Industrial fortunes

Published : Nov 08, 2002 00:00 IST

THERE are only a few Indian corporate giants that are not based in Mumbai. The State's bustling capital city and India's financial centre houses several of India's pioneering industrial groups and a number of multinational corporations. Besides every domestic and international industry major with a presence in the city, almost every global consultancy firm is headquartered in Mumbai. Furthermore, with the entertainment and media sector becoming part of the city's business crew, Mumbai has essentially established itself as India's corporate capital.

Although historically Mumbai has been the centre of India's trade and commerce, when Maharashtra was created, it cashed in on Mumbai's reputation for attracting investment and built the State's industrial sector. Today, nearly 15 per cent of the total number of manufacturing units in India are located in Maharashtra, providing employment to several thousands of people and a substantial income to the State's treasury. Mumbai is no longer the drawing factor; it is the entire State which is a hub for business and manufacture. The State's foresight in sensing the potential of industry for progress and development has obviously paid off Maharashtra has consistently remained the leading State on the industrial map of India.

In fact, according to the State government, Maharashtra's contribution to the Indian economy is so high that it is called the "Power house of India". The State accounts for nearly one-fourth of the gross value of India's industrial sector. The State's high level of industrialisation is demonstrated by the fact that the secondary and tertiary (manufacturing and service) sectors provide 78.8 per cent of Maharashtra's gross domestic product (GDP), as compared to the national average of 65.4 per cent for the same sectors.

The major manufacturing industries located in Maharashtra include those in the fields of textiles, chemicals, metallurgy, transport equipment, automobiles and machine tools, each of which account for more than one-fourth of the country's production in the industries. Other significant industries in the State are food products, beverages, tobacco and tobacco products, paper, paper products and printing, rubber, plastic, petroleum and coal products, electronic hardware and software.

Their main reason for setting up base in Mumbai or in smaller cities like Pune, say various industrialists, is the State's industry-friendly policies. Since its creation, the State has endeavoured to develop sustained industrial growth and facilitate speedy flow of investment by creating a conducive climate. Additionally, over the years Maharashtra has developed a solid base of industrial infrastructure, strong human resources, and a sustained diverse industrial base. All this has been achieved primarily owing to the State's pioneering industrial and economic policy initiatives in diverse fields.

Although the economic reforms initialised in 1991 brought about a paradigm shift in the approach to economic growth, industrialisation and income distribution, Maharashtra has been able to handle the transition and continues to stride ahead in development. In fact, since the reforms focussed on increased private participation in industry, Maharashtra adapted its industrial policies around the reforms agenda. De-licensing of industry, de-reservation of the public sector, easing of competition controls, reduction of import tariffs, deregulation of interest rates, and an opening up of capital markets were among the reforms undertaken to encourage investment and capital formation. Keeping this in mind, the Industrial Policy of Maharashtra, 1993 aimed at simplification of procedures and rationalisation of rules. Furthermore, the Industry, Trade and Commerce Policy, 1995 aimed at empowering people at all levels with special focus on infrastructure development with private sector participation.

Not to be outdone by the southern States, Maharashtra was able to grab a decent share of the lucrative information technology pie by announcing a comprehensive Information Technology (IT) Policy in 1998. Clearly, the State had the foresight to realise that this sector, other than being an integral part of the New Economy, would generate substantial employment opportunities. Moreover, it would have a profound effect on industry and trade, the financial sector, media and entertainment, health, education and research. Today there are over 181 IT companies in the state employing over 43,000 people. The government has set up IT parks all over the State and is aggressively wooing IT organisations to set up shop in the State.

During the current phase of second generation economic reforms, the State government says, the objective of the Maharashtra Industrial Policy, 2001 is "to further accelerate the flow of investment in industry and infrastructure, promoting IT, high-tech, knowledge-based and biotech industries, augmenting exports from industrial units in the State and creating large scale employment opportunities duly ensuring environmental planning". The approach of the policy, the government says, is to ensure sustainable industrial growth by introducing structural changes in the wake of the national consensus on discontinuing sales tax-based incentives, developing high-tech and other industries, creating a conducive industrial climate in the state, besides providing fiscal incentives, thereby giving a sharp competitive edge to the State's industry".

"It is mainly owing to the solid infrastructure and industry policies that we have been able to attract the creme de la creme of Indian industry," says an official in the State Industries Ministry. "From heavy engineering, automobile and agricultural products to the services sector, Maharashtra has most of the top names headquartered in the State. You name them and they are based here," the official told Frontline. The industrial giants who have set up operations in the State include the Tatas, Birlas, Mahindra and Mahindra (M&M), Bombay Dyeing, Godrej, Videocon, Fiat and Mafatlal.

The textile mills in Mumbai were perhaps the starting point for the manufacturing industry. Mumbai's advantageous location with a natural harbour allowed for a thriving trade in textiles and commodities, including gold. In a short span of time, the island city established itself as India's commercial hub. Entrepreneurs from all over the country and, in some cases, the world, made their way to this city of fortunes. They set up factories in and around the city. Owing to the incentives and infrastructure facilities offered by the State government, several manufacturing units and industrial townships were set up in and around cities such as Pune, Nashik, Aurangabad and Nagpur. Surprisingly, Mumbai has not remained the most popular destination, though its level of efficiency and cosmopolitan environment, among other factors, have more often than not made it the prime choice.

INDIA'S best known conglomerate, the Tatas were among the first to establish themselves in Mumbai. With a turnover of about $9 billion, the group has 2,25,000 employees across 94 companies. The Tatas pioneered several firsts in Indian industry, including the first private sector steel mill, first luxury hotel chain and the country's first international airline. Apart from being involved in the manufacture of heavy engineering goods, automobiles, consumer products and food products, the Tatas have expanded their empire to include IT and telecom in their portfolio. In fact, Tata Consultancy Services based in Mumbai is India's largest and most profitable software company.

Automobile manufacturers Mahindra and Mahindra, the flagship company of the Mahindra Group, has been ranked, says a company statement, among the top 10 private sector companies in the country for several years. Ever since the company was founded, Maharashtra has been its base. M&M employs more than 12,600 people and has six state-of-the-art manufacturing facilities spread over an area of 500,000 square metres. M&M's major manufacturing unit is based in Nashik; another plant in nearby Igatpuri produces the group's latest product, the sports utility vehicle Scorpio. A plant at Zahirabad manufactures heavy vehicles under the brand name Allwyn Nissan.

Godrej is a household name across the country. A company started in Mumbai that traces its origins to lock manufacturing, Godrej is today a family-owned conglomerate that makes products ranging from high-end security systems to soap and vegetable oils. The Godrej corporation has several companies and many manufacturing units. The best-known unit is Pirojshanagar, a sprawling industrial township located on the outskirts of Mumbai. The entire land was made available by the government. As one of the first townships of its kind, Pirojshanagar has been a model for several others in the State. According to company sources, employees live and work within its limits and enjoy a good quality of life.

Another family-owned empire is the now flagging Kirloskar group, which has its headquarters in Pune. The group, which is known for manufacturing generators, agricultural machinery and transformers, started operating first from Belgaum in Karnataka. When the family was ousted from their land to make room for a new suburb, they found themselves in dire need of a place to live and work. Sensing this need, the Raja of the princely state of Aundh offered Laxmanrao Kirloskar a vast tract of land to set up his company in Aundh. The factory and settlement came to be known as Kirloskarwadi. The Kirloskar group went on to become a Rs.21 billion-worth business empire, competing with the best heavy engineering companies of the world. Unfortunately, the Kirloskars are today finding it hard to survive in India's liberalised economy, but they continue to make efforts to revive their past glory.

Industry in Maharashtra cannot be discussed without mentioning the Bajaj group. Based in Pune and headed by Rahul Bajaj, the company started operations during the turmoil of India's freedom struggle. Bajaj Auto Private Limited is singularly responsible for providing affordable two- and three-wheeler vehicles to millions of Indians. Although known mainly for the manufacture of vehicles, Bajaj also makes electrical appliances. A unit in Pune and several smaller ones across the State provide not only employment, but housing as well to many people. A company spokesperson said that Bajaj is one of the biggest manufacturers of two- and three-wheeler vehicles in the world. The company currently registers an impressive turnover of Rs.42 billion. Rahul Bajaj is an active participant in the formation of India's industrial policies.

Based in Pune is Thermax Limited, a leading player in energy and environment management. Thermax, says a company statement, "is one of the few companies in the world that offers total integrated, innovative solutions in the areas of heating, cooling, power, water, waste management and air pollution control".

AMONG the many reasons attributed to Maharashtra's status as an advanced industrialised State is its ability to provide the necessary infrastructure. For instance, at more than 14,000 MW, its power generation capacity is the highest in the country. There are more than 215 industrial estates, including special economic zones (SEZs), spread all over the State. A well-spread-out network of roads and railways, along with two international seaports and one international airport, and four domestic airports are in operation. The State is building international airports at Navi Mumbai and Pune. An international passenger and cargo hub in Nagpur is in the pipeline.

In addition to infrastructure, the Industrial Policy of 2001 says, the State government has put together a strategy which includes exemption from electricity duty for certain categories; waiver of stamp duty and registration fees for most new industrial units within some categories, octroi refund and incentives to small scale industrial units. The strategy also aims at reviewing labour laws and the situation on the power and gas production front.

The government also plans to set up a few more SEZs and Specialised Industrial Areas. It says that importance must be given to research and educational institutions and towards this end it plans to provide land to institutions at concessional rates.

Although in recent years Maharashtra has been facing competition from Gujarat and the southern States in attracting investment, the government appears optimistic about the future. Hopefully, the State will be able to pull through the current recession and will continue on the track that it has so successfully run on.

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