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India By State - Punjab - Business Opportunities


Business Opportunities

 

Introduction

Punjab, the land of agriculture, has made a remarkable progress in this field and is recognised as the granary of India. The State has also made rapid strides in industrialization through coordinated development of small scale, medium and large scale industries. It has a predominance of small-scale industries, amounting to 2.04 lakh production units. These units produce bicycle parts, sewing machines, hand tools, machine tools, auto parts, electrical items, sports goods, surgical instruments, leather goods, hosiery, knitwear, nuts and bolts, textiles, sugar, vegetable oil, etc., giving employment to more than 900 000 people. All of this has been made possible by the enterprising spirit of the people of Punjab. Besides, entrepreneurs from across the globe are investing in the various sectors of the State.

 

Key Industries

Agro-Based

Punjab is a land of boundless opportunity for the agro based industry. The State makes up only 1.5 per cent geographical area of the country, but produces 22 per cent of wheat; 12 per cent of rice and 12 per cent of cotton in the country. Priority is also being given to sugarcane, oil seeds, horticulture and forestry. The cropping intensity of the State is more than 186% and has earned it a name of 'food basket and granary of India'. In Punjab, per hectare consumption of fertilizer is 177 kg as compared to 90 kg at the national level. Also, the State has been awarded 'National Productivity Award' for agriculture extension services for consecutively ten years from 1991-92 to 1998-99 and 2001 to 2003-04.

The investment potential within the agro based sector lies in the following areas:-

  • Processing of major and minor crops
  • Processing of fruits and vegetables
  • Processing of crop and agro industrial residue
  • Poultry and animal husbandry
  • Dairy and milk processing

The industrial output of agro-based industries in the state is roughly us $2.44 billion, contributing nearly 20% to the manufacturing output and about 14% to employment. The value of output grew at a CAGR of 8% between 2001 and 2005.

A Contract farming scheme was devised with elements of notable contract farming agreements including those with the Tata Group for Basmati Rice, the UB Group for malting barley and Advanta India for hyola (high-breed rapeseeds mustard). Others crops being promoted include maize, hybrid basmati and sunflower.

Organic farming is also a thrust area with initiatives from the Punjab Agriculture Export Corporation (PAGREXCO)

There are various incentives offered for promoting organic farming in the State, including free of cost consultancy and a 100% subsidy on certification of produce by internationally accredited agencies.

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Biotechnology

Punjab's strong agricultural base presents an opportunity for leveraging it to develop the biotechnology industry in the state. The Government of Punjab has taken significant initiatives to promote biotechnology related R&D in the state.

Two centres which form the nucleus of the biotech research in the region are the Institute for Microbial Technology (IMTECH) in Chandigarh which takes up research in microbial bio-processing and the Central same. In addition, it is also supporting the Scientific and Industrial Organisation (CSIO) which has been developing a number of biotech based diagnostic kits.

The state is developing a biotechnology park in the suburbs of Chandigarh to nurture commercially viable leads through companies. The park, a public-private partnership between Beckons Industries Ltd and Punjab State Council for Science and Technology, is being set up at an estimated cost of US$ 22 million. Its facilities will include a biotech incubator for research and development, pilot testing and other validation facilities. The park aims to attract Small and Medium Enterprises (SMEs) to the cluster and contribute to overall R&D in the sector.

The Punjab State Council for Science and Technology will act as the single window agency for setting up business in the biotech park. Major players to have shown an interest in the park include Ranbaxy, Dr Morepen, Panacea Biotech, among others

IT/Electronics

Punjab encompasses unique competitive merits that should facilitate further development of the IT sector in the state. These include:

  • A large number of engineering colleges and other educational institutions to create high-tech manpower resources
  • Development of IT parks to encourage software exports from the state
  • Incentives for electronics units
  • Persistent efforts by the Government to implement IT at all levels
  • Punjab Infotech has developed Mohali as a hub for electronics and IT in the state

Punjab's IT Policy and the incentives offered to the IT industry are aimed at promoting the state as an attractive destination. Mohali has been developed as an IT and ITES hub. Software exports from the state were worth $44.5 million in 2005-06. Over the past few years, over 1,200 SSI units have been set up in the electronics hardware segment. These produce personal computers, industrial electronic equipment, television sets, radios, electronic instruments, tools and components. The Electronic Test & Development Centre at Mohali provides testing facilities. The state has launched an IT-dedicated venture capital fund, with a corpus of $4.75 million, funded jointly by PSIDC, Punjab Infotech, PFC and SIDBI. Several large IT companies, including Quark, Dell and Infosys, operate out of Punjab.

Light Engineering Goods

The Light Engineering Industry in Punjab accounts for 21% share in manufacturing output ad more than 25% share in industrial development.

This industry is mainly related to bicycle and bicycle parts, hand tools, sewing machines and machine tools. In light of this, the State accounts for 15% of bicycle production and 80% of bicycle parts production in India, largely located in Ludhiana. It is home to one of the world's largest bicycle companies, Hero Cycles Ltd. The other major producer of bicycles is Avon Cycles. Both companies are located in Ludhiana.

Hand tools like wrenches, hand drills, pullers, vices, hammers, screw drivers, pliers, spanners, etc are manufactured mainly in Ludhiana, but sewing machines and their parts are mostly manufactured in Jalandhar.

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Top Ten District Production

Ludhiana 32.7%
Patiala 11.1%
Roop Nagar 8.7%
Amritsar 6.9%
Sangrur 6.7%
Bathinda 6.0%
Jalandhar 5.0%
Fatehgarh Sahib 4.8%
Gurdaspur & Mansa 3.7%
Hosiarpur 3.6%

Textiles

The textile industry of Punjab is advantageous on the competitive edge due to three key factors, bountifulness of raw material (cotton), presence of several textile and woollen clusters, and skilled labour. Possessing a US$ 2.34 billion textile industry, the state is the second largest producer of cotton and blended yarn and the third largest producer of mill made fabrics in the country. In fact, 40 per cent of the country's wool units are also located in Punjab. The District Of Ludhiana is often dubbed as the 'Manchester of India'

With the global trade in textile and clothing expected to grow from the current US$ 356 billion to US$ 600 billion by 2010, the state has seen a spurt of capacity enhancements and some ambitious scale ups in anticipation of the quota-free regime. Clearly, Punjab has an opportunity to boost its existing strengths to capture a larger share of the textile market.

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Key Players

Abhishek Industries Ltd (AIL)

Incorporated in 1990, Abhishek Industries Ltd is a part of the Ludhiana-based Trident group. AIL is the second largest manufacturer and exporter of terry towel in India. It also produces yarn, writing and printing paper, and chemicals. The company's sales in 2003-04 stood at US$ 115 million. Over 80 per cent of its revenues were from exports. AIL exports around 94 per cent of its production to major retailers in the US (Wal-Mart, J C Penney etc). With the current manufacturing capacity of 7,119 tonnes per annum, AIL has been increasing its focus on the high-margin export-oriented terry towels business. The company is expanding its production capacity to 20,000 tonnes with an investment of US$ 50 million.

Avon Cycles Ltd

The US$ 66.7 million Avon Cycles is a large bicycle manufacturer based in Ludhiana. The company produces up to 1.5 million bicycles per annum at its ten manufacturing facilities. Recently, Avon increased its production from 5,000 to 8,000 bicycles per day. The company exports 30 per cent of its bicycles. Recognised by the government of India as a 'Golden Trading House', the company is the largest exporter of bicycle parts from India. Presently, it is engaged in the development of a range of electrically powered bikes and scooters.

Dell Inc.

The US$ 49.2 billion Dell Inc. recently launched its third customer contact centre, an 180,000 sq ft centre, located at the Quark IT Park in Mohali. The centre has 300 employees approximately, who have received extensive training in Information Technology and customer-relation skills. The centre is part of a global network of around 50 centres that Dell operates around the world.

GNA Group

With plants in Jalandhar and Hoshiarpur, the GNA Group is engaged in the production of rear axle shafts and U.J. crosses, propeller shaft assemblies, hydraulic lift shafts, steering components, wheel spanners, brake S-cam shafts and forgings for use in all types of light, medium, and heavy vehicles. Apart from its strong presence in the replacement market, the company supplies its products to different automobile majors.

Gujarat Ambuja Cement Ltd (GACL)

Gujarat Ambuja Cement Ltd is India's third largest cement producer with revenues of over US$ 500 million and a total capacity of 12.5 million tonnes. The company is the most profitable cement company in the country and the least cost producer of cement in the world. In 2004, the company commissioned a capacity of over 14.5 million tonnes per annum at Ropar in Punjab. This is one of the company's five plants across the country. GACL is also setting up a 30 MW captive electricity generation plant in Punjab.

Hero Cycles Ltd

Hero Cycles Ltd is part of the US$ 1.8 billion Hero Group, one of the country's top ten business houses. Hero Cycles is the world's largest producer of bicycles, manufacturing over 5.6 million units per annum. The company's main manufacturing unit is located at Ludhiana in Punjab. Hero Cycles recently expanded its capacity by setting up a US$ 6.7 million plant to manufacture 300,000 bicycles per annum. A further investment of US$ 4.4 million is planned to enhance the capacity of the Ludhiana plant. Hero Cycles has been rated as a Superbrand by the Global Superbrands Council. The company also features in the Guinness Book of World Records as the largest bicycle manufacturer in the world since 1986. It has amalgamated with National Bicycle Industries, a part of the Matshushita Group, Japan, to manufacture high-end bicycles.

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Hindustan Petroleum Corporation Ltd (HPCL)

Hindustan Petroleum Corporation Ltd is one of India's largest integrated oil refining and marketing companies. HPCL is setting up a 9 MMTPA oil refinery at Phulokhari in Bhatinda district through its 100 per cent subsidiary, Guru Gobind Singh Refinery Ltd. The total investment in the project is estimated to be over US$ 2 billion and is expected to be operational by 2006.

International Tractors Ltd

International Tractors Ltd is one of the major producers of tractors and agricultural machinery in the country. It is a joint venture with Renault Agriculture, France. The company has a modern and completely computerised plant at Hoshiarpur in Punjab. Manufacturing about 37,000 tractors per annum, the company exports tractors to various countries including Australia, South Africa, and Algeria.

Infosys Technologies Ltd

The US$ 1.1 billion Infosys Technologies Ltd is the country's leading software services company that provides consulting and IT services to clients globally. Infosys has over 13,000 employees worldwide and has nine development centres across the country. In 2001, Infosys set up its development centre at Mohali, which is outfitted with advanced technologies and solutions for enterprise networking, office productivity, collaborative software engineering and distributed project management. In 2002, the company signed a Memorandum of Understanding (MoU) with the Union Territory of Chandigarh Administration to buy 20 acres of land at the Chandigarh Information Services Park (CISP) to set up a software development centre in Chandigarh, which is expected to house 2,400 software developers over the next five years.

JCT

JCT, Thapar Group company, is a leading textile manufacturer in Punjab. It was the first in the textile industry to receive an ISO 9002 certification and is the largest manufacturer of blended fabric in the country. JCT Electronics Ltd is a flagship company of the Thapar Group, which was the first colour picture tube manufacturer in India. The company has a plant at Mohali, near Chandigarh.

Malwa Group

The Malwa Group is among the top ten textile mills of the Indian sub-continent manufacturing cotton yarn, acrylic yarn and, polyester viscose yarn with important exports. An ISO 9002 company, its total spindelage is around 140,000.The company comprises three milling units, of which two are situated at Barnala in Punjab. The company exports all types of yarn to countries in Asia, Europe, Africa and America.

Nahar Group

Established in 1949, the Nahar Group is one of Punjab's leading industrial houses. The group has a presence in textiles, apparels, soaps, vegetable oils and sugar. It operates under four firms, Oswal Woollen Mills, Nahar Spinning Mills, Nahar Exports, and Nahar Industrial Enterprises. The US$ 450 million company is one of the largest exporters of textiles in Punjab. Its production amenities have been awarded the ISO 9002/IS 14002 certifications and Okotex Certification. It also has a plan to enter the state's retail sector.

Nestle India Ltd

Nestle India Ltd is a subsidiary of Nestle SA, Switzerland, which is one of the world's largest food and beverage companies. In India, Nestle is a leading company in the FMCG industry with brands like Maggi, Nescafe, Cerelac, Lactogen, Kit Kat and Polo. The company set up its first factory in 1961 at Moga in Punjab for manufacturing processed foods. Today, Nestle procures and processes milk from farmers in Punjab. In India, the company has over 3,000 employees and its revenues stood at US$ 497 million in 2003.

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Pepsi Foods

Pepsi Foods, part of PepsiCo USA, is one of the largest food and beverage companies in the country. The company has invested US$ 1.5 million to develop a comprehensive agro-technology programme with the Punjab Agriculture University. This programme has helped thousands of farmers across India improve the yield and quality of their agricultural products. PepsiCo and Punjab Agro have also set up a 9,600 sq ft greenhouse at the Agriculture Research and Development Centre at Jalandhar to commercialise citrus cultivation in the state. With a motive to source oranges from the state for making Tropicana orange juice, Pepsi has deployed the agri-research team of Tropicana.

Godrej Agrovet Limited

Godrej Agrovet Limited is a US$ 297 million company whose manufacturing units are spread over 40 strategic locations. It signed MOU with the Punjab government to establish a manufacturing plant for its Real Good brand of fresh, chilled chicken. An investment of around US$ 22 million has been planned for this processing unit as well as for the further expansion of its rural retail initiative Aadhaar. With an objective to set up retail stores in rural areas, Aadhaar would provide numerous services for rural households, from the basic food, grocery, apparel, footwear to furniture, kitchenware and home appliances to value-added services including banking, postal services, and pharmacy

Punjab Tractors Ltd (PTL)

In 1970, Punjab Tractors Ltd was promoted as the country's first large scale, totally indigenous project to commercialise India's first tractor. Today, PTL is a leading manufacturer of tractors, combines and forklifts. It also produces rice transplanters, light commercial trucks, mini buses, ambulances, diesel engines, and automotive seating and components. The company exports its premium products to the USA. In 2003, as part of the Government of Punjab's divestment process, majority stake in PTL was sold to UK-based CDC Group Plc.

Quark Inc.

Quark Inc. is a US-based global IT company that creates software related to communication and resource management. Quark set up its largest software development centre at Mohali with an investment of US$ 17.8 million in 1998. Currently, Quark comprises 1,100 IT professionals in the facility and plans to recruit more software developers.

Ranbaxy

The US$ 1.17 billion Ranbaxy Laboratories Ltd is the country's largest pharmaceutical company and one of the top ten generic companies worldwide. Ranbaxy manufactures and markets world-class generics, branded generic pharmaceuticals and active pharmaceutical ingredients. The company started operations in 1961 and set up its first bulk drugs and formulation manufacturing plant at Mohali, in Punjab in 1973. The manufacturing facility at Mohali is engaged in the production of APIs, primarily semi-synthetic penicillin, flouroquinolones and bulk cephalosporins. The company's products are sold in over 100 countries. It has manufacturing operations in 7 countries and ground presence in 44 countries. Majority of Ranbaxy's manufacturing facilities are US Food and Drug Administration (USFDA) approved. Currently, Ranbaxy is investing US$ 100 million to expand its production capacities in India, Brazil and USA.

Siel

Punjab-based Siel is a leading producer of industrial chemicals, vanaspati & vegetable oils and sugar. The company has an industrial chemical complex at Rajpura in Punjab, which includes a chloralkali plant set up with an investment of over US$ 55 million. Siel has a tie-up with the Government of Punjab to set up an industrial estate in the state. Siel's subsidiary companies include Honda Siel Power Products Ltd, Honda Siel Cars India Ltd and Daikin Industries.

Vardhman Group

With interests in specialized yarns, fabrics, sewing threads, and acrylic fibre, the US$ 439 million Vardhman Group is one of the largest textile conglomerates in the state. It is the second largest producer of sewing thread in the country and contributes 6 per cent to its yarn exports. The company has announced expansion plans aggregating an investment of US$ 222 million to increase its production capacity and product quality. The company exports 40 per cent of its yarn production to more than 25 countries and has a strong presence in markets like the EEC, USA, Canada, China, Japan, Korea, Mexico, Brazil, Mauritius, Middle East etc.

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Export Profile

Punjab's total exports were US$30.19 billion in 2008-09, which were 13.32 percent higher than in 2007-08.

export trends

Historically, Punjab has been a major exporter of yarns and textile , sporting goods (chess boards, cricket bats, balls, gloves and saddles) and apparel, cycles and parts, tools and rice. Ludhiana, Jalandhar and Amritsar account for 90 percent of the total exports of Punjab. The state government has identified agriculture and processed food products, ready made garments and IT sectors for export promotion and facilitation.

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