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Page 1: Punjab Lores

INDIAN STATESEconomy and Business

Punjab

www.ibef.org

Page 2: Punjab Lores

Published by

Page 3: Punjab Lores

INDIAN STATESEconomy and Business

Punjab

www.ibef.org

Page 4: Punjab Lores
Page 5: Punjab Lores

PUNJAB PAGE 3

CONTENTS

Executive Summary 5

Economic Snapshot 7

The State Economy 9

Infrastructure 10Social infrastructure 10Access infrastructure 10Communications infrastructure 11Industrial infrastructure 11

State Policy 13Vision & Mission 13Industrial policy 13IT policy 13e-Governance 14Infrastructure policy 15Biotech policy 15

Business Opportunities 17Key industries 17Exports 18Investment 19Potential hubs for investment 19

Key Players 23

Doing Business in Punjab 26Indicative list of approvals and clearances 26Cost of setting up business 27Contact for information 28

A report by PricewaterhouseCoopers for IBEF

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PUNJAB PAGE 5

Executive Summary

The state has a marked presence in the agro-businessand the light engineering goods businesses. It has over 19.7 million small and medium industries, about 653 large-scale industries and provides more than 75 per cent of the country’s requirement for bicycles,sewing machines, hosiery and sports goods.At parwith the best in the world, these high quality productshave carved a niche for themselves in markets acrossthe globe.

The state is committed to creating a climateconducive to investment. It has been proactive in attracting investment from the private sectorparticularly in areas like agro-processing,infrastructure, Information Technology (IT),textiles and biotechnology.

Punjab was the first Indian state to translateagricultural technology into “green revolution”,recording the highest growth rate in food production.Today, with its rich agricultural resources andfavourable climate, the state continues to be one of the largest producers of food grains and cash crops in the country.

Punjab contributes 68 per cent to the annual foodproduction of India.The state’s index of agriculturalproduction rose from 269.55 in 1990-91 to 314.73during 2002-03, showing an increase of 16.8 percent.The state has 3 per cent of India’s net sownarea and 1.5 per cent of its farming population.Punjab’s large agriculture base gives it a competitiveadvantage in industries such as food processing and textiles.

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Industrial Centres in Punjab

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PUNJAB PAGE 7

An Economic Snapshot

Capital Chandigarh

Area (sq km) 50,362

Population (2001, million) 25.2

Literacy rate (%) 70

Human development index 0.537 (all India rank 2nd)

Net State Domestic Product(NSDP) (US$ billion) 8.6

NSDP growth (%) (10 years) 4.06

Per Capita Income (US$) 574

Exports (US$ million) 1,558

National highways length (km) 1,557

Rail length (km) 2,102

Domestic airports Chandigarh, Ludhiana

International airport Amritsar

Key industries Agro-processing Textiles, Hosiery and WoollensLight Engineering Goods

Industries with growth potential Agri-businessIT and ElectronicsInfrastructure DevelopmentBiotechnology

Page 10: Punjab Lores

Advantage Punjab

n Leading agriculture state, per capita income is 25 per cent higher than thenational average

n Second largest producer of cotton and blended yarn, third largest producer of mill made fabric

n Competitive strength in textiles, woollens and auto parts due to presence of industry clusters

n Opportunity for further developing sectors like agro-processing,IT, electronics and biotechnology

n Potential to introduce private participation in infrastructure

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In 2004, the state enjoyed a per capita income of US$ 574. Punjab ranked second on the HumanDevelopment Index, in the Human DevelopmentReport (2001), reflecting a strong performance on the social development front.

Punjab has been focusing on developing its humanresources by building skills.The census (2001) reflectsthat the state has been successful in diverting itsworkforce to non-agriculture activities. Of its totalworkforce, only 39.36 per cent workers were foundto be cultivators or agricultural labourers.

Punjab - NSDP growth

Source: Punjab Statistical Abstract 2003 and Punjab Budget

1998

US$

bill

ion

0

2

4

6

8

10

1999 2000 2001 2002 2003 2004

Punjab - Sectoral Contribution to GDP

39% 38%

23%

Services

Agriculture

Industry Source: Punjab Economic Survey 2003-04

PUNJAB PAGE 9

THE STATE ECONOMY

Punjab’s Net State’s Domestic Product (NSDP) stoodat US$ 8.6 billion in 2004 and has been growing at a compounded annual growth rate of 4.06 per centsince 1998.

In Punjab, agriculture accounts for 38 per cent of Gross Domestic Product (GDP), reflecting a hugescope for developing industry and services sectors in the state. Between 1994 and 2003, the industrialsector in Punjab grew at 5 per cent per annum whilethe services sector grew at 7 per cent per annum.

Punjab has consistently been ranked first in thecountry on the infrastructure development index.According to a Centre for Monitoring IndianEconomy (CMIE) report (2000-01), on a nationalaverage of 100, Punjab’s relative infrastructure indexwas the highest at 186.

Page 12: Punjab Lores

INFRASTRUCTURE

and state highways aggregating 3,700 km providesconvenient access to all parts of the state. Under theon-going National Highway Development Programme(NHDP), a length of 311 km is being converted into4/6 lanes highways.The state government has alsoannounced plans to develop 12 road corridors,aggregating 845 km through public-privatepartnership.These projects are likely to commence in 2005.

Punjab is well connected by rail and all its main citiesChandigarh, Ludhiana,Amritsar, Ferozepur andJalandhar are on the main line to New Delhi.With the completion of a number of on-going railwayprojects, the railway infrastructure in Punjab will get a further boost.These projects shall improve theintra-state connectivity and enhance the carryingcapacity of major rail corridors in the state facilitatingfaster movement of goods from the state, particularlyfood grains and items destined for export markets.

Punjab has an international airport at Amritsar anddomestic airports at Chandigarh and Ludhiana.Theairport at Amritsar has an air cargo complex, whileLudhiana has an inland container depot. Containerfreight stations are also planned at Jalandhar, Ludhiana,Amritsar and Rajpura.

PowerPower is pivotal to Punjab’s industrial and agriculturesectors and the state has been working towardsexpanding and strengthening its power infrastuctureto meet the increasing consumer demand in varioussectors of the economy.

The state government has signed Power PurchaseAgreements with a number of power generatingagencies through Power Trading Corporation, NationalThermal Power Corporation (NTPC) and NationalHydroelectric Power Corporation (NHPC). Punjab

Punjab has been working towards improving itsinfrastructure to ensure better accessibility andfacilities to the industry at large and attractinvestment into the state.

Social infrastructure

Punjab has a literacy rate of 70 per cent, according to the census (2001).The state has been steadilybuilding its human resources to enable its peoplecope with the challenges of the 21st century. It hasbeen encouraging private sector participation in theeducation sector, particularly in the area of technicaland vocational education.

The state has 41 engineering colleges, 15 pharmacycolleges, 46 management and computer scienceinstitutes and over 170 industrial training institutes,including those in the private sector. Every year about 17,640 engineers and close to 31,689 technicalmanpower graduate from Punjab’s industrial training institutes.

Punjab is also gearing up to be a hub ofbiotechnology. It has five leading biotech institutionsthat produce 200 graduates and 100 postgraduatesand doctorates in the fields of biotechnology/bio-engineering.These institutes are the Punjab State Council for Science & Technology (PSCST),Punjab Agricultural University (PAU),Thapar Instituteof Engineering & Technology (TIET), Institute ofMicrobial Technology (IMTECH) and the PostgraduateInstitute of Medical Education & Research (PGIMER).The state also has a network of 205 hospitals and2037 health centres.

Access infrastructure

The road infrastructure in Punjab is amongst themost developed in India.The network of national

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PUNJAB PAGE 11

of India Ltd (GAIL) to set up a 1000 MW gas plantnear Dorhah as a cost of over US$ 851 million.A Memorandum of Understanding (MoU) with NHPC is also on the avil to initiate the process of implementing the 168 MW Shahpur Kandi Hydel Project.

Communications infrastructure

The state has seen a significant improvement in itstelecom infrastructure since the announcement of the new National Telecommunications Policy(NTP’99), which emphasised the participation of theprivate sector in the telecom industry. Since then,fixed wire telephone subscribers have increased from0.4 million in 1995 to 1.9 million in 2002, whilemobile subscribers touched 2.3 million in June 2004.

Industrial infrastructure

The Punjab State Industrial DevelopmentCorporation (PSIDC) has developed over 80industrial estates, growth centres and industrial focalpoints in the state.These estates provide units basicinfrastructure, which include uninterrupted electricityand water supply, sewerage and common roads.

Punjab’s key business and commercial centres are:

Chandigarh-MohaliChandigarh is the capital city of Punjab and theadministrative headquarters of the Punjabgovernment. Mohali is a twin township of Chandigarhand the hub for Information Technology (IT)/Information Technology Enabled Services (ITES),electronics and pharmaceuticals industries.The stategovernment is actively pursuing proposals to set up an IT-based special economic zone at Mohali.

Ludhiana-Jalandhar Spread over 6,400 sq km Ludhiana-Jalandhar are two of Punjab’s largest cities with a population of over 5 million.They also form Punjab’s principal industrialhubs, dominated by textiles and light engineering

has an installed electricity generation capacity of Punjab of 4,452 MW (2004). Over the last decadeelectricity consumption has increased 5 per cent a year on an average.

Punjab State Electricity Board (PSEB) has plannedadditional capacity of 2,277 MW during the Eleventhfive-year plan period.Two major electricity generationprojects under implementation are GHTP LehraMohabbat Stage – II (2x250MW) and the BharatHeavy Electricals Ltd (BHEL) hydro projects.Togetherthese will generate 518 MW of power. PSEB intends to enter into a joint venture with the Gas Authority

Punjab - Trend in installed capacity and electricity generation

Source: Punjab Statistical Abstract 2003

1998 1999 2000 2001 2002 2003 2004

MV

Billi

on K

Wh

3200 0

5

10

15

20

25

3400

3600

3800

4000

4200

4400

4600

Installed capacity

Generation used

Punjab – Composition of electricity consumption

29%

5%

23%

2%

41%

Industrial

Agriculture

Commercial

Domestic

Others Source: Punjab Statistical Abstract 2003

Page 14: Punjab Lores

up at the cost of US$ 75 million, will be developed by the Apparel Exporters Association of Ludhiana(APPEAL) in collaboration with the Punjab SmallIndustries and Export Corporation (PSIEC). Spreadover 100 acres, the park will be self sufficient in terms of infrastructure, have its own effluenttreatment plant and a 5-10 MW captive power plant.

Pushpa Gujral Science City The state government along with the centralgovernment is setting up the Pushpa Gujral ScienceCity (PGSC), an international level Science Centre to encourage R&D in agriculture and promote agro-based industry.The Institute will be spread over 71 acres and will be located on the Jalandhar-Kapurthala state highway.

industries. Ludhiana is the domestic leader in acrylicyarn and woollens and is gearing up for growth in knitwear exports in the post quota regime,especially as the Indian textile industry enjoys a zeroexcise status.

Ludhiana-Amritsar Under the Government of India’s IndustrialInfrastructure Upgradation Scheme, Punjab is developing two industrial clusters at Ludhiana and Amritsar to promote cotton and woollen textileexports respectively.These clusters involve an investment of US$ 11 million each.The stategovernment is also working out the modalities of setting up a General Product Zone in Amritsar.

Punjab Apparel Park To offer superior infrastructure support to apparelexport units, the state government is developing thePunjab Apparel Park at Ludhiana.The Park, to be set

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PUNJAB PAGE 13

STATE POLICY

n Development of clusters in areas according to raw material availability and competitiveadvantage

n Maximise utilisation of central government supportfor development of industrial infrastructure

n Restructure and empower public sector unitsn Promote public sector enterprises to attract

investment in public-private partnershipsn Utilise public sector enterprises to achieve

structural transformation in the economyn Revival of sick units

Single window clearance To help entrepreneurs get speedy clearances forsetting up industries in Punjab, the government hasset up a special cell called Udyog Sahayak (industryfacilitator).All knowledge driven industries such as IT, electronics and biotechnology have a separatesingle window service mechanism under PunjabInformation and Communication TechnologyCorporation Ltd.

IT policy

To maximise the potential benefits from wide-scaleadoption of IT in the state, the state government hasdevised an IT action plan that aims to:

n Provide citizen–centred governance n Create a global, digitalised economy to attract

foreign investmentn Use IT to make local industry cost competitive and

sustainable by lowering barriers to entry in theglobal market

n Provide competent technical education to create a highly qualified labour force

The state government has already started anintegrated citizens’ service project on a pilot basis in Ludhiana.

Vision & Mission

The Punjab government aims to promote industrialand agricultural growth, create employmentopportunities and make Punjab an attractivedestination for domestic and foreign investment.To do so the government has identified three focus areas:

n Diversify the agriculture base and promote valueaddition

n Promote the development of industrial clusters to strengthen their competitive position

n Restructure and empower public sector units to maximise their potential value

Industrial policy

The state government’s New Industrial Policy thatcame into effect from 1st April 2003 aims to create a conducive investment climate through infrastructurecreation, reduced regulation and general facilitation.It also aims to rejuvenate and make existing industrycompetitive through improved technology, productquality and marketing.

Key policies n Diversification of agriculture base and promoting

value additionn Investment in technology through seeds and

fertilisers to improve yieldsn Adopt contract farming to introduce modern

management into agriculturen Concentrate on post harvest measures to improve

crop utilisation efficiencyn “Second Push Programme” - setting up cold chain

infrastructure and food processing units tomaximise value addition

n Promote development of industrial clusters to strengthen their competitive position

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on export procedures, documentation and qualitycertification. It also assists smaller units obtain fundingsupport from central government schemes formarketing and development assistance.

Public Sector Enterprise (PSE) restructuring anddisinvestmentThe state government has undertaken a strategicreview of the role of public sector units in the state’seconomic development. Based on this, it has adopteda multi-pronged approach to redefine the role of various PSEs through privatisation and / orrestructuring.

Of the 38 public sector enterprises in the state,six have been closed down. Of the units earmarkedfor divestment, the largest among them viz. PunjabTractors was divested in 2003 - the Punjabgovernment sold its 23.49 per cent stake to CDCCapital Partners for US$ 48 million.The divestment

Punjab’s IT Policy also provides a range of incentivesfor IT units located in the state.These include:

n Investment incentive at 30 per cent of the fixedcapital investment

n Exemption from sales tax for a period of 10 years n Exemption from electricity duty for a period of

5 years n Human resources development grant for a period

of 5 years n Exemption from stamp duty and registration fee n A venture capital fund to support the growth

of the IT industry

e-Governance

Export promotion and facilitationThe Punjab Small Industries and Export Corporation(PSIEC) is the nodal agency for promoting exportsfrom the state. PSIEC educates and updates exporters

Page 17: Punjab Lores

PUNJAB PAGE 15

field for private players, and establishing a transparent regulatory framework governed by an autonomous regulator to grant variousconcessions and incentives to make projects and investment opportunities viable and attractive.The Act provides the necessary legal and policyframework to facilitate private investment in infrastructure projects.

n Encouraging existing Small Scale Industrial Units to undertake modernisation and technologyupgradation to meet the challenges of the WTOregime.The government has notified a scheme to provide capital subsidy.

n A scheme of freight neutralisation assistance forexport units has also been notified, which wouldneutralise the locational disadvantage of the stateto some extent.

Biotech policy

Punjab announced a state-level Biotech policy inFebruary 2003.The policy aims to ensure availabilityof trained manpower, develop quality infrastructureand provide special incentives and exemptions to thesector.The state has announced a series of fiscalincentives and a liberal regulatory regime to facilitatethe growth of biotech industries in the state.

Punjab has also set up the Punjab BiotechnologyPromotion Board (PBPB) and plans to developinfrastructure for R&D, data validation,commercialisation and public awareness in the area of biotechnology.

process of four other public sector enterprises is currently underway.These include:

n Punjab Tourism Development Corporationn Punjab Communication Ltdn Punjab State Container and Warehousing

Development Corporationn Punjab Alkalies and Chemicals Ltd

Infrastructure policy

The Punjab government has been actively pursuingprivate sector investment in infrastructure to createworld-class infrastructure and upgrade the presentinfrastructure in the state. Its recent initiativesinclude:

n Setting up the Punjab Infrastructure DevelopmentBoard (PIDB) in 1998.This is the nodal agency forfacilitating private investment in infrastructureacross different sectors - roads & highways, urbaninfrastructure, industrial infrastructure, electricity,health and education.

n Creating a US$ 4.25 million corpus called thePunjab Infrastructure Initiative Fund (PIIF) to finance project development through publicprivate partnership.

n Enacting the Punjab Infrastructure DevelopmentAct in 2002 and setting up the PunjabInfrastructure Regulatory Authority (PIRA).The state government recognised that to attractprivate participation, there was a need for anoverarching legislation to secure a level-playing

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PUNJAB PAGE 17

BUSINESS OPPORTUNITIES

Recently, the government permitted contract farmingon 20,000 hectares for basmati rice and 80,000hectares for wheat.This includes agreements withprivate sector companies like the Tata Group and theUB Group for contract farming of basmati rice andbarley, respectively.

Prominent players present in the agro processingindustry in Punjab are Pepsi Foods and Nestle.Germany-based Metro Cash and Carry Internationalhave also signed a Memorandum of Understanding(MoU) with the Punjab Agro Industries Corporationfor identifying and sourcing food products from the state.

Textiles, hosiery and woollensPunjab’s key competitive advantage in textile industryis the abundant availability of raw material (cotton),presence of several textile and woollen clusters andskilled labour.

The recent liberalisation of the country’s economyhas pitch-forked Punjab into the mainstream globalbusiness. Punjab’s inherent strengths and its efforts to attract private investment make it a land of opportunities. Its rich agricultural base has the potential to significantly value add in the foodprocessing sector. Commercial agriculture can alsoassist the state leverage its competitive advantage in the sector.

Similarly, the existing industrial base of the state can be encouraged to go in for forward integration in a variety sectors such as textiles, light engineeringgoods, IT, chemicals or biotechnology.

Key industries

Agro processingPunjab is the second largest producer of wheatcontributing 21.5 per cent to the total production inthe country. In 2002-03, Punjab produced 14.5 milliontonnes of wheat. It is also the fourth largest producerof rice in the country, contributing 9 per cent to thetotal production. In 2002-03, Punjab produced 8 million tonnes of rice.

The annual production of food products in Punjabstood at US$ 1.95 billion in 2001-02. Between 1990-91 and 2001-02, the same increased by over 300 per cent. Punjab’s share in India’s output of foodproducts stands at 3 per cent.The statistics clearlypoint towards a potential for further developing thestate’s agro processing industry.

The Punjab government has introduced policies to modernise agriculture infrastructure in the stateand promote agro-based industries.An outlay of US$ 4.4 million has been assigned to improveagriculture infrastructure and set up a cold chaininfrastructure.

Principal industries in Punjab

13%

7%

29%

7%

25%

19%

Textiles

Food and beverages

Chemical and chemical products

Other transport equipment

Paper and paper products

OthersSource: Annual Survey of Industries, 2002-03

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Exports

Between 1995 and 2003, exports from Punjabincreased from US$ 463 million to over US$ 1,588million.These largely constituted yarns and textiles,apparels, cycle and cycle parts, rice, engineeringgoods and food products. In the first half of 2004-05,exports stood at US$ 1175.74 million.

Punjab has a US$ 2.34 billion textile industry. It is thesecond largest producer of cotton and blended yarncontributing 10 per cent to India’s total industryoutput in 2003-04. During April-February 2003-04,production of cotton and blended yarn in the statestood at 280 thousand tonnes. Punjab is the thirdlargest producer of mill made fabrics in the countrywith a share of 8.1 per cent. During April-February2003-04, production of mill made fabric increased by21 per cent over the previous year to 82.6 million sq mts. Forty per cent of the country’s wool units are also located in Punjab.

With the global trade in textile and clothingexpected to grow from the current US$ 356 billionto US$ 600 billion by 2010, the state has seen a spurt of capacity enhancements and someambitious scale ups in anticipation of the quota-freeregime. Clearly, Punjab has an opportunity to boostits existing strengths to capture a larger share of thetextile market.

Light engineering goodsLight engineering goods, which include bicycle andbicycle parts, tractors, auto components and handtool industries, is another key area of strength for Punjab.

Punjab produces 1.8 million bicycles per annum,accounting for 15 per cent of the total bicycleproduction in India, which stood at 12.3 millionbicycles during 2003-04.

Punjab also holds an 80 per cent share in India’sproduction of bicycle parts. India produced 48 millionbicycle tubes and 50 million bicycle tyres during 2003-04.Two of India’s main bicycle producers Avon and Hero Group are based in Punjab.Punjab has a share of 7 per cent in the total tractorproduction in the country, which stood at 177,834units in 2003-04.The two major tractormanufacturers in the state are Punjab Tractors Ltdand International Tractors.

Punjab - Composition of exports

9%

11% 10%

18%

10%

19%23%

Cycle and cycle parts

Food products

Engineering goods

Rice

Readymade garments and hoisery

Yarn and textiles

Others

Source: Punjab Statistical Abstract 2003

Punjab - Export performance

Source: Punjab Statistical Abstract 2003

1995

US$

mill

ion

0

500

1000

1500

2000

1996 1997 1998 1999 2000 2001 2002 2003

Page 21: Punjab Lores

PUNJAB PAGE 19

of implementation in the state. Of these, themanufacturing segment, which includes textiles andchemicals, attracted the maximum investment.

Between 1996 and 2003, Punjab attracted US$ 370million of FDI in sectors like textiles, paper, paperproducts and pulp, chemicals other than fertilisers,telecommunication, drugs and pharmaceuticals.

Potential hubs for investment

Agri businessPunjab is a land of boundless opportunity for agro-based industry.With 4.2 million hectares sown area,186 per cent cropping intensity and 100 per centassured irrigation, Punjab is the granary of India.Apart from food grains, the state also has largequantity of fruits and vegetables available forprocessing.

IT and electronicsBy 2008, the Indian IT software and services sector is projected to grow to US$ 77 billion.The industry

Investment

Punjab has attracted industrial investment in sectorssuch as food & food products, textiles and apparels,chemicals and chemical products and transportequipment.

Uptil 2003, there were 633 industrial units in Punjabwith investment of over US$ 3.9 billion. In 2003-04,an additional 14 projects were implemented with an investment of US$ 15.2 million.

As on May 2004, there were 62 projects with a totalinvestment of over US$ 2.87 billion at various stages

Punjab - Distribution of investment in the pipeline

1%

3%

13%

82%

Services

Irrigation

Manufacturing

ElectricitySource: CMIE, state report

Punjab - Cumulative FDI

Source: Secretariat for Industrial Assistance reports

1996

US$

mill

ion

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

1997 1998 1999 2000 2001 2002 2003

Punjab - Sectoral break-up

20%

6%

5%11%

36%

22%

Textiles

Paper and pulp including paper products

Chemicals other than fertilisers

Telecommunication

Drugs and pharmaceuticals

Others

Source: Secretariat for Industrial Assistance newsletter, Annual Issue 2002

Page 22: Punjab Lores

through the Software Technology Park in Mohaliincreased from US$ 22.4 million in 2002-03 to US$ 37.8 million in 2003-04.

IT companies based in Mohali include Quark Inc,Dell and Infosys. Others to have evinced interest in setting up facilities at Mohali include IBM, Intel,Samsung,TCS, I-Flex, Satyam, and Wipro.

InfrastructurePunjab offers significant opportunities forinfrastructure development though public-privatepartnership.The state has been investing steadily in improving its roads. In 2003, Punjab InfrastructureDevelopment Board (PIDB) spent US$ 71 million to upgrade 65 km of roads and opened three high-level bridges to traffic.

The PIDB has taken up over a dozen road and bridgeprojects and will be investing over US$ 100 million in the same. In addition, it is also supporting the

is expected to employ four million people accountingfor 7 per cent of India’s GDP and 30 per cent ofIndia's foreign exchange inflows.

Punjab possesses distinct competitive advantages thatshould facilitate further development of the IT sectorin the state.These include:

n Persistent efforts by the government to implementIT at all levels

n A large number of engineering colleges and othereducational institutions to create high-techmanpower resources

n Development of IT parks to encourage softwareexports from the state

n Punjab Infotech has developed Mohali as a hub of electronics and IT in the state

n Incentive for electronics units

Of a total 192 software export units registered,20 started operations in 2003-04. Software exports

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PUNJAB PAGE 21

takes up research in microbial bio-processing, and theCentral Scientific and Industrial Organisation (CSIO),which has been developing a number of biotech baseddiagnostic kits.

The state is developing a Biotechnology Park in thesuburbs of Chandigarh to nurture commercially viableleads through companies.The park, a public-privateventure joint effort by Beckons Industries Ltd andPunjab State Council for Science and Technology,is being set up at an estimated cost of US$ 22 million.Its facilities will include a biotech incubator forresearch and development, pilot testing and othervalidation facilities.The park aims to attract Small and Medium Enterprises (SMEs) to the cluster andcontribute to overall R&D in the sector.

The Punjab State Council for Science and Technologywill act as the single window agency for setting upbusiness in the biotech park. Major players to haveshown an interest in the park include Ranbaxy,Dr. Morepen, Panacea Biotech, among others.

road upgradation programme of the Public WorksDepartment with an investment of US$ 33 million.It is in the process of selecting private partners forroad stretches aggregating 900 km.

The government decided to invest US$ 10 million to reconstruct and modernise bus terminals at Amritsar, Jalandhar and Ludhiana through privatesector participation.The projects are to beimplemented on a Build-Operate-Transfer (BOT) basis.

Biotechnology Punjab’s strong agricultural base presents anopportunity for leveraging it to develop thebiotechnology industry in the state.The Punjabgovernment has taken important initiatives to promote biotechnology related research anddevelopment in the state.

Two centres, which form the nucleus of the biotechresearch centre in the region, include the Institute forMicrobial Technology (IMTECH) in Chandigarh, which

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PUNJAB PAGE 23

PROFILE OF KEY PLAYERS IN PUNJAB

The company is the most profitable cement companyin India, and the lowest cost producer of cement in the world. In July 2004, the company commissioneda capacity of over 14.5 million tonnes per annum at Ropar in Punjab.This is one of the company’s fiveplants across the country. GACL is also setting up a 30 MW captive electricity generation plant in Punjab.

Hero Cycles LtdHero Cycles Ltd is part of the US$ 1.8 billion HeroGroup, one of India’s top 10 Indian business houses.Hero Cyles is the world’s largest producer ofbicycles, manufacturing over 5.6 million bicyclesannually.The company’s main manufacturing unit is located in Ludhiana in Punjab. Hero Cycles recentlyexpanded its capacity by setting up a US$6.7 millionplant to manufacture 300,000 bicycles per annum.A further investment of US$ 4.4 million is planned to enhance the capacity of the Ludhiana plant. HeroCycles has been rated as a Superbrand by the GlobalSuperbrands Council.The company also finds mentionin the Guinness Books of World Records as thelargest bicycle manufacturer in the world since 1986.

Hindustan Petroleum Corporation Ltd (HPCL)Hindustan Petroleum Corporation Ltd is one ofIndia’s largest integrated oil refining and marketingcompanies. HPCL is setting up a 9 million metric tonper annum oil refinery at Phulokhari in Bhatindadistrict of Punjab through its 100 per cent subsidiaryGuru Gobind Singh Refinery Ltd.The total investmentin the project is estimated to be over US$ 2 billionand it is expected to be operational by 2006.

International Tractors LtdInternational Tractors Ltd is one of the leadingproducers of tractors and agricultural machinery in the country. It is a joint venture with RenaultAgriculture, France.The company has a modern andfully computerised plant at Hoshiarpur in Punjab.

Abhishek Industries Ltd (AIL)Abhishek Industries Ltd, was incorporated in 1990 by the Trident Group.AIL is the second largestmanufacturer and exporter of terry towels in India. It also manufactures yarn and paper.Thecompany’s sales in 2003-04 stood at US$ 115 million.Over 80 per cent of its revenues were from exports.AIL exports around 94 per cent of its production to major retailers in the US like Wal-Mart and J C Penney. Its manufacturing capacity is currently7,119 tonnes per annum. In anticipation of the postquota regime,AIL’s has been increasing focus on thehigh-margin export-oriented terry towels business.The company is expanding its production capacity to20,000 tonnes with an investment of US$ 50 million.

Avon Cycles LtdA US$ 66.7 million Avon Cycles is a large bicyclemanufacturer based in Ludhiana.The companyproduces 1.5 million bicycles per annum at its 10 manufacturing facilities. Recently,Avon increased its production from 5,000 cycles to 8,000 cycles perday.The company exports 30 per cent of its bicycles.The company is the largest exporter of bicycle partsfrom India.

Dell Inc.A US$ 49.2 billion Dell Inc. recently launched its thirdcustomer contact centre, an 180,000 sq ft centre,in Mohali at the Quark IT Park.The Mohali centre has approximately 300 employees, who have receivedextensive training on information technology andcustomer-relations skills.The centre is part of a globalnetwork of approximately 50 centres Dell operatesaround the world.

Gujarat Ambuja Cement Ltd (GACL)Gujarat Ambuja Cement Ltd is India’s third largestcement producer with revenues of over US$ 500million and a total capacity of 12.5 million tonnes.

Page 26: Punjab Lores

company comprises three milling units, of which twoare situated at Barnala, Punjab.The company exportsall types of yarn to countries in Asia, Europe,Africaand America.

Nahar Group Established in 1949, the Nahar Group is one of Punjab’s leading industrial houses.The Group has a presence in textiles, apparels, soaps, vegetable oilsand sugar.A $450 million organisation, it is one of thelargest exporters of textiles in Punjab. Its productionfacilities have been awarded the ISO 9002/IS 14002certifications and Okotex Certification.

Nestle India LtdNestle India Ltd is a subsidiary of Nestle SA,Switzerland, which is one of the world’s largest foodand beverage companies. In India, Nestle is a leadingcompany in the FMCG industry with brands likeMaggi, Nescafe, Cerelac, Lactogen, Kitkat and Polo.The company set up its first factory in 1961 at Moga,in Punjab for manufacturing processed foods.Today,Nestle procures and processes milk from Punjabfarmers. In India, the company has over 3000employees and in 2003 its revenues stood at US$ 497 million.

Pepsi Foods Pepsi Foods, part of PepsiCo USA, is one of thelargest food & beverage companies in the country.

Infosys Technologies LtdA US$ 1.1 billion Infosys Technologies Ltd is India’sleading software services company that providesconsulting and IT services to clients globally. Infosyshas over 13,000 employees worldwide and has ninedevelopment centres across the country. Infosys setup its Mohali development centre in March 2001.In 2002, the company signed a Memorandum of Understanding (MoU) with the Union Territory of Chandigarh Administration to buy 20 acres of landat the Chandigarh Information Services Park (CISP) to set up a software development centre inChandigarh, which is expected to house 2400software developers over the next five years.

JCT A Thapar Group company, JCT is a leading textilemanufacturer in Punjab. It was the first in the textileindustry to receive an ISO 9002 certification and is the largest manufacturer of blended fabric in theIndian market. JCT Electronics Ltd is a flagshipcompany of the Thapar Group, which was the firstcolour picture tube manufacturer in India.Thecompany has a plant at Mohali, near Chandigarh.

Malwa GroupThe Malwa Group is among the top ten textile millsof the Indian sub-continent producing cotton yarn,acrylic yarn and polyester viscose yarn.An ISO 9002company, its total spindelage is around 140,000.The

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The company has invested US$ 1.5 million investmentto develop a comprehensive agro-technologyprogramme with the Punjab Agriculture University.This programme has helped thousands of farmersacross India improve the yield and quality of theiragricultural products. PepsiCo and Punjab Agro hasalso set up a 9,600 sq feet greenhouse at theAgriculture Research and Development Centre in Jalandhar to commercialise citrus cultivation in the state.

Punjab Tractors Ltd (PTL)Punjab Tractors Ltd was promoted in 1970 as India’sfirst large scale, totally indigenous project tocommercialise India’s first tractor.Today, PTL is a leading manufacturer of tractors, combines andforklifts.The company exports its premium productsto the US. In 2003, as part of the Punjab government’sdivestment process, majority stake in PTL was soldto UK-based CDC Group Plc.

Quark Inc.Quark Inc., is a US-based global IT company thatcreates software related to communication andresource management. Quark set up its largestsoftware development centre in Mohali with aninvestment of US$ 17.8 million in 1998. Currently,Quark has 1,100 IT professionals working in thefacility and has plans to recruit more softwaredevelopers.

Ranbaxy A US$ 1.17 billion Ranbaxy Laboratories Ltd is India’slargest pharmaceutical company and one of the top tengeneric companies worldwide. Ranbaxy manufacturesand markets world-class generics, branded genericpharmaceuticals and active pharmaceutical ingredients.The company started operations in 1961 and set up itsfirst bulk drugs and formulation manufacturing plant at Mohali, in Punjab in 1973.

The manufacturing facility at Mohali is engaged in theproduction of APIs, primarily semi-synthetic penicillin,flouroquinolones and bulk cephalosporins.Thecompany’s products are sold in over 100 countries.It has manufacturing operations in 7 countries andground presence in 44 countries. Most of Ranbaxy’smanufacturing facilities are US Food and DrugAdministration (USFDA) approved. Currently, Ranbaxyis investing US$ 100 million to expand its productioncapacities in India, Brazil and USA.

Siel Punjab-based Siel is a leading producer of industrialchemicals, vanaspati and vegetable oils and sugar.The company has an industrial chemical complex at Rajpura, in Punjab, which includes a chlor alkali plant set up with an investment of over US$ 55 million. Siel has a tie-up with the Punjabgovernment to set up an industrial estate in Punjab.Siel’s subsidiary companies include Honda Siel Power Products Ltd, Honda Siel Cars India Ltd and Daikin Industries.

Vardhman GroupA US$ 439 million Vardhman Group is one of Punjab’s largest textile players.The Group’sportfolio includes manufacturing and marketing of yarns, fabrics, sewing threads, fibre and alloy steel.It is the second largest producer of sewing thread in India and contributes 6 per cent to the country’syarn exports.The company has announced expansionplans aggregating investment of US$ 222 million toincrease its production capacity and product quality.The company exports 40 per cent of its yarnproduction to more than 25 countries and has a strong presence in markets like the EEC, USA,Canada, China, Japan, Korea, Mexico, Brazil andMauritius, Middle East.The company exports over 6 per cent of yarn from India.

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DOING BUSINESS IN PUNJABObtaining approvals

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

Department

Environment

Industries

Incentives

Electricity

Revenue

PSIDC/ PFC

Agency

§ Punjab State Water and AirPollution Board

§ Directorate of Industries

§ Udyog Sahayak§ PFC

§ Punjab State Electricity Board

§ PSIDC§ Udyog Sahayak

§ PSIDC§ PFC

Timelines

§ Site/environment clearance: 60 days§ No Objection Certificate (NOC) for green

category: 15-30 days§ NOC for red category: 30 – 45 days§ Renewal of consent: 90 days

§ Approval of factory plan: 30 days§ License for running factory: 15 days

§ Investment incentive: 1 month§ Sales tax exemption: 1 week

§ Loads up to 20 Kilo Watt (KW): 3 months§ Loads up to 100 KW: 4 months§ Loads above 500 KW: 8 months

§ Site Clearance: 60 days

§ Sanction of loan: 2 months

Source: PwC research

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Cost of setting up business

An indicative table on cost of setting up business in Punjab

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

Indicator Value (in US$)

Industrial land (per sq mt) Mohali - 35.42Ludhiana - 17.71 Amritsar - 11.10

Office space rent (per sq foot per month) .17 - .32

Residential rent (for a 2,000 sq m house, per month) 287 - 478.72

5-star hotel room (per night) 57.45 - 80.43

Electricity (per kWh) .086

Water (per 1000 litres) Commercial & Industrial: 0.14

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Contact for information

State Government WebsiteWeb www.punjabgovt.nic.in/

Punjab State Industrial Development Corporation(PSIDC)Punjab State Industrial Development Corporation isthe nodal agency to speed up industrialisation andpromote and nurture the growth of the organisedindustrial sector.The main functions of PSIDC include:

n Provision of industrial infrastructure for in the state

n Promotion of industrial and infrastructure projectsthrough equity participation

n Providing financial assistance for private projects n Providing escort services to private investors

PSIDC is also the holding company for various statepublic sector enterprises such as Punjab Alkalies andChemicals, Punjab Chemicals and Fertilisers etc.

Punjab State Industrial Development Corporation

18 Himalya Marg, Udyog BhawanSector 17Chandigarh 160017 Tel +91 172 2704040Fax +91 172 2714908Web www.punjabgovt.nic.in/Industry/ind552.htm

Confederation of Indian Industry (CII) Information on markets and opportunities forinvestment in Punjab can also be obtained fromConfederation of Indian Industry which works withthe objective of creating a symbiotic interfacebetween industry and government.

Confederation of Indian Industry Northern Region

Block No 3, Dakshin MargSector 31 AChandigarh 160 030Tel +91 172 2602365Fax +91 172 2606259Email [email protected]

Confederation of Indian Industry Zonal Office

509, 2nd FloorGreen AvenueAmritsar 143 001PunjabEmail [email protected] www.ciionline.org

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The India Brand Equity Foundation is a public-private partnershipbetween the Ministry of Commerce & Industry, Government of India andthe Confederation of Indian Industry.The Foundation’s primary objective

is to build positive economic perceptions of India globally.

India Brand Equity Foundationc/o Confederation of Indian Industry

249-F Sector 18Udyog Vihar Phase IV

Gurgaon 122015 HaryanaINDIA

Tel +91 124 501 4087, 4060 - 67 Fax +91 124 501 3873Email [email protected]

Web www.ibef.org