SIKKIM April 2010 April 2010

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

• Skilled and cost-effective labour • Procedures for entry and exit of firms • Labour market flexibility • Industrial regulation, labour • Labour relations regulation, other government regulations • Availability of raw materials and natural • Certainty about rules and regulations resources • Security, law and order situation

Regulatory framework Resources/Inputs Investment climate of a state Incentives to industry Physical and social infrastructure • Tax incentives and exemptions • Condition of physical infrastructure such as • Investment subsidies and other incentives power, water, roads, etc. • Availability of finance at cost-effective terms • Information infrastructure such as • Incentives for foreign direct investment (FDI) telecom, IT, etc. • Profitability of the industry • Social infrastructure such as educational and medical facilities

2 SIKKIM April 2010

Contents

 Advantage Sikkim

 State economy and socio-economic profile

 Infrastructure status

 State policies and incentives

 Business opportunities

 Doing business in Sikkim

3 ADVANTAGE SIKKIM Sikkim April 2010

Sikkim – State profile

• Covering an area of 7,096 sq km, Sikkim is the least- populated and third-smallest state after Goa and Delhi. Sikkim shares its border with the state of and the neighbouring countries of Nepal, Bhutan and Tibet.

• is Sikkim’s capital city. The state has four administrative districts - North, East, West and South. , , Mangan, Jorethang, , , Pa kyong,, Meli, Chungthang and Soreng are the key cities and towns in the state.

• Sikkim has 28 mountain peaks, 84 glaciers, 227 lakes, five hot springs, and eight mountain passes – making it an ideal tourist location. The Teesta and Rangeet are the two major rivers with nearly hundred tributaries.

• Sikkim has 15 soil series and eight sub-groups, making it a fertile land for cultivating rice, maize, wheat, millet, barley, pulses, soy bean, coriander, cardamom and various fruits.

• Nepali, Bhutia, Lepcha, Limboo, Magar, Rai, Gurung, Sherpa, Tamang, Newari, Sunuwar (Mukhia) are the commonly spoken languages. Hindi, English and Tamil are also widely spoken. 4 ADVANTAGE SIKKIM Sikkim April 2010

Advantage Sikkim … (1/2)

Natural resources Sikkim is naturally endowed with rich flora and fauna. Its climate and topographical conditions support industries such as agriculture, horticulture, food processing, tourism and non- timber forest produce.

Policy and fiscal incentives The state follows the North East Industrial Investment Promotion Policy, 2007, which provides several incentives and concessions for investment in the state.

Institutional support The state provides excellent institutional support through various central and state government agencies viz., North East Council, Ministry of Development of North Eastern Region, Commerce and Industries Department.

5 ADVANTAGE SIKKIM Sikkim April 2010

Advantage Sikkim … (2/2)

Facilitating infrastructure Sikkim is well connected by roads. Telecommunication connectivity compares with the national standards. Optical-fibre connectivity is being developed. Rail and air connectivity are also being developed in the state.

Rich labour pool Sikkim has a high literacy rate; with the establishment of Sikkim Manipal University and the Sikkim University, the quality and quantity of employable graduates has improved in the state.

Stable political environment The state has a stable political set up with a single- party government. The State Government is committed towards creating a progressive business environment.

6 ADVANTAGE SIKKIM Sikkim April 2010

Sikkim in figures … (1/2)

Parameter Sikkim All-states Source Economy GSDP as a percentage of all states’ 0.06 100.0 CMIE, 2005-06 GSDP Average GSDP growth rate (%) 13.9 7.5 CMIE, 1999-2000 to 2007-08 Per capita GSDP (US$) 986.8 998.1 CMIE, 2007-08 Physical Infrastructure Central Electricity Authority, Installed power capacity (MW) 46.1 98,996.4 as of March 2009 Cellular Operators Association of GSM cellular subscribers (No) 4,068,599* 367,328,179 , as of November 2009 Broadband subscribers (No) 14,202* 4,981,976 As of October 2008 Ministry of Road Transport & National Highway length (km) 62.0 70,548.0 Highways, 2007-08 Social Indicators Literacy rate (%)** 68.8 65.38 Sikkim Economic Survey, 2006-07 Birth Rate 18.1 23.1 National Health Profile, 2008

*Figures for the Northeast comprising Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura **Census 2001

7 ADVANTAGE SIKKIM Sikkim April 2010

Sikkim in figures … (2/2)

Parameter Sikkim All-states Source Ease of doing business Outstanding investments 4.8 1,709.7 CMIE, as of December 2008 (US$ billion) Industrial Infrastructure PPP projects (No) 24 460 www.pppindiadatabase.com

PPP: public private partnership

Parameter Sikkim Government Policy support Sectors with specific policies IT Policy, Tourism, Industrial development Availability of labour Adequate skilled labour available

8 ADVANTAGE SIKKIM Sikkim April 2010

Key industries in Sikkim with policy thrust and factor advantages

Industry attractiveness matrix High Hydro-power To ur i s m

Bamboo

Agriculture and IT Horticulture Medium Food processing

Policy thrust Policy Minerals

Sericulture Handloom

Low Medium High Factor advantage *Factor advantages include benefits due to geographical location and availability of factors such as talent pool, natural resources and capital

9 SIKKIM April 2010

Contents

 Advantage Sikkim

 State economy and socio-economic profile

 Infrastructure status

 State policies and incentives

 Business opportunities

 Doing business in Sikkim

10 STATE ECONOMY AND SOCIO-ECONOMIC PROFILE Sikkim April 2010

Socio-economic snapshot of Sikkim

Parameters Sikkim Capital Gangtok Geographical area (sq km) 7,096 Administrative districts (No) 4 Population density (persons per sq km) 76 Total population (million) 0.54 Male population (million) 0.28 Female population (million) 0.25 Population growth rate 1991-2001 (%) 33.06 Sex ratio (females per 1,000 males) 986 Literacy rate (%) 68.80 Male (%) 76.00 Female (%) 60.40

Source: Economic Survey, 2006–07

11 STATE ECONOMY AND SOCIO-ECONOMIC PROFILE Sikkim April 2010

Sikkim’s GSDP

• At current prices, the total Gross State Domestic Sikkim’s GSDP (US$ million) Product (GSDP) of Sikkim was about US$ 585.2 million in 2007-08. 2007-08 585.2 2006-07 458.3 2005-06 412.8 • The state’s GDP grew at a CAGR of 13.9 per cent between 1999-2000 and 2007-08. 2004-05 357.1 2003-04 311.3 CAGR 2002-03 263.8 13.9% • Sikkim was among the states that recorded high 2001-02 238.2 GSDP growth rates between 1999-2000 and 2000-01 221.5 2007-08. 1999-00 206.7

0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0

Source: CMIE

12 STATE ECONOMY AND SOCIO-ECONOMIC PROFILE Sikkim April 2010

Sikkim’s NSDP

• At current prices, the Net State Domestic Sikkim’s NSDP (US$ million) Product (NSDP) of Sikkim was about US$ 494.9 million in 2007-08. 2007-08 494.9 2006-07 386.5 • Sikkim’s NSDP grew at a CAGR of 13.7 per 2005-06 347.2 cent between 1999-2000 and 2007-08. 2004-05 302.3 CAGR 2003-04 263.3 13.7% 2002-03 223.0 2001-02 200.5 2000-01 186.9

0.0 100.0 200.0 300.0 400.0 500.0 600.0

Source: CMIE

13 STATE ECONOMY AND SOCIO-ECONOMIC PROFILE Sikkim April 2010

Sikkim’s economy is driven by the secondary and tertiary sectors

• The secondary sector has been the fastest Percentage distribution of GSDP growing sector, at a CAGR of 13 per cent CAGR between 1999-2000 and 2007-08. It is driven by 100% construction and hydroelectric power 80% generation. 10.4% 69.3 69.5 60%

• At over 69 per cent, the tertiary sector is the 13.0% largest contributor to Sikkim’s economy. It grew 40% 5.4 4.6 at a CAGR of 10.6 per cent and is driven by 20% trade, hotels, real estate, transport and 25.3 25.9 10.6% communications. 0% 2007-08 1999-00 Primary Secondary Tertiary • The primary sector’s share in the GSDP has been consistent at 25.3 per cent, driven mainly by agriculture. It recorded a CAGR of 10.4 per Source: CMIE cent between 1999-2000 to 2007-08.

14 STATE ECONOMY AND SOCIO-ECONOMIC PROFILE Sikkim April 2010

Per capita GSDP

• In 2007-08, the state’s per capita GSDP was US$ 986.8.

• The per capita GSDP increased at a CAGR of 11.9 per cent between 1999-2000 and 2007-08. It has more than doubled during this period.

• Trade, tourism, transportation and agriculture have been the key drivers of the increase in per capita GSDP. Per capita GSDP

1000.0 986.8

782.1 800.0 714.1 626.6 600.0 553.0 475.4 431.5 (US$) 402.2 416.4 400.0

200.0

0.0 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Source: CMIE

15 STATE ECONOMY AND SOCIO-ECONOMIC PROFILE Sikkim April 2010

Key industries in Sikkim

• The Commerce and Industries Department of Key industries in Sikkim Sikkim is involved in promotion of trade and industry in the state. Tourism Agriculture • The Sikkim Industrial Development & Investment Agro-processing Corporation Limited (SIDICO) is the state-level institution engaged in promoting, financing and Handlooms and handicrafts developing the tiny and small scale industries (SSI) Hydroelectric power sector in the state. Tea Minerals • Eco-tourism, handicrafts and handlooms, silk reeling and processing, precision Sericulture engineering, electronics, IT, medicinal Horticulture plants, floriculture, tea, spices, honey and biotechnology are thrust areas identified by the state.

• Being a potentially eco-fragile location, the people of Sikkim support promotion of pollution-free industries.

16 STATE ECONOMY AND SOCIO-ECONOMIC PROFILE Sikkim April 2010

Rice, maize, oil-seeds, orange, tea and spices are the key agricultural products

• Agriculture and allied sectors contributed 25.2 Annual production Crop per cent to the GSDP of Sikkim. (tonnes) Rice 22,230 • Sikkim enjoys a monopoly in the production of Maize 65,740 large cardamom production, contributing 85 per cent of the total produce in the country. Buck wheat 5,350 Pulses 5,790 • Sikkim aims to make the state’s farming fully Oil-seeds 7,610 organic by 2015. Organic farming demonstrations Cardamom large 2,745 have been made in over 3,000 hectares (ha) of Mandarin orange 17,910 land and bio-fertilisers have been introduced in 5,340 ha. A bio-fertiliser manufacturing unit has Tea* 167 also been set up. Source: Sikkim Agrisnet Production as of 2008-09 *As of 2006 • The Sikkim AGRISNET is an Internet-based agriculture information centre to promote scientific agricultural methods and convert research into practice in the agricultural sector.

17 SIKKIM April 2010

Contents

 Advantage Sikkim

 State economy and socio-economic profile

 Infrastructure status

 State policies and incentives

 Business opportunities

 Doing business in Sikkim

18 INFRASTRUCTURE STATUS Sikkim April 2010

Roads, railways and airports

• Sikkim has a total road length of 2,873 km with a road density of 41 km per100 sq km. The state is connected to West Bengal and rest of India through National Highway (NH) - 31A.

• The state Public Works Department (PWD) and the Border Roads Organisation (BRO) maintain the roads. The Sikkim Nationalised Transport (SNT) operates 87 busses and 92 trucks across the state, carrying 60 per cent of the state’s total freight and covering 43 routes.

• Rail connectivity is being created between Rangpoo and in West Bengal. Airport construction is underway in ; currently, helicopter services are available from Bagdogra (West Bengal) to Gangtok.

Length Length Road type Road type (Km) (Km)

National Highways (NH) 62 District roads 1,795 Source: Public Works Roads and Bridges Border roads Department, State Highways 184 894 (including NH) Sources: Economic Survey 2006-07, Government of Sikkim; Ministry of Road Transport & Highways, 2007-08

19 INFRASTRUCTURE STATUS Sikkim April 2010

Power

• As of March 2009, Sikkim had a total installed power generation capacity of 46.1 MW, which comprised 5 MW of diesel power and 41.1 MW of hydroelectric power.

• Sikkim has approved 30 new hydro electric power plants (HEP), which are at various stages of construction and would have an installed capacity of 5,352.7 MW when complete.

• About 24 HEPs are being set up under Public Private Partnership (PPP) mode.

• Sikkim has a peak hydroelectric capacity of 8,000 MW with a firm base of 3,000 MW, providing a huge potential for development. Installed state and private capacity (MW)

50.0 46.1 46.1 44.1 44.1 45.0 40.0 37.9 37.9 37.0 37.0 35.0 30.0 25.0 (MW) 20.0 15.0 10.0 5.0 - 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Source: Central Electricity Authority

20 INFRASTRUCTURE STATUS Sikkim April 2010

Telecom infrastructure

• Sikkim is among the states with the highest tele- Telecom operators in Sikkim density in the country. • BSNL

• The state had more than 49,000 landline phone • Reliance Communications connections and 15,000 plus mobile connections in • Bharti Airtel 2004. • Tata Indicom

• Vodafone Essar • Virtual Private Network (VPN) and 3G-services have been introduced in Sikkim by state-run Source: North Eastern Development Finance telecom company, Bharat Sanchar Nigam Limited Corporation Limited (NeDFI) (BSNL).

• Forty “Community Information Centres” have been constructed across the state. They provide Internet-based interface for implementing various government programmes and schemes.

• Postal services are available through India Post and other private courier services.

21 INFRASTRUCTURE STATUS Sikkim April 2010

Urban infrastructure … (1/2)

Water supply

• The Sikkim Water Security & Public Health Engineering (WS&PHE) department provides water supply to Gangtok, eight urban towns and 55 notified rural towns.

• WS&PHE supplies 130 litres per capita per day (lpcd) in Gangtok, 90 lpcd in urban towns, and 70 lpcd in the notified rural towns.

• Gangtok has a requirement of 27 million litres per day and the WS&PHE has a storage and distribution capacity of 45.45 million litres.

Sewerage

• Gangtok is the only town in Sikkim to have a full-fledged sewerage system. The sewerage system caters to nearly 50 per cent of the town, and expansion works are underway to cover the whole population.

22 INFRASTRUCTURE STATUS Sikkim April 2010

Urban infrastructure … (2/2)

• Under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), the rehabilitation of sewerage systems of Gangtok is being undertaken at a cost of US$ 5.3 million.

• Under the Basic Services to Urban Poor (BSUP) programme, three projects have been approved by the Government of India, at a cost of US$ 7.4 million, for improvement in sanitation and sewerage and poverty alleviation of the urban poor.

• With a funding of US$ 4.4 million under the Integrated Housing and Slum Development Programme (IHSDP), housing facilities are being built for the urban poor.

23 INFRASTRUCTURE STATUS Sikkim April 2010

PPP projects

• Sikkim has 24 active PPP projects of value US$ 3.8 billion, all for hydro electric power generation. Key projects Project cost (US$ million) Bermelee Khola HEP 4.7 Bhasmey hydro-power plant 32.1 hydro-power plant 98.8 hydro-power plant 110.7 Hee Khola HEP 5.3 Infrastructure for evacuation of power from IPPs 22.1 Jorathang Loop power project 59.8 Kalez Khola HEP 10.6 Kissim Khola HEP 3.3 Linza HEP 155.0 Panan hydro-power project 199.3 Rangit-IV hydro-power plant 89.7 Ringyang hydro-power plant 2.0 Rongnichu storage hydro-power plant 94.8 power plant 33.2 Talem HEP 151.5 Taramchu hydro-power plant 36.1 Teesta - VI power plant 664.3 Teesta -1 hydro-power plant 267.3 Teesta -III hydro-power project 1306.5 Upper Rimbi HEP 13.1 Source: pppindiadatabase.com IPP: independent power producers

24 INFRASTRUCTURE STATUS Sikkim April 2010

Education sector

• Sikkim has a literacy rate of 68.8 per cent as per No of educational institutions Census 2001. It has increased to 74.3 per cent in 2005. Universities 4

Colleges 12 • The Sikkim Manipal University (SMU) – a partnership between the Government of Sikkim and Polytechnics, ITI and teacher training institutes 6 the Manipal University – provides technical, healthcare and science education. It is Religious schools 89 rated as one of the top universities in the country. Senior secondary schools 42 • Distance education is available for students through SMU and Indira Gandhi National Open University Secondary schools 92 (IGNOU). Upper primary schools 150

Primary education statistics Primary schools 327 Enrollment ratio (1998-99) Lower primary schools 154 6-10 years 91.0% Sources: HRD Ministry of Sikkim, Economic Survey, 2006-07 11-14 years 86.0% Drop out ratio (I-V class, 1997-98) Girls 45.2% Boys 45.0% Pupil-teacher ratio, secondary education* 18:1

*As of 2004-05 Sources: HRD Ministry of Sikkim, Economic Survey, 2006-07 25 INFRASTRUCTURE STATUS Sikkim April 2010

Health infrastructure

• Sikkim has an impressive health Health indicators infrastructure, one of the best in the country. Population-to-bed ratio, 2004-05 530 Birth rate* 18.1 • The state fares better than the national average in almost all health indicators. Infant mortality rate**, 2005 30.0 Total fertility rate, 2005-06 2.0 • Health tourism is being promoted in the state to utilise its medical infrastructure and boost the Sources: NeDFI, Economic Survey, 2006-07 *Per thousand persons economy. **Per thousand live births

Health infrastructure

• Sub-centres: 147 • Primary health centres: 24 • Community health centres: 4 • Tuberculosis centres: 5 • Referral hospitals: 2 • Grant in institutions: 29 • Blood banks: 3 • Leprosy, mental illness and AIDS treatment hospital: 1

Source: NeFDI, 2005

26 INFRASTRUCTURE STATUS Sikkim April 2010

Cultural infrastructure

• There are three ethnic communities in Sikkim: Lepcha, Bhutia and Nepali. Buddhism and Hinduism are the two main religions followed in the state. It has nearly 200 monasteries, of which the most well known Buddhist circuits are the Pemayangste, Tashiding, Rumtek, Enchey, Phensang, Ralong, Phodang and Tolung.

• Important festivals in the state are Bumchu, Dasain, Losar, Losoong, Maghe Sankranti, Namsoong, Pang- Labhsol, Saga Dawa, Sakewa, Sonam Lochar, Tamu Lochar, Tendong Lho Ram Faat, Tihar, Trungkar Teschu.

• Sikkim, though a small state has the steepest rise in altitude over the shortest distance; its temperature varies from tropical and temperate in the Southern districts to alpine and tundra in the Northern peaks. Sikkim has lush forests, lakes, hot-springs, glaciers and mountain peaks. Trekking, river- rafting, mountain biking, mountaineering, yak riding and bird watching are the popular adventure sports in Sikkim.

• The state is richly endowed with rare and exotic flora and fauna, which includes 4,500 different flowering plants, 550 types of orchids, 36 varieties of rhodendrons, 28 bamboo species, over144 mammals, 552 species of birds and 600 different butterflies – making it a nature lover’s paradise.

27 INFRASTRUCTURE STATUS Sikkim April 2010

Industrial Infrastructure

• Sikkim has identified Rangpo-Gangtok, -Jorethang, Jorethang-Rishi and -Gangtok as industrial corridors with provision for giving the land to the investors on a lease basis.

• The strategically important, Nathula Pass, has been opened to provide trade links with Tibet and China; this has given a fillip to trade and manufacturing in the region.

• Sikkim is a leading Northeastern state in hydro electric power development with PPPs with 24 different projects identified.

• The State Government has invited “Expression of Interest” (EOI) from interested parties to invest in PPP projects in the tourism sector.

• Sikkim has identified agro-based industries, horticulture and floriculture, minor forest-based industries, animal husbandry and dairy products, tourism-related industries, ITincluding knowledge-based industries, precision oriented high value low volume products, hydro-power, tea, education and hospitality as thrust sectors.

28 INFRASTRUCTURE STATUS Sikkim April 2010

Major projects in the infrastructure sector

• As of December 2008, over US$ 4.8 billion in Infrastructure type Investments (US$ million) investments have been made towards improving Sikkim’s industrial infrastructure. Power and energy 4,513.06

Services 205.34 • Over 90 per cent of the investments in infrastructure have been made in the area of power Manufacturing 55.79 (both generation and distribution). Total 4,774.18

• A total investment of US$ 130.4 million is planned Source: CMIE in the hospitality sector.

29 INFRASTRUCTURE STATUS Sikkim April 2010

Major industrial projects being implemented

• Twenty four hydro-power plants are being set up at an investment of US$ 3.8 billion, under the PPP mode.

Investment Promoter Project Location (US$ million) Infrastructure North East Frontier Railway Railway line from Sivok to Rangpo 291.2 Sivok-Rangpo Teestavalley Power Transmission Transmission line, Teesta region 152.2 Teesta, North Sikkim Limited SIDICO -Gangtok-Nathula road project 133.8 Gangtok-Nathula Airports Authority of India Airport project 67.2 Pakyong Hyatt International Corporation Five-star hotel 43.6 Gangtok CGH Earth Hotels 21.8 Gangtok

30 SIKKIM April 2010

Contents

 Advantage Sikkim

 State economy and socio-economic profile

 Infrastructure status

 State policies and incentives

 Business opportunities

 Doing business in Sikkim

31 STATE POLICIES AND INCENTIVES Sikkim April 2010

Sector-specific policies … (1/4)

North East Industrial and Investment Promotion Policy (NEIIPP), 2007 Aim: To promote the Northeast as an attractive investment destination through several concessions and incentives. Key features:

• Industries under this policy are eligible for incentives for a period of 10 years from the date of commencement of commercial production.

• All new units as well as existing units that undergo substantial expansion (minimum 25 per cent increase in fixed capital) and start production before 2017 would qualify for incentives.

• Incentives would be available for all existing industrial units and upcoming units anywhere in the Northeast.

• A high-level monitoring committee/advisory committee would oversee the implementation of the NEIIPP.

• NEIIPP would not be applicable to peripheral activities such as preservation while storage, cleaning, packing, re-packing, labelling or re-labelling, sorting, etc.

• The North East Industrial Development Finance Corporation (NeDFI) will act as the nodal agency for disbursal of subsidies.

• NEIIPP, 2007, replaced the North East Industrial Policy,1997.

• Sikkim Industrial Promotion and Incentive (Amendment) Act, 2007, follows the NEIIPP, 2007.

32 STATE POLICIES AND INCENTIVES Sikkim April 2010

Sector-specific policies … (2/4)

NEIIPP, 2007 (continued) Incentives and concessions:

• 100 per cent excise duty exemption on finished products made in the Northeast.

• 100 per cent income tax exemption for industrial units.

• Capital investment subsidy increased from 15 to 30 per cent for plant and machinery up to US$ 360,000 per unit. For units above US$ 360,000 and up to US$ 7.5 million, an empowered committee approves. For units above US$7.5 million, the Union Cabinet approves.

• Interest subsidy to be given at the rate of 3 per cent on working capital.

• 100 per cent reimbursement of insurance premium.

33 STATE POLICIES AND INCENTIVES Sikkim April 2010

Sector-specific policies … (3/4)

Sikkim Tourism Policy, 2010 Aim: To build Sikkim as an attractive tourist location and promote the sector as an economic growth engine. Key initiatives and objectives:

• Community based eco-tourism to be promoted with the use of participatory management techniques.

• Rural tourism, adventure/sports tourism, medical tourism, trekking, natural tourism, culture and heritage tourism, cave tourism, monsoon tourism, tea tourism, etc., to be promoted through PPP projects.

• State to build the infrastructure for connectivity required to access the tourist spots.

• To have a “State Capacity Building Institute” to train and equip locals to serve the tourism sector.

• To participate in international tourist fairs and promote the tourism potential of Sikkim.

• Single-window system for clearance of private investments in the tourism sector.

• To provide concessions in luxury tax, service tax, service charges, electricity and water charges, and financial assistance on the capital outlay.

• To provide legal support and regulations to protect the industry.

34 STATE POLICIES AND INCENTIVES Sikkim April 2010

Sector-specific policies … (4/4)

IT Policy of Sikkim, 2006 Aim: To employ IT to provide better governance and generate employment. Key initiatives and objectives:

• IT to be promoted as an employment generation vehicle for the state.

• To set up software technology parks to promote call centres and business process outsourcing operations out of Sikkim.

• To promote e-governance within the State Government and its schemes to deliver speedy services to the citizens.

• To map all natural resources and the cultural heritage of Sikkim to preserve and promote its unique identity.

• To connect all district headquarters and sub-division headquarters with high-speed optical fibre cable to provide seamless Internet connectivity across the state.

• Cyber laws, security and Intellectual Property Rights (IPR) to be implemented to protect and promote entrepreneurship and innovation in the IT industry .

35 SIKKIM April 2010

Contents

 Advantage Sikkim

 State economy and socio-economic profile

 Infrastructure status

 State policies and incentives

 Business opportunities

 Doing business in Sikkim

36 BUSINESS OPPORTUNITIES Sikkim April 2010

Floriculture

• Sikkim has 4,500 varieties of flowering plants, 550 orchids, 35 rhododendrons and nine tree ferns, presenting an avenue for investment in floriculture.

• The existing industry is at a nascent stage and has potential to be developed and promoted towards an export-oriented business.

37 BUSINESS OPPORTUNITIES Sikkim April 2010

Medicinal plants and bamboo

• The agro-climatic conditions in the state support a wide variety of exotic flora and fauna that have utility in the medicine sector.

• About 182 different medicinal and aromatic plants are cultivated under contract farming for the National Medicinal Plants Board, the Department of Ayurveda and the Ministry of Health and Family Welfare, Government of India.

• The state has identified medicinal plants and bamboo as one of the priority sectors for investment.

• Sikkim has 28 varieties of bamboo, offering potential for developing the handicrafts, construction, medicine, packaging, and food processing industries.

38 BUSINESS OPPORTUNITIES Sikkim April 2010

Agriculture, horticulture and food processing

• Sikkim has a suitable climate for agricultural and horticultural products. It supports multiple crops, viz., rice, maize, millet, barley, urad, pea, soya bean, mustard, potato, sweet potato, tea, mandarin orange, banana, jackfruit, papaya, passion-fruit, litchi, broccoli, onion, egg- plant, carrot, tomato, radish, pumpkin, potato, sweet potato, turmeric, coriander, chilly, ginger, garlic and large cardamom.

• The surveyed arable land in Sikkim is 109,000 ha, of which only 9.5 per cent is used; this provides a vast untapped potential for development. The Sikkim Government is working on an ambitious plan to achieve 100 per cent organic farming by the year 2015.

39 BUSINESS OPPORTUNITIES Sikkim April 2010

Hydro power

• It is estimated that Sikkim has a peak potential capacity of 8,000MW and a steady 3,000 MW hydro- electric power. The state has invited PPP projects in the sector and 24 projects are already being set up in the state.

40 BUSINESS OPPORTUNITIES Sikkim April 2010

Tourism

• Sikkim has the perfect blend of natural wealth and topography, which ranges from tropical to temperate to alpine. The state is richly endowed with thick forests, flora and fauna, lakes, glaciers and mountain peaks, which makes it a tourist paradise.

• The number of foreign tourists increased by 9 per cent from 2005 to 2006; during the same period the domestic tourist population increased by 21 percent from 241,697 to 292,486.

• Creation of tourist complexes, eco-tourism, adventure tourism, ethnic-culture tourism, health farms, hotels, convention centres, tourist travel services, etc., are various avenues for investment in the tourism sector.

41 BUSINESS OPPORTUNITIES Sikkim April 2010

IT sector

• Sikkim’s IT policy aims to increase the use of IT in the industrial and government sectors. With a high literacy rate, affordable cost, strong English-speaking population, improved telecommunications connectivity and favourable climate, Sikkim is well poised to serve the IT industry.

• The IT policy provides several incentives and concessions for investments in the IT sector.

42 BUSINESS OPPORTUNITIES Sikkim April 2010

Sericulture

• Mulberry, muga, eri, oak-tussar and silk are cultivated in Sikkim. The Sericulture Department of Sikkim promotes exports of silk from Sikkim. The state is investing US$ 1.2 million in capacity building of farmers across 115 villages.

43 BUSINESS OPPORTUNITIES Sikkim April 2010

Handloom and handicrafts

• Carpet weaving, blanket making, handloom, cane and bamboo, Thanka painting, Lepcha hats-making and Angora shawl-weaving are the various handlooms and handicraft activities practised in Sikkim.

• Sikkim’s handicrafts are being promoted in various national and international trade fairs and have found ready buyers.

44 BUSINESS OPPORTUNITIES Sikkim April 2010

Te a

• Te a grown in the Te m i region of South Sikkim is famous by its brand name “Te m i ” tea. The tea has its unique flavour and about 100 million tonnes of tea is produced, annually.

45 BUSINESS OPPORTUNITIES Sikkim April 2010

Minerals and mining

• Sikkim has significant, untapped natural resource reserves of coal, lime stone, marble, quartzite, graphite, and garnet.

• Contour mapping and survey of minerals is being carried out by the Department of Mines, Minerals and Geology of the Government of Sikkim.

46 BUSINESS OPPORTUNITIES Sikkim April 2010

Electronics and precision engineering

• Electronics and precision engineering has been identified as a thrust area by the Sikkim Government owing to the presence of state-run precision engineering industry.

• Sikkim Precision Industries Limited, Sikkim Jewels Limited and Sikkim Time Corporation are the state-run precision engineering facilities. The success of these industries and the boost it has provided to the economy has encouraged the Sikkim Government to support and promote similar industry.

47 BUSINESS OPPORTUNITIES Sikkim April 2010

Electronics and precision engineering – companies

SITCO was established in 1976 to assemble mechanical watches for Hindustan Machine Tools (H.M.T.). The company diversified into mechanical crown watches, semiconductors, Sikkim Time Corporation (SITCO) digital and analog watches and speakers. SITCO currently employs 318 persons. It entered into an agreement with BPL, Bengaluru, to manufacture speakers for television and other applications. SJL was established in 1972 to produce watch jewels, cup jewels and rotor magnets. The company has emerged as a leading player in this segment and has become a preferred Sikkim Jewels Limited (SJL) supplier to H.M.T. Limited, Titan Industries Limited, Allwyn Watches Limited, Jaipur Meters and Electricals Limited, VXL India Limited and Andhra Pradesh Electricals and Equipment Corporation. Sikkim Precision Industries Limited SPIL was set up in 2001and employs over 100 persons. SPIL manufactures TO-202 package (SPIL) power devices and has an installed capacity of 10 million per annum.

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Contents

 Advantage Sikkim

 State economy and socio-economic profile

 Infrastructure status

 State policies and incentives

 Business opportunities

 Doing business in Sikkim

49 DOING BUSINESS IN SIKKIM Sikkim April 2010

Key approvals required

List of approvals and clearances required Department Incorporation of company Registrar of companies Registration, Industrial Entrepreneurs Memorandum, industrial licences Permission for land use Commerce and Industries Department Allotment of land Site environmental approval No objection certificate and consent under Water and Pollution Sikkim Pollution Control Board Control Act Registration under States Sales Tax Act and Central and State Excise Act Excise department Commercial taxes Sanction of power Power feasibility Energy and Power Department Power connection Approval for construction activity and building plan Public Works Department Water and sewerage clearance Water Security & Public Health Engineering Department Water connection

50 DOING BUSINESS IN SIKKIM Sikkim April 2010

Cost of doing business in Sikkim

Cost parameter Cost estimate Source

Cost of land (per acre) US$ 50,000 to US$ 75,000 in Gangtok Property dealers

Hotel costs US$ 10 to US$ 50 per room per night State tourism website

Cost of office space US$ 75 to US$ 200 per month Property dealers (2,000 sq ft)

Cost of residential space US$ 50 to US$ 100 per month Property dealers (2,000 sq ft)

Unskilled: US$ 2.0 per day Ministry of Labour, Government of Labour cost (minimum wages) Skilled: US$ 2.5 per day India

51 DOING BUSINESS IN SIKKIM Sikkim April 2010

Contact details

Key agency Contact information Government of Sikkim Gangtok - 737101, Sikkim, India Commerce and Industries Department Phone: 91-3592-202 670 Website: sikkimindustries.gov.in E-mail: [email protected] Chief Engineer (III) Energy & Power Department Energy and Power Department Gangtok Website: www.sikkimpower.org E-mail: [email protected] Managing Director SIDICO Sikkim Industrial Development & Investment Bhanu Path, Gangtok- 737103, Sikkim Corporation Limited (SIDICO) Phone: 91-3592-202 287, 202 637, 229 622 Fax: 91-3592-202 287 E-mail: [email protected] Director, D.H.H, Gangtok Directorate of handloom and handicrafts East Sikkim Phone: 91-3592-203 126/202 926

52 DOING BUSINESS IN SIKKIM Sikkim April 2010

Annexure

Exchange rates

Year INR equivalent of one US$ 2000 46.6 2001 48.3 2002 48.0 2003 45.6 2004 43.7 2005 45.2 2006 45.0 2007 42.0 2008 40.2 2009 46.0

Average for the year

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