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Madhya Pradesh: Means Business. Industries. Overview. Overview. Madhya Pradesh (MP) – State that means business. MP is the second largest State in the Country stretching over 308,000 sq kms. The State is blessed with large mineral resources of coal, diamond, limestone, methane etc.

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Madhya Pradesh: Means Business

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    1. Madhya Pradesh: Means Business Industries

    2. Overview Overview Madhya Pradesh (MP) – State that means business • MP is the second largest State in the Country stretching over 308,000 sq kms. • The State is blessed with large mineral resources of coal, diamond, limestone, methane etc. • MP is among the top 4 states of the Country for industrial investments. Economic Snapshot Madhya Pradesh is emerging as a key growth center for the Country • Per capita GSDP USD 369** • Manufacturing sector USD 8.5 bn** (Registered & Unregistered) • Gross state domestic product (GSDP) USD 23,983.63 Mn** • Average growth rate 5.5% per annum Advantage MP Madhya Pradesh has one of the upcoming industrial base in India • The State is centrally located • Investor friendly Government policies • Total electricity generation capacity 6,449.25 MW* • India’s first greenfield SEZ Indore SEZ • Industrial Centers 8 Power Electricity generation capacity at present is 6,449.25 MW and estimated to rise to a surplus in 2008-09 • MP is rich in low grade coal suitable for power generation. • Potential of hydro-energy generation. • Installed power capacity (MP’s share) • Hydel Power Generation: 852.7 MW* • Thermal Power Generation: 2,147.5 MW* *Ministry of Power ( **Source: (as on 23 Feb 2006)

    3. Enabling Infrastructure • The State is well connected with the rest of India with almost 425 trains passing through the State on a daily basis. Of these 175 trains pass through the State capital Bhopal alone. MP IS CENTRALLY LOCATED AND WELL CONNECTED WITH ALL MAJOR CITIES IN INDIA RAILWAY NETWORK • 25 airstrips.** • Convenient air links from key Indian cities like Delhi & Mumbai to Bhopal, Jabalpur, Gwalior, Indore and Khajuraho. • 5 operational airports. • Indore airport has the capability of handling international cargo. • An international airport proposed in Bhopal. GWALIOR KHAJURAHO AIRPORTS INDORE BHOPAL JABALPUR • The total length of roads spanning MP is 67,600 kms.** • National highways of 5,200 kms run through the State.* • 18 National highways including trunk routes of Delhi-Mumbai, Delhi-Chennai, Delhi-Bangalore, Delhi- Hyderabad. • The total length of State highways in the State is 9,885 kms.** • Convenient linkages to western ports i.e. Kandla Port, Jawahar Nehru Port Trust. ROAD NETWORK *Source: Department of Road Transport & Shipping ( **Source:

    4. Madhya Pradesh: A Preferred Investment Destination 31% of the State under forest cover with a largely unexploited species of rare, valuable medicinal- herbal plants Over 2,000 kms of roads being developed with Private Partnership (BOT) Offers diverse tourists destinations catering to various segments of tourism such as religious (Bhojpur), eco/ adventure (Panchmari), heritage (Sanchi, Khajuraho) tourism etc. India’s 1st operational Greenfield SEZ at Indore Third largest producer of cement in India* Over 100 agricultural farms with an area of over 20,000 acres is available on lease to investor Favourable climatic conditions for cotton and over 40,000 power-looms are driving the textile industry Various blocks available for power, cement, iron and steel units Largest producer of pulses and oilseeds in the Country (~75% of soyabean production) Over 18,000 technical graduates and 230,000 graduates add to workforce each year 12 blocks with reserves totalling 2,585 million tons of coal has been identified Over 144 BCM of coal bed methane reserves available Availability of coal and natural gas (G.A.I.L pipeline) along with support from Government to make investment in Thermal Power Plants lucrative *Source: & Brochure: MP Means Business

    5. Delhi (740 Kms) (MPV - 789.5) Ahmedabad (570 Kms) (MPV - 220.63) Kolkata (1350 Kms) (MPV - 613.19) Mumbai (780 Kms) (MPV - 1000) Pune (800 Kms) (MPV - 206.51) Hyderabad (840 Kms) (MPV - 257.9) Key Markets (Distance From Bhopal) MPV – Market Potential Value Chennai (1430 Kms) (MPV - 362.84) Bangalore (1400 Kms) (MPV - 254.52) MP: The Right Place with the Right Environment Savings in Office Space Rates (A comparison of rates in Central Business Districts) DESTINATION MADHYA PRADESH Fastest mover* in overall performance among the big States in the Country. Fastest mover in agriculture Fastest mover in infrastructure development. Bhopal and Indore have substantial cost advantages, even when compared to other Tier III and IV cities. Savings in Land Cost Ranks 2nd in terms of governance. (Estimated Values for Multi-product SEZs) Ranks 3rd in terms of law & order Cost of skilled labour is USD 2.4/day vis-a-vis USD 3.5 – USD 4.0/day in metros The cost of land is one of the lowest in the Country. Even central hubs such as Indore and Bhopal fare well against other cities in terms of low land cost. MP is centrally located. The State is at an easy distance from all the key consumer markets in the Country. * Fastest mover is the State where the rate of improvement between 2003 & 2006 was greater than that between 1991 & 2003 **Source: India Today (September ‘06 Issue) - Distances rounded off Source: (Reference: RK Swamy)

    6. Industrial Policy: Catalyst for the Investments • The Government of MP has devised an investor friendly industrial policy, which is aimed at achieving global competitiveness. The policy emphasizes on industrial growth in the state through adopting cluster approach, establishing specialized infrastructure and offering favourable incentives. • The main thrust of this policy is: • Establishment of a Madhya Pradesh Trade and Investment Facilitation Corporation which would take decisions about rationalization of taxes, facilities of mega projects and other related matters. • Enacting an Industrial Facilitation Act and to change the rules of business with a view to make single window system decisive and result oriented. • Developing infrastructure for supporting the identified industrial clusters • Reviving closed down/ sick industrial units by granting special packages. • Attractive incentive schemes. SPECIAL INCENTIVES • Special package for Mega Projects on project basis by apex level investment promotion empowered committee headed by the Chief Minister. • Industrial investment promotion assistance – 50% to 75% of commercial tax for 3-10 years • Concessional registration charges and stamp duty exemption for Term Loans. • Interest subsidy on term loan for 5 – years @ 3% to 5%. • For thrust sector industries, 25% capital subsidy would be provided limiting up to a maximum of USD 56,000 • Land on 75% concessive rate for Mega Projects limited to USD 4.4 million. • Entry tax exemption for 5 years. • 5 years electricity duty exemption on captive power generation • 15% capital subsidy to SSI up to USD 33,000 in backward areas • Infrastructure grant up to USD 0.22 million crore for developing private sector industrial parks • Partial reimbursement for Project report, ISO Certification, Patent and Technology Purchase cost • CLUSTER APPROACH • Indore – Pharmaceutical, Textile, Food Processing, IT, Auto Components • Bhopal– Engineering, Biotechnology, Herbal, IT, Food Processing • Jabalpur– Garment, Mineral, Forest & Herbal, Food Processing • Gwalior– Electronics, IT, FMCG, Engineering, Food Processing • Rewa– Refractories, Lime Stone, Forest Based • Sagar– Mineral Processing SPECIALIZED INFRASTRUCTURE

    7. Doing Business Made Easy Through MPAKVN In a bid to build a competitive environment; industries and their ancillaries would be promoted in clusters based on the availability of raw materials, skilled labour andmarket potential. Under this Industrial Policy through Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd (MPAKVNs) scheme, the State Government, has identified industrial clusters. Many of the industrial giants have their establishments in these areas, however 44% of developed area is still untapped and open for investment. Area Developed: 2,262 Hectares Allotted: 800 Hectares Units established: 326 Major Groups: JK, Surya Roshini, Godrej, Grasim, Cadbury, Hotline, Crompton Greaves Special Infrastructure: ICD, Food Park Area Developed: 790 Hectares Allotted: 125 Hectares Units established: 52 Major Groups: Raymond, Hindustan Petroleum, PBM, Ayur Special Infrastructure: Stone Park, Food Park Area Developed: 273 Hectares Allotted: 115 Hectares Units established: 121 Major Groups: Birla, Jaypee Special Infrastructure: Integrated infrastructure development centres (IIDC) Area Developed: 1,330 Hectares Allotted: 618 Hectares Units established: 286 Major Groups:HEG, Crompton Greaves, P&G, Godrej, Lupin, IFB, Oswal, Nahar Special Infrastructure: ICD, Food Park JABALPUR AKVN REWA AKVN GWALIOR AKVN BHOPAL AKVN Area Developed: 2,492 Hectares Allotted: 1431 Hectares Units established: 575 Major Groups: Tata, Ranbaxy, Eicher, Bridgestone, Hindustan Motors, Kinetic, SRF, S Kumars, Gajra, Nicholas Piramal, Indorama, IPCA, Bhilwara Special Infrastructure: SEZ, Crystal IT Park, Food Park, Apparel Park Malanpur, Malanpur Phase II, Banmore, Chainpura, Siddhgawan, Pratappura Rewa, Waidhan INDORE AKVN Mandideep, Pillukhedi, Mandideep Phase II Borgaon, Maneri, Purena Pithampur, Kheda, Dewas, Maksi, Megh Nagar Source: MPSIDC

    8. Industries

    9. MP: The Emerging Power • Madhya Pradesh is an emerging industrial powerhouse of the country. • The State houses around 1,800 companies and 19 industrial growth centers (located across 7147 Hectares.) that are close to major cities. This makes good social infrastructure accessible to industrial units. • Further, there are around 171,000 small-scale industries that contribute significantly to the economy. • MNCs like Cadbury, Bridgestone, Hindustan Lever, Coke and renowned Indian companies like Ranbaxy, Tata, Grasim, Hindustan Motors, Eicher, Kinetic, Hotline, Raymonds, Lupin, Crompton Greaves, Surya Roshni, Nahar Spinning, Anant Spinning, Godrej, HEG and several other big groups have presence in Madhya Pradesh. • These companies not only meet local requirements, but also export a variety of products and services to both developed and developing countries.

    10. MP: Attracting Investments In US$ Million • MP offers an unparallel locational advantage to companies as they incur lower transportation cost for transferring goods to every corner of the country. • Further, cost of basic requirement such as land, water, skilled manpower is less as compared to other states. • State has peaceful & conducive atmosphere for industrialization, law and order situation in the state is under control. • State also allows the industrial units to have captive power plants to produce power as per their requirement. • The State Government desires to have a higher rate of economic development through rapid industrialization. Some of the key initiatives taken by government recently include: • New Industrial Policy-2004 • Madhya Pradesh Trade and Investment Facilitation Corporation (TRIFAC) • Udyog Mitra Yojana- 2004 • Industrial Facilitation Council • Industrial Projects – SEZ, Indore, Food Park, Apparel Parks, etc • Modernization of Roads and other infrastructure • Power Sector Reforms Few Large & Medium Projects Under Implementation

    11. M.P.S.I.D.C. Enabling Infrastructure • State Government is committed to support the investors & provide them a hassle free atmosphere in the Government machinery. The state has taken several initiatives to promote investments in the state by creating enabling infrastructure. Some of the key initiatives are highlighted below. • A Special Economic Zone at Indore is being established in 1038 hectares of land with the investment of US$ 222 million, has become operational. • 8 IIDs (Integrated Infrastructure Development Centre) are being setup at Nandantola, Nimrani, Jagga Khedi, Lamtara, Naogaon, Sindiya, Pratappura, Jaderua • 165 Industrial Areas with basic infrastructure facilities are functional. • Investment Highlights • 217 proposals of foreign direct investment with an investment of US$ 1.3 billion are cleared by GOI for M.P. • 207 letter of Intent with a proposed investment of US$ 804 million are cleared by GOI for M.P. • 1978 Industrial Entrepreneurs Memorandum have been issued by GOI in favour of industrial groups who have shown interest to invest in M.P. with a proposed investment of US$ 14.43 billion. M.P. – SPECIALIZED INFRASTRUCTURE Growth Centres Integrated Infrastructure Development Centers Food Parks SEZ Indore Stone Park Crystal IT Park Apparel Parks Diamond Parks Agri Export Zones ESTABLISHED PROPOSED

    12. SEZ Advantage • Madhya Pradesh Government has adopted the SEZ policy for developing Special Economic Zones in the state. The SEZs, earmarked as duty-free enclaves, aim at promoting rapid industrial development and employment generation. The approved policy regime includes: • Exemption of all state and local taxes • Exemption from stamp duty and registration fees • Grant of labour, energy, environment, industrial health and safety related permits and approvals through a dedicated single window mechanism • Exemption from electricity duty; cess and any other tax or levy on sale of electricity for self generated and purchased power. • Expeditious process for land acquisition to set up SEZs Common Incentives FOR SEZ UNITS FOR DEVELOPERS OF SEZ S • Indirect Tax Incentives • Nil customs duty • Nil excise duty • Exemption from central sales tax • Exemption from service tax • Exemption from securities transaction tax • Income Tax Incentives • 100% tax holiday for a period of any 10 consecutive years out of 15 years beginning from the year in which the SEZ is notified • Exempt from dividend distribution tax • Long-term capital gains arising on transfer of shares in developer company tax exempt • No minimum alternate tax (MAT) • Income Tax Incentives • 15 year corporate tax holiday on export profit – 100% for initial 5 years and 50% for the subsequent 5 years 50% of reinvested reserves for the balance 5 years • Other Benefits • Duty free procurement of capital goods (including second hand capital goods), raw materials and consumable spares from domestic market • Full freedom for sub-contracting labour • Facility to realize and repatriate export proceeds within 12 months • Facility to retain 100% foreign exchange receipts in the export earners foreign currency account • SEZ units will be eligible to obtain clearances/ permissions from different departments under single agency clearance system • SEZ authority will ensure continuous and good quality of power supply • M.P. has liberal labor policy providing complete flexibility in SEZs • SEZ Development Committee monitors infrastructure development for each SEZ • Other Benefits • Full freedom in allocation of developed plots to approved SEZ units on purely commercial basis • Full authority to provide services like water, electricity, security, restaurants and recreation centres on commercial lines • No net foreign exchange earning requirement imposed Source: Ministry of Commerce and Industry, Department of Commerce

    13. Thrust Areas • Industry in Madhya Pradesh is largely resource driven, leveraging the state’s natural wealth in the form of limestone, coal, soya, cotton, bauxite, iron-ore, silica etc. Therefore the state has a strong industrial base in sectors like textile, cement, steel, soya processing and optical fibers. • However, there have been a few exceptions to the resource driven industrialisation and the State as a result of its aggressive incentive policies and strong solicitation/facilitation is developing into a strong base in the Auto, auto ancillary and textile sectors. • Substantial opportunity would emerge in following sectors.

    14. Cement

    15. Sector Profile: Cement

    16. Cement: Evolving Landscape • India is the second largest producer of cement in the world after China. The Indian cement industry’s capacity as on March 2005 was around 160 mn tonnes (including the mini cement plants).It consists of over 54 cement players and more than 129 manufacturing plants and is highly fragmented and regional in nature. • Its estimated market size in value terms is around US$ 8.89 billion and around 130 mn tonnes per annum (mtpa) in volume terms. It owes its regional nature to the concentration of cement plants near the clusters of limestone reserves, located only in few states. This has led to a surplus situation in some regions and shortages in others. India: A Major Consumer of Cement 2004 • India is one of the fastest growing markets for cement ~7.2% CAGR (2000-01 to 2004-05). The demand in the Country is riding high on the continuing growth in all the sectors especially in the IT/ITeS, Hospitality industries which in turn has driven the retail, real-estate and infrastructure boom. Key Drivers of Growth • Strong housing demand • High level of commercial construction activity • Increased government focus on infrastructure spending • Higher investment in industrial projects • Even though industry has huge potential, it faces certain challenges, for instance, the high power and fuel costs and erratic power supply in most of the states is affecting the companies. Hence, most companies have opted to set up their own captive power units to get a regular supply of power and optimise costs. The industry is not only looking for locations with availability of limestone for production of cement, but also for availability of coal for their captive power plants

    17. MP: The Cement Production Powerhouse • M.P. is the third largest producer of cement in the Country. It caters to 13% of the national demand. The State’s rich limestone reserves and the logistical advantages of these sites reduces the overall cement manufacturing & supply chain cost, helping the cement companies to get a higher Return on Investment (ROI). • At present several major groups such as Birla Corporation, Vikram Cement, Prism Cement, J.P. Rewa, Diamond Cements, & ACC cement are present in Madhya Pradesh. Out of these units J.P. Rewa & ACC are in process of investing US$ 244 million for expanding their production capacities. • The State also has the appropriate knowledge pool to operate the cement plants. Installed Capacity Requirements: India 220 MT 70 Mt of Capacity required to meet domestic demand alone 187 MT 160 MT 130 MT 2005 2009 • Being centrally located and in proximity to key cement consuming states such as Maharashtra, Uttar Pradesh, Gujarat, Andhra Pradesh etc, cement plants in MP can cater to different regions of the state. Apart from access to large market the centrally located plants benefit in terms of stable market demand. Further as a result of constant demands the state has one of the highest capacity utilisation rates in the Country (around 94%). • It is estimated that India needs an additional capacity of around 70 MT to meet its domestic demand by 2009. With its inherent advantages in terms of availability of raw material and its cost competitiveness, MP is likely to continue as a leader in cement industry. With the expected demand projection and the inherent advantages, MP is likely to attract significant investment in the sector to become the Cement Production Powerhouse of the Country

    18. Limestone Reserves Coal Reserves MP Is Naturally Strong • Madhya Pradesh has a vast reserve of limestone. The total reserves of limestone is 3625.98 mn tonnes spread across the districts of Damoh, Hoshangabad, Mandsaur, Narsinghpur, Rewa, Satna, Panna, Katni, Sagar, Dhar, Khargone, Jhabua, Balaghat, Sidhi and Morena. • In India, energy costs account for 35 per cent of the total production costs. Further, the power costs are high in India and are growing at a rapid rate. The industry is trying to insulate itself against this by setting up captive thermal power plants. The share of energy costs can be reduced to 16-20% if captive power plants are set-up. • Madhya Pradesh has a several locations (marked in circle) that offer limestone and coal. This provides an excellent opportunity to set-up a captive power plant to ensure regular and cost competitive supply of power. • The industry is expected to witness a significant boom as several project of similar profile are likely to mushroom near the limestone reserves of the State. Proportion of Own Power To Purchase (India) Likely To Increase Further Availability of high quality limestone for cement production and coal for captive power plants makes Madhya Pradesh an ideal location for cement production.

    19. Madhya Pradesh Has Access To Key Cement Markets Across The Country. Delhi (740 Kms) Jaipur (580 Kms) Lucknow (680 Kms) Kanpur (600 Kms) Ahmedabad (570 Kms) Patna (910 Kms) Kolkata (1350 Kms) Nagpur (350 Kms) Mumbai (780 Kms) Bhubaneshwar (1200 Kms) Pune (800 Kms) Hyderabad (840 Kms) Chennai (1430 Kms) Key Markets (Distance From Bhopal) Bangalore (1400 Kms) Add-ons to Natural Advantage • With land rates being as low as US$ 2 per sq mt in the industrial belts of Rewa, MP has the lowest cost of land in the Country. • The key cement markets are in close proximity to MP and are well connected through railway lines and roads. This ensures high and sustained demand of cement produced in these plants. • MP also has a strategic locational advantage; as some of the key cement consuming centers like Kanpur, Nagpur, Patna, Nasik etc are in close proximity to its limestone reserves. Since, freight expenses form 16-22% of the operating costs the proximity to these markets would serve as an edge in the long run. • Further, the largest cement consuming states of Maharashtra and Uttar Pradesh are deficient in cement as they have only 1.9% and 1% of the total limestone reserves of the country. • Even today around 25% of the cement produced in the central India is exported in surrounding regions of North, East and West. With the rising industrial and infrastructural activity expected to happen both within the state and its surrounding regions, the state holds a huge potential for cement manufacturers Cement Movement Across The Country 2004-05 (MT) Destination Source

    20. MP : A Preferred Investment Destination Installed Capacity • Most of the leading cement manufacturers of the Country have presence in MP. Seven major Cement plants are operating in the State with the annual installed capacity of 15.97 million tonnes. • Availability of raw material and investor friendly environment has facilitated several leading players in setting up their shops in the state. Eyeing the potential opportunity, the existing players are proposing to expand their operations in the State. For instance, JP Cements and ACC Ltd. have proposed expansion of around 1.3 mn tonnes each in annual capacity. • Satna region of MP, has the most number of cement plants in the Country. 2 Mn Tonnes 4.2 Mn Tonnes 2 Mn Tonnes (Maihar Cements Ltd.) 1.55 Mn Tonnes 2.2 Mn Tonnes 1.02 Mn Tonnes 3 Mn Tonnes (Vikram Cements Ltd.) (Diamond Cements Ltd.) Presence of leading cement manufacturers and their expansion plans, are true reflection of investor confidence and the huge potential the State holds for the cement manufacturers.

    21. Way Forward Proposed Projects • M.P. State Industrial Development Corporation has prospected that Damoh-Panna area, and Bela-Pagra of Rewa have limestone deposits of 8 mn tonnes and 20 mn tonnes respectively. • Besides these areas, the area around Raghurajnagar and Nagod Tehsil of Satna district also have deposits of limestone. Considering the present scenario & the availability of raw material, there is a scope of further investment of $2.5 bn* in this sector in the state. Source:

    22. Auto & Auto Components

    23. Sector Profile: Auto & Auto Components

    24. Evolving Landscape • The Indian automotive industry has flourished in the recent years. This extra-ordinary growth in the Indian automotive industry has been a result of the increase in the per-capita disposable incomes which has resulted in improvement in the living standards of the middle class. • Car Companies in India have lined up more than US$ 6.67 Billioninvestments. • Most automakers of the world either have active presence in the Country or they source components from Indian component manufacturers. The leading global players such as Hyundai, Ford, Mercedes, Toyota, Suzuki and GM have set up base in India. • The growth of the industry is primarily driven by the cost advantage of manufacturing components in India, which is typically lower by about 30% as compared to developed countries. • As the automobile industry has grown and matured, the Indian auto components industry has also grown tremendously, and is rapidly achieving global competitiveness both in terms of cost and quality. • The Indian automotive component industry has grown at a staggering pace over the last few years. The US$ 8.7 billion industry has registered a 30% jump over last year. The exports have increased from US$ 1 billion in 2003-04 to US$ 1.4 billion in 2004-05. • Industry observers believe that while Indian automobile market is likely to grow at a measured pace, the auto components industry is poised for a take-off and is one of the handful of industries where India has a distinct competitive advantage. Full Throttle- Car Sales Have Soared This Year 7.67 17.65 27.57 4.75 20.58 April- August India’s Auto Ancillary Exports US$ Million

    25. MP: Auto Hub of India • MP has been actively promoting the development of the engineering industry in the state. The state is one of the leaders in auto and auto ancillary industry with around 5 Original Equipment Manufacturers (OEMs) and over 100 auto component manufacturers. • Madhya Pradesh has an auto component industry of around US$ 306 million.60% of the auto industry in Madhya Pradesh is controlled by Auto component players. • The State has developed an industrial cluster at Prithampur which provides readily available infrastructure for companies willing to set up manufacturing facilities in the State. The estate is spread over an area of 5,000 hectares. The proposed multi product SEZ is in the vicinity of the industrial estate. • The state is witnessing an upsurge in investments in the sector. The strategic location, Government cluster development initiatives, skilled workforce are some of the factors that are providing the state a competitive edge over other states. Key Players Madhya Pradesh: Competitiveness Pithampur Auto Cluster Development The Union government of India has sanctioned an auto cluster in the Pithampur industrial area. The Government of India will grant an amount of US$ 11 million for the purpose. Local industrialists have agreed to contribute US$ 3 million for the project. The cluster would be equipped with the world’s largest testing facility, with capabilities of testing various category of vehicles in different climatic conditions at different stages. The track would also issue certificates for vehicles produced in the Country and abroad. • Strategic location • Highly productive & disciplined workforce • Presence of large number of players across the value chain • Proactive and professional approach of State Government • Quality network of educational institutions

    26. Automotive Proving Grounds - Pithampur • Area of Land – 4,000 Acres Project Implementation Schedule • Proposed Facilities- • High Speed Test tracks • Oval shaped test tracks at the outer boundary • Two straights of 3500 meters & Curves of radius 100m each • Maximum testing speed of 350 Km/ hr • Dynamic Platforms • Dynamic Area of 150 meters radius • Two acceleration lanes of 1000m • Testing speed more than 200 km/hr • Straight Line Braking • Four different braking surfaces • Low with basalt tiles 250 m long • Low with ceramic tiles 250 m long • High (Asphalt): 200 m long • Acceleration lane length of 1000 m • High speed circuit • Gradient Test Tracks • Braking test tracks • External noise test track • Accelerated fatigue • Gravel track • Off road track • Dry Handling Track • Comfort Track • Buildings • General Roads • Vehicle Dynamics Lab • Power train lab • Wet skid pad • Sustainability track for trucks Phase I: August 2009 Phase II: October 2010 • Exemptions- • Registration Fees & Stamp Duty • Sales Tax • Entry Tax, • Octroi, • Works Contract Tax • Property Tax • Other Local taxes

    27. Automotive Proving Grounds - Pithampur

    28. Advantage MP World is looking at India India- The Emerging Power • The global automotive parts industry has undergone a sea change over the past decade. Consolidation and restructuring have accelerated with the opening of new and increasingly important markets. • The search for scale and scope economies by large manufacturers and the difficulty of smaller manufacturers to sustain themselves in the investment race have led to increased outsourcing to countries like India • Suppliers are diversifying geographically, increasing research and development, and entering into joint ventures in an effort to seek more module contracts. • The world is also witnessing mushrooming of OEMs in India, China, Thailand etc. • With cost reduction and precision engineering being the mantra for most OEMs India is all set-to become the Auto component supplier of the world. • Following the Country’s WTO commitments, the Government announced the Auto Policy of 2002, aimed at developing India as a manufacturing and export base for small cars and auto ancillaries. Pithampur- The Auto-Auto Component Hub of India • Pithampur is an industrial estate spread over 5000 hectares of Madhya Pradesh, India. • Pithampur is a hub for the automobile manufacturing industry and in addition to units such as Eicher Motors, Kinetic Honda, Hindustan Motors and Bajaj Tempo Ltd. • With 5 OEMs ( plus 2 proposed) and over 100 component manufacturers, Pithampur is an ideal location for Auto and Auto component industry Madhya Pradesh- Strategically Placed For Auto • Being centrally located and in close proximity to key Indian cities MP is the ideal location for Auto-Auto Ancillary industry. • Specialised infrastructure in a cluster and government support have enabled MP to surge ahead of other states.

    29. Offering Specific Incentives National Policy • Following the Country’s WTO commitments, the GoI announced the Auto Policy of 2002, aimed at developing India as a manufacturing and export base for small cars and auto ancillaries. Accordingly, the policy enumerated several measures to develop the automobile market, including: • Removal of the clause on minimum foreign direct investment; • Removal of earlier stipulations on indigenisation and import-balancing requirements; • Permitting foreign automobile manufacturers to set up wholly-owned subsidiaries in India, without requiring approval from the Foreign Investment Promotion Board; • Specific fiscal incentives for cars less than 3.8 meters in length, to enable India to emerge as the Asian base for the export of small cars and multi-utility vehicles; • Incentives to manufacture automobiles using alternative fuel technology, such as CNG and electric batteries; • Proposals to discourage the use of old vehicles by levying higher taxes on older vehicles; • Proposal for a terminal life policy for commercial vehicles (CVs) along with incentives for the replacement of such vehicles. Regulatory Trends • There are several trends w.r.t government legislations that are making Indian companies increasingly competitive: • Safety norms to be brought on par with that of developed countries • Emission norms and environmental standards in line with those in the developed world • Fiscal duties have been significantly reduced over the years • Gradual de-reservation of items for small-scale sector augurs well for the industry • Value added tax (VAT), as a system of taxation, aimed to harmonise the tax structure across states • Exports are virtually not subject to any taxes on account of the various advance license schemes, etc. State Support • Commercial tax rates levied on automobile components industries and trade are being rationalized and will be brought at par with the rates prevalent in other competing states. • Entry tax rates on raw material such as steel being used by automobile component industries shall be rationalized. Government initiatives would act as a key driver for growth of your investments.

    30. MP: A Strategic Location • The cluster at Pithampur also has significant locational advantages on following three aspects. • 1)Proximity to steel plants of Bhilai, Nagpur etc is likely to result in reduction raw material costs. The cost of raw material is around 60% of the total production costs of which steel is the key component within the raw material. • 2)Proximity to ports both in east coast and west coast provides a vital linkage to the international markets. Since, the auto industry is exports driven this linkage is critical to the development of the cluster. Further, water linkages to both sides provides better linkages to countries. • 3)Proximity to Markets: Being centrally located and being well connected to major cities such as Delhi, Mumbai, Pune, Kolkatta etc. assists the companies to reduce logistic costs. • Further, automobile manufacturers are spread across the country. Being centrally located the auto component manufacturers would have access to a larger client base in the country. North (42%) Jamshedpur (1220) West (28%) East (5%) Kandla (933) Bhilai Haldia (1350) Nagpur (352) Satara, Pune, Ahmednagar, and Raigad (800) Mumbai (780) Vishakapatnam (1310) South (25%) Key Steel Plants (Distance from Bhopal) Key Ports (Distance from Bhopal) Region (Share of Passenger Car Market)

    31. MP: A Preferred Investment Destination Market Intensity Index Comparisons- A Reflection of Low Cost of Living • Madhya Pradesh is one of the leading states in the Country for the auto and auto ancillary industry in the Country. To its advantage several units are cluttered around a small stretch of land which would enable both forward and backward support to your business. • The low set-up costs make business proposition one of the best in the world. For example, cost of developed land in Pithampur industrial area is only US$ 1.7- US$ 4 pr sq meter. • The city of Indore also fairs well in terms of low cost of living index. Hence, the companies in Indore can expect manpower costs savings of upto 30% in comparison to companies in Chennai, Mumbai, Pune etc. Manpower costs are approximately 8-10% of the total costs. • In terms of technical manpower as well the state is well placed with over 18,000 technical graduates and an overall and an overall figure of 230,000 graduates add to the workforce every year. Investment Opportunities in MP • Information Technology Based Designing & Testing • – Leverage the Proving Grounds @ Pithampur • - Leverage Embedded Software @ Bhopal • Research & Development Center • Manufacturing Hub For South-East Asia • Auto- Component Manufacturing Facility • Offshoring/ Outsourcing Auto Components • Some of the other supporting factors assisting your business would be: • Central location • Availability of skilled manpower • Low operating cost • Co-operative Labour Union etc.

    32. Textiles & Apparel

    33. Sector Profile: Textiles

    34. Textile Evolving Landscape • India contributes to about 25% share in the world trade of cotton yarn. It is the world’s third-largest producer of cotton and second-largest producer of cotton yarns and textiles. • Indian textile industry has about 22% to the world spindleage and about 6% to the world rotor capacity installed. It has second highest spindleage in the world after China with an installed capacity of 38.60 Million • It has the highest loomage (including handlooms) in the world and contributes with a share of 61%. It contributes about 12% to the world production of textile fibers and yarns. • India is one of the largest consumers of cotton in the world, ranking second to China in production of cotton yarn and fabrics and first in installed spinning and weaving capacity • Through export friendly government policies and positive efforts by the exporters, textile exports have more than doubled from USD 7.55 billion in 1993-94 to USD 17 billion in 2005-06. • The ready made garment sector is the biggest segment in the India’s textile export basket contributing over 46% of the total textile exports. • Export of cotton based items continue to pre-dominate which is natural in view that India is the world’s third-largest producer of cotton • Exports have grown at an average of 9.47% p.a over the last decade. Textile exports in 2005-06 has gone up to USD 17 billion which is 23% higher than previous year. Indian Production Statistics (2005) • About 4% of Gross Domestic Product • About 14% of total industrial production • Employs 20% of work force • About 17% of gross export earnings Contribution of Textile Sector India’s export of textiles (2004-05) The industry is poised to play an increasingly important role in global cotton and textile markets as a result of domestic and multilateral policy reform.

    35. MP: Emerging Textile Hub of India • The industrial history of MP dates back to the later part of 19th Century when in 1866, a cotton textile unit established by then Maharaja Holkar at Indore. • Presently, the textile industry in the state is thriving in the southwest (Malwa) region. A large number of cotton textile mills are clustered around Indore, Ujjain, Burhapur etc. • Easy availability of cotton, Ginning and Pressing units, skilled manpower, developed education system, entrepreneur skills etc are some of the reasons for rapid growth of the industry in the State. • Presence of major textile players such as Bhilwaras, Indo-Rama, Bhaskar, Oswals, Parasrampuria, Maikal, S-Kumar’s etc and the proposed expansion plans indicate the high investor confidence in the State. • The state is focussing on cluster development around sectors of strategic advantage by developing infrastructure in and around these clusters. Growth of export oriented spinning and large scale knitted garment units near Indore, and growth of Chanderi & Maheshwari products are excellent examples of cluster development. Infrastructure at a glance Bhaskar Industries Ltd.

    36. MP Making Businesses Work • Madhya Pradesh is poised to become the next destination for leading textile companies, who would find market environment conducive to park their investments. • The state presents a tremendous opportunity by providing significant advantages across the value chain. • The state has several units in a cluster, which could be acquired and refurbished to provide a quick start to your business. • In terms of technical manpower as well the state is well placed with over 18,000 technical graduates and an overall and an overall figure of 230,000 graduates add to the workforce every year. Madhya Pradesh Has Strengths Across The Value Chain Process Raw Material Market Spinning Weave/ Knit Processing Stitching (Garment/ Apparel) Advantage Madhya Pradesh • Climatic Conducive for cotton production with large varieties available within and surrounding States • Being centrally located and well connected the raw material can also be brought on short notice from any part of the Country • Over 40 spinning units • Over 1.4 million spindles • The manpower has on the job experience in latest technology • Several units are available for procurement by investors • Over 47000 handlooms are installed in MP • Over 43,000 power looms • Rich tradition of weaving and knitting • Several export oriented processing units are present in the state which can be developed further. • The state has a blend of both new age and traditional processing capabilities essential to promote Indian products internationally. • MP is renowned for skills of its people in stitching garments. • Manpower is well trained and is capable of producing world-class garments/ apparels. • Further, the states strong leather industry is likely to complement the textile industry. • Strategic central location to develop warehouse • Well connected with the entire Country through railway network • Proximity to ports in Maharashtra and Gujarat provide cost competitiveness both for exports and imports • Availability of skilled manpower at competitive costs • Government initiatives in terms of proposed apparel parks, fiscal incentives etc would benefit the investors. • Success Stories: S Kumars, Bhilwaras, Oswals, Maikal, Indo-Rama etc.

    37. MP: A Preferred Investment Destination • Madhya Pradesh is poised to become one of the leading states in textile industry through its cluster development initiatives. To its advantage several powerloom/ handloom units are cluttered around a small stretch of land. To provide a kick start to your business there is a significant opportunity to target and acquire these units. • The clusters also have significant locational advantages. For instance, Malwa region near Indore cluster is a leading cotton growing belt and a textile hub in the Country providing the competitive edge to your company. The material costs account for nearly 55-60% of the costs of production in India. Even a 10% of savings due to proximity to Malwa region could result in ~5% increase in operating margins. • To further support your business endeavours Government of Madhya Pradesh has created specialised infrastructure in the form of Apparel parks. Being an industry with social importance, the Government also provides special fiscal and non fiscal incentives to the units in the state. • Some of the other supporting factors assisting your business would be: • Central location • Low set-up costs (Land, building etc) • Availability of skilled manpower • Low operating cost • Co-operative Labour Unions (one of the best in the Country) • Government support etc. Textile Clusters in The State Handloom Clusters Power-loom Clusters Proposed Apparel Parks Availability of Raw Material Malwa region is a leading cotton growing belt Malwa Region

    38. Offering Specific Incentives For ensuring maximum value addition in utilizing available resources and strengthening the different components of the Madhya Pradesh offers special incentives to units present in the state. This has further increased the competency of the units in the state and has made investments more lucrative. Highlights of Special Incentives Given to Textile Industry • Special Incentives to Readymade Garment, Powerlooms and Made-up Garment industries: • Benefits under Government of India’s schemes such as Apparel Park Scheme, Textile Centre Infrastructure Development Scheme (TCIDS) • Modernization of units of this sector through Technology Upgradation Fund Scheme (TUFS), Group Work Shed Scheme. • Exempted from the binding of minimum wage fixation on a daily basis. • An Apparel Training Institute would be set up with the assistance of Apparel Export Promotion Council in the State, so that maximum number of trained worker could get employment in the Ready-made Garment industry. • Efforts to establish a national level fashion designing technology institute in the State in order to facilitate textile industry of the State regarding the information for design development and to provide forecasts. • In order to accelerate the pace of modernization of the unorganized power-loom sector, modern power loom clusters would be developed at Burhanpur, Indore and Ujjain with financial assistance sought under Government of India’s Group Shed Scheme. • Development of the process house through private participation by providing necessary facilities and if required their cases would be considered by the committee for Mega Projects. • The provision related to labour laws declared for Special Economic Zone will be made applicable to the projects / special areas established such as Apparel Park, Garment Complex and unit established/being transferred under Group Work Shed Scheme. • Cotton ginning and pressing units would be provided high quality cotton and they would be encouraged for modernization under centrally sponsored schemes with the help of their recognized associations. • Construction of tar roads for smooth transportation to Cotton Mandi and construction of cement platform for storage of cotton, using Mandi Board's fund would be taken up on priority basis. • Units purchasing yarn produced within the State, would be given a "set off" of 2% (Two percent) on Commercial Tax would be given.

    39. The Way Forward… • With all the right ingredients in place, Madhya Pradesh has several locations which are suited for developing textile units. Investments are likely to flow in the next few years. The state is likely to witness the resurgence of textile industry, which would play a significant role even at national level. The improving infrastructure and rising standard of living are likely to infuse capital into the state. • The state could attract investments of around US$ 1.3 billion thereby generating direct employment for over 0.16 million people. Further, with the mordenization initiatives undertaken by the Government the states competitiveness in the textile industry is likely to rise. • MP also fairs well in terms of low cost of living index. Hence, the companies in Indore can expect manpower costs savings of 20-30% in comparison to companies in Chennai, Mumbai, Surat, Ahmedabad etc. The manpower costs in India typically form 8-10% of the total costs. Market Intensity Index Comparisons- A Reflection of Low Cost of Living Source: Madhya Pradesh Textile Report, MPSIDC

    40. Pharmaceuticals

    41. Sector Profile: Pharmaceuticals

    42. Evolving Landscape • The global pharmaceuticals market generated total revenues of USD 534.8 billion in 2005, representing a compound annual growth rate (CAGR) of 7.7% for the five year period spanning 2001-2005. Market size expected to reach USD 767.2 billion by the end of 2010. • With an estimated market value of USD 8.2 billion (at consumer prices, inclusive of exports) in 2004, India accounts for 2% of the world market for pharmaceuticals. • According to the global ranking estimates, India ranks as the 4th largest pharmaceutical market in volume terms and the 13th largest market in value terms. • The significant difference in the value and volume wise rankings of the Indian companies is largely attributed to the prices of drugs manufactured in the Country, which rank among the lowest in the world. With the quality being maintained at par with international standards, India exports drugs to more than 200 countries across the world. • With formulations contributing to 50% of the exports, India’s pharma exports were approximately USD 3.17 billion. • Projections of growth of Indian pharma market (exclusive of exports) range from USD 11.9 bn in 2009 to USD 25bn by 2010 • Reduced growth rate • Increasing cost of R&D • Shorter time span for exclusivity • Fewer block busters • Price pressure from Generics • Higher complexity through more number of smaller revenue drugs • Low-cost, high-quality production • Large and growing US FDA approved plant capacity • Synthetic Chemistry talent for early stage compound development • Low cost of research and world-class testing facilities • Cost of a research scientist in India is only about 1/6th to 1/4th of that in USA • Contract Research and Manufacturing (CRAM) • IT enabled services including clinical/market data analysis • Clinical Trials: Revenues to grow from $70 million (2002) to $1-1.5 billion by 2010 driven by a 60% cost advantage and large gene pool for trials • Major opportunities in Biotechnology are in the areas of Bio-informatics, Bio-pharma etc. • Many international biotech companies like Chiron Corp, GSK and Sigma Aldrich Corp have expressed interest especially in Bio-manufacturinga

    43. MP: Gaining Momentum • Located at the very heart of India, Madhya Pradesh is the second largest State and is easily accessible from every corner of the Country. • Madhya Pradesh has a made a lot of progress in the last couple of years and is paving way to be at the forefront of the Pharma industry. • Major players such as Ranbaxy and IPCA already have a foot hold in the State and are on the road to expansion under the favourable industrial policies and initiatives by the State Government. • Madhya Pradesh is envisaging a pharma cluster at Indore and has constituted a board for Biodiversity and life sciences under the chairmanship of the Chief Minister. • Efforts are also being made to establish national level training centres through support of large industrial houses of MP. This would ensure that the State will never be short of professional expertise. This is an added advantage to the investors looking to invest in the in the State as there would be a wide availability of qualified and skilled professionals at a relative low manpower investment cost.

    44. MP: Offers The Right Blend • By leveraging the existing manufacturing base, a strong health care system along with a low cost resource pool Madhya Pradesh has the potential to further develop the pharmaceutical industry in the State. • Madhya Pradesh’s network of health facilities comprises 145 hospitals, 343 community health centres, 1,705 primary health centres. It also has 34 Ayurvedic and 4 homoeopathic hospitals. The number of in-patient beds in Madhya Pradesh’s hospitals is 20,839. • MP has the right blend on freshers and laterals for the pharmaceutical industry. The institutes across the State are well equipped to provided to train manpower in each domain. There are 9 key pharmacy colleges in the state supported by 6 medical colleges and 43 management institutes (including one of the six Indian Institutes of Management at Indore). The laterals have experience of working in India’s leading pharmaceutical companies such as Ranbaxy, Lupin, NPIL, Albert David etc. Key Pharmacy Institutes Pass-out ~300 Students Each Year • B. R. Natha College of Pharmacy, Mandsaur • College of Pharmacy, Indore • Department of Pharmacy, Bhopal • Dr. Harisingh Gour Viswavidyalaya, Sagar • Institute of Pharmacy, Gwalior • R.K.D.F. Institute of Sciences & Technology, Mandideep • Shri G.S. Institute of Technology & Science, Indore • V.N.S. Institute of Pharmacy, Bhopal

    45. MP: A Preferred Investment Destination • Madhya Pradesh is all set to become the next pharma hub of India through its cluster development strategy and government support to the investors. There are many significant avenues and areas that can be tapped for setting up and scaling up your business operations. • To further support your business endeavors Government of Madhya Pradesh is developing specialized infrastructure in the form of SEZ Indore. Being an industry of economic importance, the Government also provides special fiscal and non fiscal incentives to the units in the state. Madhya Pradesh has strengths across the value chain Drug Research & Discovery Pre-clinical Development Clinical Development Approval & Launch Marketing/ Exports Manufacturing • Central location • Low cost of labour • Specialized infrastructure (SEZ) • Low operating cost • Low set-up costs (Land, building etc) • Specialized infrastructure (SEZ) • Low operating cost • Availability of skilled manpower • Low attrition rates • Government support • Availability of skilled manpower • Low attrition rates • Low cost of labour • Availability of large target population • Target population with diverse genetic set-up • Availability of skilled manpower • Low attrition rates • Government support Market Intensity Index Comparisons- A Reflection of Low Cost of Living COST INDICATORS FOR ESTABLISHING AND OPERATING BUSINESS IN MP

    46. Engineering & Electrical Equipments

    47. Sector Profile: Engineering & Electrical Equipments

    48. Evolving Landscape • India has a strong engineering and capital goods base. The Indian engineering manufacturing sector has been growing at the rate of about 5.9 per cent in the nineties. With a size of US $ 22 billion, the engineering sector exports stood at US $ 6.6 billion in 2001-02 and imports at US$ 4.9 billion in the same year. The engineering manufacturing sector employs over 4 million skilled and semi-skilled workers (direct and indirect). • The range of machinery produced in India is wide and includes heavy electrical machinery, textile machinery, machine tools, earthmoving and construction equipment including mining equipment, material handling equipment, diesel engines, electric motors, pumps, instrumentation, oil & gas equipment, sugar machinery, railway equipment, metallurgical equipment etc. • Many leading world class companies such as GE, Ford, Caterpillar, Sony, Honda, LG, Hyundai, Siemens, Philips, Daimler Chrysler, Fiat, Lafarge, ABB, Electrolux, Volvo have manufacturing base in India. Key developments observed during post liberalization period De-licensing • 34% share in number of approvals and 40% share in investment FDI • 36% of the total approvals went to the engineering industry (1991-2005) Foreign Technology Agreements • 51% of foreign technology collaborations were approved in the engineering industry • 34.4% share in total industrial production • Up by 5% share during last decade Production Exports • 8% share in 1990s • 14% share in 1999-2000 • 21% share in 2004-05 (USD 16.4 billion) “Better profitability, spruced up manufacturing setups, aggressive implementation of quality initiatives marked by higher growth and better returns on capital employed…the hallmark of Industrial India – the engineering & capital goods sector is back with a bang” – ET 500

    49. MP: Gaining Momentum • Located at the very heart of India, Madhya Pradesh is the second largest and the most easily accessible states in the Country. The State is blessed with natural wealth, and abundant supply of power and people. • The state has the largest plant of India’s leading engineering company, Bharat Heavy Electricals Limited, (BHEL). The plant had recorded a turnover of US$ 341 million in 2004-05. The profit before tax was also high at around US$ 33.78 million • An Engineering Cluster is proposed to be established at a cost of US$ 15 million at Govindpura Industrial Estate near BHEL, Bhopal. This will benefit about 445 industrial units in the Estate. • A common facility and necessary infrastructure will be developed for industries. Industries will have special facilities pertaining to engineering works and power sector related specialization since the site will be in the vicinity of Bharat Heavy Electricals Limited. • The project will be developed with an estimated cost of US$ 1.53 billion with Central government share of US$ 10.67 million. The project has been given 'in principle' sanction. A company namely Bhopal Clusters of Engineering Organization Pvt Ltd has been formed. Bhopal • Established in the late 50’s, Bharat Heavy Electricals Limited ( BHEL ) is, the largest engineering and manufacturing enterprise in India, and one of the leading international companies. • BHEL’s Bhopal plant is the company’s oldest unit with updated & state-of-the-art manufacturing facilities. • The product range at Bhopal includes Hydro, Steam, Marine & Nuclear Turbines, Hydro & Turbo Generators, Transformers, Switchgears, Controlgears, Transportation Equipments, Capacitors, Bushings, Electrical Motors, Rectifiers,Oil Drilling Rig Equipments, Battery Powered Vehicles and Diesel Generating sets. • This unit have been recommended for ISO-14001 certificate for its Environment Management System. • Some Of The Supporting Factors Assisting Your Business Would Be: • Skilled Manpower • Competitive Labour Cost • English Speaking Population • Managerial Excellence To Deliver Quality Goods On Time. • Indigenous Availability Of Raw Materials • Strategic Location Allowing Exports To Near And Far Countries • Diversified Industrial Base With Supporting Ancillary Industries

    50. MP: An Investment Destination • Madhya Pradesh is emerging as a Engineering hub of India. There are many significant avenues and areas that can be tapped for setting up and scaling up your business operations. • To further support your business endeavors Government of Madhya Pradesh has is developing specialized infrastructure in the form of SEZ Indore and Engineering Cluster. • Being an industry of economic importance, the Government also provides special fiscal and non fiscal incentives to the units in the tate. MP’s Position Across Offshoring Value Drivers Strong Weak