As Chief Minister Kamal Nath undertakes his annual pilgrimage to the World Economic Forum (WEF) meeting at Davos from January 20, the big challenge before him will be to get business for the state. While Madhya Pradesh is primarily an agrarian state, there is now a fairly broad-based consensus that the state must outgrow its dependence on agriculture and build capabilities in manufacturing and services. Nath has been trying to drive that change since he took over in December 2018, and policy changes and legislative support have begun to slowly make a difference. Early on, his government saw the need to ease land acquisition and building laws. Circle rates were slashed by 20 per cent, and the number of documents required to get building permissions and layouts, from 27 to five. “Colonisers can begin work and don’t need permission. We will check for compliances after three years,” said Nath at Magnificent Madhya Pradesh, the state’s business meet in October 2019.
In the post-GST era, MP has a strategic locational advantage. “MP shares its borders with five states…a population of nearly 500 million can be accessed from here,” says state chief secretary S.R. Mohanty. Under a separate policy for warehousing and logistics, the state is offering investment assistance of up to Rs 15 crore on plant and machinery, stamp duty exemption and an increased floor area ratio (FAR). Reliance Industries Ltd (RIL) is setting up its national distribution centres here. “Reliance will use 10 million sq. ft of space at 45 locations,” RIL chairman Mukesh Ambani announced at the Magnificent MP event. “Walmart, Reliance and Amazon too have expressed interest in building logistic hubs and warehouses in the state,” says Rajesh Rajora, principal secretary, in the department of industrial policy and investment promotion.
The state has also tweaked its industrial promotion policy. Prominent amendments include enhancing the investment promotion assistance cap from Rs 150 crore to Rs 200 crore, and an incentive of up to Rs 1 crore, or 50 per cent of the cost, to set up waste management, pollution, safety and water conservation equipment at plants.
64 large units set up in past year; rs 7,188 crore aggregate investment; 22,000 jobs created
Since employment-intensive sectors are a focus, tourism has been singled out for support. A capital investment subsidy of 15-30 per cent has been introduced for tourism projects, and a 40 per cent subsidy for ropeways and inaccessible tourist and forest areas. Efforts are also on to enhance the carrying capacity of tiger reserves to capitalise on tiger tourism in the state.
The state government has come up with a land pooling policy where landowners willingly give up their small parcels of land for the greater economies of scale. An MP Time Bound Clearances Bill has been passed for business applications. A similar law is on the cards for the services sector.
According to data put out by the Madhya Pradesh Industries Development Corporation, 64 large-scale industrial units-with aggregate investments of Rs 7,188 crore-have been set up/ expanded operations in the state in the past year, creating over 22,000 jobs. Additionally, 545 investment proposals worth Rs 31,425 crore have been cleared through the single window system.
Initial successes notwithstanding, challenges remain. The notorious bureaucracy in the state, general economic sentiment and a stuttering agriculture sector top the list. An excessive monsoon took a toll on crops, and suppressed export prices of premium products such as basmati paddy hit farm incomes. The state’s financial condition is also cause for concern. It will take two years for the changes Nath has made to take effect, say analysts. It’s still early days for an industrial revolution in Madhya Pradesh.