Archive for the 'SEZs' Category

Semiconductor Technology Innovation Center at Bhubaneswar Infocity SEZ

Bhubaneswar- Cuttack- Puri, IT, IT, Back office, BPO, Khordha, Semiconductors, SEZs Comments Off on Semiconductor Technology Innovation Center at Bhubaneswar Infocity SEZ

Following is an excerpt from a Pioneer report

Chief Minister Naveen Patnaik on Friday laid the foundation stone of the Semiconductor Technology Innovation Centre. The centre will be the first of its kind in the country and will mark the beginning of a new era in the development of the IT Industry in Orissa.

Silicon Park will be established in Infocity SEZ with total project outlay of Rs 80 crore over a period of five years. The centre would provide employment opportunities to 1,600 software professionals …

Laying the foundation stone, Patnaik said the centre would take up chip design, embedded software development for products used in IT, Telecommunication and emerging technologies. It will also provide an entrepreneurial business environment and a semiconductor product eco-system.

“My Government is actively considering declaring Electronics and hardware manufacturing as a thrust sector,” he said, adding that the State Government is pursuing an ambitious target of achieving one billion US dollar in software export from the State by 2012.

Chairman of the STG Pvt Ltd M Chandrasekhar Reddy and eminent scientist from Silicon Valley Damodar Reddy were present on the occasion.

The report in New Indian Express on the same event has the following extra information.

The Chief Minister announced that the State Government will set up three more IT special economic zones (SEZs) in the State.

One of them, the knowledge industry township, will be set up jointly with the Union Urban Development Ministry and NASSCOM while the second one will be established by DLF.

While the above report mentions about three new SEZ’s, it only talks about two. The following from Samaja mentions that the third one will be a BPO based SEZ.

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Severeal IT townships possibly with IITs and IIMs are in the offing

INVESTMENTS and INVESTMENT PLANS, IT, PPP, REAL ESTATE, Satellite and Residential townships, SEZs, STPs Comments Off on Severeal IT townships possibly with IITs and IIMs are in the offing

Economics Times reports on such an effort. I hope Orissa government is aware of this and is making pitches for one of the locations in Orissa. Following are excerpts from the Economic Times report.

THE government is planning to build 6-7 new IT townships, called knowledge townships, close to major urban centres and international airports. The residential townships will be based on the walk-to-work concept. This means the professionals working there will be encouraged to live close to the workplace.

The companies setting up units in the townships may be extended tax sops under either the software technology park (STP) or special economic zone (SEZ) scheme. Each township would have a minimum 10-hectare (1 hectare = 2.471 acres) built-up area to make it compliant with FDI rules relating to investment in real estate. Each township is likely to entail an investment of Rs 500-650 crore, depending on the area.

A committee comprising members from the PMO, ministry of IT & telecom, urban development, civil aviation, Dipp along with Nasscom has identified several areas for setting up the knowledge hubs.

Sources in the committee said that these proposed townships will be extension of satellite towns like Gurgaon (to be called Gurgaon Plus). Similarly the township near Mohali will be called Mohali Plus. The first of these new townships is expected to come up by 2012 and the rest by 2015.

… services like IT and BPO will be encouraged in these units.

Many domestic and foreign real estate players have expressed interest in owning land and build such townships.

“We want each township to be FDI compliant so that they can attract foreign expertise,” a senior DIPP official said. Every township would be a special purpose vehicle where states and developers would have stakes.

Urban development secretary M Ramachandran said that his ministry would advise the committee on facilities like water, electricity, drainage and other civic facilities. “We will also help in developing the structures,” he said.

“The townships may also have an IIT/IIM or such academic institutions to build an ecosystem. For tax sops, we are pushing for extension of STP scheme else the companies can also opt for SEZ status,” said Nasscom president Kiran Karnik. The townships will come complete with educational, recreational/amusement and healthcare infrastructure.

“The basic reason for proposing such townships is the existing saturation in real estate and infrastructure amongst existing IT hubs,” Mr Karnik added.

Gurgaon real estate rentals have shot up meteorically in the recent past while Bangalore doesn’t have any real estate. …

Currently, Mohali, Mysore, Noida and Gurgaon have come up as satellite townships to major state capitals, most of which have international airports.

… SEZs offer a five-year 100% tax exemption with two subsequent five-year exemptions of 70% and 50% to units.

POSCO R & R and compensation ideas

Jagatsinghpur, Paradip - Jatadhari - Kujanga, POSCO, SEZs, Steel Comments Off on POSCO R & R and compensation ideas

Business standard reports on government of Orissa and POSCO’s plans regarding R & R and compensation. Following are some excerpts.

… The government is also working on improving the compensation package for the area’s beetle-vine workers, who are among the most vocal opponents of the project as they fear loss of livelihood.

A joint exercise will be started soon for implementing the rehabilitation package. We will sit with Posco executives to decide what best can be offered to the displaced, in excess of the entitlements prescribed by the government’s rehabilitation policy and the package prepared by the company, …

The proposals which are being examined include a pension scheme for the displaced persons and a job card for all the displaced who are less than 60 years in age.

Hindalco SEZ in Sambalpur approved by BOA

Aluminium, Sambalpur, Sambaplur- Burla- Bargarh- Chipilima, SEZs 16 Comments »

The PIB release states that the Board of Approval of SEZ recommended grant of formal approval of an SEZ with developer Hindalco Industries Limited in Sambalpur for aluminum and aluminum products. The SEZ will come up in an area of 115.94 hectares.

Economic Effects of POSCO-India : A study by NCAER

Bhubaneswar-Paradip, Budget, State, INDUSTRY and INFRASTRUCTURE, INVESTMENTS and INVESTMENT PLANS, Iron Ore, Jagatsinghpur, MINES and MINERALS, Mining royalty, Paradip - Jatadhari - Kujanga, POSCO, PPP, SEZs, Steel, Taxes 1 Comment »

I came across a 1-page note someone from POSCO-India gave me when I was visiting Bhubaneswar in December 2006-Jan 2007. The 1-page note summarizes a study done by NCAER. The study has also been reported in News media such as Hindu Businessline. (POSCO-India in its web page has additional links.) We will give some excerpts from the Hindu Businessline report.

The 1-page note: POSCO-India’s rs 52,810 Cr investment by 2016 will stimulate Orissa Economy.

  • Economic Benefit:
    • Generate Rs 29,760 crores additional annual gross output for Orissa including Rs 12,610 Crore of POSCO-India’s direct gross output.
    • Create excess annual value addition of Rs. 12,100 crores for Orissa which equals 19% of Orissa’s state GDP in 2005-06 (equals 11.5% in 2016-17)
  • Employment:
    • Job creation of 870,000 man years, absorbs 88% of state unemployment backlog (i.e., decrease in backlog of employment from 9.9 lakhs in 2005-06 to 1.2 lakhs).
    • 18,000 man years of direct employment in POSCO-India.
  • Tax Contribution:
    • POSCO-India annual tax contribution (Rs 2,620 Crores) would be appx. 17.6% of total tax revenue of Govt. of Orissa in 2016-17.
    • POSCO-India SEZ would contribute Rs 174,970 crore tax revenue in next 35 years.
      • Rs 77,870 crores would be to Govt. of Orissa and Rs 97,100 crores to Govt. of India.
      • The differences of tax between SEZ and DTA status is less than 8% for Govt. of Orissa and 5% for Govt. of India.
  • Comparison with current Orissa Economy:
    • Orissa in 2003-04:
      • Gross Output: 111,378 crores
      • State GDP: 53,830 crores
      • Employment: 143 lakhs (2001 census)
      • Tax: 8170 crores (2005-06)
    • POSCO-India’s impact:
      • Gross Output: 29,760 crores
      • State GDP: 12,100 crores
      • Employment: 8.7 lakhs
      • Tax: 2620 crores

We now give some excerpts from the Hindu Business line article of January 2007 which partly explains how some of the above numbers were calculated. That article was written by R. Venkatesan who works for NCAER, but the article was his personal view.

The NCAER study broadly used the ADB/World Bank methodology on the social cost-benefit with minor adjustments for the local parameters. Econometric models were used to project border prices for the useful life of the project. The project’s impact from the State economy perspective — in terms of the impact on the State GDP (output multiplier effects) and employment opportunities created within the State (employment multiplier effects) was also assessed.

The output multiplier for iron ore was found to be 1.4 compared to 2.36 for steel. In other words, every Rs 1 lakh worth of output in the iron ore sector would result in Rs 1.4 lakh of output (including the Rs 1 lakh output of iron ore) compared to Rs 2.36 lakh for every Rs 1 lakh output of steel. The employment multipliers for iron ore and steel work out to 0.35 and 0.69 man-years respectively. Therefore, in terms of both output and employment, steel has a larger impact.

These multipliers imply that the Posco project would create an additional employment of 50,000 person years annually for the next 30 years vis-à-vis 870,000 person years in the steel project alternative. In terms of value addition, the iron ore and steel project alternatives would contribute 1.3 per cent and 11.5 per cent to Orissa’s State Gross Domestic Product (or SGDP) by 2016-17 respectively.

An important part of the study was the Least Cost Analysis of technology options in the steel-making, the Finex process that Posco purports to bring and the traditional blast-furnace technology. The Average Incremental Economic Cost was used as the yardstick; this was followed by computing the economic IRR (internal rate of return)
to examine whether the project was economically worthwhile from the national economy point of view.

The EIRR for the Orissa project works out to 16.6 per cent for base case and even in the worst case scenario, the EIRR at 13.9 per cent would remain above the hurdle rate of 12 per cent. The economic impact of the project was estimated at $2.5 billion at the test discount rate of 12 per cent.

The significant feature of the study was the estimation of depletion premium or the opportunity cost for depleteable and non-renewable resource iron ore for reasons cited below:

India’s high-grade ore (+ 65 per cent Fe content — Haematite) reserves, proven and probable, amount to only 0.58 billion tonnes. And even if we were to factor in indicative and inferred reserves (probable/feasible), the total reserves (proven and possibly future potential) would be only 0.92 billion tonnes.

India’s medium-grade ore (+62 per cent Fe to 65 per cent Fe — Haematite) reserves, proven and probable, is only 1.3 billion tonnes. Here too, if we factor in indicative and inferred (probable/feasible and pre-feasibility estimated) reserves, the total reserves (proven and possibly future potential) will be only 2.8 billion tonnes.

Policy Implications

Orissa stands to gain significantly if instead of exporting iron ore it processes it to steel within the State, in terms of both employment generation (17 times), and GDP impact (9 times).

India’s high and medium grade iron ore reserves may not last more than 19 years even if exports of these grades are frozen at the current level or if the targets set out in the draft steel policy are to be met. The economic analysis considered the depletion premium for high and medium grade iron ore. This is the opportunity cost to the national economy of using the depletable resource, which is the average incremental cost of depletion premiums computed year-wise.

Any exporter of iron ore of medium and high grades from the State needs to pay a depletion premium of $27 per tonne. Even this would be a sub-optimal policy from the State’s viewpoint if it can process the medium and high grade ore to steel. No such depletion premium has been applied for coking coal as its price did not exhibit any
trend before the recent steep price hike.

For the eastern States seeking to raise the mineral sector’s share in their GDP, it may be a good idea to set up processing facilities. It would not be advisable to allocate iron ore mines through open bids or accept increased royalty payments, even accounting for the depletion premium, compared to the option of processing iron ore to steel. Future cost-competitiveness and logistical advantage imply that iron ore-rich States can compete with existing over-capacities in the US, Europe and Japan even after factoring in the capital charges for new investments.

Export of iron ore needs to be restricted to grades other than medium and high-grade ore categories; for instance, export of beneficiated ore from Goa using inland waterways logistics advantages could be encouraged. Allowing exports of high grade ore would facilitate export of steel from existing over-capacities in the US, Europe and Japan to East Asia at the expense of future steel exports from new Indian steel capacities which are likely to enjoy cost-competitiveness over existing over-capacities elsewhere.

I am not qualified to judge the above analysis. I would appreciate any comments, analysis, criticisms etc. on the above.

30 Infrastructure projects with PPP funding in Orissa

Angul, Bhubaneswar- Cuttack- Puri, Bhubaneswar-Paradip, Dhenkanal, Jagatsinghpur, Jajpur, Jharsuguda-Sambalpur- Bargarh, Khordha, PPP, Railways, Rayagada, Roads, highways and Bus stands, Rourkela-Jharsuguda, Sambalpur, SEZs, Sundergarh 3 Comments »

Business Standard in an article in April listed several infrastructure related projects that Orissa is planning using PPP. Following are excerpts from that article.

… the Orissa government has lined up 18 new projects in the Public Private Partnership (PPP) mode entailing an investment of over Rs 6000 crore.

Of the 18 projects, 12, mostly large and medium, have already been consolidated with investments of Rs 3500 crore.

Another six projects, fairly bigger in respect to the previous ones, are under active consideration and would cover an investment of around Rs 2500 crore, according to government sources.

Source said, till date, an around Rs 5300 crore investments have already been lined up and are under implementation in the PPP module in 12 odd projects across the state.

In all the Orissa government plans to develop 30 odd projects in different sectors in the PPP module over the next two years covering an investment of over Rs 11,300 crore. …

The PPP modules currently under implementation and those under consideration cover a wide range of activities starting from port cuilding, railway line construction, road development and erection of urban clusters. …

The new projects being considered under the PPP module included development of road links in the Capital Region Ring Road, the Bhubaneswar-Paradip Road, the Suakati-Dubuna Road and the Tensa-Barsuan-Lahunipada Road.

These would entail a primary investment of Rs 1547 crore for the development of 279 kilometres of road, including a four-laning of the first one.

Other than this there would World Bank identified projects where four laning would be done of the Sambalpur-Rourkela road from the existing two-lane road.

The long pending Joda-Bamebari Road and Koira-Rajamunda Road covering 229 kilometres would also be taken up.

The PPP module would be used for two vital rail links. The first was the Angul-Duburi-Sukinda rail link and the second the Gunupur-Theruvali link. In both cases, the Special Purpose Vehicle ( SPV) route was being proposed. The investment for the rail links was estimated to be in the region of Rs 570 crore. The Angul-Sukinda rail link would be of 90 kilometres and the Gunupur-Theruvali link would be 79 kilometres.

PPP’s for setting up Bio-tech parks, SEZ for IT/ITES companies and integrated commercial and residential complex, an enclave at Shahidnagar are were also part of the city building endeavour of the Orissa government.

This apart, a commercial shopping complex and an A.C.Market complex at Unit IV are also being contemplated in the PPP mode as part of city development plan.

Till date, investment for the SEZ for IT/ITES companies had been identified and were estimated to be in the region of Rs 35.67 crore. As for the other residential and commercial complexes, project details and cost were being worked out on a war footing.

Coupled with these, a multi-product SEZ at Paradeep had been suggested by the government for development using the PPP route. It was expected to entail an investment of Rs 712 crore.

Land of around 1093 hectares would be needed for the SEZ in the Marshagahi Tehsil of Kendrapara under Paradeep.

This article is probably based on a presentation available from the Orissa govt. website. That file seems to be corrupt but its google cache shows part of the information.

Govt. okays Gopalpur SEZ

Berhampur- Gopalpur- Chhatrapur, Bhubaneswar-Berhampur, Ganjam, INVESTMENTS and INVESTMENT PLANS, Railways, SEZs 2 Comments »

NDTV reports that the Gopalpur SEZ has been cleared by the Central Govt.

There was a lot of hue and cry that why the Gopalpur SEZ was not moving further in Orissa. Recent events show that it was held up due to security clearances which was required. Hopefully this will ensure faster development in Orissa.

Proposal to set up a Gems and Jewellery SEZ in Bhubaneswar

Gemstones, INDUSTRY and INFRASTRUCTURE, INVESTMENTS and INVESTMENT PLANS, MINES and MINERALS, SEZs Comments Off on Proposal to set up a Gems and Jewellery SEZ in Bhubaneswar

Tahtya reports that Chhatisgarh Futuristic Infrastructure Development Company (CFIDC) has floated a proposal to set up a Gems and Jewellery Special Economic Zone (SEZ) in the state.

The company has come up with a proposal to set up a sector specific G&J SEZ at Bhubaneswar on a land of 150-200 hectare near the air port with an investment of Rs.250-Rs.300 crore.

Samaja also covers in its news.