Make in Odisha

Odisha is one of the fastest growing economy of the country. Odisha has transitioned to middle income category states in terms of Gross State Domestic Product (GSDP). Odisha is on course to become USD 1 trillion economv by 2030. Odisha has over 5,30,000 units and 113 industrial estates. Industry sector contributes around 41 per cent of GSDP. Odisha has received over Rs. 10 lakh crore of letter of intent of investment in Make in Odisha Conclave 2022. The state has become favourite destination for investment and industrialisation.

Odisha is endowed with vast resources of a variety of minerals and occupies a prominent place in the country as a mineral rich State. Abundant reserves of high-grade Iron ore, Bauxite, Chromite, Manganese ore along with other minerals such as Coal, Limestone, Dolomite, Tin, Nickel, Vanadium, Lead, Graphite, Gold, Gemstone, Diamond, Dimension & Decorative Stone etc. are extensively available in the State. This has opened up immense possibilities for locating mineral based industries for manufacture of Steel, Ferro-alloys, Cement, Alumina/Aluminum, Refractories, Thermal Power etc., along with setting up other auxiliary and ancillary downstream industries.

Odisha is one of the most mineral rich states in India. Key minerals found in the state are iron, coal, bauxite, manganese, nickel, chromite, limestone, dolomite, graphite, decorative stones, beach sand, China clay, tin ore, etc. For the record, Odisha has about 28% of India’s iron ore, 24% of coal, 59% of bauxite and 98% of chromite.

Odisha accounts for over 59% of India’s bauxite reserves, making it an ideal location for setting up aluminium and aluminium-based companies. The state ranks first in the country in terms of both production capacity and actual output of aluminium.

Odisha is one of the favoured investment destinations for domestic and international iron and steel players as well as one of the largest producers of iron and steel in India. The total production of iron ore in Odisha was recorded to be 80.87 million tonnes during 2015-16.

Between 2004-05 and 2015-16, Gross State Domestic Product (GSDP) expanded at a compound annual growth rate (CAGR) of 10.25% to US$ 50.8 billion whereas the Net State Domestic Product (NSDP) expanded at a CAGR of 10.37% to US$ 44.92 billion.

In the energy sector, independent power producers (IPPs) have invested Rs. 32,991 crore on proposed coal-fired projects after entering into MoUs with the state government. Among the 28 power companies, only three – Sesa Sterlite, Jindal India Thermal Power and GMR Kamalanga Energy Ltd – have commenced commercial production in the last 15 years. The IPPs have a combined capacity of 37,000 MW.

In the steel sector, out of Rs 222,862.63 crore investment proposed in 50 projects, Rs. 109,638.90 crore has been invested till today, said Mishra. Then, Rs.66,444 crore has been proposed in the aluminium sector by three companies – Vedanta, Aditya Aluminium and RSB Metaltech.

Odisha is amongst the top ten states accounting for the highest number of MSME enterprises. Odisha government also launched its startup policy 2016 that aims to create 1,000 startups in the state by 2020. The policy will aim at providing incentives, support and assistance to start ups at all stages of development including idea or prototype stage, commercialization stage as well as the marketing stage.

The state has sector-specific policies for IT and micro, small and medium enterprises. The state government has constituted “Team Odisha” to help with investment promotion.

The state government has constituted “Team Odisha” to help with investment promotion. The Odisha Industry is going places with excellent industrial infrastructure and presence of top national and international companies. The state has witnessed an industrial upsurge due to the favorable industrial atmosphere in the state. The state government of Odisha has invited major industrial houses of the country and abroad to invest in the state. It has achieved a considerable amount of success and several prime companies have set up their plants in the state. The industrial structure of Odisha mainly consists of four categories: Medium industries, Cottage industries, Large scale heavy industries and Large scale industries.

Mineral Based Industries

Occupying an important position on the country’s map, Odisha’s rich mineral reserves constitute 28% Iron ore, 24% coal, 59% Bauxite and 98% Chromite of India’s total deposits. The state’s comparative advantage on this account has attracted the attention of many mining and metallurgical companies. In Odisha, industrialization started shortly after independence. The oldest mines in the state were coalmines at Talcher and Ib valley. After nationalization of coal in 1975 and the national policy on energy sector, many power plants have come up in the state. Major industries in Odisha at the moment include an integrated steel plants at Rourkela, Kalinga Nagar, Jharsuguda and Angul  NALCO (National Aluminium Company Ltd.) with its Alumina Plant at Damanjodi & Aluminium smelting complex at Angul; Thermal power plants Talcher & Ib valley area etc. in addition to Fertilizer plants, Pulp and paper industries, Ferro alloys plants, cement plants etc. elsewhere in the state. The industrial growth in the state has mostly taken place in the areas where raw materials, water and power are available. The state can be divided into twelve industrially active zones / areas based on minerals namely:

• Rajgangpur Area (Iron & Steel, Sponge Iron, Cement, Secondary steel. Melting and rolling mill & refractories and chemicals).
• Ib valley area (Thermal power, Sponge iron, refractories, and coal mines)
• Hirakud area (Aluminum & rolling mills)
• Talcher-Angul area (Thermal power, Aluminum, Coal washeries, Ferro alloys, Coal mines).
• Choudwar area (Ferro alloys, Thermal power, pulp and paper, coke oven)
• Balasore area (pulp and paper, ferro alloys, rubber industries)
• Chandikhol (stone crusher, coke oven)
• Duburi (Integrated steel, ferro alloys, rubber industries)
• Paradeep area (fertilizer, sea food processing, petroleum coke)
• Khurda Tapang area (stone crusher)
• Joda Barbil area (iron, sponge iron, ferro alloys, iron ore crusher, mineral processing).
• Rayagada area (pulp and paper, ferro alloys).

Keonjhar is one of the premier minerals producing districts in Odisha. The district occupies a prominent place in the mineral map of the Country. Iron ore formations occupy most part of the district which can be traced from the Bihar boarder in the north to the Jajpur boarder in the South. Extensive deposits of Manganese ore are found in Thakurani and Joda East hills of Barbil. The two important mineral based industries in the district are the “Kalinga Iron Works” Barbil and the “Ferro-Manganese Plant”, Joda. Good deposits of Chromite, an important and strategic mineral are found in Boula area near village Nuasahi of Anandapur subdivision. There are also some other mineral deposits in the district such as Quartzite, Bauxite, Gold, Pyrophillite and Lime stone.

Kalinga Iron Works, Barbil: The Kalinga Iron Works was initially named as the Kalinga Industries in the private sector with technical collaboration of M/S. Fried Crupp of West Germany having one low shaft furnace with a capacity to produce 30000 M.T. of pig iron per annum. It was taken over by the Industrial Development Corporation of the Government of Odisha on 01st April 1963. It has since been named as “Kalinga Iron Works”. Presently the Kalinga Iron Works produces 100000 M.T. of foundry grade pig iron by three low shaft furnaces. Besides, it has a power generating plant of its own which supplies power to the GRIDCO, Odisha to the extent of 2.3 M.W. This industry was running with a capital investment of Rs.1,011.27 lakh in 1985. At present 1,320 persons (both skilled and unskilled) are working in the unit. Under the diversification programme Kalinga Iron Works is also giving to undertake the production of Ductite Iron Spun pipes in close collaboration with TOR-STEEL and MECON. Ductite Iron Spun pipes have a tremendous marketing potential in foreign countries.

Ferro-Manganese Plant, Joda: The Ferro-Manganese plant at Joda was taken over by the Tata Iron And Steel CoLtd. in December 1957. It was established with a capital investment of Rs.3000 lakhs in 1985. At present 391 employees are working in the unit. The plant is primarily meant for supplying Ferro-Manganese for TISCO’s own plant at Jamshedpur. Besides the reserves of major minerals like chromite, nickel, bauxite, iron-ore and coal; other minerals like china clay, fire clay, limestone, quartz, precious and semi precious stones, copper, manganese, graphite, vanadium etc. are also available in the state. Iron ore is abundantly available in the districts of Mayurbhanj, Sundargarh, Keonjhar and Jajpur. While chromite is confined to Jajpur, Dhenkanal and Keonjhar districts, manganese deposits are available in Sundargarh, Keonjhar, Rayagada and Balangir districts and Dolomite is available plentily only in the district of Sundargarh. There are two major coal bearing area in the state which are currently being exploited namely Talcher and the Ib valley.

Aluminium industries

Odisha is the highest producer of aluminium in the country today. To further enhance the production of aluminium, NALCO has planned to expand its aluminium smelter in Angul district by 0.5 MMTPA at an estimated investment of INR 10,000 crore. Besides, it is also expanding its alumina refinery at Damanjodi from 2.275 MMTPA to 3.275 MMTPA with an investment of more than INR4,000 crore. The State also has seen private sector large scale investments from large companies in the sector including Hindalco and Vedanta. Hindalco Industries Limited is setting up a 0.375 MMTPA Aluminium Flat Rolled Product plant at Lapanga with an investment of INR5,000 crore. Similarly, Vedanta is expanding its alumina refinery capacity by 5 MMTPA at Kalahandi and its aluminium smelter capacity by 0.2 MMTPA at Jharsuguda with an investment of INR 7,500 crore which will create employment for about 7,700 people. To promote downstream and ancillary industries, NALCO has committed 50,000 tonnes of hot metal to the Aluminium Park at Angul, which has been established in Joint Venture (JV) mode with IDCO. The Park is one-of-its-kind facility in the sub-continent.

Textiles and Apparel

Apparel, being a high employment generating sector, is a focus sector of the State. A dedicated Apparel policy has been promulgated by the State for the development of the sector. As a result of investor friendly policy in this sector, the State has seen significant investments from apparel sector companies in recent times. Shahi Exports has setup an apparel manufacturing unit at Khordha with an annual capacity of 3.6 million pieces. Aditya Birla Fashion has received approval for setting up an apparel manufacturing unit at Rayagada. Besides, a textile park is being developed at Bhadrak. This park is expected to generate significant employment in the sector through development of an ecosystem for synthetic fibres in the State. Due to pro-industrial Policy of the State and investor friendly eco-system created by the state, the industry sector has shown tremendous growth. As per latest data released by CSO, in 2017-18 (P), number of factories in manufacturing and wearing apparels has risen by 33.33% from previous year. Growth of Fixed Capital, Workers and emoluments are increased by 1890.72% (2^nd highest), 613.07% (4^th highest) and 409.32% (3^rd highest) respectively in comparison to previous year.

Chemicals, Plastics and Petrochemicals

Chemicals and Petrochemicals is also one of the identified focus sectors of the State. Indian Oil Corporation is operating a 15 MMTPA refinery at Paradip and is planning to further expand its capacity. Besides, it has also commenced commercial production from Polypropylene unit which will supply raw material to the Plastic Park at Paradip Mono-Ethylene Glycol (MEG) unit and Paraxylene-PTA units which are at different stages of implementation and will help create a large downstream ecosystem for chemicals and textiles sector in the State. The State has also received investment intent from various other national and international companies in the sector.

Food processing including sea food

The State is blessed with ten agro-climatic zones and more than 60 lakh hectares of cultivated land. It is one of the largest producers of rice, vegetables, fruits, sea food, spices, oil seeds and various other crops in the country. Keeping this in consideration, the State has also promulgated an exclusive Food Processing Policy 2016, providing competitive incentives to units setting up in the State. The State has also a conducive ecosystem for investments in the sector in the form of food parks at Khordha and Rayagada and a dedicated sea food park at Deras.As a result, the Gross Value Added in manufacture of food products has increased from INR 49,089 lakhs in 2016-17 to INR 1,48,100 lakhs in 2017-18. Further this has resulted in creation of additional employment of 2,623 number in 2017-18 over 2016-17.

Electronics Manufacturing

A 215 acres ready-to-use dedicated Electronic Manufacturing Cluster has been developed close to Bhubaneswar. An attractive incentive framework of Special Package Incentive Scheme over and above the m-SIPS Programme of Government of India has been promulgated to facilitate investments in this sector. Odisha is emerging as a manufacturing hub of the east as occupies significant place in the mineral map of India producing mineral costs of INR78,754 crore (up to February, 2020), produced more than 50% aluminium in India, major Steel producing state contributing half of steel production in India.

Micro, Small and Medium Enterprises (MSME)

The Micro, Small & Medium Enterprises (MSMEs) contributes significantly to value addition, employment generation, export promotion and overall growth & development of States’ economy. Next to agriculture this sector generates maximum employment with minimum investment. Therefore, the State Government creates adequate space for MSME development in IPR-2015 and also in MSME Policy 2016.

During 2019-20, around 57,651 MSME units were set up with an investment of INR 2659.69 crore, leading to employment generation for 1.63 lakh persons. Altogether 4,49,352 MSMEs have been established with an investment of INR 21,801.51 crore and employment of 16,92,298 persons till March 2020.

Sector-wise disaggregation indicates that repairing services account for the majority share in MSMEs, with almost 62 % share of total MSMEs setup in the State and generating 49 % of the total employment opportunities created through MSME units (Table 3.23). A possible reason for the high concentration of MSMEs in the repairing services can be attributed to challenges related to literacy, skills, opportunities, marketing, credit facility etc., pushing young entrepreneurs to engage themselves in repairing services units. Food and Allied sectors follow the Repairing services in terms of units, investment and employment generation.

Major Government initiatives in MSME Sector

1,77,503 MSME Enterprises have ‘gone into production’ with total investment of INR 8181.28 crore and employment to 5.05 lakh persons in the last three years. Thus, altogether 4,49,379 MSMEs have gone into production with an investment of INR 21,816.75 crore and employment to 16.92 persons till March, 2020. 35,219 youth have been provided Entrepreneurship Development Programme (EDP) in 1135 batches during last three (3) years including 11773 youth during 2019-20. In order to boost systematic development of MSMEs, Food Processing industry and Start-ups, Odisha MSME Development Policy, Odisha Food Processing Policy and Odisha Start-up Policy have been operationalized since 2016.1,021 MSMEs have been provided financial assistance of INR 129.20 crore under Govt. Policies from 2017-18 to 2019-20. As regards food processing sector, MIITs Mega Food Park at Rayagada has already become operational, Infrastructure Development in Marine Food Park at Deras is at advance stage of development. 9 MSME Multi-product Parks in Sambalpur, Sundargarh, Angul, Cuttack and Khordha districts have been approved to provide land with developed infrastructure to MSMEs.Similarly, new Food Parks in Bargarh, Bolangir, Ganjam, Kalahandi & Nabarangpur have been taken up through IDCO.

Odisha Steel

Odisha Steel is an emerging sector that will supplement the industrial sphere of Odisha. The developing industries producing steel will dominate the economy of the state. The presence of raw materials in abundance in the region has resulted in attracting the big investors to the region. The large scale steel enterprises have opted to invest in the state of Odisha. The reasons behind the sudden interest of the steel plants like TATA Steel and Ruia’s Essar Steel are the large iron ore deposits in the districts of Keojhar. The state mines 58 percent of iron ore which is an important raw material for making steel. The state also has a ready market for the steel products. Labor and electricity in the state are cheap which account for a low cost of production. The infrastructure of the state is also well developed that facilitates the industrial sector. These factors have lured the reputed steel companies of the country to the state. With the global demand for steel growing, the Union Cabinet recently unveiled a new steel policy that seeks to shore up the per annum steel production from 38 million tonnes to 100 million tonnes by 2019-20. But going by the current rush for iron ore in Odisha, the country may achieve the target well before the deadline. The State Government assigned 49 MoUs with various domestic and foreign companies for production of more than 75 million tonnes of steel in the state thereby bringning investment to the tune of 198,149 crore rupees. Similier MoUs have been signed by the state Government for alumina-aluminium and cement projects in the state.

A new Steel Directorate was set up on 15^th of July 2016 as a composite Directorate under the administrative control of Steel and Mines Department. The Directorate will focus on Iron Ore based Industries located in Odisha with following key activities.

• To coordinate with the steel industries in the state to assist in addressing the issues relating to such investments, in coordination with the IPICOL
• To monitor the implementation of MoUs signed steel industries for expediting the investments.
• To regularly interact with the existing steel units with a view to identifying the problems and issues relating to optimal capacity utilization.
• To maintain a database on investments, production, employment etc. of Iron ore base industries in Odisha.
• To monitor the availability of assured supply of raw material to the steel industries.
• To assist the Department in policy matters relating to steel industry.

Make in Odisha Conclave

Industrial Promotion & Investment Corporation of Odisha Ltd (IPICOL) has constantly and consistently increased the visibility of the State in National & International level by participating and organizing events, seminar and workshops across the globe. The brand “Invest Odisha” is being promoted as the best Investment destination through various modes. Make in Odisha is the flagship biennial event organized in Bhubaneswar to showcase the prowess of Industrial ecosystem in the state.

The Government organized the first conclave in 2016 which attract 84 proposals worth Rs. 2.03 lakh crores of Investment. 50 out of those proposals were approved, 29 of those projects are under construction. 6 out of those projects have already started production. The second edition of the conclave was organized in 2018 which attract Rs. 4.23 lakh crores of investment across 17 diversified sectors. 202 investment intents were received during the event and 100 proposals were approved. 58 of those projects have already started construction and 5 have already started production. The third edition of the conclave was organized in 2022 which attract Rs. 10.17 lakh crores of investment across 22 diversified sectors.

Major initiatives taken by the government to promote Odisha as an investment destination:

The Government of Odisha unveiled a strategic action plan for the implementation of the ‘Vision 2025’ which lays a road map for industrial growth in the state over the next decade during the recently concluded Odisha Investors meet in Bengaluru. The state has identified five focus sectors that include agro and food processing, chemicals and petrochemicals, textiles and apparel, downstream and ancillary industries in metal sector and electronic system design and manufacturing and IT/ITeS. The plan covers policy, infrastructure, investment promotion and skilling interventions that the state government plans to undertake for industrial development in these focus sectors.

The state government also launched an advance version of its industrial portal for land use and services i.e, GOPLUS. The GOPLUS Version 2.0 provides information about the entire land bank available in the state for industrial use and works as a onestop portal to provide information about all land related queries of an investor. Using the portal, an investor can get information about availability of land parcel in the vicinity of preferred infrastructure utilities such as airport, port etc.

Odisha government also launched its startup policy 2016 that aims to create 1,000 startups in the state by 2020.The policy will aim at providing incentives, support and assistance to start ups at all stages of development including idea or prototype stage, commercialization stage as well as the marketing stage. The Odisha government has also set up a startup capital infrastructure fund upto Rs 25 crore that will be used to support development of startup ecosystem in the state.

In order to increase the employment opportunities in the state, Odisha government has announced plans to invest US$ 28.69 billion in the manufacturing sector generating nearly three lakh job opportunities by 2020.

In June 2015, in an effort to increase the traffic of foreign airlines in the state, the state government exempted the Value Added Tax (VAT) imposed on aviation turbine fuel.

In July 2015, the state government announced plans to frame a rural Business Process Outsourcing (BPO) scheme under which subsidies are planned to be offered for establishing BPO units. In places where STPI (Software Technology Parks of India) stations are situated, employment opportunities are expected to be generated in the state. STPIs in the state are located in Bhubaneswar, Balasore, Rourkela and Berhampur.

As per budget 2016-17, US$ 39.71 million has been proposed by the state government for developing new railway projects such as the ongoing KhurdaBolangir line, new JayporeMalkangiri, Jaypore-Nabarangpur railway lines, etc. in the state through direct state funding.

As per state budget 2016-17, the state government allocated US$ 1.52 million for development and enhancement of eco-tourism in Odisha.

A biopharma IT park at Bhubaneswar is being established under the public private partnership (PPP) model over a land area of 64.68 acres.

A mega food park is being established near Bhubaneswar over 282 acres through the PPP mode. Odisha Industrial Infrastructure Development Corporation (IDCO) is the nodal agency for the establishment of this park.

In order to strengthen the artisan-based enterprises in the handicrafts sector, 19 handicraft training centres are functioning in different districts.

Focus Sectors of Odisha Government

The Government of Odisha has recognised six sectors as its focus sectors for sustainable growth of industries and economy. Of these, five are manufacturing sectors, as indicated below. These sectors were highlighted during the Make in Odisha Conclave 2018. Three of these six sectors are labour intensive in nature and are expected to generate large employment opportunities in the State.

Agro Food Processing including Seafood: To support these agro-based industries, the State government has established Mega Food Parks at Rayagada and Khurda and a sea food park at Deras.

Textiles including technical textiles: Odisha is a leader in skilled and quality workforce for the textile sector, with immense opportunity to invest in this field. Dedicated apparel parks have been established at Ramdaspur and Chhatabar.

Ancillary and Downstream Industries in Metal Sector: Odisha is the mineral hub of India and the largest aluminium, steel and stainless-steel producer in the country. To facilitate growth of ancillary and downstream sectors, a National Investment and Manufacturing Zone has been set up at Kalinganagar along with downstream park at Angul and Jharsuguda

Chemicals, Plastics and Petrochemicals: One of the four Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR) in India has been established at Paradip. The PCPIR is anchored by a 15 MMTPA refinery set up by IOCL.

Electronics Manufacturing: To enhance electronic manufacturing in the State, a dedicated electronics manufacturing cluster has been established near Bhubaneswar. A revised special incentive package has also been introduced to facilitate investments in the sector.

Odisha is one of the fastest growing economy of the country. Odisha has transitioned to middle income category states in terms of Gross State Domestic Product (GSDP). Odisha is on course to become USD 1 trillion economv by 2030. “New Odisha, Empowered Odisha” has become favourite destination for investment and industrialisation.

Pradeep Kumar Panda

Economist, Bhubaneswar