Investing In the Heart Of India: How The MP Government Has Improved Ease Of Doing Business

Since coming to power last December, the Congress government of Madhya Pradesh, led by Chief Minister Kamal Nath, has consistently focused on speeding up development in the state. Among other plans, making MP an investment hub in the country is a key focus area for the new government.

In fact, the government machinery is currently in overdrive planning an investment summit in the state. Scheduled for October 18, 2019, in Indore, the event, titled ‘Magnificent MP Investors’ Summit’, is a significant step towards drawing investment in the state. The event is not limited to any one sector but targeted at bringing investment across all major industries.

Over the past year, the MP government has implemented several such focused initiatives in its efforts to speed up development and attract investment in the state.

Connectivity

As the second largest state, MP is situated right at the centre of the country and is often referred to as the heart of India. It shares its borders with five other states; and, although land-locked, offers the advantage of connectivity. MP’s rail network is wide, with 550 trains crisscrossing it daily. There are 2,30,000 kilometers of roads, connecting MP to all major business and trading centres of the country. In addition, five airports including an international terminal makes MP a state with unparalleled connectivity. This locational and infrastructural advantage allows it to connect with over 50 percent of the country's population.

Security and Growth

MP is ideal for investors as it’s largely a peaceful state with no security problems. There is a steady growth trajectory – MP’s growth rate has been ahead of the country's average growth rate for quite some time now. In the last ten years, the state has clocked an average growth rate of 9 percent. Apart from this, the state has made significant progress in the infrastructure required for investment. Electricity is in surplus. Educational and vocational institutions, including IIM, IIT, AIIMS as well as engineering colleges

Empowering Agriculture and Agri-Based Sectors

MP primarily remains an agrarian economy with a total cropped area of 22.1 million hectares. It’s the largest producer of soybean, gram, onion and pulses. The state is also the second largest producer of wheat and green peas. Basmati rice from the state accounts for almost 50% of all basmati exports to the US and Canada. MP also has a prominent 1.3 million hectares of area under Horticulture crops such as fruits, vegetables and spices. The state tops the chart when it comes to medicinal plants, and holds a leading position in flowers, spices, and vegetable cultivation in the country. In addition, there are more than 4,000 agricultural co-operatives and 256 agriculture mandis or wholesale markets providing a stable environment and market.

The new state government appears to understand the importance of the agri-based sector, and has, within a short time, executed several agricultural support plans and policy decisions. These decisions range from certification of seeds to easy access to produce. While some decisions pertaining to farm loan waivers have made more headlines, other policies such as access to loans for agriculture have led to greater impact. As a policy initiative, the new state government has also simplified many land use policies. The biggest beneficiaries of these reforms are small and marginalised farmers and landowners.

Infrastructure for Growth

The current MP government is focused on creating an ideal environment for businesses and industries to flourish in the state. Industrial townships, such as Mandideep, Malanpur, Borgaon, and Pithampur, have been strengthened through various policy decisions in the past one year. This has helped solve longstanding issues, such as the lengthy processes involved in obtaining necessary permissions and compliances. The government has also announced the creation of four green-field textile industry areas and a non-leather and pharma park which are fast becoming centres of industrial units.

The state is also providing technical support across different verticals; for example, under the 'Ease of Doing Business' initiative, a Single Window System has been created. A portal, called Invest MP, has brought all compliance related work online, helping save time and fix accountability.

Priority Sectors

The state government has marked a few sectors—such as the textile industry—as priority sectors, in order to further strengthen their position through fresh investment. MP is famous worldwide for its Chanderi cotton, Maheshwari sarees, and silk textiles. The state presently houses around 60 large textiles mills and thousands of looms and spindles, which collectively provide employment for the youth. In addition to these, the government has announced several incentive packages for the textile industry, which are over and above the schemes and incentives announced for other industries.

Apart from larger sectors, the state government has also simplified land use rules and reduced the red tape for micro and small units in the state. Sub-leasing and allotment of small land areas for commercial purposes has become easier now. For quick resolution of any land use disputes, the state government has established a Micro and Small Enterprise Facilitation Council.

Support for Startups

The government launched the Madhya Pradesh Incubation and Startup Policy to promote startups in the state. Apart from funding and other assistance, incubation centres also act as ‘plug-and-play’ centres, wherein startups can begin operations in an environment which caters to all their needs without incurring huge infrastructural costs. In addition to this, two state-of-the-art, 200-seater startup incubators have been announced. The government is also in plans to set up 60 incubator partner networks for financial assistance, and a Rs 60-crore seed fund and investment fund has been planned for the same.

A Magnificent Promise for Investors

The MP state government is emphasising on agri-food processing, auto, pharma, IT, warehouses-logistics, textile and tourism – as potential investment sectors. As part of the summit in Indore on October 18, 2019, CM Kamal Nath and his government have invited industrialists and business leaders from across the country.

Finally, political stability and a continuity in policy making are both crucial for attracting new investors. In MP, these factors appear positive as the state government aims to continue creating an optimistic environment for businesses over the next four years. If the same trajectory continues in terms of policy and environment, the heart of India may well also become the engine driving growth and progress in the nation.

*This is in partnership with BloombergQuint Brand Studio