Enterpreneurship in India

EntrepreneurialIndia
SculptingtheLandscape
21-23December,2009-Mumbai
KPMG IN INDIA
Foreword
EntrepreneurshipisthekeytoIndiaachievingherpromise UnlikepasteditionsofthisstudyonIndianentrepreneurship
asaneconomyandasacountry.Unleashedafterdecades whichsurveyedentrepreneursacrossthecountry,this
ofslowgrowthandgovernmentcontrol,India’s whitepaperstudiesselectIndianstatesindetailandbring
entrepreneurshavebeguntotakeadvantageofmanyofthe forththestate’sperspective.Thestudyhasrevealedthat
opportunitiespresentedbythepostliberalizationbusiness Indiansareclearlybullishandforwardthinkingabout
environment.However,foritssize,Indiahasstillhasmuch entrepreneurshipandthattheyrecognizetheimportanceof
todoinordertoharnessentrepreneurshiponabroader entrepreneurship.Butthereisstillalotofroomfor
level.Theentrepreneurialecosystemcandofarmorethan improvement.Wehavealongwaytogotodevelopabroad
todaytospurtheentrepreneurtogreaterheights.Akey basedandorganizedentrepreneurialcommunity.Thispaper
pillarofthisecosysteminIndiaaregovernments–central, shouldallowustoreassessandrenewoureffortsin
stateandlocal.Governmentpolicies,incentivesand addressingthesituation.Thestudyalsobringstogetherthe
programsplayasubstantialroleininfluencing datathatcanbefurtherstudiedforpursuingaspecialpolicy
entrepreneurs.Thisplacesagreatresponsibilityon focus.
governmentbodiestoenactpoliciesandlawsthat
encourageentrepreneurshipwhichinturncanleadtothe AsacountryIndiashouldsustainapositivemomentumin
country’seconomicascent. harnessingthebusinesseswehave,identifyingthegrowth
areasoftomorrowandsupportingmorepeopletobecome
KPMG,oneoftheleadingprovidersofadvisoryservicesin entrepreneurs.Throughthisstudy,TiEandKPMGhopeto
IndiaandTiE,theworld’slargestorganizationof contributetocraftingmoremeaningfulpoliciesand
entrepreneursaspartoftheircommitmenttofoster programsthatwillcontinuetoinspiremoreandmore
entrepreneurshipinIndiaarebringingoutthethirdeditionof Indianstohaveanentrepreneurialmindsetanddevelopa
EntrepreneurialIndia2009.Thewhitepaperendeavorsto strongercapacitytograbtheopportunitieswehavenow.
assesstheinitiativesofselectIndianstatestoencourage
entrepreneurialgrowthandputforthbestpractices,raise
theprofileofdiscussionsonentrepreneurshipdevelopment
andcontributetoshapingpolicy.
VikramUtamsingh SridharIyengar
KPMGandTiEembarkedonthisuniquestudy,which
Head-Markets President
profilestheentrepreneuriallandscapeofIndiaandaimsto
KPMGinIndia TiEMumbai
uncoverfactorsleadingtoappropriatelevelsof
entrepreneurship.Thestudyevaluatestheperspectiveof
JehilThakkar
Indianstatesandtheirinitiativestowardsentrepreneurial
ExecutiveDirector,Markets
developmentononehandwhileevaluatingtheperception
KPMGinIndia
ofentrepreneursontheseinitiativesthroughtheirviewson
nationalstrengthsandweaknessesasacontextfor
entrepreneurshipontheother.Theentrepreneursindicate
whatpolicyorprogramchangestheybelievewouldenhance
thecountry’senvironmentforentrepreneurship.Italso
attemptstoestablishthebestpracticesacrossIndiato
fosterentrepreneurshipwhilealsobenchmarkingwithsome
oftheglobalbestpracticesinentrepreneurialeconomies
suchasSingapore,PhilippinesandIsrael.
©2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
ExecutiveSummary
HowsupportiveistheecosysteminIndia–doinvestors, TheEntrepreneurs’Viewpoint
thegovernment,andsocietyprovideafoundationonwhich
entrepreneurscangrowandflourish?Itisaquestionworth Availability of Finance
exploringindept.
Financialsupportwascitedasthemostlimitingfactorfor
Theemergenceofopportunitiesinmanysectorsandthe entrepreneurship.Mostentrepreneurscitedthelackof
lackofopportunityinothershasdrivenmanyyoungpeople appropriatefinancialhelp,resourcesandtheinaccessibility
tostrikeoutontheirown.Manyareleavingtheirwell ofavailablefinancing.Thereisadeficiencyofsufficientdebt,
payingjobstoestablishtheirownsmallventures. equityandventurecapitalfunding,governmentsubsidies
Entrepreneurshipishotandrisktakingabounds.The andfundingavailablethroughgovernementagaencies.
promiseofwealthinthelongrunandthefreedomto Mostentrepreneursexpressedtheneedforsufficient
choosetheirownpathare,majorfactorsbutdoingthings funding,bothdebtandequityaimedathelpingnewand
forapassionandfindingfulfillmentarekeydriversaswell. strugglingbusinesses.Theyalsostressedthattheevaluation
Today,thescopeandvarietyofself-generatedworkis forloansshouldbefocusedontheviabilityofthebusiness
unlimited. proposalandnotjustthequantumofcollateralorassetsize.
However,despitethegreatinitiativesundertakenbymany The Policy Framework

Indianentrepreneurs,Indiaremainsatoughplacetobean
entrepreneur.Governmentregulations,cumbersome Entrepreneursacrossthesixstatesprofiledmentionedthe
proceduresandrestrictedaccesstocapitalmakestarting lackofstronggovernmentpolicysupportfor
andrunninganewbusinessachallengingproposition. entrepreneurship.Theycitedbureaucracyandcorruption,
poorimplementationofexistingpoliciesandinadequate
Inmanycases,governmentsaremovingtowardsfriendlier supportmechanismsaspartofthelimitingfactorsto
policiesbutmorerapidchangeisnecessary. entrepreneurship.
TiEandKPMGasapartoftheiraspartoftheircommitment Ontheotherhand,theygenerallyagreedthatthesupport
tofosterentrepreneurshipinIndiabringoutthisthirdedition fornewandgrowingbusinessesisahighpriorityforstate
ofEntrepreneurialIndia2009.Thewhitepaperendeavorsto governmentsandacknowledgeditasathrustareafor
assesstheinitiativesofselectIndianstatestoencourage policy.Buttheycompletelydisagreedthatresultingpolicies
entrepreneurialgrowthandputforthbestpractices,raise werebeingimplementedinamannerthatbenefitednew
theprofileofdiscussionsonentrepreneurshipdevelopment andentrepreneurialbusinesses.
andcontributetoshapingpolicy.
Theratherambivalentviewofprofessionalsand
ThestudyevaluatestheperspectiveofIndianstatesand entrepreneursonwhethergovernmentpolicyis
theirinitiativestowardsentrepreneurialdevelopmentaswell categoricallylimitingorcontributingtoentrepreneurship
asevaluatingtheperceptionofentrepreneurs.The suggeststhattheyviewthegovernmentpolicyhavinga
entrepreneursindicatewhatpolicyorprogramchangesthey limitedeffect.Whilethegovernmentisperceivedtobe
believewouldenhancethecountry’senvironmentfor focusingonentrepreneurship,muchneedstobedoneat
entrepreneurship. thegroundlevelinorderforgovernmentpolicytobecomea
truecatalystforentrepreneurship.
Entrepreneursstressedthatimplementinggovernment Partnership Approach
policiesshouldbemoreefficient.Theyrecommendedlocal
policiesshouldalsobecraftedtohelpthebusinessesin Entrepreneurshipaccordingtogovernmentsisnotpurelya
ruralareasandthatbothnationalandstategovernment functionofindividualorstate’spolicyregime.Itisrathera
agenciesshouldproactivelyengageinseamless collaborationofentrepreneurs,educationalinstitutes,
partnershipsandassistanceineffectingpoliciesfor independentagencies,themediaandthegovernment,
entrepreneurship. wheregovernmentisafacilitatorandanenabler.The
governmentwouldliketoseemoreproactivepartnership
Access to Markets fromentrepreneursandbusinessinaddressingtheoverall
developmentalchallengesthatfaceIndia.
Formidablebarrierstohighgrowthentrepreneurship
continuetoexistinIndia.Ourresearchintothebarriersand Cost Benefit Matrix
facilitatorsofentrepreneurshipinthepreviouseditionsof
EntrepreneurialIndiahasrevealedmanyfacetsofthis Whilegovernmentisoftencriticizedfornotproviding
problem. enoughsupport.Withlimitedresources,eachstatealso
needstobeconvincedofthecostbenefitbeforeinvesting
State’sViewpoint inapolicyoraspecificdevelopmentprogram.The
government’sneedtoevaluatecarefullyeveryrequestfor
Thesixstatesprofiledforthepurposeofthisstudyhave assistanceorpolicyenactmenttotakeintoaccountthe
beenmovingintherightdirectiontopromotebusiness overallresourcepictureandgoalsfortheregion.
growth.Thegovernmentisincreasinglybecomingreceptive
toentrepreneurialdemandsandexpectationsandrollingout Prioritization
programstoprovidesupporttonewaswellasexisting
enterprises.However,implementationofsomeofthe Eachstateinthecountryhasasetofdevelopmental
programsiseitherlimitedorfocusedatlargerenterprises. challengesandprioritiestoraisetheoverallprofileofits
Insomecases,thegovernmentsacrossthesestatesare citizens.Withmorethan30percentofcountry’spopulation
increasinglyadoptingnewerapproaches.Whilethestates belowpovertyline,thestate’sprioritiesareoftenclearand
aremovingintherightdirection,albeitatacautiouspace, maynotfitwiththeprioritiesofsomeentrepreneursand
theytoohavetheirsetofchallenges. thatsometimeslimitsopportunities.Althoughthe
governmentsacknowledgethatopportunitycreationwill
haveadominoeffectandcouldleadtolongtermeconomic
upliftment,manyshorttermprioritiesandneedsoftentake
precedenceoverlongtermgoals.
Contents
Introduction 01
The Assessment 04
Punjab 05
Gujarat 12
Delhi 19
TamilNadu 25
Karnataka 32
Maharashtra 38
Creating an Entrepreneurship Culture 44
Conclusion and Policy Recommendations 48
About the study 50
01
Introduction
Thecentralroleofentrepreneurshipintheeconomicgrowth infrastructurehasledentrepreneurstocreatetheirownand
ofnationsisincreasinglycomingintofocus,especiallyinthe intheprocess,lockuppreciouscapitalwhichshouldhave
recenttroubledtimes.Aspointedoutinarecentarticlein beendeployedtogrowthebusiness.Inadequateavailability
The Economist,evenasgovernmentsarebusytryingto oflandwithcleartitles,andowner-occupantfriendlypolicies
savetheireconomies,policymakersaredemonstratinga hasledtothediversionofscarcecapitaltowards
renewedinterestinentrepreneurshipandinnovation. unproductiveinvestmentsinlandandbuildings.Lengthy
courtproceedingsandslowjudicialenforcementofproperty
Inmodernopeneconomies,entrepreneurshipisarguedto rightsandprivatecontractshaveledtosub-optimal
befarmoreimportantthanitverwas.Itisevidentthat businesspractices.
entrepreneurialventuresaredrivingthegrowthof
economies–developedandemerging.However,amongst Despiteallodds,theaccentonliberalizationand
thetypesofentrepreneurshipthereisnecessitybased globalizationinthelasttwodecadeshasbroughtabout
entrepreneurshipatoneendofthespectrumtoopportunity mitigatingeffectsinmanyoftheareascitedabove.A
basedentrepreneurshipattheother,thatseeksto discussionwithsomeoftheestablishedentrepreneurs
revolutionizetheworldbyleveragingnewtechnologyand pointstoapositiveroleplayedbytheneweconomic
creatingnewmarkets. policiesinopeningupareas.
WhileIndiahasalonghistoryofentrepreneurship,as GiventheambitiouseconomicgrowthtargetsthatIndiahas
evidencedbycenturiesofbusinessandcommercialactivity setforitself,highgrowthbusinesseshaveacrucialroleto
andtheexistenceofgenerationsoldbusinessgroupsand play.Whilehighgrowthbusinesseshavetousetheir
families,recentGlobalEntrepreneurshipMonitorstudies entrepreneurialingenuitytoovercometheenvironmental
foundthatentrepreneurshipinIndiahaspredominantlybeen constraintsorrenderthemirrelevant,publicpolicyhasa
necessitybasedratherthanopportunitybased. significantanddecisiveroletoplayinminimizing,and
preferably,completelyremovingtheconstraintsthathobble
Formidablebarriersexisttoentrepreneurshipcontinueto highgrowthentrepreneurship.
existinIndiaforhighgrowthentrepreneurship.Ourresearch
intothebarriersandfacilitatorsofentrepreneurshipinthe
previouseditionsofEntrepreneurial India hasrevealedmany
facetsofthisproblem.
Severalexamplescitedininterviewsinclude,several
constraintstoquicktechnologyadoptionbyIndian
companies,.InconsistentIndirecttaxrulesand
enforcementissuesthatlimittheabilitytoscalequickly,
Laborlawsthatlimitthemobilityoflaborforced
entrepreneurstofeargrowthinemployeestrength.Poor
02
ThechallengeforpolicymakersinIndiacanthusbe
articulatedasoneofcreatingtherightframeworkof
conditionstoenabletheestablishmentoffastgrowing,
innovativenewbusinesses.Therearemanyavenuesopen
topolicymakerstoaddresstheissue,butthechallenge
wouldbeinprioritization-pickingtherightsetofissuesand
sequencingthemtoachievesignificantandquickpay-off.
Againstthisbackdrop,theEntrepreneurial India 2009

focusesonhowtoredesignIndia'sentrepreneurial
ecosystemsoIndiacanfinallyunleashwhatPrimeMinister
Singhcalled"theanimalspirit"ofIndianentrepreneurs.TiE
andKPMGhavestudiedselectIndianstatestounderstand
theirregulatoryandpolicyframeworkandsuggestbest
practicesthatcouldhelpthecountrytocreateatruly
conduciveentrepreneurialecosystemfocusedatfostering
highgrowthentrepreneurialactivitynotlimitedtonecessity
butoneemergingfromaplethoraofopportunities.
04
TheAssessment
TodayinIndia,opportunityabounds.Thescopefor ThefollowingpageswillprofiletheinitiativesbysixIndian
entrepreneurialdevelopmentinthecountryistremendous. statestofosterentrepreneurialandbusinessgrowth.
WhileGDPgrowthseemstobebackontrack,thecountry
isfacedwithtremendouschallengesincludingcreationof Ourresearchfocusesonunderstandingthekeypolicy
widespreademploymentandreducingpoverty.Creatingan initiativesofthesestatestopromotebusinessandindustry.
environmentandanecosystemthatencouragesand Itfurtheranalysestheentrepreneurs’perceptionofthese
facilitatestheentrepreneurshiptakesadvantageof initiativesandtheStates’challengesinpromoting
opportunitycanbecriticalinthenationmeetingitsoverall entrepreneurialgrowth.Astheseperceptionsand
developmentgoals. challengesevolve,KPMGandTiEplantoactasacatalyst
forgovernmentsandentrepreneurstocometogetherto
InIndia,wehavedeeptechnicalandknowledgebased refineideas,enablebetterpolicyimplementationandfoster
resourcestotakeuptheentrepreneurialchallenge.The growth.
successofIndianentrepreneursaroundtheworld,and
increasinglyinIndia,istestimonytothedriveourpotential
asanentrepreneurialnation.Atpresent,therearevarious
organizationsatthecountrylevelandstateleveloffering
supporttoentrepreneursinvariousways.TheGovernment
ofIndiaandvariousStateGovernmentshavebeen
implementingvariousschemesandprogrammesaimedat
nurturingentrepreneurshipoverthelastfewdecades.
VariousChambersofCommerce&apexinstitutionshave
startedorganizingseminars&workshopstopromote
entrepreneurship.Incidentally,variousmanagementcolleges
haveincorporatedentrepreneurshipaspartoftheir
curriculum.Thisisindeedagooddevelopment.Thisshows
thecommitmentoftheGovernmentandthevarious
organizationstowardsdevelopingentrepreneurialqualitiesin
theindividuals.
However,inacountry,whereover300millionpeopleare
livingbelowthepovertyline,itissimplyimpossibleforany
governmentalonetodriveentrepreneurialandbusiness
growth–aproductivepartnershipwithallstakeholdersis
criticalandnecessary.
Punjab
Population Per Capita Net State Domestic Product

24 million (as per 2001 census)
The state had about 0.520 million (67.26 percent)

employees in public sector and rest of the 0.253
million employees was in private sector in 2005
(Source: Government of Punjab)
Source:Directorateofeconomicsandstatisticsandstategovernment,2008-09
ThePolicyFramework
New industrial policy to push the state’s economy
PunjabisoneofthelargestproducersoffoodgrainsinIndiawithfoodgrainscontributing68percenttotheannualfood
productionofIndia.In2006-07itcontributed75.3percentWheatand31.2percentRice.ItwasthefirstIndianstatetouse
agriculturaltechnologytoengineera“GreenRevolution”.1
Theeasyavailabilityofrawmaterialhasattractedagro-basedindustrieslikefood&foodproducts,textilesandapparel.
Otherindustrialsectorsinthestateincludechemicalsandchemicalproductsandtransportequipment.
Punjab’seconomyisprimarilyanagro-basedeconomyanditsindustrialbaseisdominatedbysmallandmedium
enterprises.However,withthefastchangingglobaleconomicscenario,thestategovernmenthasframedanewIndustrial
Policydirectedatattractingindustrialinvestmentinthestate.
1 ConfederationofIndianIndustry,NorthernRegion,Punjab,June2009
06
The Assessment | Punjab
Highlights of the Industrial Policy2
• Theprimaryobjectiveofthenewindustrialpolicyistobringsynergybetweentheagricultureandindustrialsectorto
growthestate’seconomy
• NoCLUchargesandLicensefeeforchangeoflandusefromagriculturetoindustryanywhereinthestate
• DedicatedannualizedfundofINR1500millionwillbecreatedforthepurposesofcreationofclusters&upgradationof
IndustrialInfrastructure
• StateGovernmentwillcreatelandbankstodevelopIndustrialAreasfortherelocationofexistingindustriesfrom
residentialareasandforlocationofnewindustries
• Extendedseveralpolicyincentivesandconcessionstoareaslikehotelandresortprojects,healthtourism,farmtourism,
multiplexesandtextileindustry
Industry specific Policies
IT Policy
ITPolicyintendstocreateanenablingenvironmentinthestateforIT/KnowledgeIndustrytoattractinvestmentfromthe
privatesector.ItalsotargetstheexportsofIT/KnowledgeindustryworthINR214.6billion(USD4.6billion)and0.6million
directandindirectjobsby2018.3
TheincentivesgiventoIT/TIESIndustryinclude:4
• Exemptionsfromstampdutyandregistrationfeeforlandtransfer/allottedbyPICTCL(PunjabInformation&
CommunicationTechnologyCorporationLtd.)
• StampdutyreimbursementonlandacquiredbydeveloperforbuildingITparkorITunitsdevelopingtheirowncampuses
• VATonallITproductsrationalizedtobeatparwiththeminimumfloorrateof4percent
• ITunitscanbesetupinresidential,commercial,institutional,industrialoragricultureusezonenotifiedunderthemaster
plan
• Capitalsubsidyat20percentoffixedcapitalinvestmentintheproject,subjecttoceilingofINR2milliontobegivento
first10SMEunitsinITParknotifiedbyPICTCL
• PunjabVentureCapitalFundhasbeencreatedbyGovernmentofPunjab,SIDBIandvariousstatecorporationsforIT/
KnowledgeIndustry
• ITParksnotifiedbyPICTCLwillbeexemptedfromstatutorypowercuts,restrictionsonpeakloadhoursandweekly
loadshedding.ITunitsandparkswillbechargedfortheactualunitsconsumed.
07
Agro- Policy5
Inordertodeveloptheagrosector,thepolicyhasmadeprovisionof:
• Interestsubsidywouldbegrantedtounitsavailingtermloanfromscheduled/nationalizedBanks/FIs,whichfallunderthe
purviewoftheReserveBankofIndia
• 5percentbackendedsubsidyfor5yearsontheinterestontermloansubjecttoaceilingofINR2millionperyearper
unitwillbeprovidedsubjecttotheconditionsspecified
• InterestsubsidywillbeavailabletoagroindustrialunitsmakingfixedcapitalinvestmentrangingfromINR100millionto
lessthanINR250millionandavailingtermloanuptoINR150million.Thecostoflandforthecomputationoffixed
capitalinvestmentwillnotbemorethan20percentoffixedcapitalinvestment
• Assistanceforpreparationofdetailedprojectreportandforpatentregistrationinagro-industriesupto50percent
• CLUchargeswouldbewaivedoffwhileEDCchargesaretobereviewed
• VATandothertaxes/levieswouldberationalized
Notification Textile Policy 20066
TextilesareafocusareaofIndustrypolicyinPunjab.KeyHighlightsoftheTextilePolicyare:
• ApparelTrainingandDesignCentreinLudhianaandparticipationoftheprivatesectorisbeingencouragedtostrengthen
apparel-relatedcoursesofIndustrialTrainingInstitutesandPolytechnicsinthestate
• Assistanceinlandacquisitionbythestategovernmentforsettingupofmegatextileunits
• Creationofinfrastructureintheformoftextileclusters,apparelparksandintegratedtextileparks,havingallnecessary
facilitiesatoneplace,developedmainlythroughprivatesectorparticipation
• Reductioninelectricitydutytohalftheexistingrateformegatextileprojectsforaperiodoffiveyearsandfullwaiverof
electricitydutyforaperiodofsevenyearsformegatextileprojectsinthedistrictsofPatiala,Sangrur,Mansa,Bathinda,
Faridkot,Moga,MuktsarandFerozepur
• Settingupofneweducationalandtraininginstitutesformakingskilledtechnicalworkforceavailabletotheindustry,with
assistancefromtheGovernmentofIndiaaswellasprivatesectorparticipation.
• Creationofinfrastructurethroughclusters,educationalandtraininginstitutions
• Reductionofelectricitydutyforprojects
• Assistanceinlandacquisition
Biotech Policy 20066
Thepolicyintendstofacilitatethegrowthofbiotechindustriesanddevelopmentofcleanbiotechtechnologiesinthestate.
Keyinitiativesunderthispolicyinclude:
• Conductingworkshopsandtrainingsessionsonapplicationofcleanbiotechtechnologiestocreatepublicawareness
aboutbiotechnology
• SetupthePunjabBiotechPromotionBoardtoattractinvestmentinthesector
6 PublicPrivatePartnershipinIndia,Punjab,StatePolicy
08
• Promotionofpublic-privatepartnershipsinagricultureextension,cropdiversificationandorganicfarminginthestate
• Establishinganewbiotechnologyinstitute,whichwillactasabiotechnologydevelopmentcentretomeetR&D,pilot
scaletestingandvalidationrequirementsofthebiotechnologyindustry
• Creatingagri-clinicsandagri-businesscentresthroughoutthestatetoserveasnodalcentresforinformation
disseminationandkisancallcentrestoprovideimmediateandfirst-handinformationtofarmers
Micro, Small and Medium Enterprise Policy highlights7
• Interestsubsidywillbeavailabletoexistingsmall/mediumagroindustrialunitsundertakingmodernizationand/or
technologyup-gradationforinstallingnewequipmentsandavailingtermloanuptoINR50millionforthepurpose
• Interestsubsidyat5percentfor5yearsontheinterestontermloansubjecttoceilingofINR2millionperyearperunit
toagro-industrialunits,agri-infrastructureprojectsandalsotoexistingsmall/mediumagro-industrialunitsfor
modernization
• Capitalsubsidyat20percentoffixedcapitalinvestmentinaproject,subjecttoceilingofINR2million,tobeavailableto
first10approvedSMEunitsintheITParksnotifiedbyPICTCL
• TheStateGovernmentwouldencourageexistingsmall/mediumagroindustrialunitstoundertakemodernizationand/or
technologyupgradationtomeetthechallengesofmarketing
ThePolicyImpact
Strong agricultural and well developed small/medium scale industrial base
Thesmallscaleindustriesleadtheindustrialperformanceofthestatewith47percentofproduction,60percentofexports
and21percentoftheinvestmentfortheindustrialsectorin2008.8
Small Scale Industries in Punjab
FixedInvestment Employment ProductionValue

Units(inmillion)
(INRMillion) (InMillion) (INRMillion)
2004-05 0.204 48350 0.934 250950
2005-06 0.205 48550 0.938 252000
2006-07 0.205 55000 NA NA
Source:GovernmentofPunjabandCII,2007-08
8 IBEF
09
Investment intentions in terms of IEMs filed, Focus on increasing the existing industrial base
LOIs/DILs issued in Punjab
ProposedInvestment Thenewindustrialpolicyhasunveiledreformssuchascluster
Numbers
(INRBillion)
approachwhichincludesdevelopmentandupgradationof
2005 203 58.46 infrastructure.
2006 214 114.09

Thenewpolicyislikelytostrengthentheexistingsmallscale
2007 105 51.72 sectorsuchashandtools,steel,forging,castingandtextile
locatedinseveralpartsoftheState.Smallscaleindustrialhubs
2008 102 94.82
includingLudhiana,Batala,Jalandhar,Amritsar,Mohali,
2009
42 86.08 Kapurthala,MandiGobindgarharelikelytobebenefitfromthe
(tillAug)
policy.
Source:DepartmentofIndustrialPolicyandPromotion,Monthly
Magazine,September2009
NotonlythesmallscalesectorbutalsotheITIndustryandagro-sectorareexpectedtoattractinvestmenttothestate.The
policyreformstocreatelandbankstoprovidelandataffordablepricestonewindustriesarealsolikelytoincreasethefresh
investmentinthestate.
GrowthImpetus
Proposed Industrial infrastructure
ConsideringthattheIndustrialparksfortheIT,BiotechandTextileindustriesaretheprimarycatalystforthegrowthofthe
industry,thestategovernmentisencouragingthedevelopmentofParks.About273MegaIndustrialManufacturing,
IndustrialPark,MultiplexandHotelProjectswithproposedinvestmentofINR614.66billionhavebeenapprovedbyState
Governmentforimplementationduring2007-08.9
Someoftheindustrialparkscomingupinnearfutureinthestateareasfollows:
Industries Infrastructure
ApparelExportersAssociationofLudhianaandthePunjabSmallIndustriesCorporationjointlydevelopingan
apparelparkin85acreswith102plots
Textiles
LudhianaIntegratedTextilePark(forknittingandgarmenting)inLudhiana,andLotusIntegratedTexpark,in
Dhaula,DistrictBarnalahavebeenapprovedforPunjabundertheSITPSchemein2007
FoodParks SirhindinFatehgarhSahibdistrict
Textile(Ludhiana),Leatherindustry(Jalandhar),SewingMachine&parts(Ludhiana),Agriculturalimplements
(Moga),MachineToolsatBatala,BicyclesandBicyclePartsatLudhiana,RerollingSteelMillsatMandi
IndustrialClusters
Gobindgarh,GemsandJewelleryatAmritsar,DieselEnginesatPhagwara,HandicraftsatHoshiarpur
AutomobilesandAutoPartsinLudhianaandWoodenFurnitureatKartarpur
ElectronicsTownship(ELTOP),spanning365acresinMohaliformsthehuboftheITindustryinPunjab
InformationTechnology
Parks
ITparksarealsoplannedforPatiala,Amritsar,JalandharandLudhiana
QuarkcityIndiaPvt.Ltd.-ITspecificSEZinMohali.ThisSEZcoversanareaof20hectares
SEZ
RanbaxyLaboratoriesLtd.,MohaliThepharmaSEZcoversanareaof32hectares
Source:UnitedNationsIndustrialDevelopmentOrganization,PunjabIndustrialreview,2008
10
Venture Capital fund for IT industry
ThestatehaslaunchedaVentureCapitalFunddedicatedtoITIndustrywithacorpusofINR200million.Thishasbeen
fundedjointlybyPSIDC,PunjabInfotech,PFCandSIDBI.10
State’s emphasis on the development of skilled work

Faculty Institutions Students
force
Engineering 38 9455
Thestatehasastrongeducationalinfrastructure,with
Management 57 2,000
literacyrateof69.7percent,whichisabovethenational
HotelManagement&
2 120
averageof64.8percent(2001census).11
CateringTechnology
MCA 25 1,180
Source:GovernmentofPunjab,Education
The Entrepreneurs’ Viewpoint
TheentrepreneursinPunjabareawareofthenewindustrialpolicyandadmitthatthestatehastakensomeinitiativesand
ismovingintherightdirection.TheyacknowledgetheinitiativestowardspromotingITindustryinthestate,however,the
entrepreneursarekeenlyawaitinganeffectivesinglewindowclearance.Theyalsoexpresstheneedtomigratemost
processesonlinetoensurefasterturnaroundsandpromotestandardization.Whiletheentrepreneursacknowledgethe
initiativesofthegovernment,thereisageneralperceptionthatthestatelacksthepoliticalwilltofocusonentrepreneurial
development.
Withregardstoeducationaldevelopment,entrepreneursfindagapbetweenacademiaandindustryandaneedforindustry
readyprofessionals.Thereseemstobeaneedforincreasedfocusonvocationaltrainingandskillsbasededucation.
WhiletheentrepreneursappreciatetheagroinitiativesandtheITindustrydevelopment,theyexpressaneedtoconsciously
boostthemanufacturingsector.Itisfeltthataconsiderablenumberofmanufacturingunitshavemovedtonearbystates
likeHimachalthatmayofferamorewelcomingenvironment.
Theentrepreneursalsoacknowledgethatthereisaneedforproactiveandusefulinteractionbetweengovernmentand
industryassociationstoarriveatamutuallyagreeablepolicyframeworkwhichislong-termandpractical.Theentrepreneurs
canbepartoftheoveralldevelopmentstrategyiftheyareconsideredatthetimeofformulatingthestrategy.Ageneral
perceptionisthatstrategiesareusuallymadekeepingthelargerentrepreneursinmindthusnotbenefitingsmaller
enterprises.However,notunderminingtheneedtoattractlargeenterprises,entrepreneursadmitlargerenterprisesare
criticaltotheecosystemtoactasacustomerbaseforMSMEs
Further,whenprobedonawishlist,theentrepreneursexpressedaneedforaregionwisepolicyandaclusterbased
approachratherthanonesinglepolicyfortheentireState.
ASeedandVenturefundcocreatedbythegovernmentandestablishedentrepreneursisalsoexpectedtoprovide
opportunitiestothestate’saspiringentrepreneurialpopulation.
10 GovernmentofPunjab,IndustrialPolicy,2009
11 MaharashtraGovernment,EconomicSurvey,2008-09
11
The Government’s Viewpoint
ThestategovernmentpraisesthepeopleofPunjabfortheirentrepreneurialqualities.However,itisfeltthatinmanycases,
theentrepreneurslimitthemselvesanddonotpushforscaleafterreachingacertainlevel.Thestatebelievesthatthereis
anenormouslevelofinnovationatthegrassrootlevelbutthisinnovationisnotcommerciallyexploitedinanefficient
manner.Rapidtechnologyadoptionisalsoachallengeasvoicedbythegovernment.
Thegovernmenthoweveradmitsthatthesupportsystemmaynotbesufficientlyrobusttogiveentrepreneurstheleverage
theyneedtogetthemtothenextlevel.Thegovernmentalsofeelsthementoringinthestateisminimalorabsentwhich
furtherleadstoopportunitylossorstagnation.
Onfinancialincentivestopromoteindustry,thestategovernmentstatedthatlimitedfundsconstrainitfromgivingmany
exemptionsandsubsidies.Thereisnoplannedexpenditureonindustries.However,shouldsurplusfundsbemadeavailable,
thestatewillfocusoninfrastructuredevelopment,VCfund,developmentoflaborskillsandlanddevelopment.
Justifyingthestate’sfocusonAgricultureandAgrobasedindustries,thestatefeelsthatitsfocusiscommensuratewith
thesectorscontributiontoGSDP.Takingtheexampleofpower–Approx32percentofpowerisconsumedbyAgriculture,
35percentbyindustry,19-20percentislostandbalanceusedfordomesticpurpose.However,industrycontributesonly15
percentoftheGSDP.
Acknowledgingthedemandsofentrepreneurs,thestategovernmentrealizesandrecognizestheneedfordevelopmenton
otherfactorslikelanddevelopment;industryspecificinfrastructurelikecoldstorage,goodroads,properwatermanagement
andindustryclusterscomprisingsimilarconcernsandexpertisetobesetup.Fromthestate’sperspective,ifgivenachoice
theywouldenhancetheirfocusonSMEsectorasthelargerenterprisescanavailofexternalhelp.
Withregardstospecificentrepreneurialeducationanddevelopment,thestatehascoursesonentrepreneurshipwherethe
objectiveistoprovidetheknowledgeforjobcreationaswellasselfemployment.Thereisalsocontinuousefforttoenable
andincreaseinteractionwiththeindustryandbridgethegapbetweenwhatistaughtintheseinstitutesandwhatthe
industryrequires.PeoplefromIndustryarecalledforinteractions,workshopsandtalks.Theyarealsoinvolvedwhile
developingthecurricula.Initiativeshavealsobeenstartedforcollaborationbetweenthegovernmentandindustryplayers
withbiggerorganizationslikeTATAandL&Ttakingthelead.
TheStateismovingintherightdirectionbutpolicyimplementationneedstoincreasethemomentumofentrepreneurial
growth.TheStatedoescitetheneedforadditionalfinancialresourcestoimplementthesepoliciesthough.TheGovernment
alsolooksforwardtoacommunicationandfeedbackmechanismwithitsentrepreneursandisopentoinitiativesthatwill
increasecommunicationandpartnershippotentialwithprivateindustry.
Gujarat
Population
50.6 million (as per 2001 census)
Per Capita Net State Domestic Product Job creation Trend
Source:SocioEconomicReview,GujaratState,2008–2009 Source:SocioEconomicReview,GujaratState,2008–2009
ThePolicyFramework
Highlights of the Industrial Policy 2009
GujaratisconsideredoneoftheleadingindustrialstatesinIndiaandisoftenprojectedasanexampleofabusiness-friendly
state.Itaccountsfor22percentofthecountry’stotalinvestmentandcontributesabout16percenttothetotalvalueof
outputaddedbythemanufacturingsectorinthecountry1.Thestatehasachievedgrowthintheindustrialsectorand
contributesnearly16.1percenttothecountry’sindustrialoutput1.
ToprovideimpetustothegrowthoftheindustrialunitsinGujarat,thestategovernmenthasreviewedandupdatedthe
IndustrialPolicyandannouncedtheGujaratIndustrialPolicy2009.Themainobjectiveofthepolicyistofacilitateinvestment
inthestate,createlargescaleemploymentopportunitiesandachieveglobalcompetitivenessbyimprovingproductivity
amongindustrialunits.Asperthenormsofthepolicy,thestatehopestodothefollowing2:
1 SocioEconomicReview,GujaratState,2008–2009
2 IndustriesandMinesDepartmentofGujarat,IndustrialPolicy,2009
13
The Assessment | Gujarat
• FocusonSpecialInvestmentRegions(SIR)andInvestmentRegions(IR)withconvergenceofindustrial,socialandurban
infrastructure.ThestatehaslegislatedtheSpecialInvestmentRegionAct,2009(SIRAct)forfacilitatingdevelopmentof
SIRinDedicatedFreightCorridor(DFC)andDelhiMumbaiIndustrialCorridor(DMIC)
• Encouragesettingupofmegaprojectstofacilitatelargescaleeconomicactivityinthestate.Projectswithinvestment
ofmorethanINR10billionandcapacitytoprovideemploymentto2,000peopleareencouraged
• Promotionofclusterdevelopmentapproachbyprovidingfinancialassistancetotheclusters
• Specialthrusttosectorssuchastextilesandapparels;gemsandjewellery,agri-business,fisheries,IT/Knowledge-
basedindustries,nanotechnology,biotechnology,non-conventionalenergyresourcesportandrelatedindustriesand
powersector
• Providingfinancialassistancefortheupgradationandimprovementuponthestatusofinfrastructureinthestate
• Developmentofnewindustrialestatesinfocussectorstopromotesectorspecificeconomicactivityandgenerate
employment.Thestategovernmentplanstoprovidefinancialassistanceandincentivessuchasreimbursementof
stampdutyonthecostofland
• DevelopmentofnewindustrialestatesthroughthePublicPrivatePartnershipmodel(PPP)framework
• Emphasisonencouragingexpansionoftheskilledandeducatedmanpowerbase
• TheGovernmentofGujarat(GoG)hasincorporatedGujaratKnowledgeSocietyandplanstosetupknowledge
corridorsforhighereducation
• Ithasproposedtosetuptrainingextensioncentersinindustrialparks/clusters/SEZsonaPPPbasis,anchor
institutes,incubationcenters
Thestateisprovidingsupporttothekeythrustsectorsthroughspecificpolicyinitiatives:
IT/ITES Policy3
TheGovernmentofGujarathasundertakeninitiativestopromotethe
IT/ITESindustryinthestate.ThestategovernmenthasnotifiedIT
Policy2006–2011inNovember2006.Asperthepolicy,thefollowing
incentiveswillbeprovidedtoaugmentthegrowthofthesector:
• Exemptionfrompaymentofelectricitydutyforaperiodoffive
yearsandpowercutsforallnewITunits
• ExemptionofstampdutyforunitsintheITParksandITSEZ
• FinancialassistancetoITparkdeveloperandallowingadditional
floorspaceindex(FSI)forIT/ITESparksinurbancenters
• ProposedinvestmentofaboutINR114millionin2009-20104
• GrantingofSEZstatustotheITindustrysubjecttotheprovisionof
SEZAct/rules
3 IndustriesandMinesDepartmentofGujarat,IndustrialPolicy,2009
4 IndustriesandMinesDepartmentofGujarat,InvestmentOpportunities(Vision2010forProposedInvestmentProgram)
14
Biotechnology Policy5
ThestateofGujaratconsistofmorethan50biotechnologycompaniesand66supportorganizations6.Toencouragenew
entrepreneursandattractinvestmentsinbiotechnologysector,theGoGhasformulatedtheStateBiotechnologyPolicy
2007–2012.Thekeyhighlightsofthepolicyare:
• Focusonthrustareassuchasanimalhusbandry;agriculture;pharmaandhealthcare;andmarineforthedevelopmentin
biotechnology
• Facilitateprivatepartnershipsfordevelopingbiotechnologyparks,zonesandothersupportinginfrastructureforresearch,
training,testing,andaccreditation
• Financialassistanceforthebiotechnologyparksat50percentoffixedcapitalinvestmentsinland,buildingsand
infrastructurefacilitiesuptoamaximumofINR25million
• Promotingsinglewindowclearancebyfacilitatingeasyapprovalsbyinstitutingacoordinatingorliaisonofficer
Gems and Jewellery Policy7
TheGoGhasidentifiedthegemsandjewellerysectorasoneofthethrust
areasfordevelopment.Thestateaccountsfor80percentofthediamonds
processedinIndiaandhasemergedasthemajorsourceofemployment
generation.Tofurtherenhanceitsdominanceinthesector,thestate
governmenthasformulatedvariousschemestomakethestateasthe
favorabledestinationofinvestment.
• FinancialassistancebywayofinterestsubsidytoModernJewellery
unitsattherateof3percentperannumuptoamaximumofINR1.5
million
• EstablishmentofjewelleryparksbyencouragingPPPinthesector
• FinancialassistancefortheestablishmentofHallmarkCertification
CentresandGemsTestingCentres
Textile and Apparel8
Thestatecontributesabout33percentofmill-madefabricand25percentofpower-loomfabricofthecountry.Tofurther
augmentthegrowthofthesector,thestategovernmenthasintroducedvariousschemes:
• Financialassistancebywayofinterestsubsidyintechnicaltextiles,spinning,weaving,knitting,apparelandmachine
carpeting
• Financialassistancefortechnologyacquisitionandupgradation.
• ProposedinvestmentofaboutINR4billiontothesector9
• AssistanceforestablishingApparelTrainingInstitutions
• Supportforsettingupapparel/sewingparks,weavingparkforcotton/synthetictextiles,exclusivetechnicaltextileparks,
etc,onPPPbasis
5 GovernmentofGujaratScienceandTechnologyDepartment,BTPolicy2007–2012
6 GujaratTheGrowthEngineofIndia,SectorProfile,Biotechnology,January2009
7 GovernmentofGujarat,IndustriesandMinesDepartment,GemsandJewellerySector,2009
8 GovernmentofGujarat,IndustriesandMinesDepartment,TextileandApparelSector,2009
9 IndustriesandMinesDepartmentofGujarat,InvestmentOpportunities(Vision2010forProposedInvestmentProgram)
15
ThestategovernmenthasidentifiedvariousincentivesfortheMSMEs.
• Interestsubsidyattherateof7percentand5percentformicroenterprisesandsmallandmediumenterprises,
respectively
• InterestsubsidyislikelytobegrantedforamaximumamountofINR2.5millionperannum,foraperiodoffiveyears
• VenturecapitalfundingfortheMSMEsuptoINR100millionduringtheoperativeperiodofthescheme
• Allotmentof50percentgrantsubjecttomaximumofINR10milliontotheMSMEsfortheacquisitionoftechnologyin
anyform
• AssistancetoR&Dinstitutionsupto60percentoftheprojectcostexcludinglandcostandbuildingcost
• Patentassistanceupto50percentsubjecttomaximumofINR1millionforexpenditureforobtainingdomesticpatent
anduptoINR2.5millionforobtaininginternationalpatents
ThePolicyImpact
TheintroductionoftheIndustrialpolicy2009isseentohavehelpedindustrialdevelopmentinthestate.
TheimplementationofpolicieshasleadtoanemergenceofnumberofIndustrialEntrepreneursMemorandum(IEMs)in
thestate.Inthefirsteightmonthsof2009,about61IEMswereimplementedwithaninvestmentofINR13.4billion.
Further,sinceAugust1991tillAugust2009,1,485IEMswhereimplementedbytheentrepreneurswithatotalinvestment
ofINR807.4billionandgeneratingemploymentfor209,100people.11
2007 2008 2009(UptoAugust)
Number Investment(INRbillion) Number Investment(INRbillion) Number Investment(INRbillion)
IEMs
223 74.7 76 13.3 61 13.4
Implemented
Source:IndiaStatandMinistryofCommerceandIndustry,GovernmentofIndia
Further,theMicro,SmallandMedium
UnitsRegisteredundertheMSMEDActfromOctober2006toJune2009
Enterprise(MSMED)Act-2006,hasalso
triggeredthedevelopmentofthemicro,small Micro Small Medium
andmediumenterprisesandabout37,312units
NumberofUnitsRegistered 29085 7911 316
havebeenregisteredwithaninvestmentofINR
201billionandemploymentgenerationof Investment(INRBillion) 58.4 114.2 28.5
approx600billionduringOctober2006–June
2009.Also,about4,359unitswereregistered Employment(milion) 0.27 0.24 0.04
duringJanuary2009–June2009. Source:OfficeofTheIndustriesCommissionerate,Gujarat
10 GovernmentofGujarat,IndustriesandMinesDepartment,Micro,SmallandMediumEnterprises,2009
11 MinistryofCommerceandIndustry,SIAStatistics,September2009
16
GrowthImpetus
Infrastructural development initiatives –Thestatehastakenanumberofinfrastructuraldevelopmentinitiativessuchas

developmentofbiotechnologyparks,industrialparksandestates.
ThestateissettingupBiotechSEZatSavil,Vadodarawithatotalareaof1,700acres,thelargestinthecountry.Thestate
governmenthasalsoproposedtosetupbiotechzonesandparksatfivelocationsinGujarat12.
Further,theGujaratIndustrialDevelopmentCorporation(GIDC)hasapproved6newproposalsforindustrialestatesatthe
endofyear2008-09.12
Investment Promotion Measures –TheGovernmentofGujarathastakenanumberofinvestmentpromotionmeasuresfor

theoveralldevelopmentofthestate.InJanuary2009,ithasorganized“VibrantGujaratGlobalInvestors’Summit-2009”to
attractinvestorstoestablishprojectsinthestate.About8690MoUsweresigned/announcedin28differentmajorsectors
withtotalinvestmentofINR12215billionand2.7millionemploymentopportunitiesinthestate.13
ProposedInvestment ProposedEmployment
Sectors MoUs(Number)
(INRBillion) (Million)
Manufacturing 576 2,405 0.98
Infrastructure 194 4,859 0.17
InvestmentRegions 101 1,967 0.85
UrbanDevelopment 261 1,012 0.17
SocialServices 145 301 0.02
Tourism 99 440 0.13
SpecialSectors 1423 721 0.05
MSME 7252 68 0.30
Announcements 15 444 0.00
Source:SocioEconomicReview,GujaratState,2008–2009
State’s emphasis on the development of skilled work force –Thestategovernmenthascreatedincubationcentersin

partnershipwithprivateandcorporatesectortosupportthepotentialoftheyouthinthestate.Thestateisalso
encouragingspecializedskilldevelopmentinstitutionsthatcanimpartvocationalskillsinareassuchasmarineengineering,
mining,specializedpipelaying,logistic,etc.14
12 VibrantGujarat,BiotechnologySector,2009;GujaratTheGrowthEngineofIndia,SectorProfile,Biotechnology,January2009
17
Major hub for SEZs units –Gujaratwasthe

ProposedInvestmentandEmploymentinthe60SEZs (May30,2009)
firststatetoimplementtheSpecialEconomic
Zone(SEZ)Act,2004.Thestateisranked ProposedInvestmentbytheDeveloper
INR2,674billion
numberoneintermsofareacoveredunder aswellasUnitsinSEZs
SEZsinIndiawith60approvedSEZs(ason ProposedEmployment 1.9millionpersons

May2009).
ProposedareaofSEZs 29423.83hectares
Source:OfficeofTheIndustriesCommissionerate,Gujarat(SEZs)
Single window clearance facility –ThestategovernmenthassetupasinglewindowclearancefacilitythroughINDEXTb

(IndustrialExtensionBureau),anorganizationofGujaratGovernment.ItactsasaninvestmentpromotionagencyofGujarat
stateandprovidessinglepointofcontactforallinvestmentrelatedactivitiesinGujarat.15
Laudingtheeffortsofthestategovernment,theentrepreneursinGujarattrulybelieveintheirstate’sgoverningmachinery.
Accordingtoentrepreneurs,thestatehassetoneofthebestplatformsforanentrepreneur.Ithastakennumeroussteps
toensureentrepreneurialdevelopment.Thereiseaseinsettingupanindustrialunitthroughquickdecisionsand
streamlinedprocedures.Thestategivesopportunitytotransformideasintoactivities.
Togetherwiththeresources,Gujaratisseenashavingaveryprogressiveoutlooktowardstheindustryandentrepreneurial
development.Thestatehasarobustpolicyframework,whichiscreatedwithparticipationfromallstakeholders.However,
theentrepreneursfeelthatwhilethestateisproactiveinannouncingpolicies,theimplementationofsomeofthesepolicies
hasbeenfallingbehindschedule.
Further,thestate’sfocusonSMEsectortogetherwithlargerenterprisesandforeigninvestmentismuchappreciatedbyits
entrepreneurs.Fromanentrepreneur’sperspective,landbankforsmallplayersandeasylandtransformationsfrom
AgriculturetoIndustry,availabilityoffinancialinstitutionsanddevelopmentbanks,easycommunicationwiththe
governmentarecitedassomeofthemotivatingfactors.Thestate’sstrategicvisioncombinedwithefficientutilisationofits
resourceshasledtovariousnewgrowthopportunitiesinthestatewhichthestate’sentrepreneurshavetriedtoharness.
AsoneoftheentrepreneurinGujaratcommented“GujarathasentrepreneurshipinitsDNA,thegovernmentonlyneedsto
provideopportunities”
Asentrepreneursinthestaterecognisethestate’seffortsandwillingnesstopromoteentrepreneurialdevelopment,they
alsoexpressedsomeoftheirconcernsandexpectations.Thereisaneedtocreatemodernworld-classsocialinfrastructure
intermsofeducation,healthcareandtourismtopromoteinboundtourismaswellasmanpowermigrationfromother
states.Further,whiletheavailabilityofmanpowerisnotanissue,athoroughskillgapanalysisisrequiredfromgroundto
topleveltoaddresstheneedsofspecialisedindustries.Thestate’sentrepreneurstakeprideinthestate’sproactive
investmentpromotionprogrammes,theyalsofeeltheneedtocreatesustainabletradeandbusinesscoordinationagency
acrossvariousIndianstatesandcountriestofosterbusinesstie-ups.Further,whilethestatehasanefficientsinglewindow
mechanismsitsentrepreneursfeelthatthattoalargeextentthisisonlyforselectmarqueeprojectsandnotallprojects
receivethesametreatmentandsomestillfacedelays.Inaddition,whilethestate’sauthoritiesareperceivedtobe
supportiveinmanyareas,entrepreneurshavefacedhindranceswhiledealingwiththecentralauthorities(Customs&excise
andIncomeTax)operatinginthestate.
15 INDEXTb
18
ThestateofGujarathasbeenattheforefrontofindustrialandentrepreneurialdevelopment.Thestatehassetmany
policiesandinitiativeswhicharenowbeingreplicatedbyotherstatestocreatesimilareffect.However,thegovernment
alsocreditsthestate’sentrepreneurialcultureforitssuccess
Thegovernmentacknowledgesitsroleasanenablerandfacilitatorforgrowthandendeavourstodeliverbycreatingthe
rightframework.Thegovernmentalsoencouragesadialoguebetweenallstakeholderstocreategrowthinitiativeswhile
focussingontheoveralldevelopmentofthestate.Thegovernmenthasbeenreceptiveofthefeedbackprovidedbythe
industryatvariousforumsandhasbeencontinuouslydevisingwaystoaddresstheconcernsofitsentrepreneurs.
Theclarityofvisionandobjectivesatthestatelevelhasenabledthestatetobecomeoneofthemostindustrialised
economiesinthecountrytoday.TheGovernmenthasacknowledgedaneedforongoingdialogueandinteractionbetween
thestateandentrepreneurstocontinuallytakeintoaccounttheentrepreneurs’needswhileframingandimplementing
policies.
Delhi
Population
Source:EconomicSurveyofDelhi,2008–2009 Source:EconomicSurveyofDelhi,2008–2009
ThePolicyFramework
Highlights of the Industrial Policy
Delhihasalargepresenceofmanufacturingunitsemployingabout0.6millionpeople,withmajorityofunitsoperatinginthe
unorganizedsector.Asperthe5thEconomicCensusheldinDelhiduring2005,thestatewasranked16thintheAllIndia
ranking,withnumberofestablishmentscontributingabout1.80percentofthetotalestablishmentsinIndia.1 Thestatehas
about28plannedindustrialestatesspreadoveranareaof4,647acres,ofwhich21areunderDelhiDevelopmentAuthority
(DDA)andtheremainingaremaintainedbyDelhiStateIndustrial&InfrastructureDevelopmentCorporation(DSIIDC).2
Thestategovernmentintendstoachieveconsistentgrowthandhasformulatedindustrialpolicytoattractinvestmentinthe
state.ThefirstindustrialpolicyfortheNationalCapitalTerritory(NCT)wasframedin1982withanobjectiveofcreatinga
manufacturingsectorandemploymentopportunitiesinthestate.However,withglobalizationofeconomiesandtechnology
andadvancementbecomingthekeystoneofaneconomydevelopment,thestategovernmenthasformulatedanew
industrialpolicy2009-2021after27yearsofthelastpolicy.
1 EconomicSurveyofDelhi,2008–2009
2 GovernmentOfNationalCapitalTerritoryofDelhi,DepartmentofIndustries,DraftIndustrialPolicy,2009-2021
20
The Assessment | Delhi
ThenewindustrialpolicyisstillunderconsiderationbyGovernmentofNationalCapitalTerritoryofDelhi(GNCTD)giving
thrustonthefollowing:2
• Focusonrelocatingandphasingoutpollutingunits
• Promotinghightechnologyandskilledindustries.Thefocusistoattractknowledge-basedindustries
• Redevelopmentofindustrialareas
• Encouragementofclusterapproachinnewindustrialareas
• PromotingPublicPrivatePartnership(PPP)fordevelopingspecializedindustrialparks(suchasHi-TechParkforIT/ITES)or
SpecialEconomicZones(SEZ)withgovernmentasco-partner
• CreationofR&Dandeducationhubsinconjunctionwitheducationaluniversities,researchinstitutesandR&Dunitsin
engineering,pharmaceuticalsandelectronics
• Promotingsinglewindowclearancethroughthe‘BusinessFacilitationMission’(BFM)program.Theobjectiveistoattract
investmentsinthestatethroughproceduralsimplificationsandremovingtheneedforapproachingvariousdepartments
forclearancesandpayments.
Industry Specific Policies
Thestateisprovidingsupporttothekeythrustsectorsthroughspecificpolicyinitiatives:
IT/ITES Policy3
TheGovernmentofNCTofDelhihasundertakeninitiativestopromotetheinformationtechnologysectorinthestate.The
stategovernmenthasputforththeITpolicyin2000,whichaimstoexplorenewopportunitiesforemployment,efficiency
andenhancefactorsforeconomicgrowth.Thekeyhighlightsofthepolicyare:
• Generateadditionalemploymentinthedigitaleconomy
• Promotetheusageofe-governancetosupportthegovernmenttodeliverefficientservicestoitscitizens
• EncouragetheuseofITinschools,collegesandeducationalinstitutionsinthestateofDelhi
• PromoteentrepreneurshipandincreaseIT'scontributiontotheeconomicgrowthofthestate
• Usethemediumofinformationtechnologytopromoteequalitybyremovingpoverty,improvinghealthcare,empowering
women,etc.
• EncourageinvestmentandaccelerategrowthintheIThardware,software,Internet,training,ITenabledservices,
telecomande-commercesectors
3 GovernmentOfNationalCapitalTerritoryofDelhi,DepartmentofIndustries,ITPolicy,2000
21
SEZ Policy4
TheGovernmentofNCTofDelhihasformulatedapolicytoprovidevariousincentivesandconcessionsforthepromotionof
SEZunitsinthestate.TofosterthegrowthoftheSEZunitsinthestate,thegovernmentisprovidingthefollowing
incentives:
• SpecificsectorssuchaselectronichardwareandsoftwareincludingITES,nano-technology,bio-technology,gemsand
jewelleryandnon-conventionalenergyareallowedtocarryoutactivitiesintheSEZunits
• IT/ITESSEZunitsarelikelytobeexemptedfromenvironmentclearance
• ExemptionfromstateandlocaltaxesfortransactionswithintheSEZunits
• 100percentexemptionfrompaymentofstampdutyonthelease/licensedeedregardingthelandorbuiltupspace,
howevernoexemptionfrompaymentofregistrationcharges
• Exemptionfromelectricitydutyortax
• AllunitsestablishedundertheSEZwillbedeclared“publicutilityservices''underthejurisdictionoftheIndustrial
DisputeAct1947
Transport Policy5
Thestategovernmentformulatedthetransportpolicytoprovidecost-effectiveand
efficientmodesoftransportationtothecitizens.Thekeyhighlightsofthepolicyare:
• Provisionofaffordablemodesoftransportsuchasbuses,mini-buses,electric
trolleybuses,metros,etc.
• ControllingpollutionbyprovidingCNGbuses,strengtheningthepollutionnorms,
introductionofstrictinspectionandcertificationsystems
• Strengtheningthetransportinfrastructurebyconstructingflyovers,subwaysand
expressways
Small Scale Industries6
ThestategovernmenthasidentifiedvariousincentivesfortheSmallScaleIndustries(SSI)inDelhi:
• ProvisionofcapitalsubsidyschemefortechnologyupgradationtothenewandexistingSSIs.Thecapitalsubsidyis
limitedto12percentofmaximumloanofUSD86,703underthescheme.
• Promotingsinglewindowclearanceservices
• Simplifyingproceduresandintroducingredressalofgrievancesandassistancemechanism
• Establishingexportpromotionandqualitycontrolcell
• Provisionoffinancialassistanceatlowerinterestrates
• Focusoninfrastructurefacilitiesbyprovidingdevelopedplotsandfactories
4 GovernmentOfNationalCapitalTerritoryofDelhi,IndustriesDepartment,SEZPolicy
5 GovernmentOfNationalCapitalTerritoryofDelhi,IndustriesDepartment,TransportPolicy
6 MinistryofExternalAffairs,GovernmentofIndia,ITPDivision,ProfileofDelhi
22
ThePolicyImpact
TheintroductionoftheIndustrialpolicyhelpedindustrialdevelopmentinthestatewithincreaseinnumberofpublicprivate
partnershipprojectsandforeigndirectinvestment(FDI)inflowsinthestate.
Theimplementationofpolicieshasfosteredthegrowthofforeigndirectinvestmentinthestate.Inthefirstfivemonthsof
2009,theDelhiregion(includingpartsofUPandHaryana)wasthesecondmostfavoredforeigndirectinvestment
destinationafterMumbai.Duringtheperiodthelargestinvestmentattractingsectorshavebeenelectricalequipment,the
servicessector,telecommunications,andtransportationindustryfollowedbychemicals,foodprocessingindustries,drugs
&pharmaceuticals.
Theinvestmentinflowislikelytobringinnewtechnology,enhancethequalityofhumancapitalandcreateastrong
competitivebaseforitsoveralldevelopment.
ForeignDirectInvestmentInflowinDelhi(INRbillion) Further,duringAugust1991toAugust2009,thestatehas
implementedonly50IndustrialEntrepreneurMemorandums
2000–2005 220.8
(IEMs)withaninvestmenttoINR6.5billionandgenerating
2006 97.8 employmentfor4,880people.7
2007 138.6
Theimplementationofindustrialpolicyhasalsotriggeredthe
2008 93.5 emergenceofpublicprivatepartnershipsprojectsinthestate.The
2009(JanuarytoMay) 101.1 2010CommonWealthGamesinNewDelhihasprovidedan
opportunitytotheprivatesectortobeinvolvedonalargescale
Note:ThedataforDelhiincludesUttarPradesh(UP)andHaryana
fortheoveralldevelopmentofthestate.
Source:IndiaStatandMinistryofCommerceandIndustry,
GovernmentofIndia
GrowthImpetus
Thestateprovidesanenvironmentconducivetobusinesswithqualityinfrastructure,favourablegovernmentpoliciesand
highly-skilledandtrainedworkforce.
Infrastructural development initiatives –Thestategovernmentistakinganumberofinfrastructuraldevelopment

initiativessuchasdevelopmentofindustrialparksandestates.Ithasacquired1,300acresoflandofwhichpossessionof
1,065acreshasbeentakenfordevelopingnewindustrialestates.Ithasalsoacquired800acresoflandforthe
developmentofindustrialareas.DevelopmentofurbantransportinfrastructuresuchastheDelhiMetro,freewaysand
betterroadshavealsohelpedmakeDelhiamoreattractivecityforbusinessingeneral.
ThestategovernmenthasmadeDelhiFinancialCorporationresponsibleforfacilitatingvariousclearancesandloans
requiredforsettingupanindustry.
TotalNumberofIndustrialEstateinDelhi(asonMarch31oftherespectiveyears)
2002 2003 2004 2005 2006 2007 2008 2009
29 29 29 31 31 31 28 28
Source:EconomicSurveyofDelhi,2008–2009
23
Thestateishostingthe2010CommonwealthGames,whichislikelytoprovideitanopportunitytoaugmentits
infrastructureandfacilities.ThestategovernmenthasproposedanoutlayofINR21.05billionfortheCommonwealth
Gamesprojects.ThegovernmenthasalsotargetedutilizingmorethanINR450billion(during2007-2012)forimprovingcivic
infrastructureandservicesinthestate.8
Strong focus on the development of skilled work force9 – Thestatehasastrongeducationalinfrastructure,withliteracy

rateof81.67percent,whichisabovethenationalaverageof64.8percent.Thestateisthehubforleadingtechnical(IIT),
medical,management,andlegalinstitutions.TheGovernmentofDelhiisfocusingontheeducationsectorandhas
increasedtheexpenditureonthesectorfrom8.5percentin2007-08to10.3percentin2008-09ofthetotalplan
expenditure.Further,in2008-09,Delhiper-capitaexpenditure(INR1,753)oneducationsectorwashigherthanallstates
(INR1,098).
Strong financial infrastructure for collection of

StatusofEducationalInstitutes
savings and disbursal of credit –Thestatehas
Schools 5022 asoundfinancialinfrastructurewith2,076
branches(September2008)ofScheduled
Colleges 175-degreecolleges
CommercialBanks,anincreaseof14.32percent
TechnicalInstitutes 46AICTEapprovedtechnicaleducationinstitutions ascomparedtothepreviousyear.Thecreditto
depositratioofallscheduledcommercialbanks
was70.49percent,veryclosetotheallIndia
FinancialInstitutionsinDelhi(asonSeptember2008)
ratioof74.93percent.
StateBankofIndiaanditsAssociates 360
NationalizedBanks 1247
ForeignBanks 40
OtherScheduledCommercialBanks 429
8 StateBudget2009–2010
9 EconomicSurveyofDelhi,2008–2009
24
WithCommonwealthGames2010aroundthecorner,thestateofDelhiisworkingtomakemanyimprovementsand
creatingaplethoraofopportunitiesinmultiplesectorsacrossthespectrum.However,whilenewopportunitiesarebeing
createdinlightoftheCWG2010,thebasicpolicyframeworkofthestatehasnotbeenrevisedforthelast27years.Hence,
manyentrepreneursinthestatearenotawareofthepoliciesandperhapswerenotabletoharnessthebenefitswhile
startingtheirentrepreneurialjourney.
However,thestateofDelhiisperceivedasnotproactiveinpromotingbusinessorindustrialgrowth.NeighbouringHaryana
andUPareactivelycreatinginfrastructuretopromoteindustrywhichhascompelledthebusinesstomigratefromDelhito
thesestates.Partly,thereluctancemaystemfromthedesiretomoveheavyindustryoutofDelhiandpartlyfromthefact
thatDelhi,beingthecapitalandtheeconomiccentreoftheNorth,seesvibranteconomicactivitywithoutactivepromotion.
However,entrepreneursdidcitetheneedforactivegovernmentsupportandthereseemedtobeanoveralllackof
awarenessoftheState’ssectorspecificpoliciesandincentivestructures.
Whilediscussingtheirwishlistandconcerns,therewasconsensusamongstentrepreneursforcreatinganenablingpolicy
frameworkfocusedatinclusivegrowthandservicesectordevelopment.Accordingtoentrepreneursinthestate,
‘entrepreneurship’isnotarticulatedinthecurrentpolicy.TheentrepreneursalsofeeltheneedforastatesupportedVenture
/SeedFund.Thereisalsoadireneedtocreateinfrastructureintermsofofficespaceanddevelopexistingpowerand
telecominfrastructuretofosterbusinessgrowthinthestate.Further,theexistingindustrialinfrastructureneedsafaceliftto
enableinvestmentsinthestatewhilecreatingamorefocusedregulatoryframeworktominimiseprocesstimeand
enhanceclarity.
WiththeCWG2010preperationsinfullswing,thestategovernmentemphasisestheopportunitiesithascreatedacross
theNCRregioninsectorssuchasinfrastructure,hospitality,construction,transportetc.Whilethestaterecognisesthatthe
focusonindustryintermsofpolicyinitiativeshaslaggedbehindschedule,thenewdraftindustrialpolicy2009-21islikelyto
befinalisedbytheendof2009.Thepolicyisfocusedatcreatingopportunitiesinnewcleanersectorswhilesimplifying
proceduresthroughamorerobustandefficiente-governanceframework.
Further,thestategovernmentintendstoachieveconsistentandrapidgrowthandhasformulatedindustrialpolicytoattract
investmentinthestatebypromotinghightechnologyandskilledindustries.Thefocusistoattractknowledge-based
industriesandredevelopmentofindustrialareas.
ThegovernmentislookingforwardtoshowcasingDelhitotheworldduringtheCWG2010andthegameshavebecomea
catalystforinvestmentandgrowthorientedactivityinthestate.
Ta m i l N a d u
Population
Source:EconomicSurveyofDelhi,2008–2009 Source:EconomicSurveyofDelhi,2008–2009
ThePolicyFramework
Highlights of the Industrial Policy 20071
TamilNaduisconsideredaleadingindustrialstateinIndia,andamajormanufacturingcentre.Itisoneofthemostfavored
destinationsbyboththedomesticandforeigninvestors,especiallyinareasofInformationTechnologyandrelated
industries,automobiles,electronics,consumerdurables,garmentsandrealestate.
Tofurtherstimulatethegrowthofindustrialdevelopmentinthestate,thegovernmentintroducedtheIndustrialPolicy2007.
Thekeyobjectivesofthepolicyaretoattractinvestment,facilitatenewmanufacturingcapacityandraisethe
competitivenessandefficiencyoflocalindustry.Otherstatedhighlightsofthepolicyare:
• IncreasemanufacturingsectorcontributioninGSDPfrom21percentto27percentby2011
• Developanefficientanddependableindustrialinfrastructure
• Upgradeinfrastructurefacilitiesbyencouragingpublicprivatepartnershipsinallindustrialclusters,includingwater
supply,power,communicationfacilities,roads,railways,etctoincreasecompetitivenessintheindustry
1 TamilNaduindustrialDevelopmentCorporationLimited,IndustrialPolicy,2007
26
The Assessment | Tamil Nadu
• UpgradationofeducationalinstitutionsbyinitiatinganIndustrialTrainingQualityImprovementProjecttoinvest
substantiallyintheITI/ITCinfrastructuredevelopmentandcapabilities
• FinancialassistancetoindustrialparksuptothemaximumofINR20millionor25percentoftheinvestmentineligible
fixedassets,whicheverisless
• FinancialassistancetotechnologyinnovatorsorstandaloneR&Dunitsorindividualsforinnovationscapableofindustrial
application,upto50percentofthecostoffilingapatentorINR0.2million,whicheverisless
• Encouragementofinvestmentsinresearchanddevelopmentbymanufacturingcompanies
• Enactmentofa‘BusinessFacilitationAct’forgivingSingleWindowCommittees,atStateandDistrictlevel,formal
authorityandcleartimelinesforeachapproval
• Implementinga‘BusinessFacilitatione-GovernanceSystem’forenablinginvestorstoapplyforSingleWindow
Clearanceon-lineandtomonitorclearances
• Promotingclusterdevelopmentactionplanforupgradingthequalityofinfrastructureinindustrialclusters
Thestateendeavorstosupportkeythrustsectorsthroughspecificpolicyinitiatives:
ITES Policy2
• Topromotethesector,in2005,theGovernmentofTamilNadureleasedanITESpolicy.Thepolicyoutlinescertain
concessionsandincentivestoencouragethegrowthofthesector.
• Granted50percentexemptionofstampdutyforITcompaniestowardslandregistrationandofficeconstruction
• Promotingunrestrictedmovementofcapitalequipmentincludinghardware,peripherals,captivepowergenerationsets,
etc.
• RelaxationofFSI(FloorSpaceIndex)upto100percentwillbegivenindesignatedITParks
• Allotmentof‘IndustryStatus’toallsoftwareindustriesincludingservicesandtraininginstitutionsinITES
• CreationofITESParksinChennaiandotherTierII/TierIIIcities
Handloom and Textile Policy3
Tostimulatethegrowthofthetextileindustry,thestategovernmenthasformulatedthehandloomandTextilePolicy2006
–2007.Thepolicyaimsatachievingglobalstandardsinproductquality,contributemoretoexportsandtoencouragetextile
clusters.Thekeyhighlightsofthepolicyare:
• Focusonhandloomexportsbyencouragingtheweaverstobringoutexport-orientedproducts
• Registeringhandloomproductssuchas‘KancheepuramSilkSarees’and"BhavaniJamakkalamunder’underthe
GeographicalIndicationsAct
• SettingupofApparelandHi-techWeavingParks
2 GovernmentofTamilNadu,ITPolicy
3 GovernmentofTamilNaduHandloomandTextilePolicy
27
Biotech Policy4
TamilNaduisrichinbioresourceswithoneofthelargestcoastlines
inthecountry,representingopportunitiesformarinebiotechnology.
TofurtheraugmentthegrowthoftheBiotechnologyindustry,the
stategovernmenthasformulatedabiotechnologypolicy.Thekey
highlightsofthepolicyare:
• FocusonMedical/Human&AnimalHealthcare,Agriculture-
food,Environment,andIndustrialProducts
• CreationofBiotechnologicalEnterprisesZones(Bio-Valleys)in
thestate
• RegulatoryfacilitationforestablishingaBiotechentityresearch
centres
• FacilitatingsinglewindowfacilityforBiotechenterprisesand
entitiestoobtainclearancesfromthevariousCentralagencies
• Enhancementofhumanresourcepoolforthedevelopmentof
thesector
• Facilitatingestablishmentofanemergingtechnologyfundfor
thesector
• Allotmentofindustrystatustothebiotechnologyunits
undertakingcommercialproduction
Micro, Small and Medium Enterprise (MSMEs) Policy highlights5
ToenhancethecompetitivenessoftheMicro,SmallandMediumenterprises,thestategovernmentannouncedan
exclusiveMicro,SmallandMediumEnterprisePolicy2008.Thepolicyfocusesonallinitiativestobetakenbythestate
governmentforthedevelopmentofMSMEs
• Encourageagro-basedindustriestoprovidebetterincometothefarmers
• Promoteentrepreneurdevelopmentandsectorspecificskilldevelopmenttrainingprogrammes
• Establishmentofnewindustrialestatesbyallotting20percentlandinallnew/expansionschemesundertakenbyState
IndustriesPromotionCorporationofTamilNaduLtd(SIPCOT)toMSMEs
• Rebateof50percentonstampdutyandregistrationatthetimeoforiginalallotment
• Encouragementofprivatelydevelopedestatesbyproviding25percentofthetotalprojectcost,subjecttoamaximum
ofINR10millionasassistance
• Financialassistancebywayofcapitalsubsidyattherateof15percentoneligibleplantandmachinery,subjecttoa
maximumofINR0.375million
• FinancialassistancebywayofcapitalsubsidyforThrustSectormanufacturingenterprisessetupanywhereintheState
4 BiotechnologyPolicyOfGovernmentOfTamilNadu
5 GovernmentofTamilNadu,Micro,SmallandMediumIndustriesPolicy2008
28
ThePolicyImpact
TheintroductionoftheIndustrialpolicy2007hasplayedacriticalroleinenhancingthegrowthofindustrialdevelopmentin
thestate.
Theimplementationofthesepolicieswereanimportantcontributortothestateincreasingtotalinvestment3timesfrom
INR1,737billiontoINR5,792billionduringJune2006toMarch2009.6 ItalsoleadanumberofIndustrialEntrepreneurs
Memorandum(IEMs)inthestate.FromAugust1991toAugust2009,about521IEMshavebeenimplementedbythe
entrepreneurswithaninvestmentofINR137.7billionandgeneratingemploymentopportunitiesfor79,084people.7
1991–2006 2007 2008 2009(UptoAugust)
Investment Investment Investment Investment

Number Number Number Number
(INRbillion) (INRbillion) (INRbillion) (INRbillion)
IEMs
438 96.4 29 15.6 24 13.7 30 12.1
Implemented
Source:IndiaStatandMinistryofCommerceandIndustry,GovernmentofIndia
Further,theimplementationofpolicieshastriggeredthegrowthofForeignDirectInvestment(FDI)inthestate.TheFDI
inflowintheChennairegion(includingTamilNaduandPondicherry)increasedfromINR28.9billionin2007toINR29.8
billiontillMay2009.
2000–2005 2006 2007 2008 2009(TillMay)
ForeignDirect
52.0 51.9 28.9 58.2 29.8
Investment
Source:MinistryofCommerce&Industry,GovernmentofIndia
ThestatehasimplementedtheMicro,SmallandMediumEnterprise(MSMED)Act-2008,whichhasstimulatedthegrowthof
micro,smallandmediumenterprisesinthestate.ThenumberofMSMEhasincreasedby3.5percentfrom0.539millionin
2006–2007to0.558millionin2007–2008,whichhasleadtoanincreaseinthenumberofpersonsemployedinthestate.8
Parameter 2005–2006 2006–2007 2007–2008
NumberofRegisteredMSMEs(Million) 0.511 0.539 0.558
InvestmentinFixedCapital(INRbillion) 161.0 168.2 193.6
ValueofOutput(INRbillion) 1,039.1 1,059.8 1,147.2
Employment(Millionnumber) 3.593 3.703 3.946
Source:DepartmentofEconomicsandStatistics,TamilNaduStatisticsataGlance-2008
Further,thepolicyalsoresultedintheestablishmentofanumberofindustrialestates.During2008–2009about11new
industrialestateshavebeenestablished.Thegovernmentplanstosetupaboutthreenewindustrialestatesfortheyear
2009–2010.9
6 GovernmentofTamilNadu,IndustriesDepartment,PolicyNote2009–2010
8 DepartmentofEconomicsandStatistics,TamilNaduStatisticsataGlance-2008
9 GovernmentofTamilNadu,PolicyNotes,Micro,SmallandMediumEnterprisesDepartment,2009–2010
29
GrowthImpetus
Infrastructural development initiatives –Thestatehastakenanumberofinfrastructuraldevelopmentinitiativessuchas

developmentofindustrialparksandSEZunitstodispersetheindustries.Thestateranksthirdinthenumberofapproved
SEZunits11.Thestatehasnotified47SEZunitswithatotalareaof3972hectares.
State-wiseDistributionofApprovedSEZs(asonMarch31,2009)
Formalapprovals In-principleapprovals NotifiedSEZs
69 17 47
Source:DepartmentofCommerce,India,SpecialEconomicZones(SEZs)andExportOrientedUnits(EOUs)
Investment Promotion Measures10 –TheGovernmentofTamilNaduhasputinplacespecificindustrialpromotional

agenciessuchasTIDCO,SIPCOTandTANSIDCOwithanobjectiveofoverallindustrialdevelopmentinthestate.
TheGovernmenthasmadesignificanteffortstoattractnewinvestmentsinthestate.Withinthenewindustrialpolicy,the
governmenthassanctionedstructuredpackagesofassistanceforattractingnewinvestmentsinthestate.During2006–
2009,thestatesigned23MemorandumofUnderstanding(MOU)inadditiontosanctioningstructuredpackagesof
assistancefor9projects.Outofthe23MOU,12weresignedinthecalendaryear2008withatotalinvestmentofINR251
billion.Thegovernmentalsoissuedstructuredpackagesofassistancefor7projectsforaninvestmentofINR54.6billion.
Availability of skilled manpower –Thestatehasaliteracyrateof73.5percent,whichishigherthanthenationalaverage

of64.8percent.Thestategovernmentistakinganumberofinitiativestoenhancethequalityofmanpower.Ithasinitiated
anIndustrialTrainingQualityImprovementProjectfortheupgradationofeducationalinstitutions.Ithasalsoopeneda
numberofindustrialtrainingcentersandissupportingdevelopmentofCentersofExcellenceandincubationcentersforthe
overalldevelopmentoftheentrepreneurs.
StatusofEducationalInstitutes
Arts,ScienceandOtherColleges 1,145
Engineeringeducationalinstitutions 355
Polytechnics 317
Governmentitis 60
AffiliatedPrivateIndustrialTrainingCenters 605
IndustrialTrainingCenters 753
Source:GovernmentofTamilNadu,IndustriesDepartment,PolicyNote2009–2010
Single window clearance facility –Thestategovernmenthasaneffectivesinglewindowclearancemechanismto

facilitatesmoothimplementationofindustrialprojects.Toavoidproceduraldelays,thegovernmenthasintroduceda
CommonApplicationForm(CAF)toreplacemultipleforms.IthasdesignatedanodalagencyTamilNaduIndustrialGuidance
&ExportPromotionBureau(GuidanceBureau)fortheefficientfunctioningofthemechanism.11
30
The entrepreneurs Viewpoint
ThestateofTamilNaduisundoubtedlyoneofthemostindustrializedstatesinthecountrywithspecificfocuson
InformationTechnology,automobilesandtextilesectors.Thestategovernmenthasbeenproactiveinidentifyingthekey
focusareasandaccordinglyimplementingthepolicyframeworktoaugmentgrowthinspecificsectors.Thestatehasalso
beenoneofthefirstinthecountrytospecificallyfocusonpromotingindustryandbusinessgrowthinTierIIandTierIII
citiesthusaimingfortheholisticdevelopmentofthestate.
Theentrepreneursinthestateacknowledgethatthestatehasbeenmovingintherightdirectionwiththeindustrialpolicy
beingbusinessfriendlyandmeasuresbeingtakenspecificallyforthemicro,smallandmediumenterprises.Therehavealso
beenspecificmeasurestopromoteITandITESindustriesandthestate’sgovernmentmachineryhasbeenextremely
supportiveandhasplayedavitalroleinestablishingtheIT/ITESsectorinthestate.
Accordingtoentrepreneurs,thegovernmentthroughTamilNaduSmallIndustriesDevelopmentCorporationLimited
(TANSIDCO),hasalsoplayedacatalyticroleinthepromotionanddevelopmentofSmallScaleIndustriesandhasteningthe
industrialdispersalthroughoutTamilNadu.Thegovernmenthasbeenproactiveinprovidingsupportthroughdevelopmentof
industrialestates,provisionofworksheds,developedplots,rawmaterialssupply,marketingassistance,exportassistance
andguidancetoentrepreneurs.
Further,thestatehascreatedvariousapexbodiesandsupportedchamberstopromotetheinterestofsmallandtiny
enterprise.Thegovernmentalsobeenorganizingguidanceseminarsforentrepreneursandcreatingtrainingprogrammesto
addresstheirconcerns.However,despitetheseefforts,mostentrepreneursfeelthatthisisanareawherethescopeof
developmentisimmense.Theentrepreneursexpectthegovernmenttoprovidesoftersupportthroughmakingcritical
information(schemes,incentivesetc)availablewhilecreatingmentoringandguidanceplatforms.
Thewishlistalsoincludescreationofstateinitiatedfundingmechanismforentrepreneurialdevelopmentwhileensuring
creationofrightinfrastructureontheotherhand.AspecificexamplecitedwaswithspecificreferencetoSEZswherethe
infrastructureattheSEZisreadybutperhapstheconnectingroadsarestillnotreadythusdelayingthepossibleusageof
thereadyinfrastructure.
ThegovernmentofTNisfocusedoncreatingandattractingindustrialprojectsandpromoteinvestmentsinTamilNadu.The
stateacknowledgestheneedforinformationdisseminationandiscommittedtoprovidingcomprehensiveinformationon
supporttoinvestorsaboutfederalandStateGovernmentpolicies,infrastructuresupport,taxation,investmentopportunities
etcthroughtheirportals.
ThegovernmentisalsoproactivelyplanningtheSingleWindowDocumentationCentreformajorinvestmentproposalsand
assistinvestorsingettingallpre-projectclearances,infrastructuresupportlikelandinindustrialparks,power,water,etc.
Howeverfromasmallerinvestorperspective,thegovernmentacknowledgestheneedtoprovidebetterinformation
disseminationonschemesandincentivesandamoreproactiveapproachtotheSMEsegment
Thegovernmentalsoclaimssignificantprogressinenablinginformationandleadsharingonexportenquiriesandother
measurestopromoteexports.
31
Thestategovernmenthastakenanumberofpolicyinitiativestopropelgrowthinthemanufacturingandservicessectors.
TamilNaduhasbeenconstantlyupgradingitsinfrastructuretomeettheindustrialneed.Policymeasuressuchassingle
windowclearancesystemhavepavedwayfortheforeignerstoinvestinthestate.TamilNaduwasoneofthefirstto
formulatepoliciesfortheITESandbiotechindustries.Ithasoneofthelowestpowertariffsinthecountryandisoneofthe
fewstatestosellelectricitytoneighbours.
Althoughthegovernmenttakesprideinthevariousinitiativestheyhavebeenrollingouttosupportindustryand
entrepreneurs,theyalsoacknowledgetheneedforimprovedcommunicationbetweenentrepreneursandthegovernment.
Thestatehasidentified5criticalactionareasi.e.,industrialpolicy,infrastructuredevelopment,proceduralsimplification,
industrialpromotionandinvestmentpackagestowardssignificantdevelopmentsintheindustrialsceneandhopesto
engagewiththeentrepreneurialcommunitymoreontheseareas.
Karnataka
Population
52.9 million ( as per 2001 census)
Source:EconomicSurveyofKarnataka,2008–2009 Source:EconomicSurveyofKarnataka,2008–2009
ThePolicyFramework
Highlights of the Industrial Policy 2009 – 2014
Knownasthe“SiliconValleyofIndia”,KarnatakaisamongstthetopfiveindustriallydevelopedstatesinIndiawiththe
servicesectorlargelyfuellingtheoveralleconomicgrowth.1
Aimedatpropellingtheoverallsocio-economicdevelopmentofKarnataka,thestategovernmentintroducedtheIndustrial
Policy2006-2009.ThispolicywasfurtherrevisitedtoformthelatestIndustrialPolicy2009-2014.Thekeyobjectivesofthe
policyaretoincreasethegrowthofGDPandexports,strengthenmanufacturingindustries,andgenerateadditional
employmentforatleast1millionpersonsinthemanufacturingandservicesectors.Otherstatedobjectivesandhighlights
ofthepolicyinclude2:
• IncreasingtheshareofindustrytothestateGDPto20percentbytheyear2014
• Developmentofsector-wiseindustrialzonesforoptimalutilizationoflocalnaturalandhumanresources
1IndiaBrandEquityFoundation(IBEF)
2 KarnatakaIndustrialPolicy,2009-2014
33
The Assessment | Karnataka
• Thrustonprovisionofworld-classinfrastructuralfacilitiesforindustrieswithactiveparticipationofprivatesector/industry.
Toupgradeandmaintaininfrastructuralfacilitiesonasustainablebasis,itisproposedtohaveadedicatedInfrastructure
DevelopmentFundofINR5billion
• Lucrativeemploymentandperformancelinkedpackageofincentivesandconcessionstoattractinvestmentsto
backwardregionsandtheMicroSmallMediumEnterprises(MSME)sector.ThestatewillallocateINR10billionfor
acquiring1000to2000acresoflandforestablishingsmallandmediumenterprisecolonies
• Emphasisonthedevelopmentofskilledmanpowerwithaspecialfocusonupgradingemergingskillsetsand
developingskillsetsinwomen
• Promotionofselfemploymentbylocalyouthislikelytobefocusedonthroughproperbackupsupportandfacilitation
• Aclusterdevelopmentapproachwillbeencouragedforthestatetoproductivelytargetresourcesanddevelopastate-
of-artindustrialinfrastructure
• Enhancetheeffectivenessofthesinglewindowclearancemechanismandreducethetransactioncostsofdoing
business
• PromotionofPublicPrivatePartnership(PPP)frameworkforthedevelopmentofnewindustrialestates
Industry Specific Policies
Thestateendeavorstopromoteinvestmentsincertainkeyfocussectorsthroughspecificpolicies:
IT/BPO Policy - No longer the de facto choice for the IT/ITES industry
Thestategovernmentispursuingnumerouseffortstoregaingrowthandexpansioninthesector
throughfavorablepolicies3:
• ExemptiontoITcompaniesfrompaymentofentrytaxoncertaincapitalgoods,concessiononstampdutyand
registrationcharges,andrebatesoncostofland
• ContinuousanduninterruptedsupplyofpoweratindustrialratestoITunits
• Pollutioncontrolclearances,relaxationinlaborlaws,andeasyfacilitationthroughthesinglewindowagency
• Venturecapitalandassistancefromgovernmentforstart-ups
Biotechnology Policy
Themainobjectivesofthebiotechnologypolicyaretospreadawarenessabouttheinvestmentopportunitiesin
biotechnologyandrelatedsectors.Furthermore,thepolicyoutlinesasetofincentivesandconcessionsforattracting
investments4:
• Exemptionfromthepaymentofentrytaxonallinputsaswellascapitalgoods,includingcaptivegenerationsets,during
theimplementationstage(upto5years)
• Megaprojectswillbeofferedauniquepackageofconcessionsforamaximumperiodof8years.Theywillalsobe
offeredupto50percentconcessiononstampdutyandregistrationchargesforfirstsaleandfirstlease
• Totalexemptionfromelectricitytaxforaperiodoffiveyears
• Upto50percentexemptionfromthepaymentofstampdutyandregistrationchargesforbiotechparks
3IndustryOverview,EconomicSurveyofKarnataka2008-2009
4 TheMillenniumBiotechPolicy
34
Special Economic Zone Policy Highlights5
TheKarnatakagovernmentannouncedastatepolicyforexpeditingthegrowthofSpecialEconomicZones(SEZ)andasa
partofthis,keybenefitstoSEZsinclude:
• SinglepointclearancewhichwillbegivenforSEZproposalsbeforerecommendingtotheGovernmentofIndiafor
approval
• SEZswillbedeclaredasindustrialtownshipsundertheKarnatakaMunicipalities(Third)AmendmentAct,2002enabling
themtofunctionasselfgoverningandautonomousmunicipalbodies
• Anexemptionof50percentonstampdutyandregistrationfeesforregistrationofleasedeeds/sub-leasedeedsin
respectofindustrialland/built-upspaceandloan/creditdocumentsintheprocessingarea
• Exemptionof1percentoflaborwelfarecessonconstructioncostincurredbytheSEZunit
• Exemptionofelectricitydutyortaxesonsaleofselfgeneratedorpurchasedelectricpowerforuseintheprocessing
areaofaSEZ
• AllpurchasesexcludingpurchaseofpetroleumproductsbySEZunitslocatedintheprocessingareasfromdomestic
tariffareaorSEZareaforitssetupshallbeexemptedfromstateandlocalbodytaxesorleviesorcess.
Micro, Small and Medium Enterprise (MSME) Policy Highlights6
Thestategovernmenthasproposedvariousmeasuresandpoliciesin
theMicro,Small&MediumEnterprisesDevelopmentAct,2006to
facilitatethegrowthofMSMEs:
• Whiledevelopingindustrialareasatleast20percentofthelandwill
beearmarkedfortheMSMEsector
• Apricepreferenceof15percentwillbeallowedforthegoods
manufacturedbyindustrialMSMEslocatedinthestateincaseof
purchasesmadebythegovernmentdepartmentsandstateowned
PSUs
• MarketdevelopmentandpromotionofMSMEmanufactured
productswillbesupportedthroughsettingupvirtualandphysical
exhibitioncentersatstate&districtlevels
• RelevantsupportschemessuchasCreditGuaranteeFundTrust
Scheme,andClusterDevelopmentProgrammeforMSMEswillbe
mergedforthebenefitoftheseenterprises
• Attractiveincentivepackageswillbeofferedespeciallyinbackward
areastoprovidecompetitiveedgetothesectorwithemphasison
theindustrializationofbordertaluks.
5StatePolicyforSpecialEconomicZones2009
6 KarnatakaIndustrialPolicy,2009-2014
35
ThePolicyImpact
TheintroductionoftheIndustrialPolicy2006-2009hasplayedanimportantroleinacceleratingthepaceofindustrialization
andtradeinKarnataka.
DuringtheApril–September2008,118IEMshavebeenissuedasagainst113IEMsforthesameperiodduringthepreviousyear.
Particulars 2006-2007 2007-2008 2007(Apr.toSept.) 2008(Apr.toSept.)
1.a.IEMsFiled 277 208 113 118
b.ProposedInvestment(inbillions) 718.44 1676.49 377.13 223.29
2.a.LettersofIntentandDirectIndustrialLicenses 9 10 5 10
b.ProposedInvestment(inbillions) 4.06 1.68 0.7 .027
Source:TechnicalConsultancyServicesOrganizationofKarnataka(TECSOK)
Further,duringApriltoNovember2008,about9,289smallscaleindustrieswereregisteredgeneratingemploymentfor
63,961persons.
2006-07 2007-08 ApriltoNovember
2007 2008
SSIsRegistered 12,580 14,984 8,398 9,289
Employment 57,517 123,399 76,862 63,961
Investment(INRbillion) 4.7 11.3 7.0 6.2
Source:EconomicSurveyofKarnataka2008-09
GrowthImpetus
Karnatakaprovidesatransparentpolicyframeworkandasupportivebusinessenvironmentwhichisdesignedtoencourage
entrepreneurshipandindustrialization.Thestategovernmentheavilyfocusesondevelopinganequippedworkforce
supportedbyawell-definedindustrialandfinancialpolicies,however,entrepreneurscontinuetociteinfrastructureas
constrainingfactorinKarnataka.
Single Window Clearance Facility -IntheKarnatakaIndustries(Facilitation)Act,2002thestateconstitutedtheStateHigh

LevelClearanceCommitteewhich,actsasthesinglepointofclearanceforSEZdevelopersandco-developers.
36
TheStateHighLevelClearanceCommitteeapproved1,818projectswithanaggregatedinvestmentofINR255.78billion
whichisexpectedtoprovideemploymentopportunitiesforabout1.2millionpersonsuponimplementation.
ProjectsApprovedbytheStateLevelSingleWindowClearanceCommitteefrom2006-2008(Oct.)
Year ApprovedProjects Investment(inbillion) Employment(InNo.s)
2006-2007 881 119.23 731750
2007-2008 728 103.09 349665
2008-2009 209 33.46 86546
Source:IndustryOverview,EconomicSurveyofKarnataka2008-2009
A Strong Financial System –Karnatakahasadevelopedbankingnetworksystemwhichextendstoboththeurbanand

ruralareas.AsofMarch2008,thereare5,280ofbankbracheslocatedacrossstateasagainst755branchesatthetimeof
nationalization(1969).Ofthese,3,304bankbranchesarelocatedinruralandsemiurbanareas,indicatingawelldistributed
creditdeliverysystem7.
The Karnataka State Financial Corporation (KSFC) and the Karnataka State -IndustrialInvestment&Development
Corporation(KSIIDC),whichprimarilyengageindevelopingMSMEsandlargescaleindustries,areintenselyfocusedon
financingschemesforinfrastructuraldevelopmentprojectsincludingtourism,healthcare,foodprocessing,textiles,
insurance,andagro-basedinsurance.ItisanticipatedthattheloansmadebyKSFCwillreachINR6.5billionasagainstINR
3.7billionasofMarch20088.
Initiatives Focused on Infrastructure Development -Asapartoftheinfrastructurepolicy2007,thestategovernmenthas

setoutseveralsectoralpoliciesfordevelopingroads,power,informationtechnology,andports.Thedevelopmental
expenditurebudgetedfor2008-2009isoftheorderofINR401.0billionagainstINR336.2billionin2007-08,anincreaseof
19.27percent9.
Active Focus on Skill Development and Training -Thestategovernmentisinvestingincreatingtherequiredfacilitiesfor

trainingpeopleoncertainkeyskills.Asapartofthis,thestatehassetupsixtraininginstitutes10.Theseinstitutesimpart
periodicaltrainingtosericulturists,reelers,entrepreneursandlicensedseedpreparers.
7InstitutionalFinanceOverview,EconomicSurveyofKarnataka,2008-2009
8 InstitutionalFinanceOverview,EconomicSurveyofKarnataka,2008-2009
9TheStateBudget,EconomicSurveyofKarnataka,2008-2009
10IndustryOverview,EconomicSurveyofKarnataka,2008-2009
37
OneofIndia’sfastestgrowingstates,KarnatakahasbeentheforerunnerinthefieldofIT/ITES.Theentrepreneursrecognize
theproactiveattitudeofthestategovernmentandappreciatethesectorfriendlypoliciesspecificallyintheIT/ITESsector.
Theentrepreneursalsoacknowledgevariousprogrammestohelpentrepreneurssetupnewbusinessesinruralareasby
providingfunds.
Thestate’sincubationfacilitiesspecificallyintheknowledgebasedindustriesarealsorecognizedwhilethestate’sfunding
ofstartupsisalsoappreciated.However,earlystageandseedfundingarestillseentobelackingandentrepreneurshave
expressedaneedforastatesupported(throughincentives&taxbenefits)seedfundorganizedbyanetworkofangel
investorsandestablishedentrepreneurs.
Thewishlistofentrepreneursincludesclarityandfasterresolutionoflandtitles;availabilityofbasicinfrastructure–Water,
Roadsandpoweratcompetitivepricesandcreationofinfrastructureaheadofdevelopment.Withregardstoavailabilityof
financeandinformationtheentrepreneursarewillingtocreatetheirownnetworksbutexpectthegovernmenttostimulate
fundingbyprivateplayers.
Whiletheentrepreneursunderstandthatthestatehasmanymorecriticalissuestotackleontheoveralldevelopment,they
expectthegovernmenttocreateanenablingenvironmentforpeopletoharnessopportunities.Thestateisbelievedtobe
wellintentionedwithinitiatives,theimplementationofthesehasbeenquestionedbytheentrepreneurs.
Karnatakaisfocusedonimprovingitsinvestmentclimate.Ithasbeenproactiveininvitingtheprivatesectorandwas
amongthefirsttoinviteprivateinvestmentintheeducationsector.Withitsencouragingpoliciesandfavourable
environment,thestatehasattractedinvestorsandhasseenasteadyincreaseinForeignDirectInvestment(FDI)inflowin
recentyears.
Karnatakaiskeentopromoteitselfasthedestinationfordomesticandforeigninvestmenttocatalyseindustrialgrowth.The
stateproposestocreateemploymentopportunitiesthroughindustrialgrowthinthestateandseveralsectorshavebeen
identifiedasthrustareas.Thestateoffersincentivessuchastaxexemptionsforinvestmentinthesesectors.Thesesectors
areelectronics,telecommunication,informatics,precisiontoolingandtoolroomindustries,readymadegarmentsincluding
leathergarments,unitsmanufacturingpollutioncontrolandeffluenttreatmentplants,equipmentandappliancesand
biotechnology.
Thegovernmentisalsofocusedonstreamliningproceduresforinvestorsandentreprneursinthestatethroughsingle
windownodalagencycalled'KarnatakaUdyogMitra'atstatelevelanddistrictlevelfornecessaryclearances.
Thestateisfocusedatachievinggrowththroughindustrialdevelopmentandhastherightvision.Thegovernmentis
initiatingschemesandsimplificationofprocessestoenabledomesticandforeigninvestmentandprovideanenabling
environment.Infrastructure–amajorpainpointforentrepreneurs–isbeingrecognizedasanurgentissueandthat
somethingthatwillbedealtwithonaprioritybasisintheshorttomediumterm.
10IndustryOverview,EconomicSurveyofKarnataka,2008-2009
Maharashtra
Population
Source:MaharashtraEconomicSurvey,2008-09 Source:MaharashtraEconomicSurvey,2008-09
ThePolicyFramework
Policy reforms to create the conducive industrial climate in the State
MaharashtraisoneoftheleadingindustrializedandurbanizedstatesinIndia.Itsstrongfinancialinfrastructurehasalso
madeitoneofthemostattractivestatesforFDIinIndia.IthasreceivedaninvestmentofINR750.96billionduring1991-
2008.1 SectorswhichhavelargelygainedbytheFDIintheStateincludeautomobilesandautocomponents,information
technology,consumerdurables,engineering,financialservices,electronicshardware,chemicals,petrochemicals,
pharmaceuticalsandbiotechnology.
Toachievethisconsistentandimpressivegrowthbycreatingafavorableenvironmentforinvestment,theMaharashtra
StateGovernmenthasissuedtheindustrialpolicy.
1DirectorateofEconomics&StatisticMaharashtra,EconomicSurvey,2008-09
39
The Assessment | Maharashtra
Highlights of the Industrial Policy2
• Thepolicyseekstobuildqualityinfrastructureandnurtureindustrialclusterstoensuresustainableindustrialgrowth
• IthasdefinedsectorssuchasTextiles,IT/ITES,BiotechnologyandInfrastructureasthrustareasfortheindustrialpolicy
• Itwillprovidequalitycompetitiveness,researchanddevelopmentandtechnologyupgradationforstrengtheningthe
SMEsector
• NewindustriesestablishinginC,D,D+areasandnonindustrydistrictsareexemptedfrompaymentofelectricityduty
foraperiodof15years
• WaiverofstampdutyforindustriesinC,D,D+areasandnonindustrydistricts
• Specialcapitalincentivesforsmallscaleindustriesareprovided
IT Policy to make Maharashtra the most favoured destination for investments in the IT and ITES
Key Features3
• GuidetheimplementationofthepolicybyestablishinganEmpoweredCommitteeandaDirectorateofInformation
Technology
• Exemptioninstampdutyandelectricityduty,eliminationofoctroiontelecomequipmentforunitsbuiltinITParks
• LowerPropertyTaxes-sameasresidentialrates
• MinimalSalesTaxratesonlocallyprocuredcapitalgoods
• Powersupplyat'industrialrates'
• Non-fiscalincentivesincludingadditionalFSI,permittingsoftwareindustryinresidentialareas,suitablepermissionsto
developcommunication
• PermissionofflexibilityinworkinghoursandrelaxationofLaborlaws
2GovernmentOfMaharashtra,IndustrialPolicyOfMaharashtra,2006
3GovernmentOfMaharashtra,ITandITeSPolicy,2003
40
Biotech Policy to promote the growth of the biotech industry in the state and make it globally competitive
Key Features4
• CreationofinstitutionssuchastheMaharashtraBiotechnologyBoard,andtheMaharashtraBiotechnologyCommission
• Fiscalbenefitsincludingelectricityduty,stampdutyandregistrationfeesexemption,octroirefund
• DevelopmentofBiotechParksandBiotechResourceCentre
• Specialincentivestopromotesettingupofbiotechnologyparks,researchanddevelopmentcentresandpilotplant
facilitiesforundertakingcontractresearch
• AllBTunitswillgetincentivesapplicabletoITunits
Tourism Policy
TheState’sTourismPolicy2006emphasisesonthedevelopmentofininfrastructuralfacilitiesattouristdestinations,
encouragingprivateparticipationincapacitybuildingrelatedtotouristaccommodation,recreationfacilities,etc.Theaction
pointsofthepolicyalsoincludestrengtheningofBedandBreakfastschemesandconservationofWorldheritagesites.5
SEZ Policy
TheSEZPolicyaimsatcreatingasimpleandtransparentsystemandprocedurestoattractlargeforeignanddomestic
investmentininfrastructureforSEZ’sinMaharashtra.
SEZpolicyofMaharashtraprovidesattractiveincentivesasfollows:
• HundredpercentexemptionfromStampDutyandRegistrationFees
• PermissionforCaptivePowerGeneration
Governmentisplanningtoinitiatemeasuresforavailabilityofcheapandtimelyfinance,technologyup-gradation,up-
gradationofskillsetsofthoseemployedinMSMEenterprisesandmarketing.
• SettingupofaspecialinstitutionfortheSMEs
• Newsmallscaleindustriesareeligibleforcapitalsubsidy
• Specialcapitalincentives(grants)areofferedforsettingupSmall-scaleindustriesinbackwardunits
• Interestsubsidyisalsoofferedtonewtextile,hosieryandknitwearSSIunits
Incentivestopromotequalitycompetitiveness,researchanddevelopmentandtechnologyup-gradation
Incentives Subsidy(%) Limitedto(INRMillion)
Capitalequipment 5 2.5
Expensesincurredforqualitycertification 50 0.10
Cleanerproductionmeasures 25 0.50
Expensesincurredforpatentregistration 50 0.50
Source:MaharashtraEconomicSurvey,2008-09
4GovernmentOfMaharashtra,BioTechpolicy,2001
5MaharashtraTourismDevelopmentCorporation,TourismPolicy,2006
6GovernmentOfMaharashtra,IndustrialPolicyOfMaharashtra,2006
41
ThePolicyImpact
MaharashtraisoneoftheleadingstatesintermsoftheinvestmentreceivedduringJan-Aug2009.Maharashtrareceived
384proposalsforIEMswithaninvestmentofINR509.48billionduringsameperiod.7
TheimplementationofaspecificpolicyforIThasleadtoanemergenceofITparksinthestate.About36publicITparks
havebeendevelopedbyMIDCandCIDCOand353privateITparkshavebeenapproved.8
PrivateITParks Number Investment(INRbillion) Jobcreation(inmillion)
Functional 53 22.49 0.122
Developmentstage(LOI) 300 158.4 0.65
Additionally,theseparatepolicyforbio-techhasenabledthedevelopmentofbio-TechparksintheStateatJalnaand
Hinjewadi(Pune).Apartfromthis,about16biotechSEZsareproposedintheStatewithlikelyinvestmentofINR64billion
andestimatedemploymentgenerationof0.13million.9
GrowthImpetus
Maharashtraprovidesabusiness-friendlyenvironment,qualityinfrastructurewithproactivegovernmentpoliciesandhighly-
skilledandtrainedworkforceintheindustrialunits.
Maharashtra -One of the most industrialized state
TheState’sindustrialpolicyhasminimizedtheindustriallicensingrequirements,removedrestrictionsoninvestmentsand
facilitatedeasyaccesstoforeigntechnologyanddirectinvestments.TheCAGRforinvestmentinprojectsregisteredand
commissionedduring2004-05to2008-09is16.1percent.10 Theindustrialinvestmentsinthestateareasfollows:
ApprovedProjects
Category
Number Investments(INRBillion) Employment
MOU 113 1234.43 423,811
Strong financial infrastructure serves as an entry point for global financial institutions
AccordingtothestudypublishedbyReserveBankofIndia(RBI)in2008-09,thestatecapturedalmost21percentoftotal
investmentproposalsmadeinthecountry.Thestatealsoaccountsfor14percentofthenationalbankdepositsandmore
than90percentofmerchantbankingtransactionsarecarriedoutinMumbai.Mumbaiisemergingasaglobalfinancialhub
andbackofficeformajorcompanieslikeMorganStanley,JPMorgan,CreditSuisse,etc.
7DepartmentofIndustrialPolicyandPromotion,MonthlyMagazine,September2009
10DirectorateofEconomics&StatisticMaharashtra,2008-09
42
State’s emphasis on the development of skilled work force
Skilledhumanresourcescontributetotheoveralleconomicdevelopmentofastatemoreeffectively.Thestategovernment
hascreatedabudgetprovisionofINR24.63billionforhigher&technicaleducationin2008-09.11
Faculty Institutions Capacity Admittedstudents
Engineering 37 14,130 11,595
ManagementSciences 2 120 121
HotelManagement&CateringTechnology 2 120 121
PharmaceuticalScience 10 416 337
IndustrialTrainingInstitutes 407 71,497 61,690
Infrastructure Development initiatives
TheCentralgovernmenthasapproved133SpecialEconomicZoneproposalsundertheStateSEZPolicy2006forcreation
ofadditionalemploymentinthestate.TheseSEZsarelikelytorequireaninvestmentofINR1487.22billionwithan
employmentcreationof6.104millionjobs.12
Industries SEZs
ITsector 52
multi-product 17
singleproduct 64
Thestategovernmentisseenastakingincreasedinterestinpromotingthegrowthofentrepreneurship.Individualsare
beingencouragedtoformnewbusinessesandarebeingprovidedsuchgovernmentsupportastaxincentives,buildings,
roads,andacommunicationsystemtofacilitatethiscreationprocess.However,whilethestategovernmentisdeveloping
itsowninnovativeindustrialstrategiesforfosteringentrepreneurialactivity,thereislimitedawarenessamong
entrepreneursoftheseincentives.
Fundingandmentoringareseenaskeytoentrepreneurialgrowth,theentrepreneursexpectthestatetocreatean
innovationfundwherethegovernmentsetsasideanon-refundableinnovationcorpusorseedfund.Theentrepreneurs
believethattheenvironmentisstillnotconduciveforentrepreneurs.Therearetoomanyregulatoryhurdleswhichan
entrepreneurgoesthrough.Governmentisseenaslaggingbehindinitsroleasafacilitator.Eventhoughtheprivatesector
isdoingitsbitintheareaoffunding,thegovernmentisnotseenasdoingmuchtohelpthem.
Entrepreneurialgrowthinthestateisalsonotuniformwithlimitedreachinruralareasandwidedisparitybetweentherural
andurbanareas.Further,mentoringopportunitiesinitiatedbothbyestablishedentrepreneurs;independentbodiesand
governmentareseenasadireneedthatiskeytocreatingalastingentrepreneurialimpactinthestate.
43
ThegovernmentofMaharashtraismakingsystematicefforttosustaineconomicgrowthbyresortingtoinnovativemethods
toimprovetheentrepreneurialenvironmentanddeveloppotentialsectors.
Thegovernmentisfocussingonspecificsectorsandformulatingitsgrowthstrategies.Inrespectofitsexistingindustries
whichincludeschemicals,textiles,engineering,petroleum,automobilesandautocomponents,thegovernment'sstrategy
involvessystematiceffortstokeepupthecurrentindustrialmomentum.Asfarasthefinancialservices,ITandITESsectors
areconcerned,itaimstocreatesufficientemploymentopportunitiesbyencouragingwidergeographicspreadofthese
industries.RegardingthetourismandbiotechnologysectorofMaharashtra,thestategovernmentplanstostrengthenthese
sectorsanddevelopastrongcustomerbase.
Addressingtheconcernsofitsentrepreneurs,MaharashtraIndustrialDevelopmentCorporation(MIDC)hasbeentryingto
fosterrapid,orderlygrowthinindustrialareasinthestate.Ithasdevelopedsectorspecificindustrialareas.Itprovides
developedplotswithnecessary
infrastructurefacilitieslikeinternal
roads,water,electricityandother
internalservicestoentrepreneursin
theindustrialareas.Ithasbeen
proactiveindevelopingawebsite,
whichprovidesusefulinformation
requiredbyentrepreneursinterestedin
settingunitsindifferentpartsof
Maharashtra.
Maharashtrawithitsstrongpositionas
thefinancialhubofthecountryandthe
reputationofbeingoneofthemost
industrializedstates,iscreatingapolicy
frameworktofosterbusinessgrowth.
However,thelackofinformation
disseminationandtheexpectationfrom
entrepreneursarestillnotmet.While
thestatehastheappropriateimpetus,
itneedstoinvolveitsentrepreneurs
andbusinesscommunityatlargeto
trulytransformitself.
44
CreatinganEntrepreneurshipCulture
Asnapshotofentrepreneurialleadingpractices
Indiaexertedgreaterefforttopromoteandnurture Basedonoursecondaryresearchandourinteractionswith
entrepreneurship.Attemptsatvariouslevelshavetaken thestategovernmentsandentrepreneurswehave
placetodirectlyorindirectlypromoteentrepreneurship.The attemptedtoidentifysome‘leadingpractices’acrossthesix
attemptsfallunderthreemaincategories:removalofstate- Indianstatesprofiledinthiseditionof‘Entrepreneurial
imposedbarriersforstartingbusinesses:availabilityof India’.Whilethisisnotanexhaustivelist,theseinitiatives
finances,educationandnurturing. undertakenbyvariousstatesexemplifytheirrespectivewill
tocreateopportunitiesforgrowthbyenablingcrosssector
India’sjourneyfromaslowgrowth,highly-regulated development,inclusivegrowth,improvedefficiencyor
economytoahigh-growthcountryisnowwellknown. marketalignment.Theleadingpracticeslistedbeloware
Manypoliciesandregulationshavefallenbythewayside specifictoaparticularstate;however,thesecanbe
overthelasttwodecades,butmanyimpedimentsto replicatedbyotherstatesinthecountrytofoster
startingandgrowingabusinessremainwellentrenched–if entrepreneurialgrowth.
notinpolicy,theninpractice.
Apositivedevelopmentofeconomicgrowthandchangein
mindsetwithinthegovernmentisthatthereisnow
recognitionatthenationalandstatelevelthatabusiness
friendlyenvironmentisamusttoencouragegrowth.
Businesses,entrepreneursandcapitalaremobileandcan
andarelikelytomoveawaytofriendlierstatesand
countriesifdoingbusinessinanyjurisdictionisdifficult
beyondapoint.Indianowcompeteswiththeworld,within
itsregionandwithitself.
Leading Practice Owner State Focus
Leveragesynergybetweenagroandindustrialsector+Apply
Punjab Cross-Sectordevelopment
technology
Conductingworkshopsandtrainingsessionsonapplicationofclean
Punjab Futuristicdevelopment
biotechtechnologiestocreatepublicawarenessaboutbiotechnology
Creatingagri-clinicsandagri-businesscentresthroughoutthestate
toserveasnodalcentresforinformationdisseminationfor Punjab Marketalignmentandvalueaddition
maximizingRoIforfarmers
• NewindustriesestablishinginC,D,D+areasandnonindustry
districtsareexemptedfrompaymentofelectricitydutyfora
periodof15years Maharashtra BalancedGrowth
• WaiverofstampdutyforindustriesinC,D,D+areasandnon
industrydistricts
MinimalSalesTaxratesonlocallyprocuredCapitalgoods Maharashtra Internaldemandcreation
45
Leading Practice Owner State Focus
Promotetheusageofe-governancetosupportthegovernmentto
Delhi Efficiencyandtransparency
deliverefficientservicestoitscitizens
ControllingpollutionbyprovidingCNGbuses,strengtheningthe
pollutionnorms,introductionofstrictinspectionandcertification Delhi Environmentalimprovement
systems
Thestateishostingthe2010CommonwealthGames,whichislikely
toprovideitanopportunitytoaugmentitsinfrastructureandfacilities Delhi Megadevelopment
inturningitselfintoa"WorldClassCity’
Strongfocusonthedevelopmentofskilledworkforce Delhi Economicenabler
FocusonSpecialInvestmentRegions(SIR)andInvestmentRegions
Gujarat Megadevelopment
(IR)withconvergenceofindustrial,socialandurbaninfrastructure
TheGovernmentofGujarat(GoG)hasincorporatedGujarat Economicenabler
KnowledgeSocietyandplanstosetupknowledgecorridorsfor Gujarat
highereducation
Micro,SMEpolicy:
•Allotmentof50percentgrantsubjecttomaximumofINR10
milliontotheMSMEsfortheacquisitionoftechnologyinanyform Gujarat FuturisticDevelopment
•AssistancetoR&Dinstitutionsupto60percentoftheprojectcost
excludinglandcostandbuildingcost
Lucrativeemploymentandperformancelinkedpackageofincentives
andconcessionstoattractinvestmentstobackwardregionsandthe Karnataka BalancedGrowth
MicroSmallMediumEnterprises(MSME)sector.
Biotech:Megaprojectswillbeofferedauniquepackageof
concessionsforamaximumperiodof8years.Theywillalsobe
Karnataka Futuristicdevelopment
offeredupto50percentconcessiononstampdutyandregistration
chargesforfirstsaleandfirstlease
SEZswillbedeclaredasindustrialtownshipsundertheKarnataka
Municipalities(Third)AmendmentAct,2002enablingthemto Karnataka Efficiency
functionasselfgoverningandautonomousmunicipalbodies
Karnatakahasadevelopedbankingnetworksystemwhichextends
Karnataka Economicenabler
toboththeurbanandruralareas.
FinancialassistancetotechnologyinnovatorsorstandaloneR&D
unitsorindividualsforinnovationscapableofindustrialapplication,
TamilNadu Futuristicdevelopment
upto50percentofthecostoffilingapatentorINR0.2million,
whicheverisless
CreationofITESParksinChennaiandotherTierII/TierIIIcities TamilNadu BalancedGrowth
Apparel:Focusonhandloomexportsbyencouragingtheweaversto
TamilNadu MarketAlignment
bringoutexport-orientedproducts
46
GlobalExperience:Asnapshotof
entrepreneurialleadingpracticesinIsrael,
SingaporeandthePhilippines
Asweunderstandthegoodpracticesbeingfollowedin
Indianstates,itisimperativetobenchmarkourstateswith
someofthemoreentrepreneurialeconomiesaroundthe
worldandunderstandtheirrespectivepracticestofoster
entrepreneurialgrowth.
InAmerica,astudyshowsthateveryyear,therewere
600,000newfirmsformedand1,000ofthemwould
ultimatelybecomehigh-growthcompanies,contributingto
1/3oftheGDPgrowth.InSingapore,SMEsaccountfor2/3
ofjobscreatedandmorethanhalfoftheirGDP.
Theseeconomieshavecreatedaveryconducive
environmentforentrepreneurship.Thesmallercompanies
andstart-upsinSingaporeenjoytheworld’slowesteffective
taxrates.Ittakeslessthan15minutesandUSD300to
registeracompanyinSingapore.Singaporehasbeen
rankedbytheWorldBankastheworld’seasiestplacetodo
businessforthreeyearsrunning.
SimilarlyinthePhillipines,4outof10adultFilipinos,aged
18to64areengagedinbusiness,whichapproximates
around19million(39.2percent)ofthewholecountry
population.ThisranksthePhilippinessecondamong
countrieswithmostindividualsowningabusiness
accordingtotheGlobalEntrepreneurshipMonitor
Further,Israelisattheforefrontoftechnology.Israelis
knownas“SiliconValleyII.”Thereareover100Israeli
businessesthattradeontheNYSE,NASDAQ,andAMEX
equitymarkets.OutsideofCanada,thereisnoother
countrythathasmorecompaniesrepresentedThisisa
tremendousachievementforasmallcountrylikeIsrael.
Thekeypracticesmentionedinthefollowingtablehave
beenusedintheseeconomiestoestablisharobust
entrepreneurialecosystem.Thesecountrieshavebenefited
greatlyfrompromotingentrepreneurialgrowth.These
practicesaresetoutasexamplesofpracticesthatcanbe
incorporatedbyIndia.It'sforIndianowtoadopttherelevant
practicesinaphasedmannerandstartanentrepreneurial
revolutionacrossthelengthandbreadthofthecountry.
47
Leading Practice Owner Country Focus
Technologicalincubators-Incubatorsthatprovideasupportive
frameworkfortechnologicalideasbyentrepreneur.Providingupto Israel FinancialEnabler
85percentoftheapprovedR&Dexpenditure.
Governmentseedfund-governmentmatchinginvestmentinastart-
Israel FinancialEnabler
upcompany,proportionaltotheinvestmentofaninvestingentity
Entrepreneurfriendlyprocedures.Ittakeslessthan15minutesand
USD300toregisteracompanyinSingapore.Singaporehasbeen
Singapore Efficiency
rankedbytheWorldBankastheworld’seasiestplacetodo
businessforthreeyearsrunning.
TheTechnologyEnterpriseCommercializationScheme(TECS)USD
50milliontohelpstart-upscreatetheirfirstprototypesformarket Singapore Marketalignment
trialsandacceptance
YoungEntrepreneurScheme(YES)fundstohelpschoolsdevelop
Singapore FuturisticDevelopment
entrepreneurshiplearningcontents
Start-upEnterpriseDevelopmentScheme(SEEDS),whichprovides
Singapore FinancialEnabler
equityfinancingwiththird-partyinvestorstosmallstart-ups.
MagnaCartaforSmallEnterprisesisalandmarklegislation.ThisLaw
isguidedbythreeprinciplesinsettingthepaceforsmalland
mediumenterprisedevelopment:
-Minimalsetofrulesandsimplificationofproceduresand
Philippines Overalleconomicdevelopment
requirements.
-ParticipationofprivatesectorintheimplementationofSME
policiesandprograms
-Coordinationofgovernmentefforts
Promotionofmutuallybeneficiallinkagesamongsmallandlarge
firms:Promotionofindustrial-subcontractingexchangeschemes,
Philippines Innovativegrowth
strengtheningofSMEassociations,establishmentoflinkagesand
cooperationbetweensmall,mediumandlargefirms
Improvingaccesstofinance:Innovativefinancingschemesusing
non-traditionalsourcesandschemessuchascooperativesand Philippines Innovativegrowth
associations,and,equityfinancingandventurecapital,respectively.
Informationsharing:Strengtheningofprimaryfocalpointsfor
deliveringinformationservicesrelatedtoexportsuchasthe
Philippines Marketalignment
PhilippineTradeInformationandNetworkSystems(PHILTINS)and,
OneStopExportInformationAssistanceCenter(EXPONET)
48
ConclusionandPolicyImplications
Insummary,policyand
implementationshouldhelpsupport
thefollowingobjectives:
Improve the quality, availability and

accessibility of financing
Inparticular,deliberateeffortsare
neededtomakebanksandangel
networksmoreresponsivetothe
particularneedsofstartup
enterprises.Whilefinancing
consistentlyemergesasthetop
challengeoffirms,especiallynascent
businesses,thereisaneed,to
developviableapproachesthatwill
makeprovisionofstart-upfinancing
Despitepositivebusinesssentimentinthecountryanda
moreattractivetobankswhileatthesametimemakingit
bullishattitudetowardsenterprise,entrepreneursinthe
moreattractiveforbusinessestomakeuseofthebanking
countrystillfacetremendouschallenges.Whilethecountry
system.Establishmentofangelnetworks–perhapsas
hasseenasurgeinentrepreneurialactivityintherecent
partnershipsbetweengovernmentandentrepreneurs–can
pastmuchscoperemainsforimprovingentrepreneurship
playacriticalroleinfinancingaswellasunderstandingthe
qualityandmomentum.
uniqueneedsofyoungenterprises.
Equalimportanceneedstobegiventoeffortsfocusingon
Enhance business growth potential of existing
futureentrepreneurs.Entrepreneurshipisrootedin
companies
education,culture,valuesandattitudesthatmustbe
nurturedfromanearlyage.Accordingly,itneedstobe Thereisaneedtoassistexistinghighpotentialbusinesses
imbibedandunderstoodonthebasisofitsdeeper inrealizingthatpotential.Animprovedbalanceandplanned
significancebeyondincomegeneration,includingitsrolein approachtoindustryincentivesandpromotionacross
fosteringgreaterindependence,prideandgoodcitizenship. industriesandashifttovalueadditionshouldbe
encouragedtoappropriatelyrespondtotheneedsofthe
Thus,atwo-prongedpolicyeffortshouldbeconsideredin marketandeventuallyexpandwithitsopportunities.Policies
addressingenterprisedevelopment.Thatis,policies, andinterventionsshouldtakeaccountoftheresourcesand
programsandinterventionsshouldfocusonbothimproving marketcharacteristicsofspecificregionsandutilizetheseto
existingbusinessesanddevelopingthecapacityoffuture maximumadvantageinordertofocusgovernments’efforts
entrepreneurs,therebycreatingmoreopportunities.Inboth
cases,ageneralimprovementofentrepreneurial
frameworksisnecessarytoprovideamoreconducive
environment.
49
Promote wider geographic penetration Ontheotherhand,addressingfutureentrepreneursentails

interventionsfocusedoneducationandtrainingtoimprove
Effortsareneededtoencourageandequipenterprisesto
bothattitudesforsuccessfulandeffectiveentrepreneurship
movebeyondthedomesticorregionalmarketsandtapthe
andskillsforenterprisemanagementandoperations.
opportunitiesintheexportmarkets.Severalcompanieshave
Increasedcontactbetweenentrepreneursandschoolsand
marketsbeyondtheirregionsthatarecurrently
collegeswillpartlyenhancetheentrepreneurialmindset
underexploited.Alongwithimprovedaccesstotechnology,
studentsandallowthemtoconsiderthepossibilitiesof
thisrequiresadeliberatemixoftheappropriate
entrepreneurshipatanearlyage.
macroeconomicpolicyenvironment(i.e.tradeandexchange
ratepolicies)andassistanceinexportmarketpromotion.
Strengthen entrepreneurial values and attitudes
Emphasize the critical role of state governments Thereshouldbeadeliberateefforttotransformthe

educationalsystematalllevelstofosteran
Stategovernmentsneedtoplayastrongerroleinenterprise
entrepreneurshipculture,throughcurriculumdesignand
promotion,supportanddevelopment.Whilecertainlarger
appropriatepedagogicalapproaches.Schoolsmustlead
businesssupportprogramscanbeeffectivelyrunbythe
studentstoaspirenotonlytoseekjobsupongraduation,
nationalgovernmentagencies,stategovernementsare
buttocreatejobs;notjustearnincomes,buttocreate
better-placedtoprovideaconduciveenvironmentfor
wealth.Educationmustalsoinstillasenseofinnovationand
enterprisedevelopment.Aspartoftheireffortstoexpand
risk-taking,inordertoovercomesomeofthetraditional
theirlocaleconomiesandreducepovertyamongtheir
barrierstoenterprisedevelopment.
populace,governmentsneedtotakeaproactivebusiness-
promotionorientation,facilitatebusinessopportunities,
eliminateunnecessaryobstaclestosettingupabusiness
andprovideanencouragingenvironmentforhealthy
businessgrowth.Consequently,stategovernments
themselveswouldneedtrainingonhowtoeffectsuchan
entrepreneurialorientation,alongwithconcreteapproaches
andmechanismsforcreatingabusiness-friendly
environment.
Conclusion
ThereareampleopportunitiesforenterprenursinIndiaand Practicalandcosteffectiveprogramsneedtobedeveloped
suchopportunitiesifleveragedhavethepotentialto toaddresstheirneedsbecauseself-employedpeoplewill
transformIndia.Forsuchtransformationtohappenthere representanimportantsegmentineconomicrevitalization.
needstobesupportbothatthegovernmentalandsocietal Aresponsive,decisiveandopengovernmentiscriticalto
level.Forthegovernmentitisimportanttorealizethatthe rapidentrepreneurialgrowth.Itisincumbentonboth,the
goalofsmallbusinessownersistoremainself-employed. entrepreneurandthegovernment,torecognizethata
Suchpeoplemaynotneedfinancialassistancebuttheyare symbioticpartnershipisnecessarytohelpthegrowthof
definitelylikelytoneedregulatory,marketingandlegal businessandofthenation.
assistanceinordertosustainthemselvesandgrow.
50
Aboutthestudy
ThethirdeditionofEntrepreneurialIndia2009isaresearch UnlikepaststudiesonIndianentrepreneurshipwhich
paperwhichassessestheinitiativesofselectIndianstates surveyedentrepreneursacrossthecountry,thiswhitepaper
toencourageentrepreneurialgrowthandputforththebest studiesselectIndianstatesindetailandbringforththe
practices.Thewhitepaperaimstoprovideaplatformto state’sperspective.Thispapershouldallowustoreassess
discussonentrepreneurshipdevelopmentandcontributeto andrenewoureffortsinaddressingthesituation.Thestudy
shapingpolicybybringingtogethertheviewsof alsobringstogetherthedatathatcanbefurtherstudiedfor
entrepreneursandstategovernments. pursuingspecialpolicyfocus.
Thestudyendeavorstouncoverfactorsleadingto Throughthisstudy,TiEandKPMGhopetocontributeto
appropriatelevelsofEntrepreneurship.Thestudyevaluates craftingmoremeaningfulpoliciesandprogramsthatwill
theperspectiveofIndianstatesandtheirinitiativestowards continuetoinspiremoreandmoreIndianstohavean
entrepreneurialdevelopmentononehandwhileevaluating entrepreneurialmindsetanddevelopastrongercapacityto
theperceptionofentrepreneursoftheseinitiativesthrough grabtheopportunitieswehavenow.
theirviewsonnationalstrengthsandweaknessesasa
contextforentrepreneurshipontheother.The
entrepreneursindicatewhatpolicyorprogramchangesthey
believewouldenhancethecountry’senvironmentfor
entrepreneurship.Italsoattemptstoestablishthebest
practicesacrossIndiatofosterentrepreneurshipwhilealso
benchmarkingwithsomeoftheglobalbestpracticesin
entrepreneurialeconomiessuchasSingapore,Philippines
andIsrael.
51
AboutKPMGinIndia
KPMGisaglobalnetworkofprofessionalfirmsproviding KPMGhasofficesinIndiainMumbai,Delhi,Bangalore,
Audit,TaxandAdvisoryservices.Weoperatein140 Chennai,Hyderabad,Kolkata,PuneandKochi.Thefirmsin
countriesandhave135,000peopleworkinginmember Indiahaveaccesstomorethan2000Indianandexpatriate
firmsaroundtheworld.Theindependentmemberfirmsof professionals,manyofwhomareinternationallytrained.We
theKPMGnetworkareaffiliatedwithKPMGInternational,a strivetoproviderapid,performance-based,industry-focused
Swisscooperative.EachKPMGfirmisalegallydistinctand andtechnology-enabledservices,whichreflectashared
separateentityanddescribesitselfassuch. knowledgeofglobalandlocalindustriesandourexperience
oftheIndianbusinessenvironment.
TheIndianmemberfirmsaffiliatedwithKPMGInternational
wereestablishedinSeptember1993.Asmembersofa
cohesivebusinessunittheyrespondtoaclientservice
environmentbyleveragingtheresourcesofaglobal
networkoffirms,providingdetailedknowledgeoflocal
laws,regulations,marketsandcompetition.Weprovide
servicestoover2,000internationalandnationalclients,in
India.
52
AboutTiE(TheIndusEntrepreneurs)
TiEinits17yearsofexistence,hastodayemergedasthe • Educating-Inspiresandeducatesbudding
world’slargestnon-profitglobalnetworkofEntrepreneurs entrepreneurs
andprofessionals,dedicatedtotheadvancementof
• Mentoring-Providesrolemodelsandone-on-one
entrepreneurship.
mentorshipthroughexperiencedentrepreneursand
supportsystemlikeVCs,serviceproviders
With53chapter(15inIndia)across13countriesand
15,000+membersworldwide,TiEoffersarichresourcepool • NetworkingHoldsregularconferences,workshops,and
toanentrepreneur. networkingmeetingsprovidingaplatformtoforge
relationships.e.g.15TiEchaptersinIndiacollectively
TiE’smissionistofosterconsciousentrepreneurship roll-out300+programsforentrepreneurseveryyear.
globallybyEducating,MentoringandNetworking:
AboutTiEMumbai
TiEMumbaiisamongthemostvibrantandfastestgrowing • Activepartnershipswithorganisationswithashared
entrepreneurialeco-systemsintheGlobalTiENetworkwith focusontheSMEsegmente.g.ICICIBank,SIDBI,
afastexpandinganddiversememberbaseof150+Charter KPMG,CII,FICCI,Academia(IIT,Welingakr,SPJainand
Membersand700+members. manyothers),andvariousotherprivateandPublicsector
agencies/bodies
• Purposeaboveactivitytoconstantlychallengestatus
• MENTORINGarobustandfocusedprogramcalled
quoandbuildinnovative,sustainableplatforms
EntrepreneurNurturingProgram(ENP)withadedicated
/programstofosterentrepreneurshipthroughadvocacy,
andactivevoluntarybaseofMentorsguidingagrowing
awarenessandassistance
baseofMentees(Entrepreneurs)
• 50+programsannuallythroughvoluntarycollaboration
• SpecialInterestgroupssuchWomenEntrepreneurship,
andparticipationfromavibrantandinclusive
Cleantech,SocialEnterprise,Tech&Media,Human
membership
Capital.
53
Acknowledgment
ThisreporthasbeenpreparedbyTiEandKPMGinIndiato SecondaryResearch
belaunchedattheTiEEntrepreneurialSummit(TES)on
21-23December2009inMumbai KunalJain,RuchikaAnand,PallaviPhatak,NishthaSatyam
(KPMGinIndia)
OverallLeadership
DesignandBrand&RegulatoryCompliance
Valuableguidancewasprovidedinpreparingthisreportby
VikramUtamsingh(KPMGinIndia),PradipKanakia(KPMGin JitenGanatraandNishaFernandes(KPMGinIndia)
India),JehilThakkar(KPMGinIndia),SridarIyengar
(President-TiEMumbai),VimalShah(AkrutiCity),Pradeep SpecialThanks
Udhas(GreaterPacificCapital),ChiragMehta,AnuSutaria,
PuneetVatsayan,ShivneetSingh,PradeepGupta,Geetika Toallgovernmentofficialsfromthesixstatesprofiledinthe
Dayal,PradeepKar,R.Ramaraj,ManakSingh(allfromTiE) study,PradipKanakia,VivekAtray,ManishAgarwal,Manish
Sharma,SameerBhatnagar,PradeepSaluja(allfromKPMG
EditingandReportCreation inIndia)andallTiEchaptersinIndia.
JehilThakkar,ManikaJauhari,NehaSangal(KPMGinIndia)
in.kpmg.com
KPMGContacts TiEChaptersinIndia
Vikram Utamsingh Ahmedabad Kerala
Head - Markets badri.mahapatra@ahmedabad.tie.org tiekerala@yahoo.com
+91 22 3090 2320 +91 79 3294 3095 +91 484 324 8735
vutamsingh@kpmg.com
Bangalore Kolkata
Jehil Thakkar info@tiebangalore.org tie.kolkata@gmail.com
Executive Director +91 80 4147 4567/69 +91 33 6454 3361
Markets
+91 22 3090 1670 Chandigarh Mumbai
jthakkar@kpmg.com info@tiechandigarh.org info@tiemumbai.org
+91 172 500 7000 +91 22 4220 0100
Chennai Nagpur
sharon.henry@chennai.tie.org info.nagpur@nagpur.tie.org
+91 98842 84578 +91 712 646 4066
Delhi Patna
info@tienewdelhi.org tie_bihar@yahoo.com
+91 120 406 6500 +91 612 222 1374
Hubli Rajasthan
santosh@nsinfotech.com zulfi@tiejaipur.org
+9198807 65246 +91 141 510 4464
Hyderabad UP
info@tiehyderabad.org rajesh.wahie@up.tie.org
+91 40 6451 3397
©2009KPMG,anIndianPartnershipandamember
Theinformationcontainedhereinisofageneralnatureandisnotintendedtoaddressthecircumstancesofany
firmoftheKPMGnetworkofindependentmember
particularindividualorentity.Althoughweendeavortoprovideaccurateandtimelyinformation,therecanbeno firmsaffiliatedwithKPMGInternational,aSwiss
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Enterpreneurship in India

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Enterpreneurship in India

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EntrepreneurialIndia

However,despitethegreatinitiativesundertakenbymany The Policy Framework

Creating an Entrepreneurship Culture 44

Conclusion and Policy Recommendations 48

About the study 50

Againstthisbackdrop,theEntrepreneurial India 2009

Population Per Capita Net State Domestic Product

The state had about 0.520 million (67.26 percent)

New industrial policy to push the state’s economy

The Assessment | Punjab

Highlights of the Industrial Policy2

Industry specific Policies

The Assessment | Punjab

Notification Textile Policy 20066

Biotech Policy 20066

The Assessment | Punjab

Micro, Small and Medium Enterprise Policy highlights7

Strong agricultural and well developed small/medium scale industrial base

Small Scale Industries in Punjab

FixedInvestment Employment ProductionValue

2004-05 0.204 48350 0.934 250950

2005-06 0.205 48550 0.938 252000

2006-07 0.205 55000 NA NA

The Assessment | Punjab

2006 214 114.09

Proposed Industrial infrastructure

The Assessment | Punjab

Venture Capital fund for IT industry

State’s emphasis on the development of skilled work

The Entrepreneurs’ Viewpoint

The Assessment | Punjab

The Government’s Viewpoint

Per Capita Net State Domestic Product Job creation Trend

Highlights of the Industrial Policy 2009

The Assessment | Gujarat

Industry specific Policies

The Assessment | Gujarat

Gems and Jewellery Policy7

Textile and Apparel8

The Assessment | Gujarat

Micro, Small and Medium Enterprise Policy highlights10

2007 2008 2009(UptoAugust)

Number Investment(INRbillion) Number Investment(INRbillion) Number Investment(INRbillion)

The Assessment | Gujarat

Infrastructural development initiatives –Thestatehastakenanumberofinfrastructuraldevelopmentinitiativessuchas

Investment Promotion Measures –TheGovernmentofGujarathastakenanumberofinvestmentpromotionmeasuresfor

Manufacturing 576 2,405 0.98

Infrastructure 194 4,859 0.17

InvestmentRegions 101 1,967 0.85

UrbanDevelopment 261 1,012 0.17

SocialServices 145 301 0.02

Tourism 99 440 0.13

SpecialSectors 1423 721 0.05

MSME 7252 68 0.30

Announcements 15 444 0.00

State’s emphasis on the development of skilled work force –Thestategovernmenthascreatedincubationcentersin

The Assessment | Gujarat

Major hub for SEZs units –Gujaratwasthe

SEZsinIndiawith60approvedSEZs(ason ProposedEmployment 1.9millionpersons

Single window clearance facility –ThestategovernmenthassetupasinglewindowclearancefacilitythroughINDEXTb

The Entrepreneurs’ Viewpoint

The Assessment | Gujarat

The Government’s Viewpoint