Ahead of the rest

Print edition : November 10, 2001

By making appropriate changes in policy, Maharashtra ensures that it remains the leader among the States in the matter of industrial development.

AMONG the industrially advanced States in India, Maharashtra is perhaps the leader. It has been in the forefront in sustaining industrial growth and in creating an environment conducive to industrial development. An investment-friendly industrial policy, solid infrastructure and a strong human resource base have made it a favoured destination for the manufacturing, export, distribution and financial service sectors. Maharashtra contributes almost 15 per cent of India's Gross Domestic Product (GDP) and more than 15 per cent of the national income. It accounts for 40 per cent of the total tax collections in the country. The State's per capita income of Rs.23,849 is 60 per cent higher than the national average and the highest among the States (at current prices, base year 1998-99). Furthermore, it has the largest share of public funds for the development of industrial and social infrastructure.

On the road to progress. A section of the new Mumbai-Pune expressway.-

But Maharashtra's numero uno position is under threat from States such as Andhra Pradesh and Karnataka. Realising this,the Democratic Front (D.F.) government has put in place easier clearance procedures and labour-friendly policies. In fact, Industrial Policy 2001 is expected to accelerate the flow of investment further, particularly in biotechnology (BT) and Information Technology (IT).

The policy exempts IT and BT units and industries set up in special economic zones and electronic hardware technology parks from paying electricity duty for 10 years, allows the establishment of IT and BT units on textile mill land in Mumbai, and liberalises Floor Space Index (FSI) norms for IT units. It also permits captive power generation by IT units.

The policy also allows the waiver of stamp duty and registration fees; the refund of octroi; capital subsidy to small-scale industry (SSI) units; interest subsidy to new textile, hosiery and knitwear SSI units; development of non-conventional energy; and exemption from sales tax for khadi and village industries.

The government, along with organisations such as the Confederation of Indian Industry (CII), the Maharashtra Economic Council and the Indian Merchant's Chamber, has been lobbying for amendments to various labour laws in order to enhance investment in the State. A senior State government official says that changes are expected in the Factories Act, the Trade Union Act, the Minimum Wages Act, the Contract Labour Act and the Industrial Disputes Act.

According to the government, because of its liberal policies the State has attracted 9,412 new projects with a total investment of Rs.2,17,226 crores since 1991. Of these, 3,817 projects, which involve an investment of over Rs.57,132 crores, are operational and have employed approximately 3.81 lakh people.

SPEARHEADING industrial development in the State is the Maharashtra Industrial Development Corporation (MIDC). It has been almost singularly responsible for Maharashtra's economic growth since it was constituted in 1962. It has developed more than 215 industrial estates, including nine "five star" estates and 63 growth centres. The MIDC has developed industrial units for chemical, textile, leather, electronics and gem and jewellery industries across the State. Making its foray into IT, it has built two major software technology parks and is in the process of creating the Pune-Mumbai knowledge corridor.

In keeping with the Central government's economic and industrial policies, the MIDC has systematically built up the State's infrastructure to accommodate new growth areas and improve facilities in existing ones.

"If you are in India, you should be in Maharashtra. When we promise something we deliver it," says Abhay Yawalkar, the MIDC's General Manager (Marketing). He told Frontline that to attract investment the State had to have its infrastructure in place. "If you say you have plans to do it nobody will come. You have to have it all set up to prove your commitment." The company believes that a key to its success has been its foresight in developing interior Maharashtra as well as areas that surround Mumbai. "Setting up independent filtered/potable water supply systems of adequate capacity as essential infrastructure for industrial development was the most intelligent step taken by the MIDC right in the beginning," says the company's profile. This decision stabilised the population base near the industrial areas. "Providing water to the domestic population resulted in a phenomenal urban growth in nearby small towns and villages," it says. The growth of the Kalyan complex near Mumbai and the Pimpri-Chinchwad area is a result of the key policy decision.

The Maharashtra Industrial Development Corporation complex.-

Following the success of creating self-sufficient urban centres around the industrial estates, the MIDC has announced plans for many more estates across the State. It caters to almost every level of all forms of entrepreneurship, ranging from five-star to mini industrial estates. There are four five-star locations, which provide incentives such as expeditious clearances for power, water, telephones and environment friendliness, besides easy registration with the Industries Department. In addition, the five-star estates promise quality infrastructure, comprehensive waste management, air strips and other commuting facilities and social infrastructure which includes luxury housing, hospitals, recreation facilities, shopping centres, police stations and post offices. The major and mini estates follow the same plan, but on a smaller scale. There are plans to set up 13 major industrial estates, four mini estates and four growth centres.

The MIDC is related to seven other specialised agencies, and their combined efforts have ensured that the State has the required infrastructure to host heavy, medium and small industries. Heading the list is the City and Industrial Development Corporation Limited, or CIDCO. The others are the Department of Telecommunications (DoT), the Maharashtra State Road Development Corporation (MSRDC), the Maharashtra State Electricity Board (MSEB), Mahanagar Telephone Nigam Limited (MTNL), the Software Technology Parks of India (STPI) and Videsh Sanchar Nigam Limited (VSNL).

With Mumbai bursting at the seams, efforts are being made to develop a new metro centre across the Mumbai harbour. Approximately 344 square kilometres of land has been demarcated for this city christened Navi Mumbai. CIDCO was specially set up to develop the centre and is focussing on creating a state-of-the-art international technology hub in the area. An International Technology Park is already operational at Vashi and so is an International Technology Centre at Belapur. On the cards are a Special Economic Zone (SEZ) in Dronagiri and two massive townships.

About Navi Mumbai, CIDCO says: "This modern city, with a target population of two million by 2003, is being developed as a series of self-contained nodes strung along an efficient Mass Transport System." Navi Mumbai is strategically located near the Mumbai-Pune expressway and therefore will be well connected to the Mumbai-Pune knowledge corridor. The approval for an international airport has been given recently to the State government. A proposed trans-harbour link between Mumbai and Navi Mumbai is expected to enhance the status of this city.

However, industrial houses appear reluctant to shift to Navi Mumbai despite CIDCO and the government having constructed new stations, wide roads and residential and recreational facilities. Nariman Point at the southern tip of Mumbai remains the most prestigious industrial address and not many are willing to give it up. Even incentives such as single-window clearance and exemption from stamp duty and the duty on electricity have failed to lure business houses to the area. Yawalkar blames the economic slowdown for this and is confident that Navi Mumbai will become a successful metro centre once the economy picks up.

THE Maharashtra Housing Area Development Authority (MHADA) is the nodal agency for constructing and selling housing to low- and middle-income groups in urban and semi-urban areas. Primarily focussed on Mumbai, the MHADA has the gargantuan task of providing housing to millions of immigrants. In the 23 years that it has been in existence, the MHADA has met only 10-20 per cent of the city's annual housing needs.

Unless the government amends some laws, the MHADA will never be able to meet the social needs of Mumbai city, says K.G. Krishnamurthy, General Manager, Technical Services, Housing Development Finance Corporation (HDFC). He told Frontline that Maharashtra, especially Mumbai, has finally woken up to the fact that housing is an integral part of infrastructure. "One of the most positive things the government has done is to reduce stamp duty," he said. In addition, it has amended the Rent Control Act and reduced the property tax. Besides, he says, the government's plan to develop business and finance districts away from Nariman Point will help balance the city's real estate market.

A financial hub at the newly developed Bandra-Kurla complex and another business district in Andheri appear to have become a more viable option for many to shift their offices out of the congested Nariman Point area. Krishnamurthy says that developing business districts in south-central and south-west Mumbai has brought down land prices in the premium areas of south Mumbai, and the divide between prices in the suburbs and the city is no longer that wide. "Once the mill areas are developed, prices will drop further," he adds. Maharashtra is making an attempt to amend the relevant laws and develop areas other than Mumbai. Creating industrial-cum-residential es-tates in other parts of the State is one such attempt, and HDFC is assisting the government in these endeavours.

A substantial demand for power is expected, commensurate with industrial growth. Maharashtra is one of the few States that have a relatively comfortable generation capacity, of over 12,232 MW, based on the current demand for power. It claims that it has achieved 100 per cent electrification of its villages. The State also has an efficient transmission network to ensure steady power supply.

In spite of problems arising out of its agreement with the Dabhol Power Company, the MSEB is recognised as one of the most efficient and profitable utilities of its kind in the country. This year it recorded its highest ever annual revenue, Rs.11,626 crores. Unfortunately, the MSEB does not benefit much from this; its obligations to Dabhol leave very little in its treasury. The controversial Enron-sponsored power project has not only depleted the MSEB's resources but also blackened Maharashtra's reputation as an investment-friendly state. Dabhol is the largest foreign direct investment in the country. Maharashtra's political bung-ling, along with Enron's shrewdness, has put a damper on other corporations interested in entering the State. Several companies have indicated that they will not be comfortable setting up shop in the State until the Dabhol issue is resolved.

Another agency that supports the government in its goal of being an investment-friendly State is the State Industrial and Investment Corporation of Maharashtra Limited (SICOM), which was created 35 years ago. It is a developmental financial institution that facilitates the establishment of medium- to large-scale industries. It plays a significant role in attracting foreign direct investment. Through SICOM, the government offers incentives, subsidies and tax benefits.

In the development process DoT's Maharashtra Circle pitches in by providing telecom services in Maharashtra (excluding Mumbai) and Goa. It serves a population of about 7.02 crores, residing in 31 districts on an area of 3,10,762 sq km. With a total equipped capacity of 36.45 lakh telephone lines, which constitutes about 11.3 per cent of the national telecom network, it is perhaps the largest telecom circle in the country. Catering to Mumbai's infinite communication needs is MTNL. This telecom utility has been able to achieve a growth potential of 10-20 per cent a year.

An essential part of Maharashtra's infrastructure plan is its transportation system. The MSRDC was set up in 1996 to undertake roadworks across the State. Among its achievements is the concrete, 96-km Mumbai-Pune expressway, the first of its kind in India. Over the past five years it has built many flyovers and railway overbridges and is now in the process of building the ambitious Bandra-Worli sea-link project. Besides laying roads, the MSRDC has taken up the responsibility of improving national and State highways. Preliminary work has begun on road improvement schemes in Pune, Aurangabad and Nagpur.

The State has an efficient public transport system run by the Maharashtra State Road Transport Corporation, with buses that connect almost all towns and villages. State transport buses, popularly known as S.T. buses, ply more than 19,000 routes, covering 1.2 million km. With approximately 15,500 buses, this system transports almost 7.5 million passengers every day. In addition, cities have private and non-private taxis, autorickshaws and efficient intra-city bus services. The bus service in Mumbai, run by the Bombay Electric Supply and Transportation Undertaking (BEST), is arguably one of the most extensive and well-managed public road transport systems in the country. BEST buses carry approximately 4.2 million passengers a day.

With Mumbai being the headquarters of the Central and Western Railways, the State has an extensive railway network. Most major cities are connected to Mumbai by this network. The city's commuters are almost completely dependent on the railways: Mumbai's local railway network is its lifeline.

As there are several industrial projects in the pipeline, the government says there is bound to be pressure on the Railways to transport more goods and materials. In order to gear its services towards meeting this demand, the Central government has undertaken several new projects in Maharashtra. These include the upgradation and modernisation of existing railway facilities to accommodate high-speed and heavy locomotives. The biggest and most ambitious project to date in this connection is the Konkan Railway Project. This 760-km railway line, which runs through Maharashtra, Goa and Karnataka, ironically passes through some of the most underdeveloped parts of the State. According to the government, these areas were not developed because of the lack of basic infrastructure.

Most of the large cities in Maharashtra are accessible by air. Mumbai has an international airport, and another has been planned for Navi Mumbai. Mumbai is also the headquarters of the country's national carrier, Air-India. Most major international destinations are linked to Mumbai by direct flights. Ten other cities in the State have airports that are regularly serviced by government or privately owned airlines. The MIDC considers airlink an essential part of the infrastructure required to attract industrial investments. With this in mind, several airstrips have been planned across the State.

Endowed with a coastline of 720 km, Maharashtra has several natural ports. One of the reasons why Mumbai became a major trading hub is that it has a natural harbour. The two principal ports are located in Mumbai - the Jawaharlal Nehru Port at Uran and the Mumbai port, which is one of the largest in the country. Together they handle the largest proportion of the country's foreign trade.

The Maharashtra government's fault lies in its being "Mumbai-centric", says a critic. According to a survey conducted by Economic Research India Limited, an organisation that tracks infrastructure projects in Maharashtra, among the four major regions of Konkan, western Maharashtra, Marathwada and Vidarbha, Konkan has cornered the maximum investment while Marathwada has received the least. "The State government has done little to mitigate this disparity," says the survey. Mumbai is no doubt the financial capital of India. For Maharashtra it is the pivotal city. Within this megalopolis, and around it, are the industries, industrial estates and small-scale manufacturing units that give the State its reputation. But it is becoming apparent that if Maharashtra wants to retain its position of lead, the government must address the needs of other parts of the State too.

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