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Uttar Pradesh @ Double
Digit Growth:
Unfolding Investment Opportunities
Analysis and Report by Resurgent India
Contents
Uttar Pradesh : An Introduction
Economy Overview and Performance
Policy Environment Overview
Infrastructure Overview
The Growth Sector
Sector Analysis
IT/ ITeS & Electronics
Infrastructure including Real Estate
Overall Facilitation to attract investment
PPP
Single Window
Investment Promotion
Skill Development
About RESURGENT INDIA
Message
It is heartening to know that the Associated Chambers of Commerce and Industry of India
(ASSOCHAM) is organizing the summit “Uttar Pradesh @ Double Digit Growth: Unfolding
Investment Opportunities” on 15th January, 2016 in Lucknow.
The Summit is an initiative to portray Uttar Pradesh as the potential world class State. The
review of the growth and development achieved by Uttar Pradesh especially in the field of
physical and social infrastructure, IT/ ITeS, transportation, agro based industries, energy,
healthcare, tourism, education, employment, foreign investment, commercialization, etc. is
far better in comparision to the other states in the country.
I am quite optimistic that the Summit will provide an opportunity to the stakeholders to
look at the vast potential of growth associated with the state of Uttar Pradesh.
I look forward to the constructive and positive outcome of the Summit.
My best wishes to ASSOCHAM for this remarkable initiative.
(Sunil Kanoria)
Message
“The growth and development of people is the highest calling of leadership”
I am happy to know that the Associated Chambers of Commerce and Industry of India
(ASSOCHAM) is organizing national investment summit “Uttar Pradesh @ Double Digit
Growth : Unfolding Investment Opportunities” on 15th January, 2016 in Lucknow.
If country’s economy is to grow at a much faster pace, UP’s contribution in the overall
development of the nation cannot be ignored as is evident from the fact that its GDP at the
rate of 8.12 per cent during 2013-14 has been much higher as compared to the national
average growth rate of 6.9 per cent in the same period.
I am aware that UP has taken several measures in the recent time to attract investment into
the state not only from within the country but from across the globe.
Currently many projects especially in the field of infrastructure, IT / ITeS, Agri & Food
processing, Tourism, Healthcare, Energy etc. are underway in UP clearly paving way for
rapid growth coupled with substantial improvement in the quality of life of the people of
UP in the coming years.
This Summit is the right platform to highlight achievements of the State leadership of Shri
Akhilesh Yadav, Hon’ble Chief Minister of Uttar Pradesh and I am very positive of his
dynamic role for the upliftment of the state economy.
I wish this historic Summit by ASSOCHAM a great success.
(Dr. Lalit Khaitan)
Chairman
NRDC, ASSOCHAM
Message
I am glad to note that the Associated Chambers of Commerce and Industry of India
(ASSOCHAM) is organizing a Summit “Uttar radish @ Double Digit Growth: Unfolding
Investment Opportunities” on 15th January, 2016 in Lucknow to showcase investment
opportunities in the State.
Uttar Pradesh as we all know is a progressive state and is considered as one of the most
preferred investment destinations in the country. Globalization of market and buoyant
economy has given tremendous impetus to the industrial growth in the State. Uttar Pradesh
has competitive advantage in terms of strategic location, basic industrial and social
infrastructure as well as large skilled, educated, young workforce. Besides, the State has
investor friendly policy environment which facilitates tremendous scope for investment.
To give a holistic overview of the areas of potential investment in Uttar Pradesh,
ASSOCHAM and Resurgent India have jointly brought out a special study on this occasion
which carries a long term vision for growth and development in the State.
I am sure this study will give a rich insight and adequate knowledge to all the stakeholders.
I congratulate my colleagues Mr. U.K. Joshi, Director and Mohd. Zumair, Assistant Director
for this remarkable initiative.
I wish the Summit a great success.
D.S. Rawat
Uttar Pradesh: An Introduction
Uttar Pradesh – An Introduction
1.1 Generic Profile
Uttar Pradesh is acknowledged for its rich endowment. It offers a good mix of
culture, religion, art & crafts, architecture, minerals, forests, flora and fauna.
Geographically, it sits in the Northern part of the country, bordered by Bihar,
Madhya Pradesh, Rajasthan, Delhi, Haryana, Uttrakhand, Himachal Pradesh and even
Nepal. It can be divided into three distinct regions: 1. The Himalayan region in the
North 2. The Gangetic plain in the center 3. The Vindhya hills and plateau in the
south.
A quick fact-sheet of the State Uttar Pradesh enumerated below:
Fact Sheet Parameters Uttar Pradesh
Geographical spread (Sq. Kms.) 240,928
Capital Lucknow
Population (million) 199.6
Population Growth 20.09%
Percentage of National Population 16.50%
Population Density per sq. km. 828/1000
Districts 71
Members of Lok Sabha from UP 80
Members of Rajya Sabha from UP 30
Source: State Horticulture Mission Uttar Pradesh website, Statistical Department U.P. & Directorate Census, Lucknow
http://www.up.gov.in/upstateglance.aspx, IBEF Report 2015
The state has a population of about 190 million according to the Census 2011, with a
20% growth rate. The population gender split and the literacy ratio is heavily
skewed towards the male population. A social profile of the state is captured below:
Fact Sheet Parameters Uttar Pradesh
Population (million) 199.6
Male Population 104.6
Female Population 95.0
Sex ratio/1000 908
Literacy rate % 69.7
Male % 79.2
Female % 59.2
Source: State Horticulture Mission Uttar Pradesh website, Statistical Department U.P. & Directorate Census, Lucknow
http://www.up.gov.in/upstateglance.aspx, IBEF Report 2015
1.2 Economic Profile
At current prices, the Gross State Domestic Product (GSDP) of Uttar Pradesh stands
at INR863 (Cr. 000s) in 2013-14. The GSDP grew at a CAGR of 14.2 percent from
2004-05 to 2013-14. The growth in GSDP over previous year stood at around 10 per
cent.
The Net State Domestic Product (NSDP) of Uttar Pradesh was about INR 761 (Cr.
000s) in 2013- 14. The NSDP grew at a CAGR of 14.2 per cent between 2004-05 and
2013-14. The state’s per capita NSDP in 2013-14 was INR 36,000 compared with
INR 13,000 in 2004-05. Per capita NSDP increased at a CAGR of 12.2 per cent
between 2004-05 and 2013-14.
Performance by Sectors
The primary sector continues to be dominant income provider to the majority of the
rural households in the state. However, the growth in the agricultural sector moderated
to 2.6 per cent in FY14 from 4.7 per cent in FY12. Services sector grew at an average of
9.1 per cent during FY 07-14. The growth was led by sectors like Real Estate, Ownership
of dwellings and business services and banking & insurance. During the same period,
the growth in the industrial sector averaged about 5 per cent.
31.0%
0.3%13.2%26.6%
29.0%
Sector Split of Outstanding Investments (2013-14)
Electricity Mining
Manufacturing Services
Others
Source : D&B Research, CSO ( At Constant Price (2004-05))
1.3 Investment Profile
Cumulative FDI inflows in Uttar Pradesh (including Uttarakhand), as per the
Department of Industrial Policy & Promotion (DIPP), amounted to US$ 454 million. This
pertains to the period starting April 2000 to January 2015.
In 2013-14 alone, outstanding investments in the state totalled US$ 110.0 billion. In
terms of sector contributions, the electricity sector accounted for around 31.0 per cent,
followed by other sectors at 29.0 per cent (constituting real estate at 26.8 per cent) and
the service sector at 26.6 per cent.
Source : IBEF 2015 Report
1.4 Inter-State Comparison of Key Economic Indicators
Having introduced Uttar Pradesh at an absolute level, it becomes important to
understand how the state stacks to national average and other counterparts on key
social and economic indicators. We have benchmarked the state to other BIMARU
states (Bihar, Madhya Pradesh, Rajasthan) and to Delhi, Maharashtra and Tamil
Nadu.
11.8%
6.8%
10.3%6.4%
12.2%
9.1%
Services Sector Split – Contribution to Domestic Product
Trade, Hotels & Restaurants
Banking & Insurance
Transport, Storage andCommunication
Public Administration
Real Estate, Ownership of dwellingsand business services
Other services
In terms of attributes, the choice has been kept as a mix of hard fiscal parameters like
NSDP, Per Capita NSDP and Number of PPP projects to more social ones like Sex ratio
etc. A brief comparison is captured below:
Source : Census India Government Website, DIPP Website, Census2011.co.in, Infrastructureindia.gov.in, IBEF Report, KPMG Report, MOSPI
2.1 Policy Environment Overview
In the last decade, the State has evolved across sectors by providing growth-focused
conducive economic environment. The thrust has been on creating an investor friendly
environment for sustainable economic growth. The State has prioritized sectors as
reflected in the policy focus, to set up for its evolution to the next level.
The Delhi Investors conclave organized by the Government of Uttar Pradesh where
investments worth Rs. 54,000 crore were committed by the Industry is a testimony to
the fact and efforts. Thus, the right policy environment has been created by an over-
arching infrastructure and industrial policy along with sector specific policies.
1.1 Infrastructure and Industrial Development Policy (IIIP), 2012
In view of major transformation of industrial environment globally and within the
country, Government of Uttar Pradesh approved and announced new Infrastructure and
Industrial Investment Policy-2012 under the Twelfth plan. The underlying objective
meant attaining the target of 11.2 percent industrial growth in Uttar Pradesh. Main
features of the policy included:
Infrastructure Development
Creation and expansion of land banks
Compilation and dissemination of land bank information to investors through
web-enabled facility
Encouragement and facilitation to private sector for development of Industrial
areas and estates along with permission to foreign direct investment in
infrastructure development
Development of roads, expressways, eco-friendly metro or rapid transit systems,
4-lane roads connecting all district headquarters to State capital and
development of new industrial areas along these roads and expressway
Full cooperation in implementation of Delhi Mumbai Industrial Corridor (DMIC)
& Dedicated Freight Corridor (DFC)
Setting up one National Manufacturing Investment Zone each in Bundelkhand,
Eastern and Central Uttar Pradesh.
Expansion & improvement in water supply and drainage system.
Boost to setting up of IT Parks, Mega Food Parks, Logistic hubs, Plastic city,
Biotech industrial parks, Integrated Industrial Townships.
High speed communication and data connectivity
Encouragement of non-conventional energy sources
Simplification of procedures for power load surrender, upgrading or reduction
by industrial units
PPP
Encouraged on priority basis
PPP through Annuity based model to be evaluated
Under the Viability Gap Funding scheme, State government will make available
grant of 20% of project cost from central government and a maximum of 20%
from its own resources to make the project viable
Industry Friendly Environment
Simplification of procedures
Strengthening and improvement in working of Udyog Bandhu
Sprucing up web-based Single Window system for investment and
implementation of e-Biz mission mode project
Creation of IT enabled interactive information mechanisms
Skill & Management development, Bar-coding especially in classified industries,
such as Food processing, Leather, Textile, Hosiery, etc.
MSME Support
Constitution of special cell in Directorate of Industry to undertake various
studies for improving overall environment for MSMEs growth
Rehabilitation Policy
Enable to set up industry specific clusters through Special Purpose Vehicles so
that the basic infrastructure facilities may be developed according to the
requirement of MSMEs.
Other Incentives/ measures:
Exemption in Stamp Duty
Concession related to Commercial Tax
Capital subsidy and Interest Free loan
Special incentives for mega projects
Electricity duty exemption
Exemption from Mandi fee
Industrial quality scheme
EPF reimbursement scheme
1.2 Solar Power Policy, 2013 and Solar Rooftop Policy, 2014
Solar Power Policy, 2013
The state government on January 23, 2013 approved solar energy policy in a cabinet
meeting. Solar power projects to be set up under the solar energy policy will increase
private investment of the state on one hand and shall make the non-agricultural and
barren land available in Bundelkhand productive, leading to production growth and
employment opportunities on the other. The policy will remain effective till March 2017
and in the period of 500 MW solar projects are intended to be installed.
Solar Rooftop Policy, 2014
Uttar Pradesh New and Renewable Energy Development Agency (UPNEDA), has issued
the Solar Rooftop Policy, aimed at Government, Public and Private Institutions. The
policy aims to promote solar energy generation for self-consumption, while excess
energy will be injected into the distribution network.
The main objectives of the policy are:
Encouraging solar energy generation in the state and contributing towards
sustainable development.
Attracting investments in manufacturing, research & development in solar
energy sector.
Optimally utilizing available solar resources & enabling stakeholders to reducing
greenhouse gas emissions.
Attracting private sector participation in solar energy sector.
1.3 Uttar Pradesh IT Policy, 2012
Vision
“To use I.T. as a vehicle for economic development of Uttar Pradesh with inclusive
growth to create a vibrant society with a high quality of life”
Mission
To position Uttar Pradesh as the preferred IT/ITES investment destination in
India
To leverage IT as an engine of growth for UP
To transform physical communities into connected communities that can help to
realize sustainable economic growth and enhance the quality of life.
Key Support Pillars
Economic Transformation
o To promote trade, investment and entrepreneurship in IT Sector, and
build an IT engine for trans-sector transformation.
o PPP
o Single Window Clearance
People Engagement and Empowerment
o To enhance quality of life through affordable and equitable IT
o Cyber Security
o Digitization of Government information
Innovation
o To nurture a creative , innovative and green IT Sector
o IPR
o Adoption of new technologies
o Creating Centre of Excellences
Infrastructure Support
o Promotion of IT cities/ Parks
o Knowledge Skills & Capacity Building
Policy Implementation Unit
Fiscal and Other Incentives
Marketing & Brand Strategy
1.4 Biotechnology Policy
Vision
Uttar Pradesh to become more prosperous through utilizing modern tools of
biotechnology-bringing prosperity to farmers, generating employment in rural areas,
food for all, good health and clean environment.
Mission
Develop knowledge based economy, assure benefit of biotechnology to all section of the
State and promote entrepreneurship in biotechnology based industries.
Objectives
To establish distinguished position of the State in the field of biotechnology.
To attract bio-technology based industrial investment.
To create awareness about the entrepreneurial and job opportunities in the field
of biotechnology.
To develop and conserve bio resource for sustainable commercial use.
To harness existing R&D capabilities for industrial/ commercial developments in
the State
To develop adequate institutional and related infrastructure for development,
acquisition and dissemination of biotechnology throughout the State.
To establish centers of excellence in frontier area of biotechnology.
Key Support Initiatives
Single Window Facility -- Constitution of Biotechnology Development Board
Land Relaxations
General Tax facilities provided to the industries to be extended to
Biotechnological units as declared by the State Government in the Industrial and
service sector investment policy.
Uninterrupted power supply
Relaxation in Zonal regulations
100 percent relaxation on Registration fee and Stamp duty on establishment of
Biotech units.
Simplified Labor Law
Ensuring steady stream of funds on reasonable terms and at reasonable costs for
proper development of Biotech companies.
Establishment of Bio Parks
Top Policy Actions
Recent Budget Highlights:
Uttar Pradesh Government presented US$ 45,784.2 million Budget for fiscal year 2014-
15. The state government has allocated US$ 8,184.7 million for power, irrigation, roads
and bridges in Budget 2014-15. This is a substantially higher provision than that for the
last fiscal year an additional grant for One Time Additional Central Assistance (OTACA)
for projects of US$ 18.6 million was granted.
In order to improve the road connectivity in Uttar Pradesh, the state intends to focus on
the following under the State Annual Plan FY14 in the road transportation sector:
Ensuring connectivity of balance 6221 habitations with over 500 population, not
covered under PMGSY (Pradhan Mantri Gram Sadak Yojana)
Building 4 Lane/2 Lane with paved shoulders Highways & Bye-Passes through
PPP mode
Widening all State Highways up to minimum 2 lane ensuring seamless transport
through augmentation of Road-Over-Bridge (ROB) Network
Construction of 572 Km long Indo-Nepal Border Road started
As per the state annual document, following are some of the National Targets as per
vision 2021 for development of road sector:
Half of the national highways to be developed with 4-6 lanes
Rehabilitation of bridges showing signs of distress
State highways of 10,000 kms road length to be four laned
By end of 2021, state highways to be expanded to 1.6 lakh kms
40% of major district roads should have a minimum of two-lane carriageway
Villages with population more than 1,000 to be connected
In terms of Power Infrastructure, the state intends to achieve the following under the State Annual Plan FY14 in the power sector:
62 new Transmission substations and augmentation of 101 substations 300 new distribution substations and augmentation of 300 substations Portions of Transmission work under PPP A plan for online metering & billing in all 168 towns having population over
30,000 Banks to provide fresh loan funds for operational losses for financial year FY13
to FY15 (under the state’s financial restructuring plan)
3.1 Infrastructure Overview
The current section provides an overview of the State infrastructure – both physical and
soft.
a) Physical Infrastructure: This will include Transport Infrastructure, Power,
Telecom and Industrial Support Infrastructure. We have covered the Physical
Infrastructure in detail in Section 3 of the report. A brief overview is provided here.
Roadways – Given the importance of Road infrastructure in a large state as UP, the
Govt. formulated a separate policy for this sector. The state boasts of 48 national
highways. Uttar Pradesh State Road Transport Corporation (UPSRTC) has a fleet size
of around 9,506 and carries 95.1 million passengers in a year. Some of the recent
and proposed projects include the Yamuna expressway and the four-laning of the
Lucknow-Sultanpur highway.
Airways - The state has six airports across its major centres, that of Agra, Allahabad,
Gorakhpur, Kanpur, Lucknow and Varanasi. Some new airports have been proposed
in Meerut, Moradabad, Faizabad, Agra, Allahabad, Bareilly and Kanpur.
Power- The state had a total installed power generation capacity of 14,842 MW, as of
January 2015. The 12th five year plan envisages UP as a power surplus state by the
end of 2017. The state government has given due importance to this sector and
allocated dedicated amount for augmenting power generation and distribution
schemes in the state.
Telecom – Given the large telecom subscriber base in excess of 133 mn, the state
government is necessitated to develop the telecom infrastructure in the state. The
state government provides supporting facilities and land to the government and
private players for setting up telecom infrastructure.
Industrial Infrastructure – The UP govt. has directed several initiatives towards
improving the overall industrial infrastructure in the state. The Infrastructure and
Industrial Investment Policy-2012 was also introduced in this regard. The state
boasts of a robust industrial infrastructure comprising of 15 industrial areas, 12
specialized parks, 4 growth centers and Industrial Infrastructure Development
Centers (IIDC) and 22 notified Special Economic Zones (SEZs).
b) Soft Infrastructure: This part will include social aspects like Health and Education.
Education -- The Banaras Hindu University at Banaras, founded in 1916, is one of the
oldest universities in the country. As of February 2014, the state has 58 universities,
10 deemed universities and 36 medical colleges. According to the provisional data of
Census 2011, Uttar Pradesh has a literacy rate of 69.7 per cent; with heavy skew
towards male literacy (79.2 per cent) against the female literacy rate at 59.3 per
cent.
The state, however, has made investments towards enhancing the standard of
education across different levels. Uttar Pradesh was one of the first few states to
have successfully implemented the “education for all” policy. There is a good private
player’s participation in the education sector with notable names like Amity. In the
budget for 2013-14, the state government allocated US$ 6,054.7 million for basic
education, expansion of education and improvement of its quality.
Some key educational institutes in Uttar Pradesh include: Indian Institute of
Technology, Kanpur. Indian Institute of Management, Lucknow. Aligarh Muslim
University, Aligarh. Motilal Nehru National Institute of Technology, Allahabad. Asian
Academy of Film and Television, Noida. Indian Veterinary Research Institute,
Izatnagar. Banaras Hindu University, Varanasi. National Institute of Technology
(NIT), Allahabad.
Upcoming national level institute projects include National Automotive Testing and
R&D Infrastructure Project, National Institute of Pharmaceutical Education and
Research, Institute of Hotel Management, All India Institute of Medical Sciences
Health --The state has a three-tier public healthcare infrastructure, comprising
Primary Health Centers (PHCs), health units, Community Health Centers (CHCs) and
sub-centers. As per Ministry of Health and Family Welfare, the state had 20,521 sub-
centers, 3,692 PHCs, 515 CHCs, 152 district hospitals and 133 mobile medical units
(MMU) to provide a range of preventive and curative healthcare services. The
figures are as on March 2012.
Health Infrastructure March 2012
Medical Colleges (including Diploma) 100
District Hospitals 152
Primary health centres 3692
Sub-Centres 20,521
Community Health centres 515
Ayurvedic Hospitals 1774
Unani Hospitals 210
Note :Ayurvedic as of August 2011, Government of UP. Source : MCI, IBEF Research
The state government allocated US$ 2,051.7 million in 2013–14 for various medical
healthcare and family welfare schemes
Sports -- The state has numerous sports stadiums and clubs in Noida, Lucknow,
Kanpur, Allahabad and Agra. The Department of Sports of the Government of Uttar
Pradesh has 56 stadiums, 49 multi-purpose halls and 26 swimming pools. Another
10 stadiums, 17 multi-purpose halls and six swimming pools are under construction.
The state has district sports promotion committees for improving the existing sports
infrastructure.
Uttar Pradesh: The Growth
Sector
7.3%7.0%
6.6%7.8% 6.9%
5.4%
9.3%
6.7%
8.6% 9.3%
6.2%5.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
FY08 FY09 FY10 FY11 FY12 FY13
Growth Comparison of GSDP vs National GDP (INR Bn)
Uttar Pradesh (%) India (%)
14%
10%8%
7% 7%6% 6% 6%
5% 5%
0%
2%
4%
6%
8%
10%
12%
14%
16%
UP Maharashtra Andhra TN WB Bihar Rajasthan Gujarat Karnatka MP
% State Contribution to All India Consumption
Uttar Pradesh, with the most population, is acknowledged for its rich endowment. It
offers a good mix of culture, religion, art & crafts, architecture, minerals, forests,
1.1 Introduction
Uttar Pradesh, besides being the most populous state (16.5% of National
Population) also boasts of the largest consumer base. With per capita income
gradually on the rise, it is fast emerging as a big market across industries.
Source : FICCI India Report 2014
Listed below are the key drivers pushing UP advantage:
1.2 Robust Infrastructure
The state boasts of a well development infrastructure with excellent inter and intra
state connectivity. It has the largest railway network in the country, spanning over
8,500 kms. Proximity to Container Freight Stations Dadri with facility of
warehousing with good connectivity to major ports in western India, vital for
EOU/SEZ (Export Oriented Units/ Special Economic Zones) also add to the
advantage. The onset of work on Dedicated Freight and Industrial corridors also
puts UP at the center of economic activity nationally, especially the Northern and
Eastern parts.
1.3 Big Consumer Market
With about 200mn people, and a growing per capita income, Uttar Pradesh postures
itself successfully as a large consumer market. Infact when stacked against all key
states for Total Consumer Expenditure, the state figures at the top with 14%
contribution to All India Consumption. (Source: NSSO)
1.4 Strong Human Base
Uttar Pradesh has a large base of skilled labour, making it an ideal destination for
knowledge-based sectors. The state is also abundant in semi and unskilled labor
pool. What adds to the attraction of abundance is the history of conducive industrial
relations in the state, having suffered minimal loss of man days on account of
industrial strife.
1.5 Location Advantage
Uttar Pradesh is surrounded by about 8 states: Uttarakhand on the north-west,
Haryana and Delhi on the west, Rajasthan on the south-west, Madhya Pradesh on the
south, Chhattisgarh and Jharkhand on south-east and Bihar on the east. In the North,
the state also shares its boundary with Nepal. Thriving on a well-developed
transport infrastructure, this puts UP at a great location advantage. Add to this the
advantage of being at the core of Dedicated Freight and Industrial Corridors, and UP
emerges as a favorable investment location.
1.6 Centre of IT/ITeS
Uttar Pradesh has fast emerged as focal point for all IT/ ITeS services including that
of software, electronics and BPOs. Many prominent industry players have their
offices & R&D centers in the state.
1.7 Favorable Policy Environment
Investor friendly environment, more rationalized and simplified procedure for
undertaking industrial investments make the state one of the favorable destination
for undertaking industrial ventures. The state offers a wide range of subsidies, policy
and fiscal incentives as well as assistance for businesses under the Industrial and
Service Sector Investment Policy, 2004 and Infrastructure & Industrial Investment
Policy, 2012. The state also has sector specific policies to induce growth – IT, Bio-
technology etc.
1.8 Rich Natural Resources
The state is a leading producer of a host of agri and poultry matter, making it a rich
source of raw material. Some of the notable produces include second largest
sugarcane producer, first in food grains production, largest mango producer, leader
in milk production etc. amongst others.
Uttar Pradesh also has ample reserves of coal, dolomite and gems. Other Important
minerals include, Sulphur and magnesite, silica sand and limestone.
It is also rich in cultural and handicrafts material like brass, silver etc.
Sector Analysis: IT/ ITeS &
Electronics
1.421.78 1.71
2.312.00
2.80
4.50
FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13
Uttar Pradesh IT/ITeS Exports
Uttar Pradesh has created a favorable investment climate especially for sectors such as
IT/ITeS, Infrastructure and Real estate, agro-based and food processing, light
engineering goods, sports goods, textiles, leather-based, tourism and biotechnology.
In this report, we have covered the IT/ITeS & Electronics and Real estate including
construction sector. We have delved on key areas in each of the sectors around the
current situation, economic performance, government policies, recent investments and
key issues faced by each of these sectors.
IT/ITeS
Country Overview
The IT/ITeS sector is a high impact sector for the economy as it contributes
approximately 8.1% to country’s GDP, employs more than 3.1 million people and is the
highest attractor of PE/VS investments among all other sectors.
State Overview
Uttar Pradesh is 6th largest exporter of IT products. In 2012-13, software exports from
the state by registered units through Software Technology Parks of India (STPI) totaled
USD 4.5 billion, accounting for approximately 6 per cent of India’s IT exports. Noida and
Greater Noida have earned recognition as major IT /ITeS destinations in the country
with a number of Special Economic Zones and Software Technology Parks. In fact, out of
the eight operational SEZs across Noida and Greater Noida, five are primarily dedicated
to IT/ITeS industries. The region is home to many prestigious companies such as IBM,
TCS, Adobe International, HCL, Nasscom, Birlasoft, Wipro, Polaris, Cadence, Convergys,
ST Microelectronics, Moser Baer, Xansa etc.
Key factors driving the IT/ITeS industry in the state, especially in areas such as Noida
and Greater Noida are favorable infrastructure, proximity to Delhi and availability of
vast talent pool. The State is home to several world class institutions imparting IT and
electronics education such as IIT Kanpur; IIM Lucknow, IIIT Allahabad, MNNIT
Allahabad; IMT Ghaziabad, etc.
Source: IBEF, NASSCOM
In USD Billion
5,500
6,0005,900
13.6%
14.1%
13.4%
13.0%
13.2%
13.4%
13.6%
13.8%
14.0%
14.2%
5200
5400
5600
5800
6000
6200
2010-11 2011-12 2012-13
Exports of Electronic Hardware (INR Crores, %)
Exports % ot TOTAL
Electronics
Country Overview
The electronics hardware production in India is estimated at USD 29.9 billion in 2014.
The market is majorly driven by accelerated demand for consumer electronics including
mobile phones, TVs, Computers and defense related electronic components.
State Overview
Several multinational companies such as LG Electronics, Samsung and Xerox have
established their operations in Uttar Pradesh, with Noida and Ghaziabad registering
maximum presence. Key factors driving MNC interest are access to large consumer
market in the state of UP and NCR region, supportive industrial infrastructure and
favorable policy and incentives offered by the state government. The state government
has taken several initiatives to develop and promote the IT & electronics industry in the
state. Some of the key initiatives include setting up of a dedicated body in the form of UP
Electronics Corporation Limited and introduction of the UP Electronics Manufacturing
Policy 2014.
Noida is fast emerging as a hub for the semiconductor design industry with many major
players having their offices and R&D centers. Some of the leading electronic companies
based in UP are Bharat Electronics Limited, LG, Onida, Moser Baer, etc. De-Core Science
and Technologies, a manufacturer of nano-opto-electronic devices, has plans to produce
LEDs from India's first advanced semiconductor lab at Noida Special Economic Zone.
Atrenta, a leading semiconductor company, relocated to an expanded R&D facility at
Noida in May 2013. Other global MNC such as Freescale, Mentor Graphics and Interra
Systems have also set up operations in Noida.
Source -escIndia
46%
16%
13%
14%
11%
Estimated Contribution of States to Exports of Electronic Harware (2013)
Tamil Nadu
Karnataka
Uttar Pradesh
Maharashtra
Others
Source -escIndia
In the last few years, the state government has taken several initiatives to develop and
promote the IT/ITeS and electronics sector. We have categorized the government
initiatives under 7 broad heads –
1. Ease of doing Business
2. Dedicated / Exclusive policy for IT/ITeS sector development
3. IT/ITeS Investments / Infrastructure Support
4. Incentives & Tax benefits
5. Focus on Tier 2 and Tier 3 cities
6. IT/ITeS MSME/ Start-up support initiatives
7. Skill Development initiatives
Ease of Doing Business
Single Window Clearance system- The state govt. has set up single-window clearance
system for entrepreneurs, corporate houses and other investors in order to attract
investment in the IT sector. Under this system, entrepreneurs get all kinds of clearances
such as building layout approval, environment permission and building completion
certificate at one platform.
To further ease the setting up process, the govt. introduced the single table clearance
system. This is a web-based single-table system for entrepreneurs who want to invest
and set up industries in the state. The main objective of this system is to ease the
setting-up process for entrepreneurs by enabling them web-based access for securing
licenses, registrations, NOCs, etc. from the concerned government departments.
Setting up of Policy Implementation Unit (PIU) for facilitating faster clearances –
A Policy Implementation Unit under the chairmanship of Principal Secretary IT,
Government of Uttar Pradesh, shall be set up to efficiently and smoothly assist the
entrepreneurs and other IT units to facilitate statutory clearances. The PIU will assist
the IT/ITeS/ESDM companies in getting necessary statutory clearances such us
Pollution Control, The Factories Act, The Shops and Establishments Act, The Payment of
Wages Act, Minimum Wages Act, Workmen’s Compensation Act, Contract Labour Act,
Power allocation etc.
Exclusive policy for promotion of IT/ITeS and electronics in the state
The state government approved the IT Policy 2012 and Electronics Manufacturing
Policy 2014 to catapult the state’s IT/ITeS and electronics sector. Moreover, the state
government has set up a state level Empowered Committee under the chairmanship of
the Chief Secretary to oversee the development of I.T. industry in the state.
IT/ITeS Investments / Infrastructure Support
The state government has launched several projects in the last few years to develop the
IT/ITeS infrastructure in the state. Few of the major projects undertaken includes a)
Setting up the IT Park in Lucknow with a project cost of USD 47.5 million, over an area
of 130,000 sq. mt., under Design-Finance-Build-Operate (DFBO) model. b) IT City,
Lucknow project is under progress on a 100 acre land in the city. This project is
expected to boost investment opportunities in ISP facilities, large Bandwidth options,
Broadband & Wi-Fi connectivity c) 23 SEZs have been notified for IT/ITeS industries in
the State. Currently, 3 IT/ITeS SEZs are operational in Noida and Greater Noida d)
Software Technology Parks at Noida, Lucknow, Kanpur and Allahabad e) Export
promotion industrial parks in Agra and Greater Noida
The State Government leverages various PPP models such as BOT, BOO and BOOT for
the growth of the IT/ITeS industry. Investments for PPP projects are also encouraged to
support facilities such as premier schools and hospitals to foster growth of IT projects
Incentives & Tax benefits
The state government provides various incentives to units in the IT/ITeS and
electronics sector. In the electronics sector, some of the incentives target the
establishment of Electronic Manufacturing Clusters (EMCs) and setting up of individual
Electronics Systems Design and Manufacturing (ESDM) units in these EMCs
Capital subsidies for ESDM units - A Capital Subsidy of 15% on fixed capital other than
land subject to maximum of INR 50 million shall be provided. Subsidy shall be given
only to the companies operating in EMCs and admissible on the capital evaluated by the
Banks/ financial institutions. This Subsidy shall be provided to first 10 companies on
the basis of their date of commencement of commercial operation i.e. when the first
business transaction takes place
EMC Infrastructure Development - State Government shall provide a subsidy equivalent
to 50% of the grant provided by the Central Government under National Policy on
Electronics, 2012 in terms of the cost incurred in developing infrastructure facilities
(Roads, Power, Water, Testing facilities, Social Infrastructure etc.) for EMC
development. This subsidy shall be applicable for first three EMCs in the state.
Incentives for filing patents – Electronics manufacturing MSME units can avail
reimbursement of up to 50% of actual filing costs subject to a maximum of INR 100,000
for domestic and INR 500,000 for international patents
Interest Subsidy – Interest on term loans and working capital loans would be subsidized
@ 5 percentage points for 5 years for the loans availed from Scheduled Banks/ Financial
Institutions subject to a maximum of Rs. 1 crore per annum per unit. For ESDM units the
tenor applicable is 7 years.
Stamp Duty – 100% exemption of stamp duty on purchase/lease of land/office space/
buildings for IT/ITeS and Electronic manufacturing clusters in Tier II/Tier III cities
provided operations commence within 3 years of purchase/lease.
Interest free loan - Interest free loan (repayable after 7 years) equivalent to the amount
of VAT and Central Sales Tax deposited or 10% of annual sales whichever is lower for a
period of 10 years from the date of commencement of business for IT/ITeS units having
capital investment of INR 5 crore or above.
In case of ESDM units, 100% tax reimbursement on VAT/CST subject to a maximum of
100% of fixed capital investment other than land (such as building, plant, machinery,
testing equipment etc.) for a period of 10 years. This reimbursement shall be done
through vouchers issued to beneficiary who shall then submit the same for redemption
claim.
Provision for Land - All IT/ITeS projects being setup in Tier II and Tier III cities will be
provided land at a rebate of 25% on the prevailing sector rates, on purchase of land
from State Agencies. For ESDMs, rebate of 25% on the prevailing sector rates shall be
provided either to EMC SPV or the companies within the EMC on purchase of land from
state Agencies
Registered IT units established in IT cities, Technology Parks, Software Technology
Parks will be allowed 100% additional Floor Space Index on the allowable Floor Space
Index up to a maximum of the FSI allowed for Residential/Office purposes (whichever is
more) in Tier II/Tier III cities.
Permission to IT/BPO units which employ a minimum of 20 and a maximum of 50
persons to establish unit anywhere irrespective of the master plan or land use
classification, barring specific land usage.
Permission to IT and ITeS companies to have 24x7 operations and employment of
women in all three shifts.
Uninterrupted Power Supply - IT/ITeS and ESDM units’ setup in IT Cities / IT Parks/
EMCs on Independent Feeder shall be provided uninterrupted power supply from State
Utility. The cost of provision of separate Feeder and separate Transmission Line will be
borne by the developer.
Plant and machinery for captive power generation- Special incentives are available to
The IT Parks and IT Cities that are interested in establishing captive power generation
plants having minimum capacity of 3 MW, and distributing the power only within
IT/ITeS unit zones
Employment generation - 50% of incentive for five years on expenditure on account of
contribution towards Employee Provident Fund and Employee State Insurance schemes
to the units employing at least 100 employees and retaining at least 75% locals for a
period of 3 years, subject to a maximum of 25% of Fixed Capital Investment.
Incentives on Case to Case Basis - IT/ITeS and electronics manufacturing projects
proposed between 100-200 crores and above are considered for special incentives over
and above the incentives provided above, by the Empowered Committee along with the
approval of the State Government.
Tier 2/Tier 3 cities
The state is working towards developing and improving civil infrastructure, such as
roads connecting IT hubs, cities and airports, to project them as favorable IT
destinations and attract IT investments
IT/ITeS MSME/ Start-up support initiatives
State government introduced a policy mandating minimum expenditure towards setting
up IT systems and software. As per the policy, each state department has to earmark a
minimum of 2% of its Plan budget for IT applications. Majority of the business is
expected to be sourced from IT/ITeS MSMEs
The State govt’s plan to adopt IT/ITeS is expected to further drive the sector growth,
especially the IT/ITeS MSMEs. The govt. plans to leverage IT to provide electronic
services to the citizens and digitize all information in the public domain such as official
gazette notifications, government orders, acts, rules regulations, circulars, policies, etc.
to enable their electronic access on the web.
Skill Development
The state government has announced plans of setting up an Indian Institute of
Information Technology (IIIT)
The State govt. is working towards establishing centres of excellence across the state so
as to facilitate exchange of ideas and promote collaboration with IT experts
The government aims to establish skill development centres based on the PPP model to
encourage the youth to improve IT capabilities
Govt. is working with NASSCOM to develop and map the training needs with industry
requirements
The government is collaborating with leading industry players through knowledge
centre programs to help skilled resources get employment in the industry
The Government is implementing an IT Literacy Enhancement Programme for its
employees to achieve 100% IT literacy in the Government
Recent Investments in IT/ITeS and electronics sector –
Uttar Pradesh, especially Noida and Greater Noida have witnessed some significant
investments from leading electronic and IT/ITeS players in the recent past. Some of the
important ones have been mentioned below -
Recently, the Uttar Pradesh government secured investment deals valued at INR
5,000 crore with companies like Samsung, Spice Mobiles, Lava and cellular
associations for setting up mobile manufacturing units in the state
Samsung Electronics invested INR 517 crore towards the expansion of its Noida
manufacturing plant which employs approximately 11,000 staff
Domestic handsets company Spice Mobile is investing INR 500 crore in two
plants in Greater Noida and Modipur, Rampur
India’s fourth largest smartphone vendor, Lava International, is investing INR
600 crores over a three year period towards developing the electronics
manufacturing cluster along the Yamuna Expressway
The Indian Cellular Association (ICA), Electronic Industry Association of India
(ELCINA) and India Electronics and Semiconductor Association ( IESA), plan to
invest of INR 1,000 crore each in the Electronic Manufacturing Clusters along
Yamuna Expressway and in Greater Noida
As per the Vision 2020 document released by Indian Cellular Association, Uttar
Pradesh has the potential to attract investment of about INR 72,000 crore by
2020 in the field of electronics system design and manufacturing.
Karbonn Mobile India Pvt. Ltd is investing INR 100 crore for setting up an
assembly line in Noida
Indian handset-maker Intex Technologies will invest INR 1,500 crore over the
next 3 years in manufacturing and research plant in Greater Noida.
Chinese handset maker Vivo is planning to start a manufacturing plant in Greater
Noida with an initial investment of INR 125 crore.
The Taiwan Electrical and Electronic Manufacturers' Association (TEEMA) is
planning to invest USD 200 million in electronic manufacturing sector in Greater
Noida
HCL Technologies is developing IT city in Lucknow under the public private
partnership mode with an investment of INR 1,500 crore over a 10 year period
IT services major Infosys is investing INR 1,400 crore in a campus proposed to
be built on 28 acres in Noida. The project is estimated to generate 35,000 direct
and indirect jobs.
IGATE Corporation, the US based IT solutions provider is setting up new facility
in Noida over 60,000 sqft, with employment potential of 550 people across two
floors.
The center plans to invest USD 10 billion in two computer chip manufacturing
facilities in India. One of them is being led by Jai Prakash Associates Ltd, which is
teaming up with International Business Machines Corp. (IBM) and Israel-based
Tower Jazz, to set up a Rs.29,000 crore unit in Greater Noida
Overview of IT/ITeS policies of select Top Performing states -
The Indian IT/ ITeS sector is a USD 118 billion industry, with approximately 70% of the
revenue is booked on through exports. This sector operates mainly through six major
states, including Karnataka, Andhra Pradesh, Maharashtra, Tamil Nadu, Haryana and
Uttar Pradesh. Major centers of the top IT/ITeS firms such as TCS, Infosys, HCL, Tech
Mahindra, Cognizant and Capgemini are based in these states. Further, a majority of
these centers are based in tier 1 cities of these states, such as Bengaluru, Chennai,
Hyderabad, Gurgaon and Noida
Percentage share of IT/ITes Exports by Region (2013)
Source-NASSCOM
The top performing states have taken several initiatives towards the development of the
IT/ITeS sector. We have analyzed few of the successful states around 5 parameters -
Infrastructure Support, Incentives & Tax benefits, Focus on Tier 2/Tier 3 cities, Support
to IT/ITeS MSMEs and steps taken towards Skill Development in IT/ITeS space
Karnataka: Overview
Karnataka is the largest exporter of IT/ITeS among all states with a 34% share in 2014.
The state is home to 47 IT/ITeS SEZs, three software technology parks (STPs),
dedicated IT investment regions (ITIR), and a developed network of physical, social and
industrial infrastructure.
IT/ITeS Investments / Infrastructure Support
The state government is targeting investments from Taiwan in IT/ITeS, especially IT
and hardware. In this regard, an exclusive hardware park for Taiwanese companies has
already been sanctioned near Bengaluru International Airport
The Government of Karnataka is currently in the process of establishing an ITIR through
public-private partnership near Bengaluru, which is expected to provide a total of 1.10
million direct jobs and 2.87 million indirect jobs
Efforts are in progress to make Mysore as the new IT destination. In this regard, STPI
plans to establish a 50,000 square feet incubation facility in the city
To foster the entrepreneurial support, the state government has established research
hubs, testing laboratories, and also provides funding worth up to 50% of the project
costs.
Incentives & Tax benefits
Entry tax (ET) exemptions on plant and machinery and capital goods are available to
IT/ITeS MSMEs, large IT projects and export oriented units,
An interest-free loan on VAT on investments worth INR100 million to more than INR 30
billion and 100% percent exemption from electricity tax/duty for the initial period of
five, four and three years for zones 1, 2 and 3
Tier 2/Tier 3 cities
The state govt. organizes investor’s conferences/ events to attract IT/ITeS investments
in tier 2 and 3 cities
With the focus on providing employment to rural youth, the ‘Rural BPO’ scheme was
launched and it already has 42 units functional under it
Start-up / MSME support
Various incentives are provided to IT/ITeS MSMEs under the Karnataka Industrial
Policy of 2009–14 to encourage and facilitate the establishment of MSMEs
The state has established innovation parks based on the PPP model and comprising
‘plug and play’ office space to provide modern technology, equipment and funding to
MSMEs
Skill Development
The state collaborates with industry players and educational institutes to establish
higher educational institutes and research labs; develop school and college curricula;
establish and promote e-learning centers as well as spread IT awareness among people
in semi-urban and rural areas
The state is working towards promoting Centers of Excellence in about 100 engineering
colleges across Bellary, Gulbarga and Shimoga districts
Maharashtra: Overview
Maharashtra contributes ~19% of IT/ITeS exports. To facilitate the development of the
IT/ITeS industry in the state, the Government of Maharashtra has made special
provisions for IT infrastructure development in its IT/ITeS Policy 2009
IT/ITeS Investments / Infrastructure Support
The state govt. has set up Incubation centres, especially for IT/ITeS MSMEs
Incentives & Tax benefits
Additional floor space index for IT/ITeS companies
Exemption from octroi /entry tax and other cess or tax
State govt. allows the establishment of IT/ITeS units (except IT and telecom hardware)
in any zone, including residential and no-development zones
Tier 2/Tier 3 cities
The state govt. offers land at low rates in Tier 2 and 3 cities, such as Nashik,
Aurangabad, Nagpur, etc. so as to encourage the establishment of IT parks and IT/ITeS
units.
Start-up / MSME support
50 percent reimbursement of the patent filing cost to IT/ ITeS MSMEs
Skill Development
Agencies such as The Maharashtra Knowledge Corporation Limited and The
Maharashtra State Board of Technical Education collaborate with industry associations
in the IT/ITeS space, such as NASSCOM, to initiate training-based certification and
placement programs
Employment-oriented institutes are established in low human development index
districts to impart IT skills
Tamil Nadu: Overview
Tamil Nadu is the third largest IT/ITeS exporter after Karnataka and Maharashtra, with
a 14% share.
IT/ITeS Investments / Infrastructure Support
The govt. promotes entrepreneurship spirit in the state by encouraging institutes to
establish incubators and introduce entrepreneurship as a subject
The govt. provides special incentives to IT/ITeS companies in Chennai, Tiruvallur and
Kancheepuram districts on a case-by-case basis
The govt. is working towards developing infrastructure in Coimbatore, Madurai, Trichy,
Tirunelveli, Hosur and Salem so as to promote them as ICT destinations. The govt. will
create at least one IT Park on an SEZ format in each of these cities.
Incentives & Tax benefits
Special tax incentives including capital subsidies and electricity tax exemption are
provided to IT/ITeS firms which Invest between INR 50–2,000 million and above,
provide direct employment to 100–400 workers and are located in tier 2 and 3 regions
50% exemption of the Stamp Duty and the Registration Fee is given at the time of
purchase of a land/ building for IT/ITeS industries.
The govt. has relaxed the floor space index (FSI) by as much as 100 percent for all
designated IT/ITeS parks across the state.
Tamil Nadu Electricity Board provides uninterrupted power supply to IT/ITeS units
whether set up in IT-ITES parks or in stand-alone locations
Tier 2/Tier 3 cities
The govt. provides incentives such as subsidy on capital and exemption from electricity
tax to all IT/ITeS units based on investments in fixed assets in tier 2 and 3 regions
An additional capital subsidy of 50 percent over and above the eligible limit is provided
to IT/ITeS companies in designated SEZs.
Start-up / MSME support
STPI is planning to set up four new incubation centres to boost the start-up ecosystem
in the state
No specific policies to support IT/ ITeS MSMEs, but the govt. provides various financial
and administrative incentives to IT/ITeS firms based on the size of investment, location
of the facility and employment generation
Skill Development
The Electricity Corporation of Tamil Nadu (Elcot) announced setting up of incubation
and training centres in Elcot’s SEZ for MSMEs in the IT sector;
The state govt. has proposed the inclusion of industry representatives in the syllabus
committee to align universities’ curricula with industry requirements
The govt. has constituted a special task force to help technical institutes transform into
centers of excellence
Issues / Concerns in the IT/ITeS sector -Listed below are some of the key challenges
faced by the IT/ITeS sector. The State government will have to work towards
addressing them so as to boost the contribution from this sector towards the state
economy
Noida faces significant competition from Gurgaon for IT/ITeS office space –
There are several factors which make Gurgaon a popular choice for setting up
office among IT/ITeS companies including proximity to IGI airport, availability
of ample office space for mid-sized and large players, accessibility of Rapid Metro
in most areas where offices are located, availability of social ecosystem built
around shopping malls – Bars and pubs, fancy and boutique restaurants that
boosts the work culture
As mentioned above as well, proximity to the airport is one of major reasons
driving IT/ITeS companies to lease / buy office space in Gurgaon. For the same
reason, the property prices and office rentals in Noida have been significantly
lower than in Gurgaon. Oversupply of office spaces may be another reason due to
which the rent and purchase price have gone down in recent times in Noida and
Greater Noida
Availability of an airport, good connectivity and lower rent than Delhi and
Gurgaon can help recover value for the office space market in Noida in future.
The start of the new airfield can benefit Noida and its extended surroundings by
driving the corporate demand for home and office space.
Some of the other issues which IT/ITeS units face are around the floor area ratio
(FAR) of plots and mixed land use norms for plots measuring 20,000 sq m and
above. Under the prevailing norms, the IT/ITeS units were mandatorily required
to construct 100% FAR in five years to get an occupation certificate from the
relevant authority. Further restrictive norms on mixed land use of IT plots are
another impediment. Consequently, more than 400 IT plots allotted in Noida and
Greater are Noida are lying idle.
However, in order to address this issue, the development authorities of Noida,
Greater Noida and Yamuna expressway recently met and have proposed some
policy changes. Under the proposed policy, the Noida Authority will provide
completion certificates to IT firms if 75% of total floor area ratio (FAR) of plots is
built within seven years of allotment. Other proposed policy changes include
permitting IT plot owners to use certain part of the IT plot for residential as well
as commercial purposes, for IT plots measuring 20,000 sq m and above. Another
proposed policy change is around allowing IT plot owners to sell residential,
commercial or institutional space reserved (25%) in their IT plots.
Sector Analysis: Infrastructure
including Real Estate
Infrastructure Overview
This section provide a detailed view of the infrastructure sector including real estate
and construction
Physical Infrastructure includes Transport Infrastructure, Power, Telecom and
Industrial Support Infrastructure.
Roadways: The State has an extensive network of Roads arid Bridges. During the last
five years, the expansion of the road system in Uttar Pradesh has been at par with the
National Average. Road infra plays a critical role given the size of the state and the need
to stay connected to its nine neighboring states and other parts of India. Some of the key
features of road infrastructure are-
The state boasts of 48 national highways.
The length of national highways running through the state accounts for over 8.5
per cent of the total National Highway length in India as per National Highways
Authority of India (NHAI).
Uttar Pradesh State Road Transport Corporation (UPSRTC) was established in
1972 to provide an economical, reliable and comfortable transport in the state.
The corporation has a fleet size of around 9,506 buses, of which 97 per cent are
on-road carrying 95.1 million passengers in a year. As per the body, the Annual
total income for the year 2012-13 was US$ 94.6 million
During FY14, seven projects were completed in the road transport infrastructure
services segment.
One of the noted Yamuna Expressway, a six lane (extendable to eight lanes), 165-
km long, controlled-access expressway, connecting Greater Noida with Agra got
operationalized. Besides reducing the travel time between cities, it also opens up
avenues for industrial and urban development in the region and provide base for
convergence to tourism and other allied industries.
Some further work has already received approvals from the central government,
such as four-laning of the Lucknow-Sultanpur section of NH-56 (under NHDP
phase IV) on a cost of US$ 218.9 million.
Roadways Fact Sheet Road Length (km)
National Highways 7,863
State Highways 8,432
Other District Roads 169.153
Rural Roads 86,827
As of January 2015. Source: Ministry of Road Transport & Highways, Directorate of Economic and Statistics, Govt. of
UP,IBEF Report
A total of 32 projects are expected to be completed by FY20. According to Udyog
Bandhu, investments worth 230 bn are planned for 2,500 km of state highway projects.
Moreover, a total road length of 6,730 km is identified as core network by World Bank,
of which 2,466 km has been developed by Uttar Pradesh Public Works Department
(UPPWD).
For improving the road infra, the State has formulated a detailed Road Policy for this
Sector. In this Policy a detailed framework has been provided for Private Sector
participation in the construction and operation of Roads. Bridges and Over‐Bridges
Rising investments in the state along with the state government’s initiatives towards
improving the road connectivity is likely to boost the road infrastructural domain.
Railways: Amongst states in India, Uttar Pradesh possesses the largest railway network
in the country spanning over 8,763 km. The total railway network spans over 8,800 kms
at the end of the year 2011-12. Various parts of the state get catered through 5 of the 17
Indian Railway zones. Lucknow is the main junction for 2 of these 5. This ensures good
intra-state connectivity also, amongst other measures.
Delhi Metro Rail Corporation (DMRC) already links the closer Noida and Ghaziabad
centres with Delhi. For Agra, Kanpur and Varanasi, a metro project is in progress under
Lucknow Metro Rail Corporation (LMRC).
The development of an Industrial corridor along the alignment of dedicated freight line
would create immense opportunities for employment and revenue generation in the
estate.
Airways - The State has already created a fairly well developed infrastructure in the
field of Civil Aviation. The state has six airports across its major centres, that of Agra,
Allahabad, Gorakhpur, Kanpur, Lucknow and Varanasi. Of these, only the latter two are
used for the international flight operations, rest are domestic.
As per Airports Authority of India, Lucknow airport received 2,312,291 passengers and
Varanasi airport received 826,282 passengers during April 2013 to March 2014
Some new airports have been proposed at various points in time. Notable mentions
include Meerut, Moradabad, Faizabad, Agra, Allahabad, Bareilly and Kanpur. Under
Infrastructure & Industrial Investment Policy 2012, an airport of international
standards is proposed to be established near Agra within the vicinity of Delhi Mumbai
Industrial Corridor. This will have the facility of dry cargo and an aircraft maintenance
hub alongside.
Also, the government has approached the Airport Authority of India for the up
gradation of Lucknow, Agra and Varanasi Airports, so that they could handle
International Charters and Cargo.
Power- The state had a total installed power generation capacity of 14,842 MW, as of
January 2015. As per 12th Plan, UP is poised to become a power surplus state, with
13000 MW additional capacity planned to be available in 5 years ending 2017. Further,
in Budget 2014-15, a sum of USD 715.3 million has been proposed for power generation
and distribution schemes.
9,247 9,984 10,458
13,05414,079 14,375 14,842
0.0
2000.0
4000.0
6000.0
8000.0
10000.0
12000.0
14000.0
16000.0
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15*
Installed Power Capacity (MW)
Source : Central Electricity Authority, Department of Infrastructure and Industrial Development
There are 10 hydro power generation projects being undertaken at various places in
Uttar Pradesh. Thermal power project of 2x250 MW capacity will be set up at Gonda Out
of Sasan ultra mega power project’s 3,960 MW, 12.5 per cent has been installed in Uttar
Pradesh.
State Owned Power Companies
Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited (UPRVUNL) Thermal Generation
Uttar Pradesh Jal Vidyut Nigam Limited (UPJVNL Hydro Generation
Uttar Pradesh Power Corporation Limited (UPPCL) Transmission
Paschimanchal Vidyut Vitran Nigam Limited (PVVNL) Distribution
Purvanchal Vidyut Vitran Nigam Limited (PuVVNL) Distribution
Madhyanchal Vidyut Vitran Nigam Limited (MVVNL) Distribution
Dakshinanchal Vidyut Vitran Nigam Limited (DVVNL) Distribution
Source : IBEF Report, News Articles
The state is still evaluating and testing the Joint and PPP model.
Joint Sector/ PPP UP’s Share MW
Ghatumpur TPS (UPRVUNL &Naveyli Lignite) 1275
Meja (UPRVUNL & NTPC) 916
Bara (JP Asso.) 1782
Source : UPPCL, UPNEDA
Under Infrastructure & Industrial Investment Policy 2012, besides micro hydro-electric
power generation through nonconventional energy, other power generation sectors like
solar, biogas, biomass, and garbage will be specially promoted.
Telecom - According to Telecom Regulatory Authority of India (TRAI), Uttar Pradesh
has nearly 132.3 million wireless subscribers and 1.0 million wire-line subscribers, with
a tele-density of 59.3 per cent as of January 2015.
The state has a vast postal circle (17,667 post offices) divided into six regions:
Allahabad, Agra, Bareilly, Gorakhpur, Kanpur and Lucknow. Proposed investments by
telecom companies are scheduled to come up at the 100 acre electronic manufacturing
cluster (EMC) in Noida. IT major Samsung India is in a process of plant expansion and
planned to spend US$ 96.0 million towards the expansion of its manufacturing unit in
Noida.
Telecom Infrastructure Uttar Pradesh
Wireless Connections 132,298,196
Wire-line connections 1026,266
Broadband Subscribers 612,550
Tele-density 59.3%
Source: TRAI, Department of Telecommunications, Annual Report 2012-13, IBEF Research Report
The state govt. has taken several initiatives in the past to develop telecommunication
facilities - The state Industrial Development Department has been nominated as the
Nodal Agency for this purpose. The State Government also provides free land to the
Telecom Department of Govt. of India, for ensuring setting up Telecom facilities.
Industrial Infrastructure - Uttar Pradesh has taken a lead in improving overall
infrastructure and logistical facilities in order to support the industrial growth, and is
fast becoming an industrial hub for Northern India. The Infrastructure and Industrial
Investment Policy-2012 is a further step in the direction.
As per D&B Research, Uttar Pradesh ranks 3rd in terms of state-wise number of MSME
enterprises nationally. A total of 1.8 lakh MSME units were set up during the 11th Five
Year Plan and in FY12, a total of 33,532 Small Scale units were established. Under a
central government scheme, integrated industrial development centers have been
established to encourage development of micro and small industries at Kosi Kotwan
(Mathura), Etah, Banthar (Unnao), Baghpat, Masuri Gulawati (Ghaziabad), Kursi Road
(Barabanki) and Chandauli.
Overall, the state has a robust industrial infrastructure, including 15 industrial areas, 12
specialised parks, four growth centres and Industrial Infrastructure Development
Centers (IIDC). As of September 2014, the state had 22 notified Special Economic Zones
(SEZs).
The state has further proposed 40 IT/ITeS parks (apart from IT SEZs), two biotech
zones and a knowledge park. Development of integrated agro/food processing zones
has been proposed at Hapur, about 54 km from Delhi. Integrated logistics hubs (free-
trade warehousing zones) have been proposed in collaboration between IL&FS, Mineral
and Mining Trading Corporation and Mitsui (Japan). Thus so far, the state government
has recommended 56 SEZs proposals to the Government of India. Of these proposals, 21
SEZs have been notified.
74%
3%
20%
3%
Sector Split of Approved SEZa
IT/ITeS
Textile/ Handicraft
Multiple Product
Non- Conventional Energy
Uttar Pradesh is the biggest beneficiary of the Eastern Dedicated Freight Corridor
project, with a 57.0 per cent share in the total length of 1,839 km. Infrastructure &
Industrial Investment Policy was launched by the Uttar Pradesh Government to
strengthen the industrial infrastructure in the state.
Delhi Mumbai Industrial Corridor (DMIC) corridor is also likely to immensely help the
cause of industrial infrastructure development.
The flagship project under DMIC is to drive manufacturing activity in the Region. In the
first early bird project, Integrated Industrial Township is to be developed on around
740 acres of land in Greater Noida. The main feature of the project is that the proposed
industry cluster is planned with all supporting amenities — residential, education,
commercial, research, offices and administration. Greater Noida being close to the
national capital, projects under DMIC will not only provide world-class infrastructure
facilities to industries in western UP but will also facilitate access to global markets.
SEZs: Uttar Pradesh has approved 31 SEZs in the state to cater to various sectors such
as IT/ITeS, textiles, handicrafts, and non-conventional energy. This is led by IT/ITeS
which accounts for nearly 74 per cent of the approved SEZs, followed by multiple
products (20 per cent), textile/handicrafts (3 per cent), and non-conventional energy (3
per cent).
Source:
sezindia.nic.in
A compilation of operational SEZs in Uttar Pradesh is provided below:
Operational SEZs in Uttar Pradesh
Name/ Developer Area Primary Industry
Noida SEZ Noida Multi-product
HCL Technologies Noida IT/ITeS
Moser Baer SEZ Greater Noida Non-Conventional Energy
Wipro Ltd. Greater Noida IT/ITeS
Moradabad SEZ Moradabad Handicrafts
Seaview Developers Ltd. Noida IT/ITeS
AachvisSoftech Pvt. Ltd. Noida IT/ITeS
NIIT Technologies Limited SEZ Greater Noida IT/ITeS
Arshiya Northern FTWZ Limited Khurja, Bulandshahr FTWZ
Source : IBEF Research
Real estate Overview
The Investments in the real estate sector from various public and private sources across
India have declined by 6% from INR 15.2 lakh crore in 2011-12 to INR 14.3 lakh crore
in 14-15, as per the an ASSOCHAM report. Of the overall investment in real estate in 14-
15, private sector accounted for 85% share, while the government/public sources
accounted for remaining share of 15 per cent. Real estate projects involving about 76%
of the total investments attracted by the sector remained non-starter during the period
between 2011-12 and 2014-15.
On a state-wide analysis, in 2014-15, the state of Uttar Pradesh received the second
highest investment in real estate after Maharashtra. Of the overall share in total
investments, Maharashtra received the highest investment in real estate at 21%
followed by Uttar Pradesh (14%), Gujarat (13%), Karnataka (12%) and Haryana (8%)
Maharashtra, 21%
Uttar Pradesh ,
14%
Gujarat, 13%
Karnataka , 12%
Haryana , 8%
Others, 32%
Real Estate Investment (% Share in 2015)
~ 2 Lakh Crore
Recent developments
The recently released list of 98 cities that would be developed into smart cities includes
13 cities from Uttar Pradesh. Under this central government scheme, these 13 cities
would get central assistance of Rs 200 crore in the first year, and Rs 100 crore each in
the next three years. Moreover, this will open up a big investment opportunity in these
cities for both domestic and international investors
Lucknow is fast emerging as a major reality hotspot. The rating agency CRISIL recently
ranked it as one of the top ten fastest growing cities for real estate. The government
recently announced five new integrated township projects on the outskirts of Lucknow.
The state govt. has even cleared licenses of five developers to develop these satellite
townships. Developers which have evinced interest in developing these smart
townships include Rohtas, Shri Colonizers & Developers, M/s Tulsiani Construction &
Developers and Omega Infra build.
An Abu Dhabi-based real estate company, Tasweek Real Estate Development recently
formed a strategic partnership with India's MAMS Holdings Group to establish 'Smart
City' projects in India.
Government initiatives to develop and maintain infrastructure –
The state government accords the highest priority towards the creation and
maintenance of high quality infrastructural facilities. On account of its high importance,
the Cabinet Committee under the Chairmanship of the Chief Minister acts as apex body
for decisions on Infrastructure related projects.
The focus on Infrastructure Sector in the state is based along the 3 pillars mentioned
below -
1. Development of Infrastructure, through Private Sector participation – Private
Sector Participation is encouraged in Infrastructure Projects, through
Infrastructure Initiative Fund. This fund also seeks participation from
multilateral agencies and International Financial Institutions
2. Comprehensive and rapid development of selected Geographical Corridors, with
high quality infrastructural facilities –While the State is committed, to the
balanced development of all the regions of the State, the focus is also on
developing certain specific locations, for the full realization of their industrial
potential. In this context the State is developing Industrial Corridors in the
various regions of the State in a phased manner. In the first phase, these
Industrial corridors will be developed - a) NOIDA‐ Greater NOIDA‐ Ghaziabad‐
Gautama Buddha Nagar b) Meerut ‐Moradabad‐Bareilly c) Agra‐ Aligarh‐
Firozabad‐Khurja (Bulandshahr)‐Kosi (Mathura) d) Lucknow‐ Kanpur
e)Allahabad‐Bhadohi‐Varanasi ‐Mirzapur f) Gorakhpur‐Basti‐Deoria g)
Jhansi‐Lalitpur‐Jalaun.
3. Up‐gradation of existing Infrastructure! Facilities. Infrastructure Initiative Fund -
The state government accords the highest priority to the upgradation of the
existing Industrial Infrastructure. To achieve this, assessment of the existing
infrastructure is being carried out to identify the gaps and inadequacies so that
an action plan can be developed to address them. Also, for the maintenance of
Industrial Estates, Industrial Cooperative Societies are being constituted under
the control of Directorate of Industries. The Government supplements the
contributions made by these Industrial Cooperative Societies up to a ceiling of
Rs. 10 lacs. The state government is also leveraging infrastructure related funds
to develop internationally competitive Infrastructural facilities in major
exporting areas of the State
To succeed on the focus areas mentioned above, the state government formulated the
Infrastructure and Industrial investment policy 2012 to develop the physical
infrastructure in the state.
The key features of the policy include –
1. Fiscal incentives to develop physical infrastructure –
a. Stamp duty exemptions - For the development of industrial
infrastructure, the state government allows up to 100% exemption from
Stamp Duty to new Industrial units on purchase or lease of Govt. land or
Private Land for select sectors and select regions
b. Infrastructure Interest Subsidy Scheme @5% for 5 years – Under this
scheme, the industrial units which take loan for developing infrastructure
facilities for self-use such as – road, sewer, water drainage, power line
etc., get reimbursement at the rate of 5% on interest rate, maximum up to
INR 1 crore for a period of 5 years
c. Industrial Quality Development Subsidy Scheme @5% for 5 years is
available to investors on setting up of R&D infrastructure such as Testing
Labs, Quality Certification Labs and Tool Room
d. Viability gap funding scheme (VGF) in PPP projects - Under the VGF
scheme, State government provides grant of 20% of project cost from
central government and a maximum of 20% from its own resources to
make the project viable.
2. Other Infrastructure development initiatives –
a) Enhance the amount of available land for industrial use through the
utilization of barren, unused and un-irrigated public land. UP government
has a successful land acquisition policy. Under the policy, the land is
purchased from the land owners through a mutual agreement by offering
a lucrative purchase price to the owner, up to 4 times the circle rates in
rural area and twice in urban areas.
b) Compilation and dissemination of land bank information to investors
through web-enabled facility; Simplification of land allotment and land
use change procedures
c) Encouragement and facilitation to private sector for development of
Industrial areas and estates along with permission to foreign direct
investment in infrastructure development.
d) Development of roads, expressways, eco-friendly metro or rapid transit
systems, 4-lane roads connecting all district headquarters to State capital
and development of new industrial areas along these roads and
expressways.
e) Development of Airports on PPP model near Agra in the vicinity of DMIC
to provide facility of dry-cargo transport along with an aircraft
maintenance hub
f) Strengthening and augmenting energy infrastructure, viz. Generation,
Distribution & Transmission through a multi-pronged strategy including
state, joint and private sector participation.
g) Development of industrial infrastructure - setting up of IT Parks, Mega
Food Parks, Logistic hubs, Plastic city, Biotech industrial parks, Integrated
Industrial Townships, etc.
3. Incentives offered to industrial units for setting up in industrial corridors / zones
a. State Government offers several incentives to industrial units for setting
up operations in the industrial zones, thereby augmenting the
development of industrial infrastructure. These incentives include stamp
duty and tax exemptions, interest free loans, capital subsidy schemes and
special incentives for mega projects, etc.
Some states have introduced new and innovative ways to address the issues prevailing
in the Infrastructure and real estate sector. The UP government can consider to
incorporate some of these practices in the state policies to tackle the problems
pertaining to the sector.
Relaxation of FSI norms in real estate to boost industry – State governments are
increasing relaxing the FSI norms to boost the industry. Recently, the
Maharashtra govt. hiked the floor space index (up to 200% of the base FSI) for IT
and IT-enabled services (IT/ITES). FSI is the ratio of the total permissible built-
up area to the size of the plot. It is an indicator of how high a developer can build.
Besides, higher FSI, the townships and other IT/ITES units have also been
offered exemptions from stamp duty, electricity duty, property tax, octroi or LBT,
VAT and works contract taxes
Policy of seeking participation of private builders to provide affordable housing -
The Maharashtra govt. is expected to introduce a new policy that will make it
mandatory for private builders to transfer a certain housing stock to
Maharashtra Housing and Area Development Authority (MHADA). This policy
was earlier applicable to Mumbai only. Under this policy the state govt. will
purchase housing stock from the developer at a pre-fixed rate and will sell them
to the economically weaker sections of the society at affordable rates
With regards to rental housing, affordable housing scheme, 2013, the private
developers are offered additional FSI as an incentive for providing apartment’s
equivalent to 25% built-up area to Maharashtra Housing and Development
Authority (MMRDA) free of cost for rental housing. These houses are allotted by
the state agencies to eligible low income group households
Leverage PPP models for Affordable housing projects - States such as Gujarat are
leveraging PPP models to meet the requirement of affordable housing. The PP
deals are structured in a way that it is viable for the private players. In many
cases, the land is provided by the Gujarat govt. and the developer receives a fixed
compensation for construction
Another model that is followed with the help of private partnership is the
Transfer of Development Rights (TDR). Under this model while the developer
constructs an affordable housing project, in lieu of that, he gets the right to
develop and sell another parcel of land
Separate regulator for the real estate sector for safeguarding consumer interests
– States such as Kerala and Maharashtra are expected to announce a separate
regulator for the real estate sector that will monitor and control construction
related activities including sale and maintenance of residential apartments,
commercial complexes, office structures and IT/ITES buildings. Under the
proposed law, the developers and real estate brokers will have to register
projects with the authority before going for the advertisements, seeking
investors or customers. The proposed regulator will resolve consumer
complaints regarding inferior quality of construction materials, delay in
completing projects and violation of any condition in the agreement. The
authority would have the right to cancel a developer’s registration if there are
grave complaints regarding the completion of a project
Setting-up vertical structures to create space for MSME units in existing
industrial estates -The Gujarat Industrial Development Corporation (GIDC), the
nodal agency for industrial development in Gujarat is designing vertical / multi-
storey structures in the existing GIDC industrial estates of Ahmedabad and
Rajkot which are constrained for space. The principal purpose for creating these
multi-storey strictures is to provide space to MSMEs, which generally find it very
difficult to set up operations in such locations due to lack of space, high rentals,
etc.
Key Issues: Infrastructure & Real Estate – The state government should focus on
addressing these issues to drive growth in this sector
Lack of robust market assessment and due diligence: There have been
instances of implementing agencies erring in assessing the demand, at the
preparation stage. For instance, sometimes assumptions that the industrial
incentives available for the area would continue for the long term are taken
which does not happen in reality. The withdrawal of the incentives earlier
compared to what was projected can impact viability significantly. On the other
hand, in certain projects, demand is wrongly estimated. Ghanauli-Dehradun
proposed railway line is a case in point. The Rs.37 billion project was stalled
after a survey report found that the route was not viable.
Lack of Funding: Constructing a kilometer of highway can cost Rs 8-15 crore,
depending on the region and on whether it is a two-, three- or four-laning
project. Developers are still largely dependent on domestic financial institutions
for funding. The corporate bond market is barely developed and external
commercial borrowings are not a viable option. It's not cost-effective because
most road projects are rated BB or BB+. The smaller developers find financing
further difficult without a promoter guarantee. The same is true not only for
Infrastructure but real estate sector as well.
Due to lack of initial stage funding for many projects, real estate developers are
forced to infuse expensive capital during land acquisition and early stages of the
project. This bears a significant impact on the overall cost of the project.
The project lifecycle of a real estate project has increased considerably over the
last few years. A real estate project has a lifecycle of about 7-8 years (from start
till possession), but many funding options offer a maturity period of 4-5 years.
This often results developers relying on informal private lending at high cost,
especially at the time of project conceptualization and land acquisition.
The credit to the real estate sector has increased at half the rate of the
infrastructure sector in the last 7-8 years. Though, the banks and NBFCs have
provided the much needed respite to the real estate sector by contributing
towards meeting the gap created in the flow of domestic and foreign equity,
there are several restrictions imposed on banks by the RBI to limit their rising
exposure to the sector citing high risk, especially in the light of global financial
crisis in 2009.
Inadequacy of PPP: It has been observed, that the per capita income of the state
plays a crucial role in attracting private investment in PPP projects. This means
that road projects located in rich states can be expected to attract PPPs, in the
form of BOT toll as well as BOT annuity contracts. So, private sector participation
is likely to help provide more and better infrastructure in rich states like
28.9%
22.7%19.9%
17.3% 16.6% 15.4% 14.9%12.4%
10.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
West Bengal HP Orissa Jharkhand UttarPradesh
Chhatisgarh AndhraPradesh
Maharashtra Telangana
States with Stalling Rate>10%
Haryana, Gujarat, Punjab, Tamil Nadu, etc. In lower per capita states like UP,
private sector is likely to invest only in projects if they are located very close to
some big city.
The 302-km Agra-Lucknow Expressway, a flagship road project, was launched
with an estimated cost of nearly Rs. 15,000 crore. It is being funded by the state
under the engineering, procurement and construction (EPC) route, after the
project failed to take off under the public-private partnership (PPP) model.
Lengthy Approval Process: While the steps are being in taken in the right
direction of easing ‘doing business in the State’, the process so far has been a
tedious one involving over 30 approvals which generally takes about two to
three years.
For the contractor or investor, this increases construction cost by 20 to 30 per
cent in addition to causing inefficiency. This also reduces capital churn as
gestation period increases and brings down the overall viability for the investor.
As per an Indian Express Report, delay in getting environment clearances, one of
the other major reasons for stalled projects during the last couple of years,
accounted for the scrapping of projects entailing estimated investments of
Rs.20,700 crore during 2014-15.
Unfavorable market conditions: The fluctuation in the rupee, and the weak
economy in 2013, had forced some foreign funds to exit the market. With a slow
growth economy and weakening demand, there has been a pile up of unmoving
inventory in case of Real Estate.
While there has been a pick-up in the number of funds going in for buy-outs of
income generating office buildings or ready assets but there is no pick up in pace
in funding coming to developers for their ongoing projects, causing them to stall
and thereby further increasing cost for the developers.
Project Delays, especially on account of Truant Contractors: Delays in highway projects have been a long-standing problem, with Ministry data from the previous session of Parliament showing that a total of 125 projects relating to the Golden Quadrilateral project are delayed. Of these, 32 have been delayed by more than five years.
Source: CMIE
Delays can be for various reasons including weather, violence and, often, truancy by contractors. Bihar initiated action against nine contractors found guilty of delaying construction, while Uttar Pradesh and Himachal Pradesh initiated action against four contractors each.
Time and cost overruns: Many projects have been built at a much greater cost
than initially envisaged. There are various reasons for such overruns like higher
cost or time for land acquisition post-award changes in the scope of the project
etc. Sometimes with the project spread across 2 states, various government
agencies made demands for changes in the project alignment and design that
result in a substantial change in scope, project cost and consequent delay in
project execution.
Further on account of weakening rupee and rising inflation, the cost of inputs has
grown manifold, and several indirect taxes have been levied which add up to the
cost. Shortage of trained workforce, inefficient cost management, etc. affect the
financial sustainability of projects, leading to lower investor attraction/
Tax: Increase in rate of service tax to 14 per cent will make real estate a bit more
expensive and impact sales as it would wear down purchasing power of an
average consumer.Real estate developers are also concerned about increase in
service tax on construction and excise duty on input goods, as also increase on
petrol and diesel coupled with increase in freight rates on cement will lead to
rise in construction costs.
Land Acquisition: While the process for the same has been recently simplified
in the state through a mutual agreement, the fight for land banks, the official
added, was going to become more intense now. In February-March, the Narendra
Modi government had sent a communication to the state governments asking
them to develop land banks by the middle of the year.
Land acquisition and approval stage account for about 2 to 4 years, and 20 – 40%
of the total project cost in urban peripheries, and as high as 50-60% in
metropolitan and few tier 1 cities. Moreover, global investors are cautious in
funding due to the high risks involved on account of lack of clear land titles and
frequent delays in approval processes. Consequently, the cost of funds at this
stage is highest even up to 24% to 30% per annum.
The slew of recent measures and policies like Simplified Land Acquisition Process,
Single Window Clearances, Sector Specific Policies etc., indicate the strong commitment
of the state towards making it an investor hub. Measures like Single Table Clearance
need to be backed by effective implementation so it doesn’t remain valid only for
information and query resolves but also works as the sole contact point for approvals
across project sizes. The government will also need to work with emerging sources of
finance and financing models to ensure adequate supply of funds for the infrastructure
projects.
Overall, in the last one year or so, the sector has garnered strong interest on the back of
improving macro-economic condition and confidence. The investor interest is likely to
pick up further with introduction of REIT by Securities and Exchange Board of India,
which will be focused on investment in rent-yielding properties. Recent relaxation of
FDI norms, development of smart cities, easing of external commercial borrowing
norms for affordable housing are all positive steps for the sector. This new move is
likely to boost investor sentiment and increase investment flow.
The various proposals announced in the recent budget for this sector as well as the
finalization of various policy initiatives taken for this sector will aid in faster recovery of
the sector.
Overall Facilitation to attract
investment
4.1 PPP
Developed infrastructure accelerates the development of the state, having direct impact
on industrialization and investment. A large state like Uttar Pradesh essentially requires
enormous investments in order to match international standards of infrastructure
facilities. Therefore, for improved quality of infrastructure facilities, faster
implementation of projects, optimal risk allocation between the State Government and
Private Participants and to meet out additional capital requirement for investment in
infrastructure, it has been considered prudent to invite & encourage private
participation on a large scale for expeditious development of infrastructure facilities. In
Uttar Pradesh, various PPP projects in different segments like expressways, roads,
energy, transport, education, urban rejuvenation and service sector etc. are already
underway and more are open for bidding. The State leverages various PPP model like
BOT (Build-operate-transfer), BOO (Build, own, operate), BOOT (Build, own, operate,
transfer) etc. for projects which minimize the initial risks of introduction and
subsequently the growth of the project. .The state has issued comprehensive, self-
explanatory guidelines to give impetus to investments by ensuring transparency and
standardization. Key PPP Projects in the recent years:
Project Name PPP Type Project Cost
(USD Mn) Stage
International Airport, Kushinagar DBFOT 58.5 Construction
Moradabad-Bareily Road BOT-Toll 413.7 Construction
Ghaziabad-Aligarh Road Project BOT-Toll 238.0 Construction
Bareily-Sitapur Road BOT-Toll 407.0 Construction
Muzaffarnagar-Haridwar BOT – Annuity 229.5 Construction
Gorakhpur Bypass Project on NH-28 BOT – Annuity 135.4 Construction
Gwalior-Jhansi Road Project BOT – Annuity 150.0 Construction
Bara to Orai BOT – Annuity 131.3 Construction
Road Stretch (50 km) between Jhansi-
Lalitpur on NH-25/26 BOT – Annuity 91.7 Construction
Merrut-Muzzaffarnagar Toll Project on NH-
58 BOT- Toll 139.3 Construction
Lucknow-Sitapur Road BOT- Toll 67.1 Completed
Jhansi-Lalitpur BOT – Annuity 68.0 Construction
Agra to Bharatpur on NH-11 BOT- Toll 40.6 Under operation
Source : IBEF Research
Proposed PPP Projects/ Investments:
Department No. of Projects Project Cost (USD Mn)
Yamuna Expressway Development Authority 1 1909.2
UP Expressways Industrial Development Authority 9 16,084.2
Housing and Urban Planning 3 136.2
UP State Highways Authority 19 2227.8
UP Power Corporation Ltd 19 20,456.9
Department No. of Projects Project Cost (USD Mn)
Energy-UP Jal Vidyut Nigam Ltd 10 66.3
Non-Conventional Energy 11 22.1
Tourism 7 169.4
Urban Development 31 243.0
Transport 2 858.0
Information Technology and Electronics (17909 CSC) 1 27.6
Source : IBEF Research
4.2 Single Window Clearance
The state already has a single window system in place, with limited application.
Currently it works as a single window for dissemination of information to prospective
investors, who have to interact with individual departments directly for getting
clearances.The proposed system would entail facilitating onetime payment of fee/levies
and common application form at the single window counter, which would be fronted by
UP industry interface ‘Udyog Bandhu’. This process is said to begin with large sized
investment proposals and will later span all investments coming to the state
There is also a provision for a web-based single-table system for entrepreneurs who
want to invest and set up industries in the state. The main objective of the system is to
facilitate the entrepreneurs to access, fill up and print the required forms from the
website and submit these along with enclosures, required fee, etc., in respective District
Industries Centres/State Udyog Bandhu. The following are the key highlights of the
single-table system:
Timely issuance of sanctions, approvals, NOCs, registration, licenses and
certificates by the concerned departments.
The single-table system, available at the website, could be examined and
processed irrespective of the location of officials or the entrepreneur.
Data monitoring and progress tracker
4.3 Investment Promotion
The state has worked towards providing a friendly eco-system for the Industries and
Business to attract investment and thrive. While there is a provision and movement
towards single window clearance system as discussed in the previous point, a
governance structure is also in place.
Udyog Bandhu is an organization of the Government of Uttar Pradesh, dedicated to
facilitate investment in the industrial and service sectors. It has emerged as the major
interaction centre for entrepreneurs and has been organizing high-level conferences on
industry-related issues.
The unit participates in various national and international conferences, exhibitions and
expositions. It has a three-tier structure as follows: District-level Udyog Bandhu
functions under the chairmanship of the District Magistrate. Divisional-level Udyog
Bandhu functions under the chairmanship of the Divisional Commissioner. State-level
Udyog Bandhu meetings are held under the chairmanship of the Chief Minister.
The government has dedicatedly worked towards ensuring a simplified business
process, below is a snapshot of key investment promotion offices, key approvals etc.
Key Investment Promotion Offices:
Agency Description
Directorate of Industries
Executive arm of the Industries Department Engaged in implementation of government policies for
all-round development of industries in the state. Registers various units (small scale industries,
biotechnology units, IT parks, etc.). Grants licences/permissions to various entities.
UP State Industrial
Development Corporation
Responsible for development of industrial areas Executes civil construction works for government and
public sector organisations Responsible for acquisition of land on demand for large
projects. Responsible for development of integrated infrastructure
industrial townships.
Department of
Infrastructure & Industrial
Development
Development of Industrial Infrastructure Responsible for promotion of various grants, assistance
for industrial and infra development
Key Approvals Required:
Approval and Clearance Required Departments
Prior Setting up the unit
Registration Industries Department
Allotment of land/shed Industrial Development Authority
Permission of Land Use District Authorities
No-Objection Certificate (NOC) under the Water and
Air Act Uttar Pradesh Pollution Control Board
Approval for construction activity and building plan Uttar Pradesh Urban Development
Authority
NOC Fire Department
Provisional Trade Tax registrations Central and State Excise Departments
Registration under Central Sales Tax (CST) Act Central and State Excise Departments
Before Commencement of Production
NOC under the Water and Air Act Uttar Pradesh Pollution Control Board
NOC Fire Department
Permanent Trade Tax registration under UP Trade
Tax Act, 1948 Central and State Excise Departments
Registration under CST Act Central and State Excise Departments
After Commencement of Production
Registration Industries Department
Cost of Doing Business in Uttar Pradesh:
Cost Parameter Cost Estimate
Industrial land (per sq m) USD 63 to 168 (by allotment in Greater Noida)
USD 80 (Agricultural land by allotment in Gr. Noida)
Office space rent (per sqft
per month) USD 0.5 to USD 2.2
Power cost (per kwh) Commercial: US 10.3 cents
Industrial: US 7.8 cents to US 9.6 cents
Labour cost (minimum
wages per day) USD 2.7 to USD 6.3
Source : IBEF Research
UPIGRS (Industrial Grievance Redressal system)
This e-governance initiative provides a seamless interface for entrepreneurs to get their
issues resolved quickly.
Key Features:
An investor friendly online platform for submitting grievances
A bridge between entrepreneurs and departments
Increases transparency
Augments ease of doing business Enables entrepreneurs in tracking of their
issues with auto-generated a Unique Token Number (UTN)
Regular monitoring at higher level of Udyog Bandhu
More effective coordination with departments
Reinforces investors’ confidence Enhances accountability
4.4Skill Development
UPSDM (Uttar Pradesh Skill Development Mission) has focused its work in the state by
providing the state youth with skill training choices relevant to them. The training is
provided at a reasonable cost and within reasonable distance from their residence.
Centres have the facility to give professional counseling to help candidates make better
career and skill training choices based upon their interest and aptitude.
Mission
To integrate efforts of various departments of the State and Central Government
organizations engaged in providing skill development training and make available
employment oriented and placement linked training in vocational skills to 45 lakh youth
in the age group of 14 to 35 years by 2016-17,
Key Strategies
A System Integrator by the name of Uttar Pradesh Skill Development Mission
(UPSSDM) to link all skill development in a sustained manner, across various
sectors and departments of the State Government.
Up-gradation of Government ITI/ITCs/ Polytechnics: In addition to setting up
newer training infrastructure, there is also a plan towards improving existing
training infrastructure in Government Institutes through filling up vacant
positions of instructors/trainers in Government run ITIs, regular review of the
functioning of Institute Management Committees (IMCs) of ITIs under the PPP
scheme, and rationalization of courses in Government run ITIs.
Engaging with Private Sector: The policy enables long term partnerships (3 to
4 years) with reputed private training providers by empaneling them on the
basis of technical qualifications and be paid notified training costs linked to
placement. The method of empanelment, assignment to districts and allocation
of courses to training providers will be made following a transparent
methodology.
Addressing the need for specific vulnerable groups:The program caters to
specific targets for Women, SCs, STs and Minorities in all trainings provided
under the Mission.
Special Scheme for Focus Sectors: Special schemes are designed for training in
certain focus sectors such as Construction, Retail Marketing, Banking,
Accounting, Security, IT / ITeS etc.
Vibrant Social Mobilization Campaign: Under the supervision of the District
Level Committee in collaboration with private training providers, UPSSDM to
undertake an annual mobilization drive across all districts to register students
for training.
Data Management and MIS: A comprehensive IT portal to be set up to host the
database of all potential trainees and details of all students. Nomination of
candidates for various trainings, placement tracking and post placement follow
up will be made through this common database. This database will be
transparent and open for all potential employers.
Post Placement Services: This will include helping the new trainees settle down
in new environment by assisting them in locating hostels, and in obtaining
identity cards, pan nos, ESI/EPF services, bank accounts etc.
About ASSOCHAM
THE KNOWLEDGE ARCHITECT OF CORPORATE INDIA
Evolu�on of Value Creator
ASSOCHAM ini�ated its endeavour of value crea�on for Indian industry in 1920. Having in its fold more than 400 Chambers and Trade Associa�ons, and serving more than 4,00,000 members from all over India. It has witnessed upswings as well as upheavals of Indian Economy, and contributed significantly by playing a cataly�c role in s haping up the Trade, Commerce and Industrial environment of the country. Today, ASSOCHAM has emerged as the fountainhead of Knowledge for Indian industry, which is all set to redefine the dynamics of growth and development in the technology driven cyber age of ‘Knowledge Based Economy’. ASSOCHAM is seen as a forceful, proac�ve, forward looking ins�tu�on equipping itself to meet the aspira�ons of corporate India in the new world of business. ASSOCHAM is working towards crea�ng a conducive environment o f India business to compete globally. ASSOCHAM derives its strength from its Promoter Chambers and other Industry/Regional Chambers/Associa�ons spread all over the country.
VISION
Empower Indian enterprise by inculca�ng knowledge that will be the catalys t of growth in the barrier less technology driven global market and help them upscale, align and emerge as formidable player in respec�ve business segments.
MISSION
As a representa�ve organ of Corporate India, ASSOCHAM ar�culates the genuine, legi�mate needs and interests of its members. Its mission is to impact the policy and legisla�ve environment so as to foster balanced economic, industrial and social development. We believe educa�on, IT, BT, Health, Corporate Social responsibility and environme nt to be the cri�cal success factors.
MEMBERS – OUR STRENGTH
ASSOCHAM represents the interests of more than 4,00,000 direct and indirect members across the country. Through its heterogeneous membership, ASSOCHAM combines the entrepreneurial spirit and bus iness acumen of owners with management skills and exper�se of professionals to set itself apart as a Chamber with a difference. Currently, ASSOCHAM has more than 100 Na�onal Councils covering the en�re gamut of economic ac�vi�es in India. It has bee n especially acknowledged as a significant voice of Indian industry in the field of Corporate Social Responsibility, Environment & Safety, HR & Labour Affairs, Corporate Governance, Informa�on Technology, Biotechnology, Telecom, Banking & Finance, Company Law, Corporate Finance, Economic and Interna�onal Affairs, Mergers & Acquisi�ons, Tourism, Civil Avia�on, Infrastructure, Energy & Power, Educa�on, Legal Reforms, Real Estate and Rural Development, Competency Building & Skill Development to men�on a few.
INSIGHT INTO ‘NEW BUSINESS MODELS’
ASSOCHAM has been a significant contributory factor in the emergence of new -age Indian Corporate, characterized by a new mindset and global ambi�on for domina�ng the interna�onal business. The Chamber has add ressed itself to the key areas like India as Investment Des�na�on, Achieving Interna�onal Compe��veness, Promo�ng Interna�onal Trade, Corporate Strategies for Enhancing Stakeholders Value, Government Policies in sustaining India’s Development, Infrastructure Development for enhancing India’s Compe��veness, Building Indian MNCs, Role of Financial Sector the Catalyst for India’s Transforma�on.
ASSOCHAM derives its strengths from the following Promoter Chambers: Bombay Chamber of Commerce & Industry , Mumbai; Cochin Chambers of Commerce & Industry, Cochin: Indian Merchant’s Chamber, Mumbai; The Madras Chamber of Commerce and Industry, Chennai; PHD Chamber of Commerce and Industry, New Delhi and has over 4 Lakh Direct / Indirect members.
Together, we can make a significant difference to the burden that our na�on carries and bring in a bright, new tomorrow for our na�on.
ASSOCHAM Corporate Of�ice 5, Sardar Patel Marg, Chanakyapuri, New Delhi - 110 021
Phone: +91-11-46550555 (Hun�ng Line) • Fax: +91-11-23017008, 23017009
E-mail: [email protected] • Website: www.assocham.org
ASSOCHAM Southern Regional Of�ice
D-13, D-14, D Block, Brigade MM,
1st Floor, 7th Block, Jayanagar,
K R Road, Bangalore-560070
Phone: 080-40943251-53
Fax: 080-41256629
Email:[email protected]
[email protected] ASSOCHAM Eastern Regional Of�ice
F-4, “Maurya Centre” 48, Gariahat Road
Kolkata-700019
Tel: 91-33-4005 3845/41
HP: 91-98300 52478
Fax: 91-33-4000 1149
E-mail: [email protected]
ASSOCHAM Western Regional Of�ice
608, 6th Floor, SAKAR III
Opposite Old High Court, Income Tax
Ahmedabad-380 014 (Gujarat)
Tel: +91-79-2754 1728/ 29, 2754 1867
Fax: +91-79-30006352
E-mail: [email protected]
ASSOCHAM Regional Of�ice Ranchi
503/D, Mandir Marg-C,
Ashok Nagar,
Ranchi-834 002
Phone: 09835040255
E-mail: [email protected]
AUSTRALIA
Chief Representative
ASSOCHAM Australia Chapter
Suite 4, 168A Burwood Road
Burwood | NSW | 2134 | Australia
Tel: +61 (0) 421 590 791
Email: [email protected]
Website: www.assochamaustralia.org
UAE
Chief Representative
ASSOCHAM – Middle East
India Trade & Exhibition Centre
M.E. IBPC-SHARJAH
IBPC-SHARJAH
P.O. Box 66301, SHARJAH
Tel: 00-97150-6268801
Fax: 00-9716-5304403
JAPAN
Chief Representative
ASSOCHAM Japan Chapter
Colors of India Center
1-39-3 Ojima Koto-Ku,
Tokyo 136-0072
Japan
Email: [email protected]
USA
Chief Representative
ASSOCHAM – USA Chapter
55 EAST 77th Street
Suite No 509
New York 10162
Contact Details:
Gurgaon Office: 903-904, Tower C, Unitech Business Zone, Nirvana Country, Sector 50, Gurgaon – 122018 Tel No. : 0124-4754550
Kolkata CFB F-1, 1st Floor, Paridhan Garment Park, 19 Canal South Road, Kolkata - 700015 Tel. No. : 033-64525594 Fax No. : 033-22902469
Mumbai Express Zone A-509, 5th floor Western Express Highway, Malad East, Mumbai - 400097 Telephone No. : 022-29810219 Fax No. : 022-28727937 www.resurgen�ndia.com
Bengaluru No. 49/1, 2nd Floor, Anees Plaza, R V Road, Basavangudi, Bengaluru - 560004 Telephone No.: 080–26570757 info@resurgen�ndia.com
RESURGENT INDIA LIMITED
DEBT I EQUITY I ADVISORY
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