Industrial Estates

Infrastructure Development Action Plan for Chhattisgarh – Final Report

Position Paper – Industrial Estates VI-1

Chapter VI POSITION PAPER – INDUSTRIAL ESTATES

• Although Chhattisgarh is rich in terms of availability of mineralresources, it has been unable to exploit this natural advantage to spurindustrial growth

• Setting up Industrial Estates would go a long way in fuelling industrialgrowth, as properly designed and implemented Industrial Estates canattract small and medium scale value-added industries

• Compared to States like Gujarat and Karnataka, which have about200-300 Industrial Estates distributed across all the districts there areonly seven Industrial Estates in the State

• There are about 781 small-scale industries and 72 medium and large-scale industries housed in these Industrial Estates. These IndustrialEstates are managed by the Audyogik Kendra Vikas Nigam, Raipur,which is now part of Chhattisgarh State Industrial DevelopmentCorporation (CSIDC)

• There is scope for setting up more Industrial Estates in the State. Tostart with, these could be set up in the regions of Dantewada, Janjgirand Surguja where the mineral processing industries and downstreamindustries of iron, aluminium and cement could be targeted

• The successful implementation of new industrial estate projects wouldcritically depend upon factors such as detailed location analysis, aproper institutional framework, adaptation of the configuration anddesign of the industrial estate to local conditions.

• The private sector must be involved in developing these IndustrialEstates to improve the commercial viability of the project – theGovernment must limit itself the policy making and regulatory roles



ObjectiveThe objectives of this position paper areto:♦ Present the concept of Industrial

Estates and the various issues thatneed to be considered in setting upIndustrial Estates in terms of− Location, configuration and

design− Institutional framework for

private sector participation− Government policies and

incentives♦ Review the current scenario of

Industrial Estates in the State interms of the land area, employmentgenerated, infrastructure, etc

♦ Identify potential for furtherdevelopment of Industrial Estates

♦ Outline steps that the Governmentneeds to undertake

Structure and ScopeThis sector paper is structured into sixsections. The first section presents theobjectives of the position paper and itsstructure and coverage.

The second and the third sections dwellon the concept of Industrial Estates andthe various issues that need to beconsidered while setting up IndustrialEstates including the need for anappropriate institutional framework.

The fourth section presents Internationaland Indian experiences in IndustrialEstates and the lessons Chhattisgarhcan draw upon.

The fifth section reviews the currentscenario of Industrial Estates inChhattisgarh and the scope for settingup Industrial Estates in the future.

The final section presents the wayforward in terms of the steps thatChhattisgarh needs to take to promoteIndustrial Estates.

Section 1: Introduction



The ConceptThe term "industrial estate" is often usedinterchangeably with industrial district,industrial park, industrial zone, specialeconomic zone, eco-zone etc.

An Industrial Estate (IE) is a self-contained geographical area with highquality infrastructure facilities, whichhouse businesses of an industrialnature. An industrial estate isadministered or managed by a singleauthority that has a defined jurisdictionwith respect to tenant companies. Theauthority makes provisions for operationand management; enforcing restrictionson tenants and planning with respect tolot sizes, access and utilities.

The IEs offer industrial, residential andcommercial areas with developed plots/pre-built factories, power, telecom,water, sanitation and other civicamenities such as hospital, sewerageand drainage facilities, security etc.

The main targets of Industrial Estatesare the high value adding small andmedium scale industries, which do nothave the wherewithal to invest indeveloping their own basic infrastructurefacilities, but have the capacity to payfor the services provided to them.Hence, Industrial Estates are regionswhere infrastructure facilities areprovided for and thus a conduciveenvironment is created to attract smalland medium scale industries.

Advantages of Industrial EstatesIndustrial Estates can positivelyinfluence the socio-economicdevelopment and industrialisation of theregion by:• Attracting investments• Generating employment

• Leveraging on raw material sources,skilled manpower resources,proximity to end-use markets, etc.

• Adding to and improving socialinfrastructure in terms of healthcareand educational facilities

Industrial Estates have led to thedevelopment of large urban regionsespecially in the States of Gujarat andMaharashtra, wherein large-scale city/town development has taken place.Bharuch, Vapi and Valsad in Gujaratand Nashik and Nagpur in Maharashtraare examples of such developments.Industrial Estates can be developedeither as a:• General Industrial Park (GIP) which

caters to all types of industries, anexample of the GIP being theIndustrial Model Township atManesar (Haryana) which hasfacilities to house different types ofindustries like auto and autocomponents, high precisionindustries, textiles, pharmaceuticals,software etc. or

• Special Industrial Park (SIP) whichfocuses on a specific industry likesoftware, textiles, plastics, etc. TheSoftware Technology Park atWhitefield in Bangalore is one suchexample

Section 2: Industrial Estates - The Concept



This section profiles the roles of variousstakeholders along with the issuesinvolved in setting up and managingIndustrial Estates.

LocationOne of the most important factorscontributing to the success of anindustrial estate is its location. The maincriteria that should be considered whiledeciding the location of an IndustrialEstate are as follows:• Natural competitive advantage of the

region in terms of the types ofindustries that can flourish there

• Potential for forming industrialclusters in the region to ensure theeconomic viability of IndustrialEstates

• Presence of transportation nodes inthe region in the form of airports,railway terminals and road networksboth from raw material sources andto end-use markets

• Presence of technological researchinstitutions and training facilitiessuch as universities, colleges, etc.,which would add value to the growthof these Estates

• Fiscal incentives applicable forsetting up the Industrial Estate in aparticular region

The competitive advantage of a regioncan be determined in terms of its:• Unique socio-economic

characteristics arising out of theexistence of traditional skills, workculture, etc.

• Proximity of the region to importantmarkets, e.g. the Industrial Parkdeveloped in Ghaziabad has beenset up to attract industries for whomDelhi is a key market

• Proximity of the region todownstream industries e.g. theancillary estates in Kalka (Haryana)

has been developed to attractcomponent suppliers to EicherGoodearth Ltd. at Parwanoo inHimachal Pradesh

• Proximity of the region to importantraw material sources e.g. the rubberpark located in Erunakulum (Kerala)has been set up to attract rubberprocessing industries - 94% of theraw material i.e. natural rubber isproduced in this region

• Connectivity of the region to otherregions e.g. Industrial Estates havebeen set up in places like Dubai andSingapore to exploit this advantage

Greater the competitive advantage ofthe region to support specific industriesthe greater is the potential for formingindustrial clusters, since a large numberof industries would get attracted. Theformation of industrial clusters would inturn, make the Industrial Estatescommercially viable.

As is evident, determination of potentiallocation of an industrial estate requires acomprehensive and scientific analysis.

Configuration and DesignUsually, an industrial estate isconfigured around three zones- theindustrial, the residential and thecommercial zones.• The industrial zone encompasses

industrial units catering to bothdomestic and export markets

• The residential zone provides forhousing facilities, and

• The commercial zone comprises ofsupport facilities like banks, postoffice, hospital, shopping centres,clubs etc.

While designing an Industrial Estate, amix of industrial, residential andcommercial zones must be kept in mind.

Section 3: Industrial Estates – The Issues Involved



The design of these infrastructurefacilities with regard to layout, size andsophistication can be tuned to the needand affordability of the industries beingtargeted.

Further, there is flexibility available indesigning each of the individual zones.The industrial zones can be divided into:• Industrial land for medium and large

industries. Different industries withinthe same industrial group can begiven contiguous land so that theyshare common facilities. For e.g. thechemical processing industries couldbe grouped together as they couldshare an effluent treatment plant.Similarly the software units could belocated nearby and share commonIT infrastructure facilities like theearth stations etc.

• Pre-built factories that providereadymade factory space and serveas incubators for start-uporganisations

The residential areas can also becommercially exploited by rentingout/selling the housing facilities tooutsiders to improve the economicviability of the project.

Government’s Role and PoliciesPromotion of industrial parks was givena boost by the Government of Indiatowards the end of the first five-yearplan (1952-57) when the ‘ IndustrialEstates Development Program’ wasinitiated. The role of the CentralGovernment in the establishment andupkeep of Industrial Estates in India hasbeen mainly that of laying down theguidelines for the State Governments.The responsibility for the selection ofsites, development of areas,construction of infrastructure facilitiesetc., has been the mandate of the StateGovernments. Subsequently, State

Governments created undertakings likethe State Industrial DevelopmentCorporation (SIDC) to execute thismandate.

Some of the roles of SIDCs include:• Setting up infrastructure facilities to

promote industrial growth by settingup industrial parks

• Identifying and promoting industrialprojects

• Providing financial participation interms of term loans and direct equityparticipation

• Handling the operations of theindustrial parks

Till date, in most States the StateIndustrial Development Corporation hasbeen the sole promoting, investing,implementing and operating agency forindustrial parks. However, the need forprivate participation in setting up andoperating industrial parks has beenrealised of late because of the:• Worsening fiscal health of the State

forcing the State Governments toreduce their investments indeveloping industrial infrastructure

• Commercial unviability of many ofthe Industrial Estates promoted bythe State

Private Sector ParticipationPrivate sector participation is beingencouraged by all the States to ensure amore commercial approach to the entireexercise of setting up and managingIndustrial Estates.

Private sector participation would leadto:• A better choice of location, design

and infrastructure facilities• Better collection of revenues



• Professional and innovativemanagement

• Greater accountability andresponsibility

• Fund mobilisation to bridge theinfrastructure investment gaps

The private sector can involve itself inseveral capacities in the entire processof configuring, investing andimplementing these projects.

Institutional Arrangements withPrivate ParticipationSo far the Government has been thesole promoting, investing, implementingand operating agency in this sector.Participation of the private sectorrequires changes in institutionalarrangements. This would lead toincrease in the number of players andwould encompass:• The State Government• A promotional agency set up by the

State like the State IndustrialDevelopment Corporation (SIDC) ora State Industrial EstatePromotional Authority (SIEPA)

• The Private Sector• Financial Institutions

With private sector participation, theinstitutional framework involved inimplementing an Industrial Estate wouldbe as follows:

State Government:The primary role of the StateGovernment would be that of afacilitator. This role would be addressedby framing an investor friendly policy forIndustrial Estates

SIEPA/ SIDC:The role of the promotional authoritywould be that of a regulator. In this

capacity, the authority would act as acentre of trust and expertise. It would laydown policy guidelines and operatingparameters for the establishment ofIndustrial Estates by the private sector.It would also form an interface with theGovernment and take on theresponsibility of obtaining the necessaryapprovals to proceed with projectimplementation. SIEPA/ SIDC wouldalso play a role in the selection andacquisition of land.

As a regulator, the authority wouldensure that the parties adhere to theircommitments and function as perspecified rules, provide an effectivedispute resolution and grievanceredressal mechanism and imposenecessary penalties wherevernecessary. The SIDC could also act asan equity partner to the private partnersto reflect its commitment andseriousness in getting the projectimplemented and also to improveproject viability.

Private Sector:The private sector can get itself involvedin various capacities for developingIndustrial Estates. As a promoter, theprivate sector player could play the roleof a developer. As an investor, theprivate sector player may be involvedactively or passively.

Implementation of an Industrial Estateproject by the private sector is usuallythrough the formation of a specialpurpose vehicle (SPV) / developmentcompany. This is a company in whichthe promoter (private or SIDC),Financial Institutions and/ or the Stateagencies have an equity stake.

When the promoter from the privatesector is involved in the implementation



of the project, he would be an activeinvestor. The promoter would be apassive investor when the SPV appointsan external agency for theimplementation of the project and thepromoter is not actively involved.

The private sector could also involveitself in the implementation of the projectas the external agency responsible formobilisation of resources, marketing theestate to private investors and later foroperation and maintenance (O&M),without any stake in the SPV.

The first example of such anarrangement in India illustrated in theBox VI.1.

Land AcquisitionLand acquisition is considered to be amajor hindrance in setting up anyindustrial estate on account of two mainreasons:• Inability to acquire contiguous land

due to reluctance of some owners tosell the land

• Problems in fixing the compensationprice of the land

Often, inability to acquire contiguousland because of the unwillingness of afew landowners to sell the land canjeopardise the entire project. Theselandowners can indulge in speculativeactivity knowing the importance of theirland to the entire project. To put an endto such practices and in cases wherelarge areas of land are to be acquiredfor the overall development of theregion, the Government takes up therole of land acquisition. Land acquisitioncan be done through two routes:• Direct negotiation with the land

owners; and

• Acquisition by Governmentnotification under the LandAcquisition Act

The key advantage in the formermethod of land acquisition lies in itsflexibility, especially for the privateowners. However, if there are a largenumber of landholders, directnegotiations could turn out to becumbersome as a host of salestransactions would have to beregistered, leading to escalation of costsand loss of interest by the privateparticipants.

Box VI.1: Mahindra Industrial Park Ltd.(MIPL) - Acase of private participation in India

The MIPL will be the first planned private sectorindustrial estate located in the Chengalpattu district ofTamil Nadu. MIPL is an SPV with a unique andpioneering institutional structure comprising of apartnership of three giants in the Indian industry. Theinstitutional framework is as follows:

The promoter:The Rs.6000 crore Mahindra & Mahindra group is thepromoter of the park from the private sector which alsoowns an equity stake in the project

The investor:Infrastructure Leasing & Financial Services, whichfocuses mainly on commercialisation of infrastructureprojects, is the Financial Institution investing in theproject.

The Government agency:Tamil Nadu Industrial Development Corporation is theGovernment agency involved in the project to reflect thecommitment of the State Government in the completionof the project.

The implementing agency:MIPL has hired Jurong Town Corporation (JTC)International to do the master planning of the park. JTCis the private sector player, which has been hired toimplement the project.



On the other hand, the latter method ofland acquisition is legalistic and rigid.This results in a protracted landacquisition process, thereby reducingthe commercial viability of such projects.

Pricing is another major hurdle in theacquisition of land.

Sustainability

The quality of Infrastructure of theIndustrial Estates is India isdeteriorating, thereby defeating thepurpose of their creation.

Sustainability of the Industrial Estates istherefore becoming an important issue,with the State Government finding itdifficult to maintain the infrastructurefacilities in these estates. Deteriorationof infrastructure facilities affects theperformance of the industrial units,which in turn affects, the revenue sourcefor the estates. Hence, a vicious cycle iscreated, leading to the failure of theindustrial park.Another issue affecting the sustainabilityof the project is the lack of properdemand – supply analysis at the time ofproject configuration, leading to unviableoperations

Fiscal Concessions

The fiscal levies on Industrial Estateshave to be examined in the overallcontext of economic growth of the State,need for infrastructure development,quantum of investments required andthe time period for obtaining minimumreturn on investments and theircontribution to social welfare. IndustrialEstates are an area where the large-investment high-risk syndrome makes itobligatory to keep the cost of servicelow and level of efficiency high.

Recognising the above complexities, theCentral Government has proposed a 5-year tax holiday followed by a 30%deduction of corporate tax for the nextfive years to attract the private sectorpromoters to set up industrial parks.Another step taken to promote industrialparks has been to liberalise theregulations on External CommercialBorrowings (ECB) to enable ForeignDirect Investments into these parks.



International ExperiencesThe concept of fully developed facilitieson a commercially viable basis isrelatively new in India. However, suchIndustrial Estates have been commonlyused as vehicles for speeding upindustrialisation in South East Asiancountries.

The experiences of a few South EastAsian countries that have usedIndustrial Estates as a catalyst foreconomic growth are given below.

Thailand:The objective of the Government policyin Thailand was primarily to attractinvestment in the provincial areas. Inorder to achieve this objective, theGovernment undertook the developmentof infrastructure facilities in theprovinces through the funding ofprojects in electricity, water supply,basic telecom and transportation. Inaddition to this, the Government alsoprovided a number of fiscal incentives(such as tax exemptions to companieswith their units in industrial zones withtight pollution control norms) toindustries located within these classifiedareas.

The Industrial Estate Authority ofThailand (IEAT) is the authorityconcerned with the promotion ofIndustrial Estates in Thailand. The IEATdirectly administers thirteen publicestates in that country and jointlymanages fourteen private ones. Thesetwenty-seven estates represent 1,700factories, an investment of about 769billion baht ($20.95 billion), andapproximately 400,000 employees.IEAT, as the permitting agency forfacilities inside the borders of IndustrialEstates, is responsible for all aspects ofestate management, including the

granting of land-use and operationpermits, operating utility and wastetreatment systems, monitoringenvironmental quality, safety, andlabour, and regulating industrialoperations, taxes and administration.One of the environmental goals of theIEAT is to group factories systematicallyby industry in order to treat and disposeoff waste more efficiently. The policiesadopted by IEAT ensures thedistribution of electronics, ceramics,gems, agro-industry and metal worksindustries to the north of Thailand;textiles, paper products, automobiles,and electronics estates through themidlands; and steel, petrochemical,palm oil/rubber, food canning, andelectronics estates to the south ofThailand.IEAT also tries to keep certain industrialsectors away from urban centers andwater sources. One example for thisexclusion that officials cite is due toparticularly high water use and pollution,in industries such as textile dying andelectroplating.One of the policy techniques IEAT usesto induce developers away from citiessuch as Bangkok is a tiered-tax system.The farther one locates from Bangkok,the better one’s tax holiday. Locators inZone 1 Industrial Estates (Bangkokarea) earn three years of corporateincome tax holidays, those in Zone 2earn seven, and those in Zone 3 earneight plus an additional 50 percentreduction for another five years.The tax concessions offered by theGovernment of Thailand include:

• Reduction of waiver of import dutiesand a 50 percent reduction inbusiness tax on imported machinery

• Upto 90 percent reduction in importduties and business tax on imported

Section 4: Industrial Estates – International and Indian Experiences



raw materials for a period of oneyear

• Three to eight years income taxholiday, with a provision allowing thecarry forward of losses incurredduring the tax holiday to be used astax credit for a maximum period offive years

• Exemption of goodwill, patent andother royalty payments for a periodof five years

Other concessions for industries locatedin the promoted zones include:• Upto 90% reduction of business tax

on sales for a maximum period offive years

• Consideration for a 50% reduction injuristic income tax for a period of fiveyears after the tax holiday period orfrom the year the operations start tomake profit

• Permission to expense cost oftransportation, electricity and waterat a rate two times the actualamount

• Permission to expense upto 25% ofthe installation costs of all facilities inany one-year or in several years fora period of 10 years from the dateoperations start to make profit

In addition to this, industries that arelocated within these Industrial Estatesare granted a concession in the form ofa 10% discount on the cost of electricityfor a period of five years from the startof the operations.

SingaporeThe rapid economic growth ofSingapore can be attributed to aprocess of systematic development ofintegrated industrial townships andfacilities. This nation has thirty State-owned Industrial Estates, of whichJurong Town is the largest estate.Jurong Town Corporation (JTC) is astatutory Body established to spearhead

the process of industrial development ofSingapore. It has a tight regulatory gripon the companies operating under itsauspices and allocates land tocompanies that may they build oroccupy buildings established by JTCunder a thirty-year lease.

JTC has built the entire infrastructure—sewers, roads, substations, electricaland communication lines—in theIndustrial Estates. The ongoingmanagement of thetelecommunications, electrical wiring,and other infrastructure supportcontracts is given out to otherGovernment agencies for a fee, whichJTC recovers through land leases. TheJTC is the single largest supplier of pre-built industrial space accounting formore than 18% of the total stock ofindustrial space. Of the total industrialspace available, the private sector ownsnearly 70%.

The various kinds of zones offered byJTC are:• Heavy Industrial Zones, which are

large industrial plots, allotted toindustries such as petrochemical,metal fabrication, etc.

• Medium and Light Industrial Zonesreserved for manufacturingindustries such as plastics,automotives, etc.

• Food and Pharmaceuticals Zones• Urban Industrial Land reserved for

multi-storey development projectswhich are light and labour intensive,such as electronic components

• Warehousing Zones fordevelopment of warehousingcomplexes

• Specialised Industrial Estates tocater to the needs of specificindustries



It is the Industrial Estates across theregion and their built-in relationship withGovernment agencies that may comeclosest to duplicating the conditions thatmade Singapore a success in theenvironmental arena. JTC’s internationalarm, JTC International (JTCI) has, as amatter of policy, exported its highenvironmental performance around theregion to other Industrial Estates inwhich it has investments.The concessions provided by theGovernment include:• Benefit of nil tax for five to ten years

after commercial production startsfor industries or products that havebeen granted pioneer status

• Investment allowance is admissibleon profits exempted upto 50% of theactual fixed investment in productiveequipment, custom designed factorypremises. Unused allowances maybe carried forward till profits aregenerated

• 10% tax for a maximum period of 10years for enterprises possessingpost- pioneer status

• Tax Concessions on increase ofincome from additional investmenton productive equipment exceeding$ 10 million for a period of five years

IndonesiaThe development of Industrial estates inIndonesia is linked to the Government ofIndonesia’s policy of promoting export-oriented units that are labour intensiveand have low capital and technologycosts.The country has forty-six IndustrialEstates in operation and only half adozen are wholly Government owned.Although Indonesia began developingits Industrial Estates under the Ministryof Industry and Trade in the early 1970s,the private sector was not allowed to

develop and manage them until 1989.The Government sites tend to exist inmore remote areas, whereas privateestates are located primarily in urbancentres. In fact, four-fifths of all ofIndonesia’s registered industrialenterprises are located near the urbanareas on Java, particularly West Javaand the capital of Jakarta. About 15percent of all Indonesia’s industrialactivity takes place on IndustrialEstates, which contain a mix ofindustrial sectors.The Industrial Estates also help inmanaging the adverse environmentalimpacts by facilitating land use planning.The operators of the Industrial Estatesare delegated powers relating tostatutory clearances with respect to landand building permits.

MalaysiaIn the case of Malaysia also, theIndustrial Estates were promoted as apart of the process of export led growth.Malaysia has 222 Industrial Estates,special economic zones and free tradezones developed by the State economicdevelopment corporations, portauthorities, and municipal governments.Private developers own and operateanother sixty-three Industrial Estatesand many more are in the planningstage. In the publication of its seventhfive-year plan, the Government ofMalaysia mentions that it will continue toencourage private developers to ownand operate Industrial Estates alone, aswell as on a joint-venture basis withGovernment agencies. If the idea isacceptable direct participation ofGovernment agencies in industrialestate development will eventually bereduced. But for now, the developmentof Malaysia’s Industrial Estates isundertaken principally by the nationalGovernment. Malaysian officials report



that most of the large companies arelocated in the Industrial Estates to takeadvantage of tax benefits offered by theGovernment.

The Indian Experience till nowAlmost all the States have takeninitiatives to set up Industrial Estates toboost the economic activity.The experiences of select SIDCs, whichhave developed Industrial Estates as acatalyst for economic growth, arediscussed below:

Haryana State IndustrialDevelopmental CorporationThe Haryana State IndustrialDevelopmental Corporation (HSIDC),was established in 1967 by theGovernment of Haryana to act as acatalyst for promoting and acceleratingthe pace of industrialisation in the State.The main objectives of HSIDC includeidentification and promotion of large andmedium sector projects and facilitationof infrastructure development. HSIDChas till date promoted 33 IndustrialEstates in the State. HSIDC, with apaid-up capital of Rs.35.56 crores hasbeen able to catalyse investment to thetune of Rs.544.70 crore in theseestates. HSIDC also recorded an all-time high income of Rs. 25.05 crore anda gross profit of Rs.6.06 crore in 1999-00. The success of HSIDC has been onaccount of the following reasons:• It seeks co-promoters from the

private sector aggressively• Has a locational advantage of being

situated near cities like Delhi andChandigarh, which are large markets

• Its ability to adapt the design ofindustrial parks based on the localcharacteristics

• Its ability to provide financialassistance to entrepreneurs andestablished industries. The financial

services offered by HSIDC includeequipment finance, bill discounting,merchant banking services, forexadvisory services, etc.

Gujarat Industrial DevelopmentCorporationThe Gujarat Industrial DevelopmentCorporation (GIDC), was created by theGovernment of Gujarat to spur industrialdevelopment in the State. GIDC has tilldate, planned for 257 Industrial Estatesof which 169 are functional. As part ofthe New Industrial Policy 2000, theGujarat Government has decided tospur the growth of the Industrial Estatesby formulating the ‘Industrial ParkScheme 2000’.

The Industrial Park Scheme 2000recognises the need for private sectorparticipation in setting up Industrialparks and creating employmentopportunities. In order to encourageprivate sector investment in this sector,the State Government has decided toimplement an incentive scheme forsetting up employment-orientedindustrial parks, high-tech parks,investment-oriented parks and tradecentres.

Details of the various incentivesprovided by the State Government arehighlighted in Table VI.1 (overleaf)



While there have been numeroussuccess stories, a few of the projectshave also failed as they were set up withthe sole motive of inducing industrialgrowth in backward regions. This motiveled to the improper selection of location,resulting in the inability to sustainindustrial activity in these regions.

The other reasons for the failure ofthese estates in India include:• Lack of funds• Inability to tailor the estate to the

characteristics of the region• Improper implementation and design

leading to poor quality ofinfrastructure facilities

• Frequent changes in administrativeheads and political interference

Lessons for Chhattisgarh

Some critical lessons offered by variouscase studies described in this sectioninclude:• Need for a specialised agency at the

State level to lay down guidelinesand operating parameters like IEATin Thailand, JCT in Singapore andMIEL of Malaysia. This specialisedagency (CSIDC) must be given fullpowers of all the departments for theindustrial estates (either by statuteor through amendments in relevantacts)

• The Industrial Estates must not beset up with the sole motive ofinducing industrial growth in thebackward regions

• A profit motive must be brought intothe entire exercise by the

Table VI.1

Type Condition Criteria for assistanceTo develop facilities for settingup a minimum of 100 units ormore or creating more than2,500 employmentopportunities in the IndustrialPark

Subsidy at the rate of 10% of capitalinvestment up to a maximum ofRs. 1crore

200 units or more than 5,000employment opportunities

Subsidy at the rate of 10% of capitalinvestment up to a maximum ofRs. 2 crores

Hi-tech park -Subsidy at the rate of 50% of capitalinvestment, subject to a maximumRs. 250 lakhs will be admissible

Investment park -Subsidy at the rate of 10% of capitalinvestment subject to a maximum ofRs. 250 lakhs will be admissible

Trade centre having a built-uparea of 5,000 sq. mtr or morefor use

Subsidy at the rate of 10 % of theeligible capital investment –maximum cash subsidy of Rs. 50/-lakhs

Trade-centre having a built-uparea of 10,000 sq. mtr or morefor use

Subsidy at the rate of 10 % of theeligible capital investment-maximumcash subsidy of Rs. 100 lakhs

Employment Oriented Park

Trade Centre

SCHEMES FOR PROMOTING INDUSTRIAL PARKS



involvement of the private sector,thereby improving efficiency

• The location of the estate and itsdesign must be tailored to leveragethe natural competitive advantage

• Concessions to industries in thearea in the form of fiscal and taxincentives to attract more units mustbe granted

• The local Government must beinvolved. Their participation wouldconsiderably enhance the speed ofsetting up these estates by removingbottlenecks during the process ofland acquisition and mobilising ofresources during projectimplementation



Industrial Estates in ChhattisgarhChhattisgarh is endowed with a richmineral resource base. The mainminerals include iron-ore, coal, bauxite,manganese, limestone, dolomite, tinore, china-clay, quartzite, quartz-silica,fire clay, fluorite, diamond, alexandrite,granite and corundum. Most of theindustries in the State are in the coresector and are located in the districts ofRaipur and Durg.In terms of industrial infrastructure, thereare 7 Industrial Estates/ growth centres.Of these 4 growth centres (Figure 1) areoperated by CSIDC – Borai, Sirgitti,Urla, Siltara and Arjuni – while the restare being looked after by the localDistrict Trade and Industry Centre

(DTIC). The Industrial Estates managedby the DTIC’s are located in Bhilai,Rajnandgaon, Champa, Korba,Chakradhar Nagar (District Raigarh),Frezerpur (District Bastar), Ambikapur(District Surguja) and Gahmaria (DistrictJashpur Nagar). Apart from theseIndustrial Estates, about 3,260 acres ofland has been acquired throughout the

State for industrial purposes. (TableVI.2)

Figures 2 and 3 present the coverage ofIndustrial Estates in the states ofKarnataka and Gujarat respectively. Ascan be seen, the current numbers and

Section 5: Industrial Estates in Chhattisgarh

Figure 1

❉❉❉❉

✜✜✜✜

Sirgitti

CentralGovernment

✜✜✜✜

✜✜✜✜

StateGovernment

❉❉❉❉❉❉❉❉ Siltara

Urla

Borai

Location Area (acres)By CSIDCDagori in Bilaspur Distt. 383.62Silpahari in Bilaspur Distt. 605.95Champa-Hathneora in Janjgir Champa Distt. 504.65Birkoni in Mahasamund Distt. 208.2By DTICRanisagar in Raigarh Distt. 45Narayanpur in Surguja Distt. 126Birkoni in Mahasamund Distt. 241Bacheli in Dantewada Distt. 23.39Dantewara-Teknar in Dantewara Distt. 47Kirandul in Dantewada Distt. 82.78Hiranar-Ghotpal-Geedam in Dantewara Distt. 192.78Maolibhata-Teknar in Bastar Distt. 795.75Raikot in Bastar Distt. 10

LAND ACQUISITION FOR INDUSTRIESTable VI.2

Figure 2

Figure 3



coverage of growth centres/ IndustrialEstates in Chhattisgarh is fairly limited.This could also be one of the reasonsfor the imbalanced industrialdevelopment as well as the low level ofindustrial activity in the State.

Chhattisgarh State IndustrialDevelopment Corporation:The Chhattisgarh State IndustrialDevelopment Corporation (CSIDC) isthe promotional agency set up by theState Government to improve theindustrial growth and industrialinfrastructure of the State. Its mainobjectives are:• Develop the industrial infrastructure

of the State. This is being donethrough the AKVNs which areresponsible for the setting up andoperating the Industrial Estates

• Act as the promoter of industries inthe State and as a liaison betweenindustry and the private sector. Inthis role, the CSIDC conductspotential surveys for setting up ofindustries

A brief comparison of the same is givenin Table VI.3. Discussed below are thekey highlights of the same.

Industrial Growth Centre – Urla: The industrial growth centre Urla(including industrial area of Bhanpuriand Ravabhata) is spread over an areaof 700 hectares in Raipur district. It hasaround 60 medium and large-scaleindustries and 550 small-scaleindustries. Investments made in thisgrowth centre are to the tune of Rs. 400crore and it provides employment toover 16000 people. It is completely

Table VI.3

Urla Siltara Borai SirgittiAvailableLand 700 h.a. 1310 h.a. 437 h.a. 430 h.a.Medium andLarge scale Ind 44 3 2 7Small scale ind. 550 9 27 195Medium andLarge scale Ind Rs.328.5 crore Rs.688.2 crore Rs.106.9 crore Rs.31.34 croreSmall scale ind. Rs.59.25 crore Rs1.63 crore Rs.7.28 crore Rs.30.64 croreMedium andLarge scale Ind 5200 1468 858 891Small scale ind. 6997 55 453 2324Medium andLarge scale Ind 11 1 nil 3Small scale ind. 83 nil 11 27

Banks 2 1 naPost Office 1 1 naTelephone 1800 lines 35 lines 80 lines naHealth Services 2 hospitals 1 mini PHC 1 Dispensary 1 Dispensary

Electricity1 HT & 1 MT Sub-station

1 MT Sub-station

1 HT & 1 MT Sub-station na

Roads 34.5 km 33.7 km 24.75 km 20.20 kmDrainage 3.5 km 6 km 0.4 k.m. 31.6 kmStreet lights 336 lights 347 lights 170 lights 180 lightsSheds 80 10 35 40n.a-not available

Units Shut down

Employment

PERFORMANCE OF THE INDUSTRIAL PARKS IN CHHATTISGARH

Source-AKVN Raipur

No. of industries

Investment



developed and has the necessaryinfrastructure like roads, street lights,water supply, shopping complex,communications network, bankingservices, warehouses, weigh bridges,petrol pumps, dispensary, police stationand a school. A fire station is in theoffing in this area. A container freightstation has also been established here,wherein all custom formalities arefulfilled.

Industrial Growth Centre – SiltaraThe industrial growth centre in Siltarasituated on NH-200 is spread over anarea of 1,300 hectares in Raipur district.There are three medium and large-scaleenterprises and nine small-scaleindustries in this centre. About Rs.700crore have been invested in this centreand it provides employment to morethan 1500 people. With private sectorparticipation, arrangement has beenmade to provide continuous watersupply during summer by channellingwater from the Kharoon river. Futureprojects in the pipeline include a power-generating unit, two sponge iron unitsand one Ferro alloy unit and a LPGbottling plant. The infrastructure facilitiesin this area include two petrol pumps, aschool and a mini-PHC.

Industrial Growth Centre – BoraiThe industrial growth centre of Borai inDurg district is spread over an area of437 hectares. It is situated on NH-6 andhas two medium and large scale andtwenty-seven small-scale enterprises.More than Rs.115 crores have beeninvested in developing this centre and itprovides employment to around 1300people. Future plans include increasingthe water supply to 300 lakh litres/dayfrom the existing 40 lakh litres/day.

Industrial Growth Centre – SirgittiThis growth centre in Bilaspur district isspread over an area of 430 hectares.The centre has 7 medium and large-scale industries and around 195 small-scale units. Rs. 93 crore have beeninvested in developing this growthcentre and it provides employment to4500 people. Owing to the fact thatBilaspur is the divisional headquarter forsouth-eastern railways and also to thepresence of South Eastern CoalfieldsLimited in the region, several ancillaryunits based on these thrive here.

Scope of Industrial Estates inChhattisgarhIndustrial estates can spur economicgrowth in Chhattisgarh by promotingseveral small and medium scaleindustries in the region. Since setting upindustrial units in Chhattisgarh givesnatural competitive advantages toseveral categories of industries onaccount of:

• Nearness to raw materials:The rich mineral deposits in theState provide opportunity for settingup Industrial Estates near the sourceof raw materials where it would bebeneficial for the small and mediumscale industries. Table VI.4(overleaf) presents potential forextraction of minerals in variousareas. These are also the areas thatoffer potential for setting upIndustrial Estates which wouldhouse the mineral processing units.Another group of industries, whichcould benefit from the same sourceof competitive advantage, arecement/ steel and aluminiumdownstream industries for which theraw materials sources are large coreindustries.



Mineral Name of Company District of location

South Eastern Coalfield LtdKorba, Raigarh,Surguja & Koria

Jindal Steel and Power Ltd RaigarhGrasim Cement RaipurCentury Cement RaipurL&T Cement RaipurLafarge Cement RaipurAmbuja Cement RaipurRaymond Cement JanjgirJamul Cement DurgBhillai Steel Plant DurgBhillai Steel Plant DurgNMDC DantewadaBhillai Steel Plant DurgMP State Mining Corp. BilaspurBharat Aluminum Company Surguja

MP State Mining Corp. Surguja

Hindalco Limited SurgujaTin Ore MP State Mining Corp. BastarCorundum MP State Mining Corp. Bastar

Bauxite

Coal

Limestone

Iron Ore

Dolomite

Table VI.5

Table VI.4

Sl.No. Name of the Mineral District

Reserves(MetricTonnes) Grade

Dantewara In excess of 590 60%-68% FeBastar 35 64%-66% Fe

669 50%-62% Fe51 60%-66% Fe

Rajnandgaon 5 60-68% FeRaipur 1155 44%-46% CaoDurg 320 45%-48% CaoBastar 46 45%-46% CaoJanjgir 37 45% CaoBilaspur 12 46% CaoRajnandgaon 49 44%-46% CaoKawardha 20 45% CaoSarguja 17 MetalRaigarh 1 MetalKawardha 7 Metal

5 Refactory1.5 (apprx) Metal

Bastar 45 High GradeJanjgir 48 High GradeDurg 28 FluxHasdeo-Arand 1201 NAMand - Raigarh 2621 NA

Mining Potential in Chhattisgarh

Source : Directorate of Geology and Mining, Raipur

Dolomite4

Coal5

Limestone2

Bastar

3 Bauxite

KankerIron Ore1

Industrial estates for industriesbased on ‘Forest produce’ &‘Agriculture produce’ also havetremendous potential inChhattisgarh, as it is rich in forestbased natural resources and since ithas a thriving agriculture basedeconomy

• Nearness to market:Chhattisgarh does not provide ahuge market for inducing theindustries to set up shop to exploitthe market potential. However, thepresence of large core industries inthe region provides opportunity forancillary units to set up theirindustrial units near these motherunits. The list of core industries inthe State is given in Table VI.5The areas of Raipur, Bilaspur andDurg already have growth centres.To ensure equitable regionaldevelopment, Chhattisgarh shouldidentify new sites for setting upIndustrial Estates. This could be in

districts like Dantewada, Janjgir andSurguja, which could house themineral processing and downstreamindustries for iron, cement andAluminum respectively. However, adetailed study comprising oflocational analysis, demandestimation and potential surveywould need to be undertaken toestablish economic viability ofIndustrial estates in these districts

Infrastructure GapsInfrastructure facilities in terms of roadconnectivity, IT infrastructure, wateravailability, etc., need to bestrengthened considerably. Hence, inorder to set up Industrial Estates in theabove-mentioned areas, basicinfrastructure facilities like roadconnectivity, power and water supplysituation must be improved.It is unlikely that the Government alonecan fund improvement in physicalinfrastructure on such a large scale,thus necessitating private sectorparticipation.



It is apparent that the active promotionand development of Industrial estateswould have to be a key strategy for theindustrial growth in the State, whichwould in turn, require immediate andsubstantial improvement in the industrialinfrastructure.

Abundance of natural resources andpoor state of industrial infrastructurefacilities provide an enormous potentialfor the growth and expansion ofeconomically viable Industrial Estates inthe State.

Given below are suggestions withrespect to the role of variousstakeholders that constitute theinstitutional framework described earlierfor development of Industrial Estates inthe State.

Role of the State GovernmentThe State Government must recognisethe importance of Industrial Estates andtake a proactive stance towards theirdevelopment.

The first step in this regard would be toformulate a long-term policy for thepromotion of industrial parks. This policymust address issues like locationidentification, land acquisition and theinstitutional framework.

The institutional framework would haveto accommodate private sectorparticipation, in order to catalyse thegrowth of industrial parks. However, theprivate sector would be attracted only ifa profit potential exists.

Locational AnalysisAs stated earlier, the location of theestate plays a critical role in its success.Hence, a detailed scientific analysis is

warranted before zeroing down on aparticular project site.In conducting the location analysis thethree most important factors that havebeen considered are:1. Cost - including the repayment

schedule2. Distance of the proposed locations

from• City Centre• Key locations of potential

markets/ raw materials3. Status of physical infrastructure

Role of CSIDCCSIDC should play the role of aregulator leaving the actualimplementation of the project to theprivate sector. It would be responsiblefor:• Identification of potential sites for

setting up Industrial Estates• Laying down policy guidelines and

operating parameters for theestablishment of Industrial Estatesby the private sector

• Ensuring that the policy guidelinesare fair and equitable

• Ensuring that bottlenecks inobtaining all the necessaryapprovals from the differentGovernment agencies, acquisition ofland etc. are removed

• Scouting aggressively for promotersin the private sector who are willingto take a stake in the entire processof setting up and operating theIndustrial Estates

• Co-ordinating with other StateGovernment departments to improvethe quality of infrastructure in theState

• Ensuring that the different partiesfunction along the specified policiesand fulfil their commitments

Section 6: The Way Forward



• Addressing the grievances of theparties and also imposing penalmechanism

In its role as a policy formulator andregulator, CSIDC must ensure:• Dovetailing the conceptualisation

and development of IndustrialEstates with an integrateddevelopmental plan for the region

• Limited regulation and provision ofadequate freedom to operating units

• Streamlining the documentationprocedure

Private Participation:The private sector should be involved inthe development of industrial estateprojects. As promoters, they would beresponsible for arranging the funds andthe implementation of industrial estateprojects.

The private sector could also beinvolved in the implementation of theprojects. In such a role, the privateparticipant would be responsible fordesigning and implementing the projectwithout necessarily investing in it.

Industrial UnitsOnce an industrial estate is set up, themain task of the promoters is to ensureproper operation and maintenance ofthe estate.At this stage, the interest, participation

and co-operation of the industrial unitsbecomes very important, because theseindustrial units are the most affected bychange in policies and also have thebest knowledge of their problems.Therefore, the industrial units must begiven a role in the management of theestate by giving them an equity stake inthe entity. This will ensure their activeinvolvement in the operation of theestate.

Local Government roleAs the industrial estate is intricatelylinked to and also dependent upon thearea in which it is located, theinvolvement and support of the localGovernment is essential for its success.The Government must try to improve theimage of the region and also set uppromotional agencies to oversee thedevelopment of the Industrial Estates.The local Government can greatlyreduce the delays caused by landacquisition and also help in removingthe bottlenecks during theimplementation of the project.Table VI.6 gives the roles of each of theagencies in the different activities.

Land acquisitionThe State Government can act as afacilitator ensuring that the negotiationsare free and fair and explain to the

Division of responsibility between each player for the activities

Policy making Regulation

Identifying the location

Design of park

Legalclearance

Financial Structuring

Land acquisition

Implementation O&M

SIPPA/SIDCFIs

Private PlayerIndustrial Units

Agency

Activity

Table VI.5



landowners the use their land would beput to and the benefits that wouldaccrue by undertaking such a project.Such a facilitating role of the State in atransparent environment could be awelcome institutional framework forgrowth with fair play. It should also bepossible for a private investor-negotiatorto look up to the Government for itssupportive intervention to resolve theproblems of breaks in land contiguity.

Industrial Estates

Documents

Transcript of Industrial Estates