HT Special | Haryana happening, Punjab in progress on industry
ON TRACK National highways passing through Haryana, proximity to Delhi, the establishment of Maruti factory, boom in service sector and digital economy helped Haryana’s industrial growth in 50 years. Though Gurgaon is its crown jewel, the challenge is to bridge gap with other parts for even development. Agrarian Punjab’s industrial journey was steady till the ’80s when militancy hit but the slide came with Centre’s tax holiday to neighbouring Himachal Pradesh and Uttarakhand that led to flight of industry to hill states. State govt going all out with policies and summits to woo investors
From back-of-the-beyond to business hub
Alcatel, Google, Honda, IBM, Microsoft and Suzuki – you name the company and it’s there. Haryana is home to more than 100 ‘Fortune 500’ companies and many upcoming ones. They have together not only made it a manufacturing hub, but also put it on the information technology map of the world.
While 50% of cars and 33% of two-wheelers in the country are made in Haryana, IT-related exports touched Rs 42,000 crore in 2015-16 despite the economic slowdown.
It’s a huge achievement for a state, which, at the time of its formation, was seen as a back-of-the-beyond region of Punjab with not much in the name of industry. “Haryana was predominantly an agriculture state with a few units in isolated pockets. Only Faridabad had some big units. These were set up by people who had got displaced due to Partition and were settled there by (then rehabilitation minister) Partap Singh Kairon,” says retired IAS officer Dhanendra Kumar.
He says there was rapid industrialisation and urbanisation after the trifurcation of Punjab, as the state exploited its proximity to Delhi.
“National highways that pass through the state, the establishment of Maruti factory, boom in service sector and digital economy have helped it grow in leaps and bounds,” Kumar says.
Rapid development, but disparities remain
A majority of these corporates have a common address – Gurgaon. Of the 1,920 large and medium registered units, almost 80% are located in Gurgoan, Faridabad, Kundli or other areas adjoining the national capital. Districts such as Jind, Bhiwani, Kaithal, Fatehabad and Sirsa districts are lagging behind. This disparity is often blamed for the lack of adequate growth in these areas.
“Take Gurgaon out of Haryana, it will be another Bihar” is what a Punjab minister had said six years ago to highlight the uneven growth. Though the comparison with Bihar was exaggerated, there is a huge gap in infra-structure, industry and employment opportunities.
Successive governments have offered incentives for investments in these areas, but there has not been much response. “It is true that Hisar, Rohtak, Hisar, Panipat and Yamunanagar haven’t seen the kind of growth Gurgaon has. But there is industry in these districts. Capital and industry have their own propensity. If you want to take industry to a particular area, it is not possible,” says Kumar.
Poised for growth
Though the economic slowdown has made capital investments sluggish in recent years, Haryana seems poised for further growth. The state government received 542 proposals/leads for investment worth Rs 6.25 lakh crore after its mega investors’ summit in March. Sudhir Rajpal, managing director, Haryana State Industrial and Infrastructure Development Corporation (HSIIDC), says companies have identified or procured land for 140 proposals for investment worth Rs 70,000 crore. Their applications are being processed through the e-biz portal for clearances and licences.
Principal Secretary, industries, Devender Singh says efforts are being made to create a conducive environment by improving transparency, eliminating physical touch points and appointing relationship managers. “Our ease-of-doing-business ranking is set to jump to number four this time from 14 last year,” he said.
Sore points: Militancy blowback, no tax sops
Primarily an agrarian economy, Punjab has never been counted among the top industrialised states in India. Given its rich agricultural base, the state’s focus remained on the Green Revolution in the 1960s, and its industrial activity has been limited to manufacturing bicycles and cotton textiles in the large-scale sector and automotive components, light engineering, leather sports goods and hosiery on the smaller scale. The small-scale units have remained the mainstay of industry in Punjab.
The re-organisation of the state in 1966 saw the number of registered factories go down from 3,700 to 2,500. Till that time hosiery, cotton textiles, manufacture of agriculture implements and tools were among the largest employers.
Punjab’s industrial performance till the 1980s was steady and comparable to the rest of the country. The state emerged as a key hub for textile-based industries, including yarn, readymade garments and hosiery. The number of small-scale units went up from 8,000 in 1966 to over 43,000 in 1980.
Though the state government says that the two decades of militancy that followed led to deceleration of industrial growth in Punjab, the period saw the number of large-scale industries increase from 230 in 1980 to over 630 in 2001. In fact this is the highest ever that the number of large-scale industries opened in Punjab.
Tax havens in vicinity
With the turn of the century began the gradual erosion of Punjab’s industrial prowess primarily hit by the Government of India offering special tax exemptions to neighbouring hill states of Himachal Pradesh and Uttarakhand. Punjab industries closed shop and opened units in Himachal Pradesh to avail the tax holiday benefits. The number of large-scale industries came down to 360 in 10 years and small-scale units fell from 2 lakh in 2000 to 1.5 lakh in 2011. The 10-year tax holiday was introduced in January 2003 but it still continues.
Successive governments have tried to retain Punjab’s industry but most of the structured efforts till recently have not yielded any substantial result. Policies introduced since 2006 tried to improve the industrial environment by offering single window and time-bound clearances, enhanced floor area ratio and curbing inspector raj.
However, the most visible intervention to encourage industrial investment in the state was in 2013 and 2015 when two investment summits were organised by the state government. The summits attracted national attention to Punjab. Between the two summits, the state signed memoranda of understanding worth Rs 2 lakh crore. Of this, till
date the state has secured on ground investment of over Rs 30,000 crore from 410 units.
The number of large and medium-scale industries went up from 360 in 2010 to 500 in 2016 though the increase in the number of small-scale industries from 1.5 lakh is marginal.
Among the top companies that have expanded operations to Punjab are Infosys, ITC, Cargill India, Sonalika International, Adani and Airtel.