General Information

Himachal Pradesh came into being on 15th April 1948 as a centrally administrative territory by the integration of 30 princely states. On 1st November 1966, its area was increased by merger of districts of Kangra, Shimla, Kullu, Lahaul-Spiti and some other areas from Punjab and Haryana. On 15th January 1971, Himachal Pradesh attained Statehood and today it has twelve districts.

The State's announcement of a new industrial policy in December 2004 has marked a watershed in its efforts to open its economy, moving to the centre stage of national and international business. The State Government is currently bringing about further changes to accelerate the process of administrative and economic reforms and strengthen the in flow of domestic and foreign investment into the state.

Fact File

Source: CSO Estimates

Advantage Himachal Pradesh

Strong support system conducive for the development of well-developed industrial areas, industrial centres and specialized complexes.

• Comfortable power situation in terms of generation and supply at moderate rates.
• Abundant water resources suitable for the growth of industrial units.
• Favourable agro-climatic conditions for a wide variety of crops-vegetables, fruits, flowers, rice, plantation and commercial crops.
• Ideal environment for the setting up of agro-based, forest based, food processing, beverages, electronic and hi tech industries.
• Peaceful industrial conditions with a minimal degree of strikes and labour unrest. Prompt measures for reconciliation of any disputes.
• Attractive tax and fiscal benefits offered by the Government of Himachal Pradesh.
• Favourable investment destination
• High potential for the development of tourism and related activities.
• Provision of packaged assistance to prospective entrepreneurs and investors.

Economic Infrastructure

Finance

The Himachal Pradesh State Industrial Development Corporation Limited (HPSIDC) is the major agency for promotion and establishment of industrial units in Himachal Pradesh. Registered under the Companies Act 1956, HPSIDC is fully owned by the Government of Himachal Pradesh. HPSIDC is the major state level financial institution and provides long-term loans for industrial projects. The important activities of the Corporation are:

• Provision of term-loans.
• Development of industrial areas/ estates
• Provide escort services to entrepreneurs including Non-Resident Indian (NRIs) for such matters as securing registrations/ licences/ clearances from the statutory/other authorities

Power

Himachal Pradesh has vast hydel potential. It has been estimated that about 20,386 MW of hydel power can be generated in the state by constructing various major, medium, small and mini/micro hydel projects on the five river basins. In addition a large number of unidentified areas have still been left in the river basins, which can contribute substantially to the power potential of Himachal Pradesh by way of mini/ micro, medium, and large projects. Further, in view of the rising cost of thermal and nuclear generation, many identified projects, which have been excluded from the above mentioned hydel potential on account of non-suitability due to high cost of generation, will also become viable in future. On these two considerations, a conservative estimate of the total potential in Himachal Pradesh can be put up at 25,000 MW or even more.

Civil Aviation

There are three airports in the state namely Shimla at Jubbar Hatti, Kangra at Gaggal and Kullu at Bhuntar.

Social Infrastructure

Education

According to 2001 census, Himachal Pradesh has a literacy rate of 76.5 per cent. The literacy rate for males stood at 85.3 per cent and at 67.4 per cent for females.

High/Senior Secondary Education

During the year 2005-06, up to December, 2005, there were 2193 notified middle, 953 high and 709 senior secondary schools out of which 2,165 middle schools, 937 High and 701 senior secondary schools were functioning in the state, under the state government management.

University and Higher Education

There were 44 Degree colleges in the state up to December 2005.

The Himachal Pradesh Private Universities (Establishment and Regulation) Bill 2006 has been passed to provide for establishment, incorporation and regulation of private universities in the state for higher education and to regulate their functioning and for matters connected there with or incidental thereto.

Health

In Himachal Pradesh, Health and Family Welfare Department is providing curative, preventive, promotive and rehabilitative services through a network of 50 civil hospitals, 66 community health centres, 439 primary health centres, 22 civil/ESI dispensaries and 2069 sub-centres. To provide better health services to the people, the government is strengthening the existing infrastructure by providing modern equipments, specialised services, increasing the strength of the medical and paramedical staff in the medical institutions and upgrading the status of the existing medical institutions.

Major Industries

Agriculture

Agriculture is the main occupation of the people of Himachal Pradesh and has an important place in the economy of the state. It provides direct employment to 69 per cent of the total workers of the state. About 21 per cent of the total GSDP comes from agriculture and its allied sectors.

Rice, Wheat and Maize are important cereal crops of the State. Groundnut, soybean and sunflower in kharif and rapeseed/mustard and toria are important oilseed crops in the rabi season. Urd, bean, moong, rajmash in kharif season and gram in rabi are the important pulse crops of the state. Agro-climatically, the state can be divided into four zones viz., (i) Sub Tropical, sub-mountain and low hills, (ii) Sub Temperate, Sub Humid mid hills, (iii) Wet Temperate high hills, (iv) Dry Temperate high hills and cold deserts. The agro-climatic conditions are congenial for the production of cash crops like off-season vegetables, potato and ginger. The State Government is laying emphasis on production of off-season vegetables, potato, ginger, pulses and oilseeds besides increasing production of cereal crops, through timely and adequate supply of inputs, demonstration and effective dissemination of improved farm technology, replacement of old variety seeds, promoting integrated pest management, bringing more area under efficient use of water resources and implementation of wasteland development projects. There are four distinct seasons with respect to rainfall. Almost half of the rainfall is received during the Monsoon season and remaining is distributed among other seasons.

Agro based industries

Himachal Pradesh is predominately an agricultural state. The natural endowments like soil, land, water etc. are being harnessed in such a way that the cherished goals of ecological sustainability, and economic upliftment of farming community are achieved. About 18-20 per cent area is irrigated and rest is rain fed. Huge investment potential exists in the following fields:

Tea Plantation:

Management of tea factories and tea gardens.

Food Processing:

Maize is an important crop where surplus is available for processing. Under the state Industrial Policy, number of incentives are available to the investors in food processing industry. Processing industries of ginger, potato and vegetables in valley areas have great investment scope.

Seed Production:

The temperate climate of the state is quite suitable for production of disease free seed. The Government is encouraging private sector participation for exploitation of vast seed production potential.

Biotechnology

Himachal has the potential to develop various types of industries using raw material base of fruits, vegetables, high value cash crops and other naturally growing herbal plants. These industries can be in the following: bio-pharmaceuticals, phyto- chemicals, bio-prospecting, fermentation, post-harvest processing, bio-processing, pharmaceuticals, biochemical, genetically engineered micro-organisms, enzyme production, environment protection and animal husbandry etc.

Due to diversified environmental conditions, Himachal Pradesh has immense microbial diversity which needs further inputs for its meaningful exploration, documentation and using them for many industrial applications. Biotechnology as a tool has helped in recovery of degraded ecosystem. Some of the methods based on plant biotechnology include reforestation involving micro propagation and use of mycorrhizae. Micro propagation has resulted in increasing the plant cover and thus preventing erosion and giving a climatic stability. It also helps in rejuvenation of degraded land, which is in plenty in Himachal and to stop genetic erosion by Lantana and other weeds.

Himachal has tremendous potential in horticultural sector. The state needs immediate replacement of old orchard with high yielding disease free fresh planting stock. Biotechnology can play important role by use of micro propagated plants. With this the industries for cider, vinegar, wine and juice can come up to international standard. The horticulture sector also needs a facelift using hi-tech biotechnological interventions at nursery, orchard, post harvest, processing, packaging and marketing stages. The Horticulture Technology Mission launched in the State will prove to be a major milestone in strengthening the developmental activities through technological inputs.

In agriculture sector there is need for diversification of farming for economic rehabilitation and self-sufficiency. High yielding improved crop verities and transgenic especially stress tolerant (cold, rain fed conditions), biofertilzers, biopesticides etc. are other areas where Biotechnology can play major role.

Tourism

Tourism has been recognized as one of the most important/significant sectors of the economy in Himachal Pradesh and has been recognized as a major engine of growth for future. The state has a natural advantage for the development of tourism as an industry. It is endowed with geographical and cultural diversity, clean, peaceful and beautiful environment owing to its forests, lakes, mountains, rivers and rivulets, sacred shrines, historic monuments and the friendly and hospitable people.

Tourism industry has been given very high priority and the government has developed appropriate infrastructure for its development, which includes provision of public utility services, roads, communication network, airports, transport facilities, water supply, civic amenities, etc.

Himachal Pradesh Tourism Development Corporation Limited (HPTDC) is encouraging the private sector to invest in tourism related projects on BOT basis.

Investment opportunities in tourism

Major chain of facilities

The State Government also poses for investment Bilaspur-Una-Hamirpur-Kangra sector for massive investment by private sector, for land has been identified especially that adjoining the lakes in Gobind Sagar and Maharana Pratap Sagar. This area is ideal for setting up of amusement parks, herbal gardens, lake resorts and floriculture. The entire belt is dotted with numerous religious places, which can be developed for the development of a major chain of facilities for use by tourist. This area is ideally suitable for adventure sports, water sports, wild life and eco-tourism. To name a few, Pragpur that has been declared a Heritage Village and Masroor, an old rock temple is located in this sector. The Judge's court at Pragpur in Kangra District is a success story as a Heritage Property. Similarly, Bilaspur, Una, Hamirpur and Kangra also have religious places like Baba Barbagh Singh, Deot-Sidh and Shakti temples like Naina Devi, Chintpurni, Jwalamukhi, Chamunda.

International standard facilities for tourists in tribal areas

The tribal areas of Himachal Pradesh are known for natural beauty and have recently been opened up to foreign tourists. There is an urgent need to provide clean international standard facilities for tourists visiting these areas. These areas have been opened for private sector investment for creation of facilities for tourists.

Ropeways and ski-resorts

Other areas, which are opened for large investment, are development of ski-resorts, lakes and ropeways. A sky-resort can be developed near Chanshal range, which is one of the largest ranges for skiing in the country. Another beautiful area for ski-resort along with a couple of ropeways is the area above Solang in Kullu Valley. This is one of the last areas for the development of a ski-resort. The State Govt. will provide all assistance in terms of clearance including forest clearance. The emphasis is to develop tourism facilities in such a way so that the fragile ecology of the state is preserved and is not tampered with. There are many identified ropeways in Himachal Pradesh. These are Kullu to Bijli mahadev (in Kullu), Mandi to Tarna (in Mandi town), Dharamkot to Triund (in Dharamshala), Narkanda to Hattu Peak and Tara Devi to Shimla (in Shimla), which are ready for private sector investment.

Heritage Properties

Himachal has an enormous range of heritage properties. Some of these are ancient forts and some of these are colonial mansions. Then there are places that belong to an era gone by and mark opulent life style of India's Princes and then there are century old hotels. Many of heritage properties have been converted into commercial heritage property and are being developed. Big hotels chain can have a look at some of these properties are for being developed as heritage property. Some colonial buildings can be found especially in Kasauli and Dalhousie for their development as Heritage properties. Many States like Rajasthan have developed heritage properties with the active participation of private sector for development of these "Heritage Properties".

Adventure sports

Himachal Pradesh has excellent scope for adventure tourism. For example para gliding, hand gliding, white water rafting, mountaineering and trekking. There are 270 identified treks in Himachal, which are utilised by domestic and foreign tourists. Trekking equipments are also made available by the department to interested tourists and regional branch of Himalyan Mountaineering Institute, Dharamshala is also playing important role in this direction. Himachal is full of beautiful places many of them are totally unexplored and unknown and hence hold immense lure for the tourists. Private sector can play a big role in the provision of appropriate transport arrangement for tourists from outside the state.

Civil aviation

Civil Aviation is very important area for private sector investment. At present the state offers three airports for private sector participation. These are Banikhet in Chamba district, Paonta Sahib in Sirmaur District and Sunder Nagar in Mandi Districts. In addition, the private sector is also encouraged for starting helicopter services within and outside the State so as to improve accessibility to and within the State.

Information Technology

With a coordinated action plan by the government and industry, NASSCOM has projected that the IT software and services industry in the state of Himachal Pradesh can grow at an accelerated pace to achieve an annual revenue of Rs.20,000 crore (US$ 4.7 billion) by the year 2009-10, which could be as much as 4-5% of the projected turnover of US$ 100 billion of the Indian software and services industry in that year.

Out of the Rs.20,000 crore of projected revenue from IT software and services industry for Himachal Pradesh in 2009-10, it is expected that Rs.14,000 crore would come from exports and Rs.6,000 crore from the domestic market. The break-up is projected as follows:

Horticulture

The state has made significant progress in the development of Horticulture. The
topographical variations and altitudinal differences coupled with fertile, deep and well-drained soils favour the cultivation of temperate to sub tropical fruits. The region is also suitable for cultivation of ancillary horticultural produce like flowers, mushroom, honey and hops. During the year 2005-06 up to December, 2005, 6.78 lakh tonnes of fruits were produced in the state and it is envisaged to bring 4000 hectares of additional area under fruit plants against which 3825 hectares of area was brought under plantation up to December, 2005. Growing of off-season vegetables has also picked up in the state. During the year 2004-05, 8.35 lakh tonnes of vegetables were produced as against 7.85 lakh tonnes in 2003-04.

Thrust Areas

• Units based directly on horticultural produce
• Mineral water bottling
• Automobile manufacturing units
• Cold storage units/chain
• Fruit/vegetable/herbs/honey/spices based wineries
• Production of ciders/ale/liqueurs
• Sericulture/ handloom/khadi industry related manufacturing industrial activities
• Electronic units including computer software and information technology except assembling units where value addition is less than 15 percent
• Floriculture
• Medicinal herbs, aromatic herbs
• Horticulture, maize based industries, herbal based industries and agro based industries excluding those in the negative list
• Sugar and its by-products
• Silk and silk products
• Wool and wool products
• Woven fabrics
• Sports goods and articles and equipment for general physical exercise and equipment for adventure sports/activities, tourism
• Paper and paper products excluding those in negative list
• Pharma products
• Information and communication technology industry, computer hardware, call centers, IT software and services
• Eco-tourism hotels, resorts in locations other than those located in the municipal limits /NAC/ Nagar Panchayats/ special area development authority limits, as the case may be of Shimla, Dalhousie, Macleodganj and Manali.
• Spa, entertainment/ amusement parks roadways, etc.
• Industrial gases
• Handicrafts
• Non timber forest product based industries
• Precision industries

Policy Framework

Industrial Policy 2004

The industrial policy statement is a reflection of the government's commitment to overall economic development of the state by continuously responding to the dynamic economic forces and carving out a niche in the national economy by responding to changing times and needs.

To spread and speed up the industrialisation process in the state and to woo indigenous and foreign investors so as to generate employment opportunities for local persons, the state government has enacted new Industrial Policy & Incentive Rules, 2004, which was made operational w.e.f. 31.12.2004. In order to provide facilities to entrepreneurs.

Information Technology Policy

Recognising the enormous potential of IT, the Himachal Pradesh Government has chalked out a multi-pronged strategy to herald the benefits of this technology for its citizens and for the state as a whole. Accordingly, the state government has created an IT friendly environment for integrated participation by all in the development process of the new digital economy. This journey into the information age has brought improvement in the quality of every aspect of human life, emergence of a competitive society and a vibrant economy of new age technologies through transparent governing systems, sound infrastructure and skilled human resources.

Biotechnology Policy

The biotechnology policy for Himachal Pradesh was formulated in June, 2001 with a mission to provide Impetus to economic development of the State through promoting diversified farming of high value cash crops, conservation and commercial exploitation of bio-resources and promoting entrepreneurship in biotechnology-based industries in the State

Objectives of the policy

• Upgrade infrastructural support to R&D Institutions to generate highly skilled human resource in biotechnology.
• Intensify R&D work in potential areas of biotechnology, including agriculture, animal husbandry and human health.
• Conserve and commercially exploit bio-resources of the State for sustainable development.
• Attract entrepreneurs for setting up of biotechnology-based industries in the State.
• Provide suitable institutional framework to achieve the objectives.

Investment Incentives

State Government Incentives

• Interest subsidy to tiny/small units in priority sector
• Capital investment subsidy for units being set up in the Priority sector,
• Special incentive for fruit, vegetable and maize based and herbal based units i.e. units based on local raw material,
• GST exemption
• CST at concessional rates
• Procurement of raw materials at 1% GST
• Allotments of plots and sheds at reasonable prices/rates in industrial areas and estates.
• Project specific special package etc. are some of the main incentives/subsidies being offered by the State Govt.

Central Government Incentives

• In January 2003, the Govt. of India had announced a special package of incentives to Himachal Pradesh. This includes:
• 100% exemption from payment of Central Excise Duty for 10 years
• 100% income tax exemption for 5 years and
• 25% and 30% exemption for the next block of 5 years ( for Individuals and Companies)
• Capital investment subsidy @15% of investment in Plant & Machinery subject to a ceiling of US$ 65,105.01
• Enhancement of funding pattern under centrally sponsored schemes like Deen Dayal Hathkargha Protsahan Yojana and Prime Minister Rojgar Yojana.
• The Central Transport Subsidy is being provided to industrial units @ 75% of the cost of transportation of their finished goods and for transportation of their raw material from the location of their units anywhere in the State to the nearest, specified broad gauge rail head.

Investment Incentive as under the Industrial Policy

• Simplification of Rules / Procedures
  • State Level Single Window Clearance
  • Time bound clearance of projects in a simple, transparent and an accountable manner.
  • Evolve standard of Best Practices in various Government Departments.
  • Planning and Development of New Industrial Areas and Land Policy
• Clearances by the State Environment and Pollution Control Board
  • Streamline procedures for the grant of No Objection Certificate (NOC) and clearance required prior to the setting up of project.
• Use of IT in industry
  • Enable industry participation in global trade and production processes.
  • Improving organizational management, increase efficiency, enhance competitiveness.
  • Explore the possibilities of setting up call centres and facilitation centres.
• Escort Services
  • Provision of special escort services on a payment basis in order to escort prospective entrepreneurs in obtaining approvals and clearances.
• Manufacturing Competitiveness and Productivity
  • Focus on specific manufacturing sectors such as Light Engineering, Textiles, Auto and Auto Ancillaries, Chemicals and Pharmaceuticals.
  • Actively support Research and Development, Technical Training Institutes and Polytechnics.
• Encouraging Agriculture/ Horticulture/ Floriculture and other allied sectors related specified activities.
  • Development of Agri-Business with a positive shift from Agriculture.
  • Revamping of Extension services, reduction of wastages, rationalization of various taxes such as Purchase Tax, Mandi Tax, Market fees. Linking of Mandis with other large markets through the use of IT.
  • Setting up of post harvest infrastructure, cold storages, mechanized packaging houses, servicing centres and services.
  • Settting up of state-of-art computerized fruit and vegetable auction houses and certifying agencies.
  • Encouragement to Public Private Partnership (PPP) that would enable investors to invest in agriculture infrastructure in partnership with banks and financial institutions.
• Technical Education and availability of trained/ skilled local manpower for industry
  • Setting up of modern educational and technical institutions, Nursing schools, Pharmacies, Tourism related institutions, Medical Institutions.
• Exports
  • Special focus / priority. Efforts to make Exporting units in the state at a level playing field in comparison to their competitors.
  • Setting up of Export Promotion Parks in the state.
  • Setting up of common facilities such as Inland Containers, Bonded Warehouses, Raw Material Depots and provision of incentives and concessions for the supply of power, labour related issues and taxes.
  • Term loans from Himachal Pradesh Financial Corporation and Himachal Pradesh State Industrial Development Corporation.