Introduction
India has seen tremendous growth in the past few years, especially for foreign investments into the country. FDI has seen a sharp inflow especially on account of the government boost in the manufacturing sector. In order to investing into India is to open a company into India and starting business in the country. India comprises of various states and union territories, one such upcoming state for investments related opportunities in Odisha.
The State of Odisha, formally known as Orissa, is located on the eastern part of the India. It is a coastal state with a coastline of 480 km and is bounded by the Bay of Bengal on the east, Chhattisgarh state on the west, and Andhra Pradesh state to the south. The primary language spoken in Odisha is Odia, an Indo-Aryan language that’s also the official language of the state. Other than Odia, Hindi language is commonly used in the region. As the state is located in the coastal area, it is well connected to major trade and manufacturing areas in Asia. Some of the main industrial cities of Odisha include Rourkela, Bhubaneswar, and Angul. Other cities include Kalinganagar, Angul, Sambalpur, where top industries in Odisha are located. The Capital city of Bhubaneshwar is also known as the land of Temples. Bhubaneshwar is divided into two parts, being the old town and the planned city with a total area of 186 sq. km. Bhubaneshwar itself hold a population of 1.2 million people. The city is also a home to major IT companies such as Infosys, TCS and Tech Mahindra.
The total population of the State is about 47 million and is the 11th most populous state and eight largest by State area, with 83% of the population living in the rural area. The literacy rate in Odisha was 72.87%, with 81.59% of males and 62.46% of females literate. In terms of the working population, 61% of the working population were main workers, and the remaining were marginal workers. About three-fifths of the working population is engaged in agriculture, which accounts for roughly one-sixth of the state’s gross product. The population size of Odisha is equivalent to that of Ireland. Some of the tourist attraction in Odisha lay in the city of Puri, which is famous for its temples notably called as the Jaganath Puri Temple and the Konark Temple also called as the Sun Temple, golden beach, Nandankanan Zoological Park and other attractions in the state.
Traditionally the economy of Odisha is an agriculture-based economy which is transitioning towards an industry and service based economy. To prove this the sector-wise contribution to Odisha’s economy was estimated to be 29% for the agriculture sector, 31% for the manufacturing sector, and 40% for the services sector in 2021-22, at current prices. Odisha is also a mineral rich state and is a national leader in the production of chromite, bauxite (aluminum ore), manganese ore, graphite. The economy of Odisha is the 15th largest state economy with Rs. 5.86 trillion (USD 70 billion) in gross domestic product which is equivalent to the GDP of a small nation in Europe like Slovenia and the per capita GDP of Rs. 127,383 (USD 1,500). The expected growth rate of Odisha is 11.5%.
Apart from the 3/5th of the population of Odisha engaged in the agriculture sector, Odisha is a home to many other industries such as mining, power, steel, aluminum, agriculture, IT and ITes. Odisha has 25% of India’s iron reserves and is the top aluminum producing state in India and has a large installed capacity for electricity production, including coal-generated, hydro, and renewable sources. 10% of India’s steel production capacity comes from Odisha and has two of India’s largest aluminum plants, NALCO and Vedanta Resources. Odisha has an Electronics Systems Design & Manufacturing (ESDM) Park in Bhubaneswar. Odisha also has a thriving handloom industry.
The state government has taken proactive measures to attract more investments. In 2023, it introduced the Long Term Linkage (LTL) policy. The policy is offering long-term ore linkages for iron ore, chrome, bauxite, and limestone produced by the Odisha Mineral Corporation (OMC). This linkage will be available to investors establishing end-use plants, with provisions for greenfield or expansion projects, regardless of whether they have mechanized evacuation systems.
Several companies have made significant investments in Odisha, with one of the most notable being the JSW Group. They are currently in the process of establishing an integrated steel manufacturing complex in Paradip, Odisha, with an estimated investment of INR 650 billion (USD 7.84 billion). Others who are investing are the Kalyani group, ArcelorMittal Nippon Steel (AMNS), etc.
Another important sector the state government of Odisha is working towards is to set up a semiconductor base, which is currently at an early stage of development. To capitalize on the Central government’s initiatives aimed at attracting semiconductor manufacturers to the country, Odisha has introduced its own package of incentives to make the proposition more appealing under its Semiconductor Manufacturing and Fabless Policy-2023. According to the policy, Silicon, Compound, Display, and Advanced Technology Manufacturing Plants (ATMP) will receive attractive incentives of 25 percent, in addition to the 50% incentive offered by the Government of India. Fabless product/IP companies will also enjoy a significant 20 percent incentive. Furthermore, Odisha will aid 25 undergraduate and 25 postgraduate institutes, supporting their research and development (R&D) activities as well as capacity building efforts.
In October 2020, the state government launched 12 different industrial projects with a combined investment of Rs. 8,796.61 crore (USD 1.20 billion). The projects included 8 MSMEs and 4 large projects in sectors such as health care, renewable energy, steel, IT, cement, and food processing. These 12 industrial units will generate employment opportunities for 7,090 people in the state.
Odisha has made key strikes in attracting FDI for the year October 2019 till March 2024 , amounting to the cumulative inflows of USD 168.55 million. Odisha is among the top ten states accounting for the highest number of MSME enterprises. The state offers a wide range of fiscal and policy incentives for businesses under the Industrial Policy Resolution, 2015. Additionally, the state has sector-specific policies for IT and micro, small and medium enterprises. The state government has constituted “Team Odisha” to help with investment promotion.
The government of Odisha recently released the Industrial Policy Resolution 2022’ which shall be in force for a period of 5 years. According to the policy, the government has categorized sectors as priority sectors and thrust sectors which shall be eligible for the incentives. In accordance with the policy, capital investment subsidy ranging from 20% to 30% shall be provided. Apart from capital subsidy, electricity tariff exemptions, electricity duty exemption, GST tax reimbursement and land rate concession subsidies shall also be offered.
You may look for more information at https://www.nexdigm.com/insights_post/incentives-for-new-manufacturing-set-ups-in-odisha/
Some of the major heavy industry companies present in Odisha are Banspani Iron Limited, Pepson Steel Private Limited, Shri Radha Raman Alloys Private Limited.
Odisha has two SEZ that have been developed by Odisha Industrial Infrastructure Development Corporation (IDFO). Infocity SEZ of IDCO at Chandaka (Bhubaneswar) developed over an area of 145.91 acre is in operation. Mind Tree, TCS, WIPRO have established their units in the SEZ. A Sector Specific IT/ITES SEZ is under implementation at Gaudakasipur near Bhubaneswar (Info Valley). IDCO is also developing an electronic hardware manufacturing cluster at Infovalley under the Electronics Manufacturing Cluster (EMC) Scheme of Ministry of Electronics & Information Technology (MeitY), Government of India.
Further under the PCPIR Scheme of Govt. of India, the State govt. is developing a PCPIR at Paradeep to be set up on 284.15 sq km (70,214 acres) of land spread over Jagatsinghpur and Kendrapara districts. The PCPIR hub is expected to attract investments to the tune of Rs 2.74 lakh crore. Indian Oil Corporation Ltd (IOCL) is the anchor tenant for the project.
Odisha has a variety of connectivity including Rail, Road and Water ways. Paradip Port is the only Major Port in the State under the control of the Government of India, which is packed to accommodate increasing traffic.
The Government of Odisha has already identified 14 potential sites for the development of Non – Major Ports, out of which, Dhamra and Gopalpur are already functioning. To facilitate the private developers for the development of such Non – Major Ports, the State Government had framed the Port Policy during the year 2004. However, the Policy has run its course, and there is a need to formulate a new Maritime Development Policy to take into account the current circumstances.
Paradip Port is connected to the East-Coast Railway. Dhamra Port is connected to the Howrah-Chennai lin. Gopalpur Port is connected to the Howrah-Visakhapatnam-Chennai. Paradip Port is connected to National Highway and State Highway.
The Capital city of Odisha, Bhubaneshwar host the only international airport in Odisha called as the Biju Patnaik International Airport. Other than the international airport, Odisha has 18 other commercial airport in the State, where there are direct flights from major cities of India making Odisha accessible to the rest of the Country within the travel time of 2 to 3 hours by air. Apart from airports Odisha is well connected by train and by bus with major national highways running through Odisha.
We at D’Andrea & Partners Legal Counsel is a legal firm with its presence in India, Pune and provide all round legal and fiscal services relating to open a company in India, legal compliance, litigation and dispute resolution, drafting of agreements and contracts, intellectual property rights protections, HR and IPR Related work and other miscellaneous services. Should you have any query or wish to know more, please reach us at info@dandreapartners.com. We are also pleased to introduce our practical guide on Foreign Direct Investment in India which you can purchase on https://www.amazon.com/Foreign-Direct-Investment-India-Invest-ebook/dp/B0BP7M7GKD/ref=sr_1_3?qid=1695004259&refinements=p_27%3ACarlo+Diego+D%27And`rea&s=digital-text&sr=1 3&text=Carlo+Diego+D%27Andrea
Disclaimer:
The above content is provided for informational purposes only. The provision of this article does not create an attorney-client relationship between D’Andrea & Partners and the reader and does not constitute legal advice. Legal advice must be tailored to the specific circumstances of each case, and the contents of this article are not a substitute for legal counsel.