By Nageshwar Patnaik in Bhubaneswar, October 29, 2019:  In less than two decades, Odisha – once known as a sluggish, ultra-poor and highly debt stressed state – has transformed itself from a laggard state to a state on a ‘Take Off’ stage.

Political stability in the state in the last two decades and Odisha’s resource base has virtually made it the eastern gateway to a vibrant economy. The state improved its economic growth in 2018-19 to 8.4% from 7.4% in the previous fiscal and, in fact, has grown at a faster rate than Hayana, Punjab, Kerala, Chhattisgarh, Madhya Pradesh and Jharkhand, according to the Odisha Economic Survey, 2018-19.  

Structurally the state economy has undergone significant changes. There has been a paradigm shift and the economy of Odisha with industry sector constituting 40% of State’s Gross Value Added (GVA) relative to 30% at all-India level in 2018-19.  The manufacturing sector is the largest contributor with a share of over 46.8% in 2018-19 followed by the mining sector at 27.3%.  

The state appears to be in an enviable position to step up industrialisation with an enabling policy frame work coupled with the necessary institutional arrangements, liberalised policy, single window system, E-Biz projects, technological interventions and so on.

Over the last few years Odisha has focused on creating a hassle-free and prompt doing business environment for investors. The State has introduced a first-of-its-kind and innovative single window system, ‘GO SWIFT’ – Government of Odisha Single Window Investor Facilitation and Tracking’ portal, to facilitate paperless, time bound and transparent approvals and clearances across the investment lifecycle of industrial projects.

“With the launch of GO SWIFT, the approval process for 33 services from 15 State government departments has been made online, including online application submission, payment, tracking and processing of applications. Going forward, more services will be progressively added to the portal. We will very soon launch the higher version of GO SWIFT,” says industry secretary, Hemant Sharma.

The Portal provides updated information relating to latest rules, policy initiatives and reforms undertaken by the Govt. of Odisha to facilitate and handhold the investors. All existing technological applications of the Industries Department including GO PLUS, GO SMILE, GO CARE, GO iPAS, and State Project Monitoring Group portal have also been integrated with GO SWIFT. Access to all these services is now available through a single sign-on user credentials. 

Despite the failure of two mega steel projects by ArcelorMittal, Posco and a dozen others projects worth Rs 90,000 crore to take off, the Odisha government has so far received investment commitments worth more than Rs 2.5 lakh crore from more than 100 companies in various sectors, including electronics, food processing, metals and minerals. 

“State’s Vision is to attract Rs 2.5 lakh crore of new investments in the identified focus sectors and create 30 lakh jobs opportunities by 2025. The State had already received proposals worth Rs 2,43,588 crore and these projects are in various stages of implementation. By 2025, we expect the investment to go up to Rs 4 lakh crore”, Sharma claims.

The Government has identified the Downstream to metal sector as a focus sector in the Odisha Industrial Development Plan, 2025, which envisions significant growth in the sector. The mineral rich state is also in the process of developing a strategy, Vision 2030, through which it intends to achieve value-addition to at least 50% of the primary metal produced in the State.

Interestingly, the presence of major industrial clusters like National Investment Manufacturing Zone at Kalinganagar, Angul Aluminium Park and host of upcoming private industrial parks developed by bellwethers in the metal sector such as Jindal Stainless Ltd, Jindal Steel and Power Ltd and Vedanta has paved the way for sustained growth of the downstream to metal sector.

The Naveen Patnaik government is also making a conscious effort to broad base industrialization with investment in other sectors like Food Processing and Allied sectors, Chemicals and Petrochemicals, Textiles including Technical Textiles, Information Technology (IT), Information technology enabled services (ITeS) and Electronic System Design and Manufacturing (ESDM) etc as given in below table.

In the past few years, the state has also seen significant investment in the Chemicals and Petrochemicals sector with projects from the Indian government owned Indian Oil Corporation Ltd and Haldia Petrochemicals being the largest. The state is also home to one of the five Petroleum, Chemical and Petrochemical Investment Regions (PCPIRs) in the country and provides a unique ecosystem for the sector to grow. 

To top it all, the long coastline along with the three deep-sea ports at Paradip, Dhamra and Gopalpur provide industries operating in the state ample opportunities to tap the south-east Asian market.

The state is looking to emerge one of the top three states in ‘Ease of Doing Business’. But it has shed four places to finish at the 11th slot at the latest rankings released last year. Though Odisha improved its score in compliance with Business Reforms Action Plan and earned the tag of ‘leader’, it lost ground to competing states in investor perception.

In an effort to resurrect its image, Odisha now is working on a new Industrial Policy Resolution (IPR) in line with the Indian government’s IPR, which is expected to be released in December. “We are in touch with the government of India providing input for the new IPR. Our new IPR, to be announced next year, will align with broad contours of the union government’s IPR,” Sharma added.

The new IPR is likely to offer investors sops like SGST (State Goods & Services Tax) holiday and electricity duty exemption for five years. It is also expected to sweeten the subsidy on fresh capital investments by existing and prospective investors. The new policy statement is set to be valid for at least five years from the date of its promulgation.

The proposed industrial policy envisages industrial parks for each of the focus sectors and creation of industrial corridors to set up small & medium enterprises across the state. For extension of credit at concessional rates to the eligible MSMEs (micro, small & medium enterprises), a suitable interest subvention scheme shall be introduced by the government.

As of now, 4,03,933 MSMEs have been established with an investment of Rs.19,571 crore and employment to 15,60,484 till July, 2019. The number of MSMEs in the state in the past five years has grown substantially as shown below Table.

This brings us to the question whether Odisha can become a developed state by 2025? Chief minister Naveen Patnaik went a step further by saying, “Our aim is to make Odisha No.1 state in the country”. However, going by the structure of the state’s economy, its financial development, and its manufacturing prowess, a developed Odisha by the targeted year will remain a distant dream.