Odisha racing to $1 trillion economy by 2030

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By Pradeep Kumar Panda

Bhubaneswar, April 24: Odisha is one of the fastest growing economy of the country. Odisha has transitioned to middle income category states in terms of Gross State Domestic Product (GSDP). Odisha is on course to become $1 trillion economy by 2030.

Odisha has over 5,30,000 units and 113 industrial estates. Industry sector contributes around 41 per cent of GSDP. Odisha has received over Rs. 10 lakh crore of letter of intent of investment in Make in Odisha Conclave 2022. The state has become favourite destination for investment and industrialisation.

Odisha is endowed with vast resources of a variety of minerals and occupies a prominent place in the country as a mineral rich State. Abundant reserves of high-grade Iron ore, Bauxite, Chromite, Manganese ore along with other minerals such as Coal, Limestone, Dolomite, Tin, Nickel, Vanadium, Lead, Graphite, Gold, Gemstone, Diamond, Dimension & Decorative Stone, etc., are extensively available in the State. This has opened up immense possibilities for locating mineral based industries for manufacture of Steel, Ferro-alloys, Cement, Alumina/Aluminum, Refractories, Thermal Power etc., along with setting up other auxiliary and ancillary downstream industries.

Odisha is one of the most mineral rich states in India. Key minerals found in the state are iron, coal, bauxite, manganese, nickel, chromite, limestone, dolomite, graphite, decorative stones, beach sand, China clay, tin ore, etc.

For the record, Odisha has about 28 per cent of India’s iron ore, 24 per cent of coal, 59 per cent of bauxite and 98 per cent of chromite. Odisha accounts for over 59 per cent of India’s bauxite reserves, making it an ideal location for setting up aluminium and aluminium-based companies.

The state ranks first in the country in terms of both production capacity and actual output of aluminium. Odisha is one of the favoured investment destinations for domestic and international iron and steel players as well as one of the largest producers of iron and steel in India.

The total production of iron ore in Odisha was recorded to be 80.87 million tonnes during 2015-16. Between 2004-05 and 2015-16, Gross State Domestic Product (GSDP) expanded at a compound annual growth rate (CAGR) of 10.25 per cent to $ 50.8 billion whereas the Net State Domestic Product (NSDP) expanded at a CAGR of 10.37 per cent to $ 44.92 billion.

In the energy sector, independent power producers (IPPs) have invested Rs. 32,991 crore on proposed coal-fired projects after entering into MoUs with the state government. Among the 28 power companies, only three – Sesa Sterlite, Jindal India Thermal Power and GMR Kamalanga Energy Ltd – have commenced commercial production in the last 15 years. The IPPs have a combined capacity of 37,000 MW.

In the steel sector, out of Rs 222,862.63 crore investment proposed in 50 projects, Rs. 109,638.90 crore has been invested till today, said Mishra. Then, Rs.66,444 crore has been proposed in the aluminium sector by three companies – Vedanta, Aditya Aluminium and RSB Metaltech.

Odisha is amongst the top ten states accounting for the highest number of MSME enterprises. Odisha government also launched its startup policy 2016 that aims to create 1,000 startups in the state by 2020. The policy will aim at providing incentives, support and assistance to start ups at all stages of development including idea or prototype stage, commercialization stage as well as the marketing stage.

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 state government has constituted “Team Odisha” to help with investment promotion. The Odisha Industry is going places with excellent industrial infrastructure and presence of top national and international companies. The state has witnessed an industrial upsurge due to the favorable industrial atmosphere in the state.

The state government of Odisha has invited major industrial houses of the country and abroad to invest in the state. It has achieved a considerable amount of success and several prime companies have set up their plants in the state. The industrial structure of Odisha mainly consists of four categories: Medium industries, Cottage industries, Large scale heavy industries and Large scale industries.

Mineral Based Industries

Occupying an important position on the country’s map, Odisha’s rich mineral reserves constitute 28% Iron ore, 24% coal, 59% Bauxite and 98% Chromite of India’s total deposits. The state’s comparative advantage on this account has attracted the attention of many mining and metallurgical companies. In Odisha, industrialization started shortly after independence. The oldest mines in the state were coalmines at Talcher and Ib valley. After nationalization of coal in 1975 and the national policy on energy sector, many power plants have come up in the state.

Major industries in Odisha at the moment include an integrated steel plants at Rourkela, Kalinga Nagar, Jharsuguda and Angul NALCO (National Aluminium Company Ltd.) with its Alumina Plant at Damanjodi & Aluminium smelting complex at Angul; Thermal power plants Talcher & Ib valley area etc. in addition to Fertilizer plants, Pulp and paper industries, Ferro alloys plants, cement plants etc. elsewhere in the state. The industrial growth in the state has mostly taken place in the areas where raw materials, water and power are available. The state can be divided into 12 industrially active zones / areas based on minerals namely: Rajgangpur Area (Iron & Steel, Sponge Iron, Cement, Secondary steel. Melting and rolling mill & refractories and chemicals); Ib valley area (Thermal power, Sponge iron, refractories, and coal mines); Hirakud area (Aluminum & rolling mills); Talcher-Angul area (Thermal power, Aluminum, Coal washeries, Ferro alloys, Coal mines); Choudwar area (Ferro alloys, Thermal power, pulp and paper, coke oven); Balasore area (pulp and paper, ferro alloys, rubber industries); Chandikhol (stone crusher, coke oven); Duburi (Integrated steel, ferro alloys, rubber industries); Paradeep area (fertilizer, sea food processing, petroleum coke); Khurda Tapang area (stone crusher); Joda Barbil area (iron, sponge iron, ferro alloys, iron ore crusher, mineral processing); Rayagada area (pulp and paper, ferro alloys).

Keonjhar is one of the premier minerals producing districts in Odisha. The district occupies a prominent place in the mineral map of the Country. Iron ore formations occupy most part of the district which can be traced from the Bihar boarder in the north to the Jajpur boarder in the South.

Extensive deposits of Manganese ore are found in Thakurani and Joda East hills of Barbil. The two important mineral based industries in the district are the “Kalinga Iron Works” Barbil and the “Ferro-Manganese Plant”, Joda. Good deposits of Chromite, an important and strategic mineral are found in Boula area near village Nuasahi of Anandapur subdivision. There are also some other mineral deposits in the district such as Quartzite, Bauxite, Gold, Pyrophillite and Lime stone.

Kalinga Iron Works, Barbil: The Kalinga Iron Works was initially named as the Kalinga Industries in the private sector with technical collaboration of M/S. Fried Crupp of West Germany having one low shaft furnace with a capacity to produce 30000 M.T. of pig iron per annum. It was taken over by the Industrial Development Corporation of the Government of Odisha on 01st April 1963. It has since been named as “Kalinga Iron Works”. Presently the Kalinga Iron Works produces 100000 M.T. of foundry grade pig iron by three low shaft furnaces. Besides, it has a power generating plant of its own which supplies power to the GRIDCO, Odisha to the extent of 2.3 M.W.

This industry was running with a capital investment of Rs.1,011.27 lakh in 1985. At present 1,320 persons (both skilled and unskilled) are working in the unit. Under the diversification programme Kalinga Iron Works is also giving to undertake the production of Ductite Iron Spun pipes in close collaboration with TOR-STEEL and MECON. Ductite Iron Spun pipes have a tremendous marketing potential in foreign countries.

Ferro-Manganese Plant, Joda: The Ferro-Manganese plant at Joda was taken over by the Tata Iron And Steel CoLtd. in December 1957. It was established with a capital investment of Rs.3000 lakhs in 1985. At present 391 employees are working in the unit. The plant is primarily meant for supplying Ferro-Manganese for TISCO’s own plant at Jamshedpur. Besides the reserves of major minerals like chromite, nickel, bauxite, iron-ore and coal; other minerals like china clay, fire clay, limestone, quartz, precious and semi precious stones, copper, manganese, graphite, vanadium etc. are also available in the state. Iron ore is abundantly available in the districts of Mayurbhanj, Sundargarh,

Keonjhar and Jajpur. While chromite is confined to Jajpur, Dhenkanal and Keonjhar districts, manganese deposits are available in Sundargarh, Keonjhar, Rayagada and Balangir districts and Dolomite is available plentily only in the district of Sundargarh. There are two major coal bearing area in the state which are currently being exploited namely Talcher and the Ib valley.

Aluminium industries

Odisha is the highest producer of aluminium in the country today. To further enhance the production of aluminium, NALCO has planned to expand its aluminium smelter in Angul district by 0.5 MMTPA at an estimated investment of INR 10,000 crore. Besides, it is also expanding its alumina refinery at Damanjodi from 2.275 MMTPA to 3.275 MMTPA with an investment of more than Rs 4,000 crore. The State also has seen private sector large scale investments from large companies in the sector including Hindalco and Vedanta. Hindalco Industries Limited is setting up a 0.375 MMTPA Aluminium Flat Rolled Product plant at Lapanga with an investment of Rs 5,000 crore.

Similarly, Vedanta is expanding its alumina refinery capacity by 5 MMTPA at Kalahandi and its aluminium smelter capacity by 0.2 MMTPA at Jharsuguda with an investment of Rs 7,500 crore which will create employment for about 7,700 people.

To promote downstream and ancillary industries, NALCO has committed 50,000 tonnes of hot metal to the Aluminium Park at Angul, which has been established in Joint Venture (JV) mode with IDCO. The Park is one-of-its-kind facility in the sub-continent.

Textiles and Apparel

Apparel, being a high employment generating sector, is a focus sector of the State. A dedicated Apparel policy has been promulgated by the State for the development of the sector. As a result of investor friendly policy in this sector, the State has seen significant investments from apparel sector companies in recent times. Shahi Exports has setup an apparel manufacturing unit at Khordha with an annual capacity of 3.6 million pieces. Aditya Birla Fashion has received approval for setting up an apparel manufacturing unit at Rayagada. Besides, a textile park is being developed at Bhadrak.

This park is expected to generate significant employment in the sector through development of an ecosystem for synthetic fibres in the State. Due to pro-industrial Policy of the State and investor friendly eco-system created by the state, the industry sector has shown tremendous growth. As per latest data released by CSO, in 2017-18 (P), number of factories in manufacturing and wearing apparels has risen by 33.33% from previous year. Growth of Fixed Capital, Workers and emoluments are increased by 1890.72% (2nd highest), 613.07% (4th highest) and 409.32% (3rd highest) respectively in comparison to previous year.

Chemicals, Plastics and Petrochemicals

Chemicals and Petrochemicals is also one of the identified focus sectors of the State. Indian Oil Corporation is operating a 15 MMTPA refinery at Paradip and is planning to further expand its capacity. Besides, it has also commenced commercial production from Polypropylene unit which will supply raw material to the Plastic Park at Paradip Mono-Ethylene Glycol (MEG) unit and Paraxylene-PTA units which are at different stages of implementation and will help create a large downstream ecosystem for chemicals and textiles sector in the State.

The State has also received investment intent from various other national and international companies in the sector.

Food processing including sea food

The State is blessed with ten agro-climatic zones and more than 60 lakh hectares of cultivated land. It is one of the largest producers of rice, vegetables, fruits, sea food, spices, oil seeds and various other crops in the country. Keeping this in consideration, the State has also promulgated an exclusive Food Processing Policy 2016, providing competitive incentives to units setting up in the State.

The State has also a conducive ecosystem for investments in the sector in the form of food parks at Khordha and Rayagada and a dedicated sea food park at Deras. As a result, the Gross Value Added in manufacture of food products has increased from Rs 49,089 lakhs in 2016-17 to Rs 1,48,100 lakhs in 2017-18. Further this has resulted in creation of additional employment of 2,623 number in 2017-18 over 2016-17.

Electronics Manufacturing

A 215 acres ready-to-use dedicated Electronic Manufacturing Cluster has been developed close to Bhubaneswar. An attractive incentive framework of Special Package Incentive Scheme over and above the m-SIPS Programme of Government of India has been promulgated to facilitate investments in this sector. Odisha is emerging as a manufacturing hub of the east as occupies significant place in the mineral map of India producing mineral costs of Rs 78,754 crore (up to February, 2020), produced more than 50% aluminium in India, major Steel producing state contributing half of steel production in India.

Micro, Small and Medium Enterprises (MSME)

The Micro, Small & Medium Enterprises (MSMEs) contributes significantly to value addition, employment generation, export promotion and overall growth & development of States’ economy.

Next to agriculture this sector generates maximum employment with minimum investment. Therefore, the State Government creates adequate space for MSME development in IPR-2015 and also in MSME Policy 2016.

During 2019-20, around 57,651 MSME units were set up with an investment of Rs 2659.69 crore, leading to employment generation for 1.63 lakh persons. Altogether 4,49,352 MSMEs have been established with an investment of Rs 21,801.51 crore and employment of 16,92,298 persons till March 2020.

Sector-wise disaggregation indicates that repairing services account for the majority share in MSMEs, with almost 62 % share of total MSMEs setup in the State and generating 49 % of the total employment opportunities created through MSME units.

A possible reason for the high concentration of MSMEs in the repairing services can be attributed to challenges related to literacy, skills, opportunities, marketing, credit facility etc., pushing young entrepreneurs to engage themselves in repairing services units. Food and Allied sectors follow the Repairing services in terms of units, investment and employment generation.

Major Government initiatives in MSME Sector 1,77,503 MSME Enterprises have ‘gone into production’ with total investment of Rs 8181.28 crore and employment to 5.05 lakh persons in the last three years. Thus, altogether 4,49,379 MSMEs have gone into production with an investment of Rs 21,816.75 crore and employment to 16.92 persons till March, 2020. 35,219 youth have been provided Entrepreneurship Development Programme (EDP) in 1135 batches during last three years including 11773 youth during 2019-20. In order to boost systematic development of MSMEs, Food Processing industry and Start-ups, Odisha MSME Development Policy, Odisha Food Processing Policy and Odisha Start-up Policy have been operationalized since 2016.1,021 MSMEs have been provided financial assistance of Rs 129.20 crore under Govt. Policies from 2017-18 to 2019-20.

As regards food processing sector, MIITs Mega Food Park at Rayagada has already become operational, Infrastructure Development in Marine Food Park at Deras is at advance stage of development. Nine MSME Multi-product Parks in Sambalpur, Sundargarh, Angul, Cuttack and Khordha districts have been approved to provide land with developed infrastructure to MSMEs.Similarly, new Food Parks in Bargarh, Bolangir, Ganjam, Kalahandi & Nabarangpur have been taken up through IDCO.