Investment Climate in Punjab

Investment Climate in Punjab

Contents

Economic and Demographic Profile 1 Economic Profile 1 Demographic Profile 2Physical Infrastructure 3 Power 3 Roads 4 Railways 4 Dedicated Freight Corridor 4 Airports 4 Telecom 4Social Infrastructure 5 Health 5 Education 5Industrial Profile 5Land Availability 6 Industrial Land 6 Agricultural Land 7 Manpower Availability 7State Policies and Incentives 7Investments in the State 8Looking Ahead 9Annexure : Policies 10

• All data is at constant (2004-05) prices unless explicitly stated otherwise

• GSDP stands for Gross State Domestic Product

• CSO data accessed on 18 October, 2012

Known as the land of five rivers, Punjab is endowed with rich, fertile and productive agricultural land. This has been the bulwark of agricultural growth, making the state a leading food producer in the country as well as an attractive hub for the agro based industry. Historically, an agrarian economy, it is the entrepreneurial spirit of its people that transformed Punjab into a state with a strong industry base, especially MSMEs. Today, Punjab is one of the most progressive states in the country, with a strong tradition of entrepreneurship and business acumen.

Advantage Punjab:

• Leading producer of foodgrains in the country, second largest contributor of wheat to the Central Pool

• One of the country’s largest producers of cotton, blended yarn and mill-made fabrics

• High propensity to consume, giving impetus to the retail sector. Cities of Ludhiana, Jalandhar, and Amritsar

emerging as key retail markets of north India

• Well established export-base

• Well-developed infrastructure, including a well-connected intra-transport system, and excellent

telecommunication set-up

• Availability of a large talent pool

• Enabling policy framework and facilitation mechanisms creating a favourable investment climate

• Strong tradition of entrepreneurship

• Thrust on knowledge-based industries such as IT/ITeS, biotechnology and traditionally strong manufacturing

industries such as textiles, agro-based and light engineering industries.

EXECUTIVE SUMMARY

Source: CSO

Figure 1: GSDP of Punjab

1

Economic & Demographic Profile

Economic profile

The GSDP of Punjab was Rs 1,565 billion in 2011-12 against Rs 968 billion in 2004-05, registering a CAGR of 7.1 percent. The GSDP contribution of the state in the national GDP was 3 percent in 2011-12.1

1 CSO2 Economic Survey, Punjab, 2011-12

The state achieved the average growth rate of 6.9 percent during the 11th plan as against the target of 5.9 percent2.

Source: CSO

Key Component (2011-12) Value

GSDP Rs 1,565 billion

Growth in GSDP 5.7 percent

Per Capita Income Rs 46,788

National Per Capita Income Rs 37,851

Figure 2: Key Economic Indicators

1,026 1,130 1,232

1,304 1,386

1,481 1,565

5.9

10.29.0

5.8 6.3 6.85.7

0

3

6

9

12

-

300

600

900

1,200

1,500

1,800

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

in p

erce

nt

in b

illio

n

Figure 3 : Contribution of different sectors towards the economy of Punjab

Punjab, primarily an agrarian economy, is diversifying into industrial and services sectors. This has resulted in an increase in the shares of the secondary and tertiary sectors.

3 Census 2011 (Provisional); www.punjabcensus.gov.in

Demographic profile

Punjab, with a population of 27.7 million, constitutes 2.3 percent of the national population and ranks 15th in terms of size of the population. The population density of Punjab is 550 persons per sq km. The decadal population growth stood at 13.7 percent.3

Source: CSO

Figure 4: Key Demographic Indicators

Key Indicators Value

Population 27.7 million

Population Size (Male) 14.6 million

Population Size ( Female) 13.1 million

Rural Population 17.3 million

Urban Population 10.4 million

Literacy Rate 76.7 percent

Male Literacy 81.5 percent

Female Literacy 71.3 percent

Density of Population (persons per sq km)

550

Sex Ratio (females per 1000 males) 893

Source: Census (Provisional) 2011

32.7

24.7

42.6

2004-05

Primary Secondary Tertiary

22.8

31.7

45.5

2011-12

Primary Secondary Tertiary

32.7

24.7

42.6

2004-05

Primary Secondary Tertiary

2

3

4 Central Electricity Authority, August 2012, including allocated shares in joint and central sector utilities

Figure 5 : Urbanisation trends in Punjab

Physical Infrastructure

Power

Punjab has a total installed power generation capacity of 7,143 MW, which includes 5,130 MW under the state utilities, 1,876 MW under central utilities and 137 MW under the private sector. Of the total installed capacity in the state, the contributions from the various sources are as follows4:

• Thermal power – 49.5 percent • Hydro power - 42.2 percent • Renewable energy sources- 5.3 percent • Nuclear power- 2.9 percent

Source : http://punjabcensus.gov.in/pdf/Paper%20I.pdf

Figure 6 : Peak demand – supply position in the State

Source: CEA

To address the growing demand for power, Punjab has undertaken various power projects to augment the overall capacity of the state. Steps have been taken to make Punjab self sufficient by March, 2014.

Source: Annual Plan 2012-13, Government of Punjab, Planning Commission

Projects MW Expected Completion Date

Ongoing Power Projects

Goindwal Sahib Thermal Power Project

540 May, Nov, 2013

Talwandi Sabo Thermal Power Project

1,980 Aug, Nov, 2013, Mar,2014

Rajpura Thermal Power Project 1,400 Jan, May, 2014

Proposed Power Projects in 12th Plan

Figure 7 : Upcoming Power Projects

Giddherbaha Thermal Power Plant 2,640 Allotted to NTPC

Mukerian Thermal Power Plant 1,320 In state sector

Shahpur Kandi Hydel Project 206 Not available

5 www.nhai.org/statewise1.asp6 Annual Plan 2012-13, Department of Planning, Government of Punjab7 The Indian Telecom Service Performance Indicator (January-March 2012), Telecom Regulatory Authority of India

Roads

The state has an excellent network of 64,037 km of roads. 12 national highways pass through Punjab accounting for 2.1 percent of the total national highways in India5. Punjab is the first Indian state with 100 percent connectivity to the rural areas.

Projects completed during 11th Five Year Plan:

• 405 km road length of key national highways upgraded to four lanes • 520 km on nine roads upgraded on Build Operate Transfer (BOT) basis at a cost of Rs 6.2 billion. • 705 km of state roads were upgraded under the World Bank Funded Road Sector Project at the outlay of Rs 15 billion • Under Pradhan Mantri Gram Sadak Yojana, 3,193 km of rural roads were upgraded at a cost of Rs 11.8 billion.

Proposed projects during the 12th Five Year Plan:

• The work of four laning 400 km of four national highways - Shambhu-Jalandhar highway, Pathankot-Amritsar, Ludhiana- Talwandi Bhai and Bhogpur-Mukerian is under progress and is likely to be completed by July 2013 • 893 km road length on 5 national highways of Zirakpur- Bathinda, Jalandhar-Dhilwan, Amritsar-Shri Ganga Nagar, Jalandhar-Jind road and Kharar-Ludhiana road shall be upgraded to 4/6 laning under Public Private Partnership • Proposal to construct and upgrade 575 km of road length under Build Operate Transfer (BOT) basis at an estimated cost of Rs 24 billion • 3,200 km of rural road length at a cost of Rs 16 billion to be taken up, in addition to the upgradation of 2,000 km of rural roads in border belt • 27 Road Over Bridges (ROBs)/ Road Under Bridges (RUBs) and 10 High Level Bridges and construction of bye-passes in major towns will also be taken up over the next few years • 204 km of state roads will be upgraded through long term 10 year tenure under Output and Performance Based Road Contracts.

Figure 8: Key Road Network

Road Type Road Length (in km)

National Highways 1,739

State Highways 1,503

Major District roads 2,107

Rural Roads (including Village link roads)

58,688

Source: Economic Survey 2011-12, Government of Punjab

4

Railways

Punjab has a total rail length of 2,134 km and has the fourth highest rail density amongst all states and Union Territories in India.

A Metro Rail project has been proposed at Ludhiana at an investment of Rs 103 billion. The project is to be completed over the next five years. It will have 2 corridors - 15.8 kms long Corridor-I and 13 km long Corridor-II. Altogether, there will be 27 stations.

Dedicated Freight Corridor

About 88 kms of the total 1,839 kms of the Dedicated Eastern Freight Corridor will transverse through Punjab. The corridor, starting from Ludhiana, will connect the state to the eastern port at Dankuni providing connectivity to the eastern coalfields of India – which is very important for thermal power projects in the state.

Airports

The major airports in Punjab are located at Amritsar (International aiport), Chandigarh, Ludhiana and Pathankot (operational civil enclave). New airports have been proposed at Mohali, Bathinda and Ludhiana. The proposed Greenfield airport at Ludhiana to be developed as an aerotropolis, with an investment of Rs 180 billion. For upgradation and extension of air terminals and aerodromes, a sum of Rs 240 million was earmarked in the annual budget of Financial Year 20126.

Telecom

Punjab has 33.3 million subscribers and an overall teledensity of 113.1.7

Key Indicators Value

Subscribers 33.3 million

Wireless subscribers 31.9 million

Wireline subscribers 1.4 million

Teledensity 113.1

Urban Teledensity 180.9

Rural Teledensity 64.6

Source: The Indian Telecom Services Performance Indicators (January - March 2012) Telecom Regulatory Authority of India

Figure 9: Key Telecom Indicators

5

8 Economic Survey of Punjab 2011-12

Social Infrastructure Health

The healthcare infrastructure in the state is quite robust.

A sum of Rs 7.2 billion was allocated for the development of health infrastructure in the annual budget for the Financial Year 2012.

Education

Punjab has a well-developed school education network consisting of 13,950 primary, 3,792 middle and 5,657 high/senior secondary schools. It has 6 Universities and 234 colleges. Some of the premier higher education institutions in the state are:

• Panjab University, Chandigarh • National Institute of Technology, Jalandhar, • Thapar University, Patiala • Indian School of Business, Mohali • Rajiv Gandhi University of Law, Patiala • Punjab Agricultural University, Ludhiana • Guru Angad Dev Veterinary and Animal Sciences University, Ludhiana

Industrial profile

Punjab State Industrial Development Corporation and Punjab Small Industry and Export Corporation are the state nodal agencies for the promotion of industries and development of industrial infrastructure.

Punjab has a strong industrial base. The state has 425 large and medium scale industrial units with a fixed investment of Rs 400 billion and turnover of Rs 820 billion providing employment opportunities to 2,35,000 people as on 2010-11(Provisional)8. small scale industries constitute around 40 percent of the production, 60 percent of the exports and 15 percent of the investment made in Punjab. These industries generate 4.3 times the employment generated by the medium and large scale industries.

The Government of Punjab has given top priority to industrial development in the state. The Industrial Policy, 2009 focuses on development of industrial clusters to provide a competitive advantage to the industries.

Key Infrastructure Indicator Numbers

Hospitals 91

Primary Health Centres 444

Community Health Centres 130

Dispensaries 1,412

Ayurvedic and Unani Institutions 529

Homeopathic Institutions 111

Figure 10 : Key healthcare infrastructure in the State (2010-11):

Source: Economic Survey, Punjab, 2011-12

Key Heath Indicator Numbers

Population served per bed (2010) 1,281

Birth Rate* 16.6

Death Rate* 7

Infant Mortality Rate** 34

Figure 11 : Key Health Indicators in the State

Source: Punjab Planning Board; Sample Registration System, December 2011Note: * per 1000 population ** per 1000 live births

Source: Economic Survey of Punjab 2011-12

Figure 12 : Number of large and medium scale industrial units and growth in production

Source: Economic Survey of Punjab 2011-12

Figure 13 : Number of small scale industrial units and growth in production

355373

400425

450

17.7

22.3

20.017.1

15.9

0

5

10

15

20

25

0

100

200

300

400

500

2007-08 2008-09 2009-10 2010-11 2011-12 (P)

Gro

wth

in p

erce

nt

Num

ber o

f Ind

ustr

ial U

nits

Number of working large and medium scale industrial units

Growth in production (in percent)

167,722

162,559

164,732

168,000

170,500

9.5

15.0 14.612.5

11.1

0

2

4

6

8

10

12

14

16

158,000

160,000

162,000

164,000

166,000

168,000

170,000

172,000

2007-08 2008-09 2009-10 2010-11 2011-12 (P)

Gro

wth

in p

erce

nt

Num

ber o

f Ind

ustr

ial U

nits

Number of working small scale industrial units

Growth in production (in percent)

6

Ludhiana, Jalandhar, Amritsar, Mandi Gobindgarh and Mohali constitute the main industrial centres in Punjab. Ludhiana has the largest number of large and medium units and is a major exporter of textiles, light engineering products including machines tools, hand tools and sewing machines, bicycles and bicycle parts and auto components. Jalandhar is known for leather goods, sports goods and sewing machines and Amritsar for food processing and textiles industries. Mandi Gobindgarh, is the “Steel Town of Punjab”, a cluster of 275 operational rolling and re-rolling mills related to the iron and steel industry. Mohali is host to IT/ITeS sector and electronics manufacturing.

With the abundant resource endowments in the state, the potential industries include tractors and auto components, agro-based industries, bicycle manufacturing, chemical products, food products, pharmaceuticals, textiles, paper products and light engineering goods.

Punjab has a rich and productive agricultural base combined with a conducive Agro Industrial Policy, 2009 making it an ideal destination for setting up agro & food processing industries. The state has the highest cropping intensity in the country9 and contributes 45.4 percent of wheat and 25.3 percent of rice to Central Pool10. Punjab is a leading producer of milk with diary production of 25,600 tonnes. The state accounts for 10 percent of fertiliser consumption and one third of all the tractors operational in the country.

The Punjab Agro Industries Corporation has been encouraging private sector investments in agro‐processing units. The Agro Industrial Policy, 2009, provides special incentives to the agro industry investors based on the size and projects with minimum fixed capital investment of Rs 250 million under mega project scheme. In addition, Punjab Agri Export Corporation provides a subsidy of 25-30 percent on waxing/grading, packing and freight for distant marketing and export of fresh and processed vegetables. The total storage facility of foodgrains in the state is 22.6 million tonnes in 2010-11.

The state has set up a Permanent Perishable Cargo Centre at Amritsar international airport to boost farm exports and agricultural machinery service centres to provide agricultural tools on custom hiring bases. The total budget outlay by Punjab government for the year 2011-12 for agriculture and allied sectors was Rs 4.53 billion, out of which Rs 3 billion was for crop husbandry and Rs. 450 million for animal husbandry11.

IT/ITeS sector is another key potential sector in the state with Mohali as the hub of electronics and IT industry. The state government has also identified suitable land parcels at Railmajra and Kapurthala for the development of world class IT/ITES infrastructure. The software exports doubled to Rs 14 billion in 2010-11 from Rs 7 billion in 2009-10.12

Punjab is one of the leading producers of cotton, blended yarn and mill-made fabrics in the country.

Light engineering goods industry, consisting of bicycle and bicycle parts, hand tools, sewing machines and machine tools is an important sector of the state. A significant share of bicycles and bicycle parts produced in the country come from Punjab.

Total exports from Punjab during the year 2010-11 were valued at approximately Rs 174.3 billion displaying a 9.1 percent increase over exports in the year 2009-1013.

9 http://www.pbindustries.gov.in/strengths.htm10 Economic Survey of Punjab 2011-1211 Economic Survey of Punjab 2010-1112 Economic Survey 2011-12, Government of Punjab13 Government of Punjab14 Economic Survey of Punjab 2011-12; KPMG Research

Figure 14 : Export trends

Source: Statistical Abstract Punjab 2010; Government of Punjab

Hosiery and readymade garments constitute about 31 percent of the total exports from Punjab followed by yarn and textile contributing 23 percent. The districts of Ludhiana, Gurdaspur and Jalandhar accounts for around 95 percent of the total exports from Punjab.

The key sectors in the state include textiles, light engineering goods, automotive, IT and electronics and agro-based industries.

Land AvailabilityIndustrial Land

The state government proposes a cluster approach to boost industrialisation. Some of the proposed industrial areas/theme parks include14:

1. Mohali-Chandigarh is a hub for IT/ITeS, electronics and pharmaceuticals industry. The proposed plans include: • Information and Knowledge City at Mohali over an area of 1,500 acres

Figure 15 : Sector wise distribution of goods exported from Punjab (2009-10)

Source: Government of Punjab

7

Source: Statistical Abstract of Punjab, 2011

Land Type Area (‘000 hectares)

Geographical area 5,036

Area for land utilisation 5,033

Forest area 294

Net sown area 4,158

Net irrigated area 4,070

Gross irrigated area 7,724

Not available for cultivation

Area put to non agricultural use

508

Barren and uncultivable land 24

Other uncultivated land excluding fallow land

Permanent pastures and other grazing lands

4

Cultivable waste land 4

Figure 16 : Land Utilisation pattern in Punjab

2. Investment Corridor Ludhiana-Jalandhar-Amritsar is a hub for Textile and Light Engineering goods. The proposed plans include : • World class IT/ITeS infrastructure at Railmajra/Kapurthala • Industrial clusters to promote cotton and woollen textiles • Mega Tourism Project for integrated development of Amritsar city

3. Growth Centres of Bathinda-Sangrur-Patiala-Rajpura are hubs for light engineering goods, petrochemicals, and food processing. The proposed plans include: • Global Industrial Knowledge City at Rajpura spread over an area of 1,359 acres

Agricultural Land

Around 83 percent of the available geographical area is used for agricultural purposes (i.e. the net sown area) and approximately 6 percent of the total geographical land is under forests.

Manpower Availability

Punjab’s growth is fuelled by the availability of a large talent pool. The state government has taken a number of steps to improve the quality of education, including encouraging private participation in technical and vocational education.

Area put to non agricultural use 503

Barren and uncultivable land 25

Institutes Numbers

Number of Government ITIs

97

Seating Capacity 20,260

Number of Private ITCs 243

Seating Capacity 28,784

Total ITIs/ITCs 340

Total Seating Capacity 49,044

Figure 17 : ITIs/ITCs

Source: Directorate General of Employment & Training (DGET), Ministry of Labour & Commerce

The state is currently upgrading 35 Industrial Training Institutes (ITIs) into Centres of Excellence at a cost of Rs 1.28 billion and 76 ITIs at Rs 25 million per ITI under PPP scheme. In addition, 11 technical institutions have been upgraded into multipurpose academies under National Bank for Agriculture and Rural Development (NABARD) project.

Some of the key skill development initiatives taken by the state are:

• Draft Technical Education Policy – a pioneering initiative to encourage skill training in the state• Under the National Skill Development Mission, 73 new ITIs and 2,500 Skill Development Centres will be opened by 2017• 50,000 candidates to be provided skill development training in one of the 1,400 courses by Vocational Training Providers (VTP), every year• A Construction Skill Development Centre has been setup in village Abul Khurana of Lambi Block in Sri Muktsar Sahib district, in collaboration with L&T• A centre for providing training in the trades of driving and automotive skills setup in collaboration with Tata Motors in village Mahuaana of Lambi block in Sri Muktsar Sahib district• Establishment of Entrepreneurship Development Centres at PTU Colleges • Establishment of Incubation Centre at LPU campus, Jalandhar and Mohali• Skill Gap Study by CII • Skill Centre in the retail sector set up at Amritsar, in collaboration with Bharti Walmart.

State Policies and IncentivesIn order to position itself as the destination of choice in many diverse sectors and to encourage the overall growth of its economy, the Government of Punjab has implemented several policies. These policies provide a roadmap to boost the industrial climate and remove various road blocks which hampered the industrial expansion of the state. These policy documents also encompass investment incentives and schemes for investors.

Please refer to Annexure for various policies and tax structure in place in Punjab.

8

Single Window Clearance Mechanism - Udyog Sahayak

The state government has implemented the Punjab Industrial Facilitation Act, which aims at expediting industrial approvals in a time bound manner. Udyog Sahayak in the Directorate of Industries & Commerce and District Industries Centres in the state have been designated as State Nodal Agency and District Nodal Agencies respectively under this Act. The following committees have been constituted under the Act:

• State Board under the Chairmanship of the Chief Minister to review and monitor industrial approvals and grant exemption or relaxation from the provision of any law made by the Punjab State Legislature relating to industrial development.

• Empowered Committee on Industrial Facilitation under the Chairmanship of Industries & Commerce Minister to review and monitor the status of applications for clearances and resolve inter-departmental matters

• District Level Single Window Clearance Committee under the Chairmanship of Deputy Commissioner to review and monitor the status of applications received at the district level.

Time schedules for various approvals required by an entrepreneur have been notified under the Industrial Facilitation Act. Notification has also been issued to the effect that in case the application for approvals is kept pending by the department concerned without assigning any reason, and approval is not granted within the notified time schedule; deemed approval shall be granted to the applicant by the Nodal Agency.

Investments in the StateThe state received industrial investment proposals amounting to Rs 1,232.8 billion during the period August 1991 to May 2012. During the year 2011 the state has attracted investment intentions of Rs 135.7 billion.

Foreign Direct Investment

According to the Department of Industrial Policy and Promotion, FDI inflows from April 2000 to July 2012 amounted to US$ 1.2 billion in the state (including Chandigarh, Haryana and Himachal Pradesh). For the period April 2012 to July 2012, FDI inflows amounted to US$ 7 million.15

15 Department of Industrial Policy and Promotion, Ministry of Commerce & Industry

Year Numbers Filed

Proposed Investment (Rs billion)

Share of state in Northern Region proposed investments (percent)

Proposed Employment (Numbers)

2009 68 97.3 18.5 14,449

2010 102 67.8 9.2 39,166

2011 112 135.7 13.7 29,815

2012(May) 39 21.8 9.0 10,539

Source: SIA Statistics, Department of Industrial Policy and Promotion, Ministry of Commerce & IndustryNote: Investment in terms of Industrial Entrepreneur Memoranda (IEMs) filed, Letters of Intent (LOIs) issued and Direct Industrial Licenses (DILs) issuedNorthern Region includes the states of Delhi, Haryana, Himachal Pradesh, Jammu & Kashmir, Punjab, Rajasthan, Uttar Pradesh, Uttarakhand and UT Chandigarh

Figure 18 : Investment Intentions in the state

Punjab, a progressive state with enterprising people, has a strong industrial base. The traditional industries in the state include agro-based & food processing, textiles, light engineering, auto parts, sports goods, tractor and bicycle & bicycle parts.

The Industrial Policy of the state aims to broaden the industrial base. It envisages greater role for the industry and services sectors in the economic development of Punjab. Some of the focus areas identified by the policy include IT & ITeS, value-added agro-based & food processing, entertainment, hospitality, healthcare, biotechnology, telecommunication and research and development services. The policy also lays emphasis on promoting PPPs.

The policy addresses land-related issues by specifying measures to facilitate land use

conversion. It provides fiscal incentives for mega projects (projects with fixed capital investment of Rs 1,000 million and above, and Rs 250 million for border districts).

In order to create an enabling environment for the industry, Punjab aims to become a power surplus state by March 2014 and is making substantial investment in the power sector. Skill development is another key focus area, with the state planning to implement the Technical Education Policy. The focus is to improve the quality of education. Many specialised skill development institutions are being set up in the State and the existing ones are being upgraded in Public Private Partnerships. To improve connectivity, the state is focusing on improving road infrastructure by 4 and 6 laning of existing national and state highways seeking greater participation of private players through Public Private Partnership mode.

With a favourable policy environment, an enabling infrastructure and the enterprise of its people, Punjab is an attractive investment destination.

LOOKING AHEAD

9

Annexure : Policies

Industrial Policy 200916

The New Industrial Policy 2009 aims at infrastructure development, lesser number of regulations and speedy clearance of new projects.

The key initiatives under this policy include:

• State-level monitoring committees set up to oversee the implementation of the industrial policy in a time-bound manner • Easy and quick clearance for projects through one-time settlement schemes and Udyog Sahayak • Constitution of the empowered committee to grant special privileges for projects of significance • Special incentives for industries proposed to be set up in border areas • Infrastructure development through private sector participation by setting up Special Purpose Vehicles (SPVs), exemption to private investors from the Punjab Apartment and Property Regulation Act 1995, and exemption from payment of stamp duty on the first sale/ transfer of developed infrastructure by the developer • Power sector reforms, including permission for power generation for captive use, use of non-conventional sources of energy, electricity duty exemption for captive power generated for self-use • Implementation of VAT and replacement of octroi and entry tax with a single point local area development tax • Enhancement of competitiveness of existing industrial units through capital subsidy and freight subsidy • Automatic clearance for sugar industry units for co-power generation, setting up of distilleries and sale of power to other industries • Revival of sick industrial units through various subsidies • Incentives to agro-based industries like permission for direct purchase of agricultural products from farmers, minimal sales tax on

Agro Industrial Policy 200917

Agro Industrial Policy 2009 aims to explore the vast untapped potential in agro industrial sector and make Punjab, the destination of choice for investors and processors, both global and domestic.

Key features of the policy include:

• To increase the flow of investments in agriculture and agro industries so as to establish backward and forward linkages • To accelerate a close interface between research, extension mechanisms, industry, farmers, markets and consumers • To increase value addition thereby increasing income of farmers, traders and delivering better quality products to consumers • To create modern supply-chain infrastructure needed for agro industrial development and marketing of agri produce • To create employment opportunities, thus, improving the quality of life • To assist small-scale agro based units to remain competitive in a globalized market

• To increase export of fruit and vegetables and value added agri products

• 5 percent back ended subsidy for 5 years on the interest on term loan subject to a ceiling of Rs 2 million per year per unit i.e.

maximum of Rs 10 million in five years, will be provided subject to the conditions specified

• Interest subsidy will be available to agro industrial units making fixed capital investment ranging from Rs 100 million to less than Rs

250 million and availing term loan upto Rs 150 million. The cost of land for the computation of fixed capital investment will not be

more than 20 percent of fixed capita.

10

16 http://pbindustries.gov.in/pdf/Industrial_Policy_2009__48%20-%2006%20Oct2009.pdf17 http://pbindustries.gov.in/pdf/Industrial_Policy_2009__48%20-%2006%20Oct2009.pdf ; The policy is a part

of Industrial Policy 2009

packaging materials, no market fee and rural tax on commodities other than wheat and paddy.

11

18 www.punjabinfotech.org, The policy is a part of Industrial Policy 200919 punjabtourism.gov.in/Punjab%20Eco-tourism%20Policy%202009.rtf

socially and economically sustainable manner.

IT/Knowledge Industry Policy 200918 The Information Technology & Knowledge Industry Policy 2009 endeavours to delineate a strategy for harnessing the opportunities and the resources offered by the Information Technology and Knowledge Industry for the comprehensive social and economic development of the state of the IT policy.

Key features include: • IT and other knowledge units notified by PICTCL will be exempt from the purview of the Punjab Pollution Control Board (PPCB) on compliance of basic minimum norms/standards defined by PPCB for green industries • VAT on all IT products rationalized to be at par with minimum floor rate of 4 percent • No stamp duty and registration fee will be levied in respect of land allotted by PICTCL to the IT Parks/units • IT Units/Parks will have permissible FAR of 300 percent on gross area of the project • Power would be available to IT units/knowledge industrial units at industrial tariff irrespective of their location/zoning • IT/Knowledge Industry Parks shall be exempted from the Punjab Apartment and Property Regulation Act (PAPRA) 1995, in accordance with the power vested with the state government under Section 44 (2) of the Act • Special Incentives for mega projects - government may consider special package of incentives for all mega projects on a case-to- case basis, based on the gestation period of projects, pioneering nature of projects, locational aspects, state-of-the-art technology, profitability, scope for further related investment etc. Empowered Committee, under the Chief Minister shall be competent to approve the special package of incentives and modalities for the same • Special Incentives for Small and Medium Enterprise (SMEs) - Capital subsidy at 20 percent of fixed capital investment in a project, subject to ceiling of Rs 2 million, to be available to first 10 approved SME units in the IT Parks notified by PICTCL • Punjab Venture Capital Fund has been created by Government of Punjab with a corpus of Rs 200 million contributed by SIDBI and various state corporations. The fund has already mobilized contributions to the tune of Rs 50 million and the management of the

fund is going to be entrusted to a private partner. The state government will contribute an additional sum of Rs 5 million to the

Eco Tourism Policy 200919

Punjab is endowed with a very rich spectrum of landscapes, forests, wildlife, wetlands, community reserves, conservation reserves and cultural diversity. It is also home to several endangered species including the Indus Dolphin.

The Government of Punjab has implemented Eco Tourism Policy 2009 to promote ecotourism in the state. It has been developed in harmony with the broad framework outlined in the Tourism Master Plan for the state. The focus of the policy is on conservation of natural resources through awareness building, diversification of tourism activities and destinations, and local community participation and synergy with general development of the tourism sector. This policy is aimed at informing and sensitising the general public and related government departments towards ecotourism and laying down the framework for its growth in the state in an environmentally,

Key features include:

• Building environmental and cultural awareness and respect and provide positive experience for both visitors and hosts • Ecotourism would involve a selective approach, scientific planning, effective control and continuous monitoring • It should be planned as part of the overall area development strategy guided by an integrated land-use plan and associated with commensurate expansion of public services • Emphasis will be given to actively involve local communities and enhance their economic conditions • The type and scale of tourism development should be compatible with the environment and socio-cultural characteristics of the local communities and would lead to sustainable development of the area • Only activities and facilities having least impact on the natural resources and the local culture to be permitted. Preference should be given to use the already existing infrastructural facilities available in the area rather that creating a new one • Adhering to the principles of carrying capacity to avoid overuse of natural resources

corpus.

20 http://www.pbindustries.gov.in/downloads/NotificationTextilePolicy2006.pdf21 http://www.ireda.gov.in/Compendium/Data/Punjab/NRSE%20POLICY-2006.pdf

12

• Capacity building of local communities and other stakeholders shall be ensured • State shall ensure that certain part of project cost/economic returns of such activities are ploughed back in conservation and

Textile Policy 200620 The government initiated Textile Policy (2006) to facilitate and promote the growth of the industry, achieve global standards in product quality, contribute to exports and to encourage textile clusters so as to improve business processes. Textile Policy key features include: • Maximum investment to be attracted under the Technology Upgradation Fund Scheme (TUFS) of the central government • Creation of sound infrastructure in the form of textile clusters, apparel parks and integrated textile parks, having all necessary facilities at one place, developed mainly through private sector participation • Setting up of new educational and training institutes for making skilled technical workforce available to the industry, with assistance from the Government of India as well as private sector participation • Reduction in electricity duty to half the existing rate for mega textile projects for a period of five years and full waiver of electricity duty for a period of seven years for mega textile projects in the districts of Patiala, Sangrur, Mansa, Bathinda, Faridkot, Moga, Muktsar and Ferozepur; • Assistance in land acquisition by the state government for setting up of mega textile units, with provisions to offer flexible labour

regime for these units.

New & Renewable Source of Energy (NRSE) Policy 200621

Punjab formulated the NRSE Policy 2006 to develop and promote new technologies based on renewable sources of energy and focus on energy conservation measures.

NRSE Policy key features include:

• Power generation though small/ micro hydro projects, co-generation of power in industries like sugar, paper, chemical and fertilisers and power generation from bio mass, agricultural waste and solar energy • Clearances for all projects related to NRSE, in a time-bound manner through a single window mechanism within a period of 60 days • Exemption of octroi on energy generation and NRSE devices/ equipment/ machinery for NRSE power projects • Maintenance of a ‘Renewable Energy Corpus Fund’ by the Punjab Energy Development Agency to assist and undertake activities towards commercialisation of NRSE projects and programmes • Provision for purchase of electricity in whole or part (as required by the power producer) by Punjab State Electricity Board to ensure full utilisation of NRSE • Provision of government land, if available, for setting up NRSE projects at a nominal lease rent of rupee one per sq m for a period of 33 years.

development of natural resources of that area.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual

or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information

is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information

without appropriate professional advice after a thorough examination of the particular situation. © 2012 KPMG, an Indian Partnership

and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative (“KPMG

International”), a Swiss entity. All rights reserved.

The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.

This report has been made by KPMG in India for CII.

13

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 150 countries and have 138,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

Our Audit practice endeavors to provide robust and risk based audit services that address our firms’ clients’ strategic priorities and business processes.

KPMG’s Tax services are designed to reflect the unique needs and objectives of each client, whether we are dealing with the tax aspects of a cross-border acquisition or developing and helping to implement a global transfer pricing strategy. In practical terms, that means KPMG firms work with their clients to assist them in achieving effective tax compliance and managing tax risks, while helping to control costs.

KPMG Advisory professionals provide advice and assistance to enable companies, intermediaries and public sector bodies to mitigate risk, improve performance, and create value. KPMG firms provide a wide range of Risk Consulting and Management Consulting that can help clients respond to immediate needs as well as put in place the strategies for the longer term.

KPMG in India, a professional services firm, is the Indian member firm of KPMG International and was established in September 1993. Our professionals leverage the global network of firms, providing detailed knowledge of local laws, regulations, markets and competition. We provide services to over 5,000 international and national clients, in India. KPMG has offices across India in Delhi, Chandigarh, Ahemdabad, Mumbai, Pune, Bangalore, Chennai, Kochi, Hyderabad and Kolkata. The firms in India have access to more than 5,000 Indian and expatriate professionals, many of whom are internationally trained. We strive to provide rapid, performance-based, industry-focused and technology-enabled services, which reflect a shared knowledge of global and local industries and our experience of the Indian business environment.

kpmg.com/in

About KPMG IN INDIA

14

The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the growth of industry in India, partnering industry and government alike through advisory and consultative processes.

CII is a non-government, not-for-profit, industry led and industry managed organisation, playing a proactive role in India’s development process. Founded over 117 years ago, it is India’s premier business association, with a direct membership of over 7100 organisations from the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over 90,000 companies from around 250 national and regional sectoral associations.

CII catalyses change by working closely with government on policy issues, enhancing efficiency, competitiveness and expanding business opportunities for industry through a range of specialised services and global linkages. It also provides a platform for sectoral consensus building and networking. Major emphasis is laid on projecting a positive image of business, assisting industry to identify and execute corporate citizenship programmes. Partnerships with over 120 NGOs across the country carry forward our initiatives in integrated and inclusive development, which include health, education, livelihood, diversity management, skill development and water, to name a few.

The CII Theme for 2012-13, ‘Reviving Economic Growth: Reforms and Governance,’ accords top priority to restoring the growth trajectory of the nation, while building Global Competitiveness, Inclusivity and Sustainability. Towards this, CII advocacy will focus on structural reforms, both at the Centre and in the States, and effective governance, while taking efforts and initiatives in Affirmative Action, Skill Development, and International Engagement to the next level.

With 63 offices including 10 Centres of Excellence in India, and 7 overseas offices in Australia, China, France, Singapore, South Africa, UK, and USA, as well as institutional partnerships with 223 counterpart organisations in 90 countries, CII serves as a reference point for Indian industry and the international business community.

Confederation of Indian Industry

The Mantosh Sondhi Centre 23, Institutional Area, Lodi Road, New Delhi – 110 003 (India) T: 91 11 24629994-7 • F: 91 11 24626149 E: info@cii.in • W: www.cii.in

Block No. 3, Dakshin Marg, Sector 31-A Chandigarh - 160 030 Tel : 0172- 6515505 / 5022522/ 2605614 Fax : 0172-2614974 sumanpreet.singh@cii.in