Is Rajasthan really ready for industrial surge?

A number of  ‘Rajasthan is ready’ advertisements are already on air. The eye-catching advertisements and teasers with current Bollywood flavor Irfan Khan (who hails from Jaipur), is intended to attract investments into the state from potential investors.

With a blitzkrieg of advertisements, pre-event fests like the Start-Up fest, road shows and a line-up of MOUs worth crores, Chief Minister Vasundhara Raje wants to make Rajasthan happen and not let it be known just as a tourist destination.

The promised 15 lakh jobs over the next five years is something Raje is desperate to achieve. Because at the end of the day, when the voting machines start whirring again, the electorate would be more concerned about the number of jobs generated, the price control, the increase in the basic facilities rather than the number of MOUs signed and the amount invested in the state.     

From March 2015 till October 2015, Rajasthan has signed at least 70 MOUs which has assured more than Rs one lakh crore investment.  

Rajasthan recently signed 13 (MOUs) worth Rs. 50,527 crore in the mining, steel, cement and solar sectors. These include projects in iron ore, lignite, copper, rock phosphate, limestone and dolomite, and base metals as well as steel and cement plants.

These MoUs were signed with Central PSUs like SAIL, NLC, RINL, Hindustan Copper and FCI and private sector companies like Reliance Cement, Hindustan Zinc, Jindal Saw, UltraTech Cement, Marwar Cement, Ojaswi Marble and  Granite and Ambuja Cement.

Additionally, the state government also signed an MOU for a Rs.10,000 crore project for the planning and development of an inter-state transmission system for the evacuation of solar energy  generated in the solar power parks  in Jodhpur and Jaisalmer districts.

Expressing satisfaction with Rajasthan’s success in attracting substantial investment in the mining and mineral based industries, Raje said, “The state’s new Mineral Policy intends to promote greater transparency in the allocation of mines as well as the development of minerals, metals and mineral processing industries, with an emphasis on introducing new technologies in exploration, minimising wastage, waste recycling, job creation, especially for people drawn from the weaker sections, and greater revenue for the state. We are committed to facilitating the growth of the mining industry but equally to ensuring ecological balance through systematic, scientific and sustainable mining.”

Reiterating her government’s commitment to promoting Green Energy and reducing carbon emissions, the Chief Minister noted that the state had attracted commitments of investment to set up solar power capacity in excess of 26,000 MW. Infrastructure for evacuation of the power was, however an issue.

Raje’s inspiration for Resurgent Rajasthan to attract investments is the Vibrant Gujarat model.

Rajasthan government claims the reasons to invest in the state are many like ease of doing business like its single window system with a unique ID, which allows tracking of the application online, strategic location, industrial power, land availability, skilled manpower, Delhi- Mumbai Industrial Corridor, which will do away with limitation of it being a landlocked state and will ensure industrial development along the corridor, labour reforms, state policies, taxation reforms and good quality of life.

The state is also planning to prepare 10,000 acres of land bank. Rajasthan has already acquired 6,000 acres. It is expecting Rs 2 lakh crore investments in the solar sector.

Investors till now, however, speak highly of the industrial climate in the state.

“Our Rajasthan project is one of the largest investments of Saint Gobain in a single location. The state government has been very welcoming and cooperative right from the day project was conceived.” Benoit D’Iribarne, President and Director- General, Saint Gobain.

Another investor, Raman Kumar Sharma, Vice President, Honda Siel Cars India Ltd, says: “While evaluating locations for our second plant, we were looking for a location to accommodate a fully integrated car manufacturing facility, with proximity to world-class auto component manufacturers and reasonably close to our existing plant at Greater Noida, UP.  Most importantly, size of the land plot, existing / planned infrastructure support, and availability of the same as per our own plan and schedules. All the above requirements were optimally realized, as a package, at Tapukara.  The government of Rajasthan has been very proactive, responsive and in a “partnering” mode, to resolve and expedite the industry’s needs.”

But experts say for Rajasthan to become another Gujarat, basic infrastructure, abundant power and water supply are needed, which have been the hallmark of the Gujarat model.     

Rajasthan, has however increased the power tariff.  The industrial tariff (HT-5 category) has gone up by Rs 1/ unit to Rs 6.5/unit, which is an increase of 18% from existing tariff and overall a 56% increase in 5 years). The hike is similar in other categories of industrial tariffs also.

For Non-Residential or Commercial (LT 2) for hotels, malls etc, it has been increased by 20.5% for first 100 units and 19.2% for next 100 units. This tariff order is in force from February, 2015.

This power hike has affected all industries as electricity is major part of their expenditure and may deter other potential investors too. This tariff hike comes after almost 2.5 years.

A study sponsored by the Planning Commission in 2014, however enlisted Haryana, Gujarat and Madhya Pradesh as the top three industry-friendly states in the country. And Rajasthan was ranked  eighth in the industry-friendly states list.

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