Then & Now

The second in this series of stories appeared in The Times Of India dated July 24, 2003. It talks about Punjab on the verge of industrial ruin due to special status granted to Himachal Pradesh.

THEN July 24, 2003

Punjab's loss is proving to be Himachal's gain. Backed by the latest exemption regime and advantages on the power front, the border industrial township of Baddi in Himachal Pradesh is coming in for renewed focus from industry in Ludhiana.

As per information available, around 60 small and medium scale manufacturers from the city have already bought land in Baddi over the last six months. Fifty of these are power intensive units using furnaces in their manufacturing process while 10 are from the hosiery sector.

Says Ludhiana-based Chamber of Industrial and Commercial Undertakings president Inderjit Singh Pardhan, ‘‘Apart from exemptions on the taxation front, these units are looking to set up shop in Baddi also on account of a better industrial environment. If the present situation persists, we will witness a virtual beeline of industrial units to new areas.''

The development has lead to an increase in price of real estate in Baddi by 25 to 30 per cent in the last four months. Says Chandigarh-based property dealer Taran Inder Singh, ‘‘Baddi is receiving increased attention from industry not only in Punjab but other states as well.''

The Central government has granted exemption to industry in Himachal Pradesh on central excise, income tax and investment subsidy for new units for a period of 10 years. The state government too has continued with its old policy of exemption on sales tax.

Pradhan says that businesses in Ludhiana are miffed as they had to pay high power tariffs in face of power shortage.

A unit cost of electricity in Himachal Pradesh costs one rupee lesser than Punjab.

Says All India Bread Manufacturers Association Convener, Ramesh Maggo, ‘‘The recent introduction of EXIM form is also seen as a retrograde step. It will lead to unnecessary delays in supply of raw materials.''

Industrialists say that the increase in price of fuel and lubricants will also add up their costs.

Says Pradhan, ‘‘With these disadvantages in place, the Baddi belt is emerging as an attractive destination. It is conveniently located and industrialists can set up their manufacturing base while continuing to reside in Punjab.''

The Punjab government is seized of the situation but is not in a position to do much.

Says director industries S K Sandhu, ‘‘We are seized of the fact that the exemptions available to industry in Himachal Pradesh are harmful to the industrial prospects of Punjab. We have been taking up these issues with the Central government but to no avail.''

However, there are others who term the trend as a short term phenomenon. Says Hero Cycles Managing Director (Works) S K Rai, ‘‘Industry moving there are only looking at gains in the short run. They will be back in place after the end of the exemption period.''

NOW December 13, 2007

Baddi has emerged as one of the biggest non-port industrial zones in the country. The subsidies and exemptions, which have been extended to 2010, has helped attract industry in droves. The Baddi, Barotiwala, Nalagarh area now has the presence of almost all the major industry houses of the country. The area has fast emerged as the manufacturing capital of the North. Though industrial houses are no longer moving out of the state, the Central exemptions have had a negative effect on the industrial growth of Punjab. The majority of manufacturing units in Punjab have invested in Baddi as part of their expansion plans. The manufacturing industry capital base of the state has remained almost static. The state has received investments mainly in agri-business, retail, real estate, and IT. Industrial houses like Reliance have declared plans to invest Rs 25,000 crore in the state in the coming years.