A state of resurgence

Building on its natural strengths, Rajasthan is emerging as an investor-friendly State, notably in infrastructure creation and industry.

in Jaipur

TRADITIONALLY known for its sprawling deserts, rich forests, mineral wealth, feudal ethos and vibrant tourism, Rajasthan is now emerging as an investor-friendly State ready for the new initiatives of the 21st century, notably in the areas of infrastructure creation and industry. In spite of a five-year-long drought, it has managed to draw attention to aspects that it identifies as its strengths.

One of the major initiatives in this predominantly desert State has been in the area of infrastructure creation, be it power or roads. Traditionally, the State is known for being poor in infrastructure. Added to this was the drought. As most of the State is dependent on rainfall for irrigation, the demand for power by the farming community during the lean months can hardly be understated. But that image is fast changing as there is a concerted effort on the part of Rajasthan to come out of the BIMARU group of States. The State has, as the Bureau of Investment Promotion describes it, an investor-friendly administration.

Undoubtedly, Rajasthan has a strategic advantage in terms of its geographical location. Its proximity to Delhi and other parts of the north and north-western India is deemed as favourable for investment and industrial growth. Despite the absence of a port, the State has embarked upon an ambitious programme of setting up Special Economic Zones (SEZs), which will be, in the words of a senior Industry Department official, "absolutely foreign territory". In fact, such has been the response to the Gem and Jewellery SEZ in Jaipur that all 50 plots that were put up for sale were sold within two days. It appears that global or domestic recession has had little impact on entrepreneurial enthusiasm in the State.

Industry observers say that the State is ideally suited for automobile and auto component industries. The automobile industry located in the State has access to the rich northern and western markets, which account for more than half of the automobile sales in the country. And proximity to the main centres of automobile production in the country, namely, the Noida-Gurgaon and the Mumbai-Pune belt, is a strategic advantage for auto ancillary units. The State is also home to several auto components and vehicle manufacturers, including Mico-Bosch, Eicher Motors and Federal Mogul. Seventy per cent of the country's clay, quartz and feldspar are produced in Rajasthan. Some of the important glass and ceramic manufacturers who operate in the State are Samcor Glass in Kota, Kajaria Ceramics in Bhiwadi and Jaipur Ceramics in Jaipur.

The textile industry is also one of the more vibrant industries in the State, with a growing countrywide demand for traditional prints and material. A great potential exists in this sector as it can give a huge impetus to the traditional craftspersons operating in this area. In fact, the textile industry is the third largest employment-providing sector in the State. Rajasthan has the second largest limestone deposits and is the largest producer of cement in the country.

The national highway that passes through Rajasthan connects Delhi with Mumbai and these two cities with the markets in Gujarat. (The segment in Rajasthan is 700 km long. While eastern Rajasthan is close to Delhi, the southern parts of the State are close to Mumbai. The relative proximity to these markets provides an opportunity for industries to set up units in Rajasthan to cater to these markets. Low-cost labour is another attractive factor for industries to set up units in the State.

The Planning Commission has identified Rajasthan along with Gujarat, Karnataka and Uttar Pradesh as the States that are likely to lead manufacturing growth in the country and has estimated that these States can achieve a rate of growth of over 10 per cent in this sector over the next few years. The EXIM Policy had identified 12 industrial clusters (the third largest number of clusters in any State after Maharashtra and Gujarat) in the State, which have the potential to contribute to meeting the exports growth of 10 per cent per annum. These industrial clusters are intended for products such as handicrafts, textile and gems and jewellery.

IN March 2000, the State government decided to set up what it called a "Single Window Clearance System", which basically involved the filling up of a single composite form by investors. Three committees were formed for the speedy clearance of investment proposals with the sole prerogative for acceptance or rejection lying with the Chief Minister. Under this system, individual departments were not required to re-examine or refuse to implement the decision of the committees. The Board of Infrastructure Development and Investment Promotion, headed by the Chief Minister, has had eight meetings and the State-level empowered committee has had 26 meetings since the launch of the single-window system. In addition, three new policies, prepared in consultation with industrial associations, export promotion organisations, eminent economists and experts, are on the anvil. These are Investment Promotion Policy, Trade Policy and Export Policy.

Over the years the State has managed to attract some of the major players in Indian industry and some multinationals. The new Investment Policy of 2003 facilitated the entry of more business houses into the State. The leading companies that have set up units in the State include Corning of the United States for the manufacture of picture tubes, Gillette, Federal Mogul of the U.S. , Electrolux of Sweden, Mico-Bosch of Germany, Luxottica of Italy for Ray-Ban sunglasses, Coca-Cola, Pepsi, Kajaria Ceramics, Mahindra and Mahindra, EID Parry (for sanitary ware), Gee Pee Ceval (for solvent extraction operations) and Reliance Industries (in telecom and petroleum).

GE Capital Corporation, a Fortune 500 company, has identified Jaipur as its next business destination after the three major industrial hubs of Bangalore, Hyderabad and Gurgaon. GE Capital India, a fully owned subsidiary of the company, has decided to invest Rs.500 million in the State in two stages. This will provide employment for 1,500 people in three years. According to the government, Grasim Industries, Shree Cement Limited and Larsen and Toubro have also expressed interest in setting up cement plants in the State. It will be interesting to watch the trajectory of economic growth and employment in the State in the next few years when all these projects take off.

According to government figures, a total of 2,451 industrial investment proposals have been filed for the State between August 1991 and January 2003, which is close to 4.77 per cent of all the proposals filed with the Government of India. These Industrial Entrepreneur Memorandums, filed with the Secretariat of Industrial Assistance, constitute one of the key parameters for adjudging the level of proposed investment in any region. Of the total proposed investment of Rs.39,347 crores, investment proposals worth Rs.10,967 crores have been implemented up to January 2003. It is expected that the employment potential, which will ensue from such proposals, will also be substantial.

Private sector participation in infrastructure development in the State has got a boost with the setting up of a special committee, the Standing Committee on Infrastructure Development (SCID), under the Chief Secretary. The main functions of this committee are approving infrastructure projects to be undertaken by the private sector and taking policy decisions on the same. The SCID has been converted into an Empowered Committee on Infrastructure Development in order to strengthen the decision-making process and to ensure speedy resolution of inter-departmental matters. Basically, the government has sought to remove unnecessary bottlenecks in the clearance of projects.

Realising that there is a need for change in the face of the fast-changing business environment and to facilitate the growth of new industries, the government revised some of the acts and laws relating to labour. Some of the specific revisions relate to organisations and business organisations working in the areas of Information Technology (IT), computers, fibre optics and biotechnology. These industries will be exempt from the provisions of Sections 1, 12 and 22 of the Rajasthan Shop and Establishment Act, 1958, subject to certain conditions. Thus, there will be considerable relaxation in the areas of employee working hours and overtime, and working on holidays and working hours for women.

The other provision relates to self-certification by employers under certain Acts. This is also subject to certain conditions. Employers in the area of IT, computers, fibres and biotechnology can resort to self-certification where the Factories Ordinance, 1948 and the Rajasthan Factories Act, 1951, the Contract Labour (Regularisation and Removal) Ordinance, 1979 and the Contract Labour Act, 1971, the Minimum Wages Ordinance, 1936 and the Rajasthan Minimum Wages Act, 1959 are concerned. A few other pieces of legislation are also covered under this scheme of self-certification. The process of self-certification ensures that employers can themselves certify - that they are complying with the provisions under the Acts that apply to their establishments.

The need for developing industrial infrastructure is also paramount and the Rajasthan State Industrial Development and Investment Corporation Ltd (RIICO) has been made the primary agency responsible for the development and maintenance of industrial areas in the State. About 282 industrial areas have been developed. RIICO has acquired 47,129 acres of land, of which 30,537 acres has been developed involving an expenditure of Rs.994 crores on development and maintenance. Giving an idea of how difficult it has been to overcome climactic hurdles and the debilitating effect of drought, Jagdeep Singh, General Manager, Public Relations, RIICO, said that out of the 53 years after Independence, 45 have been drought years in Rajasthan. He said that there had been an attitudinal change since the onset of economic liberalistion in the early 1990s. RIICO itself underwent certain conceptual changes in that the rules of business were drastically revised. "We decided to regard the hotel and tourism sectors as industries that need to be developed further," he said.

Chairman-cum-Managing Director of RIICO Satya Priya Gupta said that on the whole the investment policy of the State was a "forward looking" one. There were certain inherent advantages that the State possessed. Tourism potential was one, the rich mineral resources, another, and the third was the availability of land. In fact, Rajasthan is deemed as the second richest State in terms of mineral resources after Bihar. Satya Priya Gupta was confident that trade would result in the creation of more jobs. He said that industry and business were coming out of the global recession. As an example, he said that each unit in the SEZ in Jaipur, would employ close to 200 people.

As a part of its operations, RIICO plans to develop Special Industrial Purpose Parks. These include a leather complex near Jaipur, wool complexes at Bikaner and Beaver, a ceramics complex in Beaver, a gems and jewellery complex at Sitapura near Jaipur, an automobile complex at Bhiwadi, a hardware technology park at Kukas near Jaipur and a software technology park at Kanakpura near Jaipur. Parks that are being set up include bio-technology parks in Jaipur, Jodhpur and Sotanala; Information Technology parks in Jaipur, Udaipur and Kota; agro food parks in Kota, Jodhpur and Sri Ganganagar; and a stone park in Jodhpur.

Rajasthan has the distinction of being the first State to set up two Export Promotion Industrial Parks or EPIPs. The first, at Sitapura is already functional, while another has been launched in Jodhpur. Under a Central government scheme, RIICO has, along with the State government, developed five growth centres. While four are operational, the fifth, at Bhilwara, is under development. Additionally, there are Integrated Infrastructure Development (IID) centres in Jodhpur, Nagaur, Niwai and Kalrawas in Udaipur. Evidently, a lot of emphasis is being laid on infrastructure creation and development. The government is keen to bring in private sector participation in order to revitalise industry. It also wants to strengthen the manufacturing sector.

The Rajasthan government has introduced a package for sick units in an effort to revive at least 50 per cent of them and secure a 4 per cent growth rate from them. According to the government, as on March 31, 2001, the total number of closed units stood at 229, representing 30.77 per cent of all units in the State. The government has extended the unavailed benefit of sales tax incentive under the incentive schemes to sick units and for those that were at the stage of incipient sickness. In order to unlock blocked funds, there is also an effective system in place to dispose of closed units under the Rajasthan Finance Corporation and RIICO by auction on the basis of the market value of their assets.