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By : Satya Prakash, Head/VP/GM-Marketing UNICON SECURITIES
Functional Area : Getting Started
Activity:  0 comments  762 views  last activity : 07 06 2010 20:18:04 +0000
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Advantage Bihar
  • The Gangetic plain of Bihar, the biodiversity of Bihar, backed by good climate & fertile soil.
  • Direct access of 46% of country's population having common boundaries with UP, Orissa, Jharkhand and West Bengal and international border with Nepal & NE states with chicken neck.
  • The state has a strong agricultural base for setting up agro-based industries like agri & food processing units for sugar, jute, tea, etc.
  • The state has virtual monopoly in production of Litchi, Makhana and Honey.
  • Fairly motivated and hard working manpower.
  • The state is capable of producing mushrooms of best quality and in abundant quantity.
  • Traditional knowledge weavers are available in plenty.
  • Very close to international silk route.
  • Producer of tasar, eri and mulberry silk of good quality.
  • Water resource is available in abundance

Economic Infrastructure

PowerThe present power scenario in the state is outlined below (as on September 2006)
 Average
NationalBihar
Percentage of villages electrified84 per cent 41 per cent
Household electrification55.8 per cent10.3 per cent
Per Capita Consumption612 units76 units
Installed capacity1,18,619 MW584 MW
Actual Generation71,000-75,000 MW(approx) 30 MW
The demand and supply scenario in the power sector is as follows (as on September 2006):Figures in MW
 PeakOff-Peak
Demand15001100
Supply950900
Shortage550200
A new power policy is on the anvil with the following core components:
  • Augment generation and distribution by encouraging private investment.
  • Bring down average transmission and commercial losses (AT&C) by 3 per annum in the next five years
  • Stop cross subsidy and recover costs
The state has undertaken a number of reforms to improve upon the power situation in the state. These include:
  • SEB is being re-organized into eight companies and the Power Finance Corporation (PFC) has been appointed as consultants for implementation.
  • State Regulatory Commission is in place and an application has been filed for tariff revision
RoadsThe road network in the state is outline below:
  • 3629 Kms of National Highways
  • 3232 Kms of State Highways
  • 7714 Kms of Major District Roads
Total anticipated expenditure in the major roads sector in the next three years:
  • 4-Laning - 11400 Crores (NHAI)
  • State Highways - 4000 Crores
  • Major District Roads - 2500 Crores
  • Total - 17,900 Crores
As for the rural roads, the following works have been taken up:
  • Construction of 2400 km of link routes and upgradation of 2000 km of through routes costing Rs. 1416.88 crores under Pradhan Mantri Gram Sadak Yojna.
  • Construction of 1000 km of link routes costing Rs. 300 crores under Mukhya Mantri Gram Sadak Yojana
  • Upgradation of 2460 km of through routes costing Rs. 599 crores under state plan.
RailwaysBihar has a fairly good railway network. A few railway routes connecting important places like Muzaffarpur-Samastipur-Barauni-Katihar and Muzaffarpur-Chapra-Siwan have been converted into broad gauge. The main rail junctions are at Patna, Gaya, Muzaffarpur, Katihar and Samastipur, etc. FinanceBihar State Financial Corporation (BSFC) is the main state level institution providing term lending facilities to industrial entrepreneurs. Banks have also shown increasing interest in term lending to industrial units. BSFC will be restructured and strengthened to meet the growing financial and mercantile needs of entrepreneurs. The Corporation also undertakes the appraisal of projects coming up in the state with a view to raising money from the capital market (Public/Rights Issues).

Major industries

Agriculture The production scenario of agricultural sector is outlined below:
Crop/EnterpriseAnnual Production(Million MT)Bihar's share in National pool (%)Marketable surplus (percentage)
Vegetables8.599.0100
Fruits3.358.080
Food grains11.905.675
Sugarcane135.5100
Fish0.278.3100
Milk4.064.4100
A brief profile of a few of the products is given here, in which the state has a comparative advantage.

Maize

Sugarcane

The current level of sugarcane in the state is 13.00 million MT and the targeted production by 2015 is 46.72 million MT. Investment opportunities exist in the following segments for the private sector:
  • New green field Sugar mills Capacity expansion of existing mills
  • Ethanol manufacturing
  • Molasses based alcohol
  • Cogeneration of power
  • Bagasse based paper

Litchi

The current level of production in the state is 0.28 million MT and the production target for 2015 has been fixed at 0.5 million MT. Litchi's whole sale price in Bihar is less than that of competing states, giving comparative advantage for domestic and export market. Investment opportunities exist in the following segments for the private sector:
  • Contract farming
  • Export of fresh fruits
  • Export of processed fruits
  • Litchi honey

Makhana

Makhana is an aquatic organic crop rich in protein and low in fat content. The present production of Makhana in the state is 0.003 million MT (Bihar contributes 85 per cent of national production) and the target for 2015 has been fixed at 0.050 million MT. Investment opportunities exist in the following segments for the private sector:
  • Contract farming
  • Processing and exports (pure organic based cultivation gives an added advantage to the crop, particularly in the export market)

Mango

The present level of production of mango in the state is 1.4 million MT (13 per cent of all India production) and the target for 2015 has been fixed at 3.0 million MT. Several varieties such as Jardalu, Langra and Krishna bhog are produced in the state. Investment opportunities exist in the following segments for the private sector:
  • Contract farming
  • Export of fresh/processed food
  • Cold chain

Vegetables

The present level of production of vegetables in the state is 8.60 million MT (9 per cent of all India level) and the targeted production for 2015 has been fixed at
12.4 million MT. Investment opportunities exist in the following segments for the private sector:
  • Contract Farming
  • Processing & export
  • Cold chain
Sugar Industry Sugar industry is the largest agro-based industry in Bihar. This industry generates sizeable employment in the farm sector directly as well as through ancillary industries and related activities. It is estimated that about five lakh farmers and their dependents are engaged in the cultivation of sugarcane and approximately another half a lakh unskilled and skilled personnel, including highly qualified and trained technologists are engaged in the sugar industry in the state. Status of the sugar industry in Bihar (2004-05)
Total area under sugarcane2.27 lakh hectare
Total production of sugarcane122.51 lakh M.T.
Productivity of sugarcane55.43 M.T./Hectare
Canecrushed26.48 lakh M.T.
Sugar Produced2.54 lakh M.T.
Investment opportunities in sugar and allied industries in Bihar:
  • Green field sugar mills
  • Capacity expansion of existing sugar mills
  • Ethanol manufacture
  • Manufacturing of Molasses based alcohol and commercial spirit
  • Cogeneration of power
  • Manufacture of bagasse- based paper
  • Press- mud based organic manure
  • Engineering units related to sugar industry
  • Manufacture of sugar- based confectionery items
Incentive package for sugar industry For new sugar mills:
  • Reimbursement of central excise duty on sugar.
  • Exemption of purchase tax on sugarcane.
  • Exemption of stamp duty and registration fees on purchase of land.
  • Grant of 10% subsidy on capital investment (plant and machinery) to a maximum of Rs. 10.00 crores, which ever is less.
For distillery and ethanol units
  • Exemption of administrative charge on molasses.
  • Reimbursement of sales tax (VAT) on molasses.
  • Exemption of stamp duty and registration fees on purchase of land.
  • Grant of 10% subsidy on capital investment (plant and machinery).
Setting-up Co-generation Power Units
  • Exemption of electricity duty on co-generated power.
  • Exemption of stamp duty and registration fees on purchase of land.
  • Grant of 10 % subsidy on capital investment (plant and machinery).
  • Laying of transmission line from factory to grid station by electricity board.
Food processing industryBihar is the leading state in the production of fruits and vegetables. It is the first largest producer of vegetables and second largest producer of fruits in the country. There exists huge scope of investment in the food-processing sector in the state Private Sector participation is being encouraged in packaging and food processing sectors to ensure better quality. Also, the state welcomes private investment for comprehensive development of tea industry and capital subsidy is available for setting up tea processing units. Further, there is huge potential for development of farming and processing of medicine (herbal and aromatic plants) in the state on account of natural environment and geographical location of the state. The active participation of private sector and Non Government Organizations is encouraged and incentives are provided under the Industrial Policy.Textile IndustryTextile sector also offers huge potential to the investors. The state has strong weaving traditions. The total number of weavers in the state is over 90,000. The major locations for the textile industry are Bhagalpur, Gaya, Nalanda, Darbhanga, Madhubani, Siwan and Patna.

Investment Opportunities

  • Agro based industries
  •  
    • Cattle feed
    • Jute, hemp, sisal and other fabrics
    • Tea cultivation, processing and packaging
    • Paper
    • Floriculture
  • Industries based on medicinal and aromatic plants
  • Sericulture /Tasar
  • Chemical based industries
  • Power generating and allied industries
  • Electronic and computers and IT based industries
  • Industries based on non-conventional energy
  • Livestock based industries, such as dairy, poultry, piggery, equipment meat processing, etc.
  • Industries based on recycling of wastes, eco-friendly raw materials and processes.
  • Super specialty Health services
  • Telecommunications and related products
  • Food processing industry
  • Tissue culture products
  • Seeds and planting materials
  • Foods and Vegetable processing
  • Bio-technological processes and products
  • Post Harvest technologies
  • Tourism
  • Cold storage
  • Plastic and Plastic based industries
  • Pharmaceutical drugs based industries
  • Leather based Industries
  • Technical education
  • Ceramics
  • Sports Goods
  • Packaging
  • Metallurgical industries including power intensive units like induction furnaces, furnaces ferro alloys, oxygen plants, graphite and gas plants and calcium carbide plants.
  • Textile, hosiery, knitwear
  • Handicrafts
  • Natural Gas based industries
  • Housing fixtures and related industries
 
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