Sunday, Jun 23, 2024
Update At 14:00    USD/EUR 0,92  ↑+0.0002        USD/JPY 151,69  ↑+0.174        USD/KRW 1.347,35  ↑+6.1        EUR/JPY 164,16  ↑+0.143        Crude Oil 85,49  ↓-0.76        Asia Dow 3.838,83  ↑+1.8        TSE 1.833,50  ↑+4.5        Japan: Nikkei 225 40.846,59  ↑+448.56        S. Korea: KOSPI 2.756,23  ↓-0.86        China: Shanghai Composite 3.015,74  ↓-15.745        Hong Kong: Hang Seng 16.512,92  ↓-105.4        Singapore: Straits Times 3,27  ↑+0.018        DJIA 22,58  ↓-0.23        Nasdaq Composite 16.315,70  ↓-68.769        S&P 500 5.203,58  ↓-14.61        Russell 2000 2.070,16  ↓-4.0003        Stoxx Euro 50 5.064,18  ↑+19.99        Stoxx Europe 600 511,09  ↑+1.23        Germany: DAX 18.384,35  ↑+123.04        UK: FTSE 100 7.930,96  ↑+13.39        Spain: IBEX 35 10.991,50  ↑+39.3        France: CAC 40 8.184,75  ↑+33.15        

Maharashtra targets $84 billion in investment by 2020

Article - March 11, 2016

Already the country’s number one business destination, India’s financial capital and most industrialized state Maharashtra aims to attract greater investment and achieve more inclusive growth by creating a more business friendly environment


Best known for its fast-paced capital Mumbai (formerly Bombay), Maharashtra – a region roughly equal in size to Japan that spans across west-central India – is the country’s third-largest and second-most populous state. Its vast area and sprawling population of 110 million inhabitants, as well as its rich history as the gateway for trade on the sub-continent, also make it India’s financial center and most industrialized region.

By contributing approximately 15% of the country's GDP, Maharashtra – with its $398 billion economy – is undeniably India’s economic powerhouse. While also being famous as the home of Bollywood, the world’s biggest movie industry, the capital of Mumbai houses the headquarters of almost all major banks, financial institutions, insurance companies and mutual funds, with the city’s Bombay Stock Exchange considered to be one of the fastest and oldest exchanges in Asia.

Aside from Mumbai, the cities of Pune and Nagpur also play a huge role in strengthening the Indian economy, with an estimated 41% of Standard & Poor’s CNX 500 conglomerates having corporate offices across Maharashtra. It is such corporate presence that resulted in the state attracting $73 billion in foreign direct investment (FDI) between 2000 and 2015 – more than any other state in India.

Despite all this, the reality is that Maharashtra – like all of India – still faces huge challenges, and still has huge potential for growth. This is outlined by the fact that the government aims to attract a further $84 billion in FDI to the state by the end of the decade. Chief Minister of Maharashtra, Devendra Fadnavis, explains that he thinks this is realistic because of the three things: “Demography, democracy, and demand.”

Indeed nowhere else in India has the potential to bring these three “ingredients” together, as Mr Fadnavis puts it, quite as effectively as Maharashtra. While the demography and demand elements of India are obvious, democracy, says Mr Fadnavis, means “predictable policies, stable government and a little bit of ‘hand-holding’.” ‘Hand-holding’, more specifically, means making it easier for companies to do business – an area in which Maharashtra has been making great progress.

“The ease of doing business in our state has improved immensely,” the Chief Minister points out, referring to the fact in 2015 alone, the Maharashtra government managed to cut the number of permits needed to set up business in a designated industrial area, as well as the time taken to receive permits, by more than half.

The State Minister of Industries, Subhash Desai, also points out that many of the reforms Maharashtra implemented during 2014-2015 – including an e-platform to monitor the setting up of new industries and investment – were not taken into account in the World Bank’s latest Doing Business ranking, where Maharashtra ranked eighth overall in India. “If the World Bank did the rankings 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 were number one,” says Mr Desai.

“Because of this, businesses are getting the idea that this is a regime that actually means business,” adds Mr. Fadnavis, a seasoned public representative and respected political leader who held the distinction of being India’s second youngest-ever mayor during his time in office in Nagpur, Maharashtra’s second capital city.

“We have made our Maharashtra Industrial Development Corporation (MIDC) a one-stop shop for all investments and we are involved in certain forums where we interact with the private sector, understand their problems, and solve their problems,” continues Mr Fadnavis. “Foxconn [the world's largest contract-manufacturing firm for consumer electronics] last year invested $5 billion into Maharashtra, which is proof that the business community has a lot of faith in the state. There are many companies that are looking at our state as an investment destination.”

Amongst such companies is a significant collection of American multinationals, including General Electric (GE) and Microsoft. After GE cleared an investment of $2 billion in January 2015 for the manufacture of high capacity platform turbines, as well as a $200 million investment in its multi-modal manufacturing facility in Pune, CEO Jeff Immelt has reiterated the company’s commitment to Maharashtra and to India in general, commenting that he sees huge potential in the manufacturing space in the country.

“Infrastructure is a key driver of India’s growth,” says Mr Immelt. “We are keen to invest much more in India and in projects to boost its infrastructure in sectors such as rail, power and healthcare.”

Infrastructure is one area in particular where Maharashtra stands out from the crowd, and plays a major part in helping it attract some of the world’s biggest firms. “Maharashtra can count on a strategic location and strength in ports, logistics, connectivity and skilled manpower. We have nearly 80,000 hectares of industrial land with power, water and necessary infrastructure, and have many locations to offer businesses to flourish,” explains the state’s Industries Minister, Mr Desai.

And with the Maharashtra government highlighting infrastructure as the sector which could attract the most investment in the next two years, things are likely to improve.

As part of the state government’s Mumbai Next initiative to transform the country’s financial capital into a global financial and entertainment center, the Mumbai Metropolitan Region (MMR) is set for an infrastructure overhaul, including a new airport – the first phase of which is slated for completion in 2019. Complementing this will be the Navi Mumbai Airport Influenced Notifield Area (NAINA), a planned 600 square kilometer ‘smart city’ surrounding the airport. An 800 kilometer super expressway between Nagpur and Mumbai is also in the pipeline, which according to Mr Fadnavis will “change the face of Maharashtra” by bringing together all four parts of the state.

What’s more, Maharasthra plans to establish a further 22 ‘smart cities’ around the state, connected by a trans-harbor sea link, a 32km coastal road, and a 108km metro network. To power the entire new infrastructure, the state is in the stages of developing an additional capacity of 15,000 megawatts from renewable energy sources.

Alongside the proposed 22 smart cities – which are part of an urban renewal and retrofitting program by the Government of India to develop 100 sustainable cities in total – Mr Fadnavis announced at a Microsoft event in Mumbai last November that Maharashtra will create a number of ‘smart villages’ during 2016 in partnership with the US-based company. “We are looking to integrate ICT into healthcare, education, energy and other areas. We want to empower people and we will look for support from Microsoft to enable digitization of processes,” he said.

On top of this announcement, Microsoft India Chairman Bhaskar Pramanik officially launched Microsoft’s Commercial Cloud Services from its two centers in Pune and Mumbai in December 2015. “The Microsoft Cloud in India will transform the way computing is done in the country. It will empower governments, businesses and users, and offer enough computing power that will support their existing workloads,” said Mr Pramanik, emphasizing that the company had chosen Maharashtra because of its “better availability of infrastructure, ease of doing business, high bandwidth and highest customers.”

Indeed it is such advantages created by the state government that will continue to see firms, from giant multinationals to homegrown start-ups, choose Maharashtra for their investments.

The electronics sector is one industry in particular that Mr Desai believes will be crucial for Maharashtra’s future. “India imports almost all of its electronics, almost similar to crude oil imports,” he explains. “Our Indian youngsters are masters in software development and management, but in the case of hardware, we are at almost zero. It is therefore our wish to start manufacturing within the state and we have made the necessary preparations.”

Mr Fadnavis goes as far to say that due to the state’s “educationally well developed and qualified human resources” Maharashtra has potential to become a “new Taiwan or a new Korea in electronics.”

In order to realize such a scenario, as well as reach its capacity in a whole range of identified sectors, the Maharashtra government’s recently launched its Make in Maharashtra initiative. Established on the sidelines of the nationwide Make in India program, the initiative’s objective is to continue creating a business friendly atmosphere in Maharashtra by increasing ease of doing business.

The state government attributed the investment assurances of almost $11 billion that it received in 2015 to the success of its Make in Maharashtra campaign. Furthermore, at the Make in India week held in February in Mumbai, Maharashtra signed a total of 2,594 Memorandums of Understanding worth Rs7.94 lakh crore in diverse sectors, including manufacturing, agro-industry, textiles, energy, infrastructure, retail, tourism and real estate. All these projects together hold the potential to generate employment for nearly 3 million people, and perhaps most importantly include significant investment in the poorer Maharashtra regions of Vidarbha and Marathwada.

With most of Maharastra’s industrial growth centered on the west of the state (Marathwada, for instance, receives only 2% of the state’s FDI as indicated by its Statutory Development Board), there exists a vast regional imbalance in Maharastra. According to Mr Fadnavis, investment in the state’s more underdeveloped areas will go a long way to achieving more inclusive growth.

“I think this is the biggest challenge, not only for us, but also for India as a whole. All our policies and schemes are aimed at inclusiveness, and only through inclusion can we have sustainable development,” he says. “Investments flowing to the regions of Vidarbha and Marathwada are thanks to our endeavor to tap global and domestic investments beyond the golden triangle of Mumbai-Pune-Nashik. These untapped regions, which have opened up, will automatically develop and attract greater investments ahead. Maharashtra has always remained the gateway of India, and the economic growth of Maharashtra as a whole will contribute to national growth.”