INDIAN STATE: UTTARAKHAND

General Information

Uttarakhand is the twenty-seventh state of the country. The state was created on 9th November 2000. The total population of the state according to the 2001 census is 84.89 lakh. The population density is 159 (per square kilometer). It is surrounded by China and Nepal on its international boundary. On the domestic boundary, Uttar Pradesh, Himachal Pradesh and Nainital surround Uttarakhand.

In recent years, Uttarakhand has emerged as one of the most attractive industrial destinations in India. The government is encouraging private participation in all industrial activities and as a result big players such as HLL and Dabur have set up units in the state. The New Industrial Policy announced in 2003 by the state government puts in place the regulatory framework for Uttarakhand's industrialisation. The New Industrial Policy indicates that private resources may be tapped while promoting integrated Industrial Estates in Uttarakhand.

Fact File

Advantage Uttarakhand

• Udyog Mitra- State level facilitation body has been set up.
• State Industrial Development Corporation of Uttarakhand Limited (SIDCUL) has been created to ensure all facilities to industrialists.
• Industrial estates have been established at Haridwar, Pantnagar, Sitargunj, Selakui, Kotdwar, and various other areas.
• New Industrial Policy with wide range of fiscal and non-fiscal incentives.
• The State has rich mineral deposits of limestone, soapstone, magnesite etc., besides minor minerals. Resource mapping is being undertaken.
• Action is being taken to simplify and rationalize the Labour Laws.
• Concessional Industrial Package Announced
• Land Bank - A dedicated land bank being created to provide land for projects across the table.
• Peaceful and Secure Industrial Environment.
• Hydro Power Resource - Potential powerhouse of the Nation. Only 9% of the total hydropower potential has been tapped till now. Uttarakhand is a land of vast water resources. It is proposed to scientifically utilize the immeasurable water wealth and make Uttarakhand an energy state by the year 2016. Tehri dam will prove a major asset in fulfilling this aim.
• Tourism Potential Unmatched - Mountain, leisure, Spiritual, Adventure, Religious, Eco-traditional and high-end tourism along with related services.
• Good Quality of Life - Healthy climate and Pollution free environment
• Major Climate Zones in close Geographical proximity.
• 175 species of Medicinal Herbs found in Uttarakhand.
• Proactive government.

Economic Infrastructure

Power

The state has adequate availability of power and is aiming to further increase hydro power production by over 5000 MW before the end of the present decade. A number of small and medium size hydro sites have been identified to be developed in the private sector or in public-private partnership, besides development of projects in the public sector. These measures have been taken up to ensure supply of quality power to the entrepreneurs setting up industrial units in the state.

The mission of the state with respect to the power sector is:

• Achieve 100% rural electrification by March 2007, Hamlets by March 2008 and rural households by March 2009.
  
• Provide 24x7 reliable, quality and un-interrupted supply to its consumers.
  
• Provide "power to all" on demand.
  
• Strengthen the existing power network based on present advanced technology with an objective to reduce T&D losses.
  
• Provide power system network with minimal environmental impact.
  
• Plan and provide strong power system to the state and its consumers at an affordable cost.
  
• Develop a professionally managed organization.
  
• Generate additional revenue for the Corporation and State by developing a strong, adequate, reliable and cohesive power network based on most techno-economical aspects to contribute towards the development and prosperity of the State.
  
• Improve social status of the people.
  
• Reduce poverty of the people.
  
• Provide employment in the rural sections by providing reliable supply.
  
• Establish Consumer Care Centre, Central Call Centre etc. to provide Quality Service to the Consumers.
  
• Release Electricity Connection to the consumers under Tatkal Sewa within 24 hours for better service to them.
  
• Contribute to the formation of a developed & progressive Uttarakhand State.

Roads

Vision

• Provide high speed connectivity with rest of the country
  
• Provide adequate and efficient connectivity to all the demand drivers (Tourism, Industries, Agriculture and Urban centres.)
  
• Provide connectivity to all the villages/habitations through roads and bridges.
  
• Provide 100 percent all weather roads.

Strategy for Development

• Identification of core network and all future developments to be linked to the core network to ensure economies of scale in terms of traffic counts.
  
• Work in close co-ordination with the central government for development of high-speed corridors NH 58 & 87.
  
• Minimize transaction costs and delays in transportation through integrated check posts and bypasses along core network.
  
• Explore spectrum of private participation in construction, maintenance and management of corridors through BOT and other options.

Initiative Underway

• Discussions initiated with multilateral institutions for development of road network.
  
• Asian Development Bank - connectivity to sparsely connected hill districts.
  
• World Bank - upgradation/ widening of all State Highways and Major District Roads.
  
• 300 km of road stretches forming entry points to the State identified for development through the private sector.

Aviation

Vision

• Position air transport as a reliable all weather low cost transport option in the hills and as a driver of quality tourism.
  
• Establish scheduled air service with every state capital and connectivity with an international gateway.

Strategy for Development

• Increase stake of state in development of Airports and develop low cost Air Bases.
  
• Put in place a proactive PSP structure, attractive incentives and positive risk sharing mechanism that encourage efficient low cost services.
  
• Facilitate participation of state governments, urban local bodies, airline/aircraft operators, other private investors in development, upgradation and management of small airports/airstrips.

Initiatives Underway

• Close coordination with the Airport Authority of India for upgradation/expansion of Jolly Grant airport Dehradun.
  
• Operationalising of the airstrips at Gaucher (Chamoli), Chinyalisaur (Uttarkashi) and Pithoragarh.
  
• Feasibility study for launching a Mountain Airline to boost high altitude tourism.
  
• Promotion of Aero sports.

Social Infrastructure

Health

The Government of Uttarakhand is committed to improve the health status and quality of life of its people, by focusing on health issues with the objective of reducing disease burden, creating an enabling environment influencing direct and indirect health determinant such as nutrition, water, sanitation, the environment and other factors such as education and employment in the state. The Government intends to reach the replacement level of fertility, population stability with due attention to disadvantaged sections, inaccessible and remote areas.

The following objectives have been laid down by the state in its health and population policy:

• Eradicate polio by 2007.
  
• Reduce the level of leprosy to below 1 per 10,000 population by December 2007
  
• Reduce mortality on account of tuberculosis, malaria, and other vector and water-borne diseases by 50 percent by 2010. Reduce prevalence of blindness from around 1 to 0.3 percent by 2010.
  
• Reduce Iodine Deficiency Disorder (IDD) by 50 percent of the present level by 2010.
  
• Reduce RTIs to below 10 percent among men and women by 2007.
  
• Increase awareness on HIV/AIDS.

Education

The literacy rate in Uttarakhand is 72%, which is higher than the national literacy rate. The state strives to achieve 95% literacy rate, for which it has adopted a tri-fold strategy with the following elements:

(a) 100% enrolment
(b) 100% retention
(c) Continuous Education Programme

Major Industries

Floriculture and Horticulture

Uttarakhand has almost all the different agro-geo climatic zones making it particularly conducive to commercial horticulture and floriculture. Floriculture is being developed in a big way in order to meet the demand of both - the domestic as well as the foreign markets. The climate is ideal for growing flowers all round the year. Hence, it is proposed to establish floriculture parks with common infrastructure facilities for sorting, pre-cooling, cold chain, processing, grading, packing and marketing facilities. Horticulture is also being promoted in a big way through adequate incentives and facilities to the industry.

Agro and Food Processing Industries

The state government provides assistance in establishing small and medium size agro parks, food parks etc., which in turn are expected to provide common infrastructure facilities for storage, processing, grading and marketing.

Four Agri Export Zones (AEZs) have already been declared under the AEZ scheme of Government of India for leechi, horticulture, herbs, medicinal plants and basmati rice.

Uttarakhand has been included in difficult area category by the Ministry of Food Processing Industry (MFPI) and hence units being set up in Uttarakhand will be eligible for higher incentives under the scheme of MFPI.

The state government is also providing matching subsidy for projects under various schemes of Agricultural and Processed Food Products Export Development Authority (APEDA), National Horticulture Board (NHB), Ministry of Food Processing Industry (MFPI) and the Natural Medicinal Plant Board (NMPB) subject to a maximum limit of Rs. 20 lakhs.

Biotechnology

Biotechnology (BT) is poised to make significant contributions in agriculture, human and animal health care, environment management and process industries. Rare species of plants and animals found in the state, add to its natural advantage in this sector. In this context, a MOU has already been signed between Rabo India Finance Company, Infrastructure Development Finance Company and the G.B. Pant University of Agriculture and Technology in order to forge strategic cooperation to jointly pursue initiatives in the sphere of research in food and agriculture sectors. A high level Biotechnology Board is also being setup under the Chairmanship of the Hon'ble Chief Minister.

The proposed strategy of the state with respect to the biotechnology sector is:

• Units coming up in this sector, including the R&D units in this field, shall be accorded industry status and the provisions made for the IT sector shall be made applicable to this sector as well.
  
• Establish an internationally competitive business infrastructure and environment for the biotechnology industry in the state.
  
• Develop Uttarakhand as a centre of excellence in biotechnology by providing necessary education and training facilities for the creation of a large pool of multi-skilled, technically competent manpower and organizations for state of the art biotechnology research in the state.
  
• A biotechnology park will be developed near Pantnagar to achieve the vision of the government. The proposed Biotechnology Park will integrate resources and provide amongst others, a focused institutional set up for accelerated commercial growth of Biotechnology and Bio-Informatics.

Information and Communication Technology

The state is naturally endowed and has all prerequisites for developing as a preferred destination for IT & ITES along with hardware production. IT & ITeS have been accorded the status of Industry. Several initiatives have been taken to promote IT and ITeS industry in Uttarakhand. Uttarakhand offers high-speed connectivity with the establishment of an STPI earth station at Dehradun and proposed earth stations at other locations. Facilities by BSNL and Reliance are also available in the state. A dedicated IT park is already coming up in Dehradun and others are in the pipeline. Also, stamp duty concessions are proposed for units located in IT parks.

Hydro power

The state has untapped potential for generating hydropower, which is both cheap and clean. Nearly 15000 MW of hydropower can be generated in the state. The government has identified 47 small hydro sites (upto 25 MW) for allotment to the private sector. Also, 17 major hydro sites (25-100 MW) have been taken up for development.

Forest Products- Herbs and Spices

Since a significant part of the state is under the forest cover (almost 70 percent), there exists excellent potential for the development of forest resources based industries. In addition, there is ample scope to develop industries based on forest and agro wastes such as lantana, pine needles and plant & vegetative fibers.

Uttarakhand is also a storehouse for a rich variety of herbs, medicinal and aromatic plant species. With a view to utilize these resources, a medicinal and aromatic plants export zone has been set up covering seven districts of Uttarakhand and specialized herbal parks are in the offing.

Tourism

Tourism industry has been accorded the status of a thrust sector in the state and the state government has set up statutory Uttarakhand Tourism Board as an apex body for development of tourism in the state. Several areas of Uttarakhand are already established as centres of pilgrimage tourism. Huge investment potential exists in the tourism sector including:

• Development of facilities for providing spiritual lessons, reiki, and other rejuvenating courses.
  
• Eco- tourism hotels, spa, resorts, amusement parks and ropeways.
  
• Winter sports at places such as Auly, which have the requisite terrain for the purpose.
  
• Adventure tourism

A detailed and separate tourism policy has also been formulated under which a multitude of incentives have been provided to boost the industry:

• New tourism units will be allowed rebate/deferment facility in respect of luxury tax for a period of five years from the date of commencement.
  
• New ropeways installed in the state will be exempt from payment of entertainment tax for a period of five years from the date of commencement.
  
• New amusement parks set up will be exempt from entertainment tax for a period of five years from the date of becoming fully operational.

Policy Framework

Industrial Policy 2003

The aim of the policy is to provide a comprehensive framework to enable a facilitating, investor friendly environment for ensuring rapid and sustainable industrial development in Uttarakhand and, through this, generate additional employment opportunities and to bring about a significant increase in the State Domestic Product and eventual widening of the resource base of the State. The policy shall remain in force for a period of 5 years.

Full text of the policy (.pdf)

IT policy

Objectives of the policy

• Encourage the use of IT in the Government not only as a tool for management and decision support systems but also re-engineer the processes of the government to provide a more efficient, transparent, accountable and responsive government to its citizens.
• Upgrade the quality of life of citizens of the state by facilitating easy access to consumer applications of IT.
• Encourage private sector initiatives for the development of world class IT infrastructure adequate for the needs of the citizens, the industry and the government.
• Upgrade and develop manpower skills required for the IT industry and to accelerate the use of IT in schools, colleges and other educational institution with a view to providing skills and knowledge to the youth so as to render them fit for employment in this industry.
• Use IT as GDP driver by promoting IT industry in the State, developing the State as an attractive IT destination with a view to generate employment for youth in this sector thereby raising their earning capacity and simultaneously realizing the export as well as domestic revenue potential in this sector.

Full text of the policy

Investment Incentives

• 100% Central Excise exemption for 10 years on items other than those mentioned in the negative list in the concessional industrial package announced by the central government.
  
• 100% income tax exemption for first 5 years and 30% for next 5 years for the Companies and 25% for others
  
• CST @1% for 5 years
  
• Capital investment subsidy @15% with maximum of Rs. 30 Lakhs (Rs. 3 million).
  
• Central transport subsidy extended till 2007.
  
• Exemption from entry tax on Plant & Machinery for setting up Industry or undertaking substantial expansion and modernization
  
• Land use conversion and development charges and regime will be rationalized
  
• Stamp duty concession will be provided in respect of land in specialized commodity parks, including I.T. parks
  
• Interest incentive @ 3% with a maximum of Rs. 2 Lakhs per annum per unit shall be provided to New Small Scale Industries (SSIs) and existing SSIs for modernization and substantial expansion, provided they have available loan from State level Financial Institutions or Banks operating in Uttarakhand and not defaulted in payment of principal or interest installments. However, for S.S.I. units and units notified as Thrust Industries being set up in remote areas, the interest incentive shall be granted @ 5% with a maximum of Rs. 3 Lakhs/annum. The interest incentives shall be admissible to the unit only if it remains in operation for last installment, failing which the Government will have the right to recover the amount of incentive availed.
  
• For the purpose of Interest Incentive, substantial expansion shall mean additional investment of not less than 25% of the underpreciated book value of plant and machinery of an industrial unit
  
• For the purpose of the Interest incentive, modernization of new existing Industrial units means additional investment to the extent of 25% of the underpreciated book value of plant and machinery, made in acquisition of plant and machinery and technical know-how for such modernization
  
• For revival/rehabilitation of sick SSI units, interest incentive @ 3% with a maximum of Rs. 2 Lakhs per annum shall be provided on the loan taken under fully tied up revival and rehabilitation package from financial institutions, banks etc. For entrepreneurs in remote areas the interest incentive will be granted @ 5% with a maximum of Rs. 3 Lakhs per annum. The interest incentive shall be admissible to the units only if it remains in operation for minimum of 3 years from the date of date of disbursement of last installment, failing which Government will have the right to recover the entire amount of incentive availed
  
• In the case of sick non-SSI units, Government will sympathetically consider measures required under revival/rehabilitation package drawn by Operating Agency/Financial Institutions/Banks
  
• 100% exemption on Entertainment tax will be allowed for Multiplex project in the State for period of three years, and for all new amusement parks and ropeways for five years.
  
• 75% of the Total Expenditure subject to a maximum of Rs. 2 Lakhs incurred in obtaining national/internationally approved quality marks such as ISO series certificate etc., shall be reimbursed to the entrepreneurs provided that the reimbursement/grant availed for this from all sources should not exceed the total expenditure on this head
  
• 50% of the expenses subject to a maximum of Rs. 1 Lakhs incurred in installing pollution control equipments shall be reimbursed to the entrepreneurs, provided that the total reimbursement/grant availed for this from all sources should not exceed the total expenditure on this head.
  
• 75% of the cost subject to a maximum of Rs. 2 Lakhs shall be made available to the entrepreneurs in the shape of assistance for registering their patents, provided that the total reimbursement/grant availed for this from all sources should not exceed the total expenditure on this head.
  
• For educated unemployed youth, financial loan assistance for project upto Rs. 2 Lakhs in case of Manufacturing/Services Industry and project upto Rs. 1 Lakhs in business sector shall be available under the "PRIME MINISTER ROZGAR YOJNA" with subsidy of 15% of the project cost subject to a maximum of Rs. 15,000. Age limit has also been relaxed under this scheme from 35 years to 40 years
  
• Industries generating employment opportunities shall be encouraged
  
• Purchase preference and price preference will be given to State SSIs in State purchases
  
• Purchase preference shall be accorded to Non-SSI units within the State vis-à-vis units outside the State
  
• Matching State subsidy on approved projects of National Horticulture Board (NHB), Agriculture & Processed Food Products Export Development Authority (APEDA), National Medicinal Plants Board (NMPB) subject to a maximum of Rs. 20 Lakhs and subject to a total subsidy not exceeding over 50% of the project cost.

Industrial Estates

• Well equipped industrial estates are being developed in the following areas in the state:
  • Industrial Estate, Haridwar
    
  • Integrated Industrial Estate, Pantnagar
    
  • Integrated Industrial Estate, Sitarganj
    
  • Development Centre, Kotdwar
    
  • Pharma City, selakui, Dehradun
    
  • Sixty acre IT park, Sahasrdhara Road, Dehradu
• In the districts Udhamsingh Nagar, Haridwar, Dehradun 18 private-public and cooperative industrial estates are being developed on 800 acres of land with private - public participation.
• An ultra modern industrial estate developed in Haridwar on 2000 acres of land.
• Hindustan Lever Ltd., Mahindra & Mahindra, ITC, Kirby and other leading industrial houses have established their units in these estates.
• Under the industrial package, 180 large, medium and small scale industrial units established by the end of 2005.

Useful Web Links

• Official website of Government of Uttarakhand
• SIDCUL