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INDIAN STATES Economy and Business Chhattisgarh www.ibef.org
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INDIAN STATESEconomy and Business

Chhattisgarh

www.ibef.org

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INDIAN STATESEconomy and Business

Chhattisgarh

www.ibef.org

CONTENTS

Executive Summary 3

Economic Snapshot 5

The State Economy 7

Infrastructure 8Social infrastructure 8Access infrastructure 8Communications infrastructure 10Industrial infrastructure 10Key industrial centres 11

State Policy 12Vision & Mission 12Industrial policy 12Human resource policy 13Mineral policy 13IT policy 13Tourism policy 14Biotech policy 14e-Governance 14

Business Opportunities 15Key industries 15Exports 16Investment 16Potential hubs for investment 17

Key Players 18

Doing Business in Chhattisgarh 20Obtaining approvals 20Cost of setting up business 20Contact for information 21

A report by PricewaterhouseCoopers for IBEF

CHHATTISGARH PAGE 3

Executive Summary

has been limited to 18 (compared to 52 in theundivided state).

The state has recognised infrastructure provisioningas an industry and has drawn up an InfrastructureDevelopment Action Plan to facilitate timelydevelopment of physical infrastructure in the state.

Chhattisgarh is rich in minerals and natural resources.The state has a substantial share of India’s coal,iron-ore, bauxite and limestone reserves. In all 28 varieties of minerals are found in the state.The key sectors of Chhattisgarh’s economy arecement, mining, steel, aluminum and power.

Chhattisgarh’s large coal reserves present a largeopportunity for electricity generation in the state.The state also offers opportunities for investment in infrastructure development.

Chhattisgarh came into being as a state of the IndianFederal Union on November 1, 2000. It was carvedout of the sixteen south-eastern districts of undividedMadhya Pradesh. Geographically, it has an area of 135,191 sq km, which makes it the ninth largeststate in India.

With a Net State Domestic Product (NSDP) of over US$ 3.3 billion, Chhattisgarh’s economy is the sixteenth largest in India. Being a newly createdstate, Chhattisgarh has the advantage of a responsiveadministration.The state government is committed to containing establishment costs to less than 40 per cent of its revenues, so as to make resourcesavailable for economically beneficial activities.The state government has undertaken variousinitiatives to curtail unproductive administrativeoverheads and encourage public-private partnership.The number of departments in the state government

Industrial Centres in Chhattisgarh

CHHATTISGARH PAGE 5

An Economic Snapshot

Capital Raipur

Area (sq km) 135,191

Population (2001) 20.8 million

Literacy Rate (%) 65

NSDP (US$ billion) 3.3

NSDP growth (%) (10 years) 2

Per Capita Income (US$) 264

National highways length (km) 1,827

Rail length (km) 1,180

Domestic airport Raipur

Key industries CementMiningIron & SteelAluminium

Industries with growth potential Power Infrastructure

Advantage Chhattisgarh

n A new state with an opportunity to adopt a modern model for economicdevelopment

n Large mineral resources to facilitate development of cement, steel, aluminiumand electricity generation

n Single window clearance framework with statutory backing

n Electricity surplus state, with relatively low land and labour cost

The contribution of the services sector registered an increase from 30 per cent to 36 per cent duringthe same period.

CHHATTISGARH PAGE 7

THE STATE ECONOMY

Between 1994 and 2003, the state’s NSDP increased from US$ 2.7 billion to US$ 3.3 billion at a compounded annual growth rate of 2 per cent.

During 2002-03, Chhattisgarh’s per capita incomestood at US$ 264. Between 1993-94 and 2001-02,the share of agriculture sector in the state declinedfrom 40 per cent to 36 per cent and the industrialsector from 30 per cent to 28 per cent.

Chhattisgarh - Sectoral Contribution to GDP

36% 36%

28%

Services

Agriculture

Industry

Source: Estimate of State GDP of Chhattisgarh, 1993-2002,Directorate of Economics & Statistics, Chhattisgarh

Chhattisgarh - NSDP Growth

Note: the figures are at 1993-94 prices,Source: Estimate of State GDP of Chhattisgarh, 1993-2002,

Directorate of Economics & Statistics, Chhattisgarh

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

US$

bill

ion

Year

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

INFRASTRUCTURE

Access infrastructure

Chhattisgarh is a land locked state that is surroundedby six Indian states - Uttar Pradesh, Jharkhand, Orissa,Andhra Pradesh, Maharashtra and Madhya Pradesh.This makes its geographic location strategic.By developing its infrastructure the state can use its geographic location to develop a logistics andwarehousing network to service the region.

The total length of roads in Chhattisgarh stands at over35,388 km.The state has 24,236 km of surfaced roads.Chhattisgarh’s road density stands at 26.2 km per 100 sq km.The total length of national highways passingthrough the state is 1,827 km. National Highway 6,which connects the west to the east, passes throughsome of the most industrialised areas of the state.

To meet state’s growing transport requirements,the National Highways Authority of India (NHAI) is planning to develop five national highway projectsaggregating 450 km through private sectorparticipation.The state’s highway network is beingupgraded with funding from the Asian DevelopmentBank.The project envisages improving 1,700 km of state roads by 2009 with an investment of US$ 286 million.Another five projects aggregatingUS$ 50 million of private investment are in variousstages of implementation in the state.

The existing industrial areas, industrial parks, exportzones etc. and those to be set up in future, will beconnected by excellent roads with the national / statehighways and important railway stations.

Given the significant presence of mineral-basedindustries in the state, availability of efficient railwaylinks is critical. Currently, the total railway network in Chhattisgarh is 1,180 km. Of this, almost 861 km is electrified track.

Social infrastructure

Since its creation in 2000, the state has laid particular emphasis on improving social infrastructurethrough a focus on poverty alleviation and rural development.

Chhattisgarh has a population of over 20.8 million(Census 2001). Its population density stands at 154 persons per sq km, much lower than the all India-average of 324 persons per sq km. Populationgrowth rate in Chhattisgarh stood at 18 per centduring 1991-2001, lower than the national growthrate of 21.3 per cent during the same period.

Chhattisgarh’s social performance (as measuredthrough the Human Development Index in 2001)shows that certain parts of the state (Durg (0.62),Raipur (0.56) and Korba (0.56)) have a relatively well-developed social infrastructure as compared to other districts in the state.This may be attributedto industrialisation and better infrastructure networkin these regions.

The state has done well in terms of literacy,which increased from 43 per cent in 1991 to over 65 per cent in 2001. Chhattisgarh’s educationnetwork consists of 4 universities, 116 colleges,over 31,600 primary and 8,930 secondary schools.Its college network includes 12 engineering colleges,with an annual intake of over 3,300 students,69 technical training institutes and 2 medical collegesthat offer 200 seats.This strong network of traininginstitutes provides a pool of qualified professionals to businesses and industries located in the state.

The state’s network of health facilities comprises 27 hospitals, 23 dispensaries, 631 primary and community health centres and 3,818 sub-primary centres.

CHHATTISGARH PAGE 9

All necessary efforts will be made and steps taken for early commencement of work on Dalli-Rajhara-Raoghat-Jagdalpur rail line project.

Recognising the potential for mining and metalindustry related traffic in the state, the Indian Railwayshas established a new zone named South-East Central Railway with its headquarters at Bilaspur.Indian Railways is also implementing projects for new railway lines in the state aggregating 235 km at a cost of approximately US$ 80 million.

Expansion and capacity augmentation of the railwaynetwork in Chhattisgarh will provide impetus to movement of goods within and outside the state.It will also improve Chhattisgarh’s integration with thenational railway system and enhance the competitivenessof industries located in Chhattisgarh’s hinterland.

Chhattisgarh has one airport in Raipur, the statecapital. Rapiur is connected by air to New Delhi,Mumbai, Kolkata etc.The state does have smallerairports / air strips helipads at a number of locationsincluding Raigarh, Jashpur,Ambikapur, Bilaspur, Korba,Sarangarh, Jagdalpur, Bhilai etc.

Both domestic and foreign capital and public privatepartnership will be encouraged in the basicinfrastructure projects. For this purpose, apart fromthe State Government implementing projects from its own resources, projects based on “BOT”,“BOOT”etc. will be permitted.

Power Chhattisgarh has the unique distinction of being a power surplus state. The installed electricitygeneration capacity of Chhattisgarh is 1,401 MW.96 per cent of Chhattisgarh’s electricity generationcapacity is based on thermal energy. Hydel generationaccounts for the remaining 4 per cent of power.

Electricity consumption in Chhattisgarh increasedfrom 2,977 million units (MU) in 1996-97 to over3,540 MU in 2001-02, thus indicating a compounded

annual growth rate of 3 per cent. On a per capitabasis, electricity consumption in Chhattisgarh standsat 284 kWh per annum. Industry represents thelargest consumer category, followed by domestic and agriculture consumers.

To meet the country’s growing power requirements,the state government is planning and implementingseveral power projects with capacities aggregating 11,969 MW.The Chhattisgarh State Electricity Board (CSEB) plans to add another 2,000 MWcapacity by 2007.

Chhattisgarh - Composition of electricity consumption

15%

16%

5%

64%

Domestic

Agriculture

Industrial

OthersSource: Chhattisgarh State Electricity Board

Chhattisgarh - Trend in installed capacity and electricity generation

Source: Chhattisgarh State Electricity Board

MW

Mill

ion

Uni

ts

Installed capacity (MW)

Electricity generation (MU)

2001 2002 2003 20041320

1340

1360

1380

1400

1420

6800

7200

7600

8000

8400

Communications infrastructure

The number of fixed wire telephone subscribers in the state increased from 0.23 million in 2001 to 0.27 million in 2002.All districts in the state arelinked with optical fibre cable and all district centreshaving internet facilities. Cellular mobile telephony has gained considerable ground in the state with thepresence of private cellular players such as Reliance,Birla AT&T and Airtel.

Chhattisgarh - Growth in fixed wire telephones

Year 2001 2002

Fixed wire telephones

(in ‘000) 234 265

Source: Chhattisgarh at a Glance, 2002 & 2003, Directorate of Economics & Statistics

Industrial infrastructure

Chhattisgarh has several industrial parks / growthcentres, which act as hubs of industrial developmentin the state.These include industrial parks in Bhilai,Korba, Borai in Durg, Urla in Raipur city, Siltara,Sirgitti in Bilaspur, among others.

These industrial estates are close to major cities and provide basic physical and social infrastructurefacilities to industrial units.The Chhattisgarh StateIndustrial Development Corporation (CSIDC)manages these industrial estates.The stategovernment has also set up a software technologypark in Bhilai and another is being established at Korba.

For planning and development of basic infrastructurefor new industries, initiative will be taken forpreparation of an “Industrial Zoning Atlas”.Development of private industrial areas will also be encouraged.The state plans to adopt clusterapproach for setting up of new industries and suitable areas will be identified for development of herbal park, food park, aluminium park, metal park,cycle complex, apparel park, IT park, gem andjewelery park etc.

National Thermal Power Corporation (NTPC) is expanding its presence in the state throughconstruction of 2,980 MW plant at Sipat with an investment of US$ 1,800 million. Jindal Power is implementing a 1,000 MW electricity generationproject at Raigarh.The first phase of 500 MW shallcost US$ 500 million and is expected to be completeby 2007.The Lanco Group is setting up a 250 MWcoal based project at Pathadi in Korba district.The plant is expected to be commissioned by 2007.

The state proposes to make special efforts for the supply of uninterrupted and quality power toindustries by the Chhattisgarh State Electricity BoardTo meet the requirement of power by industries,incentives will be given for captive power generation.

Chhattisgarh - Electricity generation projects in the pipeline

Project Capacity (MW)

Under Implementation

Thermal

Bhaiyathan/Surguja 1,000

Korba West Extn Unit 5&6 2 X 250

Ratija Korba 25

Sipat NTPC/Bilaspur 2,980

Mandi/Raigarh 1,000

Raigarh 1,000

Sub-Total 6,505

Planning

Thermal

Balkunthpur/Kona 1,000

Premnagar/Bishrampur 1,000

Chhuri/Korba 2 X 260

Korba FCI/Korba 2 X 210

Korba East/Korba 2 X 210

Bhilai/Durg 2 X 287

Korba Risdi site/Korba 2 X 535

Hydel

Mahan HEP 4 X 10

Moran HEP 4 X 30

Rehar I HEP 3 X 50

Rehar II HEP 3 X 50

Sub Total 5464

Total 11,969

Source: Chhattisgarh State Electricity Board

CHHATTISGARH PAGE 11

Provision of roads, water supply, power supply andother common facilities, their up-gradation andmaintenance will be taken up from the State’s ownresources and through Special Purpose Vehicles(SPVs).The SPVs will be set up under the industrialinfrastructure up-gradation scheme of theGovernment of India.

To promote exports from the State, efforts will be made to set up “special economic zone”,“agro export zone” and “air cargo complex”.Efforts will also be made for upgradation of facilities in the existing “inland container depot”.A dry port has been established at Urla in Raipur city,to facilitate movement of international trade cargofrom the state.

Some of the infrastructure investment being plannedin the state are:

n A second dry port to be established by theContainer Corporation of India

n An industrial park on 750 acres of land at Raigarh with an investment of US$ 8 million to be developed by Jindal Steel and Power

n A new capital city, with an investment of US$ 1 billion.The concept plan for the citycovering over 7000 hectares has been finalised and it will be implemented over three phases.

Chhattisgarh State Industrial DevelopmentCorporation (CSIDC) has developed variousIndustrial Growth Centres & Industrial Areas namelyUrla, Sarora, Bhanpuri, Rawabhata, Siltara in Raipur,Borai in Durg and Sirgitti,Tifra, Rani durgawati in Bilaspur.

Key industrial centres

Raipur regionRich reserves of minerals, limestone, and coal havemade Raipur district one of the key industrial centresin the state. Raipur city is also the state capital andthe government proposes to develop the city into

a new world-class capital city. Raipur has 58 large andmiddle scale industries with prominent players such as Monnet Ispat, Century Cement, Lafarge andAmbuja Cement.

Durg-Bhilai regionThe Durg-Bhilai region is rich in mineral depositsespecially iron-ore, limestone and quartzite.Theregion is well connected by road and is just 50 kmaway from the Mana airport at Raipur. Major playerslocated in the region include Bhilai Steel, the SteelAuthority of India (SAIL) and Associated CementCompany (ACC).The Borai Industrial Growth Centrespread over 397 hectares is also in this region.

Bilaspur regionBilaspur is a prominent industrial centre inChhattisgarh.The district has a total population of 1.7 million.The presence of South EasternCoalfields Ltd in the region has ensured thrivingoperations for ancillary industrial units in the area.National Thermal Power Corporation (NTPC) is building the state’s largest thermal power plant at Sipat in Bilaspur district.

The Sirgitti Industrial Growth Centre spread over338 hectares is located in this region. Bilaspur is alsothe divisional headquarters for South Eastern CentralRailways. Bilaspur’s railway division is one of the mostprofitable in India, contributing about 17 per cent of the revenues of the Indian Railways.

Korba regionKorba district is known as the Electricity Capital of India.The region has rich reserves of coal andbauxite. It is connected to Bilaspur, the divisionalheadquarter for South-Eastern Central Railways byrail. It is about 200 km from Mana airport in Raipur.

Major industries present in the region include mining(coal and bauxite), electricity generation andaluminum production.

STATE POLICY

investment subsidy, exemption from electricity duty,exemption from stamp duty, exemption from entrytax, allotment of plots at concessional premium in industrial areas, reimbursement of project reportsexpenses, quality certification subsidy, technologypatent subsidy, interest subsidy for technologyupgradation etc.

Directed incentives provided in this policy will be available to new industrial projects and to those industrial units which expand theirproduction capacity.

Public sector undertakings will be encouraged to form joint ventures, particularly in the area of mining, with the private companies makinginvestment for value-addition within the State.

Private sector participation in infrastructure buildingwill be encouraged, particularly in basic infrastructurelike roads, power, water supply, housing; industrialinfrastructure such as development of industrial areasand parks, cluster development; logistics infrastructurelike air-cargo complex, inland container depot,warehousing, logistics hub; and social infrastructurelike health, education, tourism.

An action plan will be prepared for promotion of export oriented units to be implemented by availing of the benefit of various export promotionschemes of the Government of India. Initiatives will be taken for creation of infrastructure necessary forpromotion of exports. Assessment of state’s exportpotential will be undertaken through a national levelinstitute / agency.

To attract investment by non-resident Indians,arrangements will be made for inviting themindividually, and in groups, and organising theirmeetings / dialogue with the local entrepreneurs.

Vision & Mission

The State Government endeavours to work towards rapid economic growth with regionalbalance to bring about prosperity in the state.One of the priority areas of the government is to create a favourable investment environment for increasing industrial production and to createemployment oportunities.

The New Industrial Policy (2004-09) proposes to addmaximum value to state’s abundant natural resources.The policy aims to provide necessary infrastructurefor investment, reducing the cost of production forthe investor and ensuring an investor friendlyadministration.

Industrial policy

n To create additional employment opportunities by accelerating the process of industrialisation in the state

n To create enabling environment for ensuringmaximum value addition to the abundant, locallyavailable mineral and forest based resources

n To ensure balanced regional developmentby attracting industries in the economicallybackward areas of the state

n To make industrial investments in the statecompetitive vis-a-vis other states in the country

n To promote private sector participation forcreation of industrial infrastructure in the state

n To create an enabling environment for increasingindustrial production, productivity and qualityupgradation to face the challenge of competitionemerging from economic liberalisation

Directed incentives will be provided for industrialinvestment in the State in the form of interestsubsidy, infrastructure development / capital

CHHATTISGARH PAGE 13

IT policy

The State’s IT and ITES policy aims to leverage thepotential of Information Technology for rapid socialand economic development to significantly improvethe quality of life for its citizens. It also aims toestablish Chhattisgarh as the leading destination of choice for IT Investment and promote the growthof local IT industry in the state. Some of the keyinitiatives taken by the government are:

n Incentives to IT industry n Constitution of high level committee for grant

of No-Objection Certificate through single window system

n Creation of a distinct budgetary head of accountfor IT-related activities in the annual state budget

n Encourage public-private-partnership policy for e-Governance

The state government is also taking steps to promoteIT in various aspects of governance.These include:

n Linking all districts with optical fibre cables andensuring that all district centres have internetfacilities

n Linking 63 treasuries and sub-treasury offices in the state

n A Memorandum of Understanding (MoU) with theIndian Institute of Technology, Kanpur to promotee-governance in the state and using IT foreconomic and technological development, andenhancing the skills of faculties at educationinstitutes in the state

n Provided land at concessional rates to alluniversities imparting IT education

n Compiling data for a geographical informationsystem with the help of the Indian Space Research Organisation at an estimated cost of US$ 4.5 million

n Computerising land records.Till August 2003, landrecords of 19,466 villages of the state’s 19,995villages were computerised

Financial incentives will made available to industrialunits to encourage technology up-gradation, patentregistration and R&D. Additional financial incentiveswill be provided for investment by non-residentIndians and for foreign direct investment.

Monitoring of implementation of the Industrial Policy will be done by the State Industrial Investment Promotion Board and its high poweredinter-departmental committee.

Human resource policy

An assessment will be made of the existing trainingfacilities and the future requirement of skilled manpower in the State and measures will be taken to meet the gap between the requirement and the actual availability.The State Government willprovide incentives to increase the presently availablespecialties in the training institutions, both in theprivate and government sector.

Efforts will be made to involve the private sector andthe owners of existing industrial units to set up newtechnical institutions. For this purpose, in addition to concessional land, other necessary assistance willalso be provided.

Mineral policy

The State’s Mineral policy aims at creating a conducive business environment to attract privateinvestment in the sector.The initiatives taken underthe policy include:

n Simplification of mining laws and leasesn Preference in sanction of leases for minor mineralsn Implementation of Granite Conservation &

Development Rules, 1999n Speedy addressal of infrastructure constraints

for mining activity by Chhattisgarh InfrastructureDevelopment Corporation

n Constitution of Chhattisgarh Mining Corporation

n Providing infrastructure for biotechnology industrythrough setting up of biotechnology parks and bio-villages

n Human resource development throughintroduction of biotechnology in technicaleducation institutions and industry partnerededucational programmes

n Incentives for bio-technology industry

e-Governance

The State Government proposes to put in place the system of “single point contact” for accordingapprovals and clearances for investment. For thispurpose, an administrative complex will be built in the State capital Raipur to house all the agenciesconnected with industrial investment promotion.

With a view to create enabling environment forpromotion of industrial investment, an institutionalarrangement will be put in place by constituting a State Level Industry Advisory Board headed by the Chief Minister for periodic consultation andinteraction with industrial associations, investors,subject experts etc.

District Investment Promotion Committees and theState Industrial Promotion Board constituted underthe Chhattisgarh Industrial Investment Promotion Act, 2002 will be strengthened for effectiveness.The system of deemed approvals in cases of failure of concerned government agencies to accordinvestment clearances within the specified time limit will be put in place.

For giving various statuary and administrativeclearances to investors, state and district level nodalagencies will be put in place to work as “single pointof investor contact” which will be responsible forfacilitating all necessary clearances. Necessary stepswill also be taken for simplification of labour laws.

n The Government has also set up a nodal agency,CHiPS to propel IT growth and implementation in the state.The agency is headed by the chiefminister and is responsible for implementing the state-wide ‘Chhattisgarh Online Information for Citizen Empowerment’ (CHOiCE) e-Governance project

Tourism policy

Chhattisgarh has a rich cultural heritage and attractivenatural diversity.The state government has taken a conscious decision to create a unique image for thestate and position it as an attractive destination forboth domestic as well as foreign tourists. Some majorobjectives of this policy are:

n Integrated development of special tourism areasn Promote private sector initiatives in developing

tourism-related infrastructuren Promote eco-tourism, adventure tourism,

culture-heritage and ethno tourism n Setting up the State Tourism Promotion Board

as a nodal agency to promote tourism

Biotech policy

Biotechnology has been identified as a thrust sector in the State’s Industrial Policy.The Bastar region is one of the richest biospheres in India.The state is endowed with about 22 varieties of forest and is extremely rich in aromatic plants used in herbalmedicine.The state has vast land of virgin biospherereserves. Its biotech policy has the following objectives:

n Focus on thrust areas viz.Agri-biotechnology,Health care, Bioinformatics, Industrial andEnvironment biotechnology

n Creation of a Biotechnology Fund with an initialcorpus of US$ 7 million

CHHATTISGARH PAGE 15

BUSINESS OPPORTUNITIES

The mining and quarrying sector contributed 12 per cent to the state’s GSDP in 2001-02.The stategovernment is facilitating proper exploitation of itsmineral wealth by promoting mining and mineralbased industries.The state government aims todouble the contribution of minerals to the state’sGDP by 2010.To encourage investment in the Miningsector, the state has formulated a Mineral policy,which seeks to simplify mining laws and leasing.

Chhattisgarh - Mineral production, 2001-02

Mineral Production (million tonnes)

Chhattisgarh India % share

all India

Coal 53.6 327.6 16.4

Iron Ore 18.1 86.3 20.9

Bauxite 0.55 8.6 6.3

Dolomite 0.84 3.2 26.4

Kaolin 0.17 0.85 19.7

Source: Indian Bureau of Mines, Government of India, 2002

Several private players with captive mining operationsin the state include Essar Steel, Jindal Steel and PowerLtd, South Eastern Coalfields Ltd, National MineralDevelopment Corporation (a Government of Indiaundertaking) etc.

Iron & Steel With over 20 per cent of India’s iron-ore reserves,Chhattisgarh has a competitive advantage in iron and steel industry. Presently, iron-ore is beingexported from the Bailadila iron-ore mines of Dantewara district.

A number of prominent global and domestic playershave also recently announced plans to set up steelplants in Chhattisgarh.These include SAIL, which plansto increase the proposed capacity of its plant at Bhilaifrom 4.9 million tonnes per annum to 7 million

Key industries

The economy of Chhattisgarh is largely naturalresource driven and it leverages the state’s richmineral resources.The key sectors whereChhattisgarh has a competitive advantage includecement, mining, steel, aluminium and power.

CementChhattisgarh is the fifth largest producer of cement in India.With a capacity of over 8.6 million tonnes per annum, Chhattisgarh accounts for over 10 per cent of India’s cement production.

The cement industry in India is witnessing significantgrowth in recent years.With the domestic demandfor cement expected to grow at 8-9 per centannually, cement production in India is projected to reach 160 million tonnes by 2007.

Chhattisgarh’s advantage in the sector lies in the factthat it has large limestone reserves. Limestoneproduction stood at 13.7 million metric tonnes in 2002-03.At present, the state has 9 major cementplants and 12 mini cement plants.

All the large cement producers have a significantpresence in the state.These include AV Birla Group(Grasim Industries, Ultratech Cemco), Gujarat Ambuja Cement, ACC and Lafarge.

Mining Chhattisgarh is rich in mineral resources and it is the only state in India with iron-ore reserves.One fifth of India’s iron-ore reserves are located in the state. Other significant minerals found in thestate include bauxite, dolomite and kaolin. In 2002-03,Chhattisgarh produced minerals worth US$ 900million, contributing to 13 per cent of the mineralproduction in India.

Investment

Till 2003, Chhattisgarh attracted industrial investmentin sectors such as basic metals, other non-metallicmineral products, food products and manufacture of coke, petroleum products. Basic metals account for more than 85 per cent of the industrialinvestment in Chhattisgarh.

Between 1996 and 2003, Chhattisgarh attracted overUS$ 105 million of FDI.

As in 2003, investment projects totalling over US$ 9.8 billion were in different stages of implementation.

tonnes per annum; Jindal Steel which plans to expandits finished steel making capacity by 1 million tonnesper annum by March 2006; and Monnet Ispat Ltd signed a memorandum of understanding (MoU) with CSIDC to implement projects worth US$ 260 million for steel products, sponge iron andcoal washery in the state. Presently, a US$ 15 millionproject, to set up a ferro alloy production plant at Raipur is under execution.The Government has also signed an MoU with Visa Industries Ltd (US$ 225 million), Bhushan Ltd (US$ 500 million), andSanvijay Rolling & Engineering Ltd (US$ 100 million)for investing in sponge iron & steel.

AluminumChhattisgarh’s share in India’s bauxite and coalreserves stands at 3.5 per cent and 16 per centrespectively.This makes the state one of the leadingproducers of aluminium in India. In 2003-04, itproduced 100,000 tonnes of aluminium, representingaround 15 per cent of India’s total production.

Some of the major projects under implementation in the state are a US$ 863 million expansion plan by BALCO, a part of the Vedanta Resources Group,to increase its aluminium production capacity from100,000 tonnes per annum to 350,000 tonnes perannum by 2006. BALCO is also setting up a 540 MWelectricity generation plant for captive consumption.Jindal Steel and Power too plans to set up a 50,000tonnes capacity aluminium plant in the state with an envisaged investment of US$ 90 million.The state government is setting up an Aluminium Park in Bilaspur to encourage investment in the sector.

Exports

The value of the exports from Chhattisgarh stood at US$ 95 million in 2002-03, accounting for less than1 per cent of the exports from the India.

Chhattisgarh exports iron-ore, cement, steel castingsand equipment, railway tracks and wagon parts, riceproducts, handicraft items and tussar silk.

Chhattisgarh - Cumulative FDI

Source: Secretariat for Industrial Assistance reports

1996 1997 1998 1999 2000 2001 2002 2003

US$

bill

ion

0

20

40

60

80

100

120

Chhattisgarh - Distribution of investment

11%17%

8%

64%

Source: Projects Today database, June 2004

Electricity

Services & Utilities

Mining

Manufacturing

CHHATTISGARH PAGE 17

Power Chhattisgarh has over 40 billion tonnes of coalreserves amounting to 16 per cent of India’s total coalreserves. It therefore has an edge over other states as it can use these reserves for power generation.

Chhattisgarh already has surplus electricity generationcapacity. Being strategically located in central India,the electricity generated in the state can be easilytransmitted to any of India’s four regional electricitygrids or to power deficient markets in India at competitive prices, particularly since with theenactment of the New National Electricity SectorLegislation, inter-state supply and trading of electricityis permitted. Chhattisgarh is considered the powerhub of India and has the potential to produce up to50,000 MW of power. Several power capacities arealso under implementation currently. It is expectedthat the state will be the preferred destination for all power intensive industries.

Infrastructure Recognising the need for development ofinfrastructure, the state has identified infrastructureprovisioning as an industry in its Industry Policy.Thestate offers significant opportunities for infrastructuredevelopment through private sector participation.A comprehensive Infrastructure Development PlanAction has been prepared to identify infrastructuredevelopment needs of the state and the ChhattisgarhInfrastructure Development Board has been set up tocatalyse investment in the state.The total investmentrequirement for infrastructure development in thestate is estimated to be US$ 22 billion.

Chhattisgarh has a track record of successfulimplementation of public-private partnership forinfrastructure development. In fact, it was the first state in the country to have a public-privatepartnership in industrial water supply.The first phase of the Borai industrial water supply project is operational and it supplies 12 million litres of water every day.

Within manufacturing, basic metals includingaluminium and iron & steel accounted for thedominant share of investment.

Potential hubs for investment

Within three years of its formation, Chhattisgarhembarked on social and economic developmentthrough policy reforms, focus on infrastructuredevelopment and improving the investment climate in the state.The state is richly endowed with naturalresources and has large untapped potential fordevelopment. Potential exists to substantially increasethe pace of economic development in the state by appropriate exploitation of its mineral wealth.

In addition to its present areas of strength in cement,mining and iron and steel, a number of sectors areemerging with substantial potential for privateinvestment and business in Chhattisgarh.The mostprominent among these are electricity generation and infrastructure development.

Share of industries in net value addition

1.5%4.6%

6.6%2.2%

85.1%

Food products

Coke

Basic metals

Other non-metallic mineral products

OthersSource: Annual Survey of Industries, 2002-03

PROFILE OF KEY PLAYERS IN CHHATTISGARH

work has led to the discovery of more than 20 newkimberlite deposits in four states, which are currentlyundergoing appraisal for diamond content. De BeersIndia’s exploration investment in India to date hasbeen approximately US$ 10 million with plannedexpenditure in 2005 budgeted at US$ 7.7 million.Chhattisgarh is one of the principal regions of interestfor De Beers in India.

Grasim Industries LtdGrasim Industries is the flagship of the AV BirlaGroup, one of the most prominent Indian businesshouses. In 2004-05, Grasim’s revenues stood at US$ 1329 million. Grasim is the world's eighth largestcement producer, and the largest in a single location.The Group has cement operations spanning thelength and breadth of India, with 11 composite plants,seven split grinding units, four bulk terminals andseven ready-mix concrete plants.With a combinedcapacity of 13.12 million tonnes per annum, Grasim isamong the largest producers of grey cement in India.Two of its units are located at Jawad and Raipur inChhattisgarh.All of Grasim's units have earned ISO9002 and 14001 certifications. Grasim's otherbusinesses include Viscose Staple Fibre (VSF), spongeiron, chemicals and textiles.

Gujarat Ambuja Cement Ltd (GACL)Gujarat Ambuja Cement Ltd is India’s third largestcement producer, with a capacity of 12.5 milliontonnes and revenue in excess of US$ 531 million.The company’s plants are some of the most efficientin the world.They also have environment protectionmeasures that are at par with the finest in the world.In Chhattisgarh, Gujarat Ambuja has a facilityproducing 1 million tonne of cement per annum in Bharatpura.

Jindal Steel and Power Ltd (JSPL)Jindal Steel and Power Ltd, part of the Jindal group,

Associated Cement Companies Ltd (ACC)Associated Cement Companies is one of India’slargest cement manufacturing companies, with a cement production capacity of 16 million tonnesper annum.Apart from cement,ACC is also India’slargest refractory manufacturer and supplier, thelargest research and consultancy organisation in theIndian cement sector, and a pioneer in the area of advanced materials. ACC has a cement plant with 1.58 million tonnes capacity at Jamul, at Korbadistrict. ACC’s revenues stood at US$ 1035 million(2004-05).

Bharat Aluminium Company (BALCO)Bharat Aluminium Company is one of the largestproducers of aluminium in India.Till 2001, thegovernment divested 51 per cent of its equity andmanagement control in favour of Sterlite Industries (I) Ltd at a cost of US$ 123 million.Today, BALCO isan integrated aluminium company with captive bauxitemines, a captive power plant, refineries and smelters.BALCO’s plant at Korba in Chhattisgarh produces100,000 tonnes of aluminium every year. Its captivepower plant has a capacity of 270 MW to meet itsown requirement. Currently, BALCO is executing a US$ 863 million expansion plan to increase itsaluminium production capacity from 100,000 tonneper annum to 345,000 tonne per annum. It is alsosetting up a 540 MW electricity generation plant forcaptive consumption.The expansion project shall becompleted by 2006.

De BeersDe Beers is the flagship company of De Beers, SouthAfrica, which is the largest diamond mining companyworldwide. De Beers is committed to the discoveryof new world-class diamond mines in India.Thecompany was first granted reconnaissance permits in India at the end of 2000 and active explorationcommenced in early 2001.To date this exploration

CHHATTISGARH PAGE 19

Steel Authority of India (SAIL) Steel Authority of India is India’s largest steelproducer.The Government of India holds 86 per centequity stake in the company. SAIL’s operating incomein 2003 stood at US $ 3.8 billion. SAIL has a steelplant at Bhilai with a capacity of manufacturing 3.6 million tonne per annum of saleable steel.It is India’s sole producer of rails and heavy steelplates.The steel plant at Bhilai is an ISO 9001:2000unit. It has also received the ISO-14001 certificationfor its environment management systems. In August2004, SAIL announced plans to increase the capacityof Bhilai Steel Plant to over 7 million tonnes perannum.The company plans to invest US$ 5.5 billionup to 2012 in its integrated steel plants plans.SAIL also proposes to spend US$ 950 million on immediate priority schemes to be completed by 2006-07.

National Mineral Development Corporation(NMDC) National Mineral Development Corporation is India’ssingle largest iron-ore producer and exporter.It currently produces 15.75 million tonnes of iron-orefrom its three fully mechanised mines in Chhattisgarh.A public sector enterprise, NDMC currently operatestwo mines in Bailadila in Chhattisgarh. Iron-ore fromthis region is known to be super high grade havingover 66 per cent iron content, free from sulphur and other deleterious material and the best physicalproperties needed for steel making.To meet thegrowing demand for iron-ore, the company is planningto open new mines in the Bailadila sector and a newiron-ore mine at Kirandul in Dantewada district.NDMC is the largest exporter of iron-ore in thecountry. In 2004, the company’s revenues stood at US$ 326 million.

is among the largest coal-based sponge ironmanufacturers in India. It has a 24 per cent marketshare in this product segment. JSPL also sellselectricity to the Chhattisgarh State Electricity Board.In 2003-04, JSPL’s net sales stood at US$ 315 million.JSPL has the world’s largest coal-based sponge ironplant at Raigarh in Chhatisgarh with an installedcapacity of 6,50,000 MPTA. JSPL’s growth plans include expanding the finished steel making capacity to 2.9 million tonne per annum by March 2006.A US$ 270 million project envisages setting up of a coke oven battery and a sinter plant as supporting facilities.The company also plans to set up a 1000 MW power plant.

Lafarge IndiaLafarge India is a part of the Lafarge Group, theworld’s leading cement and construction materialcompany. Lafarge India has a total cementmanufacturing capacity of 5 million tonnes per annum. In Chhattisgarh, Lafarge has two cementmanufacturing plants at Sonadih and Arasmeta with a capacity of 2 million tonnes per annum. Lafarge Indiaplans to invest US$ 70 million for setting 50 MWcoal-based captive power plants for two of its units.It also plans to set up a railway siding for its plant at Sonadih in Chhattisgarh, which will connect it withBilaspur railway station.

National Thermal Power Corporation (NTPC)National Thermal Power Corporation is India’s largestpower utility and the sixth largest thermal powergenerator in the world. In 2003-04, the company hadan installed capacity of 19.4 per cent in India andproduced 27 per cent of total electricity generated in the country. One of its largest plants, with an installed capacity of 2,100 MW is located at Korbain Chhattisgarh. NTPC is currently implementingIndia’s largest coal based electricity plant at Sipat in Chhattisgarh.The plant will have an installedcapacity of over 3,000 MW and is expected to cost over US$ 1,800 million.

DOING BUSINESS IN CHHATTISHGARHObtaining approvals

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

Department

Industries / Land revenue

Infrastructure-Electricity / Water

CentralGovernment

Agency

District Investment Promotion Committee

District Investment Promotion Committee

District Investment Promotion Committee

Timelines

Land transfer:Government revenue land – 45 working days from date of application

Through private negotiations – 30 working days

Any clearances from localgovernment/statutory requirements of state government – 7 days

45 working days or 75 working days from the identification of the site, whichever is earlier

Recommendations to Central Government,if required – 45 working days or 75 working daysfrom the identification of the site, whichever is earlier

Cost of setting up business

An indicative table on cost of setting up business in Chhattisgarh

Indicator Value (in US$)

Industrial land (per sq mt) 4.8 - 33.5

Office space rent (per sq ft per month) 0.48 - 0.957

Residential rent (for a 2,000 sq mt house, per month) 239.4 - 335

5-star hotel room (per night) 57.44 - 95.74

Electricity (per kWh) 0.057 - 0.095

Water (per 1000 litres) 0.19 - 0.287

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

Source: PwC research

CHHATTISGARH PAGE 21

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

Confederation of Indian Industry Eastern Region

6 Netaji Subhas RoadKolkata 700 001Tel +91 33 22307727Fax +91 33 22301721Email [email protected]

Confederation of Indian Industry State Office

193 Jabbal Building Civil LinesRaipur 492 001ChhattisgarhTel +91 771 5013520Fax +91 771 5093299Email [email protected] www.ciionline.org

Contact for information

State Government WebsiteWeb www.chhattisgarh.nic.in

The Chhattisgarh State Industrial DevelopmentCorporation (CSIDC)The Chhattisgarh State Industrial DevelopmentCorporation is the nodal agency that promotessetting up of industrial units in the state. CSIDC is entrusted with the work of industrial promotionand assistance, marketing, export promotion andmaintenance of industrial areas & basic infrastructuralfacilities. It acts as a facilitator for development of medium and large industries in this region, providesESCORT services and endeavours to remove‘bottlenecks’ in industrial development.

The Chhattisgarh State Industrial Development Corporation

LIC Campus, PandriRaipur 492 001 ChhattisgarhTel +91 771 2583789 / 90Fax +91 771 2583794Email [email protected] www.csidcindia.com

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


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