Maharashtra the growth paradigm of Automotive sector in India

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1 8 th Issue MahaConnect The Business Newsletter From Government of Maharashtra - MIDC Maharashtra the growth paradigm of Automotive sector in India Aerial view of Mumbai Maharashtra Industrial Development Corporation (MIDC)

2 Editor s Letter Dear Reader, Dr. Kshatrapati Shivaji (IAS) Chief Executive Officer, MIDC Government of Maharashtra (GoM) is all set to welcome the year 2011 with an aim to build Maharashtra as world s numero uno investment destination. The year 2010 has been aspectacular year with the launch of One Stop Services for Investors! -Single Window Clearance portal, a major initiative of ERP implementation. The initiative has witnessed several award winning laurels at the national level. With the establishment of special Micro, Small and Medium Enterprises (MSME) department and ahigh Power Committee for Delhi Mumbai Industrial Corridor (DMIC) project to facilitate interdepartmental coordination and fast tracking of approvals, we are on accelerated growth track for industrial development in the state. The prestigious DMIC project is going to benefit Maharashtra's industrial output significantly over the next thirty years and would further create anadditional industrial and manufacturingjobs over the same period. Following the spirit of the year passing by, the state is looking forward to further foster four pillars of robust economic growthtechnology enhancement, policy reforms, strong positioning on international arena and infrastructure development. We have been proactive in undertaking various measures towards its realisation - the prime being, Government of Maharashtra participation in World Economic Forum India Economic Summit Adelegation of senior government officials led by Hon. Chief Minister Shri. Prithviraj Chavan participated in the event held in New Delhi betweennovember 14-16, Further, following the second series of the Five Series Knowledge Investor s Kit, we bring you Investor Guide Road to Investment. Hope this series of the Knowledge Investor s Kit enlightens you with an in-depth-information on ease of doing business in Maharashtra State. Also there is asubsequent addition of anew column in the newsletter Moving beyond the obvious. This column has been introduced with the intent to share economic growth indicator contributionmaharashtra sstory ofevolution. In continuous stride to make MahaConnct the best channel for information dissemination, we welcome your views and feedback. To connect,do writeto us at mahaconnect@midcindia.org Dr.KshatrapatiShivaji (IAS) ChiefExecutiveOfficer MaharashtraIndustrial Development Corporation (MIDC) 2

3 News Update Cover Story of the Month Destination Ahead - Maharashtra Auto/Auto Ancillary Sector Puneis the largest auto hub of India India has the world s 2 nd largest two wheeler market; 4 th largest commercial vehicle market; 4 th largest tractor market; 5 th largest bus and truck market (by volume) and read more on pages 4-5 POSCO to invest USD 600 million in Maharashtra Steel Plant in Vile Bhagad Industrial Area South Korean steelmaker POSCO will invest USD 600 million (INR 2880 crores) in Maharashtra by MIDC has allotted 150 acre of land in Vile Bhagad Industrial Area, District read more on pages 7 CIDCO to call for bids for proposed Navi Mumbai International Airport NMIA granted environmental clearance The Navi Mumbai International Airport (NMIA) project got environmental clearance from the Union Ministry of read more on page 9 Moving beyond the obvious Infrastructure Today Mega convention centre coming up near Pune PIECC, India s largest center in India The Pune International Exhibition and Convention Centre (PIECC), has received State government approval. It will be built on 240 acres of land at Moshi, about read more on page 6 SPANCO to distribute power in Nagpur High level of consumer satisfaction Systems integration company SPANCO has received aletter of intent from the Maharashtra State Electricity Distribution Company for distributing power to most parts read more on page 8 Maharashtra Connects B2B meeting of GoMwith topnotch global companies World Economic Forum organized India Economic Summit in New Delhi, between November 14 16, This year- s India Economic Summit s theme was read more on pages 10 Maharashtra is the most preferred investment destination in the country due to its robust infrastructure facilities. 97 percent of the villages are well connected with all weather roads in the in Maharashtra. The total length of the national. read more on page

4 Destination Ahead - Maharashtra Auto/Auto Ancillary Sector Auto Pune is the largest auto hub of India Nashik is home to India's largest multiutility vehicle Automotivesectorscenarioin India India has the world s 2 nd largest two wheeler market; 4 th largest commercial vehicle market; 4 th largest tractor market; 5 th largest bus and truck market (by volume) and Asia s 3 rd largest passenger vehiclemarket. Indian automotive industry has attracted acumulative FDI of USD 4.3 billion during Industry s turnover is estimated to touch alevel of USD 155 billion by The overall production of automobiles increased from 8.7 million units in to 11.4 million units in Expected to be the world s 7 th largest automobile market by 2016 and world's 3 rd largest by 2030, after China andus. Automotive sector scenario in Maharashtra Maharashtra accounts for approximately 33% of the country s output of automobiles by value. Major automobile clusters in the state are Pune (in and around Pune - Chakan, Rajgurunagar), Nashik, Aurangabadand Nagpur. Pune, Ranjangaon, Talegaon, Chakan has around 53 large companies and around 7,000 auto ancillary units. The state is the leading producer of heavy and commercial vehicles in the country. Major OEMs and auto ancillary units such as Daimler Chrysler, Fiat, Skoda Auto, John Dierre, Tata Motors, Mahindra &Mahindra, Bajaj Auto, Kinetic Engineering, and Bharat Forge, have their presence inthe state. The total FDI investment in the Auto se ctor till January 2010 was USD 191 million. Pune is the largest auto hub of India with over 4,000 manufacturing units only in Pimpri-Chinchwad region. Pimpri Chinchwad is an auto cluster, established under Industrial Infrastructure Upgradation Scheme (IIUS). The city is home to large players like Bajaj Auto Limited, Daimler Chrysler Limited, Tata Motors, etc. Nashik is home to India's largest multiutility vehicle manufacturer, Mahindra & MahindraLimited. The Auto and Component industry has strong backward (components, basic material) and forward (finance, insurance, oil, roads, after-sales-service, retailing) linkages. These sectors offer enormous potential for enterprise &employment. The strong skilled labor base in the state supports the automotive industry. The state offers astrong educational infrastructure with technical institutions providing automobile engineering courses across the state. IBM has set up aglobal Delivery Center in Pune to provide auto majors business consulting and application services. India's premier automotive R&D, testing and certification organisation, Automotive Research Association of India (ARAI) is present in Pune. India s first Auto Cluster Development and Research Institute is in the state. continued on the next page 4

5 Continued Automotive sector advantage in Maharashtra Evolution of Automotive sector in Maharashtra India s first vertical diesel engine manufactured by Kirloskar group (1940) 1940 Large base of OEMs and automotive players Proximitytointernationalmarket Noteworthy export potential, and high qualitystandards Highproductdevelopmentcapabilities Availability of skilled manpower, R&D centersand traininginstitutes Largeand growingdomesticmarket Major local auto companies were established: Tata Motors, Mahindra, Bajaj (1945) Tata Motors manufactured its first commercial vehicles in 1954 in collaboration with Daimler-Benz (1954) Force Motor (formerly known as Bajaj motors) was established (1958) Automotive Research Association of India (ARAI) was established, led by Tata (1966) 1970 First commercial vehicle solely manufactured by Tata Motors at Pune (1977) Swaraj Mazada was established (1983) Diversification of Tata motors products - heavy commercial (1983) 1980 Diversification of Tata motors products - light commercial (1986) Launch of popular MUV Tata Sumo, attracted the 1 st wave of supporting industries to Pune (1994) Entry of US/EU automakers - Mercedes-Benzes (1995) Launch of Tata Indica, attracted the 2 nd wave of supporting industries to Pune (1999) Entry of US/EU automakers -Skoda (VW group) (2001) -Renaut / Mahindra (2005) Entry of US/EU automakers -Fiatt/ Tata (2007) -Volks Wagen(2007) Establishment of General Motors at Talegaon, Pune ( ) CEAT Tyres Ambernath (2008) Bridgestone, Chakan (Production facility) (2010) 5

6 Mega convention centre coming up near Pune Exhibition and Convention center PIECC to be built on 240 acres of land PCNTDA will give INR 100 crore to the SPV, while the Central government will contribute INR 50 crore to fund theproject, - Shri. Dilip Band, Divisional Commissioner,Pune The Pune International Exhibition and Convention Centre (PIECC), has received State government approval. It will be built on 240 acres of land at Moshi,about40 km fromthecity. The INR 600-core project that will be completed in phases will be executed by aspecial purpose vehicle (SPV), newly set up by the Pimpri Chinchwad New Town Development Authority (PCNT- DA), which owns the land and holds 100 per cent stakeinthe company. Themaster plan for PIECC, drawn up by BBG Alliance, anew York-based firm of architects, envisages developing three primary zones: seven exhibition pavilions and a convention centre on 120 acres of land, acommercial and residential district on 64 acres and a green zone cum amenities area, including a9- holegolfcourse,separatingthetwo. Shri. Dilip Band, Divisional Commissioner, Pune, said that the first phase will be completed by the end of It involves building two exhibition pavilions, the convention centre and alarge entrance gateat acostof aroundinr 150 crore. PCNTDA will give INR 100 crore to the SPV, while the Central government will contribute INR 50 crore to fund the project, he said, adding that two plots of land will be auctioned in due course to hospitality groups to set up hotels. A third plot of land will be auctioned subsequently to cash in on the valueaddition,he said. Among the features of PIECC will be twolarge28-flooriconictowers, and bu- ildings conforming to green standar-ds. The entire project will evolve in time, and may take up to 10 years to be completed. Calling this as an exhilarating moment from the point of view of the Mahratta Chamber of Commerce, Industries and Agriculture, its President, Mr. Abhay Firodia said that PIECC will create a platform for Pune to project itself to industry at the international and national level. 6

7 POSCO to invest USD 600 million in Maharashtra Steel Steel Plant in Vile Bhagad Industrial Area South Korean steelmaker POSCO will invest USD 600 million (INR 2880 crores) in Maharashtra by MIDC has allotted 150 acre of land in Vile Bhagad Industrial Area, District Raigarh to M/s. POSCO Maharashtra Steel Pvt. Ltd. POSCO s project report submitted to MIDC states atotal investment of Phase I & Phase II INR 4400 crores and productioncapacitiesareas follows: Phase-I Continuous Galvanized Line - 4,00,000tones per year Anealing and Coating line -3,00,000 tonesper year. industry. Thework,as indicated,mightstartnext Year. Phase-II Cold rolling Mill -20,00,000 tones per year Continuous Annealing Line -9,00,000 tonesper year Continuous Galvanizing Line - 4,00,000tones per year The galvanising plant is expected to come up by 2012 while the cold-rolled mill will be ready by Nearly 150 acres have already been acquiredforthe project, - Mr. Gil Ho Bang, Man-aging Director,Posco India POSCO has expressed an interest for more land of 100 acres for another Electrical Steel Plant in Vile Bhagad IndustrialArea. The galvanising plant is expected to come up by 2012 while the cold-rolled mill will be ready by Nearly 150 acres have already been acquired for the project, said Mr. Gil Ho Bang, Managing Director, Posco India. Posco board approved an investment of INR 1363 crores for setting up the cold-rolled milltomeet the needs of theautomotive 7

8 SPANCO to distribute power in Nagpur Power Efficient power, reduced losses and high level of consumer satisfaction Systems integration company SPANCO has received aletter of intent from the Maharashtra State Electricity Distribution Company for distributing power to most parts of Nagpur. SPANCO's bid, to be the power distribution franchisee for 15 years, was the highest at INR 5,350 crore. SPANCO's role will be to provide efficient power, reduce losses and provide high level of consumer satisfaction to ground four lakhs number of consumers of Nagpur city for 15 years. CESC, A2Z, Indu Project, Vijay Electrical, CGL, SMS, Spanco, GTL, Tata Power, Reliance, and India Bulls were the 11 bidders for Nagpur Distribution Franchisee. MSEDCL invited these bids as part of its strategy to curtail power distribution losses with the help of the private sector. The franchise will act as an entity empo-wered by the State to operate an existi-ng utility and distribute electricity within an identified area for aprescribed duration. 8

9 CIDCO to call for bids for proposed Navi Mumbai International Airport Airport NMIA granted environmental clearance from the Union Ministry of Environment and Forests The Navi Mumbai International Airport (NMIA) project got environmental clearance from the Union Ministry of Environment and Forests in November City and Industrial Development Corporation of Maharashtra (CIDCO), the project developer of the proposed Navi Mumbai airport, is working on the various activities for the early take off of the project. It is expected that bids for the project will be called in acouple of monthsnow. While welcoming the clearance for the airport, Civil Aviation Minister Praful Patel said, "Clearance of Navi Mumbai airport is avery crucial step for not only Mumbaiand Maharashtraeconomy but alsoforthe wholeof country." Honorable Chief Minister of Maharashtra, Shri. Prithviraj Chavan thanked the Union Environment Minister Jairam Ramesh and said that environmental issues could not be overlooked. "We cannot leave aside the environmental concerns and Navi Mumbai airport sanction is a classic example of respecting the norms. This should be the same for all mega projects. The Navi Mumbai airport clearance is crucial for Maharashtra"said Hon.CM. 9

10 Maharashtra Connects Events and Participation B2B meeting of GoM with topnotch global companies Hon ble Chief Minister, Shri. Prithviraj Chavan at the WEF conference, New Delhi Government of Maharashtra delegation team at the WEF conference, New Delhi World Economic Forum - The India EconomicSummit New Delhi, November14-16,2010 World Economic Forum organized India Economic Summit in New Delhi, between November 14 16, This year India Economic Summit s theme was Implementing India. The theme focused on how inclusive social and economic progress can be delivered and serve as amodel for other developing economies. India s imperatives include building critical infrastructure, expanding skills development, addressing security threats and achieving income and gender equality. The Government of Maharashtra (GoM) delegation led by Hon ble Chief Minister, Shri. Prithviraj Chavan attended the Global Summit. The team comprised of senior government officials from the state of Maharashtra and representative from Ernst &Young Pvt. Ltd., the Knowledge Partner to the state (GoM/MIDC). Thedelegationmemberswere: Shri. Azeez M. Khan, Principal SecretaryIndustries,GoM Shri Ajit Kumar Jain, Principal SecretarytoChief Minister,GoM Dr. Kshatrapati Shivaji, Chief ExecutiveOfficer,MIDC Shri. Sunil Chandiramani, Partner and National Director, Ernst &Young Pvt. Ltd. Global companies from various sectors expressed their interest for an interactive session and B2B meeting with the delegation. The delegate team from governmentof Maharashtrametthe senior representative of eight leading business firm seeking to invest in the state. The B2B meeting of GoM was successfully accomplished with eight topnotch global companies from different sectors IT/ITES, Oil and Gas, Defense and Aviation, Telecom, Healthcare and Energy. The Hon. CM also interacted with Mr. Klaus Schwab founder of WEF and discussed the establishment of WEF development Center in Mumbai. The delegation was planned as apart of investment promotion and to showcase Maharashtra as one of the most preferred investmentdestination. Germantwin-expo Mumbai,November18-20,2010 Atwin-trade exhibition The International Exhibition and Conference and Drink Technology India 2010 covering packaging, beverage and liquid foods was held in Mumbai, during November The exhibition was jointly organized at Bombay Exhibition Centre, for which Messe München GmbH and Messe Düsseldorf GmbH signed aco-operation agreement. Over 200 companies from 17 countries showcased their latest manufacturing technology in the liquid foods sector and the exhibition witnessed over 4,000 business visitors from around the world. The twin exhibitions offered the latest in machinery and technological innovations covering raw materials, production, filling, packing and logistics solutions. The product categories included cold drinks, water, beer, spirits, carbonated drinks, milk and milk-based beverages and otherproductsin beverages category. 10

11 Moving beyond the obvious Infrastructure Today To Gujarat To Madhya Pradesh To Madhya Pradesh Dighi Thane Nasik Mumba i Raigarh Ozhar Sinnar Pune Rajgurunagar Ratnagir i Baramati Satara Phaltan Karad Sangali Shirdi Shirpur Jalgaon Dhule Ahmednagar Aurangabad Beed Jalna Osmanaba d Solapur Latur Akola Gangapur Nanded Amravati To Andhra Pradesh Wardha Yavatmal Gadchiroli Chandrapur To Andhra Pradesh Nagpur Gondia Bhandara To Chhattisgarh Kolhapur To Karnataka Sindhudurg To Goa To Goa Maharashtra is the most preferred investment destination in the country due to its investor friendly ecosystem and robust infrastructure facilities. 97 percent of the villages are well connected with all weather roads in the in Maharashtra. The total length of the national highway is 4,367km and statehighwayis 33,933km. The state encompasses 2major railway zones the Central and Western and contributes to 9.2 %of total railway network in the country. The railway route length per 1,000 sq. km of geographical area is km in the state as against km in the country (as on 31st March, 2009). Thetotallength ofthe railwaynetwork is5,983km. The state is well connected to all the major cities in five continent and other Indian metropolitan cities. There are 23 airports in the state, out of which four are international airports. The coastline of Maharashtra stretches to 720 km, which encompasses 2 major airports and 48 minor airports. Maharashtra handles 21% of the total cargo traffic of the major ports in India. Jawaharlal Nehru Port Trust in Maharashtrais India'slargestcontainerport(61%). 11

12 Moving beyond the obvious Transition Sector Trend Share ( in per cent) Recession S T Primary Secondary Tertiary AREA UNDER MAHARASHTRA BEFORE THE FORMATION OF THE STATE AGRI- CULTURE AGRICULTURE AND MANUFACTURING MANUFACTURING MANUFACTURING AND SERVICE KNOWLEDGE BASED ECONOMY Minor Port policy Policy and Acts MID Act Stamp duty Act Sales Tax Act Focus on agriculture and manufacturing sector Elimination of NA permission system Captive Power and Cogeneration Grape processing policy, Biotech policy, Tourism policy, Industrial policy, IT policy PSI Proposed policies are as follows: 1. Textile policy 2. Food and agro policy 3. Labor policy 4. MSME policy > Maharashtra is the leader in provision of infrastructure facilities to the various sectors of economic development and the topnotch destination for FDI investments. Due to increasing investment interests of investors and entrepreneurs, through time the state has evolved as service and manufacturing sector hub. Note: 1 Compound annual growth rate (CAGR) of GSDP, at constant ( ) prices, during the last nine years i.e. from to was 7.7 per cent Source: GoM(2010), Economic Survey of Maharashtra , Mumbai: Directorate of Economics and Statistics, Planning Department. 12

13 It is Christmas in the heart that puts Christmas in the air. ~W.T. Ellis We wish one and all a Merry Christmas

14 Government of Maharashtra Maharashtra Industrial Development Corporation Maharashtra Industrial Development Corporation UdyogSarathiMahakali Caves Road, Andheri(E), Mumbai Board Numbers: / 54 / 73, Fax: , mahaconnect@midcindia.org, feedback@midcindia.org Knowledge Partner Mumbai skyline Disclaimer Statements and opinions expressed in articles and reviews herein are those that are collated from various departments and media sources. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur.