Investment Climate in

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Table of Contents

EXECUTIVE SUMMARY...... 4 BIHAR - SELECT INDICATORS ...... 6 ECONOMIC OVERVIEW OF THE STATE ...... 7 ECONOMIC PERFORMANCE ...... 7 PEOPLE - ECONOMIC PROSPERITY ...... 7 INDUSTRIAL PERFORMANCE ...... 8 INVESTMENTS IN BIHAR ...... 9 LABOUR FORCE ...... 10 INFRASTRUCTURE ...... 10 LAND ...... 10 EDUCATIONAL INFRASTRUCTURE ...... 11 MEDICAL AND HEALTHCARE FACILITIES ...... 11 INFRASTRUCTURE FOR SAVINGS & BORROWINGS...... 11

TRANSPORT INFRASTRUCTURE ...... 12 POWER ...... 12 TELECOMMUNICATION ...... 13 INDUSTRIAL INFRASTRUCTURE ...... 13 POLICY FRAMEWORK ...... 14 KEY NODAL AGENCIES ...... 15 KEY INDUSTRIES AND PLAYERS ...... 16 AGRO–BASED ...... 16 FOOD PROCESSING ...... 17 TEXTILE (HANDLOOM & SILK) ...... 18 LEATHER INDUSTRY ...... 18 ENGINEERING INDUSTRY ...... 18 MINES AND MINERALS ...... 19 IT AND COMMUNICATION ...... 19 PETROLEUM PRODUCTS ...... 19 DOING BUSINESS IN BIHAR ...... 20 COST ESTIMATES ...... 21 CONTACT INFORMATION ...... 22 APPENDIX ...... 22

A report by ICRA for IBEF Executive Summary

‘Investment climate’ is a broad concept, encompassing all the Bihar is a result of the bifurcation of erstwhile Bihar and the factors affecting business decisions, including profi tability and creation of the state of Jharkhand in 2001, which also took away where to locate plants and other units. A good investment the majority of mineral rich areas as well heavy industrial units. climate provides opportunities and incentives for fi rms to invest Thus, not surprisingly, agriculture is a prominent component of productively and create jobs, thus playing a key role in ensuring the , employing over 84 per cent of the state’s sustained growth and poverty reduction. workforce.

Factors infl uencing investment climate include: The Gross State Domestic Product (GSDP) for Bihar in 2005- • Availability and ease of use of factor inputs such as land and 06 was $13.4 billion. The average annual growth rate of GSDP labour; between 1999-00 and 2005-06 was 6.6 per cent. The per capita • Availability of adequate physical and social infrastructure, income of the state at $139 in 2004-05 was much below the such as power, telecom, urban infrastructure, water supply, national average. hospitals, and educational institutions; • Governance and regulatory framework in terms of rules and Bihar has a mix of industries ranging from agro-based (food pro- regulations governing entry, operation, and exit of fi rms, sta- cessing, silk and tea) to leather and non-metallic minerals, though bility in regulation, integrity of public services, law and order dominated by the small scale sector. Food, beverages, tobacco and investment facilitation; and and petroleum products account for more than 85 per cent of • Provision of incentives and access to credit. the total industrial income. The state contributes about 10 per cent of ’s common fruit and vegetable output, but The state of Bihar is situated in the eastern part of India with less than 1 per cent of processed output. the Himalayan nation of Nepal to its north and the states of West Bengal, Uttar Pradesh and Jharkhand fl anking each of the The state is committed to create an investment climate condu- other sides. Bihar is the land of origin of religions like cive for private sector participation. With its Industrial Incentive Buddhism and Jainism. , the present day state capital, Policy 2006, the state initiated power sector reforms, one-time traces its history to the erstwhile capital city of Patliputra of settlement schemes, creation of special economic zones (SEZs), Emperor . revival of sick industrial units and other measures to attract investments. Thrust areas also include promotion of specifi c The state has an area of 94,163 sq km and is home to about 8 industries, in particular agro-based industries (food processing, per cent of India’s population. Its geography is varied – north- jute, sugar and horticulture) since they are based on the state’s ern Bihar is mostly level tract and part of the Gangetic plains, factor advantages, as well as other industries like IT and enter- while southern Bihar is wooded and hilly. The state has fertile tainment. soil, well-irrigated by rivers, as well as forest wealth. Present day BIHAR PAGE 5

Another initiative alongside the Industrial Incentive Policy 2006 was the Single Window Clearance Act, 2006. It aims at speeding up the clearances required for implementation of industrial and other projects and ensures single point clearances to promoters for early commercial production of such projects. The initia- tive covers various nodal agencies and supervisory bodies with clearly defi ned roles and responsibilities.

In parallel, the state is working on enhancing industrial infra- structure as seen in projects such as Agro-Park, Air Cargo Complex and Inland Container Depot. The state has a well developed rail network, and is working on enhancing its roads as well as upcoming inland waterways network. Telecom (fi xed line and mobile) is developing rapidly, while power – grossly under- invested till recently – is seeing a huge infl ow of funds to address demand shortage. Bihar is below national averages on various health and social indicators (life expectancy, literacy etc), and gaps in its social infrastructure are also starting to be addressed – by fi lling vacancies in educational institutions, inviting private participation in higher and technical education as well as fi nancial support programmes for healthcare.

stment Climate in Bihar

Since the onset of the Industrial Policy regime and Single Win- dow system, the State Investment Promotion Board has ap- proved over 100 proposals worth over $8.6 billion. The propos- als cover infrastructure sectors, the thrust industries as well as others like healthcare and hospitality. As of March 2007, projects worth $2.7 billion were under implementation. Bihar - Select indicators

Capital Patna International airport Patna

Land and Climate Area (sq km) 94,163 Climate Summer (March to May) Rainy season (June to October) Winter (November to February) Rainfall (millimetres) 1,205

Main rivers Ganga, Saryu, Gandak, Bagmati, Koshi, Sone, Punpun, Phalgu

Districts 38 Number of villages 45,103 Number of urban agglomerations 9 Number of towns 130

People Main religion Hinduism Population (in millions) (2001 Census) 82.88 Density of population 880 per sq km Literacy rate (%) 47.5 Male 60.3 Female 33.5

Offi cial languages , State’s share in India’s population 8.1% Birth rate (per thousand persons) 31 Death rate (per thousand persons) 10.5 Infant mortality rate (per thousand live births) 61

Industry Major Industries: Agro-based, Food processing, Mining, Oil refi nery, Textiles, Leather and Miscellaneous Engineering BIHAR PAGE 7

Economic Overview of the State

The present state of Bihar is the result of the bifurcation of the Bihar's GSDP (USD billion) erstwhile larger Bihar on 15th November 2000, resulting in the CAGR creation of the new state of Jharkhand. Bihar today has an area 6.6% 13.40 12.60 of 94,163 sq km and a population of 82.88 million (2001 census). 11.60 11.90 9.70 9.80 It is the third largest state of India in terms of population. Bihar 9.10 accounts for 8.1 per cent of India’s total population, but has only 2.9 per cent of its total area. Thus, the population density in Bihar, which stands at 881 persons per sq km, is one of the highest in India.

1999Ͳ00 2000Ͳ01 2001Ͳ02 2002Ͳ03 2003Ͳ04 2004Ͳ05 2005Ͳ06

The bifurcation of erstwhile Bihar resulted in substantial mineral Source: Indiastat.com resources going to Jharkhand. But the state still has abundant natural resources in the form of fertile soil and plentiful wa- services). The secondary sector (comprising manufacturing, ter resources. Nearly 90 per cent of the total population lives construction and electricity, gas and water supply) has been the in rural areas, with agriculture being the mainstay of the rural weakest in Bihar; registered manufacturing, a sub sector under economy. Around 57 per cent of the gross cultivated area is ir- this category, has consistently recorded negative growth rates in rigated. recent years.

Bihar also has a few large industries, mostly in the public sector. Percentage distribution of GSDP Major public sector units include Indian Oil Corporation (which CAGR has an oil refi nery), Hindustan Fertilizer Corporation Ltd at TertiarySector 6.80% and Pyrites Phosphates and Chemicals Ltd at Amjhor. 49.8% 53.6% Other industries include cotton spinning mills at Siwan, Pandaul, SecondarySector 7.60% , Mokamah and Gaya, and sugar mills located across the 10.5% 11.8% state. PrimarySector 39.7% 34.6% 2.40%

In addition, there are distilleries at Gopalganj, West Champaran, 2000-01 2005-06 Bhagalpur and Riga (), leather units in West Source: Indiastat.com Champaran, and Barauni, jute mills at and Samastipur, a medicine manufacturing unit at , food pro- cessing units and vanaspati manufacturing units at Aurangabad CAGR of 7.6 per cent between 2000-01 and 2005-06. and Patna. The structural composition of the state’s economy has wit- The investment front in the state looks promising, with total nessed an uneven transformation over the years – tertiarisation outstanding investments worth $8.6 billion envisaged in over of the economy before full growth of the secondary sector. 100 projects as of March 2007, a healthy rise of 23 per cent over The primary sector currently accounts for 34.6 per cent of the the previous year’s fi gures. GSDP, its share having fallen from 39.7 per cent in 2000-01. The secondary sector accounts for 11.8 per cent, having grown at a Bihar’s economic performance CAGR of 7.6 per cent between 2000-01 and 2005-06. The tertiary sector accounted for 53.6 per cent of GSDP in The GSDP of Bihar has exhibited a compound annual growth 2005-06, up from 49.8 per cent in 2000-01. This growth has been rate (CAGR) of 6.6 per cent between 1999-00 and 2005-06, driven by increased activity in sub-sectors like communication increasing from $9.1 billion to $13.4 billion. and banking and insurance.

This growth has been driven by two sectors – primary (compris- People - Economic prosperity ing agriculture and livestock, forestry and logging, fi shing, mining and quarrying) and tertiary (comprising trade, hotels and restau- The per capita income in Bihar, which is below the national aver- rants, transport, storage and communication, fi nancial services, age of $514.2, has grown from $65.2 in 1993-94 to $139.9 in real estate and related services, public administration and other 2004-05. average, as the purchasing power of people is not as high as in Distribution of household by income (Per cent) Bihar other developed states in the country. India Urban Rural Industrial performance in Bihar 32.6 57.5 < USD 1667 12.2 46.1

USD 1668- 23.1 25.7 Key Industries 3330 26.1 32.5

USD 3331- 28.4 10.3 6667 39 16.8 • Food products/beverages • Tobacco products 15.9 > USD 6667 6.5 22.7 4.6 • Textiles/textile products • Leather/leather products Source: The Market Skyline of India 2006 by Indicus Analytics • Wood/wood products • Paper/printing/publishing The annual income of households is also an important indicator • Mines and minerals of economic prosperity. Bihar has a lower share of households • Dairy (both urban and rural) in higher income categories compared to • Tea all-India fi gures. • Sugar • Makhana (a fl owering plant with edible seeds) For example, 15.9 per cent of Bihar’s urban households and 6.5 per cent of rural households fi gure in the highest income Unregistered units dominate the overall industrial sector in category of $6,667 and above, as compared to all-India fi gures of the state, accounting for more than half of its total income. The 22.7 per cent and 4.6 per cent, respectively. Annual Survey of Industries (ASI) 2004-05 reveals that there are 1,675 industrial units in the state. However, in terms of net value But 32.6 per cent of Bihar’s urban households and 57.5 per cent added, food, beverages, tobacco and petroleum products account of rural households fi gure in the lowest income category of less for more than 85 per cent of the total industrial income. than $1,667, as compared to all-India fi gures of 12.2 per cent and 46.1 per cent, respectively. On the other hand, the percent- Though Bihar produces about 10 per cent of India’s total output age of households in Bihar in the middle income group – $1668- of fruits and vegetables, the state’s share in processed output is $3330 and $3331-$6667 – is almost the same as in case of all- only 1 per cent. This clearly shows that there is enough scope to India categories, which indicates the presence of a large potential develop this sector further. in the consuming class. Tea and dairy are two major industrial sectors in the state. Other potential industries are sugar, makhana, leather, textile and Four-wheelers Two-wheelers handloom. Mineral production in Bihar includes pyrites, quartz- Bihar 1% Bihar 5% ite, mica and limestone.

All-India 4% All-India 18% Industrial centres Television Electricity The main industrial centres are Patna, Magadh, Muzaffarpur, Bihar 15% Bihar 14% Barauni, Bhagalpur, , and Tirhut. All-India 41% All-India 64% According to the Department of Industries, the number of Source: The Market Skyline of India 2006 by Indicus Analytics large and medium industries in the state is only 259, of which the highest concentration (38.2 per cent) is in , Another factor relating to the population’s prosperity is the followed by Tirhut (21.6 per cent) and Magadh (9.7 per cent). ownership of physical assets like vehicles and consumer elec- Out of 38 districts spread over in 9 divisions, 10 do not have any tronics, which are indicators of consumer aspirations. A com- large/medium industrial unit. parison of asset ownership by households shows that consum- ers in Bihar are way behind in consumption vis-à-vis the all-India Patna is an important business and agricultural centre of eastern BIHAR PAGE 9

India, exporting grain, sugarcane, sesame and medium-grained Investments in Bihar rice. It has also emerged as a big and rapidly expanding con- sumer market, both for fast moving consumer goods (FMCG) Breakup of Investments by sector and consumer durable items. The government plans to develop Mining Patna as the second international gateway in eastern India (after Irrigation 9.4% 1.4% Kolkata) to exploit its tourism potential and for promotion of trade and commerce with neighbouring countries in the east. Services 17.6%

Muzaffarpur district is home to several industrial units, the major Manufacturing ones being Prabhat Zarda, Indian Drugs & Pharmaceuticals Ltd 11.3% (IDPL), Bharat Wagon and Engineering Ltd., Leather Develop- Electricity ment Corporation and Muzaffarpur Dairy (a unit of the Bihar 67.0% State Dairy Corporation). It is an also important trade centre Source: Monthly Review of states of India, CMIE March for textiles, mango and litchi. Report 2007

The Barauni refi nery of Indian Oil Corporation Ltd (IOC) is Outstanding investments in Bihar stood at $8.6 billion as of one of the country's biggest oil refi neries. It has a capacity of 6 March 2007, lower by 2.73 per cent as compared to the pre- million metric tonnes per annum (MMTPA). State-owned Bihar vious year. This fall was induced by an 11.8 per cent drop in State Electricity Board (BSEB) signed a memorandum of un- investment in the power sector, which accounted for a dominant derstanding (MoU) with Vikash Metal and Power Ltd (VMPL), a share of almost 67 per cent in total investment. Kolkata-based company, for setting up a power plant at Barauni at a cost of $500 million. However, outstanding investment in the manufacturing as well as mining sectors surged by an impressive 300 per cent and 263 Bhagalpur is famous worldwide for its silk production. A silk per cent, respectively. This robust increase in the manufacturing culture institute and an agricultural research station are also sector can be attributed to the growth in investment in food and located in the city, which has major road and rail connections. beverages (265 per cent). Other industries include rice and sugar milling and wool weaving. Gaya is another major weaving centre with around 8,000 power As on March 2007, 82 projects worth $2.6 billion were in looms. the announcement stage, 23 projects worth $3.6 billion were proposed and 86 projects amounting to $2.7 billion were under

Table 1: Distribution of Large and Medium Units in Bihar by Industrial Groups and Division Divisions Food, Tobacco, Cotton, Wool, Material, Metal, Rubber, Plastic, Total Beverages Jute, Paper Machine Chemicals (Share in per cent) Patna 22 18 52 7 99(38.2) Magadh 6199 23(9.7) Bhagalpur 2332 10(3.9) Munger 2 3 1 12 18(6.9) Saran 12 1 1 0 14(5.4) Tirhut 21 6 16 13 56(21.6) Darbhanga 9 9 - 1 19(7.3) Koshi ---- - 8631 18(6.9) 82(31.7) 47(18.1) 85(32.8) 45(17.4) 259(100) Source: Economic Survey of Bihar 2006-07 implementation. Among the new projects announced, Dhauad- Infrastructure in Bihar har Industries’ Kumarbagh sugar project worth $44.4 million, was the largest; next came the $33.3 million Kahalgaon cement Land project. Land acquisition in Bihar is under the purview of the Land Ac- The state government plans to invest $46 million for developing quisition Act 1894. Based on this Act, the state government came infrastructure in various tourist spots to promote the tourism out with the Bihar Land Acquisition Rules, 2007. Investors can sector. acquire land from the following sources:

Labour force in Bihar • Bihar Industrial Area Development Authority (BIADA) – land that is classifi ed/earmarked for industrial purposes, provided Bihar accounts for only about 7 per cent of the total organised the investor is keen on investing within the premises of the sector employment in India’s public sector and a mere 3 per park cent in the private sector. • Private transaction – Purchasing land outside the industrial area from a private party; Of the total population of 82.88 million, the workforce adds up • Government can acquire agricultural land, convert its classi- to 28.1 million (34 per cent). After the division of Bihar in 2000, fi cation for industrial purpose and provide it to BIADA, thus there has been a change in the percentage distribution of work- making it available to investors ers – the maximum number of the workers is engaged in the agriculture sector as cultivators or labourers. Land/shed in Growth Centres or Industrial Areas is allotted by BIADA to entrepreneurs for setting industrial units on lease of 90 years with option for renewal. The rent is subject to revision after every 20 years.

The predetermined cost of developed land/shed is realised in easy installments. The entrepreneur has the right to mortgage the land/shed with fi nancial institutions/banks – for getting term/ working loans – without requiring separate permission either of

Table 2: Employment in organised sector (lakhs) Public Sector Private Sector 2000 2001 2002 2000 2001 2002 Bihar (share in all-India) 13.6(7.1) 13.6(7.1) 13.6(7.2) 2.5(2.9) 2.5(2.9) 2.5(3.0) All India 193.1 191.3 187.7 86.4 86.5 84.3

Source: Manpower Profi le, Institute of Applied Manpower Research, 2004, New Delhi; fi gures in parentheses are the percentage share of Bihar employment vis a vis all-India fi gures

Table 3: Percentage Distribution of Workers in Re-organized Bihar Economic Classification Number in thousands Share in total Per cent Cultivators 8,192 29.2 Agricultural labourers 13,527 48.2 Household industries 1,086 3.9 Other workers 5,273 18.8 Total workers 28,080 100 (Source: - Census of India, 1991) Note: - Total may not tally due to rounding off the figure. BIHAR PAGE 11

the Government or the Industrial Area Development Authority. Medical and Healthcare Facilities The Industry Department would determine the period of con- struction for large, medium and small scale units. The lease deed Health Indicators would carry the condition that if the unit is not constructed within the prescribed period, the land could be taken back. Au- Bihar All-India thorities managing Industrial Areas and Growth Centres would Population served per be the single contact point for clearances regarding allotment of land. Doctor 2,363.9 1,607 Birth rate* 31 24.8 In order to expedite the process of land allotment, a number of inter-departmental references have been minimised along with Death rate* 10.5 8.1 decentralisation of powers to the level of collectors. Collectors maintain detailed information on all available Government land Infant mortality rate** 61 63 in the district. While the collectors are authorised to allot up to 5 acres of Government land for industrial purpose, govern- *per thousand persons **per thousand live births ment land in excess of this is leased to entrepreneurs with the approval of the Empowered Committee. Life expectancy at birth(Years) Male 61.6 64.1 Educational infrastructure Female 59.7 65.4

Status of educational Institutes Source: Statistical Abstract of India, Economic Survey of Bihar • 12 universities/deemed universities • 11 research institutions There are 121 hospitals, 1,641 primary health centres, 70 com- • 743 arts, science and commerce colleges munity centres and 1,000 dispensaries/clinics in Bihar. Some • 7 engineering degree colleges policy decisions in the area of health have been the establish- • 23 medical colleges ment of the ‘Mukhya Mantri Sahayata Kosh,’ to provide medical • 15 teacher-training colleges facilities to families with annual income upto $2,000. • 63 other educational institutions Source: RHS Bulletin, March 2006, M/O Health & F.W., GOI and India Infrastructure for savings & borrowing stat.com There are three kinds of institutions functioning in the state There are 36,798 primary, 15,314 middle, 62 Government Sec- – banks (including commercial banks, regional rural banks, ondary Schools and 2,534 Rajkiyakrit Secondary schools besides co-operative banks as well as other co-operative institutions), other minority and informal educational institutions. Bihar’s state fi nancial institutions and national fi nancial institutions. Co- educational network includes the universities of Nalanda (one of operatives largely look after the requirements of the agricultural the earliest universities of India), Vikramshila and the University sector, commercial banks provide fi nance for industry as well as of Patna, which has 11 colleges. The literacy rate of the state is agriculture, state fi nancial institutions help to promote industrial low at 47 per cent, as compared to the national average of 64.8 development and national level institutions cater to the require- per cent. ments of large-scale fi nance.

An international university as a centre of excellence has been The state has a large number of commercial bank branches planned as a regional initiative with the help of major Buddhist (2,061) compared to regional rural banks (1,482) and co-opera- countries of the Far East and South East Asia. tive banks (152). The Bihar State Finance Corporation, which had stopped lending due to huge outstanding loans, has been revived. The National Bank for Agriculture and Rural Development (NA- BARD) is helping support rural projects. Transport Infrastructure Railways

Roads The state has an extensive and well-developed railway network providing vital links between the mining and tourism centres and Bihar has a total road length of 81,655 km, of which 77.5 per important cities and ports in the country. The total rail length cent are village roads. The length of National Highways and State in the state exceeds 5,400 km. A few railway routes connecting Highways in the state stands at 3,629 km and 3,232 km, respec- important places like Muzaffarpur-Samastipur-Barauni-Katihar tively. The state has 77 km of road length per 100 sq km and and Muzaffarpur-Chapra-Siwan have been converted into broad only 50 per cent of roads are surfaced as against the national gauge. The main rail junctions are at Patna, Gaya, Muzaffarpur, average of 60 per cent. Katihar and Samastipur. Over $1.4 billion worth of investment has been planned by the Central Government for the moderni- The old Grand Trunk Road is being upgraded to 4/6-lane super- sation of railways in Bihar, including gauge conversion, doubling highway under the Golden Quadrilateral Project. An east-west of lines and electrifi cation. 4-lane high-speed corridor is under construction by the Na- tional Highways Authority of India. Under the National Highway Inland Waterways Development Project, 3,890 km of national highways have been identifi ed for upgradation to 4-lane under the build-operate- The stretch of Ganga between Allahabad and Haldia has been transfer (BOT) scheme, providing additional corridors to declared National Waterway 1 and is being developed for naviga- Nepal and Assam. District roads are to be converted into state tion by the Inland Waterways Authority of India. A permanent highways under the state highway development programme to terminal is being planned at Patna, and cargo handling facilities further improve connectivity within the state. are being developed accordingly. The National Inland Navigation Institute has been set up in Patna to train crew. Civil Aviation Power Major airports in Bihar include Patna International Airport and an international airport at Gaya. Muzaffarpur, Raxoul and Jogbani After bifurcation of the state, 70 per cent of the generation are the other domestic airports in Bihar. Thirty-nine district capacity of erstwhile Bihar has fallen within the jurisdiction of headquarters have air strips/aerodromes. Small air taxi/charter Jharkhand, but 70 per cent of the load is left with present-day services are available at Patna. The state government plans to set Bihar. Its power generating capacities were considerably dimin- up an air cargo complex in Patna that will be promoted by the ished to just 565 MW in thermal plants in Barauni (320 MW) Bihar Industrial Area Development Authority (BIADA) and the and Muzaffarpur (220 MW) with a limited 25 MW generated Airport Authority of India at a cost of around $1.6 million. from hydel power sources.

Table 4: Upcoming Aviation Projects Cost Status Location (USD million) Gaya Airport New Terminal Building 9.7 Under Gaya Project Implementation Kishanganj Airport Project 0.8 Proposed Kishanganj Total Investment 10.5

Table 5: Present power scenario in Bihar Average National Bihar Percentage of villages electrified 84 per cent 41 per cent Household electrification 55.8 per cent 10.3 per cent Per capita consumption 612 units 76 units Source: Indian business website BIHAR PAGE 13

New projects in the pipeline involve a total estimated cost of Air Cargo Complex $4.4 billion in the ongoing 11th Five Year Plan (2007-2012) with a total capacity of 4,820 MW. These include Barauni T.P.S exten- Though Bihar has considerable potential for export of agricul- sion project, Pirpainti T.P.S, Nabinagar and Katihar projects, all ture/horticulture products, it has under-performed in terms of planned for completion in four-and-a-half years. The Bihar State exports, partly due to the absence of air cargo infrastructure. Hydroelectric Power Corporation (BSHPC) has hydel power An Air Cargo Complex is proposed to be built adjacent to projects in fi ve districts with a capacity of 44 MW, and is target- the Jai Prakash Narayan Airport, Patna, to be promoted by the ing a higher utilisation rate. BIADA and Airport Authority of India. The complex will facilitate exports of fruits, vegetables and horticulture products, silk and Abhijeet Group, a diversifi ed business group with interests in other exportable items. The complex will feature: steel, power and construction is investing over $1.4 billion to set • Pre-cooling facilities as well as cold storage for highly perish- up nine, coal-based thermal plants (each with 135 MW capacity) able commodities such as fl owers, fruits and vegetables; at Navinagar, , Pirpainti and Banka in Bihar. • Elevating Transfer Vehicle (ETV) for storage and retrieval of ready-built unit load devices; Telecommunications • Modern cargo equipment like cranes, forklifts, high-reach stackers, power pallet trucks CCTV monitor and control. Bihar fi gures among the fi rst fi ve states in the country in terms of revenue per Direct Exchange Line (DEL). Calculations show a Software Technology Park tele-density of 70 telephones per thousand population, compris- ing fi xed lines, global system for mobile communications (GSM) The 45th Software Technology Park (STP) in India is coming up and code division multiple access (CDMA) connections. There on the campus of the New Government Polytechnic Complex were 1,163 exchanges in the state as on April 1, 2006. At pres- in Colony in Patna. The project involves grants-in-aid ent, there are 6.8 million telephone connections in Bihar. Of the of $200,000 and provision of three acres of land. The STP would four operators, BSNL commands the largest share of 41 per have 5,000 sq ft of built-up space. The Biscoman Tower, where cent, followed by Reliance, Bharti and Tata Telecom. the STP is located, is a city landmark with excellent IT and social infrastructure. Industrial infrastructure Inland Container Depot Bihar is aggressively working on building industrial infrastructure including an Export Promotion industrial park, Food Parks, an Inland Container Depot, Sitalpur, is one of the mega infrastruc- Air Cargo Complex, a Software Technology Park, an Inland Con- ture projects sanctioned and fi nanced by the Union Ministry of tainer Depot and Agri-Export Zones. Commerce and Industry, at a projected cost of $5.1 million. It is being set up to facilitate export of fruits, vegetables, horticulture Export Promotion Industrial Park products and other exportable items produced in the state. Land acquisition is in process. Its salient features are: Export Promotion Industrial Park (EPIP), Hajipur, is being devel- • Two full train length rail lines oped as a multi-product export-processing zone for north Bihar • 500 sq m covered warehouse space for import cargo under the umbrella of the Union Ministry of Commerce and • 5,000 sq m covered warehouse space for export cargo Industry and the . It would be spread over • Open space for stacking 3,000 loaded containers 94 acres and cost about $2.6 million with requisite infrastruc- • Open space for stacking 4,000 empty containers ture facilities for setting up export units. • Eight hectares parking area to accommodate 4,000 trailers • Administrative building with 4,000 sq m of built-up area Food Park • Computerised weigh bridge facility • Container repair facility The Union Ministry of Food Processing Industry has sanctioned the establishment of Food Parks at Hazipur and to promote agro-based and food processing units. The infrastruc- ture will include cold storage units, refrigerated vehicles and effl uent treatment plants. Agri-Export Zone charges and reimbursement of Value Added Tax (80 per cent in the case of new units and 25 per cent for old units). Bihar is the largest producer of litchi in India. An Agri-Export Zone (AEZ) is being developed for promoting litchi exports Policy for Sugar Industry from the districts of Muzzafarpur, Samstipur, Hajipur, , East and West Champaran, Bhagalpur, Begusarai, , Sitamarhi, Key initiatives under this policy include: Saran and Gopalganj. Various central government agencies will • Incentive package including reimbursement of Central Excise contribute $900,000 for the $2.6 million AEZ, while the state Duty on sugar for a period of fi ve years government and private agencies will contribute the rest. The • Exemption of purchase tax on sugarcane for fi ve crushing projected incremental exports of litchi from this zone is years $34.1 million over the next fi ve years and around 10,000 farm- • Exemption of stamp duty and registration fees for land trans- ers are likely to benefi t. fer • 10 per cent subsidy on capital investment or a maximum Policy Framework $2.2 million, whichever is less, on machinery, after comple- tion of fi rst year of commercial production The post-liberalisation era has ushered in new investment chal- • Incentive package for distillery and ethanol as well co-gener- lenges and opportunities for various Indian states. The Bihar gov- ation of power ernment has announced various investment-friendly policies and initiatives to create an attractive investment climate in the state. Single Window Policy Industrial Incentive Policy 2006 Following introduction of the policy relating to single-window Key initiatives under this policy include: clearance for private investments in August 2006, the state saw • Bihar Single Window Clearance Act – 2006, for rapid clear- investments of $132.7 million and has received 205 investment ance procedures for new industries proposals. • Bihar Infrastructure Development Enabling Act – 2006, to provide for development of physical and social infrastructure Agriculture Policy in the state and to attract private sector participation • Provision of self-certifi cation to simplify the inspection of An Agriculture Policy was drafted by the state government in factories 2006 to build upon the natural advantages that the state has in • Establishment of Land Banks to meet the requirements of agriculture. Food security, increase in crop productivity, increase industries and development schemes in farmers’ income and environmental conservation are the four • To develop handicraft, handloom, khadi, silk and village indus- targets of the new agricultural policy regime. A mega project for tries establishment of soil testing laboratories in all 534 blocks has • Granting of incentives (pre-production incentives of subsidy, been sanctioned, to make soil-testing facilities more accessible exemption from stamp duty and registration fee and post- for farmers. production incentive of grant/exemption for preparation of project reports, purchase of land/shed, technical know-how, Further, 31 new seed-testing laboratories are to be established captive power generation/diesel generating set, quality certifi - to provide every district with its own laboratory. Micro-nutrient cate, VAT, luxury tax, electricity duty, conversion fee, market testing laboratories have been established in three districts. fee etc) Research and educational infrastructure of the Rajendra Agricul- • Special incentives announced for investment in education tural University, the only agricultural university in the state, has include subsidy on land and its registration, subsidised infra- been strengthened. structure support (water, power, approach roads) along with assistance in seeking approvals from the All India Council of The Bihar State Seed Corporation has been revived, and seed Technical Education (AICTE) production has been started on 45 state agricultural farms. A Farmers’ Commission and a Land Reforms Commission have Signifi cant measures include waiving of the minimum monthly been established. guarantee electricity bill, discontinuation of land registration BIHAR PAGE 15

Key Nodal Agencies

Single window clearance mechanism in Bihar

INVESTMENTS HANDLED: UNDER THE CHAIRMANSHIP OF: NODAL AGENCY:

Industries Department Between USD STATE LEVEL (Udyog Mitra) 2.38 & 23.8 million INVESTMENT Industries Development -State level PROMOTION BOARD Commissioner District Industries District Collector, Centre - district level Lower than DISTRICT LEVEL USD 2.38 million COMMITTEE

The state legislature enacted the Bihar Single Window Clear- investment proposals and is headed by a general manager. Since ance Act, 2006, to provide for speedy processing of clearances this system is still at the nascent stage, implementation at the for implementation of industrial and other projects and ensure district level has not yet gained in momentum. single point clearances to promoters for early commercial pro- duction of such projects. State Investment Promotion Board

The nodal agencies are the Industries Department at the state The act states that the state government notifi es the SIPB as the level and the District Industry Centre at the district level; the state level empowered committee, which will review investment supervisory bodies are the State Investment Promotion Board proposals worth between $2.38 million and $23.8 million, and is- (SIPB) and district level empowered committees. sue ‘in-principle’ approvals that will be binding on the concerned authorities. Subsequently, investors need to approach individual Projects with investment above $23.8 million are routed through departments directly to get fi nal clearances. the Chief Minister and the Cabinet for approval.

Industries Department District Level Empowered Committee

The Industries Department acts as a state level nodal agency A District Single Window Clearance Committee has been set and plays the role of a facilitator and enabler for all investments up by the government for each district to act as the approving between $2.38 million and $23.8 million. It is headed by the authority. Investment proposals that are less than $2.38 million director, technical development. Its primary functions involve are under the purview of this committee. providing a common application form, assisting the investor in fi lling up the form, helping in convening the SIPB meeting and Bihar State Financial Corporation (BSFC) facilitating the process of getting fi nal clearances with various departments. BSFC is the main state level institution providing term lending facilities to entrepreneurs. Banks have also shown increasing Udyog Mitra interest in term lending to industrial units. BSFC will be restruc- tured and strengthened to meet the growing needs of entrepre- Udyog Mitra, part of Industries Department, disseminates rel- neurs. The corporation also undertakes the appraisal of projects evant information to the investor pertaining to investment pro- coming up in the state with a view to raising money from the fi les for different industries and the various clearances required capital market. at the business entry stage. Bihar State Hydroelectric Power Corporation (BHPC) District Industry Centre BHPC has been the nodal agency for development of hydel The District Industry Centre acts as nodal agency to handle potential in Bihar. The company is moving ahead to achieve its objectives of identifying potential for hydro projects, planning The sugar industry attracted private investments to the tune of and executing them. It is involved in the business of purchasing, $1.1 billion in 2006. Closed sugar units are being revived, consid- selling, manufacturing, trading, and maintenance of hydroelectric ering the expanding market for ethanol blended fuel. The state and other projects. has received over 19 proposals for establishment of greenfi eld projects with a cumulative crushing capacity of over 100,000 Bihar Industrial Area Development Authority (BIADA) tonnes/day and distillery capacity of 235 kilolitres/day. These will create direct and indirect job opportunities for 210,000 people. BIADA was constituted under the statutory provision of the Bihar Industrial Area Development Act 1974, to promote and assist industrialisation and create awareness about the industrial K.K. Birla Group policy of the state. BIADA is the nodal agency nominated by the state government to co-ordinate and implement activities of the The K.K. Birla Group’s sugar company Upper Sugar Agri-Export Zone and schemes under the guidelines of APEDA (UGSIL) has two units in Bihar – Bharat Sugar Mills, Sidhwalia, to promote the export of fruits and other agro products grown District Gopalganj, with a crushing capacity of 2,500 tonnes per in Bihar. day, and Hasanpur Sugar Mills, Hasanpur, District Samastipur, with a crushing capacity of 1,750 tonnes per day. UGSIL is investing Key industries and players in Bihar $88.4 million for expansion of both units to crush 5,000 tonnes per day each, apart from setting up a sugar refi nery and co-gen- Bihar has a mix of industries – agro-based, food processing, silk/ eration unit at Bharat Sugar. textiles, leather and mineral-based as well as miscellaneous engineering-based industries. Indian Gasohol Ltd

Agro–based Indian Gasohol Ltd (IGL), a company started by a group of NRIs, plans to produce fuel alcohol for blending with petrol and diesel. Bihar produces several types of agriculture products such as It pans to invest $299.4 million for setting up four maize-based rice, wheat, maize, gram, oilseeds, sugarcane and jute. industrial units in Bhagalpur, Muzaffarpur, Begusarai, and Vaishali.

Sugar Industry It has proposed a further investment of $3.4 billion to set up 10 mega distilleries for producing ethanol from sugarcane with a combined capacity of 5.4 million tonnes annually. Each unit Status of Sugar Industry would have a crushing capacity of 25,000 tonnes crushed daily (TCD). Apart from ethanol, the mills would also generate 2,000 x No. of sugar mills 29 MW of energy out of bagasse, of which 70 per cent will be x Total Cultivable land 5.5 million hectares x Land under Sugarcane 0.23 million hectares surplus and will be utilised by the state government for rural x Total Sugarcane production 129.9 million MT electrifi cation. x Sugar produced 0.4 million MT x Crushing duration 122 days Tobacco

The availability of Kendu leaves and cheap labour has helped Sugar industry is the largest agro-based industry in Bihar. The make Bihar the country's sixth largest tobacco producing state. current production in the state is 13 million MT and the tar- Bidi manufacturing industries are located at Bihar Sarif (Nalanda geted production by 2015 is 46.7 million MT. It is estimated that district) and Janjha in Munger district. about half a million farmers and their dependents are engaged in the cultivation of sugarcane and another 50,000 unskilled and ITC Ltd skilled personnel, including trained technologists, are engaged in the sugar industry in the state. The fi rst cigarette factory of ITC Ltd was established in Munger. ITC has decided to invest $6.6 million in various schemes, in- Sugarcane is grown on 230,000 hectares (around 4.5 per cent) cluding primary education and health care in Munger district. of the total 5.4 million hectares of cultivable land in the state. BIHAR PAGE 17

Food Processing 1991–92 to 2005–06. It contributes 9 per cent of the total milk processed in the state and sells milk and milk-based products Bihar is the eighth largest producer of food grains in the country, under the popular brand ‘Sudha’. the third largest producer of vegetables (6.72 million MT per annum) and the sixth largest producer of fruits (3.03 million MT Other sectors with potential include processing of litchi, honey, per annum). Pineapple and makhana are also produced in large makhana, mango and tea. quantities in the state. Litchi The major food processing activities in the state are milling and milk processing. Currently, there are 58 roller fl ourmills, Bihar is known for its premium litchi. The area under litchi is 4,872 rice mills (3.5 per cent of total rice mills in India) and 45 concentrated in the districts of Muzaffarpur, Vaishali, Madhubani, licensed fruit and vegetable processing units. Samastipur and other adjoining districts of north Bihar. The area covered is around 28,870 hectares and current production is The food processing industry in Bihar, which has grown at an av- 336,852 MT. This accounts for 80 per cent of national produc- erage of 3.5 per cent over the last three years (compared to an tion. Its targeted production by 2015 is 500,000 MT. Litchi's all-India average of seven per cent) is mainly in the unorganised wholesale price in Bihar is less than that of competing states, giv- sector. The government is laying emphasis on setting up of cold ing it a comparative advantage in the domestic as well as export storages. Private sector participation is encouraged for packag- market. ing and food processing to ensure better quality and production through modern technology. Realising the potential of this fruit, an Agri-Export Zone for litchi has already been sanctioned. The Planning Commission has Usher Agro identifi ed for fund infusion for systematic development. A National Centre for Litchi has been established Usher Agro commenced operations in 1996 and is engaged in at Muzaffarpur. the milling of paddy. It has set up a fully automatic rice mill plant at Buxar. The Buxar plant, which started commercial production Table 6: Exports of litchis (fresh & processed) from Bihar in November 2003, is fully automated with an installed capacity Year 2002-03 2003-04 2004-05 2005-06 of 46,800 tonnes per annum (TPA). The company produces raw Quantity in MT 152 388 624 900 white rice, par-boiled rice and steam rice of different grades of Source: Economic Survey of Bihar both the basmati and non-basmati varieties. Honey Dairy Bihar is one of the leading honey-producing states in India. The A number of milk cooperative societies have been established in main beekeeping regions are the districts of Muzaffarpur, Vaishali, the state, and the targeted milk production by 2015 is 8.4 million Sitamarhi, Champaran, Madhepura, Katihar and Begusarai. The MT. present production capacity of honey is 1,300 MT (13 per cent of the total production capacity in India) and the target for 2015 COMPFED has been fi xed at 3,900 MT. Bihar is the only state producing honey on a commercial scale. It has the potential to produce The Bihar State Cooperative Milk Producers’ Federation about 40,000 MT of honey with an estimated value of $44.2 mil- (COMFED) is one of the few success stories of organised milk lion annually, employing over 600,000 people. processing in India. COMFED’s success is based on integrated vertical and horizontal linkages across the supply chain of milk. Makhana (Gorgon nut) It provides all the elements of supply chain intervention to its members – upgradation of milk production technology (includ- Bihar is the only state producing makhana (gorgon nut) com- ing milch animals varietals and productivity enhancements), mercially. Makhana is an aquatic organic crop rich in protein and animal health, effi cient procurement, storage and processing low in fat content. Bihar accounts for over 80 per cent of the (using appropriate and latest technology), and market linkage. makhana production in the country. Madhubani, Darbhanga, Si- COMFED procures 600,000 litres of milk per day through milk tamarhi, Saharsha, Katihar, Purnia, Samastipur, Supaul, Kishanganj unions. Procurement has increased by about eight times from and Araria districts are major producers of makhana. Investment opportunities exist in contract farming as well as processing and 11,361 powerlooms in Bihar. The handloom sector is concen- exports (pure organic-based cultivation gives an added advan- trated in the districts of Patna, Gaya, Bhagalpur, Biharsharif, tage to the crop, particularly in the export market). Madhubani and Siwan. There are 1,089 Primary Weavers Coop- eration societies in the state. The government has introduced Table 7: Makhana production in Bihar and India various welfare schemes for the handloom and powerloom sec- Area Production Farm gate value (In Ha) (In Tonnes) (In million USD) tors relating to marketing assistance, modernisation of weavers India 18500 54550 97.4 training centre and shed-cum-housing facilities for rural weavers. Bihar 16850 50550 97.4 Source: Economic Survey of Bihar The Tasar Silkworm rearing areas in Bihar are Bhabhua, Rohtas, Nawada, , Banka and Munger, while the reeling and weaving areas are Bhagalpur, Banka, Gaya, Raxaul and Nawada. Mango The leading spinning mills in Bihar include: Mango is the leading fruit crop of Bihar with an approximate Bhagalpur Co-Operative Spinning Mill, Bhagalpur share of 50 per cent of the total area under fruit crops. It is Siwan Co-Operative Spinning Mill, Siwan grown in over 100,000 hectares of land; the state has an annual Pandaul Co-Operative Spinning Mill, Pandaul (Madhubani) production of 1.5 million MT. Bihar is the fourth largest produc- Bihar Spun Silk Mill, Bhagalpur er of mangoes in the country, accounting for nearly 11 per cent of the total production. Leather Industry

The state is known for a large variety of mangoes grown in its Leather-based industries have vast potential in the state owing plains, the most popular being Maldah, Bombay, Jardalu, Jrada, to Bihar’s rich cattle population and the high quality of their Safeda, Sepia, Sukul and Gulabkhas. The leading mango-producing hides. There are around 50,000 footwear artisans in the state districts include Darbhanga, Muzaffarpur, Samastipur, East and with tanneries in the private sector. There are 85 leather units, West Champaran and Bhagalpur. The Planning Commission has of which 20 manufacturing units each are located in Patna, identifi ed the district of Darbhanga for systematic development Muzaffarpur and Bettiah, and the remaining 25 units take up only of the fruit crop for its total commercial exploitation. job work.

Tea The leather tanning industry consists of units established under the Bihar Leather Development Corporation (BLDC) and its Around 20,000 acres of land are covered under tea plantation sister concern, the Bihar Finished Leather Ltd; private tanneries in , providing employment to about 15,000 operate at Muzaffarpur (six tanneries in the industrial area at workers. The district has been declared as a non-traditional area Muzaffarpur) and Mokhamehghat. under a Tea Board scheme, and enjoys subsidies/incentives. There are two processing units in the district, which produces green Bata India Ltd leaf tea that is ultimately converted to around 2,300 tonnes of processed tea. Incorporated in 1931, Bata India Ltd was promoted by the Toronto-based Bata Shoe Organization. Bata is India`s largest Lochan Tea Ltd manufacturer and marketer of footwear products. It manufac- tures different types of footwear. Bata has a tannery at Mokame- Lochan Tea Ltd began operations at its Doke plantation in Kis- hghat and a leather footwear factory at Bataganj in Patna. hanganj in 1997. The plantation is a testing ground for planting and raising organic tulsi leaves and tea. Situated on the banks Engineering industry of the Doke, the organic farm is located between Pothia and Thakurgunj towns in the district. Some key players include: Bharat Wagon and Engineering Co Ltd Textiles (handloom and silk) Bharat Wagon and Engineering Co Ltd, part of Bharat Bhari Udyog Nigam, a undertaking, has manu- There are 10,817 handlooms under the co-operative sector and facturing units in Mokama and Muzaffarpur. Both the units have BIHAR PAGE 19

been accredited with ISO 9001-2000 certifi cation for manu- Century Plywood facturing of wagons. Its third unit is at Bela in Muzaffarpur for manufacturing LPG cylinders. Century Plywood, a Kolkata-based fi rm, is setting up a million- tonne cement grinding unit in Kahalgaon at a cost of $30 million. IDL Industries Ltd IT and Communications IDL Industries Limited, a Hinduja group company, is the second largest detonator manufacturer in the world. The company Bihar has initiated several measures for computerisation of manufactures detonators and slurry explosives for commercial operations in areas like treasury, fi nance, collection of taxes, use. It has a production facility at Rajarappa and a support bulk payment of electricity bills and governance within the judiciary. unit at Rajmahal. Video-conferencing has been initiated in all the 38 districts, with State Wide Area Network (SWAN) being established along with Sonalika Tractors Vasudha Kendras (e-service centres) in all the panchayats.

International Tractors Ltd (ITL), part of the Sonalika group (with Tata Consultancy Services a turnover of $220 million), is a leading manufacturer of tractors and other agricultural equipment and components. Its prod- The state government has signed a memorandum of understand- uct line includes multi-utility vehicles, three-wheelers, engines, ing (MOU) with Tata Consultancy Services, a leading IT fi rm, for hydraulic systems, castings, forgings, brake systems automotive software applications for integrated workfl ow and data manage- components, farm equipment and implements. It has acquired ment system, monitoring of rural management, revenue adminis- land for setting up a plant at Fatuha Industrial area in Patna. With tration including administration of value-added tax scheme. an investment of $28.7 million, the plant will have an annual capacity of 40,000 units. Petroleum Products

Mines and Minerals Indian Oil Corporation’s refi nery at Barauni was built at a cost of $10.9 million; it has a capacity of six MMTPA. A catalytic Though undivided Bihar possessed nearly 25 per cent of the to- reformer unit (CRU) was added to the refi nery in 1997 for pro- tal mineral deposits in the country, post-bifurcation, the state is duction of unleaded motor spirit. A 943-km-long Haldia-Barauni left with only one per cent of the total deposits. Two minerals – pipeline receives crude oil at Haldia oil jetty and transports it to limestone and pyrite – are found in suffi cient quantities in Bihar. Indian Oil’s Barauni refi nery. The crude oil requirement of Indian Oil’s subsidiary refi nery at Bongaigaon is also partly transported Eight districts – Rohtas, Kaimur, Bhagalpur, Banka, Munger, Jamui, through the pipeline up to Barauni. Gaya and Nawada – are important in terms of mineral wealth. Further, 30 known decorative stone deposits are present in Banka, Jamui, Nawada, Jehanabad and Gaya. Bihar also has 68 mil- lion cubic meters of granite deposits; 32.04 cubic metres are of the best quality.

Ambuja Cement

One of India’s leading cement manufacturers, Ambuja Cement received approval for a $35 million, four million MT capacity ce- ment plant at Barh.

Birla Corporation

Birla Corporation, a fl agship of the MP Birla group, has proposed setting up a $30 million, million-tonne grinding unit in Barh. The proposal is currently being processed. DOING BUSINESS IN BIHAR

The Industries Department acts as the single point contact for all investment proposal applications. Within the Industries Department, Udyog Mitra is the main information dissemination division. As a part of its facilitation process, Udyog Mitra provides a ‘Step by Step’ approach to open a business, and provides guidance and assistance to the investor. There is a process of ‘deemed approval’ and the time limits that have been stipulated as per the Single Window Act for every department are provided below.

Table 8: Time taken for various licenses as envisaged

Items List of approvals & clearances Departments to be consulted Days

Incorporation Incorporation of the company Registrar of Companies NA Application for Director Identity Number, Permanent Account Ministry of Corporate Affairs/ Income Tax Number department 1 day Registration, Industrial Entrepreneur's Memorandum, District Industry Centre/ Bihar Industries Industrial Licenses Department/ Secretariat of Industrial Assistance NA

Bihar Industrial Area Development Authority 7-21 days (90 for Land Allotment of land (BIADA) non-industrial land) 30 days (45 days for conversion of non- Permission for land use Revenue and Land Reforms Department Industrial land) Registration with Inspector of Factories under Factories Act, Factories and Registration with Inspector of Boilers Office of the Chief Inspectorate of Factories, Boilers under Boilers Act Office of Chief Inspector of Boilers 30 days State pollution control board and Ministry of Environment Site environmental approval environment and forests 60 days No Objection Certificate and consent to establish under Water Act 1974, Air Act 1981 and Environment State pollution control board and Ministry of Protection Act 1986 environment and forests 30 days Approval of construction activity and Construction building plan Town and country planning authority 7 days Health & Health clearance, Safety Certificate State Health Society, Electrical Inspectorate Safety from Chief Electrical Inspector department Power Sanction of power State electricity board 30 days Water Sanction of water State water board 30 days Fire Fire service clearance State Fire Service Headquarters 15 days

Registration under states sales tax act, Value added tax and central and Sales tax department, Central and State excise Taxes state excise act departments 7 days Source: Industries Department, Government of Bihar BIHAR PAGE 21

Cost Estimates

This gives an insight into various cost estimates for doing business in Bihar.

Table 9: Cost of doing business in Bihar

Cost of land per acre* Government Land: USD 72,000 in Hazipur (leading industrial area of the state); USD 20,300 (Upcoming industrial area like Muzzafarpur)

Hotel costs** USD 86 to USD 95 per room night

Cost of office space*** 20-35 cents per square foot per month

Cost of residential USD 143 to USD 281 per month for a 2,000 square feet house space*** (Rates depend on the type of structure and location)

Power cost**** Industrial use: 1) LT Ind.- (a) Up to 25 HP 9.2 cents per kWh (b) 26 to 99 HP 9.5 cents per kWh 2) HT Ind.- (a) Up to 33KVA 9.2 cents per kWh (b) 34 to 132 KVA 9.3 cents per kWh (c) 75 to 1500 KVA 9.4 cents per kWh. Commercial use: (a) 1 to 100 KW 9.3 cents per kWh (b) 101 to 200 KW 10 cents per kWh (c) More than 200 KW 10.67 cents per kWh

Cost of water***** Commercial & Industrial: Not Regulated. Industries are allowed to set up their own water pump to draw ground water.

*Source: Bihar Industrial Area Development Authority **Source: Leading hotels in the state ***Source: Discussions with property dealers ****Source: Superintendent Engineer (Supply) Bihar State Electricity Board.

*****Source: Deputy Director, Dept. of Industries, Govt. of Bihar. Contact Information Appendix Bihar State Credit and Investment Corporation Ltd Exchanges rates used (BICICO) 4thFloor, Indira Bhawan, Year One USD is equivalent to Rs. Ram Charitra Singh Path P.B.No.204 GPO 2000 46.6 Patna-800001 2001 48.3 Tel: + 91 612 228552, 232277 Fax: + 91 612 234298 2002 48.04 Website: http://www.bicico.com 2003 45.6 Email: [email protected] 2004 43.7 Bihar State Financial Corporation 2005 45.2 Fraser Road Vittiya Nigam Bhawan, 2006 45 Patna-800 001. 2007 42 Phone: 91-612-210968, 234210 Fax: 91-612-225228

Small Industries Service Institute Industrial Estate Patna -800 013 Tel: 0612-2262719, 0612-2262186, 0612-2262208 Fax: 0612-2261677 E-Mail: [email protected]

Confederation of Indian Industry (CII) M-3/24, Near Basawan Park, S.K.Puri, Patna-800001 Phone No/Fax: +91-0612-6450301

BIHAR PAGE 23

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May 2008