India Inc investing beyond metros

India Inc is rearranging its investment itinerary with little known investment destinations like Bihar, Assam, West Bengal and Orissa gaining a place on the country's economic roadmap.

An analysis of the recent investments made by big business houses reveal that corporates are getting attracted to these states, long known to have unrealised potential like abundant minerals, sufficient green cover and skilled and cost effective manpower but lagging behind on the investment scene.

However, the recently acquired investor-friendly attitude of the state governments, availability of resources, better accessibility and tax incentives are driving capital investments to these states.

Bihar could be a striking example of this shift in the investment paradigm after remaining out of the ambit of the corporates' investment radar for a long time, due to factors like socio-economic backwardness and infrastructure-related issues.

However, Bihar has recently played host to a number of big brothers of corporate India, like Ratan Tata of the Tata group, Max Healthcare Chairman Analjit Singh and Ashok Ganguly of call centre firm ICICI OneSource, while others like Mahindra and Mahindra's Anand Mahindra and Singapore's foreign affairs minister slated to visit the state soon.

Tata Group chairman Ratan Tata, who also holds the position of Investment Commission Chairman, said during his recent visit to Patna that the state offered great opportunities in areas of infrastructure, health, tourism, education, urban development and agriculture.

Given the huge potential in the tourism sector, the Tata group is also believed to be exploring the possibility of launching a range of low-cost hotels in the state.

M&M Vice Chairman Anand Mahindra is also scheduled to visit the state soon and is said to be mulling over the possibility of a tractor production plant in Bihar. Max Healthcare too is looking to set up a super-specialty healthcare centre and hospital in the state.

The Max Healthcare proposal holds significant promise since more than 50 per cent of the patients coming to New Delhi's All India Institute of Medical Sciences (AIIMS) are said to be from Bihar.

The state, which is under a rebuilding phase, promises lots in terms of profit for corporate houses with cheap real estate prices, limited labour-related issues and a large educated manpower at nearly one-third the cost in cities like Bangalore or Chennai, experts believe.

However, Bihar may have to fight challenges like huge infrastructural requirements and socio-economic backwardness, law and order, over-population and poverty.

Bihar, accounting for a seventh of the country's population below the poverty line, also has problems like low investment rates, weak transport system, lack of water management and fragmentation of land holdings to resolve.

The state was ranked the third worst performer in terms of investments made by corporate houses in the June-August period in a recent study conducted by industry body Assocham.

The state, which was listed as a poor performing state in the study, attracted an investment of Rs 740 crore (Rs 7.40 billion) during the period under review as against a huge investment of Rs 63,000 crore (Rs 630 billion) attracted by the top performer Karnataka.

India Inc has made investment announcements of over Rs 6,72,000 crore (Rs 6,720 billion) across the country in two and half months till August 31, with states like Bihar, Assam and Himachal Pradesh getting a total investment commitment of about Rs 1,600 crore (Rs 16 billion) only, the Assocham study shows.

While states like Orissa and Chhatisgarh have already started emerging on the investment landscape, with investment proposals worth between Rs 33,000 crore (Rs 330 billion) and Rs 47,000 crore (Rs 470 billion), states like Bihar, Assam and Himachal are still trotting around to get actual investment commitments.

West Bengal has also started attracting huge investments from corporate majors like DLF, Reliance Industries Limited, Tata, Monnet Ispat Industries. In order to improve its image as a preferred investment destination, the West Bengal government has already announced incentive schemes like subsidies on capital investment, interest payments and waiver of duties and fees.

West Bengal's neighbouring state Orissa is also emerging as a major investment hotspot in sectors ranging from IT, power, hospitality and healthcare, while grabbing attention of industry giants like Mittal, Posco, Jindal Steel, Essar, TCS and Infosys.

In the healthcare sector, Apollo Hospital and Asian Heart Hospital are also looking to invest in Orissa while in the hospitality industry, Oberoi, Hyatt, Sinclair's and Best Western are looking at expanding their base in the state.