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Bihar Enters the Industrial Age

Author: Amitabh Srivastava
Publication: India Today
Date: June 25, 2012
URL: http://indiatoday.intoday.in/story/bihar-nitish-kumar-big-business-houses-queue-up-to-establish-industries/1/200866.html

Introduction: Big business houses queue up to establish industries in Bihar

Until a decade ago, big business ignored Bihar when it came to new initiatives. Safety was an issue. Now, though, it's on the verge of a belated industrial revolution. Stable law and order and a proactive government have done an image makeover for the state. The government claims a double digit growth rate while admitting that it has been possible because of a lower base of the state's economy. Bihar's agricultural fertility and inexpensive labour have renewed its appeal for industrialists. The Confederation of Indian Industry (CII) President Adi Godrej attested as much on his maiden visit to Bihar on May 20. Godrej, who is also the chairman of the Godrej Group, said his company would invest Rs.60 crore to set up an animal feed plant in Hajipur town. Godrej also praised Bihar for being the fastest growing state in 2011-12 fiscal. "Bihar is moving in the right direction," he said.

The textile industry, which according to apex trade association Assocham will touch a turnover of Rs.5.75 lakh crore by year end with a growth projection of 16 per cent, is clearly eyeing Bihar as an emerging market. "Of the 755 business proposals approved by the State Investment Promotion Board (SIPB), 59 are already functional with an investment of over Rs.3,712 crore," Bihar Deputy Chief Minister Sushil Kumar Modi told India Today.

Though Modi admits Bihar is yet to receive mega investments, some big names have already arrived. In February, Kumar Mangalam Birla, chairman of the Aditya Birla Group, announced his plans to set up a cement factory. Beer giant Molson Coors Cobra India has also started production from its Bihar-based brewery in February. Vijay Mallya's United Breweries is just a few months away from setting up a brewery. Raymond Ltd Chairman Gautam Hari Singhania, who visited Patna on May 15, has also spoken about his "step-by-step" business extension plan. Chief Minister Nitish Kumar has offered Singhania land for setting up a garment factory in Bihar. "We have already earmarked a place in Patna for setting up the textile, garment and it industry," Nitish said.

The emerging consumption market and easy availability of wheat has seen the arrival of major biscuit makers in the state since 2010. Britannia Industries invested Rs.58.62 crore to set up a biscuit-making unit at Hajipur in 2011. With an investment of Rs.48.70 crore, Bansal Biscuit, the maker of the Anmol brand, has also begun production in Bihar. Parle G, the Mumbai-based Rs.5,000-crore company, has formed a partnership with Bihar's Lavanya Finvest to set up another unit in Muzaffarpur. These units have provided employment to 1,581 persons so far.

Inspired by the growing interest, the state government updated its industrial policy in 2011. The new blue book on investments has provisions for 35 per cent reimbursement of project cost, besides 80 per cent reimbursement of vat with a ceiling of 300 per cent of the capital invested for 10 years. But more than incentives, a secure environment and the state's emergence as a big consumption market is the reason behind investors eyeing Bihar, says Modi.

Land unavailability has emerged as one of the biggest bottlenecks for Bihar's proposed industrialisation. With a population density of 1,102 persons per sq km, Bihar finds it difficult to vacate land for setting up industrial units. Being a power-deficient state is another problem that confronts the expansion plan. Modi says the fact that the Patna airport is one of the fastest-growing airports in the country is an indication of the growing interest in Bihar. The number of domestic passengers travelling to and from Patna has jumped from 3.44 lakh in 2008-09 to 10.21 lakh 2011-12. With the arrival of India Inc, Bihar may fly even higher.
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