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Why foreign investors choose Maharashtra as their investment destination of choice

Interview - January 28, 2016

From its pro-business environment and bureaucratic streamlining to its highly educated and skilled workforce and bureaucratic streamlining, Maharashtra offers a complete ecosystem for investors. The state’s Minister of Industries, Subhash Desai, explains its draw for investors and which areas are now prime for future growth.



Given that India is growing at rapid pace and that Maharashtra is very much a microcosm of India, driving the country’s economy, what is your vision on Maharashtra’s economy today and what is its outlook for the immediate future?

India is going through a transformation and Maharashtra cannot remain behind, as it is the growth engine of India. Our state represents more than 15% of the country’s overall GDP, 10% geographical area and 10% of its population. As far as industry is concerned, Maharashtra has been the undisputed leader for many years in a row now. We are number one and will retain this position. 35% of total FDI influx into the country comes into Maharashtra and our state is responsible for approximately 40% of national exports. Maharashtra also counts with a strategic location and strength in ports, logistics, infrastructure, connectivity and skilled manpower. Any company can get 100 engineers in a day in Maharashtra. We have nearly 1.1 million students graduating every year and getting into a wider variety of sectors, such as engineering, medical, management and so forth. These are the true strengths of Maharashtra.


With so many young people entering the workforce every month, how is Maharashtra making sure that they are properly skilled?

We take this issue very seriously and want to avoid at all costs that this degree just becomes a piece of paper. We want our youth to possess skills. And for this we have introduced and are in the process of introducing more and more short-term courses after graduation to make every youngster employable. Only the academic qualification is not enough. We have roped in many leading companies to join hands with us. We also have industrial training institutes. Many leading companies such as Mercedes, Volkswagen, Bharat Forge, etc. have adopted these institutes. They have introduced new courses. Skill development is on a fast track in Maharashtra. No entrepreneur or industry captain should feel that we have to bring these skilled people from outside Maharashtra.


How would you evaluate Make in Maharashtra and what sectors would you like to highlight as most promising within the state?

Maharashtra boasts complete infrastructure, one of the key requirements for Make in India or Make in Maharashtra to succeed. Our own Maharashtra Industrial Development Corporation is the largest land bank in the country. We have nearly 80,000 hectares of industrial land with power, water and the necessary infrastructure. We have many locations to offer for businesses to flourish. Furthermore, we have also selected a few sectors that we believe will be crucial for Maharashtra’s manufacturing future.

One of the main issues Maharashtra and India are facing today, however, is how to add value within the country. Maharashtra is the number one cotton producer in the country. Nevertheless, all the cotton is exported to other states and neighboring countries, many of which are making use of our cotton, are doing the value addition and transforming it into the finished products.


Whereas India could do it by itself?

If you see garments with the Made in China label, you can rest assured that the cotton is from Maharashtra. This has made us decide to set up textile parks. We are setting up 10 textile parks in Maharashtra. With these emerging parks, we have enough cotton, skilled manpower, and now also the complete infrastructure. We want to set up these parks in cotton-growing areas so that transportation is not a problem. These cotton-growing areas are in Vidarbha, with Nagpur as the main city. Marathwada is another area where cotton is grown and so is northern Maharashtra. There are almost 10 districts where cotton grows in abundance. It will only be to the benefit of every stakeholder involved to have the value addition and manufacturing units near the crop areas.


So you would say that textiles is among the most important sectors in Maharashtra?

Spinning, weaving, garment making, apparels, from cotton to fiber, and fiber to fashion is our theme. We have established brands like Raymond, Siyarams and Bombay Dyeing. They are producing high quality fabrics. So I would say that textiles is one important sector.

Second I would say is electronics. India imports almost all of its electronics, almost similar to crude oil imports. Indians are fond of using electronic gadgets. But we don’t make them here. So now we want to manufacture electronic goods in India. Our Indian youngsters are masters in software development and management. But in case of hardware, we are almost zero. It is therefore our wish to start manufacturing within the state and we have made the necessary preparations. Foxconn has decided to invest $5 billion in Maharashtra. This is one of the largest investments in recent times. With the entry of Foxconn, many local people, entrepreneurs and businesses will get a boost.

Defense is another important sector. The Indian government has introduced defense for the private industry. Until 2015, this was confined only to government enterprises. Only government-owned factories used to manufacture goods required for the defense forces. But percentage-wise it was negligible. Almost all arms, ammunitions, aircraft, vessels, and ships were being imported. We were dependent on imports for defense requirements.

Today, with the introduction of this new policy, we have more than 100 industrial players who wish to invest in the defense sector. Companies like Larsen & Toubro, Tata, Reliance, and Bharat Forge are those who have already proven their skills. They are in the process of making tie-ups with companies from Germany, the US, and Sweden. Many companies have almost finalized their deals. Recently we offered a piece of land for Reliance Industries in Mihan, a new place coming up in Nagpur, just adjacent to the airport. They are into Reliance Aerospace. There are many sectors and industrial estates that are ready to accommodate all these defense projects.


What are you doing to accommodate foreign investors?

We are providing complete ecosystem to all who are investing. We have more than 1,000 engineering colleges. Our IITs (Indian Institutes of Technology) are leading institutions globally. We have more than 1,000 industrial training institutes. With new technologies, these institutes will be a backbone to make available all the skilled manpower. In addition, our government has been working relentlessly to improve the ease of doing business in the country and to make sure that foreign investors keep choosing Maharashtra as their investment destination of choice.


Even though India jumped 12 places recently on the ease of doing business ranking of the World Bank, the country still ranks 130th out of 189 economies, with Maharashtra ranked 8th in India as the best place to invest.

This is not entirely the true picture. We started making reforms in 2014-15. The initial months were preparatory. From June to September, we issued as many as 47 notifications called Government Resolutions. But they were not taken into consideration while doing the ranking. If the World Bank would decide and do the ranking today, I am confident that we would be posted at number two or three in whole of India and I would not be surprised if we would be labeled number one.

Maharashtra has taken major decisions. Regarding construction permits for example, we have reduced many NOCs (no-objection certificates) required earlier to a lowest possible number. So construction permits have now been made easier. In regard to our industries, we have introduced the system of self-certification. There will be no need for our inspectors to go and inspect. Self-certification is enough. This stands in stark contrast with the randomized inspections that are happening now. All infrastructure permissions have also been reduced. If anyone wanted to set up industry in Maharashtra before, they needed 76 permissions. With our efforts, we have brought it down to 37 and we are further trying to bring it down to 25.