Investment Climate in

Investment Climate in Rajasthan

Contents

Economic and Demographic Profile 1 Economic Profile 1 Demographic Profile 2 Physical Infrastructure 3 Power 3 Roads 4 Railways 4 Delhi Mumbai Industrial Corridor 4 Airports 5 Telecom 5 Social Infrastructure 5 Health 5 Education 6 Industrial Profile 7 Land Availability 8 Industrial Land 8 Agricultural Land 9 Manpower Availability 9 State Policies and Incentives 10 Investments in the State 10 Looking Ahead 11 Annexure : Policies 12

• All data is at constant (2004-05) prices unless explicitly stated otherwise • GSDP stands for Gross State Domestic Product • CSO data accessed on 18 October, 2012 EXECUTIVE SUMMARY

Rajasthan has emerged as an attractive investment destination with a steady inflow of investments, particularly in the manufacturing sector. The geographical location of the state gives it an easy access to major markets of north- western . 23 percent of the National Capital Region, lies in Rajasthan, one of the world’s largest urban agglomeration. The state’s economic performance is propelled by growth in all three sectors - primary, secondary and tertiary sectors.

Advantage Rajasthan

• Locational advantage because of its proximity to the National Capital Region • 37 percent of the proposed western Dedicated Freight Corridor and 46 percent of the Delhi Mumbai Industrial Corridor will fall in the state, providing access to the western and northern markets as well as access to the western ports of India • Endowed with vast resources of mineral wealth, the state is an attractive investment destination for mineral based manufacturing such as cement, ceramics and glass industries • Well - developed industrial areas and sectoral parks • Availability of skilled manpower • Fast developing IT sector, with IT majors such as and setting up their facilities • Focus on simplification of procedures and favourable environment for industries • Single window clearances for investments greater than Rs 10 million 1

Economic & Demographic Profile

Economic profile The GSDP of Rajasthan was Rs 2,155 billion in 2011-12 against Rs 1,278 billion in 2004-05, registering CAGR of 7.8 percent. The GSDP contribution of the state in the national GDP is 4.1 percent in 2011-121.

Figure 1: Growth of GSDP of Rajasthan Figure 2: Key Economic Indicators

3,000 11.7 11.0 12 Key Economic Indicator(2011-2012) Value 2,500 9.1 2,155 9 GSDP Rs. 2,155 billion 2,044 2,000 6.7 1,745 1,842 1,600 Growth in GSDP 5.4 percent 1,522 1,500 1,363 6 Per capita income Rs 27,421 5.5 5.4

5.1 in percent in Rs Rs in billion 1,000 National per capita income Rs 37,851 3 Exports (2010-11) Rs 237.5 billion 500

Source: Economic Review of Rajasthan, 2011-12; 0 0 and CSO 06 07 08 09 10 11 12 ------2005 2006 2007 2008 2009 2010 2011

Source: CSO

1 CSO 2

The services sector in the state has expanded in the last few years Demographic profile contributing 48 percent to GSDP followed by the industrial and agricultural sectors at 30 percent and 22 percent respectively for The population of Rajasthan is 68.6 million2. The decadal growth the year 2011-12. rate for the state was 21.4 percent as compared to national growth rate of 17.6 percent. The density of population of the state is quite low at 201 persons per sq km. The overall sex ratio is 926 females per 1,000 males.

Figure 3 : Contribution of different sectors towards the Economy of Rajasthan Figure 4 : Key Demographic Indicators (2011)

2004-05 2011-12 Key Indicators Value

22 Population 68.6 million 26 Population size (Males) 35.6 million 44 48 Population size (Females) 33.0 million

30 30 Population size (Urban) 17.1 million Population size (Rural) 51.5 million Density of Population (persons per sq km) 201 Agriculture Industries Services Agriculture Industries Services Literacy rate 67.1 percent Source: CSO Male literacy rate 80.5 percent Female literacy rate 52.7 percent Sex ratio (females per 1000 males) 926

Source: Census 2011 (Provisional)

2 Census 2011 (Provisional) 3

Physical Infrastructure solar energy. To harness renewable energy New capacity addition expected in the the state is implementing some innovative 12th Five Year Plan (2012-2017)5 Infrastructure forms the backbone of any programmes. Rajasthan Renewable Energy economy. In this regard, the Government Corporation Ltd. (RREC) is implementing » Conventional sources - 13,000 MW of Rajasthan is taking requisite measures Solar City programme, Remote Village for the development of its infrastructure. Electrification (RVE), developing Grid » Renewable sources - 3,000 MW Interactive Solar Power Project (MW In addition, an Atomic Power Project on Power scale), decentralize and Off-grid Solar the banks of river Mahi in Applications and Solar Parks in the state. The state has an installed capacity of is also proposed. 10,251 MW3. Figure 5 : Peak demand- supply position in the state

10,000 20 Rajasthan has tremendous potential for 17.3 solar energy due to high level of solar 8,000 13.7 16 radiation per square inch and large 12.8 6,000 12 amounts of contiguous, relatively flat, 7.8

MW 7.1 undeveloped land in the state. 4,000 8 Peak deficit % deficit Peak 3.2 3.7 The state has renewable energy based 2,000 4 installed power generation capacity of 0.0 0 0 4

2,372 MW. Rajasthan is expected to take a 05 06 07 08 09 10 11 12 ------lead in the use of generating power from 2004 2005 2006 2007 2008 2009 2010 2011

Peak Demand Peak Met Peak Deficit %

Source : CEA

Figure 6 : Services offered by different power companies in Rajasthan

3 Central Electricity Authority, August 2012, including allocated shares in joint and central sector utilities 4 Central Electricity Authority 5 http://investrajasthan.com 4

Roads The total length of roads in Rajasthan is 190,402 km6 . The road and northern domestic markets, as well as international markets density of the state is 55.63 km per sq km (as of 2011-12). The total via ports on the western seaboard. This will also provide high length of National Highways passing through the state is 6,576 speed, double stacked container rail connectivity that will reduce km. The state is also a part of national level projects, including transit time, costs and increase reliability. Golden Quadrilateral, east-west Corridor and north-south Corridor. A stretch of 150 km has been chosen on both the sides of the Western DFC is proposed to be developed as the Delhi Figure 7 : Key Road Network (as on March, 2012) Mumbai Industrial Corridor (DMIC). Around 46 percent of the

Road Length DMIC falls in Rajasthan, which constitutes about 60 percent Road Type (in km) of the State’s geographical area. The project influence area National Highways 6,576 of DMIC will positively impact major districts such as , , , Pali and Bhilwara. The DMIC will provide a high State Highways 11,388 quality environment with state-of-the-art infrastructure for Major District Roads 9,880 new investors. Khushkhera-Bhiwadi-Neemrana region is being developed as an Integrated Industrial Township in the first phase Other District Roads 24,004 and Jodhpur-Pali-Marwar area is being developed as a second Village Roads 138,554 node. Development plans under DMIC include:

Source : Economic Review of Rajasthan, 2011-12 • Greenfield Integrated Township: Within the Investment Region of Khushkheda-Bhiwadi-Neemrana: It is to be developed as To further augment its road infrastructure, the state has a model future city spread over 160 sq km having a world class undertaken various schemes such as the Missing Link project knowledge city. and the Central Road Fund, through which new roads are being constructed to link all villages in the state. Few initiatives taken by • Greenfield Airport/Aerotropolis: A world-class integrated the state include: logistics warehousing hub.

• Road Infrastructure Development Company of Rajasthan • Jodhpur-Pali-Marwar Investment Region: To be developed as (RIDCOR) has identified 7 projects under Public Private an integrated township with a new civil airport, integrated Partnership pattern for development of state highways multi-modal logistics hub and mass rapid transit system (MRTS) and major district roads having a total length of 273.5 km. The and well connected road network. proposed cost of this project is Rs 7.43 billion. DMIC intends to mitigate the limitations of Rajasthan as a • Rajasthan State Road Development & Construction land-locked State and will generate ample opportunities for Corporation (RSRDCC) has identified 15 projects for development. development of state highways and major district roads measuring1,081 km involving a cost of Rs 25.95 billion7.

Figure 8: Delhi Mumbai Industrial Corridor (DMIC) Railways

The total length of railway network in Rajasthan is 5,780 km. Almost, 4,465 km (77.3 percent) of the railway network is covered under broad gauge, 1,228 km (21.3 percent) under meter gauge and 87 km (1.5 percent) under narrow gauge. The railway route length per 1,000 sq km of geographical area is 16.9 km8 .

Important routes in the state are Jodhpur-Marwar, Jodhpur- Jaisalmer, Lalgarh-Kolayat and Lalgarh-Merta Road station.The state government is planning Metro Rail project for Jaipur city.

Delhi Mumbai Industrial Corridor

The proposed Western Dedicated Freight Corridor (DFC) connecting the Jawaharlal Nehru Port near Mumbai with Dadri near Delhi is 1,483-km long rail corridor. Around 37 percent of the Source: Government of Rajasthan corridor will pass through Rajasthan, creating new opportunities for companies located in Rajasthan to access the large western

6 Economic Review of Rajasthan, 2011-12, data as on March 2012 7 Economic Review of Rajasthan, 2011-12 8 Economic Review of Rajasthan, 2011-12, data as on March 2012 5

Airports Figure 9 : Summary of health institutions (Allopathic) • Creation of 116 posts of Lab Technicians in the state (as on December, 2011) Rajasthan has full-fledged airports at at City Dispensaries/Community Health Jaipur, , Kota, Jodhpur, , Centres (CHCs)/Primary Health Centres Institutions Number 12 and Jaisalmer. Jaipur has an international (PHCs) airport providing connectivity to Dubai, Hospitals 108* • Upgradation of 35 Primary Health Sharjah, Bangkok and Singapore. The Dispensaries 195 Centres (PHCs) to Community Health domestic and international traffic handled Primary Health Centres (PHCs)- 1,612 Centres (CHCs) by the Jaipur airport during 2011-12 Rural was 15,95,655 passengers and 2,32,649 Primary Health Centres (PHCs)- • Establishment 50 new PHCs along with 9 37 passengers respectively. Moreover, air Urban creation of posts strips and helipads exist at a number of Community Health Centres (CHCs) 428 other locations. Figure 11 :Key Health indicators Maternity and Child Welfare 118 To facilitate trade on both within and Centres Key Indicator Value outside India, the state has an Air-Cargo Aid Posts (Urban) 13 Birth rate* 26.2 Complex at Jaipur and Inland Container Sub-Health Centres (SHCs) 12,696 Depots (ICD) at Jaipur (2), Jodhpur (3), Death rate* 6.7 Bhilwara and Bhiwadi. Source: Economic Review of Rajasthan, 2011-12 Infant Mortality Rate** 55 * Excluding Medical college hospitals Source: Sample Registration System, 2011 Note: * per 1000 population Telecom In addition, a total of 3,708 Ayurvedic ** per 1000 live births Rajasthan has 50.3 million telecom Hospitals/Dispensaries including subscribers and an overall teledensity of Naturopathy & Yoga along with 7 Mobile 72.9.10 Units are functioning in the state. Figure 10 : Distribution of Ayurvedic and Naturopathy institutes in the state (as on December, 2011) Wireless and wireline service providers in the state include : Name of the District Hospital Hospital Dispensary Mobile Unit Grand Total system (Bedded) (bedded) • Bharti Airtel • Aircel Urban Rural Urban Rural Urban • Reliance Communication • Vodafone Ayurvedic 18 45 55 3,389 188 7 3,702 • Tata Teleservices Naturopathy - - 3 1 2 - 6 • Bharat Sanchar Nigam Limited & Yoga • Idea Source: Economic Review of Rajasthan, 2011-12

To improve the healthcare facilities of the Rajasthan is also one of the 18 high priority state, a number of initiatives such as the states under National Rural Health Mission Chief Minister’s Jeevan Raksha Scheme programme (NRHM, 2005-2012). NRHM Social Infrastructure and the World Bank assisted Rajasthan aims to provide effective healthcare to Health System Development Project have rural population throughout the country Health been taken up. Further, a few activities and to raise public spending on health have been sanctioned during the year Rajasthan has well developed health from 0.9 percent of GDP to 2-3 percent of 2011-2012, which include11: infrastructure. GDP. 13 • Construction of new buildings of Community Health Centre, Kekri ()

9 Airports Authority of India ,http://www.aai.aero/allAirports/jaipur_generalinfo.jsp 10 The Indian Telecom Services Performance Indicators (January – March 2012), The Telecom Regulatory Authority of India 11 Economic Review of Rajasthan, 2011-12 12 Economic Review of Rajasthan, 2011-12 13 National Rural Health Mission (2005-2012), Mission Document 6

Education Figure 12 : Distribution of medical institutes in Rajasthan (2011)

Course Institutions Total The state has 49,210 primary schools Government Private with 224,818 teachers and 55,980 upper Medical College 7 2 9 primary schools with 235,396 teachers with a total student enrollment of 12.5 Dental College 1 9 10 14 million . B-Pharmacy - 40 40

In terms of secondary education, the state D-Pharmacy 1 23 24 has 15,504 secondary and 8,189 senior M-Pharmacy - 17 17 secondary schools, out of which 8,108 B.Sc Nursing 1 140 141 secondary and 3,137 senior secondary Source: Economic Review of Rajasthan, 2011-12 schools are in the government sector. The total number of students enrolled is 3.2 Figure 13 : Distribution of institutes for million. Higher Education (2011)

The state government is working towards developing Rajasthan as a Center of Knowledge and is taking initiatives to encourage Knowledge Hubs in the state. As a result of this many institutions have come up in the state , specially in the private sector.

Prestigious academic institutions in Rajasthan include BITS (Birla Institute of Technology & Science) Pilani, The Mayo College in Ajmer and Raffles University (Singapore) in Alwar. In addition, several well known institutions are currently Source: Economic Review of Rajasthan, 2011-12 establishing campuses which include:

• IIT (Indian Institute of Technology), FDDI (Footwear Design & Development Institute) and NIFT (National Institute of Fashion Technology) in Jodhpur

• IIM (Indian Institute of Management) in Udaipur

• Central University at Ajmer

14 Economic Review of Rajasthan , 2011-12 7

Industrial profile Industries Department, Office of the Commissioner of Industries, Nearly 100 units are currently functional in Bhiwadi, Neemrana Bureau of Investment Promotion (BIP), Rajasthan State Industrial and Pathredi in , Rajasthan. A special auto and Development and Investment Corporation (RIICO), Rajasthan engineering zone has also been developed in the Pathredi Financial Corporation (RFC), and Project Development Industrial Area and another special zone is being planned in Corporation are the agencies facilitating industrial development Bhiwadi. in the State. The State Government has investor-friendly sector- Rajasthan’s textile industry with a network of backward and specific policies which include The Rajasthan Industrial and forward linkages, offers significant competitive advantage. Investment Promotion Policy, 2010, The Rajasthan Investment Rajasthan has a leading position in the production of polyester Promotion Scheme (RIPS 2010), Policy for Promotion of Agro- viscose yarn and synthetic suiting material as well as processing Processing and Agri-Business, 2010, The IT Policy 2007, The of low-cost, low-weight fabric (at Pali, Balotra, Sanganer and Tourism Policy 2007, etc. Bagru). Jaipur is also a well-known centre for manufacturing Rajasthan is favourably suited for investments in sectors garments, primarily for exports. Bhilwara has emerged as India’s such as cement, IT and ITeS, ceramics, tourism, automotive leading manufacturer of suiting fabrics and yarn. and agro-based industries due to its natural resources, policy Major horticulture fruits include ber, aonla, pomegranate and incentives, strategic location and infrastructure in the state. guava. Leading producer of mustard and rapeseed spices viz. The state is among the largest mineral producing states in India fenugreek, cumin seeds and coriander, guar and maize. Spices with 58 minerals out of available 79 varieties of minerals being such as coriander and ajwain including cumin and fenugreek are produced on a commercial scale. Important minerals are silver, being exported outside India. Apart from this, medicinal crops phosphate fluoride, rock phosphate, copper, , gypsum, clay, such as sonamukhi, mehandi, and kalonji are being exported to granite, , , dolomite, calcite, emeralds and Dubai. garnets , lignite etc. In 2009-10, Rajasthan was the Huge potential for dairy farming exists in rural areas in the state. sole producer of lead concentrate, zinc concentrate, calcite and The state has the 3rd largest cattle population in India with some wollastonite in India. Almost the entire production of silver, ochre of the finest breeds of milk and draught cattle. Rajasthan is 3rd and mineral gypsum, in the country is from the state. largest producer of milk in India with an annual production of The availability of clay and feldspar in Rajasthan makes it an 9.54 million tonnes (2009-10), accounting for 8.4 percent of the excellent location for ceramic-related industry (e.g., white-ware, country’s milk production. In addition, the state is the largest floorings and bone-china). To tap the potential of this sector, a producer of wool in the country with an annual production of dedicated Ceramic & Glass (Industrial) Zone is being developed 12,529 tonnes in 2009-10. at Ghilot near Neemrana in Alwar district. Incentives are available With its rich cultural and historical background Tourism accounts for investment under a package for promotion of Ceramics and for over 15 percent of the State’s economy. The state ranks 5th in Glass industries. the country in number of domestic tourists’ arrival (3.9 percent Rajasthan is the second highest cement producing state in India of total domestic tourists) and 6th in number of foreign tourists with a share of about 15 percent in the total cement production arrival (7.8 percent of total foreign tourists). The State operates in the country. As of March, 2012, Rajasthan had 19 projects with famous luxury tourist trains - Royal Rajasthan on Wheels and aggregate Cement capacity of 38.8 million tonnes per annum Palace on Wheels - that connect some of the important tourist (MTPA). More than 10 cement plants will be installed in the State destinations of Rajasthan with Delhi and Agra (in Uttar Pradesh). in near future, particularly in Chittorgarh, Jaipur, Jhunjhunu, Popular tourist destinations in the State include historic cities Nagaur and Pali given the availability of huge cement grade (Jaipur, Udaipur), wildlife sanctuaries (Sariska, Ranthambore) and limestone reserves in the state. desert locations (Jodhpur, Jaisalmer, and Bikaner). Jantar Mantar (Jaipur) and Keoladeo Ghana National Park (Bharatpur) have been Rajasthan is also endowed with mineral oil. The Mangala, included in the list of World Heritage Sites of UNESCO. Bhagyam and Aishwariya (MBA) fields, among others, constitute Cairn India’s key assets in Rajasthan. The MBA are the three largest Gems & Jewellery constitute 17 percent of India’s export, of which finds in Rajasthan. The Mangala field — considered to be the a significant contribution comes from Rajasthan. Jaipur is one of largest onshore hydrocarbon finds in India in last two decades — the most important & vibrant Gems & Jewellery clusters in the was discovered in January 2004. This was followed by discoveries country. Close to 300 years old, Jaipur is world’s largest center at the Bhagyam and Aishwariya fields. To date, 25 discoveries for cutting and polishing of coloured gemstones. Over the past have been made in the Rajasthan block. Studies indicate that it decade, the industry has witnessed a complete transformation. has further potential for growth. The Rajasthan block’s resource With heavy investment in technology, gemstone cutters have potential was estimated at 7.3 bn boe gross in-place. There have forward integrated and have started jewellery manufacturing. been exploration upsides with the prospective resource base 80 percent manufacturers produce gems and balance 20 rising from an earlier estimate of 2.5 bn boe gross in-place to 3.1 percent jewellery. There are 100 active exporters and 1500 bn boe gross in-place. sub-contractors in Jaipur. The industry provides employment to almost two lakh persons directly and indirectly. A wide pool The state offers excellent advantage for setting up of auto and of skilled manpower - designers as well as artisans - is available auto ancillary units especially in Alwar district due to its close in the region. A number of training institutions also exist for proximity to major auto production hubs of the country such capacity building. as Noida (Uttar Pradesh), Gurgaon and Dharuhera (Haryana). 8

Figure 14 : SEZs

RAJASTHAN

JAIPUR . Mahindra world city Ltd (Handicrafts,IT/ITeS and engineering) Khushkera, Bhiwadi . Vatika Jaipur SEZ Bikaner . RIICO SEZ (Gems and Jewellery) . Genpact KHUSHKERA, BHIWADI . Somani worsted Ltd.

Jaipur JODHPUR Jodhpur . RIICO SEZ (Handicrafts) BIKANER Ajmer . RNB Infrastructure International Airport

DMIC Investment Region - Khushkhera-Bhiwadi-Neemrana Investment Region DMIC Investment Region - Ajmer- Kishangarh Investment Region

Dedicate Freight Corridor

Capital City - Jaipur

Source: RIICO and KPMG Research

Land Availability Agro Food Park Industrial Land 4 Agro Food Parks in Kota, Jodhpur, Sriganganagar and Alwar for development of agriculture based industries developed by RIICO Easy availability of land is a very important factor for promoting with an investment of Rs 614 million15. industrial development. Rajasthan State Industrial Development & Investment Corporation Ltd (RIICO) is the sole government agency in the state Export Promotion Industrial Parks (EPIPs) involved in development of land for industrial enterprises. RIICO EPIPs have been set up at Sitapura in Jaipur, Neemrana in Alwar has embarked upon creation of Special Purpose Industrial Parks. and Boranada in Jodhpur. The EPIP at Jaipur is the largest export RIICO has developed 323 industrial areas in Rajasthan. park in northern India.

Figure 15 : Summary of Industrial Parks in Rajasthan

Type Location Special Economic Zones

Special Economic Zones Jaipur and Jodhpur 3 Special Economic Zones (SEZs) has been developed by RIICO in the state which are: Agro Food Parks Kota, Jodhpur, Sriganganagar & Alwar • Gems and Jewellery in Jaipur (2 in number) Export Promotion Industrial Parks Jaipur, Jodhpur and Neemrana • Handicrafts in Jodhpur Information Technology Parks Jaipur, Jodhpur, Kota and Udaipur Besides RIICO SEZ’s, the has approved the Gems & Gold Jewelry Complex Sitapura ,Jaipur following SEZs for the state.

Fig 16 : List of SEZs in Rajasthan Textile City Bhilwara

Leather Complex Manpur Macheri Type Numbers

SEZs (notified and operational) 3 Ceramics Complex Khara & Bikaner SEZs notified 6 Karauli ,Sawai Madhopur, Dhoinda in Minor Mineral Complexes SEZs formally approved 1 Rajsamand & Mitrapura in Dausa SEZs approved in-principle 12 Bio-Tech Parks Sitapura- Jaipur Total 22

Source: RIICO Source: RIICO

15 http://investrajasthan.com/cms.php?id=8&media=print 9

Fig 17 : List of notified and operational SEZs in Rajasthan (including RIICO’s Figure 19 : Land Utilisation pattern in Rajasthan (2010-11) SEZs- sector wise) Land type Area in (lakh ha) Type Numbers Forest 26.60 IT/ITES 1 Handicrafts 2 Land put to non-agricultural use 17.60 Engineering including related Barren and uncultivated land 24.98 1 industries Permanent pastures and grazing land 17.08 Gems and Jewellery 2 Land under miscellaneous tree crops 0.14

Source: RIICO Culturable waste land 45.46 Fallow other than current fallow 24.07 Fig 18 : Notified SEZs- sector wise Current fallow 12.75

Type Numbers Net area sown 173.94 Total cropped area 216.64 IT/ITES 4 Source : http://www.planning.rajasthan.gov.in/ Gems and Jewellery 1 Textiles 1

Source: RIICO Manpower Availability

Mahindra World City The focus of the state is on skilling the youth so that quality manpower is made available to the industry. With this agenda, In partnership with RIICO, Mahindra & Mahindra Group has the state government aims to project Rajasthan as a Center of established Mahindra World City (MWC), a multi-product SEZ Knowledge17 and is taking initiatives to encourage creation of in Jaipur spread over an area of 2,500 acres equipped with high knowledge hubs in the state. Jaipur, with the IIT and the Jaipur quality infrastructure. MWC already has signed agreement with National University, has the potential to become one of these about 41 companies, including Infosys Ltd., Infosys BPO, Wipro, hubs. Deutsche Bank, ICICI Bank, QH Talbros, Connexions, Nagarro Software, Tech Mahindra and JCB India for IT, engineering and Figure 20 : Technical Institutes (2011) handicraft SEZ zone. The IT zone in the Mahindra World City is spread over 750 acres, one of the India’s largest IT SEZ with plug- Courses Number Intake and-play facilities and robust connectivity. ITIs / ITCs 825 109,413 Japanese Zone in Neemrana Engineering 127 54,500 The state has developed an industrial estate in Neemrana Management 134 10,500 dedicated to Japanese investors. So far 446 acres of land has been Polytechnic 177 47,050 allotted to 42 Japanese companies out of which 20 companies have started commercial production and 11 have started Source: Economic Review of Rajasthan, 2011-12

construction work. 134 ITIs (including 8 for women) with 30,704 seats in the public A total investment of Rs 39.8 billion is expected from these sector and 691 ITIs with 78,709 seats in the private sector are projects creating employment opportunities for approximately functioning in the state and providing vocational training in 8,550 people16. engineering trades and non-engineering trades18.

Figure 21 : Distribution of Polytechnic institutes (2011) Agricultural Land Agriculture plays an important role in the economy of the state with net area sown accounting for 53.5 percent to the total reporting area.

Source: Economic Review of Rajasthan, 2011-12

16 Government of Rajasthan 17 Mr. S Ahmad , Former Chief Secretary, Rajasthan 18 Economic Review of Rajasthan, 2011-12 10

State Policies and Incentives Investments in the State In order to attract investment into the various sectors of the The state received industrial investment proposals amounting state the Government of Rajasthan has made several policy to Rs 1,699.6 billion during the period August 1991 to May announcements. These policies have provided a roadmap and 2012. During the year 2011 the state has attracted investment attempt to boost the industrial climate and remove various road intentions of Rs 234.9 billion. blocks which hampered the industrial expansion of the state. Figure 22 : Investment Intentions in the state These policy documents also provide investment incentives and schemes for the investors. Proposed Share of state in Proposed Year Numbers Investment Northern Region Employment Please refer to Annexure, for various policies in Rajasthan. Filed (Rs billion) proposed investments (Number) (percent) 2009 88 134.6 25.6 11,515 Single Window Clearance 2010 122 296.7 40.4 35,465

The Rajasthan Enterprises Single Window Enabling and Clearance 2011 165 234.9 23.6 32,653 Act became effective in the State since 27.12.2010 to provide for accelerated and time-bound grant of various licences, 2012(May) 90 112.6 46.5 29,135 permissions and approvals and to enable an alternative single Source: SIA Statistics, Department of Industrial Policy and Promotion, Ministry of Commerce window clearance mechanism to be triggered in case of failure of & Industry competent authorities to act in time and to support an investor Note: Investment in terms of Industrial Entrepreneur Memoranda (IEMs) filed, Letters of friendly environment in the State. Intent (LOIs) issued and Direct Industrial Licenses (DILs) issued Northern Region includes the states of Delhi, Haryana, Himachal Pradesh, Jammu & The Rajasthan Enterprises Single Window Enabling and Clearance Kashmir, Punjab, Rajasthan, Uttar Pradesh, Uttarakhand and UT Chandigarh Rules were notified 25.01.2011 for implementing the provisions of the Act. The state is attracting significant investments. In the financial year 2011-12 upto December, 2011 a total of 9,195 industrial This Act is aimed at ensuring smooth, simplified and hassle free units were registered in the MSME sector. These units with a total procedure for setting up industries and fructifying investment investment of Rs 17.6 billion have generated direct employment in the State. The Act prescribes that investments between for 74,051 persons. During the year 2011-12, upto November Rs 10 million to Rs 100 million would be cleared at the district 2011, the state received proposals for establishment of 117 major level by a committee headed by the District Collector. The nodal and medium industries with an investment of Rs 132 billion. agency for this is the District Industries Centre (DIC).

Investments beyond Rs 100 million are cleared by a State level Foreign Direct Investment empowered committee headed by the Chief Secretary. The State Level Committee is also competent to recommend customized According to the Department of Industrial Policy and Promotion, package for large investments to the Council of Ministers. FDI inflows from April 2000 to July 2012 amounted to US$ 607 million in the state. For the period April 2012 to July 2012, FDI inflows amounted to US$ 54 million19.

19 Department of Industrial Policy and Promotion, Ministry of Commerce & Industry 11

LOOKING AHEAD

Rajasthan is taking major initiatives facilitate Rajasthan easier access to market, ceramic areas, automotive, non- towards improving the business climate seaports at Maharashtra and Gujarat. The water intensive industries, apparel, solar and encouraging private investments DMIC planned along the alignment of industries, etc. Sectors such as cement in various sectors including physical western DFC will provide further impetus and tourism offer significant potential and social infrastructure through Public to trade and investment in the state. to attract additional investments. State Private Partnerships. Rajasthan Investment offers tremendous scope in the field of The state has taken many initiatives to Promotion Scheme 2010 provides various renewable energy especially in solar create favourable investment climate financial incentives and subsidies. The energy with state government aiming to which includes expediting decision state has introduced a statutory Single set up 10,000 – 12,000 MW of solar power making at the political and bureaucratic Window System and an online electronic plants over a decade. levels, preparation of masterplans for clearance mechanism for time bound all cities in the state to enable prompt approvals for investment proposals. industrial conversions20 and emphasizing Special economic zone dedicated for responsibility sharing across all levels. investors from Japan has been established Steps have been taken to simplify the at Neemrana in the state, an indicator of tedious process of changing land use international interest for investments in from Agricultural to Industrial. Adequate the state. The state provides excellent measures have been initiated to deal with industrial infrastructure in the form of well the challenges related to availability of developed industrial parks. land, basic infrastructure and water supply. The proposed Western Dedicated Freight The state offers ample scope for Corridor with about 37 percent of the investment in sectors such as agro food corridor passing through the state will

20 Mr.CK Mathew, Chief Secretary , Rajasthan 12

Annexure : Policies

Rajasthan Industrial and Investment Promotion Policy-201021 Objective : The policy has been announced with a vision to catalyze investments, accelerate inclusive economic and create large scale employment opportunities in Rajasthan. Key features

• Improving the business climate through policy initiatives and systemic changes • Developing high quality infrastructure • Enhancing skill levels and employability by setting up training institutes in Private Public Partnership( PPP) • Easy availability of land for projects • Focus on Micro Small and Medium (MSMEs) growth by giving high priority to cluster based development of MSMEs • Promotion of thrust areas

Rajasthan Investment Promotion Scheme (RIPS), 201022 Objective : The Scheme has been notified to promote investment in the State of Rajasthan, facilitate investment in establishment of new enterprise(s) and/or investments made by the existing enterprise(s) for modernization/expansion/diversification, help in revival of sick industrial enterprises and to further generate employment opportunities through the instrumentality of such investments. Key features

• Subsidy: Investment Subsidy—To the extent of 30 percent of tax(es) paid by the enterprise. Employment Generation Subsidy—To the extent of 20 percent of tax(es) paid by the enterprise. • Exemption: Luxury Tax (100 percent) Electricity Duty (50 percent) Entertainment Tax (50 percent) Land Tax (50 percent) Mandi Fee (50 percent) [Above subsidies and exemptions are available for 7 years (10 years for the MSME units in the notified areas)] Stamp Duty (50 percent) on purchase or lease of land and construction/improvement on such land Conversion Charge (50 percent) payable for change of Land use. • Applicable to: (a) New Enterprise (b) Existing Enterprise making investment for modernization/ expansion/diversification (c) Sick industrial enterprise for its revival (d) Enterprise which has set up project for common social good.

Solar Policy 201123

Objective : The policy aims to establish Rajasthan as a national leader in solar energy in phased manner by creating the policy frame work for promoting use of solar energy in various applications.

Key features • Exemption from electricity duty: The energy consumed by the power producers for own use will be exempted from payment of electricity duty. • Grant of incentives available to industries: Generation of electricity from solar power plants shall be treated as eligible industry under the schemes administered by the Industries Department and incentives available to industrial units under such schemes shall be available to the solar power producers.

21 Government of Rajasthan 22 Government of Rajasthan 23 http://re.indiaenvironmentportal.org.in/files/rajasthan percent20Solar percent20Policy2011.pdf 13

Availability of water for power generation: Water Resource Department will allocate required quantity of water from Indira Gandhi Nahar Project (IGNP) canal or the nearest available source for development of solar thermal plants subject to the availability of water for power generation • Power producer will intimate estimated water requirement to Rajasthan Renewable Energy Corporation (RREC) along with source of water. After assessment/scrutiny, case of water requirement shall be forwarded to the Water Resource Department. The modification(s) required, if any, in the existing canal system shall be done by the Water Resource Department at the cost of the power producer • Allotment of government land at 10 percent DLC Rate (Agriculture) • Conversion of agricultural land to industrial use at 10 percent rate • Exemption of ceiling limit for the installation of solar power plants in excess of ceiling limit prescribed in the Ceiling Act 1973

Promotion of Agro-Processing and Agri-Business 201024 Objective: The policy for the promotion of agro processing industries and agri-business seeks to address the entire value chain in agro processing and marketing, including development of the supply chain, market development and diversification. Other objectives • To increase the income in the hands of the farmers through more remunerative prices of their produce • To encourage value addition in agricultural produce and to reduce post harvest losses • To bring in new technologies and practices to modernize agro-processing and marketing • To promote export of agri-products of the state and to build a strong state brand in the domestic and international market • To attract private investment in agro processing and create new employment opportunities on a large scale

Key features

• Incentives admissible under RIPS 2010 • Additional incentives/concessions under this policy • Incentives/assistance admissible under ongoing or specific schemes/ programs

Rajasthan Micro, Small and Medium Enterprises (MSMEs) Development Assistance Scheme, 2008 25

Objective: With a view to strengthening the institutional support framework, improving quality of MSMEs’ products through Research & Development (R&D) and compatibility with the environmental benchmarks, the scheme was introduced under Incentive Package for MSMEs 2008.

Key features Concessions: • 50 percent of the capital cost for establishment of Common Effluent Treatment Plant/Facilities (CETF/Facilities) by industries association of MSMEs in industrial areas/clusters in the state • 50 percent of the capital cost incurred by MSMEs for establishment of individual Effluent Treatment Plant/Facility. This benefit would be available only if the enterprises’ establish the Effluent Treatment Plant/Facilities, using 80 percent of the recycled water. • Part of the capital cost as decided by the competent committee under clause 6(I) for setting up a regional office or the branch of national laboratories in the state • Part of the capital cost as decided by the appropriate committee mentioned under clause 6 for the establishment of Research, Development and Testing laboratories set up by MSMEs Association. Maximum limit of part of the capital cost to be provided under the scheme by the state government would be Rs 20 millions. This benefit would be available only to such laboratories which obtain accreditation from national level accreditation board/authority • 50 percent of the capital cost for setting up of training institute in the state by national/state level institutions for ensuring availability of skilled manpower in the state

Exemptions: 75 percent exemption from electricity duty to the MSMEs located in rural areas.

24 http://rajind.rajasthan.gov.in/Msme.pdf 25 http://rajasthan.gov.in/rajgovresources/actnpolicies/it_policy.pdf 14

IT & ITES Policy 200726 Objective: : An investor friendly IT Policy has been implemented in the state which provided lucrative incentives to IT industries. It is targeted for the IT and IT enabled service industries which aspire to invent in the state.

Key features Concessions available for IT Companies. • Land rebate up to 60 percent, depending upon the type & size of investment in RIICO IT Parks • Exemption of stamp duty on registration of land • 50 percent exemption from electricity duty for 7 years • Simplified Labour Laws. (Women are allowed to work in night shift, self certification under various state enactments, etc.) • Customized package for investment beyond Rs 500 million. • Venture capital support

Tourism Units Policy 200727 Objective: This policy enhances the scope of the Hotel Policy, 2006, by including all other categories of hotels (heritage hotels and other tourism units such as health spas, golf academy and golf course) under its purview.

Key features • There will be no conversion charges for conversion of agriculture land in urban areas and coversion of agriculture land for non agriculture purpose in rural areas under tourism unit policy 2007 • Maximum land are for allotment of land in urban areas has been increased and special reserve prince has been kept from 10 percent to 50 percent of the commercial reserve prince of the are and in rural area on DLC rate of the local area for various Tourism Units under Tourism Unit Policy 2007 • Regularisation of residential land & building which were running as hotels or other tourism units without permission and are also operational the same shall be regularised on marit basis on payment of 25 percent of regularisatin fee scheme under Rajasthan Municipality Rule 2000 under Tourism Unit Policy 2007 • F.A.R. for hotels already established will be increased from 1.75 to 2.0 to allow construction of additional floor under Tourism Unit Policy 2007 • For new hotel project under Hotel Policy 2006 Floor Area Ratio (F.A.R.) has been increased upto twice within scheme are subject to the condition that overall F.A.R. of the scheme are shall not exceed 1 (one) • Heritage property which is converted into Heritage Hotel having minimum of 10 rooms has been exempted 100 percent from conversion charges • 75 percent concession in stamp duty on conversion of old heritage properties (more then 100 years) into hotels • 50 percent Remission in luxury tax during the off season i.e. April to July

Other Policies/Packages/Schemes/Incentives28 Various other Policies for promoting investments in the state include: • Policy for Promotion of Private Sector Investment for setting up of power generation projects in the state of Rajasthan, 2005 • Rajasthan Special Economic Zone Policy, 2003 • Special Incentive Package for Ceramic and Glass Sector, 2011 • Rajasthan Mineral Policy, 2011 • Rajasthan Ecotourism Policy • Policy to Promote Private Investment in Healthcare Facilities (Amendment), 2011 • State Livestock Development Policy • Incentive Package for Powerloom sector in Jodhpur, Pali and Barmer • Rajasthan Incentive Scheme for BPO Centre and KPO centre, 2011 • Integrated Township Policy 2007 • Policy for promoting generation of electricity from Wind 2012 • Policy for promoting generation of electricity from Biomass

26 Government of Rajasthan 27 Government of Rajasthan 28 Government of Rajasthan This report has been made by KPMG in India for CII.

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