Advantage Vidarbha PDF

Advantage
Vidarbha
An Emerging
Business Destination
kpmg.com/in
Message by
Hon'ble Chief Minister

Government of Maharashtra
Vidarbhas latent potential becomes evident as one travels along the regions vast land mass,
which occupies 31.6 percent1 of the State of Maharashtra. The regions richness in terms
forest and mineral wealth is complimented by its central location, uninterrupted quality
power supply and developing social infrastructure. The Government of Maharashtra
is keen on leveraging Vidarbhas inherent strengths and facilitate the regions
transformation into a premium investment destination for a host of industries.
The regions economic development is a top priority for the Government of
Maharashtra. State Government driven major infrastructure projects, such as the
Multi Modal International Cargo Hub (MIHAN) and Butibori Industrial Area, are at
an advanced stage of completion. In addition, recent policy initiatives in the form
of the States New Industrial Policy and the New Textile Policy have been aimed
at providing a further thrust to industrial investments in the region. Furthermore,
the State Government is also collaborating with key stakeholders i.e. State level
authorities such as MIDC, Urban Local Bodies (ULBs) and industry associations
such as VIA and FICCI to ensure holistic and inclusive development of the
region.
The initial steps in the right direction have been taken and Vidarbha stands
on the cusp of industrial and economic development. I hope that Advantage
Vidarbha 2013 can shed further light and provide investors a firsthand
view of the untapped opportunities that exist in this emerging region of
Maharashtra.
Shri. Prithviraj Chavan

Hon'ble Chief Minister
Government of Maharashtra
1.
Census of India 2011
2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
Foreword by
KPMG in India
Over the years, the State of Maharashtra has been a vanguard of Indias
economic development. As a result, it has been able to attract industrial
investments from every major sector. However, there is a perception that
the investments have been limited to certain key regions of the State. The
Government of Maharashtra is intent on rectifying this anomaly and facilitate
the economic transformation of the entire State.
The same is evident in the States New Industrial Policy and the New Textile
Policy, both of which have been aimed at providing an impetus to industrial
investments in regions such as Vidarbha. The policy support offered is
praiseworthy as it will certainly benefit the regions key existing industries most
notably, Textiles. However, it is imperative to realise that Vidarbhas investment
potential extends beyond a few sectors and region has much more to offer.
To highlight a few, Vidarbha can be potentially developed into an Auto and Auto
ancillary Hub given the large industrial land bank available and its established
engineering background. Similarly, eco tourism can flourish in region by provision
of adequate policy support and undertaking of marketing initiatives to promote its
national parks and other attractive tourist destinations.
Given this backdrop, the study Advantage Vidarbha, is aimed at providing investors a
brief overview of the investment potential within the region. In addition to highlighting
the key positives of Vidarbha, the study identifies the improvement areas by undertaking
a SWOT analysis for the region. It further deliberates on the regions potential for 8 key
industries namely Textiles, Logistics, Agro & Food processing, Tourism, Mining, Power
and Farm equipment, Auto & Auto ancillary, IT/BPM, and Pharma & Fine Chemicals. Finally,
the study dwells on the existing regulatory scenario and suggests possible measures for
stakeholders who are keen on ensuring the integrated and holistic development of Vidarbha.
Pradeep Udhas
Partner and Head
Markets
Table of
Contents
Vidarbha
At a glance
01
Vidarbha
An emerging investment destination
04
SWOT analysis for Vidarbha

Based on Investment drivers
06
Sector analysis for potential

investors
10
Regulatory Scenario
Government Policy and Support
Conclusion
13
14
Advantage Vidarbha 01
Vidarbha
At a glance
The Vidarbha region, located in the eastern part of Maharashtra, is traditionally

known across the country for its oranges. Located in the center of India, the
region is now transforming itself into a center of industry and business.
Vidarbha is made up of Nagpur and Amaravati divisions which comprise of
11 districts namely, Buldhana, Akola, Washim, Amravati, Yavatmal, Wardha,
Nagpur, Bhandara, Gondia, Chandrapur and Gadchiroli. Nagpur is the
largest district in terms of population and contribution to the regions
GDP2.
Vidarbha at a glance
Indicator
Value
Area (sq.km.)
97,404
Contribution to Maharashtras area
31.6%
Population (mn, 2011)
23.0
Contribution to Maharashtras population
20.5%
GDP at current prices (INR bn., 2010-11)
1,670.0
Contribution to Maharashtras GDP
15.6%
Per capita income (INR, 2010-11)
65,368
GDP growth (CAGR, 2008-10)
6.7%
Major crops
Orange, Cotton, Soyabean
Mineral resources
2/3rd of Maharashtras Mineral resources. The region is rich in minerals such as Coal, Limestone,
Manganese and Iron Ore.
Forest resources
3/4th of Maharashtras Forest Cover
Major industrial sectors.
Natural & Man-made fibre Textile, Agro and food processing, Engineering sectors, Cement, Steel
Major tourist destinations
Chikhaldara, Melghat Tiger reserve (Amravati); Tadoba Andhari Tiger reserve (Chandrapur); Nagzira
wildlife sanctuary, Navegaon National Park (Gondia); Lonar lake (Buldhana); Khindsi Lake, Ramtek
(Nagpur)
Main economic cities of Vidarbha
Akola, Amrawati, Chandrapur & Nagpur
Source: Economic Survey of Maharashtra 2011-12; Infrastructure Statistics of Maharashtra State, Directorate of Economics and Statistics, GoM; Census of India 2011; KPMG in India analysis
2.
Economic Survey of Maharashtra 2011-12
02
Advantage Vidarbha
Vidarbha constitutes 15.6 percent of Maharashtras GDP3,

while Nagpur and Amravati are the two economically
important cities of the region. The GDP of these two districts
together accounts for, approximately 42.8 percent of
Vidarbhas GDP and 6.7 percent of the Maharashtras GDP4.
However, in comparison to the rest of Maharashtra, the
region is considered to be economically backward4.
Nashik
1,409.6
Vidarbha
72,209
1,670
65,368
Konkan
Marathwada
4,107.3
1,142.6
60,013
1,25,527
Pune
2,353.8
93,626
GDP at current prices(INR bn, 2010-11)
Per capita income (INR, 2010-11)
Vidarbhas economy: A disaggregated picture

District
GDP at current prices

(INR bn, 2010-11)
Contribution to
Maharashtras GDP (%)
Per capita income (INR,

2010-11)
GDP growth* (CAGR,

2008-09 to 2010-11)
Buldhana
121.9
1.1
45,699
4.3%
Akola
117.7
1.1
58,627
7.2%
Washim
62.4
0.6
52,075
16.3%
Amravati
201.3
1.9
63,270
10.0%
Yavatmal
188.6
1.8
63,469
2.7%
Wardha
91.9
0.9
61,391
3.8%
Nagpur
513.4
4.8
96,458
9.6%
Bhandara
77.5
0.7
57,094
1.6%
Gondia
70.9
0.7
50,042
-2.3%
Chandrapur
175.9
1.6
67,641
7.3%
Gadchiroli
48.5
0.5
43,058
0.6%
Vidarbha
1,670.0
15.6
65,368
6.7%
Source: Economic Survey of Maharashtra 2011-12 and 2010-11

* GDP growth: GDP figures taken at constant (2004-05) prices in (INR bn)
3.
4.
Economic Survey of Maharashtra 2011-12 and 2010-11; KPMG in India analysis

Greens aye Vidarbha with forests intact, The Times of India, 18 December, 2009
From a social development perspective, Vidarbha fares well in terms of the

literacy rate. However as per the Maharashtra State Development Report
(2005), the region needs to improve on social development indicators. With
the exemption of Nagpur, no other district of Vidarbha scored higher than
Maharashtras average on Human Development Index (HDI)5.
Vidarbhas demography: A disaggregated picture

District
Population (mn, 2011)
Literacy rate (%, 2011)
Urban population as % of total population
Buldhana
2.6
82.09
21.2
Akola
1.8
87.55
39.7
Washim
1.2
81.70
17.7
Amravati
2.9
88.23
35.9
Yavatmal
2.8
80.70
21.6
Wardha
1.3
87.22
32.5
Nagpur
4.7
89.52
68.3
Bhandara
1.2
85.14
19.5
Gondia
1.3
85.41
17.1
Chandrapur
2.2
81.35
35.1
Gadchiroli
1.1
70.55
11.0
Vidarbha
23.0
83.6
35.1
Maharashtra
112.4
82.91
45.2
Source: Census of India 2011
Despite this, it is believed that

the region has substantial
potential for industrial
development. In recent times,
the Government of Maharashtra
(GoM) has made efforts to tap
the economic potential of the
region. Out of 169 mega projects
sanctioned in Maharashtra,
56 entailing an investment
of INR 350bn are coming up
in Vidarbha6. Furthermore, in
2010, the Maharashtra Industrial
Development Corporation (MIDC)
allotted INR 2bn for development
of industrial areas in Vidarbha.
More recently, the GoM through
its Industrial and Textile policies
is providing special impetus for
increasing industrial investments
in various sectors which can be
potentially developed in the region.
5.
HDI 2000, Maharashtra State Development Report 2005, State Plan Division, Planning Commission, Government of India
6.
Vidarbha getting highest investment', The Times of India, 31 July 2010
04
Advantage Vidarbha
Vidarbha
An emerging investment destination
Vidarbhas latent potential

As the region accounts for nearly one-thirds of the States cotton production7, Vidarbhas potential for
the textile industry is well known. However, there are various latent opportunities in other sectors as
well.
Land availability and industrial infrastructure to support Engineering industries
Establishment of several industrial estates throughout the region has meant that adequate land
bank is available at an affordable cost.
Further, as of 2011, the region accounts for 48.7 percent8 of the installed thermal power generation
capacity of the State. The region has a total water reservoir capacity of 5,607 mn cubic meters (m3)9.
Thus, quality power and water is available on demand.
These factors make it a favourable destination for engineering industries such as Auto and Auto
ancillary units and Power Equipment.
Vidarbha Industrial Estates

Category
Number of
Estates
Area Developed
(ha.)
No. of Units
Established
Investment
(INR Cr)
Employment
MIDC Estate
87
15,148
3,900
11,900
45,550
Co-op.Estates
11
231
510
120
4,150
Total
98
15,379
4,410
12,020
49,700
Source: Maharashtra Industrial Development Corporation (MIDC)
Raw material availability for Agro and Food Processing
Vidarbha Crop Production
players
Agro and Food Processing players can also set up base in
the Vidarbha as it is rich in agriculture produce. In addition
to being the largest producer of oranges in the State10, the
region also produces 5.5 mn metric tonnes per annum
(MTPA) of Soyabean, 1.9 mn MTPA of Pulses, 1.1 mn MTPA
of Paddy and a variety of other fruits and vegetables11. The
central location could also enable ease of distribution which
is key determinant for Agro and Food processing industries.
7.
Department of Agriculture; GoM, KPMG in India analysis
8.
Infrastructure Statistics of Maharashtra State, Directorate of Economics and Statistics, GoM; KPMG in
India analysis
9.
MIDC
Crop
Average Production (MTPA)
Cotton
6.2
Soya bean
5.5
Pulses
1.9
Paddy
1.1
Oranges
0.7
10. Vidarbha Economic Development Council (VED)

11. MIDC
Central location acts as a fillip for Logistics players

Further, given its central location, Vidarbha could also be an ideal place for logistics operations.
The region is well connected to all the corners of the country through rail, road and air. In addition,
Nagpurs international airport, presence of the Container Corporation of India (CONCOR) depot and
the completion of the MIHAN project could potentially make it an international cargo hub.
Knowledge-based sectors can benefit from the educational and institutional base
Sectors such as IT/BPM and Pharmaceuticals which are heavily dependent on their human resource
assets can tap the regions educational and institutional base.
Vidarbha Education Profile

Category
Number of Institutes
Intake Capacity
Engineering
220
57,990
Vocational Skills
470
70,700
Management
68
5,850
Tourism potential in emerging and niche areas

Vidarbha also holds the potential to become one of the most popular eco tourism destinations in the
country. Known as the Tiger Country, the region dotted with scenic locations has three quarters of
Maharashtras forest resources12 and is home to 4 out of the 5 National Parks of the State13.
In addition, medical tourism has emerged as a business possibility in districts such as Nagpur,
Ramtek, Sevagram, Amravati. The region also has considerable scope for religious and spiritual
tourism14.
Mineral resource base for Mining related sectors
Endowed with mineral resources such as coal, limestone, iron ore and manganese, Vidarbha holds
approximately two-thirds of Maharashtra's mineral resources15. Chandrapur district alone accounts
for about 29 percent of the value of total mineral production in the Maharashtra15. Hence, there
exists an investment potential for mining related sectors which is yet to be tapped.
Vidarbha Mineral Deposits

Minerals
12. Infrastructure Statistics of

Maharashtra State, Directorate
of Economics and Statistics,
GoM; Annual Administration
Report 2010-11, Forest
Department, GoM; KPMG in
India analysis
13. Vidarbha Economic
Development Council (VED)
14. MIDC
15. Infrastructure Statistics of
Maharashtra State, Directorate
of Economics and Statistics,
GoM; KPMG in India analysis
Deposits (mn tonnes)
Key Districts
Coal
5,530
Chandrapur, Nagpur, Yavatmal, Wardha
Lime Stone
1,368
Chandrapur, Yavatmal, Gadchiroli, Nagpur
Granite
207
Bhandara, Chandrapur, Nagpur, Gadchiroli
Iron Ore
185
Gadchiroli, Gondia, Chandrapur
Dolomite
61
Yavatmal, Nagpur, Gadchiroli
Manganese
21
Bhandara, Nagpur
Kainite, Selimanite
Bhandara
Pyrofilate
Chandrapur, Bhandara
06
Advantage Vidarbha
SWOT analysis for Vidarbha

Based on Investment drivers
Developing a conducive atmosphere for industrial development is the key for

any region looking to fulfill its economic potential. The following Investment
drivers are the key determinants which are sought after by investors:
Investment Drivers: Determinants of Economic Development

Investment drivers
Government policy
support
Investments made
Land and Physical
Infrastructure
Social Infrastructure
Material resources
availability
Human resources
availability
Rationale

Government as well as private investments made in the past define the economic significance of a region.
Due note has to be taken that adequate land is available for setting up industrial units in the region.
Consumption factors
Strategic Government support in the form of investorfriendly policies helps in creation of an adequate business
environment.
In addition, facilitation of physical infrastructure services which includes power, transportation/logistics and
telecommunication is also vital.
Social infrastructure which covers education, healthcare and entertainment facilities have a direct impact on the
quality of life and hence determine a regions competitiveness.
The available material resources (mineral, forest and agriculture resources) have an impact on the cost of
production and consequently the profitability of the business.
Optimum utilization of the available material resources is dependent on the quality of human resources available
in the region.
It is also important that the manpower is available at competitive rates.
Economic indicators such as GDP and per capita income are key factors for consumption oriented industries such
as agro and food processing.
Source: KPMG in India analysis
A SWOT analysis of Vidarbha undertaken by KPMG in India on the aforementioned aspects outlines why Vidarbha offers
adequate investment opportunities for various industries.
SWOT Analysis: Vidarbha

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Strengths
1. Availability of land and water for industrial usage16

Given the dearth of industrial land with basic infrastructure facilities

at affordable prices in Mumbai, Pune and other developed areas of
the State, Vidarbha could be considered as an ideal destination on this
point.

The region has over 3000 ha. of ready industrial land having
necessary infrastructure facilities like roads, water supply, etc.
90 Industrial areas 38 Major Industrial Areas and 52 Mini

Industrial Areas.
Industrial estates under development Additional Butibori,

Additional Amravati, Chandrapur.
The region has a total water reservoir capacity of 5,607 mn m3.
GoM has earmarked about 9300 ha. for the development of

industrial township18.
The Central Government has proposed to set up National

Investment and Manufacturing Zone (NIMZ) in Kuhi and Umred
Taluka of Nagpur district. The proposed NIMZ is third of its kind
in Maharashtra19.
Under a scheme of the Union Ministry of Agriculture (National

Horticulture Mission), Maharashtra State Agriculture Marketing
Board (MSAMB) will develop a terminal market yard in Nagpur20.
3. Adequate power generation capacity

2. Government support
The State Government is taking several initiatives to support
Industries setting up units in the region would be able to benefit

owing to the availability of adequate electricity in Vidarbha.

Vidarbha has adequate power generation capacity. As of FY2011,

the region accounted for 48.7 percent of the installed thermal
power generation capacity of the State. However, the total
power consumption for the region was about 13 percent21.
Additional capacity of 86,400 megawatt (MW) is under

installation22.
economic and industrial development of Vidarbha region.

Number of special incentives for industries that invest in

Vidarbha under the States New Industrial Policy, 2013.
45 percent equity support for new cooperative spinning mills in

Vidarbha17
Driving IT investments through the States IT/ ITES policy 2009

which focuses on tier-II cities.
16. MIDC
17. Textile Policy 2011-2017, GoM
18. Vidarbha Industries Association
19. Ministry of Commerce and Industry, GoI
20. Set up Terminal market at Nagpur: VEDC, The Economic Times, 16 January 2012
21. Infrastructure Statistics of Maharashtra State, Directorate of Economics and Statistics, GoM; KPMG in India
analysis
22. 132 power units to turn Vidarbha into environmental graveyard, The Economic Times, 5 June 2012
Advantage Vidarbha
08
4. Educational and Institutional base

Presence of several educational institutes in the region ensures
5. Rich natural resources - Yet to be tapped

Vidarbhas inherent strengths, in terms of natural resources, could
adequate availability of fresh talent in the region

result in lower costs of production and increased profitability for

certain industries that can use these resources as input material.
Vidarbha has 220 Engineering, 470 Vocational Skills and 68

Management institutes with an aggregate student intake
capacity of ~0.14 mn23.
Literacy rate of Nagpur as well as Amravati divisions are above

the State average of 82.9 percent.
Presence of numerous Government and private research &

training institutions like NEERI, CICR, NPTI training institutions,
etc24.
Vidarbha holds approximately two-third of Maharashtra's

mineral resources and three quarters of its forest resources25.
The districts of Bhandara, Chandrapur, Gadchiroli, Nagpur and

Yavatmal are well endowed with mineral resources such as coal,
manganese, iron ore, limestone, granite etc26.
Vidarbha accounts for nearly 1/3rd of the 7.5 mn bales of cotton

produced in the State in FY201127.
The region is the largest producer of oranges in the State23.
The region also produces 5.5 mn MTPA of Soyabean, 1.9 mn

MTPA of Pulses and 1.1 mn MTPA of Paddy26.
Weakness
1. Specific policies targeted at attracting value
adding industries28

2. Migration of skilled labour28

The dearth of value-adding industries and employment opportunities

has hindered Vidarbhas further economic development.

Vidarbha has been unable to attract industries like Automobiles

and Pharmaceuticals that have considerable venderdevelopment possibilities.
In addition to employment, development of value-added

industries will have a spiral effect and lead to development of
ancillary industries which can further create opportunities for
Micro, Small and Medium Enterprises (MSMEs).
Skilled labour migration can prove to be a hindrance to the economic

prospects of the region.

Talent is available in the region. However, experienced

managerial and skilled talent is in relatively short supply as
people prefer to migrate to larger cities in Maharashtra and
other adjoining States.
Opportunity
1. Improving road, rail and air connectivity
2. Cargo hub at Nagpur
Efforts are being made to attract investors by improvement of the

regions transport infrastructure.

Vidarbha regions road connectivity has improved during the

last decade. During 2000-2011, it met 75.15 percent of its road
construction target as compared to the target achievement of
64.96 percent during 1981-200029.
As of FY2011, Vidarbha has 32.93 percent of total railway

network of the State. All major train routes pass through Nagpur
which is well connected to almost all the cities in the country.
Other urban centers of the region such as Amravati and Akola
are also well connected by rail30.
In terms of total passenger traffic, Nagpur International Airport

is the 17th busiest in India. While domestic passenger traffic
increased by 14.8 percent per annum in FY2012, international
passenger traffic witnessed an increase of 4.1 percent31. The
Maharashtra Airport Development Company Limited (MADC)
is also developing airports at Gadchiroli, Chandrapur and
Amravati32.
The impending GST regime, and central location has the potential to
transform Vidarbha into a cargo hub for the country.

MIHAN project is aimed at developing the existing airport of

Nagpur as an international passenger and cargo hub airport.
A Multi product Special Economic Zone (SEZ) abutting the
boundary of the airport is also being developed.21 MIHAN
project would open new opportunities for domestic, export
oriented industries and IT sector.
A USD 100 million maintenance repair overhaul (MRO) project of

aircraft major Boeing is underway in MIHAN33.
As of FY2011, 284 godowns are present in the Vidarbha region.

These account for 26.4 percent of the total capacity of the
State34.
23. MIDC
29. Govt neglected village roads in Vidarbha, The Times of India, 5 January 2013
24. Phronesis Strategies; KPMG in India analysis
30. Infrastructure Statistics of Maharashtra State, Directorate of Economics and Statistics, GoM; Emergent
Nagpur: An IT/ITES Destination, pManifold, February, 2012; KPMG in India analysis
25. Infrastructure Statistics of Maharashtra State, Directorate of Economics and Statistics, GoM; Annual
Administration Report 2010-11, Forest Department, GoM; KPMG in India analysis
31. Airports Authority of India
26. MIDC
32. Economic Survey of Maharashtra 2011-12, Directorate of Economics and Statistics, GoM
27. Department of Agriculture; GoM, KPMG in India analysis
33. Boeing's MRO to become operational by Q2 next year, The Hindu Business Line, 17 March, 2012
28. Vidarbha Industries Association; KPMG in India analysis
34. Infrastructure Statistics of Maharashtra State, Directorate of Economics and Statistics, GoM; KPMG in
India analysis
3. Developing social infrastructure

In terms of commercial real estate, Nagpur city has been rated

among the top 10 emerging business destinations in India36.
Prominent developers like Kalpataru and Rustomjee, and
pan-India developers such as Mantri Realty, Godrej Properties,
Mahindra Lifespaces, L&T, Tata Realty and DLF have launched
various real estate projects in Nagpur37.
Vidarbha is home to 4 out of the 5 National Parks in

Maharashtra38.
The region has potential to attract industries and the necessary talent
given its fast developing social infrastructure base.

The region has 20 percent of States hospitals with a capacity of

29732 beds i.e. 17 percent of the States total capacity.
The region has close to 270 accommodation units with 5,094

rooms accounting for 7.4 percent of the States total room
inventory35. The region also has a few luxury hotels.
Threats
1. Aggressive policies of neighboring States and competition from developed areas of Maharashtra

Vidarbhas investment prospects could also be hindered if investors

perceive that neighboring regions/States offer a better cost effective
environment for the industry to flourish in.

Despite being rich in cotton, only 30 percent of cotton produced

in Maharashtra is processed locally and rest is sold outside the
State or exported39.
The competitive and aggressive policies of neighboring States

have elevated their position in the textile industry value chain.
Furthermore, investments in MIDC industrial units of Vidarbha

have grown at a CAGR of 6.4 percent during FY07-FY11. In
comparison, the State has witnessed a CAGR of 26.3 percent40.
Despite its inherent strengths and a rich resource base, it is felt that Vidarbha
has not been able to attain its full potential. Major infrastructure projects such as
MIHAN Butibori and Amravati Industrial Estates were expected to deliver the thrust
for industrial transformation. As per latest reports many companies are at various
stages of development. Some have taken land but are yet to start construction
while many have invested but are uncertain of their future plans. An argument
against this is the current economic cycle. Many newer investments here are from
the Aviation and IT/ ITeS space which are facing economic headwinds.
The question arises Why are such projects proceeding by fits and starts?
Are investments shifting to neighboring States/regions?
Is skilled labour migration a deterrent for investors?
Is the economic slowdown to be blamed for dampened investments?
Is it a case of lack of co-ordination between the concerned stakeholders?
Perhaps, the cumulative impact of the above mentioned factors have to an
extent, hindered the regions growth prospects in the past. However, economic
transformation of Vidarbha could take place provided the concerned stakeholders
come together to develop an integrated and cohesive approach to support the
sectors/industries which can be potentially developed in Vidarbha.
35. Tourism Survey of Maharashtra, Ministry of Tourism, GoI; KPMG in India analysis
36. Top 10 Emerging Business Destination in India, Cushman and Wakefield, October, 2012
37. Emergent Nagpur: An IT/ITES Destination, pManifold, February, 2012
39. MIDC; KPMG in India Analysis
40. Economic Survey of Maharashtra for 2007-08 and 2011-12; KPMG in India analysis
10
Advantage Vidarbha
Sector analysis for potential investors
Based on the above mentioned investment accelerators, the industry attractiveness could be mapped for Vidarbha region as follows:
The ratings are done on a scale of 1 to 5. With 5 being the highest and 1 being the lowest rating.
Investment
Drivers
Government
Policies
Investments
made
Physical
Infrastructure
Sectors
Availability &
Access to raw
material
Labour
Social
Infrastructure
Textile

45 percent of
equity support for
new cooperative
spinning mills41.
10 percent capital
subsidy for new
textile units41.
Presence of
textile players
such as Raymond,
Indorama,
Indoworth,
Gimatex, PeeVee
Textiles, Mohata
Mills, etc42.
500+ ha. of land is

been sanctioned
for textile zones
in Vidarbha43.
The region
accounts for
nearly onethirds of the
States cotton
production44.
Availability of
adequate skilled
labour.
Low cost of living
Low cost of living
Low cost of living
Logistics

Agro & Food

processing

MIHAN has
the potential to
transform the
region into a cargo
hub.
USD 100 mn
MRO center
is being built
by Boeing at
Nagpur45.
Region is well
connected
through road, rail
and air.
Nagpur is the
geographical
center of the
country (Zero
mile city)43.
Availability of
unskilled labour
at reasonable
wage levels
GST regime will

open further
opportunities.
Necessary policy
and regulatory
support provided
by the Government
for agro & food
processing
industries.
Presence of
players such
as Ruchi Soya,
Haldiram, Murli
Agro, Dinshaw,
etc43.
United Nations
Industrial
Development
Organisation
has identified 6
food processing
clusters in the
region46.
The region is the

largest producer
of oranges in the
State47.
Availability of
skilled labour
impacted by
migration
The region also

produces 5.5
mn MTPA of
Soyabean, 1.9
mn MTPA of
Pulses and 1.1
mn MTPA of
Paddy43.
41. Textile Policy 2011-2017, GoM
45. Boeing's MRO to become operational by Q2 next year, The Hindu Business Line, 17 March, 2012
46. United Nations Industrial Development Organisation (UNIDO)
43. MIDC
44. Department of Agriculture; GoM, KPMG in India analysis
Investment
Drivers
Government
Policies
Investments
made
Physical
Infrastructure
Availability &
Access to raw
material
Sectors
Labour
Social
Infrastructure
Tourism

Mining
& Power
equipments
Auto & Auto

ancillary

Government has
made Nagpur as
the Tiger gateway
and promoted
wildlife and
eco-tourism in the
region.
However, there
is room for
improvement in
these policies.
Necessary policy
support provided by
State Government
and regional
authorities.
State Policy
initiatives to
promote Auto and
Auto ancillary
industries need to
be strengthened.
Large luxury
hotels have been
planned in MIHAN.
Additionally,
leisure hospitality
companies are
eyeing tourist
spots such as
Tadoba for setting
up resorts and
holiday homes.
132 power plants

are likely to be
added52.
Vidarbha has the

sizable power
equipment
(transmission
related)
manufacturing
capacity53.
Mahindra and
Ashok Leyland
have set up works
(Tractor and
trucks)55.
The region is
well connected
through road, rail
and air.
Well connected
logistics network.
Availability of
commercial real
estate space at
Nagpur.
Availability
of developed
industrial land.
Three-quarters of
the States total
forest cover lies in
the region48.
Availability of
unskilled labour
at reasonable
wage levels
The region boasts

4 out of 5 National
Parks in the
State49.
Vidarbha holds
two-thirds
of States
total mineral
resources54.
Availability of
unskilled labour
at reasonable
wage levels.
The region
accounts for
7.4 percent of
States total room
inventory50.
CIDCO is
developing new
9300 ha. township
near Nagpur51.
Low cost of living
Low cost of living
The region
accounts for nearly
half of thermal
power capacity of
the State54.
Engineering skills
available.
48. Infrastructure Statistics of Maharashtra State, Directorate of Economics

and Statistics, GoM; Annual Administration Report 2010-11, Forest
Department, GoM; KPMG in India analysis
50. Tourism Survey of Maharashtra, Ministry of Tourism, GoI; KPMG in India

analysis
52. 132 power units to turn Vidarbha into environmental graveyard, The
Economic Times, 5 June 2012
51. Vidarbha Industries Association
Availability of
unskilled labour
at reasonable
wage levels.
Availability of
skilled labour
impacted by
migration.

54. Infrastructure Statistics of Maharashtra State, Directorate of Economics
and Statistics, GoM; KPMG in India analysis
55. Maharashtra IT/ITES Policy (2009)
10
12
Advantage Vidarbha
Investment
Drivers
Government
Policies
Investments
made
Physical
Infrastructure
Availability &
Access to raw
material
Sectors
Labour
Social
Infrastructure
IT/BPM

Pharma &
Fine chemical
States IT/ITeS
Policy (2009)
could drive IT
investments in
Nagpur.
Additional FSI
for IT/ITES units
with 10 percent
premium56.
MIDC to develop
2800+ ha. of
chemical zone in
Amaravati55.
Three IT parks in
Nagpur. Three
more in process of
setting up55.
Central location
and connectivity
by air, rail and
road.
600 hectares of
space reserved in
MIHAN for the IT
sector57.
No significant
investment
Commercial office
space available at
affordable rates.
Limited availability
of experienced
managerial talent.
Availability of
skilled labour
impacted by
migration.
Well connected
logistics network
Limited raw
material
availability
Availability of
skilled labour
impacted by
migration
Good literacy rate.

Availability of
affordable houses
and Quality
healthcare
facilities.
Lower attrition rate
than Tier-1/Tier-2
cities in India.
Low cost of living
Very Low
Low
Average
High
Excellent
55. Maharashtra IT/ITES Policy (2009)

56. MIDC
57. KPMG Global Frontiers: Nagpur; April, 2010
Regulatory Scenario
Government Policy and Support
Maharashtras new industrial policy (2013-18)

Incentives for Vidarbha
Policy and regulatory support to the agro and

food processing sector
Economically less developed regions such as Vidarbha have

received interest in the New Industrial Policy of Maharashtra
announced in the first week of January, 2013. Some of the
key benefits offered will be58:
As per the Agricultural policy of Maharashtra (2010), the state

provides the following incentives for the industry:
Waiver on electricity duty, stamp duty, and local taxes like

octroi.
Micro, small and medium industries (MSMI) will be

offered a concession of one rupee per unit in electricity
tariff if they set up units in backward regions such as
Vidarbha and Marathwada.
MSMIs will also be given a subsidy of 5 percent on capital

investment in talukas which are classified as C and D for
development purposes.
Incentive up to 90 percent of permissible capital

investment limits to MSMEs in Naxal areas.
Refund equivalent to VAT payable as well as input tax

credit.
Reimbursement of 50 percent of VAT, instead of 25

percent
5 percent interest subsidy on term loans for fixed capital

investment for 5 years
Encouraging IT investments in Nagpur
IT investments in Nagpur
As per the ITES policy 2009 of the Maharashtra
government59:

There will be a focus on driving IT investments in Nagpur,

Nashik, Aurangabad and low Human Development Index
(HDI) districts to build on their potential and generate
employment.
Additional floor space (FSI) will be provided to all

registered IT/ITES units with 10 percent premium in Nasik,
Aurangabad and Nagpur Districts and without premium in
Low HDI Districts.
Additionally, the policy will also permit the setting up of

Integrated Industrial Areas (IIAs). These will be set up in the
SEZs which have been de-notified. This move will likely make
more land available for investments.
Other key initiatives

Incentives to boost Vidarbhas textile industry

As per the textile policy of Maharashtra for 2011-17, the

government will provide 45 percent of equity support for
new cooperative spinning mills in Vidarbha/Marathwada
and North Maharashtra.
10 percent capital subsidy scheme for new textile project

in Vidarbha, Marathwada and North Maharashtra.
Interest rate on capital projects will be zero percent for

eligible textile units in Vidarbha, Marathwada, North
Maharashtra, Konkan and D+ Industrial Areas.
The Government of Maharashtra has earmarked area

for the development of industrial townships. City
and Industrial Development Corporation (CIDCO)
is developing a 9,300 ha. industrial township called
Meghdoot offering investment opportunities for housing,
commercial complexes, hospitals and hotels60.
MIDC has taken possession of nearly 60 percent61 of the

area in the Amravati region for the development of a special
chemical zone to attract investments from chemical industry
players which will be provided with all the facilities and
amenities.
58. Sops for units in Vid, Naxal areas, The Times of India, 4 January 2013
59. Maharashtra IT/ITES Policy 2009
60. New state industrial policy to facilitate townships in SEZs, The Economic Times, 4 January 2013
61. MIDC
14
Advantage Vidarbha
Conclusion
Given the economic, social, educational and administrative base, it is evident

that Vidarbha is a case of unmet potential. Domestic as well as foreign investors
could eye making investments in various sectors. Its rich resource base makes
it a prospective destination for manufacturing sectors such as Textiles, Mining,
Power, Agro & Food Processing and Pharmaceuticals and Fine Chemicals. At the
same time, service sectors such as Logistics, Tourism and IT/ITES also have the
potential to flourish in the region.
The following are some small yet vital aspects which need to be considered
towards the achievement of the economic transformation goal. By encompassing
these into Vidarbhas vision document, the stakeholders could ensure integrated
and holistic development.

Set up a dedicated agency which provides a fillip to Vidarbhas economic

development.
District level panels should set up for each of the potential sectors/industries
identified.
Single-window clearance system for companies belonging potential sectors/

industries identified.
Establishment of comprehensive backward and forward linkages for the

identified sectors/industries will enable them to become the key drivers of
industrial and economic development of the region.
In addition to the industrial incentives offered on a State level, the region

should provide special incentives targeted at investments the identified
sectors/industries to facilitate value-added employment generation and social
infrastructure development.
Address the issues faced by major infrastructure projects such as MIHAN to

bring them back on track at the earliest. Ensure timely completion of such
projects in the future.
The Government must harness the vast potential of the Textile industry by
ensuring that the availability of viability gap funding required towards industrial
unit set up and initial operations.
All stakeholders i.e. the State Government, ULBs, industrial associations

should work in unison to bring economic prosperity to Vidarbha.
A variety of reasons have hindered Vidarbhas prospects in the past. It is about

time that the region gets its due from the concerned stakeholders. The first step
towards this has been taken in the form of Advantage Vidarbha 2013. However,
a Vision Document specifying the road map for economic development of the
region, and the specific role that Government and other stakeholders need to play,
is an immediate necessity.
KPMG in India contacts

Pradeep Udhas
Partner and Head
Markets
T: +91 22 3090 2040
E: pudhas@kpmg.com
Raajeev B Batra
Partner
Risk Consulting
T: +91 22 3090 1710
E: rbbatra@kpmg.com
Sanjay Garg
Partner
Risk Consulting
T: +91 124 334 5027
E: sanjaygarg@kpmg.com
kpmg.com/in
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accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information
without appropriate professional advice after a thorough examination of the particular situation.
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Advantage

Hon'ble Chief Minister

Shri. Prithviraj Chavan

Census of India 2011

SWOT analysis for Vidarbha

Sector analysis for potential

The Vidarbha region, located in the eastern part of Maharashtra, is traditionally

Contribution to Maharashtras area

Population (mn, 2011)

Contribution to Maharashtras population

GDP at current prices (INR bn., 2010-11)

Contribution to Maharashtras GDP

Per capita income (INR, 2010-11)

GDP growth (CAGR, 2008-10)

Orange, Cotton, Soyabean

3/4th of Maharashtras Forest Cover

Major industrial sectors.

Major tourist destinations

Main economic cities of Vidarbha

Akola, Amrawati, Chandrapur & Nagpur

Economic Survey of Maharashtra 2011-12

Vidarbha constitutes 15.6 percent of Maharashtras GDP3,

Vidarbhas economy: A disaggregated picture

GDP at current prices

Per capita income (INR,

GDP growth* (CAGR,

Source: Economic Survey of Maharashtra 2011-12 and 2010-11

Economic Survey of Maharashtra 2011-12 and 2010-11; KPMG in India analysis

From a social development perspective, Vidarbha fares well in terms of the

Vidarbhas demography: A disaggregated picture

Population (mn, 2011)

Literacy rate (%, 2011)

Urban population as % of total population

Source: Census of India 2011

Despite this, it is believed that

Vidarbha getting highest investment', The Times of India, 31 July 2010

An emerging investment destination

Vidarbhas latent potential

Vidarbha Industrial Estates

Source: Maharashtra Industrial Development Corporation (MIDC)

Raw material availability for Agro and Food Processing

Vidarbha Crop Production

Department of Agriculture; GoM, KPMG in India analysis

Average Production (MTPA)

Source: Maharashtra Industrial Development Corporation (MIDC)

10. Vidarbha Economic Development Council (VED)

Central location acts as a fillip for Logistics players

Vidarbha Education Profile

Source: Maharashtra Industrial Development Corporation (MIDC)

Tourism potential in emerging and niche areas

Vidarbha Mineral Deposits

12. Infrastructure Statistics of

Deposits (mn tonnes)

Chandrapur, Nagpur, Yavatmal, Wardha

Chandrapur, Yavatmal, Gadchiroli, Nagpur

Bhandara, Chandrapur, Nagpur, Gadchiroli

Gadchiroli, Gondia, Chandrapur

Yavatmal, Nagpur, Gadchiroli

Source: Maharashtra Industrial Development Corporation (MIDC)

SWOT analysis for Vidarbha

Developing a conducive atmosphere for industrial development is the key for

Investment Drivers: Determinants of Economic Development

Source: KPMG in India analysis