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: Driving up to the verdant Nainital hill resort from a hot and muggy capital Delhi, the first sight that greets a visitor on entering Uttaranchal is swathes of green fields in the Terai region. Less than 25 km further, on both sides of the road, the greenery gives way to steel and concrete. Dusts swirls in the air, stacks of bricks and broken rock fight for space with mounds of sand to be used in construction, and hastily-put-up tinsheds house cement sacks in thousands. Trucks towing ready-to-use concrete jam roads coming apart with overuse.
Welcome to Pantnagar, 29.03 degrees latitude and 79.47 degrees longitude, the new Indian destination for manufacturing companies. Leading corporate India’s charge into Pantnagar is Tata Motors, which has acquired 1,100 acres, a third of land under development in the nascent industrial town. India’s largest auto company is pumping in Rs 2,000 crore to set up an unit that will roll out 2.25 lakh units of its popular minitruck Ace. Giving the Tata unit company will be 40 auto ancillary units including Sundaram Fasteners and TVS-Delphi.
The newfound energy in Pantnagar, until now known as home of Govind Ballabh Pant University of Agriculture & Technology, springs from a generous decision by New Delhi granting hill states Himachal Pradesh, Uttaranchal and Sikkim concessions starting 2002: 100% excise exemption for 10 years, 100% income tax exemption for the five years of operation and 30% for next five years, and concessional central sales tax of 1% for five years. Investments have not stopped since.
The first mover, Baddi, a Himachal town 40 km away from Chandigarh, has so far attracted Rs 18,000 crore in investments. In Uttaranchal, companies are pumping in Rs 4,000 crore in Pantnagar and Rs 2,500 crore in Haridwar, according to Alok Kumar, managing director, State Industrial Development Corporation of Uttaranchal Ltd, or Sidcul, a local public sector unit that works to encourage investment in the state. (See table.)
So, do the concessions given to companies investing in the hill states make up for increased inventory costs, additional transportation charges, training expenses for labour and other sundry costs associated with translocation of managers to the sleepy towns? For companies operating out of Pantnagar and Haridwar, it has been a mixed experience so far. Not only have the excise sops added to profitability, the use of new technology and higher levels of automation have led to high productivity levels. “Output per employee...
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