required Departments to be consulted

Prior to setting up the unit

Registration District Industry Centre for SSI or large and medium industries

Allotment of land/shed State Department of Industries/Infrastructure corporation

Permission for land use District authorities, Department of Town and Country Planning

No-objection certificate under the Water and Air Act Himachal Pradesh State Pollution Control Board

Approval for construction activity and building plan Town and Country Planning Authority

Site environmental approval State Pollution Control Board and Ministry of Environment and Forests

Provisional trade tax registrations Central and state excise departments

Registration under Central Sales Tax act Central and state excise departments

Before commencement of production

No-objection certificate under Water and Air Act State Pollution Control Board

No-objection certificate Fire Department and Directorate of Factories and Boilers

Permanent trade tax registration Central and state excise departments

Registration under Central Sales Tax Act Central and state excise departments

After commencement of production/activity

RegistrationDepartment of Industries and respective sector departments such as

information technology/biotechnology, etc.

DOING BUSINESS IN HIMACHAL PRADESH


79

Key nodal agencies

Single-window clearance

agency

• Agency for speedy clearance and in-principle approval to large and medium scale projects.

• Time frame for approval is 30 days.

• Since inception in January 2004, 36 meetings have been held and 753 projects with an

investment of US$ 5.37 billion have been approved up to March 2009.

Directorate of Industries

• Registration of small scale industries (SSI) and recommendation of medium and large scale

industries to the appropriate authority.

• Technical and general consultancy.

• Recommendation for financial assistance to financial institutions/banks for margin money and

loans.

• Industrial infrastructure development.

• Collection and maintenance of data relating to industrial units.

• Allotment of industrial plots, sheds and shops in districts.

• Liaison with and provide feedback to the central and state governments.

• Administration of all incentives to industries given by both central and state governments.

Himachal Pradesh Small

Industries and Export

Corporation

• Supply of raw material through appropriate depots.

• Supply of machinery on hire-purchase.

• Provision of assistance in export and marketing.



80

Cost of doing business in Himachal Pradesh

Cost parameter Cost estimate

Industrial land (per sq ft)Baddi industrial area: US$ 15 to US$ 50

Other industrial areas: US$ 12 to US$ 35

Office space rent

(per sq ft per month)US 10 cents to US$ 8

Residential rent

(1,600 to 2,500 sq ft house)US$ 250 to US$ 900 per month*

Hotel costs (per room, per night) US$ 20 to US$ 45

Power# (per kWh)Small and medium industries: US 8.4 cents to US 8.9 cents

Large industries: US 7.4 cents

Labour (minimum wage per month) US$ 48 to US$ 54

Water (per kl)Non-industrialised areas: US 12 cents

Industrialised areas: US 19 cents

Sources: Directorate of Industries, Department of Labour, Industry sources

*Simla or Kulu Manali

#Commercial and industrial

kl: kilolitre



81

Single-window clearance mechanism … (1/2)

• Single-window clearance mechanism (SWM), established under the Himachal Pradesh Industrial Facilitation Act, 2005. It has two-tier structure to grant exemption or relaxation from any of the provisions or rules of the Act.

• District Single Window Clearance Committee for each district in the state; chaired by the General Manager/Member Secretary, with senior-most officers of departments concerned in the district as members.

• State-level agency with the Chief Minister of Himachal Pradesh as its Chairman and various heads of departments as its members.

• Approvals for proposals with investments of over US$ 1.2 million, power requirement of above 5 MW and industries in the negative list such as forest-based, mining, etc., as defined by the Central and State Government – are decided by the state-level single-window clearance agency.

State-level Single Window

Clearance and Monitoring

Authority

Chief Minister of

Himachal

Pradesh

District-level single

window clearance agency

GM-

DIC/Member

Secretary

SWM structure in Himachal Pradesh



82

Purpose:

• Provide first approval to medium and large scale investment proposals within 30 days of submission.

• Projects above US$ 1.2 million, power requirements above 5 MW, forest-based and industries indicated in the negative list by central and state governments–approved by the agency.

Single Window Clearance and Monitoring Agency: state-level nodal agency

Purpose:

• Provides sanctions and clearances for setting up small scale industrial units.

District Industry Centre (DIC): district-level committee for single-window clearance

Composition:

• The Chief Minister of Himachal Pradesh is the Chairman of the agency; other members include heads of the departments of town and country planning, labour, electricity, water, director of industries, industrial adviser.

Composition:

• Convened by the General Manager, DIC or member secretary, Single Window Clearance and Monitoring Agency

Single-window clearance mechanism … (2/2)



83

Contact list

Key agency Contact information

Himachal Pradesh Industries

Department

Udyog Bhawan

Shimla

Phone: 91-177-2812613

E-mail: [email protected]

Website: http://himachal.nic.in/industry/welcomelat.htm

Himachal Pradesh Small State Industries

and Export Corporation Limited

Kishore Bhawan, The Mall

Shimla

Himachal Pradesh - 171001

Phone: 91-177 2656713/ 2658266/ 2653070


Website: http://hpssiec.com/

Himachal Pradesh State Industrial

Development Corporation Limited

New Himrus Building

Circular Road

Shimla

Phone: 91-177-2624751, 2624752, 2624754, 2625422

Fax: 91-177-2624278


Website: http://www.hpsidc.nic.in/tele.htm



mailto:[email protected]:[email protected]:[email protected]://himachal.nic.in/industry/welcomelat.htmmailto:[email protected]://www.hpsidc.nic.in/tele.htm

84

Source: Market Research Society of India

Education/occupation

Illit

era

te

Schoo

l up t

o four

year

s/ litera

te,

but

no form

al

schoo

ling

Schoo

l up t

o

five

to n

ine y

ear

s

SSC

/HSC

Cert

ific

ate

cours

e, but

not

grad

uat

e

Gra

duat

e/P

ost

Gra

duat

e

genera

l

Gra

duat

e/P

ost

Gra

duat

e

Pro

fess

ional

Unskilled workers E2 E2 E1 D D D D

Skilled workers E2 E1 D C C B2 B2

Petty traders E2 D D C C B2 B2

Shop owners D D C B2 B1 A2 A2

Entrepreneurs: employee none D C B2 B1 A2 A2 A1

Entrepreneurs: employee < 10 C B2 B2 B1 A2 A1 A1

Entrepreneurs: employee > 10 B1 B1 A2

A

2 A1 A1 A1

Self-employed professionals D D D B2 B1 A2 A1

Clerical/salesman D D D C B2 B1 B1

Supervisory level D D C C B2 B1 A2

Officers/executives: junior C C C B2 B1 A2 A2

Officer/executive: middle/senior B1 B1 B1 B1 A2 A1 A1

AnnexureSocio-economic classification of urban and rural households: urban grid



85

Education

Type of house

Pucca Semi pucca Kuccha

Illiterate R4 R4 R4

Literate, but no

formal schoolR3 R4 R4

Upto fourth standard R3 R3 R4

Fifth to Ninth

standardR3 R3 R4

S.S.C./H.S.C. R2 R3 R3

Some college, but not

GraduateR1 R2 R3

Graduate/post

graduate (general)R1 R2 R3

Graduate/post

Graduate

(professional)

R1 R2 R3

Source: Market Research Society of India

Annexure … (1/2)

Socio-economic classification of urban and rural households: rural grid



86

Year INR equivalent of one US$

2000 46.6

2001 48.3

2002 48.0

2003 45.6

2004 43.7

2005 45.2

2006 45.0

2007 42.0

2008 40.2

2009 46.0

2010 47.4

Annexure … (2/2)

Exchange rates

Average for the year



87

India Brand Equity Foundation (“IBEF”) engaged

ICRA Management Consulting Services Limited (IMaCS)

to prepare this presentation and the same has been

prepared by IMaCS in consultation with IBEF.

All rights reserved. All copyright in this presentation and

related works is solely and exclusively owned by IBEF. The

same may not be reproduced, wholly or in part in any

material form (including photocopying or storing it in any

medium by electronic means and whether or not

transiently or incidentally to some other use of this

presentation), modified or in any manner communicated

to any third party except with the written approval of

IBEF.

This presentation is for information purposes only. While

due care has been taken during the compilation of this

presentation to ensure that the information is accurate

to the best of IMaCS‟s and IBEF‟s knowledge and belief, the

content is not to be construed in any manner whatsoever

as a substitute for professional advice.

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