BIHAR - Business Opportunities in India: Investment … • Covering an area of 94,163 sq km, Bihar is located in the eastern part of India. The state has a population of 83 million

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BIHARApril 2010

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Investment climate of a state is determined by a mix of factors

Investment climate of a state

Resources/Inputs

Incentives to industry Physical and social infrastructure

Regulatory framework

• Skilled and cost-effective labour• Labour market flexibility• Labour relations• Availability of raw materials and natural

resources

• Tax incentives and exemptions• Investment subsidies and other incentives• Availability of finance at cost-effective terms• Incentives for foreign direct investment (FDI)• Profitability of the industry

• Procedures for entry and exit of firms• Industrial regulation, labour regulation, other

government regulations• Certainty about rules and regulations• Security, law and order situation

• Condition of physical infrastructure such as power, water, roads, etc.

• Information infrastructure such as telecom, IT, etc.

• Social infrastructure such as educational and medical facilities

BIHAR April 2010

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Advantage Bihar

State economy and socio-economic profile

Infrastructure status

State policies and incentives

Business opportunities

Doing business in Bihar

Contents

BIHAR April 2010

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• Covering an area of 94,163 sq km, Bihar is located in the eastern part of India. The state has a population of 83 million and is one of the most densely-populated states in the country.

• It shares borders with Uttar Pradesh, Jharkhand and West Bengal and international border with Nepal.

• The state has 38 administrative districts. Patna is the capital city. Gaya, Bhagalpur, Muzaffarpur and Darbhanga are other key cities in the state.

• The Ganges, one of the major rivers in the Indian sub-continent, flows through the state, making Bihar’s land extremely fertile for agriculture.

• The four agro-climatic seasons and fertile soil of Bihar support cultivation of a wide range of crops.

• The most commonly-spoken languages of the state are Hindi, English, Urdu and Bhojpuri.

Bihar – State profile

Source: Maps of India

ADVANTAGE BIHAR Bihar April 2010

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Advantage Bihar … (1/2)

High economic growth

Policy incentives

The economy of the state has grown at around 15.2 percent from 2005-06 to 2008-09. The state providesinvestment opportunities in sectors such as agro-basedindustry, foodprocessing, sugar, power, leather, manufacturing andtourism.

The state offers a wide range of policy incentives forbusinesses under the Industrial Policy, 2006. The statealso provides incentives for the sugar, renewableenergy, food processing and the tourism sectors.


Bihar April 2010ADVANTAGE BIHAR

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Rich labour poolThe state has a large base of industrial labour, making itan ideal destination for wide range of industries.Traditionally, a prominent seat of education, Bihar has anumber of reputed educational institutions in severalfields.

Location advantageThe state enjoys a unique location-specific advantagebecause of its proximity to the vast markets of Easternand Northern India, access to the ports such as Kolkataand Haldia, raw-material sources and mineral reservesfrom the neighbouring states.



Advantage Bihar … (2/2)

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Bihar in figures

Parameter Bihar All-states Source

Economy

GSDP as percentage of all states’ GSDP 3.2 100.0 CMIE, 2007-08, current prices

Average GSDP growth rate (%) 13.0 7.5 CMIE, 1999-2000 to 2007-08

Per capita GSDP (US$) 306.6 998.1 CMIE, 2007-08

Physical infrastructure

Installed power capacity (MW) 590.4 98,996.4 Central Electricity Authority,as of March 2009

Broadband subscribers (No) 63,305* 4,981,976 As of October 2008

National highway length (km) 3,642 70,548 Ministry of Road Transport and Highways, 2007-08

Airports (No) 2 133 Industry sources

Social indicators

Literacy rate (%) 47.0 64.8 Census of India, 2001

Birth rate (per 1,000 population) 29.4 23.3 Central Bureau of Health Intelligence, 2007

Ease of doing business

Outstanding investments (US$ billion) 20.8 1,709.7 CMIE, as of December 2008

Industrial infrastructure

PPP projects (No) 2 460 www.pppindiadatabase.com

*Includes JharkhandPPP: public-private partnership


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Key industries with policy thrust and factor advantages

Minerals

Tour ismTextiles/ handlooms

Leather

Food processing

Sugar

Medium HighLow

Medium

HighIndustry attractiveness matrix

*Factor advantages include benefits due to geographical location and availability of factors like talent pool, natural resources and capital

*Factor advantage

Polic

y th

rust


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Advantage Bihar






BIHAR April 2010

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Socio-economic snapshot of BiharParameters Bihar

Capital Patna

Geographical area (sq km) 94,163

Administrative districts (no) 38

Population density (persons per sq km) 881.4

Total population (million) 83.0

Male population (million) 43.2

Female population (million) 39.8

Decadal population growth rate (%) 28.4

Sex ratio (females per 1,000 males) 919

Literacy rate (%) 47.0

Male (%) 59.7

Female (%) 33.1

Average life expectancy (years)

Male (years) 61.6

Female (years) 59.7

Sources: CMIE, www.gov.bih.nic.in, Census 2001

Bihar April 2010STATE ECONOMY AND SOCIO-ECONOMIC PROFILE

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10.8 11.9 12.014.2 15.1 16.3 17.7

23.8

28.5 28.7

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

• At current prices, the Gross State Domestic Product (GSDP) was US$ 28.7 billion. In 2008-09

• Between March 2000 and March 2009, the average annual GSDP growth was 11.5 per cent.

• The state had a robust growth of 15.2 per cent between March 2005 and March 2009.

Source: CMIE

Bihar’s GSDP (US$ billion)

CAGR 11.5%

Bihar’s GSDP


12

9.9 10.9 10.913.0 13.7 14.6 15.8

21.4

25.8 26.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

• In 2008-09, the Net State Domestic Product (NSDP) of Bihar was about US$ 26.0 billion.

• The average NSDP growth rate between 1999-2000 and 2008-09 was about 11.3 per cent.

• This growth has been driven by the services sector including trade, real estate, hospitality and others.

Source: CMIE

Bihar’s NSDP (US$ billion)

CAGR 11.3%

Bihar’s NSDP


13

35.527.2

7.65.4

56.967.4

0%

20%

40%

60%

80%

100%

1999-00 2008-09

Primary Sector Secondary Sector Tertiary Sector

• At US$ 17.3 billion, the tertiary sector contributed 67.4 per cent to the GSDP (at current prices) in 2008-09.

• It was followed by the primary sector, contributing US$ 7.0 billion (27.2 per cent), and the secondary sector contributing US$ 1.4 billion (6.8 per cent).

• Tertiary sector is the fastest growing sector. It registered a CAGR of 12.9 per cent from 1999-2000 to 2008-09.

• This growth has been supported by the trade, real estate and hospitality sub-sectors.

Source: CMIE

Percentage distribution of GSDP

CAGR

7.5%

6.8%

12.9%

The tertiary sector has an increasing share in Bihar’s economy


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• Bihar’s per capita GSDP increased almost 2.3 times from US$ 135 in 1999-2000 to US$ 303 in 2008-09.

• A robust tertiary sector has helped Bihar increase its average per capita GSDP by over 9 per cent between 1999-2000 and 2008-09.

• At 13.4 per cent, the state had robust growth in per capita GSDP between March 2005 and March 2009.

• The per capita GSDP has more than doubled during this period. Source: CMIE

Per capita GSDP

Per capita GSDP

135 145 142166 174 184 196

259

306.6 303

0

50

100

150

200

250

300

350

(US$

)


15

4.1

11.8

40.7

43.5

5.0

14.6

30.5

49.9

0 20 40 60

R1

R2

R3

R4

Bihar All India

• The per capita income of Bihar was US$ 303 in 2008-09.

• The distribution of households by socio-economic classification (SEC) indicates that a significantly large portion of Bihar’s population falls in the low education and unskilled categories, although there is some concentration at the self-employed and junior-employee levels.

Percentage distribution of households in urban areas by SEC*

Rural

Source: BW Marketing Whitebook, 2009-10* See Annexure for SEC categories

Percentage distribution of households in rural areas by SEC*

3.5

6.7

8.0

8.3

19.9

23.4

11.5

18.6

3.4

6.8

8.5

9.3

16.9

20.3

9.3

25.4

0 10 20 30

A1

A2

B1

B2

C

D

E1

E2

Bihar All India

Urban

Distribution of households by income … (1/2)


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• In terms of ownership of household goods and basic amenities such as sewing machines, in-house toilets, clocks and ceiling fans, rural Bihar lags as compared to all-India levels.

Source: BW Marketing Whitebook, 2009-10

Percentage of rural population owning household goods and basic amenities


Distribution of households by income … (2/2)

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• The natural resources and policy incentives support agro-based sector, which accounts for around 50 per cent of large- and medium-scale industries in terms of gross value added.

• There are 263 large and medium industries, a majority of which are located in Patna. Tirhut is the other major industrial centre.

• The unorganised sector accounts for around 65 per cent of the manufacturing output of the state; unregistered units account for one-third of the total.

Source: Economic Survey of Bihar, 2008-09

Key industries in Bihar

• Food and beverages• Rubber and plastics• Transport equipment• Chemicals• Tobacco• Textiles• Leather• Paper, printing and publishing• Mines and minerals• Dairy• Tea• Sugar

Industrial distribution in Bihar

32.3%

17.9%17.1%

32.7%Food,beverage,tobacco

Cotton, wool, jute, paper, leather

Rubber, plastic, chemicals

Material, metal, machine, transport, equipments

Key industries in Bihar


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Bihar is one among the three large producers of maize and jute

Crop Annual production (‘000 tonnes)

Sugarcane 5,960.0

Rice 4,990.0

Wheat 3,910.0

Maize 1,720.0

Potato 1,178.1

Jute and mesta* 250.2

Rapeseed and mustard

90.0

Gram 50.0

Arhar 40.0

Sunflower seed 30.0

Tobacco 16.1

Castor 2.0

• In 2006-07, the total production of the major crops in the state was over18.2 million tonnes.

• Sugarcane and rice, together, accounted for 61 per cent of total crop production. They were followed by wheat, maize and potato.

• In 2006-07, Bihar was one among the three largest producers of maize, jute and mesta in the country.

*A variety of juteSource: CMIE


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Investments

As of December 2008

Source: CMIE

• As of December 2008, total outstanding investments in Bihar were US$ 20.8 billion.

• The electricity sector accounted for the largest share of investments (64.1 per cent), followed by services (15.7 per cent) and manufacturing (15.4 per cent).

• Between December 2005 and December 2008, 164 investment proposals were approved by the State Investment Promotion Board (SIPB).

• Of these, 15 have been completed and are in operation, one is ready to commence operations and 49 are at advanced stages of implementation.

15.4% 0.5%

64.1%

15.7%

4.1% 0.2%

Manufacturing

Mining

Electricity

Services

Irrigation

Construction

Source: Economic Survey of Bihar, 2008–09

Year SIPB approved proposals (No)

Cumulative No

2006-07 (up to January 2007) 72

2007-08 (up to December 2007) 43 115

2008-09 (up to December 2008) 49 164

Break-up of investments by sector


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Advantage Bihar






BIHAR April 2010

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Road network• Bihar has 28 national highways covering 3,642

km. The total pucca road length is 46,000 km, of which 60 per cent are village roads, the remaining being district and state roads and national highways.

• The east-west, four-lane, high-speed corridor and the golden quadrilateral road passes through Bihar.

• Under National Highway Development Plan (NHDP-III), 1,105 km of national highways have been identified for upgrading to super-highways.

• According to the state plan, the budgeted outlay for roads and highways is US$ 576 million for 2009-10, up from US$ 541 million for 2008-09.


Bihar April 2010INFRASTRUCTURE STATUS

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Railway network• Hajipur in Bihar is the headquarter of the East-

Central Railway. The state’s main railway junctions are at Patna, Gaya, Muzaffarpur, Katihar and Samastipur.

• More than US$ 1.1 billion of investment has been planned for the modernisation of the railways in Bihar, including gauge-conversion, doubling of lines and electrification.

• Several link-lines, such as Muzaffarpur-Samastipur-Barauni-Katihar and Muzaffarpur-Chapra-Siwan, have been converted to broad gauge from metre gauge.



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Airports and waterways … (1/2)

• Bihar has two domestic airports, located in Patna and Gaya.

• Most district headquarters have airstrips or aerodromes; small air taxi or charter services are available from Patna.

• Several domestic airlines connect Patna to Delhi, Kolkata, Mumbai, Lucknow and Ranchi.

Domestic airport

Airports



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Airports and waterways … (2/2)

• The 1,620 km stretch of the river Ganges – that flows between Allahabad in Uttar Pradesh and Haldia in West Bengal – has been declared ‘National Waterway 1’ and is being developed for navigation by the Inland Waterways Authority of India.

• Patna has a low-level fixed terminal for handling containers. The National Inland Navigation Institute has been set up in Patna to train vessel crews.

• It has been proposed that waterways be used to deliver coal to power plants located on the river-side.

Waterways



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Telecom infrastructure• Bihar has a tele-density of 22.2 per cent. As of

March 2009, there were 21.1 million subscribers as compared to 11.8 million in 2008.

• Of these, 20.1 million were wireless subscribers and one million were wire-line subscribers.

• As of March 2009, the state had 67,160 public call offices and 9,057 post offices.

Telecom infrastructure in Bihar

Parameter 2009 2008

No of telephone exchanges 1,235 1,223

No of telephone connections (million) 21.1 11.8

No of wire line connections (million) 0.97 0.98

No of mobile phone (million) 20.13 10.87

Tele-density (per 100 population) 22.2 12.6

Source: Department of Telecommunication, Government of India

Source: Cellular Operators Association of India

Major telecom operators in Bihar

Bharat Sanchar

Nigam Limited (BSNL)

Bharti Airtel

Vodafone Essar

Uninor

Reliance Communications

Idea Cellular

Tata Teleservices

Aircel

S Tel


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Power• As of March 2009, Bihar had total

installed power generation capacity of 590.4 MW, all owned by the state utilities.

• The total installed power capacity comprised of 540 MW of coal based power plants and 50.4 MW of hydro-power plants.

• Apart from the state and private sectors, NTPC, the central sector operator, had plants of another 2,340 MW for thermal power generation in the state.

• Bihar has 63 power grids across seven transmission circles, which are supervised by the Bihar State Electricity Board.

598 598 598 598

629

604

590 590

570

580

590

600

610

620

630

640

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Installed state and private capacity (MW)

Source: Central Electricity Authority


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Urban infrastructure• Under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), eight projects costing

US$155 million have been sanctioned for the urban centres such as Patna and Gaya.

• The key areas of development are solid-waste management system, water supply and sewage.

City Water supply Solid-waste management Sewage

Patna • Present per capita water supply of 107 lpcd is planned to be increased to 145 lpcd.

• US$ 116 million sanctioned for Patna and Danapur area for improvement of water supply.

• Solid-waste generated in the city is 646 tpd.

• US$ 10.5 million sanctioned for improvement of solid-waste management.

• Around 170 mld of sewage generated, of which 109 mld is treated.

• Planned investment of US$ 96.5 million for improvement of sewage management.

Gaya • Total water supply in the city is 2.7 mld.

• US$ 7.3 million sanctioned for Gaya to improve water supply.

• Solid-waste generated in the city is 15.5 tpd.

• Planned investment of US$ 2 million for solid-waste management.

• US$ 20.9 has been sanctioned for improvement of sewage management.

lpcd: litre per capita per day, mld: million litre per day, tpd: tonnes per day.Source: Jawaharlal Nehru National Urban Renewal Mission (JNNURM), Ministry of Urban Development, Government of India


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Key public-private partnership projects

Project name Sector PPP type Project cost (US$ million)

Stage

Kosi bridge project Roads BOT-Annuity 90.9 Construction

Ratu road commercial complex Urban development BOT-Annuity 0.9 Operating

BOT:Build-operate-transferSource: pppindiadatabases.com


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Education sector• According to the Census 2001, the literacy rate in

Bihar was 47 per cent.

• In 2006-07, total number of students enrolled in primary and upper primary (up to class VII) schools was 15 million; an increase of over 34 per cent since 2003-04.

• In 2006-07, the gross enrollment ratio (GER) among 14-18 years old was 12.8 which is lower than national average of 40.6.

• The prestigious Indian Institute of Technology (IIT) has been established in Patna in 2008-09. The State Government has offered land at Bihta in Patna to set up a campus for the institute.

• The Aryabhatt Gyan Vishwavidyalaya is being established in Bihar. All engineering and management institutes in the state will be affiliated to the university for development.

Education infrastructure in Bihar

• Universities/deemed/open universities: 13

• Research institutions: 11

• Government-aided colleges: 259

• Private colleges: 245

• Engineering colleges: 7

• Medical colleges: 23

• Teacher training colleges: 15

• Other educational institutions: 63

Reputed technical institutes in Bihar

• Indian Institute of Technology , Patna

• National Institute of Technology, Patna

• National Institute of Fashion technology, Patna



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Health infrastructure• Bihar has around 11,107 health centres of various

categories. There are around 415 rural primary health centres (PHC), 69 urban PHCs, 1,035 additional PHCs and 70 referral hospitals.

• On an average, there are 130 health centres for a population of one million. At the district level, there is a wide variation in health coverage.

• Government initiatives have improved healthcare delivery in the state. Out patient department (OPD) turnout in the government hospitals in rural Bihar has increased from 39 patients per day in 2006 to 4,380 patients per day in 2008.

*Per thousand persons ** Per thousand live birthsSources: Economic Survey of Bihar, 2008-09, Ministry of Health and Family Welfare, Government of India.

Health indicators

Persons served per doctor 20,000

Birth rate* 29.4

Death rate* 7.3

Infant mortality rate** 56

Life expectancy at birth (years)

Male 61.6

Female 59.7

Government initiative in the health sector

• Increase in sanctioned manpower in departments such as Medical, Public Health and Family welfare.

• Higher level of personnel appointments and training.

• Involving private sector in support services related to cleaning, pathology and radiology.

• Free drug distribution and indoor treatment.


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Cultural infrastructure• According to the ‘Sports Policy, 2007’, the State

Government will take various initiatives to promote sports in the state by augmenting sports infrastructure, providing facilities for coaching and supporting the promising players.

• An international conclave on ‘Experience Buddhism - In the land of its origin’ was organised to give major thrust to cultural tourism and explore potential related to the Buddhist circuits in India, especially in Bihar.

• Bihar Government has released a ‘Cultural Policy’ in 2004, the purpose of which is to preserve and promote local culture.

• There are 19 museums in the state and the State Government has taken steps for their development.

Major museums in Bihar

• Patna Museum, Patna

• Chandra Dhari Museum, Darbhanga

• Gaya Museum, Gaya

• Nardhaha Museum, Nawada

• Bhagalpur Museum, Bhagalpur

• Maharaja Lakshimshwar Sing Museum, Darbhanga

• Sitaram Upadhya Museum, Buxar

• Bihar Sharif Museum, Nalanda

• Chandra Sekhar Singh Museum, Jamui

• Ramchandra Shahi Museum, Muzaffarpur

Source: Youth, Art & Culture Department, Government of Bihar


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Industrial infrastructure … (1/3)• The Bihar Industrial Area Development Authority (BIADA) is responsible for promoting and assisting the

rapid development of industries in the industrial areas and estates.

• In order to provide quick services to entrepreneurs, operations of BIADA has divided in four regions –Patna, Muzaffarpur, Darbhanga, Bhagalpur.

• Regional offices, under the guidelines of head office, develop industrial area, industrial growth centres and implement projects

Source: BIADA

Region Industrial area (No) Total Land (Acre)

Vacant Land (Acre)

Largest Vacant Land (Acre)

Patna 17 1506.2 175.6 50

Bhagalpur 12 1236.3 261.6 150

Darbhanga 11 899.8 491.5 392.5

Muzaffarpur 7 1040.4 284.0 8.1


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• BIADA is developing industrial growth centres across the state, which will have the infrastructure to promote industries in sectors such as agro-processing, light engineering, electronics, repairs and servicing and garments.

The other projects planned by BIADA are as follows:

• Establishment of food park at Begusarai (100 acres) and Hazipur (100 acres).

• Establishment of mega industrial park at Bihta (100 acres) and Hazipur (100 acres).

• Implementation of District Rural Industries Project in six districts.

• Construction of an integrated textile park.


Industrial growth centres in Bihar

• Khalgaon

• Begusarai

• Aurangabad

• Gidha

• Maranga (Purnia)

• Khagaria


Industrial infrastructure … (2/3)

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Centres Industries

Patna

Major agricultural centre of trade exporting grain, sugarcane, sesame and medium-grained rice; has also emerged as a manufacturing hub in Bihar with the highest number of industrial units.

Tirhut Has the second-highest number of units in the state; food/beverage processing and manufacturing units are located here.

Muzaffarpur Important trade centre for cloth; famous for exporting fruits, particularly, mango and litchi.

BarauniHas major industrial units including those of Indian Oil Corporation’s refinery; a thermal power station has been proposed to be set up.

Bhagalpur

Famous worldwide for tussar silk; trading of agricultural produce and cloth is an important economic activity. Other major industries include rice, sugar milling and wool weaving.

Gaya Major weaving centre, important tourist hub

Source: Economic Survey of Bihar, 2008–09

Industrial clusters in Bihar

Manufacturing

Textile/Sericulture

Sugarcane

Agro-based industries (except sugarcane)


Industrial infrastructure … (3/3)

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Infrastructure investments

Infrastructure type Investments (US$ million)

Power* 5,199.7

Roads 66.3

Oil and Gas 7.4

Railway 1,101.8

Air transport 0.8

Total 6,375.9

*Generation and distributionSource: CMIE

• As of December 2008, the total investments in Bihar’s infrastructure sector were over US$ 6.3 billion.

• Over 81 per cent of investments in infrastructure were in the area of power generation and distribution.

• About 17 per cent of the investments were in the railways sector.

• Other infrastructure sectors where investments have been made are road, oil, gas and air transport.


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Advantage Bihar






BIHAR April 2010

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Industrial Policy, 2006

Aim: To establish new industries and revive sick units, provide conducive environment to attract domestic and foreign investment and provide environment for a balanced development of the state.

Key initiatives and objectives:

• Creation of corpus fund along with commercial bank and industry association for the revival of sick -and closed-units . A state-level committee will decide on concessions and/or exceptions to be provided for rehabilitation of concerned units.

• Single-window clearance system to be provided.

• Infrastructure Development Enabling Act, 2006, for development of infrastructure through private participation.

• Establishment of land bank to meet requirements of industries and development schemes.

• Enhancement of competitiveness of industrial units through pre- and post-production incentives.

• Incentives to handloom sector industries.

• To develop handicrafts, handloom, khadi, silk and village industries.

• Provision of self-certification to simplify inspection of factories.

Sector specific policies … (1/6)

Bihar April 2010STATE POLICIES AND INCENTIVES

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Industrial Policy, 2006 (continued)

Key incentives:

• Exemption from stamp duty and registration fee; provision of reimbursement of value-added tax (VAT).

• Reimbursement of 50 per cent of cost on preparation of project report, up to US$ 1,630.

• Incentives on purchase of land and sheds:

• For small or tiny units at 50 per cent of the cost, up to a maximum of US$ 163,043.

• For medium to large units at 25 per cent of the cost, up to a maximum of US$ 326,087.

• Incentive grant of up to 50 per cent for expenditure on plant and machinery for captive power generation units.

• Electricity duty exemption for five years for captive generation of power for new units.

• Exemption from luxury tax, electricity duty, conversion charge and market fee for seven years.



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Food Processing Policy

Objectives: To address the infrastructure, technology, skills and marketing constraints being faced by rice, maize, pulses, honey, makhana, fruits and vegetables, and other food processing units in the state by facilitating the setting up of new food processing units. To aid the expansion and up-gradation of existing units.

Key incentives:

• Grant of US$ 3.25 million or up to 20 per cent of the total project cost, whichever is less, for setting up food parks.

• Grant up to 40 per cent of the project cost, subject to a maximum of US$ 2.17 million, for a special purpose vehicle (SPV) for a common cluster infrastructure and up to 35 per cent of the project cost, subject to a maximum US$ 1.08 million, for an individual investor.

• For expansion and capacity increase of existing units, the benefits of the scheme will only be available if the expansion project leads to capacity addition of at least 50 per cent.



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Sugar Incentive Package

Objectives: The package aims at reviving the sugar industry by building on the factor advantages of the state.

Key incentives:

• Re-imbursement of central excise duty on sugar for five years.

• Exemption from purchase tax on sugarcane for five crushing-years.

• Exemption from stamp duty and registration fees for land transfer.

• Subsidy of 10 per cent on capital investment or a maximum of US$ 2.2 million, whichever is less, on machinery after completion of first year of commercial production.

• Incentive package for distillery and ethanol as well as co-generation of power.



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Bihar Tourism Policy

Objectives: The policy aims at promotion and development of tourism in Bihar and to transform tourism industry as a vital part of vibrant economic activities of the state.

Key initiatives:

• The State Government will prepare an area-based master plan for developing infrastructure that are necessary for the tourist destinations. The department of tourism will formulate a 20-year master plan with future projection for development of tourism in the state.

• All facilities and incentives available for industry will apply to investment in tourism sector.

• The state will promote private investment for setting up hotels and heritage hotels. The State Government will explore and develop possibilities of launching a paying-guest scheme.

• Rules and regulations for land allotment will be simplified to create tourism infrastructure.

• The Department of tourism would identify potential tourist destination where religious fairs and festivals are an integral part of culture and would promote such destinations.

• Tourist information centres will be equipped with the modern information and communication technology devices.

• The State Government will promote weekend tourism, wildlife tourism, aqua tourism and rural tourism.

• Human resources required for growth of tourism will be developed.



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Policy guidelines for private sector participation for developing non-conventional energy sources

Objectives: To encourage private sector participation in decentralised generation of grid-grade power, through the use of the available inputs for renewable and non-conventional energy sources such as solar, wind, water, biomass and other wastes.

Key initiatives:

• Any industry, institution, private agency, partnership firm, consortium, panchayat, cooperative society or registered societyinterested in installing and generating electricity from non-conventional energy sources – such as mini- and micro-hydro plants, solar-thermal plants, solar-photovoltaic system, bio-mass plants, bagasse-based plants, wind plants, cogeneration plants, municipal and industrial waste plants – will be eligible for availing of incentives under the scheme.

• The Bihar State Hydro-electric Power Corporation (BHPC) and/or Bihar Renewable Energy Development Agency (BREDA) will provide necessary information and assistance regarding identification and selection of feasible sites.

• The project will be treated like any other industry and incentives/concessions applicable to new industrial units will be available according to the industrial policy.

• There will be no restriction on power generation capacity or supply of electricity to the grid.



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Advantage Bihar






Company logos cited in this section are registered trademarks of the respective companies.

BIHAR April 2010

Contents

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Food processing and dairy• Bihar is one of the largest producers of vegetables and fruits

in the country. The factor advantages of the state make it a suitable place for setting up units in the food processing sector.

• The state is one of the leading producers of banana, mango, litchi and vegetables such as onions, tomato, potato, egg-plant and makhanas in the country.

• Food processing is a priority sector for the State Government; up to 40 per cent of the project cost for setting up food processing units is subsidised by the State Government.

• Besides food processing, the State Government promotes cooperative marketing of milk and dairy products.

Key players

COMPFED

Usher Agro Limited

Bihar April 2010BUSINESS OPPORTUNITIES

45

Food processing and dairy – company profiles

COMPFED — Bihar State Cooperative Milk Producer’sFederation

• COMPFED is an organised milk processing cooperative, which collects milk through district level cooperative unions, processes and markets the same.

• It also supports members with interventions across technology, supply chain, marketing, training, etc.

• In 2007, COMPFED covered four districts directly and 22 districts through five district level cooperative unions.

• COMPFED procures around one million litres of milk per day.

Usher Agro Limited • Usher Agro Limited is one of the large basic food grain (rice and wheat) processing companies in India.

• The company established its rice processing mill in Buxar, Bihar in 2003.

• The products of the company are sold under the brand name ‘Rasoi Raja’.


46

Chemical, oil and gas• The major drivers of chemical, oil and gas industry

in Bihar are proximity to sea ports – Kolkata and Haldia, availability of labour, and the vast market of eastern India.

• Petroleum remains a large contributor to the state’s GSDP as it has one of the largest public sector refineries in the country, that of Indian Oil Corporation Limited (IOCL).

Key players

Krishi Rasayan Exports Private Limited

Graphite India Limited

Indian Oil Corporation


47

Chemical, oil and gas – company profiles

Krishi Rasayan Exports Private Limited (KREPL)

• KREPL is one of the major agri-chemical manufacturer, with five composite technical manufacturing units. In 2008, the total revenue of the company was US$ 63 million.

• In 1973, the company set up its plant at Muzaffarpur in Bihar for producing dusting powder formulation.

• The company operates a poultry feed unit in Muzaffarpur with capacity of form. 150 tonnes per day in pellet

Graphite India Limited (GIL)

• GIL was incorporated in 1963. The company has nine plants located across India and producing graphite products, coke and power.

• The coke division of the company at Barauni in Bihar is engaged in manufacture of calcined petroleum coke (CPC) and has installed capacity of 30,000 tonnes per annum.

• In 2008-09, the company produced 28,350 tonnes of calcined petroleum coke.

Indian Oil Corporation Limited (IOCL)

• IOCL is India’s leading petroleum refinery and a Fortune 500 company. It has a refinery at Barauni, with an annual capacity of six million metric tonnes.

• Secondary processing facilities, such as a resid-fluidised catalytic cracker, diesel hydro-treating and a sulfur-recovery unit, have been added to the main refinery.

• The 498-km long Haldia-Barauni crude oil pipeline (HBCPL) receives crude oil at the Haldia oil jetty and transports it to the Barauni refinery.


48

• Sugar plays a prominent role in Bihar’s economy; the north of the state is climatically well-suited for producing good quality sugarcane with minimum inputs as compared to other states.

• In 2006-07, about 117,000 hectares were under sugarcane production and the state produced about 5.96 million tonnes of sugarcane.

• It is estimated that about 500,000 farmers are engaged in sugarcane cultivation and another 50,000 skilled and unskilled labours are working in sugar mills.

• The State Government offers incentive package to the sugar industry. The Sugarcane Institute in Pusa and Rajendra Agricultural University are engaged in sugarcane-related research activities.

Sugar

Key players

K. K. Birla Group

Riga Sugar Company Limited

Vishnu Sugar Mills Limited

Eastern Sugar & Industries Limited


49

K. K. Birla Group • The K K Birla Group’s sugar company, Upper Ganges Sugar (UGSIL), has two units in Bihar –Bharat Sugar Mills at Sidhwalia, with a crushing capacity of 5,000 tonnes per day (tpd) and Hasanpur Sugar Mills at Hasanpur, with a crushing capacity of 3,000 tonnes per day.

• The Sidhwalia unit also has a 18 MW cogeneration power plant.

Riga Sugar Company Limited

• The company belongs to the P. L. Dhanuka group and was incorporated in 1980.

• It manufactures ethyle alcohol, molasses and sugar at Sitamarhi in Bihar.

• The plant has crushing capacity of 5,000 tonnes per day.

Vishnu Sugar Mills Limited

• The company is promoted by the Bajoria family and was incorporated in 1932.

• It manufactures molasses and sugar at Gopalganj in Bihar.


Eastern Sugar & Industries Limited

• The company was incorporated in 1932.

• It manufactures molasses and sugar at Purba Champaran in Bihar.


Sugar – company profiles


50

Manufacturing industry• Consequent to the bifurcation of Bihar, the state lost most

of its large units (mostly mining and engineering units) to Jharkhand.

• Currently, the state has leather, textile and handloom industries as its prominent sectors, apart from some engineering units.

• The state has ample raw materials (hides and skin of livestock), technical skills (leather technology institutes) and manpower, which are the major drivers for leather industry in the state.

Key players

Bata Industries

Bharat Wagon and Engineering Company

Gangotri Iron & Steel Company


51

Manufacturing industry – company profiles

Bata Industries • Promoted by the Toronto-based Bata Shoes, Bata is among India’s largest manufacturer and marketer of footwear products.

• The company has a tannery at Mokamehghat in Bihar and a leather footwear factory at Bataganj in Patna.

Bharat Wagon and Engineering Company

• The Bharat Wagon and Engineering Company is a part of Bharat Bhari Udyog Nigam, a Government of India undertaking . It has a over 50 years of experience in heavy-steel fabrication.

• It has two units at Mokama and Muzaffarpur, which are ISO 9001 certified for manufacturing wagons; a third unit at Muzaffarpur manufactures gas cylinders. All threeplants have captive-power generation capacity.

Gangotri Iron & Steel Company

• The company produces mild steel (MS) bars and billets.

• In 2009, the company produced 19,665 tonnes of MS bar and 8.888 tonnes of MS billet.

• In January 2009, the company set up a new unit in Bihta, in Bihar and the company has production capacity of 145,000 tonnes of MS bar, 108,900 tonnes of MS billet and 540,000 cubic metre of oxygen.


52

Tourism … (1/2)• The state has a rich cultural heritage as it is

associated with pilgrimages related to religious gurus such as the Buddha, Mahavir, Guru Gobind Singh, and other historical monuments.

• Tourism in the state revolves around the Buddhist circuit (Bodhgaya, Rajgir, Nalanda), the Jain circuit (Bisram, Mandar hill, Champanagar) and the Sufi circuit.

• Monuments of historical and religious significance present tremendous potential for attracting both domestic and foreign tourists.

• The state’s tourism policy stresses on developing infrastructure and financing for tourism.

• The Bihar Government is preparing a 20-year master plan for promotion and development of tourism in the state.



53

• In an effort to promote tourism in the state, the Department of Tourism, Government of Bihar, along with the Ministry of Tourism, Government of India, organised an international buddhist conclave in Nalanda and Rajgir.

• The state is also developing the Buddhist tourist circuit (Bodh-Gaya-Rajgir-Nalanda) with an assistance of US$ 4.6 million from the Central Government.

• In 2007, the total number of tourist arrival was around 10.5 million. Arrivals have been growing at around 9.7 per cent over previous two years.

8687.227774.732

10352.887

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

2005 2006 2007

63321

84942

177362

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2005 2006 2007

Arrival of domestic tourist in Bihar Arrival of foreign tourist in Bihar (No)

Source: Ministry of Tourism, Government of India


Tourism … (2/2)in

'000

54

Major industrial projects being implemented

Project Sector Promoter Investment(US$ million) Location

Kahalgaon-II transmission line Power distribution

Power Grid Corporation of India Limited (PGCIL) 3,867.8 Kahalgaon -

Biharsharif

Kahalgaon-North Karanpura-Barh composite transmission line

Power distribution

PGCIL 2,000.0Kahalgaon-North Karanpura

Barh power project Power NTPC Limited 1,889.7 Barh

Nabinagar power project Power Bharatiya Rail Bijlee Co Limited 1,087.0 Nabinagar

Basic telecom sevices projectTelecom services Tata Teleservices Limited 1,087.0 Partially in Bihar

Patna Ganga railway bridge project Railways East Central Railway 181.5 Sonepur

Sub-transmission and distribution project

Power distribution Bihar State Electricity Board 178.9 Bihar

Sugar (Paschimi Champaran) project

Sugar Globe Sugar Refinery Limited 173.9 Champaran

Araria-Galgalia railway line project Railways North Eastern Railway 115.2 Galgalia

Sugar (Betiah) project Sugar Moria Sugar Private Limited 108.7 Betiah

Source: projectstoday.com


55

Key industrial projects being planned

Project Sector Promoter Investment(US$ million) Location

Pirpainti thermal power project Power Nalanda Power Company 2,173.9 Pirpainti

Nabinagar thermal power project Power Bihar State Electricity Board 1,956.5 Nabinagar

Coal-based power (Buxar) project

Power Krishak Bharati Co-Op. Limited 1,304.4 Buxar

Hathiadah and Durgawati pumped storage (hydel) power project

Power Bihar State Hydro-Electric Power Corporation Limited 933.4 Bhabhua

Diesel locomotive (Marhowra) project

Manufacturing Ministry of Railways, Government of India 591.1 Marhowra

Thermal power (Barauni) project Power Vikash Metal & Power Limited 543.5 Barauni

Electric locomotive factory (Madhepura) project

Manufacturing Central Government 426.2 Madhepura

Khagaria- Bakhtiarpur NH-31 road project

Roadways National Highways Authority of India 383.9 Bakhtiarpur

Integrated steel (Begusarai) project

Finished steel Vikash Metal & Power Limited 326.1 Begusarai

High sulphur crude maximisation project

Refinery Indian Oil Corporation Limited 171.7 Barauni

Hospital-cum-medical college (Bihta) project

Hospitals Employees' State Insurance Corporation 138.5 Bihta

Water supply scheme (Patna)Water and sewerage

pipeline Government of Bihar 95.9 Patna

Source: projectstoday.com


56

Advantage Bihar






BIHAR April 2010

Contents

57

Key approvals required … (1/2)

Approvals and clearances required Departments to be consulted Estimated time in days

Incorporation of company Registrar of companies NA

Registration, Industrial Entrepreneurs Memorandum (IEM), industrial licenses Nodal agency (Industries Department) NA

Allotment of land Bihar Industrial Area Development AuthoritySeven to 21 days (up to 90 days for acquisition of non-industrial land)

Permission for land use Revenue and Land Reforms Department, Government of Bihar

30 days (45 days for conversion of non-industrial land for use)

Registration under Factories Act and Boilers Act

Offices of Inspector of Factories, Inspector of Boilers Up to 120 days

Site environmental approval, No objection certificate and consent under Water and Pollution Control Acts

Bihar State Pollution Control Board and Ministry Of Environment And Forests, Government of Bihar

60 days

Approval of construction activity and building plan

Urban Development and Housing Department, Government of Bihar Seven days

NA: not available

Bihar April 2010DOING BUSINESS IN BIHAR

58

Approvals and clearances required Departments to be consulted Estimated time in days

Sanction of power Bihar State Electricity Board Up to 30 days

Sanction of water Water Resources Department, Government of Bihar Up to 30 days

Fire service clearance State Fire Service Headquarters, Government of Bihar Up to 15 days

Registration under state’s sales tax act, and central and excise acts

Sales tax department, central and state excise departments Seven days


Key approvals required … (2/2)

59

Cost of doing business in Bihar

Cost parameter Cost estimate Source

Industrial land (per acre) US$ 384,780 in Patliputra, US$ 83,700 in Muzaffarpur

Bihar Industrial Area Development Authority

Labour (per man year) US$ 825 to US$ 1,275 Labour Resources Department, Government of Bihar

Office space rent (per sq ft per month)

US 20 cents to US 35 cents Property dealers

Residential rent (2,000 sq foot per month)

US$ 145 to US$ 280 Property dealers

Five-star hotel room (per night) US$ 100 to US$ 180 Leading hotels in the state

Commercial and industrial electricity (per kWh)

Industrial: US 8.8 cents to US 9.2 centsCommercial: US 9.1 cents to US 10.5 cents

Bihar State Electricity Board


60

Single-window approval mechanism• Bihar Single Window Clearance Act, 2006, and the Bihar Industrial Policy, 2006, promote industrial

growth by giving rapid clearances, issuing of licenses and certificates and providing an overall investor-friendly environment in the state .

• The Industries Department of the state and the District Investment Centre (DIC) act as nodal agencies for investments.

• Proposals for investment greater than US$ 21.7 million are routed through Chief Minister and the Cabinet for approval.

Investment handled Body Chairman Nodal agency

US$ 2.17 million to US$ 21.7 million

State-level investment promotion

board

Industries Development Commissioner

Industries Development (Udyog Mitra) – state level

Below US$ 2.17 million District-level committee

District Collector DIC – district level


61

Key investment promotion offices … (1/2)

Industry Department,

Government of Bihar

• State-level nodal body under the single-window regime for investments of above US$ 2.17 million.

• Primary functions involve coordinating applications from investors, and processing and facilitating the process of getting clearances from various departments.

• Industry Department, headed by the Principal Secretary, supervises district industry centres (DIC), industrial area development authorities and industrial premises in the state.

District Industry Centre

(DIC)

• District-level nodal agency for investments below US$ 2.17 million.

• DIC supports entrepreneurs in identifying local resources, supply of raw materials and equipment, arrangement of credit facilities, marketing, quality control, etc.

Bihar Industrial Area

Development Authority

(BIADA)

• BIADA develops infrastructure for industries in segments such as roads, drainage, water, power, etc.

• Supports entrepreneurs in setting up industries and in availing incentives offered by the State Government.


62

Bihar State Finance

Corporation

• The main state-level institution that provides term lending facilities to industrial entrepreneurs.

• The corporation has been revived to supplement the role of banks in lending to industries.

Bihar State Electricity Board

(BSEB)

• The board is responsible for the synchronised development of generation, transmission and distribution of power in the state.

Bihar State Pollution Control

Board

• The purpose of the organisation is prevention and control of pollution through inspection of treatment plants, standards application, research and developmentactivities, etc.

• Headquartered at Patna, the organisation has seven zonal-offices.


Key investment promotion offices … (2/2)

63

Contact list … (1/2)

Key agency Contact Information

Industries Department,Government of Bihar

Vikas BhawanBailey Road, Patna - 800 001, Bihar.Phone: 91-0612-2215 211Fax: 91-0612-2217 991Website: http://industries.bih.nic.in/

Bihar State Finance Corporation Bihar State Finance CorporationFraser Road, Patna - 800 001, BiharPhone: 91-0612-2332 210Fax: 91-0612-2217 991E-mail: [email protected]: http://bsfc.bih.nic.in/


http://industries.bih.nic.in/�

mailto:[email protected]�

http://bsfc.bih.nic.in/�

64

Key agency Contact Information

Bihar State Electricity Board (BSEB) Bihar State Electricity Board (BSEB)Vidyut Bhawan, Bailey Road, Patna - 800 001, Bihar.Phone: 91-0612-2504 610Website: http://bseb.bih.nic.in/

Bihar Industrial Area Development Authority (BIADA)

Bihar Industrial Area Development Authority Udyog Bhawan, First floor,East Gandhi Maidan,Patna - 800 004, Bihar Phone: 91-0612-2302 914 Fax: 91-0612-2302 989 E-mail: [email protected], [email protected], Website: http://www.biada.in

Bihar State Pollution Control Board Bihar State Pollution Control BoardBeltron Bhawan, Shastri NagarJawahar Lal Nehru Marg,Patna - 800 023, BiharPhone: 91-0612-2302 914 Fax: 91-0612-2281250 Email: [email protected], Website: http://wgbis.ces.iisc.ernet.in


Contact list … (2/2)

http://bseb.bih.nic.in/�



http://www.biada.in/�


http://wgbis.ces.iisc.ernet.in/�

65

Annexure … (1/3)

Source: Market Research Society of India

Education/Occupation

Illite

rate

Scho

ol u

p to

four

ye

ars/

lite

rate

, bu

t no

form

al

scho

olin

g

Scho

ol u

p to

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ine

year

s

SSC

/HSC

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ate

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ot g

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ate

Gra

duat

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st

grad

uate

ge

nera

l

Gra

duat

e/po

st

grad

uate

prof

essio

nal

Unskilled workers E2 E2 E1 D D D D

Skilled workers E2 E1 D C C B2 B2

Petty traders E2 D D C C B2 B2

Shop owners D D C B2 B1 A2 A2

Entrepreneurs: employee none D C B2 B1 A2 A2 A1

Entrepreneurs: employee < 10 C B2 B2 B1 A2 A1 A1

Entrepreneurs: employee > 10 B1 B1 A2 A2 A1 A1 A1

Self-employed professionals D D D B2 B1 A2 A1

Clerical/salesman D D D C B2 B1 B1

Supervisory level D D C C B2 B1 A2

Officers/executives: junior C C C B2 B1 A2 A2

Officer/executive: middle/senior B1 B1 B1 B1 A2 A1 A1

Socio-economic classification (SEC) of urban and rural households – urban grid


66

Source: Market Research Society of India

Socio-economic classification (SEC) of urban and rural households – rural grid

Education

Type of house

PuccaSemi-pucca Kuccha

Illiterate R4 R4 R4

Literate but no formal school R3 R4 R4

Up to fourth standard R3 R3 R4

Fifth to ninth standard R3 R3 R4

SSC/HSC R2 R3 R3

Some college but not graduate R1 R2 R3

Graduate/post-graduate (general) R1 R2 R3

Graduate/post-graduate (professional) R1 R2 R3

Bihar April 2010

Annexure … (2/3)

DOING BUSINESS IN BIHAR

67

Year INR equivalent of one US$ 2000 46.6

2001 48.3

2002 48.0

2003 45.6

2004 43.7

2005 45.2

2006 45.0

2007 42.0

2008 40.2

2009 46.0

Exchange rate

Average for the years

Bihar April 2010

Annexure … (3/3)

DOING BUSINESS IN BIHAR

68

India Brand Equity Foundation (“IBEF”) engagedICRA Management Consulting Services Limited (IMaCS) to prepare this presentation and the same has been prepared by IMaCS in consultation with IBEF.

All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF.

This presentation is for information purposes only. While due care has been taken during the compilation of this

presentation to ensure that the information is accurateto the best of IMaCS’s and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice.

IMaCS and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation.

Neither IMaCS nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.

BIHAR April 2010

DISCLAIMER

Documents

BIHAR - Business Opportunities in India: Investment … • Covering an area of 94,163 sq km, Bihar is located in the eastern part of India. The state has a population of 83 million