A pioneer in the industrial growth of India

Background
The resource-rich State of West Bengal was the industrial hub of British and Independent India. The State's strategic position in the eastern region makes it the natural gateway to the East. It is well connected by land, air and sea routes to major global cities as also to the Pacific rim and to the thriving South East Asian megalopolises like Hong Kong, Tokyo, Seoul, Shanghai, Singapore, etc. In view of brightening prospects of `Barrier free' trade with neighbouring countries like Bangladesh, Nepal and Bhutan under the umbrella of SAARC, West Bengal is destined to play a key role as the economic hub of the region.
West Bengal is the home to India's largest concentration of mining, iron and steel, metal working and engineering industries; besides being the leader in two of the world's biggest agro-based industries-tea and jute. It is now poised for a resurgence in the industrial sector with modern industries in the Petrochemicals, PTA, Electronics and Information Technology taking shape.
It is commonplace that West Bengal had been a pioneer in the industrial development of the country and enjoyed a position of pre-eminence till about the mid-sixties. In fact the year 1965 marked the peak of industrialisation and industrial employment but a steep decline started thereafter reaching the nadir in the seventies. The reasons are well known and need not to be mentioned here. Suffice it to say that the attitude of successive Union Government to the State had not only been indifferent but, more often than not, definitely negative. The unusually long continuance of the Freight Equalisation policy and controls on industrial licensing to the detriment and neglect of the State are some of the contributory factors for the slide.
Since the Left Front Government was installed in the State in 1977 it embarked on a course of reconstruction of the economy. The sectors in which the State had the powers to act under the constitution of naturally received priority attention. As a matter of conscious policy, the State Government focussed on rural development, land reforms, agriculture, small scale industries and fisheries along with decentralisation through empowerment and involvement of the panchayats in all developmental work. The policy resulted not only in a major `break-through' in the rural-agricultural sector but also an upsurge in agricultural production, creation of a fast expanding domestic market and a stable political environment.
The State enjoys a few natural advantages which had in the past contributed to its industrial development. They still continue-the geographical location, a fairly developed industrial infrastructure, abundance of mineral and other resources and, above all a vast reserve of skilled and trained manpower.
New Economic Policy of 1991 and The State's Reaction
The new Economic Policy (NEP) of the Union Government had evoked mixed reactions in many circles. While welcoming the discontinuance of the Freight Equalisation policy, and removal of the often odious system of licensing, the State Government had reservations about certain other aspects of the policy, especially with regard to small scale industries, down playing the importance of the public sector undertakings and arbitrary and abrupt import tariff reduction. Nevertheless the NEP provided, for the first time, an opportunity to the State Government to pursue a policy of promotion of investments in the medium and large scale sectors which had, as stated earlier, been languishing.
At this stage it would be pertinent to point out a few salient features of the Industrial Policy Statement of the State Government announced in 1994. The policy statement was the outcome of an extensive interaction with the leaders of the industry and the Chamber of Commerce. It has been well received by both the investors from within India and abroad. It is to be reiterated that the State wants foreign investment and technology from abroad on mutually advantageous terms. As to technology, the State wants its upgradation for which import of advanced technology is essential. The Government recognises the need to faster indigenous `Research and Development' to keep abreast of the technological changes and advances going on abroad. This is a means to the ultimate goal of `self-reliance’ which should be pursued by all concerned.
West Bengal is second to none in recognising the importance of the private sector in providing accelerated growth while public sector will continue to play a vital role even in the changed circumstances. While investments are being encouraged in productive industrial ventures, private participation in the development of industrial and social infrastructure like housing, education, healthcare and communication is also welcome. Generation of power is one sector where private initiative has been encouraged since long. The State Government also want industrial `growth centres' to be developed by private initiative. In short, in the changing scenario of the economy of the State and the country, the State recognise that there is a meaningful role of the public sector, the joint sector as also the private sector.
Some Macro Economic Indicators
As a result of the collective consequences of plan expenditure, decentralisation and involvement of common working people in the entire process, there have been increases in production in agriculture, industry and other sectors, resulting in an estimated rate of growth of the State Domestic product at 6.7% in the current year, which is much higher than the national average in GDP of the entire country at 5.8%. For the entire 8-year period since what is called the policy of liberalisation, the growth in the State domestic Product of West Bengal has been 6.6%, which is considerably higher than the average annual rate of growth of 5.8% for the entire country during this period.
The rate of industrial production, based only on actual implementation of projects, increased steadily from 4.3% in 1993-94 to almost 9.2% in 1996-97, which is in fact higher than the all-India rate of growth of industrial production in that year. In regard to development in many areas, where the majority of the people in the country and our State live and work, it is noteworthy that West Bengal has reached the first position among all the major States in the country. According to the latest data available for period 1980 to 1997, while all the States' average annual growth in foodgrains production was 2.6%, West Bengal recorded the highest rate of 4.5%. Even in terms of productivity per hectare, West Bengal remains the highest.
Thrust Areas For Rapid Growth
Based on the potential of the State, the Government have identified a number of sectors for accelerated growth. They are : Petrochemicals and Downstream Industries, Electronics and information Technology, Leather and Leather Products, Food Processing and Agro-based industries, Gems and Jewellery, Tourism and related activities. Greater attention is being given to these sectors.
How The World Perceives West Bengal
West Bengal is today perceived as a strategic location for global growth.

The State's superb geographical location makes it a true gateway State.
Land, sea, air-routes connect the State to all major world locations.
India's largest concentration of mining, iron and steel, metalworking and engineering industries are here. And the State leads in Tea and Jute.
A new industrial resurgence has catapulted the State into sophisticated, high-technology industries such as Petrochemicals, PTA, Electronics and Information Technology.
Urban renewal is intense Satellite townships, roads and highways infrastructure development, underground railway expansion, civic amenities, housing, ports, entertainment and leisure, education and tourism-are together making Calcutta and West Bengal an ideal place to live, work and invest.
Electrical Energy Utilities in West Bengal are among the top performers in the country. The State offers adequate power to new industries at attractive rates.

The international optimism on opportunities in West Bengal was emphasized when Howard Hughes of Price Waterhouse, London, said “West Bengal, a pioneer in the industrial growth in India, is today well geared to take up challenges and provide attractive investment opportunities”. Recently McKinsey and Company Inc. have iterated that “We believe the State possesses key intrinsic advantages in terms of its size and wealth, its relative stability and its emerging investor-friendly climate”.
The McKinsey study for Destination West Bengal also revealed that with a population larger than any European country, it was a “very large market by any standard. In terms of total size, West Bengal was India's fourth largest market. It also possessed a disproportionately large share of the nation's higher income households. One in ten of India's richest consumers are resident here”. State Government's efforts in emphasizing land reforms and rural prosperity was also commented on by McKinsey when they said that “West Bengal has been quietly building the foundation for a strong middle class...... it has doubled the number of households above the poverty line in the last decade”. McKinsey also said that “West Bengal's relatively stable society could prove to be a major asset. Investors loathe uncertainty”.
Calcutta, the capital of West Bengal, has been hailed as the best among Indian metros by “The Times of India”. The fact that the state scored high on most counts including power, water, cost of living, law and order situation and public health, was corroborated by leading international magazines. Sometime back “Newsweek” depicted the `New Calcutta' in its cover.
Initiatives To Change Investors' Perception
As a decisive step towards increasing West Bengal's `visibility' among the investors, WBIDC organised `Destination West Bengal'-an investors' meet in the idyllic environs of Ffort Radisson at Raichak in January 1999. The exclusive session in the morning was attended by 150 business personalities drawn from within the country and abroad. The Plenary session in the afternoon was attended by nearly 1000 invitees from Chambers of Commerce, Business and the Press. This was the biggest such event organised by the State Government and was hailed as one of the best of its kind hosted by any of the States in the recent past. Efforts are being made to disseminate information regarding the improving industrial scenario of the State and to reach our message to the investors that the Government is committed to support industrial ventures.
The exercise in association with McKinsey undertaken by WBIDC in December 1998 for `Destination West Bengal' brought into light a few features which need to be highlighted. One tenth of India's market is in West Bengal. In terms of total size it is the country's third largest market. Only Maharashtra and UP are larger. The percentage of population of the State living below poverty line has dramatically reduced owing to comprehensive land reforms and success of rural development programmes driven by people's participation. The State's performance in growth of Food Grains has been, to say the least, remarkable. It has vast natural and human resources. It is also important to recall what McKinsey had to say about the state : “West Bengal should prove highly attractive to investors because of its fundamental business advantages. These are; one, the size and wealth of its markets; two, the quality of certain key resources, such as its agriculture, its people and its culture; three, the positive impact of a relatively low competitive intensity and four, the government's increasingly proinvestor stance.”
It may be recalled that some projects were announced at the end of the Plenary Session at Raichak by the representatives of the concerned companies who declared their plans for new investments. We are happy to note that out of the sixteen projects announced, four projects viz. Praxair's Nitrogen Plant, BOO Power Plant by L&T at Haldia, Hind lever Chemicals' Phosphate Plant at Haldia and Asia Hotel Limited's 5-star Hotel Project at Salt Lake are either complete or are in advanced stage of construction. In addition, the cement grinding unit by Ambuja Cement and PET Resin Project of South Asian Chemicals are expected to begin construction. We understand that VIDEOCON will commence implementation of the new `White Goods' Manufacturing Unit at Salt Lake and also will revive the Philips Colour TV Manufacturing Unit at Salt Lake. The remaining projects which were announced are being actively pursued.
On 19 and 20 March 1999 Intechmart (Investment and Technology Market) was organised by the Government of West Bengal in assoication with United nations Industrial Development Organisation (UNIDO), Government of India and Confederation of Indian Industry (CII) during 19-20 March, 1999, at Oberoi Grand Calcutta. This event was conceived as a corollary to the Destination West Bengal Summit with the following objectives :

Potential foreign investors and industrialists from West Bengal of explore possibilities for joint collaborations
Overseas companies to offer technology to West Bengal based Indian companies
Promotion of foreign investment in the state of West Bengal

The West Bengal Industrial Development Corporation Limited played a key role on behalf of the State Government to make it a grand success.
On the 30th of December, 1999, the Industry Sub-Committee organised an event, aptly named "UDYOG SHIBIR", in association with WBIDC. The "Udyog Shibir" was designed as an Interactive Workshop of NRI's and Local Business Communities, Investors, Entrepreneurs and the like. A large number of successful and well established NRI's attend the Workshop. Exchange of ideas, forging alliances, starting joint ventures and other collaborative business issue featured prominently in the proceedings.
Power Scenario
In the Power sector the `turnaround' has been spectacular. As regards to power for industries supplied by WBSEB and DPL there is a very attractive incentive scheme in existence, which has been notified separately by Power Department. This envisages discounts (less billing) of upto a maximum of 40% in the first six years of commercial production (in a graded manner) to new units. The Fiscal Incentives along with incentives offered by the Power Department, when viewed in totality, provide a package to new units which have made West Bengal a very competitive destination for industrial investments.
Availability of adequate power for industrial purpose is definitely one of the principal advantages of our State, particularly when the rest of the country is faced with varying degrees of scarcity. Because of power advantage a number of Induction Furnace based Mini Steel Plants and Ferro Alloy Plants have been set up in the last four years in different areas falling within the districts of Howrah, Hooghly and Burdwan. In Durgapur, the availability of power at a very competitive rate from DVC has seen a concentration of power intensive industries. Ferro Alloy Units by Bhaskar Srachi Corporation, Kartick Alloys, Srinivasa Alloys, Monet Alloys have already begun commercial production. Many more are in the pipeline which indicates that West Bengal will increasingly become a `hub' for power intensive investments.
Overview of investments
From 1991 till August 1999 a total of 2017 industrial approvals have been received for projected investment of Rs. 47,358.69 Crore. Out of this 338 projects having a total investment of Rs. 8,668.21 Crore, have already been implemented. At present 74 projects with estimated investments of Rs. 10,056.50 Crore are under construction in various parts of the State (power project are not included). This implies that 412 projects having total investments of Rs. 18,724.71 Crore have either been implemented or are under construction. In financial terms, the projects implemented and those under construction account for 39.5% of the total approval [Rs. 47,358.69 Crore]. This figure compares favourably among the leading states in India, and is the best in the Eastern Region.
With an industrial climate increasingly becoming more conducive to new investments, it is little wonder that some of the biggest international and domestic corporate names have made West Bengal their home. The list includes Matsushita, Mitsubishi Chemical Corporation, Nichimen Corporation, Mitsubishi Corporation, Itochhu, Marubeni, Sumitomo, Sumikin Bussan, Nishi Lowai, Toyo, Siemens, Vesuvius, Caltex, Motorola, ABB, Computer Associates, Bayer, Lurgi, Daelim, Balmer Lawrie, VXL Landis & GYR, BOC, Price Waterhouse, Alcoa, Deutsche Bank, George Soros, TCG, Pepsico India, Coca Cola, Sumitomo Electric, United Airlines, Tata, SAIL, Birla Group, ACC, INDAL, Exide, Hindustan Lever, RPG, India Foils, ITC, Duncan, Gujarat Ambuja, L & T and many more.
SOME PROJECTS UNDER CONSTRUCTION
The project which symbolises the industrial resurgence of West Bengal is the Haldia Petrochemicals which is scheduled to go into commercial production in February 2000. The project which now has an investment of around Rs. 5200 crore (US $ 1.3 billion) and is jointly promoted by the State Government, Soros Chatterjee Group and the Tata Group. The core complex is coming up at Haldia on nearly 1000 acres of land. The Japanese contractors Toyo Engineering Corporation have categorically stated that they are proud not only because the construction of the plant is completely going as per plan, but they have been able to cold mechanical completion of their work 2 months in advance of the schedule which is a world record time.
A PTA plant promoted by Mitsubishi Chemical Corporation is another giant project under construction at Haldia. Marubeni Corporation, Mitsubishi Corporation of Japan as well as the West Bengal Industrial Development Corporation (WBIDC) each have small stakes in the project. The construction of the factory is progressing on schedule and the plant is expected to commence commercial operation in early 2000. The project cost is about Rs. 1600 crore (US $0.4 billion). It will provide opportunities for development of downstream units like Polyester Filament Yarn and Fibre, PET Resin and other downstream projects. The Project is one of the largest single foreign direct investment industrial projects in the country today.
The South Asian Petrochem Limited, Promoted by Dhunseri Group of Calcutta, is setting up a 100 per cent export oriented bottle grade PET Resin project at Haldia. It has technical collaboration with Zimmer AG of Germany. The project is expected to start commercial production by 2001. The project cost is estimated at Rs. 450 crore (US $ 100 million). Praxair, a Fortune 500 Global Company, is setting up a Nitrogen Plant at Haldia mainly to meet the requirements of steam, power and nitrogen of HPL. L & T have build a Rs. 600 crore BOO Power Plant at Haldia in association with HPL.
Hind Lever Chemicals Limited, a subsidiary of Hindustan Lever Limited of Unilever Group, is expanding its facilities at Haldia with three new plants. The units are expected to go onstream by the year end. A number of other important projects are in the pipeline for Haldia. One such major project at Haldia is a 6 million tonne refinery expansion by the Indian Oil Corporation.
Bhushan Industries Limited. are setting up a modern cold rolling mill complex at near Rishra with a total investment of Rs. 30 Crore. This is a pioneering project in the State. Ambuja Cement Eastern Limited, a subsidiary of Gujarat Ambuja Cement Limited, is set for a Cement Grinding unit at Howrah for an investment of Rs. 120 crore (US $ 25 million).
Electronics & Information Technology Sector
The Electronics Complex at Salt Lake has been set up on 130 acres of land by WEBEL. The complex already employs about 11,500 people. The prominent Indian and International houses that are in position in the field include Price Waterhouse Coopers, Siemens, Computers Associates, Research Engineers, R S Software, Cognizant Technology, TCG Software, IBM, Globsyn, Astral Systems and others.
In the Information Technology sector, the distinct advantages of Calcutta are beginning to be appreciated by the `Technology Savvy' entrepreneurs. The Information Technology Policy of the State Government is under finalisation and will be announced soon. This will signify the priority we attach to investments in IT sector. We are also keen to introduce Information Technology systems in the Government offices to enable improvement the quality of interface with the public. You may be aware that in the Electronics Complex at Salt Lake a number of units have come up employing 11,500 persons. The prominent Indian and International houses that are in position in the field include Price Waterhouse Coopers, Siemens, Computer Associates, Cognizant Technologies, Sema, TCS Software, Research Engineers, R S Software, The Chatterjee Group (TCG), United Airlines and others. Given the availability of qualified human resources and due to the affordable real estate costs, we expect a radical growth of investments in the IT sector.
Computer Associates, the third largest business software company in the world has teamed up with The Chatterjee Group (TCG) for a joint venture named CATCG Software Private Limited (CATS). A new unit with a manpower of 120 has been set up where the TCG Group has already invested Rs. 15 Crore (US $ 4 million). The future plans of CATS include software technology development outfit and to provide global professional assistance. There are three new software related investments in the Salt Lake Complex of TCG. It has a major software infrastructure project called Bengal Industrial Bank Limited under contruction with 1,30,000 sq.ft. of space, which will have job opportunity for 1500 software personnel. At present the Group operates at the SDF building with 900 people. The Chatterjee Group and the United Airlines are planning a Rs. 20 crore (US $ 5 million) joint venture to set up a software Development Centre named Sky Tech Solution in Calcutta which will give emphasis on development and enhancement of application software to facilitate operations of airlines.
Globsyn Limited is getting ready to inaugurate its IT infrastructure project named INFINITY. This is going to be a `walk in' facility for IT enterprises. It has 1.5 lakh square feet of space which is ready for occupation in Salt Lake.
The State Government has recently announced an IT Policy which reinforces the commitment to create an enabling environment in the State of IT enterprises and to introduce IT in the `Citizen-Government' interface.
Infrastructure
The State Government is aware of the critical role of the infrastructure to support new investments. The State Government accordingly attaches topmost priority to this area. Infrastructure projects taken in hand or identified comprise setting up a new township at Rajarhat near Calcutta, massive housing projects, in joint venture and private sectors, and others which include improvements of National and State Highways, new Express way, setting up a new Port and a number of new Growth centres, establishing an Aviation Institute at Panagarh and starting a Calcutta based Airlines which will operate for the time being in Eastern and North Eastern India. A number of Foreign investors including the Asian Development Bank and other international institutions are already participating in the sector. The WBIDC has formed a joint venture with ICICI called I-WIN for undertaking infrastructure projects in the State. It has already developed a shelf of commercially viable projects.
Mention must be made of the North South Corridor Project connecting Calcutta and Haldia in the South and Siliguri in the North. It is an integrated multi-nodal transport corridor. The Asian Development Bank has associated itself with the project with a Project Preparation Technical assistance Grant of US $ 1 million. Some of the other major projects conceived by the State Government are Industrial Complex near Kharagpur with emphasis on Textile Sector, a Financial Service Centre on EM Bypass, Reclamation of the Northern Canal System of Calcutta etc. I-WIN, a joint venture of WBIDC and ICICI, are associated with all of them.
Haldia is indeed emerging as the nerve centre of business in West Bengal. Besides petrochemicals and downstream industries, which will provide very substantial opportunities for jobs and self-employment, the State Government has also identified a number of other sectors for accelerated growth. These are : Electronics and Information Technology, Leather and Leather Products, Food Processing and Agro-based Industries, Gems and Jewellery, Tourism and related activities. Major headway has been made in the electronics and information technology sector of the State.
In consonance with the urban renewal programme State Government has encouraged private initiative in new projects like River Front Development, Permanent Exhibition Ground, World Trade Centre, New Stock Exchange, 6 Fly-overs with OECF assistance, Preservation of Heritage Buildings, etc. For giving a fillip to investments in the entertainment industry, State Government has recently formed a West Bengal Motor Sports Council who, in partnership with GRAND PRIX INDIA plc. will set up FORMULA ONE racing track over a 750 acre area in the Rajarhat Satellite City limits adjacent to Calcutta Airport.
In the context of the projected demand for technically qualified people in the years to come, the State Government are encouraging the setting up of Engineering Colleges and Polytechnic in each District of the State, to be run mainly by non-Government bodies. Similarly, medical colleges are being allowed to be set up by well-reputed and competent organisations in the private sector as joint ventures. The Government have also decided to allow many more educational institutions with English as a medium of instruction.
In view of the strong agricultural base of our State, special emphasis has been given on food processing and agro-based industries and an area of about 500 acres is being developed by a private sector to set up a `Food Park' for locating such units. A BOT project to set up the largest leather complex in Asia, which will be ready in two year's time, will be able to provide accomodation and common servicing facilities as also use of latest technology in leather processing and manufacturing of finished goods is under implementation. It will cover an area of 1000 acres of land near Calcutta.
WEST BENGAL INDUSTIRAL DEVELOPMENT CORPORATION LIMITED
The West Bengal Industrial Development Corporation Limited (WBIDC) is the premier State level promotional agency engaged in the growth and development of industries and infrastructural network in the State of West Bengal. The Corporation as the nodal agency of the State Government has been playing an active role in assisting the implementation of investment through its One Window system `Shilpa Bandhu', details of which is given below.
In order to extend assistance to entrepreneurs for establishment of medium and large scale industries by coordinating the efforts of different departments/agencies and also to enable them to obtain various clearances required for setting up their units, a single window agency (Shilpa Bandhu) was set up by Government of West Bengal in the year 1984. Shilpa Bandhu was constituted in 1994 by Government with officers of different departments as senior level to expedite decision on the problems experienced by the entrepreneurs in setting up their units. Shilpa Bandhu provides counseling services to entrepreneurs intending to set up new projects as well as expansion, diversification, modernisation of their existing units. It solves problems in respect of identification and allotment of land vested with the Government helps for mutation and conversion of land, supply of construction and bulk power to industries, issue of provisional certificate of sales tax, sales tax registration, sales tax remission/deferment under the State Government's Incentive Scheme. Shilpa Bandhu also helps entrepreneurs to obtain NOC from West Bengal Pollution Control Board, telephone connection etc. Shilpa Bandhu maintains a data bank on vested land, industrial growth centres for the benefit of entrepreneurs. In addition to above, 200 project profile developed by WBIDC, based on the available opportunities are available at Shilpa Bandhu for the use of potential investors. In the last two years the Shilpa Bandhu has handled 1250 cases relation to majority new investments and some existing industries.

The performance of the Corporation during the year ending 31st March, 1999 has continued to improve. Disbursement of equity was Rs. 160.40 crore indicating a growth of more than 200% in comparison to that of previous financial year. The disbursement of loan this year is Rs. 42.36 crore, Which is almost the same amount as was disbursed during the last financial year. During the financial year an amount of more than Rs. 21 crore was disbursed to new and expansion projects as incentives. The recovery performance during the year 1998-99 was Rs. 42.18 crore against the recovery of previous year (1997-98) of Rs. 41.33 crore. The Corporation has registered an operational profit of Rs. 76.71 lakh during the year 1998-99.
The Corporation has recently diversified its activities into the areas such as short term loan and bills discounting. The Corporation has disbursed a sum of Rs. 7.65 crore as short term loan and Rs. 90 lakh towards bill discounting during 1998-99. The recovery rate is 100% in these two schemes.
The Corporation has emphasised on the need to disseminate information about the improving investment scenario of the State. It has participated in a number of exhibition within the country and abroad. It has undertaken a few publicity campaigns in print media and TV in the last few years on behalf of the State Government.
The WBIDC has been allowed to engaged McKinsey & Company lnc. for advising on `re-engineering of investor process’, streamlining Single Window agency and to help take initiatives in Food processing, IT and infrastructure sectors.

ICICI-West Bengal Infrastructure Development Corporation Limited, I-WIN in short is WBIDC's joint venture with ICICI Limited which has been set up primarily to promote develop and finance infrastructure projects. I-WIN is currently working on the following infrastructure projects :

North South Corridor Development Project;
30 MGD Water Supply project at Haldia;
Development Plan of Haldia;
New Calcutta Township at Rajarhat;
Floriculture Infrastructure project in North and south Bengal;
Industrial Complex on Textile sector at Kharagpur and many other projects.