Time for Maharashtra to shine again

Once the darling of investors, Maharashtra seemed to have lost its way in the middle but is now charging forward again. In mid 2015 when a delegation from Taiwanese contract manufacturer Foxconn was scouting for a suitable destination for investments in India and South East Asia, the western state of Maharashtra was not even in their initial list of considerations. States such as Gujarat that has a reputation as being most friendly for business, Karnataka that has an established Information and Technology hub, and Andhra Pradesh which is rebuilding and aggressively wooing potential investors with sops after Telangana was carved out of it, were the first stops. Also in contention were countries like Indonesia and Malaysia that also have a reputation for being investment friendly and share greater cultural linkages with the Chinese firm. Yet a mix of canny marketing by state chief minister Devendra Fadnavis who struck up a personal rapport with Foxconn founder-CEO Terry Gou helped by the head chef at the Chinese consulate in Mumbai, the infrastructure around Pune along the Mumbai-Pune expressway and the level of research being done at IIT Mumbai helped clinch the deal in favour of the state. In some ways, the Foxconn deal signals a second coming of age for Maharashtra for attracting investments. For a state that counts Mumbai - the economic capital of the country, as one of its biggest cities, an established port infrastructure and a historical readiness to facilitate businesses, Maharashtra has always been a highly industrialised state. Even at the start of the new millennium, the state′s output from manufacturing accounted for Rs 1783.8 billion or nearly 22 per cent of India′s total manufacturing output, according to official Planning Commission data. Yet, as other states, especially neighbouring Gujarat, became more aggressive with wooing investors with promises such as cheap land, taxation benefits and better infrastructure, a sense of complacency gripped the state. With so many companies already operating in the state, it did not matter anymore if a few went elsewhere. The Mumbai-Pune-Thane belt that contributed 60 per cent of the state′s output in 1999-00, also started becoming clogged and congested over the next 10 years and so were the sea-ports in the state. In a nutshell, the state was losing out in the new wave of FDI that was being lapped up by Gujarat, Karnataka and Tamil Nadu. In terms of absolute investments, Maharashtra (Rs 24,330 crore or $3.6bn) had slid behind Gujarat (Rs 74,988 crore or $11bn) and Andhra Pradesh (Rs 25,173 crore or $3.7bn) while its 142 projects was less than Tamil Nadu′s 157 in terms of number of new projects bagged annually. The loss of the less capital intensive but highly prestigious Nano project of Tata motors in 2008 to Gujarat proved to be another blow. Maharashtra is considered the home of the Tatas and when its small car project ran into trouble in Bengal, it was widely believed it would shift to Maharashtra close to Tata Motor′s existing factory in Pune. Instead, the then chief minister of Gujarat and the current prime minister, Narendra Modi, clinched the deal that has led to the state emerging as the new automobile hub in the country - a mantle that belonged to Maharashtra in all these years. Market leader Maruti Suzuki, Ford, Hero MotoCorp and Honda Motorcycles and Scooters India are some of the other companies that have followed Tata into Gujarat ever since. Over the last three years though, the state government has taken many steps to get back into the game. The major thrust has been to improve the infrastructure and ease of doing business in the state. In Mumbai, the number of building permissions issued by the Brihan Mumbai Municipal Corporation has been cut to 58, from 119. All approvals are now being given within 60 days. Earlier, it took about 140 days to obtain government permits for any business to start, which can now be obtained within 60 days. Similarly, the number of statutory approvals required for industrial investments has been reduced to 25 from 76 while a single-window clearance policy, which aims to provide various project approvals by bringing together necessary departments and state undertakings, has also been brought in. There has been a massive push towards infrastructure development as well, an area where the state has been lagging. Work has already begun on the Rs 90,000-crore ($13.5bn) Mumbai-Ahmedabad bullet train and the Rs 30,000-crore ($4bn) Mumbai-Nagpur super expressway. The city of Mumbai alone has projects worth Rs 100,000 crore ($15bn) in various stages of implementation. These include an increase in the Metro rail network to 140 km, from 11.4 km now, at an earmarked cost of about Rs 50,000 crore ($7.5bn); the Rs 18,000-crore ($2.6bn) Mumbai Trans-Harbour Link connecting Mumbai and Navi Mumbai; the Rs 11,000-crore ($1.6bn) coastal road connecting south and north Mumbai; the Rs 18,000-crore ($2.6bn) Navi Mumbai international airport; the 63-km Churchgate-Virar elevated rail corridor, with investment of Rs 21,000 crore ($3bn), and the Rs 11,000 crore ($1.6bn) CST-Panvel corridor. For the purpose of large industrial investments, a tranche of 4,000 hectares of land along with the Delhi Mumbai Industrial Corridor (DMIC) touching Aurangabad and Dighi Port region, has already been acquired and set aside by the state government. “This is the most opportune time to invest in India and especially Maharashtra,” says Devendra Fadnavis, the chief minister of the state. “We are the powerhouse of the Indian economy accounting for 15per cent of the country's GDP, 25per cent of exports and 30per cent FDI. We are also growing faster than the national growth rate of 9.5per cent. Between 2018 and 2030, this state will grow at more than 10per cent.” These steps have begun to show results. According to the department of economic affairs, of the total of 5,210 infrastructure projects - both government, private sector and public-private partnership - Maharashtra alone houses 728, cornering Rs 423,070 crore ($63bn), or 13 per cent, of the total valued projects in the country. Analysts say a sum total of investments worth Rs 19 lakh crore are pending in the state of which Rs 10 lakh crore are in various stages of completion. A survey of 20 states in the country by New Delhi based think tank National Council of Applied Economic Research put Maharashtra in the top five states on various factors like labour, infrastructure, economic climate, political stability and governance. The central location of the eastern side of the state also stands to benefit from the passage of Goods and Services Tax (GST|) as the potential master warehouse of the country. Besides its oranges, its location as the geographic centre of the country has already made Nagpur the hub of logistics. For long the city could not exploit its geography as multiple state borders made freight transport by road cumbersome, inefficient and expensive. With GST dismantling these check points, freight transport by road is set to get a leg up which is expected to play in favour of the city. No wonder, the country's biggest shipping companies including Container Corp. of India Ltd., Mahindra Logistics Ltd. and Transport Corp. of India Ltd. are all setting up facilities in Nagpur, along with US-based Deere & Co. “With the GST and the free movement of goods, the very disadvantage of being at the center will be translated into a real economic advantage,” says Arun Lakhani, chairman, Vishvaraj Infrastructure. “It is time for Nagpur to rise and shine.” So too for Maharashtra.