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Maharashtra's Industry Secretary V. K. Jairath is extremely optimistic about the state retaining its position as India's Number 1 in terms of overall economic growth. In a detailed interview to Indo-US Business, Jairath chalks out Maharashtra's roadmap for progress in key sectors. These include Information Technology, biotechnology, wine manufacturing, automotive industry, etc. According to Jairath, Maharashtra is still the most sought after destination for foreign investment despite competition from other states to attract the same. Following are the excerpts.

The state government has an industrial policy, which is dovetailed into the central government's overall industrial policy. But strategy wise, what is the cutting edge of Maharashtra?
Maharashtra has always been the most industrialized and the most progressive state in the country. We are not talking only in terms of the industrial infrastructure. Even if you look at it from a social perspective, the kind of reforms, which came in the social sector, have been exceptional. We also have the advantage of Bombay always, and the way Bombay has developed as an industrial area especially in the cotton textile industry.
Trade played a significant part in Maharashtra after it became a separate state. The strengths of Maharashtra came in the form of excellent infrastructure and human resources. When I say human resources I mean, the technical pool, which is available in the state. Today if I were to just give out a figure, we have about a 1,000 institutions such as ITI, IIT, polytechnic colleges and universities. We are turning out 170,000 technically trained people every year. And this has come about because of good educational institutions in the state. We also have a good entrepreneurial class. The kind of business enterprises, which have come up, have been good. Then the state has also been pro-active. It is not only a one time government policy. There is a consistency and continuity in government policies. So all these factors plus the location advantage has added to making Maharashtra a very attractive avenue for business and investment.
Another important factor to note is that the state did not want to only focus on Mumbai, Pune or Thane in the area of development. The state thought that it must disperse industries. So there has been an overall development and we can boast of cities like Nagpur, Aurangabad, Nashik, Kolhapur, in addition to Mumbai, Pune or Thane. So there is a wide variety or a wide menu for any investor to see where you would like to locate yourself. Whether you would like to capitalize on the raw material advantage or whether you would like to capitalize on the export or market advantage. So that's what we feel is our strength.



It is a historical advantage that Bombay has, but when you take Information Technology, cities like Bangalore, Chennai and Hyderabad seem to have done better than Bombay. You should have anticipated this kind of an explosion coming up and could have developed some satellite town near Mumbai, which has not been done.
That is not true actually. We are talking of one Chennai, one Bangalore and one Hyderabad. On the contrary, and very deliberately we on the other hand are dispersed. Look at Pune and its IT infrastructure. We want to brand Pune as the model IT city of the country. IT is not only about putting up buildings and getting companies to work there. It's an environment. In fact we are talking of Mumbai, Navi Mumbai, Thane and Pune as one corridor. We call it the knowledge corridor. So we are not just talking about the BPO industry.

Our strength also lies in the knowledge-based industry. BPO is only a small part of it. We are relying on IT and IT enabled services as well as biotechnology. But we have others centers. Look at Nagpur, its now developed as a multi-nodal hub. We got Satyam and many major companies coming there. We have Nashik and Aurangabad. To give you figures, 25 percent of the top software companies are in Maharashtra, in one state. Similarly 25 percent of the country's exports are from Maharashtra. So it's a myth as people get to see one Bangalore. If I were to disperse Maharashtra or if I were to convert what is available in Maharashtra we would be huge as compared to cities like Bangalore and Hyderabad. Why are companies finding things attractive out here? Why was the MIDC space in Nagpur sold out in five hours? It's because these is a large pool available and companies find it an attractive source. We do not want to rely too much on cyber cafes and BPOs. We want to provide high-end knowledge-based outsourcing. So when we talk of the IT industry in Maharashtra we are talking of the high end services like engineering design. We are talking about other financial services which are being outsourced to places like Pune. You look at the kind of companies, which are coming up here. Call centers are something which developed in Gurgaum and other areas.
Look at the auto sector. You get the best of people who work in the auto sector. In fact, the kind of work force which is available in the auto sector is one of the best in the world.
In fact I would quote figures from the planning department's study on Maharashtra. It says that factories in Maharashtra account for 37 percent more output and 51 percent more value addition than any other factory elsewhere. So with the same labour the value addition is 51 percent more. It's the work culture, it's the talent pool, it's the skills, which are available. Today, companies are looking at the global competition. And global competition comes with infrastructure, it comes with where you are located, it comes from the kind of people you are employing.

What is the state doing in the area of imparting cutting edge qualification to graduates to work in the knowledge sector?
Our universities are already working on that. Most of the companies are themselves taking people in and training them. I read somewhere recently that software companies are now planning not only to look at engineering graduates but also commerce and science graduates. These people will need training. I'll give you an example. We had a major British company JCB who manufactures heavy equipment. They were to set up a factory at Talegaon, where there is an ITI is located. When the construction of the JCB factory was on, we handed over the ITI to them for some time. They got in an instructor from the UK who spent two years out there training the boys from the ITI. By the time the factory got into actual commercial production, they also recruited trained staff.


IT has actually democratized so many things. It has brought all these sectors- ranging from financial services to manufacturing at together. What are the changes of Mumbai emerging as a world financial centre?
We are going ahead on this front. The Finance Minister has made a statement recently saying that Mumbai would be the financial services capital not only of the country but also the hub of the region. And when we say hub we are saying in the region between Tokyo and London, because of its geographical and time advantage. In fact if you get up early in Mumbai you can start accessing capital markets and equity markets in Australia and Japan. By the time it is night you are accessing markets in New York. So during the course of the day we are in touch with all the major equity markets so why should we not capitalize on that? So to that effect the government of India has given support and we are working with all the financial institutions to make Mumbai into a regional financial hub..

Agriculture has also been a strong focus of business. To stop the migration of people from the rural areas it's important to develop the rural economy. What efforts is the government making on the agri-business front?
Firstly, the state has always gone in for products, which are into horticulture and floriculture. The best kind of flowers are grown in areas like Pune and Nashik. They are exported directly from here. The best varieties of pomegranates, grapes and oranges are grown in Maharashtra. The state is actively promoting the wine industry. We have set up an institute in Nashik. The state manufactures 90 percent of the wine produced in the country. All the top players are out here. So the value edition to the farmers comes in the form of these kind of products which have an international market. In addition to that fruits like oranges need to be processed for bringing in value addition. We are coming up with special economic zones for food processing industries. The proposals have been put before the centre. Wine is going to be made available off the shelf.


The Chief Minister has talked about the mega project policy?
The last policy, initiated in 2001 will end on 31st of March. First I'd like to say that we are coming up with an integrated policy on the 1st of April 2006. In the world economic scenario, India is becoming a very attractive destination. This is a very good time for all the states to project themselves. With Maharashtra being Number One in terms of infrastructure and investment, we should not become complacent. So we have decided to take that extra advantage. So the mega project policy has been evolved to attract major investments in certain areas. The norms are based on investment and employment generation. We have based our criteria either on investment or on job creation and based on its location. Our policy has always been to disperse industries all over the state and move the load from Mumbai and Pune because we don't want the same infrastructure problems which is coming up in Bangalore and in Chennai. You have to go in for balanced regional development. We have evolved our policy on this basis and we are offering a customized packaging. We have two fast track committees one at the level of the Chief Minister and at the level of the Chief Secretary to clear the projects. We have received some very positive results. In June 2005 we came out with a policy and right up to the end of last month we almost have MOU's signed up to a billion dollars that is Rs 4,500 crores. And another billion dollars is under negotiation.

Coming to the constraints, power is one of the major constraints and a state like Maharashtra shouldn't be in such a delicate situation.
We do not deny it. We haven't covered up anything. We are being very straight. There has been a problem in the last 5-7 years. No fresh capacity has been added to the existing generation. Along with generation capacity, you have to add the transmission i.e. the range you are going to take electricity. Now there are historical reasons for that. The Dhabol project was a major set back. So wherever an industry is located in an MIDC area, except for the weekly power cut there is no load shedding. So the industry has not been starved of power. Short-term measures have been taken up on capitalizing on the captive power developed by private units. Group captive power is encouraged by MIDC. And in the long term, the state has entered into MOUs with major power producers. They have entered into agreements for generating more than 12,000 MW. The state has also increased its generation capacity. And with Dhabol coming back into production by 15th of May and full production by 31st of December, 2000 MW of extra power will be made available.

What about alternative sources of energy?
Already more than 500 MW of power is being produced from wind energy. We have a policy on alternate sources of energy. And a lot of incentives are being given. There are two or thee sites where wind energy has been taken up. We are also giving incentives to energy being produced from cotton stalks and molasses and sugarcane stalks known as bagasse. .


Trade delegations from various countries keep visiting India, especially Mumbai. Has Maharashtra been taking advantage of them?
We have been doing very well on this front. Last year alone there were three premiers of three Australian States visiting Mumbai. There was the governor of Washington. We have been talking to these trade delegations, They have been meeting the Chief Minister and at the Premier level there have been active discussions. And we have entered into a lot of informal understandings. We had also proposed to enter into formal MOUs. The Ministry of External Affairs has a policy that says that states are not allowed to enter into such agreements. We have prevailed upon them saying that the whole world is becoming one and the issue has been raised at the Cabinet Secretary level. Not to leave at that, SICOM and KSIDC have entered into agreements with Korea to encourage trade delegations and promotion of business. With Quebec, a joint declaration was signed. We want that kind of association. There are other trade delegations coming. We want discussions to promote trade on a state- to-state basis.

Any Particular agenda for the George Bush visit?
The CM himself visited the US last June. He had led a very important delegation and I must say the response we got from American companies has been tremendous. They have been looking extensively not only at India but Maharashtra.in particular. We were surprised that small towns of Maharashtra were discussed by American companies.
The capital will move. The sectors we are looking at are IT, biotechnology. MIDC has a joint venture with a NRI group in New York. We have also been talking to some players in real estate. We are also talking to people in the entertainment sector. There are companies in Los Angeles and Hollywood who are looking at Bollywood. There are natural synergies in this area. These are the sectors we have been actively talking about. We have also been talking to a number of American companies in the IT and auto sectors. We should have a very fruitful relationship with them in the near future.


What about the gem and jewellery industry?
Bulk of the gem and jewellery exports are from Mumbai. And that market is very well established. There are very important synergies between us and Antwerp. They are located at SEEPZ, which has already been designated as a Special Economic Zone.

Do you have any strong message to send out to Investors outside India?
The message is that we have always been Number One and we will strive to be Number One. The point is that we understand that any investor will come here if he gets the advantage to become globally competitive. This state will strive to give him that advantage. Not only in terms of the fiscal incentive, but also in terms of the infrastructure he requires, in terms of the talent pool he requires to make him globally competitive. To be located in Maharashtra, not only from the manufacturing point of view but also the huge market which is available.



Foreign Investment Institutions (FIIs) investing in stocks and shares on the Bombay Stock Exchange are also exposed to opportunities available in Mumbai and Maharashtra. Aren't they taking advantage of their exposure here?
The FIIs are basically looking at the stocks for investment. Whatever is there in the financial markets is available to them. If companies backed by FIIs want to set up business in Maharashtra we certainly extend all support. Fortunately we also have majors industry associations such as CII, FICCI All India Industries Association, who are represented on our body also. We also have the trade offices of different countries. Whatever information they require, we are providing it.