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A half empty glass is half full, Principal Secretary to the Industries Department V P Baligar had said reacting to a query on the chaos and mismanagement that marred the government’s much touted Global Investors’ Meet (GIM), indicating that there was more to the meet than the ‘small’ negative events.
True to his observation, at the end of day two of GIM, Karnataka surely had a lot to show, at least, symbolically. The State signed a record number of 353 MoUs bringing in investment proposals worth Rs 4 lakh crore, proposed to generate an estimated 8.65 lakh jobs across different sectors giving a major fillip to the State in its endeavours for inclusive growth and overall development. This is a huge jump from the Rs 26,000 crore worth of investments attracted in the earlier meet in 2000.
“We want to make Karnataka a model state globally, known for its vibrant economy and investment potential...” Chief Minister B S Yeddyurappa had said hinting at the objectives of such a massive event. While transforming the State into a vibrant economy is still quite distant, though we are in the right direction, Karnataka, however, showcased its potential in terms of being an investment destination very efficiently at the two-day meet.
Stealing the show
Analysing the proposed investments sector-wise, we find that the iron and steel sector bagged the lion’s share with 38 projects and food processing in the second position with 33 projects with an investment of Rs 1,121 crore.
Steel majors flocking in droves signing project proposals envisaging massive investments, saw the sector ‘steeling’ the show at the event and the State too was more than happy as this supports its ambitious attempt – of turning Bellary district into a Steel Zone a la Jamshedpur, besides providing a fillip to its overall development mantra.
Steel companies such as Arcelor Mittal, Posco, JSW Steel Limited, Brahmani Industries and Hazira Steel Limited among others all signed MoUs with the government for investment of more than Rs 2 lakh crore on projects in the State.
“We are very happy with the way things have progressed between us and Karnataka. There is a strong and deliberate attempt from the state in attracting top class steel firms and it is definitely in the right place in terms of policies and its proactive approach,” L M Mittal had said hailing Karnataka’s intentions and commitment.
This was not just it. The state attracted investments spread across sectors, in tune with its multi-dimensional development slogan, with aerospace attracting an investment of Rs 885 crore for eight projects, automobile Rs 113 crore for four, cement Rs 3,699 crore for nine, engineering Rs 322 crore for eight, hospital Rs 1,249 crore for six, hotel 1,441 crore for 10, infrastructure Rs 1,282 crore for four. Even information technology (IT), Karnataka’s most proud industry, received investment proposal worth Rs 3,818 crore for four large projects from Wipro and Infosys.
These proposals clearly indicate the government’s inclination in making a shift from the services sector, which of course, has worked tremendously for the State, towards making Karnataka a manufacturing hub also. In the new industrial policy that the State unveiled, there is a strong emphasis on sector-wise development.
Understanding that the State has huge potential in terms of resources – both natural and human capital – it had taken to a cluster approach, which, with these investments, when materialised will get a major boost resulting in huge employment opportunities and development.
Further, in tune with global trends, the State is also deliberately trying to add value to its resources like iron ore, in terms of producing by-products and downstream products rather than just exporting.
Let’s take for example the iron and steel sector which was the highlight of the meet. In line with the State’s stated policy to discourage iron ore export and encourage production of steel and its downstream products for more value addition, the GIM has raised huge interest in the steel sector. While projects from Mittal, Posco and Reddy are for integrated steel plants, others like Surya Roshini and Bharat Forge will indulge in making pipes and other products that add more value to iron ore.
Time for action
Overall, with 7,600 delegates, 3,900 companies, 18 countries and 21 states descending at the gala event, the government saw success as anticipated. The two-day jamboree now a past thing, its time to work for the government and for us to look at it’s catches and misses.
Going through the aforementioned exercise, one finds that a mega event of this stature was a much needed one to boost the State’s economy after the world-wide recession in the last two years. Infosys CEO Kris Gopalakrishnan, who also advised the government on the event, echoed this thought when he said: “the timing of the event is perfect... we needed it.”
As for the State, it wants GIM to read: ‘Guaranteed Investment Mela’ like Chief Secretary S V Ranganath envisages. “We’ll leave no stone unturned to see that all the projects signed are materialised...” he had said. This will be a tough task though, given the limitations that a state government would face in a political set up like ours. Like Chief Minister Yeddyurappa puts it: “signing MoUs is the first move. We will face other challenges and hurdles which we are confident of resolving...” Some of the specific hurdles that the state may find is getting clearances from departments that are not under its governance, like the Forest and Environment Ministries, allocating resources that are needed to implement such large projects, providing with the required infrastructure and other facilities.
For instance, providing companies with captive mining licenses will prove to be key in writing a success story with the massive steel projects, and similar problems will be seen with other projects as well.
The State, as expressed by officials and ministers, however, claims to be ready to face these challenges and overcome the hurdles that may arise.
Exuding this confidence was the State bureaucrats’ boss S V Ranganath. In order to keep a tab on the progress of the projects and investors’ grievance the State has already launched a grievance website and is in the process of creating an interactive online helpline with separate passwords using which investors can comment on issues related to their projects and other concerns. These comments and grievances will be reviewed once in 15 days and the government will revert back to the concerned investor. Similarly, the government has also formed a sub-committee to the cabinet under the chairmanship of the Chief Minister to put matters related to industry and investment on a fast track. He also said that the Centre has been very supportive of the State’s cause and that Karnataka is confident of receiving similar eagerness from New Deli going forward – implying that the state is confident of approvals and other formalities from the Centre.
On the other hand, even as issues like allocation of resources, providing infrastructure (water, power, roads et al) and other problems will haunt the State while materialising these deals, the event was a good brand building exercise by the government to put Karnataka on the global map.
This will give a big push in attracting investment into the State across different sectors even in the future. As some experts opine: “State governments are generally lethargic in these matters. Events like the GIM make the government spring into action, and efforts are intensified over a short time.”
Industrialists, from L M Mittal, Vijay Mallya to others, lauded the efforts of the government and said this was a combined effort with all sections of government acting in concert.
Investors too got to see the interest and readiness to cooperate from the government.
However, another section of the industry thinks that the government could have done away with the gala time and fanfare to get mere paperwork done for projects cleared earlier and concentrated on putting more systems in place, as also used the platform to woo fresh investors.
Supporting this argument is the following data: Karnataka saw only 56 new proposals during this GIM with a proposed investment of about Rs 78,395 crore estimated to generate 1.73 lakh employment opportunities while the rest were projects cleared in the last seven to nine months and some even before.
Also, even though the state boasts of participants from as many as 18 countries like US, UK, Germany, France, South Korea, China, Japan, Malaysia, Sweden, Singapore, Switzerland, UAE, Sri Lanka, Egypt among others, it did not attract investments from any foreign company that does not already exist in the country.
Though Posco and ArcelorMittal may be treated as exceptions, their implementation track record for projects signed earlier in other states of India are not too encouraging. On the whole, it was a great show put up by the BJP-led government in terms of building brand value for ‘Karnataka’ but how much of this hype will actually fructify into concrete projects and create real value, only time will tell...
Source :- deccanherald.com/content
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