India's most industrialised state is now offering 40,000 acres of land, special labour laws and guaranteed 48-hour clearances to secure its position as India's most attractive investment destination.
The competition to attract foreign direct investments (FDI) is heating up among Indian states. Close on the heels of the western Indian state of Gujarat announcing it had 33,000 hectares of land that it would allocate to interested domestic and foreign investors within seven days of receiving applications, its neighbour Maharashtra unveiled its Magnetic Maharashtra 2.0 initiative to fast-track investment proposals in the state.
Taking a cue from Indian Prime Minister Narendra Modi's call for an Atmanirbhar Bharat (self-reliant India), which involves, among other things, competing with other states to attract investments from companies looking for alternatives to China, the Maharashtra government announced that it was making a land bank of 40,000 acres available for domestic and foreign industries along with plug-and-play infrastructure.
Plug-and-play infrastructure means the government will provide ready to use facilities such as power, road, rail and sewage connectivity, buildings and all clearances within a specified (and short) time frame so that the investing company can commence operations smoothly and within the desired time schedule. In addition, the Maharashtra government has said it will provide flexible rental and pricing structures, special labour laws and a specialised agency for mapping and matching available skill sets with those required by the investing company.
The goal of the Magnetic Maharashtra 2.0 programme is to attract investments and convey to the world the state's readiness to face the post-pandemic world, Maharashtra Chief Minister Udhav Thackeray's office said in a media statement. “While... our healthcare system is scaling to meet the unprecedented challenges posed by the Covid-19 pandemic, the state's economic response has remained resilient to offset long-term impacts. The state of Maharashtra has methodically re-opened more than 60,000 industries in the state and these enterprises employ close to 1.5 million people,” the statement added.
Maharashtra is India's most industrialised state and clocked a gross domestic product of $400 billion in 2019-20. Had the state been an independent country, it would have ranked as the world's 27th largest economy, ahead of powerhouses such as Norway, Hong Kong, United Arab Emirates, Malaysia and the Philippines. It is also growing at a fast clip. In rupee terms, the state's economy grew at a CAGR of 11.83 per cent between 2011-12 and 2019-20.
Maharashtra has a progressive political culture that makes it an attractive investment destination and business centre. Since Independence, successive governments, cutting across party lines, have nurtured the conducive business environment of the state, thereby contributing to the overall development of its economy. The Government of India's Department for Promotion of Industry and Internal Trade (DPIIT) website says Maharashtra received cumulative FDI inflows of $133.83 billion between April 2000 and December 2019. In 2019 alone, it received 410 investment proposals worth $15.59 billion.
Mumbai, the state capital, is the country's financial capital and a major regional financial and business centre in Asia. It is home to the Indian and /or regional head offices of many large foreign and domestic companies. And Pune, the state's second-most important city, is a major educational hub.
At the Magnetic Maharashtra event earlier this week, the state signed memoranda of understanding (MoUs) worth a cumulative $2.2 billion with more than a dozen foreign and Indian companies. The largest of these is the $1-billion proposal by China's Great Wall Motors to set up a car plant in the state. Other companies that have signed MoUs are US oil major ExxonMobil, RackBank from Singapore, Foton from China and United Phosphorous from India.
The Modi government is in touch with about 1,000 companies that are looking for alternatives to China. The total investment potential is estimated at $375 billion. Indian officials are confident of attracting a good chunk of this massive flow but say the states will have to work in tandem with the federal government to roll out the red carpet for investors.
And schemes like Magnetic Maharashtra will intensify the competition among Indian states to draw investors looking for attractive alternatives to China for their factories and offices.