INDIAN STATES : UTTAR PRADESH

General Information

Uttar Pradesh is the rainbow land where the multi-hued Indian Culture has blossomed from times immemorial. Rich and tranquil expanses of meadows, perennial rivers, dense forests and fertile soil of Uttar Pradesh have contributed numerous golden chapters to the annals of Indian History. Dotted with various holy shrines and pilgrim places, full of joyous festivals, it plays an important role in the politics, education, culture, industry, agriculture and tourism of India.

Fact File

Source: CSO Estimates, Economic Survey of Maharashtra, 2005-2006

Advantage Uttar Pradesh

• Large, inexpensive and disciplined labour force available.
  
• Vibrant investment Climate.
  
• Investment proposals received:
  
  • US$ 3.09 billion in 2004
    
  • US$ 7.22 billion in 2005
    
  • US$5.31 billion in 2006 (upto May)
    
• Basic inputs like land and water available in abundance.
  
• Excellent connectivity to all parts of the country.
  
• Port facility at doorstep through 7 inland freight stations and 1 cargo complex.
  
• Good quality power supply to industry.
  
• Land at competitive rates.
  
• Special facilitation to foreign and NRI investors.
  
• Availability of institutional finance through vibrant state financial institutions.
  
• Integrated townships of Noida and Greater Noida adjacent to New Delhi, with fully developed infrastructure, including recreational facilities like 100 acre golf area.
  
• Single table clearance system through Udyog Bandhu.
  
• Well-developed special purpose modern industrial areas like software technology parks, electronic city, toy city, plastic city, integrated agro park, leather park, chemical complex and textile city.
  
• Large number of bank branches in the state including major foreign banks.
  

Economic Infrastructure

Uttar Pradesh State Industrial Development Corporation Limited (UPSIDC) is committed to provide high standard, plentiful infrastructure, facilities, and an investor friendly environment for ensuring higher industrial growth in the state.

The industrial and service sector policy of UP government for the infrastructure sector is based on the following pillars:

• Creation of world-class infrastructure through private participation.
  
• Upgradation/ maintenance of industrial areas by a co-operative society of the entrepreneurs.
  
• Creation of Industrial Infrastructure Development Fund (IIDF) for financing initiatives in infrastructure development.
  
• Promotion of captive and co-generation of power
  
• Promotion of natural gas as an alternative source of energy.

Roads

The budget for roads has been increased five times from Rs. 1,083 crore in 2003 to Rs. 5583 crore in 2006. The state plans to bring up the State Highway Authority (SHA) on the lines of the National Highway Authority of India.

Road sector: Vision 2021

• Length of state highways to be increased to 12174 km
  
• Length of district roads being increased to 24,348 km
  
• 100 per cent connectivity is being ensured for villages.
  
• Widening of all state highways to double- lane
  
• Widening of 40 per cent major district roads to double lane

Rail

Lucknow is an important junction of the Northern and North Eastern Railways. It is well connected with all important cities of India.

Aviation

Lucknow, the capital of Uttar Pradesh, is well connected by air with New Delhi, Patna, Calcutta and Mumbai.

Power

The total estimated investment requirement during FY 2000-FY 2009 in the state is:

• Generation -Rs. 37 billion
  
• Transmission -Rs. 37 billion
  
• Distribution -Rs. 112 billion

The state is on the path of constant progress in with respect to the power sector. This is evident from the fact that 7503 villages were electrified during 2005-06 and the state aims to electrify all villages by 2008. Further, many major private projects like Dadri Power Project of Reliance Energy Generation Limited, Roza Power Project of Birla Group are in various stages of implementation in the state. To boost the investments in this sector, government land is being made available on lease for a period of 99 years at the rate of Rs. 100 per acre to set up a power generation project. Also, the state has formulated an explicit power policy to facilitate investments in the power sector.

Transmission Works Target - 11th five year Plan (2007-12)

Social Infrastructure

Education

Uttar Pradesh was ranked as first for the successful implementation of education for all policy. The state launched its mid -day meal programme in 95,000 primary schools and about 1.75 crore of children benefited under this scheme. The state has provided financial aid of Rs. 20,000 for higher education of girls under Kanya Vidyadan scheme. Further, provision has been made for free distribution of books and uniforms for students in primary schools.14,412 new school buildings have been constructed in the state during 2004-05.

Policy Framework

Industrial and Service Sector Investment Policy 2004

Industrial and service sector investment policy aimed at creating comprehensive reforms and restructuring of the economy is creating new opportunities and opening new avenues for investment in the state.

The policy provides special incentives on infrastructure in addition to exemption from various tax and duties to the investors. The policy maintains a single window policy for speedy and hassle free procedures. A 100 per cent exemption on stamp duties for IT, ITeS, food processing sector and some of the service sector; rebate on stamp duty, land on priority, interest free loan under industrial investment promotion scheme, uninterrupted power supply and exemption from electricity duty, 50-100 per cent exemption from stamp duty on purchase of land have helped to create ideal environment for investment. Also extra incentives are being given on case-to-case basis for investment more than Rs.500 crores.

Full text of the policy (.pdf)

Information Technology Policy 2004

Objectives of the Policy

• Bringing IT to masses
  
• Accelerate the use of information technology in schools, colleges and educational institutions
  
• Spurring the Domestic demand for software, hardware and services
  
• Making Software, Electronics/IT Hardware and ITS/ITES Sectors globally competitive and thereby increasing export earnings
  
• Facilitating the industry for addressing global markets
  
• Facilitate formation of value additions for growth of the industry
  
• Help businesses realise full potential in creating wealth.

Strategy of the Policy

The strategy is to achieve economic growth through development of nationally and globally competitive industry by facilitation and providing confidence, dedication, purpose and a fertile ground in which investments would flourish.

Full text of the policy (.pdf)

Biotech Policy 2004

The state Uttar Pradesh aspires to utilize the modern tools of biotechnology and attain prosperity for farmers, generate employment in rural areas, food for all, good health and clean environment. The mission of the policy is to develop knowledge-based economy, assure benefit of biotechnology to all section of the State and promote entrepreneurship in biotechnology-based industries.

Objectives of the Policy

• Establish pre-eminent position of the State in the field of biotechnology.
  
• Create awareness about the entrepreneurial and job opportunities in the field of biotechnology.
  
• Attract biotechnology based industrial investment.
  
• Develop and conserve bio-resource for sustainable commercial use.
  
• Harness existing R&D capabilities for industrial/ commercial developments in the State and to promote corporate funding and developing such knowledge.
  
• Develop adequate institutional and related infrastructure for development, acquisition and dissemination of biotechnology through out the State.
  
• Promote research and development and to establish centers of excellence in frontier area of biotechnology.

Full text of the policy (.pdf)

Policy for Food Processing Industry 2004-09

Uttar Pradesh is one of the largest producers of farm commodities in the country and the largest producer of vegetables, wheat, maize, sugarcane, potato and milk. Some of the most delicious varieties of fruits are grown in the state. Thus there is an immense inherent potential in this sector. The state also has diverse agro climate conditions, which are conducive for a variety of crops round the year.

Despite the inherent potential, it has so far been untapped. Large quantities of vegetables and fruits are wasted as only around 2% of the production is commercially processed. Though considerable success has been achieved in evolving appropriate pre harvest practices, the issue relating to post harvest management, which includes grading, sorting, packaging, processing, transportation and marketing, are still not adequately addressed. It is believed that agriculture in the state can turn into a lucrative venture, if there is a proper linkage from end to end among various components of agri-business, i.e. from the stage of sowing to final sale and consumption, which can develop synergy and dynamic efficiency in the system.

Objectives of the Policy

The policy aims at achieving the following objectives:

• Better returns to the farmer for his produce
  
• Encourage investment and employment generation in the sector
  
• Promote value addition and quality consciousness
  
• Minimize wastage of agriculture and horticulture produce
  
• Provision of appropriate linkages between the agricultural and industrial sectors
  
• Provide a 'market' focus to the entire range of activities involved in food processing.

Strategy of the Policy

The strategy would center around identification of potential areas for value addition, keeping in view both the international and domestic market demand and
addressing issues relating to the entire value chain, right farm to the palate, for achieving the objectives outlined in the policy. Apart from evolving new and more
effective instruments for overcoming the constraints in this sector & for promoting food processing, emphasis will be on:

• "Convergence" of all fiscal and financial incentives provided by Central and State Government agencies;
  
• "Partnership" between the farmer, private sector processors, Central and State Government; and
  
• "Focus" on such issues, which are critical to the growth of this sector.

Full text of the policy (.pdf)

Power Policy 2003-09

Power to all is an integral and primary component of the developmental program of the State. To address this key developmental challenge Government of Uttar Pradesh formulated a Power Policy in 1994 and a Power Reform Policy in 1998 with the following objectives. The power policy has been drafted to attract private sector investment into power generation, transmission and distribution with a view to ensuring electricity supply to all villages in the state.

• Provide cost efficient good quality electricity to all categories of consumers for economic development and social uplift of the state.
  
• Make the energy sector commercially viable so that it ceases to be burden on the state budget; and
  
• Protect the interest of the consumers
  
• ·With the above objectives in perspective, the Government of Uttar Pradesh agreed on the following key aspects of the power sector Reform programme.
  
• Restructuring of Uttar Pradesh State Electricity Board (UPSEB) into autonomous and separately accountable entities.
  
• Creation of an independent Regulatory Body to protect consumers as well as long-term financial health of the power sector.
  
• Ultimate transfers of ownership of assets to public corporate entities over a phased time scale.
  
• Rationalization of tariff.

Full text of the policy (.pdf)

Policy for Promotion of Private Investment in the Development of Hi-Tech Townships in Uttar Pradesh

Objectives of the Policy

• Produce competitive hi-tech marketable estates with an attractive environment for high quality living, work and recreation.
  
• Encourage high technology and knowledge based industries, tourism and
  
• Provide facilities for business organisations engaged in modern technologies.
  
• Facilitate and create an enabling environment for attracting maximum private investment in housing and infrastructure development.
  
• Support and enable private investment in other sectors of the state economy.

Full text of the policy (.pdf)

SEZ Policy 2006

• SEZ Policy-2006 (Part -A: simplification of Financial Exemption/Assistance, Procedures)
• SEZ Policy-2006 (Part-B: Provision Regarding Selection of Developers, Availability of land and land use in master plan etc)

The government has announced the SEZ policy to foster industrial and economic development and create conducive environment for the development of SEZ.

Salient Features of SEZ acknowledged by the policy:

• Integrated areas with world-class infrastructure facilities will be developed through establishment through establishment of SEZ.
  
• Apart from achieving a rapid economic & industrial growth in the country and the state, new avenues for employment generation will be created by setting up of SEZs.
  
• The establishment of SEZs will boost the exports. Domestic Investments, FDI and foreign & modern technology will be attracted.
  
• Provisions for the exemption of taxes etc. for rationalization/exemption in the legal provisions related to labour, environment, electricity, etc. has been provided for in the policy.

Sugar Policy

The Government of Uttar Pradesh declared the new sugar industry promotion policy in 2004. Under its proposals, entrepreneurs are provided with a host of incentives and concessions to set up sugar mills in the state. These include exemption of entry tax on sugar, reimbursement of administrative charge and trade tax on molasses. Further, exemption from stamp duty and land registration fee, exemption and reimbursement of purchase tax on sugarcane, reimbursement of expenditure on transport of sugarcane and sugar are also provided.

Uttar Pradesh has traditionally been known as the "Sugar Bowl of India" (accounting for 40 per cent of the total production) and sugar is an important source of livelihood in the state. The new policy on sugar provides direct benefits to the farming community as it has generated rural employment, reduced income inequalities, and propelled the growth process of the state.

Investment Incentives

The Government of Uttar Pradesh is committed to provide high standard, plentiful infrastructure facilities, enabling conducive policy framework and an investor friendly environment for ensuring higher industrial growth in the state. The state recognizes its role in nurturing economic activity and entrepreneurship and places high priority on providing outstanding infrastructure to the industry

Incentives under the industrial and service sector investment policy - 2004:

Financial Assistance: Infrastructure Projects

• Industrial Estates for IT/BT units are eligible for 50 per cent of investment or US$541,913.99 whichever is less.
  
• Other industrial estates are eligible for 20 per cent of investment or US$ 541,913 whichever is less.
  
• Call centre hubs having covered area of not less than 10,000 m2 are eligible for 50 per cent of investment or US$ 108386.66 whichever is less.
  
• Convention halls, multimedia centres, exhibition grounds and business trade centres will also be entitled to certain incentives on the fulfillment of certain prerequisites.
  
• Laboratories for quality control and Research and Development for products of small-scale industries are eligible for 50 per cent of investment or US$ 216, 780.09 whichever is less.

Stamp Duty and Registration Charges on Land

• 100 percent exemption from payment of stamp duty on:
  • New small-scale units in 24 districts of Poorvanchal and 7 districts of Bundelkhand.
    
  • Infrastructure projects.
    
  • IT/BT and food processing units and call centers.
    
  • Service sector projects such as multi facility hospitals with specified facilities and having at least 100 beds; super specialty hospitals with specified facilities among others.
• Facility of registration of all industrial projects at concessional rate of Rs. 2 per thousand subject to a maximum of US$ 108.485

Fiscal Incentives- Service Sector

Certain Service sector projects will also be eligible for:

• Exemption from acquisition charges if land for the project is acquired by the Government.
  
• Exemption from entry tax on plant and machinery used for the establishment of project.
  
• Exemption from electricity duty for 10 years from the date of establishment.
  
• Exemption from development charges and malba charges levied by the development authority/local authority.
  
• Exemption from house-tax, water and sewage tax and all other taxes/charges levied by the development authority/local authority for five years from the date of establishment.

Investment Incentives under the information technology policy (2004)

• Preferential Allotment of Land: Preferential allotment of land will be made for IT industry by NOIDA/Greater NOIDA, UPSIDC/Development Authorities in the state.
  
• Exemption of Stamp Duty and Registration Fee: I.T units and call centres shall be given 100% exemption from payment of Stamp Duty and Registration fees.
  
• Uninterrupted Power: Continuous and uninterrupted power supply for IT industries. Exemption from power cuts without limit.
  
• Captive Power Generation: Encouragement to captive power generation in IT locations. I.T Units with 5 KVA power requirement can be set up anywhere irrespective of master plan or land use classifications.
  
• Incentives to Mega Investment Units: Information Technology and electronic units set up in the state with an investment of US$10.8484 million or more shall be classified as Mega Investment Units. The mega investment units will be entitled to a plethora of incentives including allotment of land on priority basis, interest free loans for a period of 15 years upto the amount of sales/trade tax liability among others.
  
• Venture Capital Fund: venture capital fund will be created with state government/PICUP/ UPSIDC/ UPFC/private enterprises/ SIDBI and others for IT sector.
  
• Special Financing Package will be developed by the State Financial Agencies to fulfill the unique needs of the IT sector.
  
• A Range of Trade Tax Concessions will also be provided to the IT sector.
  
• Power Tariff: IT units in information technology parks and STPs will be charged the same power tariff as the SSI.
  
• Exemption from Pollution Control Provisions.

Investment incentives under the biotech policy (2004)

• Single window facility and constitution of biotechnology development board.
  
• Relaxation of taxes on Biotechnology based products.
  
• Relaxation on land for establishment of biotechnological units.
  
• Biotechnological units shall be exempted for entry tax for fifteen years, on
  Capital goods including captive generation sets.
  
• Captive generation sets installed by biotechnological units shall be exempted of electricity tax for 10 years.
  
• Uninterrupted power supply.
  
• Relaxation in stamp duty and registration fee.
  
• Relaxation in zonal regulations.
  
• Projects where an investment of US$10.8484 million or more will be made either in expansion of existing units or in setting up a new unit, also such units which employ more than 250 people will be declared as mega projects. Such projects will be given relaxation under special package.
  
• Provision of cluster development fund /venture capital.
  
• Establishment of Biotech parks at NOIDA and Lucknow.

Investment incentives to SEZ developer and units (2006)

• SEZ developer and SEZ units shall be exempt from all kinds of taxes, cess or levies of the Government of Uttar Pradesh or taxes of any other local authority/agency for any transactions within the SEZ or any procurement of goods, supplies or services from the Domestic Tariff Area. Units in DTA would also be exempt from these on sales made by them to a SEZ unit or SEZ developer. These include UP trade tax, turnover tax, mandi tax, entry tax, development tax, local bodies tax, etc.
  
• SEZ developer and units would also be exempt from taxes levied by local bodies, as SEZs would be an industrial township under constitution of India and would be responsible for providing services within the zone.
  
• Developers, Co-developers of SEZs and units established/ to be established will get total exemption from the stamp duty & registration fee on first transaction but on implementation of amendments in the Indian stamp act -1899, as per third schedule of SEZ Act-2005, exemption will be applicable as provided therein.
  
• Facility for treating sales from SEZ to DTA as "imports" is not being implemented at this stage because many of the other states are not having any such policy. However, this point is subject to revision.
  
• Electricity duty and taxes shall be exempted on generated or purchased electricity for use in processing area of the SEZ for a period of 10 years from the date of production or start of service.
  
• SEZ will have freedom of generation, transmission, and distribution of electricity within the SEZ subject to provision of Electricity Act 2003. Wherever the consent of U.P. State Regulatory Commission will be required, same shall be obtained.
  
• Under the U.P. power policy, all admissible facilities shall be available to SEZ also.

Investment Opportunities

• Power
  
• Food processing
  
• Agro Based industries
  
• Animal Husbandry
  
• Engineering
  
• Horticulture
  
• Petrochemicals
  
• Sugar
  
• Silk

Useful Web Links

Government of Uttar Pradesh

U.P. Industries, Government of Uttar Pradesh

Uttar Pradesh State Industrial development corporation Limited