Odisha: Growing steadily and surely

At a growth rate of 7.14 per cent in the gross state domestic product (GSDP) for the financial year 2017-18, Odisha surpassed the national average of 6.75 per cent. According to the revised estimates presented in state’s Economic Survey in March 2018, the state’s economy in 2016-17 grew at a scorching rate of 10.4 per cent, which has been attributed to a structural shift in the management of the economy.

A politically stable government of 18 years in the state initiated measures in building highways, linking the far-off mineral-rich districts to ports and investing in nurturing technical institutes to make employable human resources available. In fact, overcoming issues of inadequate infrastructure and the lack of a talent pool became the turning point of Odisha’s growth story. Getting the basics right and building upon its strength Odisha created a stable investment climate.

Upcoming stream

A study conducted by ASSOCHAM Economic Research Bureau (AERB) in 2017 highlighted that Odisha fares high in the ‘implementation rate’ index, which measures the execution of sanctioned projects and proposals. On this count the study noted that the state was executing the sanctioned projects and proposals on a war footing to attract both domestic as well as global investors. At the close of the financial year 2017, the state had attracted over 900 projects with live investments worth over US$184 billion, approximately. As a result, the economic growth rate of the state has seen a significant increase from 4.6 per cent in the financial year 2013 to above seven per cent in the financial year 2017.

Besides the industry and the agriculture sector that have seen significant growth, the ASSOCHAM study identifies food processing, marine and tourism as the sectors with high potential of growth, partnerships and investments. Gateway to the ASEAN region, Odisha is India’s mineral hub and the aluminium capital of South Asia. The state produces 54 per cent of the aluminium in the country and 25 per cent of its steel. Odisha is a power surplus state and has 11 per cent of the entire nation’s water resources.

Investor commitment

In the second edition of the biennial ‘Make in Odisha’ event held in November this year the state received an investment intent of about US$58.3 billion across 15 sectors. Japan was the partner country for the conclave that projected creation of nearly 600,000 new jobs. The event attended by senior officials from the Japan International Cooperation Agency (JICA), Japan External Trade Organisation (JETRO) and Japan Chamber of Commerce and Industry in India (JCCII) aimed at boosting collaborative business efforts.

In the last four years, more than 118 manufacturing related proposals have been approved in Odisha with the average time taken for approval of the projects now reducing by 20 days from the date of receipt of complete application

Through the Official Development Assistance (ODA) loan of about US$1.4 billion, JICA is already assisting 13 projects in Odisha related to agriculture, power, forestry and water and sanitation. On the other hand, Odisha is trying to fill the gaps in certain industries in Japan like the seafood industry. Odisha has also identified 665 acres of land for the Japanese organisations to set up their business infrastructure in the state.

The event also witnessed leading businesses in India such as Haldia Petrochemicals, Jindal Steel and Power, Aditya Birla Group, Indian Oil Corp, TATA Steel and Reliance Industries committing to the state. The companies were drawn, not just by investor-friendly government initiatives, but also by Odisha’s mineral and forest resources as well as human capital. Its long coastline offers tourism opportunities, while IT and sciences are the emerging sectors. The state, largely untapped so far, offers high-quality and high-margin opportunities for private investors, Indian and foreign alike.

Vision 2030

Looking to attract value-added players in the metals space and becoming a maker of value-added products rather than being the sole supplier of raw materials, Odisha is fast emerging as the manufacturing hub of eastern India. The geographic location of the state is conducive to trade and commerce as in less than 10 hours goods and materials can be transported from an industrial area to ports in Odisha. With a vision to achieve more than 50 per cent value addition to primary metals produced in the State by 2030, the Government of Odisha is giving special emphasis to the development of downstream and ancillary sector investment. The government of Odisha has also announced an Aerospace and Defence Manufacturing Policy aimed at creating a robust defence industrial base in the state.

In the last four years, more than 118 manufacturing related proposals have been approved in Odisha with the average time taken for approval of the projects now reducing by 20 days from the date of receipt of complete application. The ease of doing business has attracted many foreign players intending to be a part of Odisha’s growth story. Eyeing business opportunities in the state, the French government is looking to invest in the hotel, steel, electrical appliances, energy and other sectors. Riyadh based SABIC a global leader in chemicals is keen to invest more than US$710 million in a petrochemical project on Odisha’s coast.

State Advantages

Low wages, land availability and transparent policies are key to the increasing graph of investments in Odisha. More than 65 per cent of the US$28 billion investment proposals received in the 2016 ‘Make in Odisha’ conclave are under implementation. In June this year, Odisha also decided to formulate the vision document 2020-2030 for the state in line with the Sustainable Development Goals (SDGs) set by the United Nations. The state government led by chief minister Naveen Patnaik is competing hard with the developed coastal states of India, and this opens a floodgate of opportunities for domestic and foreign investors in the next breakout state of India.