“Availability of raw material, skilled workforce, a growing market of consumers and state incentives makes Bihar a compelling choice for investors”- Says Sandeep Poundrik, Additional Chief Secretary, Department of Industries, Govt of Bihar
Situated in the eastern part of India, Bihar’s journey has been one of transformation and progress. The State has some inherent strengths such as availability of skilled workforce, access to abundant raw materials but has somehow not managed to attract enough investments. The Govt of Bihar is now going all out to woo investors to its state. In this context, the Department of Industries, Government of Bihar, is hosting a Global Investors’ Meet, titled “Bihar Business Connect 2023” on the 13th and 14th of December at Patna. In this connection, a high-level delegation was here in the capital recently to address investors at ITC Maurya.
Namrata Kohli in conversation with Sandeep Poundrik. IAS. Additional Chief Secretary. Deptt. Of Industry Bihar on why investors should look at Bihar for setting up industries
Biharis are known to be one of the most hardworking, competent and talented set of people. And yet, majority of people from the state of Bihar reside outside the state of Bihar. The state is known to be losing much of its talented manpower to the other places, especially Delhi and Mumbai. That also leads to a big strain on our metros. Will your endeavor also encourage reverse migration?
Basically, you don’t have industry here. That’s why people move out and then you don’t have people. So, it’s a vicious cycle. What we are trying to do is that for now, at least one and a half years, is that we are trying to convince companies that they could put up units in Bihar and use the skills and power in some sectors. For example, in textile sector we tried the anchor investor model where a Mumbai based company set up their unit and the state government encouraged 40 women entrepreneurs. Today there are some 1,100 machines working in that cluster, of which only 200 have been put up by the company. This is perhaps the biggest textile cluster in the country, and they were earlier working in Mumbai and now have relocated to Bihar. We are trying similar things. So, I will not say reverse migration but actually we will be able to stop further migration and then maybe try for reverse migration. But we are trying to create employment opportunities in the state so that the youth of the state and women can easily get some work here itself.
Is there any interest from new age economy sectors such as the IT sector? I was looking at one of the recent reports and it shows that Bihar is attracting the lowest number of IT companies. One of the reasons cited was issues related to good governance apart from infrastructure. Do you think there is a lack of confidence somewhere of the corporate sector and investors.
In the IT sector, I agree that not many companies are here. But I’m very hopeful. One US based company has already announced it will start operations at Bihar. We are in talks with another huge brand. We are offering them a plug and play infrastructure, which is suitable and meets the IT standards. Industrial standards are different, textile is different. It is different. We are giving them prepared facilities where they can just move in with their laptops and start work. And we are also going to announce an effective IT policy very soon. So hopefully you will see more IT companies this year.
What is your total investment commitment so far? How many people will get employment?
Basically we are inviting investors to look for opportunities in Bihar. Having said that, many industries, more than 400 have taken land in last one year. That is indication of interest of investors. Bihar was given recognition from Govt of India for this. The target is high and however much gets done is good. In the industry sector local people come to work. With big industries ancillary industries also develop. Apart from this, Bihar government is promoting micro industries which helps people start their own enterprise. We have allocated 29,000 crores over the past five years for this. Micro Industries have boomed for entrepreneurs. In fact Bihar is number one in the country for micro industry certification. Our effort is to make the micro enterprise solid.
The state has nurtured a flourishing ecosystem of agro-based industries, leveraging its fertile lands and abundant agricultural resources. What are the industries you are trying to develop and incentives that you are giving to the private sector to promote investment in Bihar?
In recent years, Bihar has seen remarkable growth in ethanol production, textiles and leather, general manufacturing, food processing, dairy farming, and horticulture. In the industrial areas, we are giving industries a unique offering that no one else provides. For high priority industrial areas, we are building industrial sheds that we are giving away on a rental basis for fifteen years at a very nominal cost of Rs 4 to 8 per square foot. For example, if anyone wants to install a textile unit, depending on the area we are proving already made sheds, which no one else is providing on such a large scale. Talking about infrastructure, over the last year we have spent 1,400 crore on infrastructural improvements. For urban improvement too we have spent on infrastructure budget. An IT sector company working in cyber analytics has also opened its offices here. Industrial work is being done. For the food processing industry 250 crore investment is promised. Other industries like fisheries are also coming. This is the effort of the Bihar government and we have received a good response so far. The Bihar government along with the administration is ensuring that industries do not have problems.
Bihar is basically an agro processing state and doing well for serving the domestic market. But why is export from the state not gaining traction?
I totally agree with you that while we have been a very good producer of agricultural products, we have not been able to export much except for to Nepal or Northeast. We are trying to boost export by two things. First is our logistics policy which we will announce very soon that will improve the logistic infrastructure in the state, as multimodal logistic is an essential requirement for improving the export. Second, we are trying to find out export markets which have requirements of products which are produced by us. Eg during WFI we discussed with Lulu Group whether they can make Bihar a partner. We are improving our infrastructure, logistics and trying to create revenues for our exposed products. Currently a lot of products from Bihar are going to other states and then getting exported from there in the name of that state.
What are the stages of approval as part of the investment promotion policy of your State?
In 2015, we announced the investment promotion policy and gave incentives to the industry for putting up industry in the state. So, there are three stages of kinds of approvals under the policy. First is the stage one approval, where the industry shows its intent to put up a unit. The second stage is what we call financial clearance, where the industry has done all its homework, including securing the loan and land and everything. And then it’s more or less certain that they will now move forward. And third is that when they actually have started production.
What are the key things that an industrialist wants when he is investing in a new territory and what boxes are you ticking in making that a lucrative proposition for your investors?
When any industrialist decides to put up a unit in a place, in my opinion, they consider three to four things. First is the market. What is the market, whether the market is there or not. Second is raw material, whether the raw material is available or not. Third is infrastructure in terms of physical infrastructure as well as social infrastructure and fourth are incentives. Incentives in themselves are not sufficient to attract industry in my opinion. They are one of the contributing factors but they are not the only factor in the industry. So in terms of market Bihar as everybody knows Bihar as a population of 13 crore and then you can also supply to Nepal, Northeast, Jharkhand, Bengal, Eastern UP so you can cover approximately a population of 35 to 40 crore people if you put up a unit in Bihar. That is almost one third of India’s population and a unique advantage in terms of its strategic location. In terms of market, it’s not only a big market, but it’s also a growing market and Bihar GDP growth has always been more than the national average for many 20 years. When the national average was 9.4% approximately, Bihar was 11%. That means that the purchasing power in Bihar is growing faster than the national average and second is that Bihar’s population is growing faster. That may not be a good factor for other parameters but from market perspective it is a good thing that the market will be growing. So because of both these points the market will continue to grow for a long time. On the raw material side Bihar is the best in terms of vegetables, fruits, some fresh products. Next year is the year of Makhana and 85% of makhana comes from the state of Bihar.
You have raw material availability plus also human resource. You go to any cluster of textile, IT -in the country and you will find a lot of people from Bihar working there. But especially after COVID they want to come back to the state. I think we may not be the best but we are among the best in terms of incentives. For example for textile we are offering up to Rs 5,000 per month per employee as an incentive. So if you pay say Rs 12,000 to an employee you can get Rs 4,000 from the government. That’s a big factor and Bihar is now becoming competitive in terms of attractiveness for investment.