Industrialization in the state of Himachal Pradesh

Introduction:

Industrial sector performance is critical and plays a decisive role in determining the overall growth of State output and employment through backward and forward linkages with the other sectors of the economy. Objective of present State Industrial Policy is “To create an enabling
ecosystem to enhance the scale of economic development & employment opportunities, ensure sustainable development & balanced growth of industrial & service sectors to make Himachal as one of the preferred destination for investment”. Recently many initiatives have been taken by
State Government to facilitate investment in the State.

Past Journey:

During the last few years Himachal Pradesh has made significant achievements in the field of
industrialization.

Starting from almost nothing, the Industrial Journey of Himachal Pradesh has been spectacular. Despite being a geographically challenged State, Himachal is a classic example of rapid transformation from a backward to a relatively advanced State in India.
Before grant of Statehood only a few industrial units namely Nahan Foundry at Nahan, M/s Mohan Meakins Breweries at Kasauli and Solan, Salt Mines at Drang (Mandi), Nurpur Silk Mill, Palampur Co-oprative Tea Factory, Rasin & Turpentine Factories at Nahan & Bilaspur and four small gun factories at Mandi were the main industrial units functioning in the State.
After attaining Statehood, the concerted efforts were made for significant infrastructure
development and Industrial Areas/Estates were developed at Parwanoo, Barotiwala, Bilaspur,
Shamshi, Nagrota Bagwan, Mehatpur, Chambaghat, Kangra, Kullu & Kinnaur.
Industrial growth attained momentum after 1978 when District Industries Centres came
into existence as a 100 per cent Centrally Sponsored Scheme.
Till 2003-04, the growth was slow. The then Prime Minister, Shri Atal Bihari Vajpai ji announced the Industrial Package for the State in January 2003, which proved to be
a growth accelerator in the Industrial sector.
The Baddi- Barotiwala- Nalagarh sector has emerged as biggest pharmaceutical hub in the country.
With a mere 7 per cent contribution to State GDP in 1970, today the Secondary Sector boasts of a contribution of 39.66 per cent.
The State Government recognized the importance of Industrial Policy as an effective instrument to boost the confidence of investors and accelerate industrial development. Incentives to Industries were notified initially during 1971 and were then revised periodically with the latest policy notification in August 2019. Through this policy graded Incentives are being offered with higher incentives to the inner areas of Himachal Pradesh.

Status of Industrialization

Presence of more than 28,000 enterprises.
Micro, Small & Medium Enterprises (MSME) comprising 99 per cent industrial sector. 93 per cent of total employment generation of industrial sector is from MSME sector.
Annual export worth `10,000 crore to more than 60 countries.

Pharma Hub

Himachal Pradesh has emerged as a hub of drug manufacturing units and meets 35 per cent of the demand of pharma products in Asia. Due to the growth of the pharmaceutical industry, Baddi-Barotiwala-Nalagarh industrial belt is known Globally for production of formulation drugs. The belt manufactures more than 150 formulation drugs, with a demand in over 200 countries.

Khadi and Village Industries

HP Khadi and Village Industries Board is also playing a pivotal role in rural industrialization and employment generation by encouraging rural artisans/entrepreneurs to establish micro/village industries at their doorsteps thereby, utilizing locally available raw material and skills. The Board is implementing “Prime Minister’s Employment Generation Programme” providing wool carding
and finishing of woolen clothes facilities to sheep rearing people of the Tribal Areas of the State through 13 wool carding and one finishing plant established in the tribal and far-flung areas. The Board is also engaged in marketing of Khadi and Village Industries products.

Khadi and Village Industries

Development of Industrial Areas/ Estates

Since the formation of Himachal, there was a land pool of approximately 3,000 acres is available
with the Industries Department for industrial development. The Government has now added to this and created a land bank of approximately 2,800 acres for Industries Department during this
current financial year for the proposed future industrial development.

Attracting Investment

In order to give a further boost to the economy of the State and create more job opportunities, the
Department has successfully organized the first Global Investor Meet and Ground Breaking Ceremony in 2019 where MOU’s for 236 projects worth 13,600 crore were signed.

Prime Minister Formalisation of Micro Food Processing Enterprises (PMFMFPE)

Under Atama Nirbhar Bharat, “Prime Minister Formalisation of Micro Food Processing Enterprises (PMFMFPE)” has been launched, with an objective to assist Food Based Micro Enterprises of unorganized sector and bring them to organized sector. The Department is working
proactively to implement this scheme in the State.

Mukhyamantri Swavlamban Yojna (MMSY)

Under Mukhya Mantri Swavlamban Yojna, till now more than 3,000 projects have been sanctioned by the Banks, through which approx. 10,000 self-employment opportunities have been generated. It is an ambitious scheme of State Govt. to provide self-employment opportunities for youth of Himachal Pradesh. This scheme became very popular in spite of “Covid Pandemic” with a phenomenal increase in the sanctioned cases. The scheme has been available online with the provision of 60 per cent “Front Loading” of subsidy.

Mining

In order to bring transparency and save time, the entire process of sanctioning the mining lease is now online. Strict provisions have been made to check illegal mining: the amount of fine has been raised from `25,000 to `5,00,000 and the provision for imprisonment has been modified to provide for up to 2 years for an offence. Previously, there was a provision of charging a minimum fine of `25,000 for mechanical illegal mining in river beds, which has now been increased to `50,000. Where on one hand Government is committed to check illegal mining and punish the
offenders with the strict provisions made in the rules, on the other hand, it is making all efforts to make mining material available for legal activities. The bordering Districts of State viz: Kangra, Una, Solan and Sirmaur are sensitive for the activities of illegal mining. Government therefore decided to set up 10 mining Check posts / Weighbridges in some of the sensitive areas of these districts in the beginning to check illegal Mining activities. In compliance of this decision, 1 Mining Check post / Weighbridge at Solan and 5 at Una have started functioning. To check
illegal mining, all Mining lease holders have been directed to install CCTV cameras in their leased areas.

Ease of Doing Business

Himachal Pradesh is making new strides on the front of Ease of Doing Business by improving its
performance on various parameters of its assessment. Recently, Government has taken several industries specific reform initiatives, such as Single Window Clearance System, Online portal for issuance of EC and permissions to purchase land u/s 118, HP MSME (Facilitation of Establishment and Operation) Act, 2019 and Project Implementation Monitoring through “Himpragati Portal”, which have significantly improved the overall business environment. Under
Ease of Doing Business rating by Govt. of India, State has secured 7th position in the Country. It is an unprecedented achievement, as previous ranking was 16th. State has emerged as the Fastest Moving State in the Country. This improved ranking will create a friendly environment for
Industrial Investment.

Index of Industrial Production

The Index of IndustrialProduction (IIP) is a Yardstick for measuring industrial growth, it includes the relative change of physical production in the field of Industry during specific period as compared to the previous period. The main objective of this index is to estimate the contribution of Industrial sector to the Gross State Domestic Product. IIP in the State is being compiled on base year 2011-12. The IIP is estimated quarterly by collecting data from selected units of Manufacturing, Mining, Quarrying and Electricity, on the basis of quarterly indices, annual indices have been worked out and are shown in following table.

The General Index has increased from 192.3 to 223.9 in the year 2019-20 showing an increase of
16.43 per cent, this increase is mainly attributed to the Electricity production that resulted in a healthy growth of the Industrial sector. As regards the indices for year 2020-21, these have been worked out on the basis of two quarters (June and September, 2020). As compared with the quarterly indices of the June 2019-20 quarter for the same quarter of 2020-21, it a dip has been observed in Mining and Manufacturing indices due to COVID – 19 lockdown measures. This has
hampered industrial production though a marginal increase has been observed in 2020-21 September quarter both in Mining and Manufacturing indices, which is a healthy sign of V shape recovery.

Read also:

Industrialization in the state of Himachal Pradesh – HPAS Mains

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