Bihar2009 2010

BIHAR
November 2010

1

BIHAR November 2010

Investment climate of a state is determined by a mix of factors

• Skilled and cost-effective labour • Procedures for entry and exit of firms
• Labour market flexibility • Industrial regulation, labour regulation, other
• Labour relations government regulations
• Availability of raw materials and natural • Certainty about rules and regulations
resources • Security, law and order situation

Resources/Inputs Regulatory framework
Investment climate
of a state Physical and social
Incentives to industry
infrastructure
• Condition of physical infrastructure such as
• Tax incentives and exemptions power, water, roads, etc.
• Investment subsidies and other incentives • Information infrastructure such as telecom, IT,
• Availability of finance at cost-effective terms etc.
• Incentives for foreign direct investment (FDI) • Social infrastructure such as educational and
• Profitability of the industry medical facilities

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BIHAR November 2010

Contents

 Advantage Bihar

 State economy and socio-economic profile

 Infrastructure status

 State policies and incentives

 Business opportunities

 Doing business in Bihar

3

ADVANTAGE BIHAR
Bihar November 2010

Bihar – State profile
• Covering an area of 94,163 sq km, Bihar is located
in the Eastern part of India. The state has a
population of 83 million and is one of the most
densely-populated states in the country.

• The state shares its border with the states of Uttar
Pradesh, Jharkhand and West Bengal and the
neighbouring country of Nepal.

• The state has 38 administrative districts. Patna is the
capital city. Gaya, Bhagalpur, Muzaffarpur and
Darbhanga are other key cities in the state.

• The Ganges, one of the major rivers in the Indian
sub-continent, flows through the state, making
Bihar‟s land extremely fertile for agriculture.

• The four agro-climatic seasons and fertile soil of
Bihar support cultivation of a wide range of crops.

• The most commonly-spoken languages in the state
are Hindi, English, Urdu and Bhojpuri.
Source: Maps of India

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ADVANTAGE BIHAR
Bihar November 2010

Advantage Bihar … (1/2)

High economic growth
The economy of the state has grown at around 16.7 per
cent from 2005-06 to 2009-2010. The state provides
investment opportunities in sectors such as agro-based
industry, food processing, sugar, power, leather,
manufacturing and tourism.

Policy incentives
The state offers a wide range of policy incentives for
businesses under the Industrial Policy, 2006. The state
also provides incentives for the sugar, renewable energy,
food processing and tourism sectors.


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ADVANTAGE BIHAR
Bihar November 2010

Advantage Bihar … (2/2)

Rich labour pool
The state has a large base of industrial labour, making it an
ideal destination for wide range of industries. The state
has institutes of national importance such as National
Institute of Technology (NIT) and Indian Institute of
Technology (IIT) which provide skilled manpower to the
industries.

Location advantage
The state enjoys a unique location-specific advantage
because of its proximity to the vast markets of Eastern
and Northern India, access to the ports such as Kolkata
and Haldia, raw-material sources and mineral reserves
from the neighbouring states.


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ADVANTAGE BIHAR
Bihar November 2010

Bihar in figures … (1/2)

Parameter Bihar All-states Source
Economy
GSDP as percentage of all states‟ GSDP 2.9 100.0 CMIE, as of 2007-08, current prices
Average GSDP growth rate (%)^ 10.4 11.8 CMIE, 2000-01 to 2007-08, current prices
Per capita GSDP (US$) 306.3 992.5 CMIE, as of 2007-08, current prices
Physical infrastructure
Installed power capacity (MW) 1,845.7 159,398.5 Central Electricity Authority, as of March 2010
Cellular Operators Association of India, as of June
GSM cellular subscribers (No) 32,416,063 456,586,162
2010
Broadband subscribers (No) 63,305* 4,981,976 As of October 2008
Ministry of Road Transport and Highways, Annual
National highway length (km) 3,642 70,548
Report 2008-09
Airports (No) 2 133 Industry sources

^ In terms of Indian rupee
*Includes Jharkhand

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ADVANTAGE BIHAR
Bihar November 2010

Bihar in figures … (2/2)
Parameter Bihar All-states Source
Social indicators
Literacy rate (%) 47.53 64.8 Census of India, 2001
Ministry of Health & Family Welfare, RHS Bulletin,
Birth rate (per 1,000 population) 28.9 22.8
March 2008
Ease of doing business
Outstanding investments (US$ billion) 23.7 1,972.6 CMIE, as of March 2010
Industrial infrastructure
PPP projects (No) 6 515 www.pppindiadatabase.com

PPP: public private partnership

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ADVANTAGE BIHAR
Bihar November 2010

Key industries with policy thrust and factor advantages

Industry attractiveness matrix
High

Food
processing
Sugar

Textiles/ Tourism
Policy thrust

Medium handlooms

Leather
Minerals

Low Medium High
*Factor advantage

*Factor advantages include benefits due to geographical location and availability of factors like talent pool, natural resources and capital

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BIHAR November 2010

Contents

 Advantage Bihar






10

STATE ECONOMY AND SOCIO-ECONOMIC PROFILE
Bihar November 2010

Socio-economic snapshot of Bihar
Parameters Bihar
Capital Patna
Geographical area (sq km) 94,163
Administrative districts (No) 38
Population density (persons per sq km) 881.4
Total population (million) 83.0
Male population (million) 43.2
Female population (million) 39.8
Decadal population growth rate (%) 28.4
Sex ratio (females per 1,000 males) 919
Literacy rate (%) 47.53
Male (%) 60.32
Female (%) 33.57
Life expectancy (years)
Male (years) 61.6
Female (years) 59.7

Sources: CMIE, www.gov.bih.nic.in, Census 2001

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Bihar November 2010

Bihar‟s GSDP
• In 2009-2010, the Gross State Domestic Product (GSDP) at current prices was US$ 32.7 billion.

• Between March 2000 and March 2010, the average annual GSDP growth rate was 11.8 per cent.

• The state had a robust average annual growth of 16.7 per cent between March 2006 and March 2010.

Bihar‟s GSDP
(US$ billion)

35.0 32.7
31.0
30.0 28.5
CAGR 11.8%
25.0 23.7

20.0 17.6
16.3
14.2 15.1
15.0 11.9 12.0
10.8
10.0

5.0

0.0
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Source: CMIE

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Bihar November 2010

Bihar‟s NSDP
• In 2009-2010, the Net State Domestic Product (NSDP) of Bihar was US$ 29.6 billion.

• The average NSDP growth rate between 1999-2000 and 2009-2010 was about 11.6 per cent.

• This growth has been driven by the secondary sector which includes manufacturing, electricity, gas and
water supply and services sector including trade, real estate, hospitality and others.

Bihar‟s NSDP
(US$ billion)
35.0
28.1 29.6
30.0
25.6
CAGR 11.6%
25.0
21.4
20.0
14.6 15.7
15.0 13.0 13.7
9.9 10.9 10.9
10.0

5.0

0.0
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Source: CMIE

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Bihar November 2010

The tertiary sector has an increasing share in Bihar‟s economy
• At US$ 19.8 billion, the tertiary sector Percentage distribution of GSDP
contributed 60.7 per cent to the GSDP (at CAGR
current prices) in 2009-2010. 100.0%

80.0%
53.9
• It was followed by the primary sector, 60.0%
60.7 13.1%
contributing US$ 7.6 billion (23.2 per cent), and
the secondary sector contributing US$ 5.3 billion 40.0% 12.4
16.2 14.7%
(16.2 per cent). 20.0% 33.7
23.2 7.7%
• Between 1999-2000 and 2009-2010, secondary 0.0%

sector was the fastest growing sector with a 1999-00 2009-10
CAGR of 14.7 per cent, followed by tertiary Primary Sector Secondary Sector Tertiary Sector
sector, with a CAGR of 13.1 per cent.
Source: CMIE
• This growth has been supported by the
manufacturing, electricity, gas and water supply,
construction and services.

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Bihar November 2010

Per capita GSDP
• Bihar‟s per capita GSDP increased over 2.5 times from US$ 135 in 1999-2000 to US$ 341 in 2009-2010.

• A robust secondary and tertiary sector has helped Bihar increase its average per capita GSDP by around
9.7 per cent between 1999-2000 and 2009-2010.

• At 14.9 per cent, the state had robust growth in per capita GSDP between March 2006 and March 2010.

Per capita GSDP
400.0
327.9 341.3
350.0 306.3
CAGR 14.9%
300.0 258.7
250.0
195.6
US$

200.0 173.8 183.8
144.8 166.5
150.0 135.2 142.3

100.0
50.0
0.0
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Source: CMIE

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Bihar November 2010

Distribution of households by income
• The per capita income of Bihar was US$ 341 in 2009-2010.

• The distribution of households by socio-economic classification (SEC) indicates that a significantly
large portion of Bihar‟s population falls in the low education and unskilled categories, although there
is some concentration at the self-employed and junior-employee levels.

Percentage distribution of households in rural areas Percentage distribution of households
by SEC* in urban areas by SEC*

E2 25.4
49.9 18.6
R4 9.3
43.5 E1 11.5
30.5 D 20.3
R3 23.4
40.7 C 16.9
19.9
14.6 B2 9.3
R2 8.3
11.8 8.5
B1 8.0
5.0 6.8
R1 A2
4.1 6.7
Rural 3.4
A1 3.5 Urban
0 20 40 60
0 10 20 30
Bihar All India
Bihar All India

Source: BW Marketing Whitebook, 2009-2010
* See Annexure for SEC categories

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Bihar November 2010

Consumer expenditure on household goods and services

• In rural Bihar, expenditure on food has greater share compared to all-India.

• Share of expenditure on durable goods in rural Bihar is comparable to that of all-India. .

Share of average monthly per capita expenditure on
household goods and other services

50.0% Urban 70.0% Rural
39.6% 59.7%
60.0% 52.3%
40.0%
33.7% 50.0%
30.0% 40.0%
20.0% 30.0%
20.0%
10.0% 7.1% 5.7%
5.2% 4.2% 10.0% 6.3% 3.2%
2.3% 2.6% 3.7% 2.2% 3.6% 3.1%
0.0% 0.0%
Food Education Medical Durable Food Education Medical Durable
goods goods

All-India Bihar All-India Bihar

Source: Household Consumer Expenditure in India, 2007-08 NSS 64th Round

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Bihar November 2010

Key industries in Bihar
• The natural resources and policy incentives support agro-based sector. Agro-based industry and
petroleum products (primarily, Barauni oil refinery) account for around 85 per cent of the total industrial
output in the state.

• There are 272 large and medium industries, a majority of which are located in Patna. Tirhut is the other
major industrial centre.

• Small scale industries, micro and artisan enterprises play a major role in terms of employment. As on
September 2009, there were 178,863 permanent registered units with total investment of US$ 232.9
million and providing employment to 0.58 million workers.
Industrial distribution in Bihar
Key industries in Bihar
• Food and beverages Food, beverage,
• Rubber and plastics tobacco
• Transport equipment 33.1% 32.7% Cotton, wool, jute,
• Chemicals paper, leather
• Tobacco
• Textiles Rubber, plastic,
• Leather chemicals
• Paper, printing and publishing 16.9% 17.3%
Material, metal,
• Mines and minerals
machine, transport,
• Dairy equipments
• Tea
• Sugar Source: Economic Survey of Bihar, 2009-2010

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Bihar November 2010

Bihar is among the three large producers of maize and jute

• Major crops produced in the state include sugarcane, Annual production
rice, wheat, maize and potato. Crop as of 2007-08
(„000 tonnes)

• In 2007-08, total production of sugarcane, rice and Rice 5,340.0
wheat was 14.1 million tonnes. Wheat 4,674.0
Sugarcane 4,083.0
• In 2006-07, Bihar was among the three largest
Rapeseed and mustard 111.0
producers of maize, jute and mesta in the country.
Maize^ 1,720.0
Potato^ 1,178.1
Jute and mesta^* 250.2
Gram^ 50.0
Arhar^ 40.0
Sunflower seed^ 30.0
Tobacco^ 16.1

^As of 2006-07
*A variety of jute
Source: CMIE

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Bihar November 2010

Investments
• As of March 2010, total outstanding investments in Bihar Break up of investments by sectors
were US$ 23.7 billion.
1.4% 2.2%
• The electricity sector accounted for the largest share of
investments (56.8 per cent), followed by services (23.6 5.7% 10.2% Food & beverages
per cent) and chemicals (10.2 per cent).
Chemicals
23.6%
• As of March 2010, investments worth US$ 11.8 billion Electricity
were under implementation. Services^
Irrigation
• Between December 2005 and November 2009, 245
Others*
investment proposals were approved by the State 56.8%
Investment Promotion Board (SIPB).

• In 2009-2010 (up to November 2009), SIPB has approved
81 proposals that are expected to strengthen the base of ^Services exclude financial services.
medium scale industry in the state. *Others include construction, non-metallic mineral
products, metals, metal products and mining.
SIPB approved Cumulative As of March 2010
Year Source: CMIE
proposals (No) (No)
2006-07 (up to January 2007) 72
2007-08 (up to December 2007) 43 115
2008-09 (up to December 2008) 49 164
2009-2010 (up to November 2009) 81 245

Source: Economic Survey of Bihar, 2009-2010

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BIHAR November 2010

Contents

 Advantage Bihar






21

INFRASTRUCTURE STATUS
Bihar November 2010

Road network
• There is 3,642 km of National Highways and
3,989 km of State Highways in Bihar. Besides,
there are major district roads and village roads.

• The east-west, four-lane, high-speed corridor and
the golden quadrilateral road passes through
Bihar.

• The State Government aims to provide road
infrastructure in Bihar, equivalent to „best in the
country‟ by 2015.

• According to the State Plan of the Road Source: Maps of India
Construction Department of the State, the
budgeted outlay for roads and highways was US$ Type of Road Length (Km)
576 million for 2009-2010, up from US$ 58.5 National Highway^ 3,642
million for 2005-06. State Highway 3,989
Major District Roads 8,156
• In terms of physical achievement, compared to
Other District Roads 3,818
construction of 415.5 km of road in 2005-06,
2,417.1 km of road was constructed in 2008-09. Village Roads 63,262

Source: Economic Survey of Bihar, 2009-2010, ^Ministry
of Road Transport and Highway, Government of India.

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Bihar November 2010

Railway network
• Bihar has an extensive railway network of more
than 5,400 km.

• Hajipur in Bihar is the headquarter of the East-
Central Railway. The state‟s main railway
junctions are at Patna, Gaya, Muzaffarpur,
Katihar and Samastipur.

• More than US$ 1.37 billion of investment has
been planned for the modernisation of the
railways in Bihar, including gauge-conversion,
doubling of lines and electrification.

• Several link-lines, such as Muzaffarpur-
Samastipur-Barauni-Katihar and Muzaffarpur-
Chapra-Siwan, have been converted to broad Source: Maps of India
gauge from metre gauge.

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Bihar November 2010

Airports
• Bihar has one domestic airport, located in
Patna and one international airport at Bodh
Gaya.

• Several domestic airlines connect Patna to
Delhi, Kolkata, Mumbai, Lucknow, Bangalore,
Hyderabad and Ranchi.

• The airport in Bodh Gaya is used for
international connectivity with Bangkok,
Colombo and Kuala Lampur.

Domestic airport

International airport


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Bihar November 2010

Waterways
• The 1,620 km stretch of the river Ganges – that
flows between Allahabad in Uttar Pradesh and
Haldia in West Bengal – has been declared
„National Waterway 1‟ and is being developed for
navigation by the Inland Waterways Authority of
India.

• Patna has a low-level fixed terminal for handling
containers.The National Inland Navigation Institute
has been set up in Patna to train vessel crews.

• It has been proposed that waterways be used to
deliver coal to power plants located on the river-
side.


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Bihar November 2010

Telecom infrastructure
• As of December 2009, there were 31.7 million Telecom infrastructure in Bihar
subscribers as compared to 21.1 million in
December March
March 2009. As of December 2009, tele-density Parameter
2009 2009
in the state was 33 per cent.
No of telephone exchanges 1,236 1,235
• Out of the total number of subscribers, 30.7 No of telephone connections
31.7 21.1
million were wireless subscribers and 1 million (million)
were wire-line subscribers. No of wire line connections
1.0 1.0
(million)
• As of March 2009, the state had 67,160 public No of mobile phone (million) 30.7 20.1
call offices and 9,056 post offices.
Tele-density (per 100
33.0 22.2
population)
Major telecom operators in Bihar
Source: Department of Telecommunication, Annual Report 2009-2010
Bharat Sanchar Reliance Communications
Nigam Limited (BSNL) Idea Cellular
Bharti Airtel Vodafone Essar
Dishnet Wireless

Source: Cellular Operators Association of India

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Bihar November 2010

Power
• As of March 2010, Bihar had a total installed
power generation capacity of 1,845.7 MW, of Installed power capacity (MW)
which 584.6 MW was owned by state 1,970.0 1,970.0
2,000.0 1,845.7
utilities and 1,261.1 MW was owned by 1,767.6
1,644.1
central utilities. 1,750.0
1,500.0

• The total installed power capacity comprised 1,250.0
of 1,661.7 MW of coal-based power plants 1,000.0
and 129.4 MW of hydro power plants. 750.0
500.0
• Besides, there is 54.6 MW of installed power 250.0
generation capacity from renewable sources. 0.0
2005-06 2006-07 2007-08 2008-09 2009-2010
• As of March 2009, Bihar State Electricity
Board served over 2.18 million consumers Source: Central Electricity Authority
across eight transmission circles in the state.

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Bihar November 2010

Urban infrastructure
• Under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), eight projects costing
US$155 million have been sanctioned for the urban centres such as Patna and Gaya.

• In 2009-2010, US$ 15.7 million was released for projects related to development of water supply and
sewage system.

• The key areas of development are solid-waste management system, water supply and sewage.

City Water supply Solid-waste management Sewage
Patna • Per capita water supply of 107 lpcd is • Solid-waste generated in the city is • Around 170 mld of sewage
planned to be increased to 145 lpcd. 646 tpd. generated, of which 109 mld
is treated.
• US$ 116 million sanctioned for Patna • US$ 10.5 million sanctioned for
and Danapur area for improvement of improvement of solid-waste • Planned investment of US$
water supply. management. 96.5 million for improvement
of sewage management.
Gaya • Total water supply in the city is 2.7 • Solid-waste generated in the city is • US$ 20.9 million has been
mld. 15.5 tpd. sanctioned for improvement
of sewage management.
• US$ 7.3 million sanctioned for Gaya to • Planned investment of US$ 2 million
improve water supply. for solid-waste management.

lpcd: litre per capita per day, mld: million litre per day, tpd: tonnes per day.
Source: City Development Plans, JNNURM, Ministry of Urban Development, Government of India

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Bihar November 2010

Key public private partnership projects
Project cost (US$
Project name Sector PPP type Stage
million)

Hajipur-Muzaffarpur Roads BOT-Annuity 141.7 Construction

Chappra-Hajipur Roads BOT-Annuity 121.3 Construction

Kosi bridge project Roads BOT-Annuity 90.9 Construction

Mokama-Munger Roads BOT-Annuity 74.3 Construction

Forbesganj-Jogbani Roads BOT-Annuity 15.6 Construction

Ratu road commercial complex Urban development BOT-Annuity 0.9 Operating

BOT: Build-operate-transfer
Source: pppindiadatabase.com

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Bihar November 2010

Education sector
• As per Census 2001, the literacy rate in Bihar was
47.53 per cent. Education infrastructure in Bihar

• Deemed/open universities: 13
• In 2007-08, total number of students enrolled in • Research institutions: 15
primary and upper primary (up to class VII)
schools was 17.7 million, an increase of over 58 • Government-aided colleges: 451
per cent since 2003-04. • Engineering colleges: 7
• Medical colleges: 8
• Budgeted plan expenditure on education in the • Other colleges: 364
state has increased from US$ 97.3 million in 2005-
• Teacher training colleges: 15
06 to US$ 245.8 million in 2008-09, of which 99.9
per cent have been utilised. • Other educational institutions: 164

Source: Economic Survey of Bihar, 2009-2010, Medical
• The prestigious Indian Institute of Technology (IIT) Council of India
has been established in Patna in 2008-09.The
institute offers B. Tech and Ph. D. programmes in
computer science and engineering, electrical
engineering and mechanical engineering. Reputed technical institutes in Bihar

• Indian Institute of Technology, Patna
• National Institute of Technology, Patna
• National Institute of Fashion Technology, Patna

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Bihar November 2010

Health infrastructure
• As of October 2009, Bihar had 10,634 health centres of Health indicators as of 2008
various categories. There are 487 rural primary health
Persons served per doctor 25,000
centres (PHC), 46 urban PHCs, 1,234 additional PHCs
and 70 referral hospitals. Birth rate* 28.9
Death rate* 7.3
• On an average, there are 110 health centres for a
population of 1 million. At the district level, there is a Infant mortality rate** 56
wide variation in health coverage. Life expectancy at birth (years) as of 2001
Male 61.6
• Development of health infrastructure in Bihar has
resulted into higher patient turnarounds in outpatients Female 59.7
department, from 10.5 million in 2006-07 to 16 million
in 2008-09. *Per thousand persons
** Per thousand live births
Sources: Economic Survey of Bihar, 2009-2010, Ministry of
• An institute on the lines of All India Institute of Medical Health and Family Welfare, Government of India, Census 2001
Sciences (AIIMS) has been proposed to be set up in
Patna.There will also be a medical college offering
undergraduate, postgraduate and doctoral course.
Government initiatives in the health sector
• Increase in sanctioned manpower in departments such as medical, public health and family welfare.
• Higher level of personnel appointments and training.
• Involving private sector in support services related to cleaning, pathology and radiology.
• Free drug distribution and indoor treatment.

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Bihar November 2010

Cultural infrastructure
• According to the „Sports Policy, 2007‟, the State
Major museums in Bihar
Government is undertaking various initiatives to
promote sports in the state by augmenting • Patna Museum, Patna
sports infrastructure, providing facilities for • Chandra Dhari Museum, Darbhanga
coaching and supporting the promising players.
• Gaya Museum, Gaya

• An international conclave on „Experience • Nardhaha Museum, Nawada
Buddhism - In the land of its origin‟ was • Bhagalpur Museum, Bhagalpur
organised in February, 2010, to give major thrust • Maharaja Lakshimshwar Sing Museum,
to cultural tourism and explore potential related Darbhanga
to the Buddhist circuits in India, especially in • Sitaram Upadhya Museum, Buxar
Bihar.
• Bihar Sharif Museum, Nalanda

• Bihar Government has released a „Cultural • Chandra Sekhar Singh Museum, Jamui
Policy‟ in 2004, the purpose of which is to • Ramchandra Shahi Museum, Muzaffarpur
preserve and promote local culture.
Source: Youth, Art & Culture Department, Government of
Bihar
• There are 19 museums in the state and the State
Government has taken steps for their
development.

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Bihar November 2010

Industrial infrastructure … (1/3)
• The Bihar Industrial Area Development Authority (BIADA) is responsible for promoting and assisting the
rapid development of industries in the industrial areas and estates.

• Operations of BIADA are divided in four regions – Patna, Muzaffarpur, Darbhanga, Bhagalpur to facilitate
quick services to entrepreneurs.

• Regional offices, under the guidelines of head office, develop industrial area, industrial growth centres and
implement projects.

Industrial area Total land Vacant land Largest vacant land Average price of land
Region
(No) (acre) (acre) (acre) (US$/acre)

Patna 17 1,506.2 239.4 2.8 79,500

Bhagalpur 12 1,236.3 261.6 150 11,000

Darbhanga 10 899.8 99.0 2.5 10,490

Muzaffarpur 7 1,040.4 284.0 3.5 23,670

As of May, 2010
Source: BIADA

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Bihar November 2010


• BIADA is developing industrial growth centres across Industrial growth centres in Bihar
the state, which will have the infrastructure to
• Kahalgaon • Gidha
promote industries in sectors such as agro-processing,
light engineering, electronics, repairs and servicing and • Begusarai • Maranga (Purnia)
garments.
• Aurangabad • Khagaria

The other projects planned by BIADA are as follows: Source: Economic Survey of Bihar, 2008-09

• BIADA has proposed acquisition of 1,900 acres of land for Bihta Mega Industrial Park which will have
prestigious educational institutes such as Indian Institute of Technology (IIT) and National Institute of
Technology (NIT).

• BIADA has allotted 150 acres of land for textile park and 25 acres of land for handloom park at mega
growth centre at Kahalgaon.

• BIADA will also allot land to Indian Oil Corporation Limited (IOCL) for its proposed petrochemical
complex at Begusarai.

• BIADA is building separate feeder lines for uninterrupted electric supply in the selected industrial areas of
Patna, Fatuah, Hajipur, Muzaffarpur, Gidha, Barari and Maranga.

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Bihar November 2010

Centres Industries Industrial clusters in Bihar
Major agricultural centre of trade, exporting
grain, sugarcane, sesame and medium-grained
Patna rice; has also emerged as a manufacturing hub in
Bihar with the highest number of industrial
units.
Has the second-highest number of industrial
Tirhut units in the state; food/beverage processing and
manufacturing units are located here.
Important trade centre for cloth; famous for
Muzaffarpur
exporting fruits, particularly, mango and litchi.
Has major industrial units including those of
Indian Oil Corporation‟s refinery; capacity
Barauni
addition of the existing thermal power station is
being carried out.
Famous worldwide for tussar silk; trading of
agricultural produce and cloth is an important
Bhagalpur
economic activity. Other major industries
include rice, sugar milling and wool weaving. Manufacturing
Textile/sericulture
Gaya Major weaving centre, important tourist hub
Sugarcane
Agro-based industries (except sugarcane)

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Bihar November 2010

Infrastructure investments
• As of March 2010, the total investments in Investments
Bihar‟s infrastructure sector were around US$ Infrastructure type
(US$ million)
9 billion.
Power* 5,646.5

• Over 62 per cent of investments in Roads 1,884.4
infrastructure were in the area of power
Oil and gas 7.2
generation and distribution.
Railway 1,446.9
• About 21 per cent of the investments were in Total 8,984.9
road transport and around 16 per cent were in
the railways sector. *Generation and distribution
Source: CMIE
• Other major infrastructure sector attracting As of March 2010.
investments was oil and gas.

36

BIHAR November 2010

Contents

 Advantage Bihar






37

STATE POLICIES AND INCENTIVES
Bihar November 2010

Sector specific policies … (1/6)
Industrial Policy, 2006

Aim: To establish new industries and revive sick units, provide conducive environment to attract domestic and foreign investment
and provide environment for a balanced development of the state.
Key initiatives and objectives:

• Creation of corpus fund along with commercial bank and industry association for the revival of sick and closed units . A state-
level committee will decide on concessions and/or exceptions to be provided for rehabilitation of concerned units.

• Single-window clearance system to be provided.

• Infrastructure Development Enabling Act, 2006, for development of infrastructure through private participation.

• Establishment of land bank to meet requirements of industries and development schemes.

• Enhancement of competitiveness of industrial units through pre- and post-production incentives.

• Incentives to handloom sector industries.

• Development of handicrafts, handloom, khadi, silk and village industries.

• Provision of self-certification to simplify inspection of factories.

38

Bihar November 2010

Industrial Policy, 2006 (continued)
Key incentives:

• Exemption from stamp duty and registration fee; provision of reimbursement of value-added tax (VAT).

• Reimbursement of 50 per cent of cost on preparation of project report, up to US$ 1,630.

• Incentives on purchase of land and sheds:

 For small or tiny units at 50 per cent of the cost, up to a maximum of US$ 163,043.

 For medium to large units at 25 per cent of the cost, up to a maximum of US$ 326,087.

• Incentive grant of up to 50 per cent for expenditure on plant and machinery for captive power generation units.

• Electricity duty exemption for five years for captive generation of power for new units.

• Exemption from luxury tax, electricity duty, conversion charge and market fee for seven years.

39

Bihar November 2010

Food Processing Policy

Objectives: To address the infrastructure, technology, skills and marketing constraints being faced by rice, maize, pulses, honey,
makhana, fruits and vegetables, and other food processing units in the state by facilitating the setting up of new food processing
units. To aid the expansion and up-gradation of existing units.
Key incentives:

• Grant of US$ 3.25 million or up to 20 per cent of the total project cost, whichever is less, for setting up food parks.

• Grant up to 40 per cent of the project cost, subject to a maximum of US$ 2.17 million, for a special purpose vehicle (SPV) for a
common cluster infrastructure and up to 35 per cent of the project cost, subject to a maximum US$ 1.08 million, for an
individual investor.

• For expansion and capacity increase of existing units, the benefits of the scheme will only be available if the expansion project
leads to capacity addition of at least 50 per cent.

40

Bihar November 2010

Sugar Incentive Package

Aim: To serve the sugar industry by building on the factor advantages of the state.
Key incentives:
• Re-imbursement of central excise duty on sugar for five years.

• Exemption from purchase tax on sugarcane for five crushing-years.

• Exemption from stamp duty and registration fees for land transfer.

• Subsidy of 10 per cent on capital investment or a maximum of US$ 2.2 million, whichever is less, on machinery after completion
of first year of commercial production.

• Incentive package for distillery and ethanol as well as co-generation of power.

41

Bihar November 2010

Bihar Tourism Policy

Aim: To promote and develop tourism in Bihar and to transform tourism industry as a vital part of vibrant economic activities of
the state.
Key initiatives:

• The State Government will prepare an area-based master plan for developing infrastructure that is necessary for the tourist
destinations. The Department of Tourism will formulate a 20-year master plan with future projection for development of
tourism in the state.

• All facilities and incentives available for industry will apply to investment in tourism sector.

• The state will promote private investment for setting up hotels and heritage hotels. The State Government will explore and
develop possibilities of launching a paying-guest scheme.

• Rules and regulations for land allotment will be simplified to create tourism infrastructure.

• The Department of Tourism will identify potential tourist destinations where religious fairs and festivals are an integral part of
culture and will promote such destinations.

• Tourist information centres will be equipped with the modern information and communication technology devices.

• The State Government will promote weekend tourism, wildlife tourism, aqua tourism and rural tourism.

• Human resource required for growth of tourism will be developed.

42

Bihar November 2010

Policy guidelines for private sector participation for developing non-conventional energy sources

Aim: To encourage private sector participation in decentralised generation of grid-grade power, through the use of the available
inputs for renewable and non-conventional energy sources such as solar, wind, water, biomass and other wastes.
Key initiatives:

• Any industry, institution, private agency, partnership firm, consortium, panchayat, cooperative society or registered society
interested in installing and generating electricity from non-conventional energy sources such as mini- and micro-hydro plants,
solar-thermal plants, solar-photovoltaic systems, biomass plants, bagasse-based plants, wind plants, cogeneration plants,
municipal and industrial-waste plants will be eligible for availing incentives under the scheme.

• The Bihar State Hydro-electric Power Corporation (BHPC) and/or Bihar Renewable Energy Development Agency (BREDA) will
provide necessary information and assistance regarding identification and selection of feasible sites.

• The project will be treated like that of any other industry and incentives / concessions applicable to new industrial units under
industrial policy will be available to the project.

• There will be no restriction on power generation capacity or supply of electricity to the grid.

43

BIHAR November 2010

Contents

 Advantage Bihar






Company logos cited in this section are registered trademarks of the respective companies.

44

BUSINESS OPPORTUNITIES
Bihar November 2010

Food processing and dairy
• Bihar is one of the largest producers of vegetables and
fruits in the country. The factor advantages of the state Key players
make it a suitable place for setting up units in the food
processing sector. Bihar State Cooperative Milk
Producer‟s Federation (COMPFED )
• The state is one of the leading producers of banana, Usher Agro Limited
mango, litchi and vegetables such as onions, tomato,
potato, egg-plant and makhanas in the country.

• In 2008-09, total production of fruits in Bihar was 3.85
million tonnes and total production of major
vegetables was 13.4 million tonnes.

• Food processing is a priority sector for the State
Government. Up to 40 per cent of the project cost for
setting up food processing units is subsidised by the
State Government.

• Besides food processing, the State Government
promotes cooperative marketing of milk and dairy
products.


45

Bihar November 2010

Food processing and dairy – company profiles
Bihar State Cooperative Milk • COMPFED is an organised milk processing cooperative, which collects milk through district
Producer‟s Federation level cooperative unions, processes and markets the same.
(COMPFED )
• It also supports members with interventions across technology, supply chain, marketing,
training, etc.

• COMPFED covers five districts directly and 26 districts through six district level
cooperative unions.

• In 2009-2010, COMPFED procured around 1 million litres of milk per day from a member
base of around 0.46 million.
Usher Agro Limited • Usher Agro Limited is one of the large basic food grain (rice and wheat) processing
companies in India. The company established its rice processing mill in Buxar, Bihar in 2003

• In 2009, the revenue of the company was US$ 44.1 million compared to US$ 7.4 million in
2005.

• The products of the company are sold under the brand name „Rasoi Raja‟.

46

Bihar November 2010

Chemical, oil and gas
• The major drivers of chemical, oil and gas industry
in Bihar are proximity to sea ports – Kolkata and Key players
Haldia, availability of labour, and the vast market of Indian Oil Corporation Limited
Eastern India.
Graphite India Limited

• Petroleum remains a large contributor to the state‟s Krishi Rasayan Exports Private Limited
GSDP as it has one of the largest public sector
refineries in the country - Indian Oil Corporation
Limited (IOCL).

• IOCL is expected to set up petrochemical complex
at Begusarai.

• Oil and Natural gas Corporation Limited (ONGC)
is carrying out exploration for petroleum and
natural gas in four districts in Purnea division.

• GAIL (India) Limited is considering setting up a gas
based 300 MW power plant at Bettiah.


47

Bihar November 2010

Chemical, oil and gas – company profiles
Indian Oil Corporation • IOCL is India‟s leading petroleum refinery and a Fortune 500 company. It has a refinery at
Limited (IOCL) Barauni, with an annual capacity of 6 million metric tonnes.

• Secondary processing facilities, such as a resid-fluidised catalytic cracker, diesel hydro-treating and
a sulfur-recovery unit, have been added to the main refinery.

• The 498-km long Haldia-Barauni crude oil pipeline (HBCPL) receives crude oil at the Haldia oil
jetty and transports it to the Barauni refinery.
Graphite India Limited • GIL was incorporated in 1963. The company has nine plants located across India and producing
(GIL) graphite products, coke and power.

• The coke division of the company at Barauni, in Bihar is engaged in manufacture of calcined
petroleum coke (CPC) and has an installed capacity of 30,000 tonnes per annum.

• In 2009-2010, the company produced 30,781 tonnes of calcined petroleum coke in its Barauni
plant, surpassing installed capacity.
Krishi Rasayan Exports • KREPL is one of the major agri-chemical manufacturer, with five composite technical
Private Limited (KREPL) manufacturing units. Total revenue of the company in 2008-09 was US$ 61.5 million.

• In 1973, the company set up its plant at Muzaffarpur in Bihar for producing dusting powder
formulation.

• The company operates a poultry feed unit in Muzaffarpur with a capacity of 150 tonnes per day in
pellet-form.

48

Bihar November 2010

Sugar
• Sugar, the largest agro-based industry in the state
Key players
plays a prominent role in Bihar‟s economy.
K. K. Birla Group
• The North of the state is climatically well-suited for Riga Sugar Company Limited
producing good quality sugarcane with minimum
Vishnu Sugar Mills Limited
inputs as compared to the other states.
Eastern Sugar & Industries Limited
• In 2007-08, about 108,560 hectares were under
sugarcane production and the state produced about
3.85 million tonnes of sugarcane.

• It is estimated that about 500,000 farmers are
engaged in sugarcane cultivation and another 50,000
skilled and unskilled labours are working in sugar
mills.

• The State Government offers incentive package to
the sugar industry.The Sugarcane Institute in Pusa
and Rajendra Agricultural University are engaged in
sugarcane-related research activities.

49

Bihar November 2010

Sugar – company profiles
K. K. Birla Group • The K K Birla Group‟s sugar company, Upper Ganges Sugar & Industries Limited (UGSIL), has
two units in Bihar – Bharat Sugar Mills at Sidhwalia, with a crushing capacity of 5,000 tonnes per
day (tpd) and Hasanpur Sugar Mills at Hasanpur, with a crushing capacity of 3,000 tpd.

• The Sidhwalia unit also has a 18 MW cogeneration power plant.
Riga Sugar Company • The company belongs to the P. L. Dhanuka group and was incorporated in 1980.
Limited
• It manufactures ethyle alcohol, molasses and sugar at Sitamarhi in Bihar.

• The plant has crushing capacity of 5,000 tonnes per day.
Vishnu Sugar Mills Limited • The company is promoted by the Bajoria family and was incorporated in 1932.

• It manufactures molasses and sugar at Gopalganj in Bihar.

Eastern Sugar & Industries • The company was incorporated in 1932.
Limited
• It manufactures molasses and sugar at Purba Champaran, in Bihar.


50

Bihar November 2010

Manufacturing industry
• After bifurcation of Bihar, a number of large units
(mostly mining and engineering) of erstwhile Bihar are Key players
now located in Jharkhand. Bata Industries
Bharat Wagon and Engineering Company
• The state has leather, textile and handloom industries Gangotri Iron & Steel Company
as its prominent sectors, apart from some engineering
units.

• The state has ample raw materials (hides and skin of
livestock), technical skills (leather technology
institutes) and manpower, which are the major drivers
for leather industry in the state.

• There are 85 leather units in the state of which 60 are
manufacturing units and 25 units take up job-work.

51

Bihar November 2010

Manufacturing industry – company profiles
Bata Industries • Promoted by the Toronto-based Bata Shoes, Bata is among India‟s largest manufacturer
and marketer of footwear products.

• The company has a tannery at Mokamehghat, in Bihar and a leather footwear factory at
Bataganj, in Patna.

Bharat Wagon and Engineering • The Bharat Wagon and Engineering Company is a part of Bharat Bhari Udyog Nigam, a
Company Government of India undertaking . It has a over 50 years of experience in heavy-steel
fabrication.

• It has two units at Mokama and Muzaffarpur, which are ISO 9001 certified for
manufacturing wagons; a third unit at Muzaffarpur manufactures gas cylinders. All three
plants have captive-power generation capacity.
Gangotri Iron & Steel Company • The company produces mild steel (MS) bars and billets.

• In 2009, the company produced 19,665 tonnes of MS bar and 8,888 tonnes of MS billet.

• In January 2009, the company set up a new unit in Bihta, in Bihar. The company has
production capacity of 145,000 tonnes of MS bar, 108,900 tonnes of MS billet and 540,000
cubic metre of oxygen.

52

Bihar November 2010

Tourism … (1/2)
• The state has a rich cultural heritage as it is
associated with pilgrimages and historical
monuments related to religious gurus such as
the Buddha, Mahavir, Guru Gobind Singh.

• Tourism in the state revolves around the
Buddhist circuit (Bodhgaya, Rajgir, Nalanda),
the Jain circuit (Bisram, Mandar hill,
Champanagar) and the Sufi circuit.

• Monuments of historical and religious
significance present tremendous potential for
attracting both domestic and foreign tourists.

• The state‟s tourism policy stresses on
developing infrastructure and financing for
tourism.

• The Bihar Government is preparing a 20-year
master plan for promotion and development
of tourism in the state.

53

Bihar November 2010

Tourism … (2/2)
• In an effort to promote tourism in the state, the Department of Tourism, Government of Bihar, along with
the Ministry of Tourism, Government of India, organised an international Buddhist Conclave in Nalanda
and Rajgir in February, 2010.

• The state is also developing the Buddhist tourist circuit (Bodh-Gaya-Rajgir-Nalanda) with an assistance of
US$ 4.6 million from the Central Government.

• In 2009, the total number of tourist arrival was around 16.1 million. Arrivals have grown at around 23.4
per cent between 2007 and 2009.

Arrival of domestic tourists in Bihar Arrival of foreign tourists in Bihar
18 450 423
15.7
16 400
345.6
14 11.9 350
12 10.4 300

thousand
million

10 250
8 200 177.4
6 150
4 100
2 50
0 0
2007 2008 2009 2007 2008 2009

Source: Ministry of Tourism, Government of India

54

Bihar November 2010

Major industrial projects being implemented
Investment
Project Sector Promoter Location
(US$ million)
Power Power Grid Corporation of India
Kahalgaon-II transmission line 3,867.8 Kahalgaon-Biharsharif
distribution Limited (PGCIL)
Kahalgaon-North Karanpura-Barh Power Kahalgaon-North
PGCIL 2,000.0
composite transmission line distribution Karanpura
Barh power project Power NTPC Limited 1,889.7 Barh
Nabinagar power project Power Bharatiya Rail Bijlee Co Limited 1,087.0 Nabinagar
Telecom
Basic telecom sevices project Tata Teleservices Limited 1,087.0 Partially in Bihar
services
Patna Ganga railway bridge project Railways East Central Railway 181.5 Sonepur
Sub-transmission and distribution Power
Bihar State Electricity Board 178.9 Bihar
project distribution
Sugar (Paschimi Champaran) project Sugar Globe Sugar Refinery Limited 173.9 Champaran
Sitamarhi-Jaynagar-Nirmali railway Sitamarhi-Jaynagar-
Railways East Central Railway 143.2
line project Nirmali
Nawada-Laxmipur railway line
Railways East Central Railway 131.0 Nawada-Laxmipur
project
Araria-Galgalia railway line project Railways North Eastern Railway 115.2 Galgalia
Sugar (Betiah) project Sugar Moria Sugar Private Limited 108.7 Betiah

Source: projectstoday.com

55

Bihar November 2010

Key industrial projects being planned
Investment
Project Sector Promoter Location
(US$ million)
Pirpainti thermal power project Power Nalanda Power Company 2,173.9 Pirpainti
Nabinagar thermal power project Power Bihar State Electricity Board 1,956.5 Nabinagar
Coal-based power (Buxar) project Power Krishak Bharati Co-Op. Limited 1,304.4 Buxar
Hathiadah and Durgawati pumped storage Bihar State Hydroelectric
Power 933.4 Bhabhua
(hydel) power project Power Corporation Limited
Ministry of Railways,
Diesel locomotive (Marhowra) project Manufacturing 591.1 Marhowra
Government of India
Thermal power (Barauni) project Power Vikash Metal & Power Limited 543.5 Barauni
Electric locomotive factory (Madhepura)
Manufacturing Central Government 426.2 Madhepura
project
Khagaria- Bakhtiarpur (NH-31) road National Highways Authority of
Roadways 383.9 Bakhtiarpur
project India
Integrated steel (Begusarai) project Finished steel Vikash Metal & Power Limited 326.1 Begusarai
High sulphur crude maximisation project Refinery Indian Oil Corporation Limited 171.7 Barauni
Co-generation power (Paschimi Paschimi
Power Kamlapur Sugar & Industries 168.8
Champaran) project Champaran
Hospital-cum-medical college (Bihta) Employees' State Insurance
Hospitals 138.5 Bihta
project Corporation
Water and
Water supply scheme (Patna) Government of Bihar 95.9 Patna
sewerage pipeline

Source: projectstoday.com
56

BIHAR November 2010

Contents

 Advantage Bihar






57

DOING BUSINESS IN BIHAR
Bihar November 2010

Key approvals required … (1/2)
Approvals and clearances required Departments to be consulted Estimated time in days
Incorporation of company Registrar of companies NA
Registration, Industrial Entrepreneurs
Nodal agency (Industries Department) NA
Memorandum (IEM), industrial licenses
Seven to 21 days (up to 90
Allotment of land Bihar Industrial Area Development Authority days for acquisition of non-
industrial land)
30 days (45 days for
Revenue and Land Reforms Department,
Permission for land use conversion of non-industrial
Government of Bihar
land for use)
Registration under Factories Act and Boilers Offices of Inspector of Factories, Inspector of
Up to 120 days
Act Boilers
Site environmental approval, No objection Bihar State Pollution Control Board and Ministry
certificate and consent under Water and of Environment and Forests, Government of 60 days
Pollution Control Acts Bihar
Approval of construction activity and building Urban Development and Housing Department,
Seven days
plan Government of Bihar

NA: not available

58

Bihar November 2010

Key approvals required … (2/2)
Approvals and clearances required Departments to be consulted Estimated time in days
Sanction of power Bihar State Electricity Board Up to 30 days
Water Resources Department, Government of
Sanction of water Up to 30 days
Bihar
State Fire Service Headquarters, Government of
Fire service clearance Up to 15 days
Bihar
Registration under state‟s Sales Tax Act, and Sales tax department, central and state excise
Seven days
Central and State Excise Act departments

59

Bihar November 2010

Cost of doing business in Bihar
Cost parameter Cost estimate Source

US$ 384,780 in Patliputra, US$ 83,700 in Bihar Industrial Area Development
Industrial land (per acre)
Muzaffarpur Authority
Labour Resources Department,
Labour (per man year) US$ 825 to US$ 1,275
Government of Bihar
Office space rent
US 20 cents to US 35 cents Industry sources
(per sq ft per month)
Residential rent
US$ 145 to US$ 280 Industry sources
(2,000 sq foot per month)
Five-star hotel room (per night) US$ 100 to US$ 180 Leading hotels in the state

Commercial and industrial electricity Industrial: US 8.8 cents to US 9.2 cents
Bihar State Electricity Board
(per kWh) Commercial: US 9.1 cents to US 10.5 cents

60

Bihar November 2010

Single-window approval mechanism
• Bihar Single Window Clearance Act, 2006, and the Bihar Industrial Policy, 2006, promote industrial
growth by giving rapid clearances, issuing of licenses and certificates and providing an overall investor-
friendly environment in the state.

• The Industries Department of the state and the District Investment Centre (DIC) act as nodal agencies
for investments.

• Proposals for investment greater than US$ 21.7 million are routed through Chief Minister and the
Cabinet for approval.

Investment handled Body Chairman Nodal agency

US$ 2.17 million to State-level Industries
Industries Development
investment Development
US$ 21.7 million (Udyog Mitra)
promotion board Commissioner
District-level
Below US$ 2.17 million District Collector DIC
committee

61

Bihar November 2010

Key investment promotion offices … (1/2)
Industries Department, • State-level nodal body under the single-window regime for investments of above US$ 2.17
Government of Bihar million.

• Primary functions involve coordinating applications from investors, processing and
facilitating the process of getting clearances from various departments.

• The Department, headed by the Principal Secretary, supervises district industry centres
(DIC), industrial area development authorities and industrial premises in the state.
District Industry Centre (DIC) • District-level nodal agency for investments below US$ 2.17 million.

• DIC supports entrepreneurs in identifying local resources, supply of raw materials and
equipment, arrangement of credit facilities, marketing, quality control, etc.
Bihar Industrial Area • BIADA develops infrastructure for industries in segments such as roads, drainage, water,
Development Authority (BIADA) power, etc.

• Supports entrepreneurs in setting up industries and availing incentives offered by the State
Government.

62

Bihar November 2010

Key investment promotion offices … (2/2)
Bihar State Finance Corporation • The main state-level institution that provides term lending facilities to industrial
entrepreneurs.

• The corporation has been revived to supplement the role of banks in lending to industries.
Bihar State Electricity Board • The board is responsible for the synchronised development of generation, transmission
(BSEB) and distribution of power in the state.

Bihar State Pollution Control • The purpose of the organisation is prevention and control of pollution through inspection
Board of treatment plants, standards application, research and development activities, etc.

• Headquartered at Patna, the organisation has seven zonal-offices.

63

Bihar November 2010

Contact list … (1/2)
Key agency Contact information

Industries Department, Vikas Bhawan
Government of Bihar Bailey Road,
Patna - 800 001, Bihar.
Phone: 91-0612-2215 211
Fax: 91-0612-2217 991
Website: http://industries.bih.nic.in/
Bihar State Finance Corporation Fraser Road,
Patna - 800 001, Bihar
Phone: 91-0612-2332 210
Fax: 91-0612-2217 991
E-mail: bsfcpatna@gmail.com
Website: http://bsfc.bih.nic.in/

64

Bihar November 2010

Contact list … (2/2)
Key agency Contact Information

Bihar State Electricity Board (BSEB) Vidyut Bhawan,
Bailey Road,
Patna - 800 001, Bihar.
Phone: 91-0612-2504 610
Website: http://bseb.bih.nic.in/

Bihar Industrial Area Development Authority Udyog Bhawan, First floor,
(BIADA) East Gandhi Maidan,
Phone: 91-0612-2302 914
Fax: 91-0612-2302 989
E-mail: md@biada.in, info@biada.in,
Website: http://www.biada.in
Bihar State Pollution Control Board Beltron Bhawan, Shastri Nagar
Jawahar Lal Nehru Marg,
Phone: 91-0612-2302 914
Fax: 91-0612-2281250
Email: bspsb@vsnl.net,
Website: http://wgbis.ces.iisc.ernet.in

65

Bihar2009 2010

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