INDIAN STATES

Economy and Business

Orissa

www.ibef.org
Published by
 INDIAN STATES
Economy and Business

Orissa

www.ibef.org
 ORISSA PAGE 5

CONTENTS

Executive Summary 7

Economic Snapshot 8

The State Economy 11

Infrastructure 12
Social infrastructure 12
Access infrastructure 12
Communications infrastructure 14
Industrial infrastructure 14

State Policy 16
Vision & Mission 16
Industrial policy 16
Port policy 17
e-Governance 17

Business Opportunities 18
Key industries 18
Exports 19
Investment 20
Potential hubs for investment 21

Key Players 23

Doing Business in Orissa 26

Indicative list of approvals and clearances 26
Cost of setting up business 26
Contact for information 27

A report by PricewaterhouseCoopers Pvt Ltd for IBEF

 ORISSA PAGE 7

Executive Summary

With a Net State Domestic Product (NSDP) of over The state’s proximity to the fast growing economies
US$ 4.9 billion, Orissa ranks fourteenth among the of China and South East Asia and the availability
Indian states on the basis of NSDP. Its per capita of port infrastructure in the state provides
income in 2003 was US$ 230. it a strategic economic advantage.

Orissa is located on India’s east coast.The state Orissa is also the first state to restructure
is rich in mineral resources such as coal, iron-ore its electricity sector and privatise generation and
and bauxite and is poised to emerge as the metals, distribution of electricity.The state has also made
mining, and a manufacturing hub of the country. significant progress in restructuring its public
enterprises.
Orissa is the leading producer of aluminium in the
country. Its strength in steel and aluminium industry
is recognised and major international and domestic
players have recently announced a spate of investment
in these sectors in the state.
Industrial Centres in Orissa
 ORISSA PAGE 9

An Economic Snapshot

Capital Bhubaneswar
Area (sq km) 155,707
Population (2001) 36.7 million
Literacy rate (%) 63.6
Human Development Index 0.404
NSDP (US$ billion) 4.9
NSDP growth (%) 4.8
Per Capita Income (US$) 230
Exports (US$ million) 648
National highways length (km) 3,704
Rail length (km) 2,401
Domestic airport Bhubaneswar
Key industries Mining
Iron & Steel
Aluminium
Industries with growth potential Power
IT / ITES
Tourism
Infrastructure
Advantage Orissa
n Proximity to China and South East Asia

n Large mineral resources, particularly coal (25 per cent of India’s total),
iron-ore (25 per cent) and bauxite (50 per cent)

n First state in the country to restructure and privatise the electricity sector

n Major investment announced by global and Indian investors in steel and

aluminium industry

n Potential to become a major coal based electricity generation region

n Potential to develop tourism and IT / ITES industries

 ORISSA PAGE 11

THE STATE ECONOMY

Between 1996-97 and 2002-03, Orissa’s real NSDP Orissa - Sectoral Contribution to GDP
growth rate was 4.8 per cent, increasing from
US$ 3.7 billion to US$ 4.9 billion.

Orissa - NSDP
6.00 37%
48%
5.00
4.00
US$ billion

3.00
2.00
1.00 15%
00
1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 Tertiary
Year
Primary
Secondary Source: Economic Survey of Orissa, 2003-04
The tertiary sector has been the largest contributor
to Orissa’s economy. It is also the fastest growing
sector of the economy. Between 1997-98 and The primary sector accounted for 37 per cent
2002-03, the average annual growth rate of the of the state’s output. Orissa is a state rich in natural
tertiary sector was 6.5 per cent. Although, resources. Orissa’s per capita NSDP is recorded
contribution of the secondary sector to the state at US$ 230.
economy is low, it showed a high growth
of 6.2 per cent during 1997-98 and 2002-03.
INFRASTRUCTURE

Social infrastructure km is higher than the national average of 76.8 km.

The total length of national highways passing through
Orissa has achieved significant progress in improving the state is 3,704 km, this includes the highway
its social infrastructure.This is best reflected in the connecting Kolkata and Chennai, a major transport
state’s improving performance on the Human corridor between east and south India.
Development Index, where it has risen to the eleventh
rank in 2001. Human Development Index value has Under the on-going National Highway Development
increased from 0.345 in 1991 to 0.404 in 2001. Programme (NHDP), 444 km of national highways
in the state are being converted into 4-6 lane
Orissa has a population of over 36.7 million (Census carriage-ways.The National Highway Authority
2001) and its population density is 236 persons per of India (NHAI) has taken up 4-laning of NH-5 from
sq km. During 1991-2001, Orissa’s population growth Balasore to Icchapuram and NH-60 from Balasore to
rate was 15.9 per cent, significantly lower than the Laxmannath. Besides the up-gradation under the
national growth rate of 21.3 per cent. Orissa’s urban Golden Quadrilateral Project, the state government
population is 5.4 million, close to 15 per cent of its proposes to upgrade 1,505 km of existing state
total population. highways to national highways.

The literacy rate in the state was 64 per cent The state government is also planning to develop
in 2001. Orissa has a strong network of educational a coastal highway along the coastline of Bay of Bengal
institutions, which train a steady pool of qualified linking Andhra Pradesh in south and West Bengal
professionals for businesses and industries in the in north.The proposed coastline road length
state.The state has 9 universities and over 700 is to extend over 674 km from Gopalpur in Orissa
institutions of higher education.These include to Midnapore in West Bengal and is envisaged
36 engineering colleges, 159 technical institutes, to be executed with the assistance from
47 colleges offering post graduate courses in Government of Norway.
computer applications, an agriculture university,
20 management institutes, 4 medical colleges Within the state, Orissa plans to introduce an 80 km
(including a dental college), 3 nursing colleges long mass rapid transit system (MRTS) to connect
and 14 pharmacy institutes. Cuttack and Bhubaneswar, the two biggest cities
in the state.
Orissa’s network of public and government-aided
Orissa - Growth in road network
health facilities comprises 180 hospitals,
158 community health centres and 1,350 primary Year 1998 1999 2000 2001 2002

health centres, besides privately run hospital and Total length 262,272 262,513 236,082 236,993 237,034
healthcare centres. (in km)
Surfaced length 87,161 88,416 51,231 51,849 52,245
(in km)
Access infrastructure
Source: Ministry of Road Transport and Highways, Government of India

The total length of roads in Orissa is over 237,000 The total length of the railway network in Orissa
km. Orissa’s road density of 168.6 km per 100 square is 2,401 km, of which 552 km is electrified track.
 ORISSA PAGE 13

Given the significant presence of mineral based project entails the development of the minor port for
industries in the state, the availability of efficient both captive and general use. 11 other smaller ports
railway links is critical to fully exploit their potential. will be developed along the state’s 480 km long
coastline in a phased manner in synchronisation with
A number of projects have been undertaken the overall economic development of the state.
to improve the railway infrastructure in the state.
Orissa - Growth in port traffic
The Daitari-Banaspani rail link is being implemented
with an investment of US$ 130 million.The link shall (million tonnes)

provide direct port access to the iron-ore rich region Year 1999 2000 2001 2002 2003
of Orissa and will help significantly enhance the Cargo handled 13.1 13.6 19.9 21.1 23.9
competitiveness of iron-ore from the state in Source: Economic Survey of Orissa, 2003-04

international markets. Other projects that have

been undertaken include laying 950 km of new
Orissa- Composition of commodities handled by ports
railway lines with an investment of US$ 620 million, Total - 23.9 million tonnes
gauge conversion of 90 km with an investment
of US$ 17 million and doubling of 308 km lines
with an investment of US$ 205 million. 13%

Orissa has a domestic airport at Bhubaneswar and 8%

is well connected to major Indian cities.The state 49%
has seen a 15 per cent increase in passenger traffic 10%
in 2003-04. Since 1995, the airport has been
functioning as a customs airport as well. 20%
Orissa - Growth in air traffic
2002-03 2003-04 2004-05 Coal
(April - June) Iron-ore
Passengers 136,044 156,417 48,277 Fertiliser
Cargo (in tonnes) 627 696 185 POL
Source: Airports Authority of India Source: Major Ports Profile 2002-03,
Others Indian Ports Association

Orissa has a major port at Paradeep and a fair-

weather port at Gopalpur both of which are being Power
upgraded.The government has sanctioned over The installed electricity generation capacity of Orissa
US$ 220 million to upgrade the Paradeep port is 3,489 MW.The state has a captive electricity
to international standards, following which, the generation capacity of 1,206 MW. Between 1998-99
port will be able to accommodate capsize vessels and 2002-03, the total availability of power in the
of 125,000 DWT from the current 70,000 DWT. state increased from 1,207 MW to 1,371 MW,
The Gopalpur fair-weather port is to be converted an annual average growth of 10.78 per cent.
to an all-weather port as it will offer significant On a per capita basis, electricity consumption
advantages to the proposed Gopalpur Special in Orissa stands at 470 kWh per annum.
Economic Zone. A mega port is being developed
at Dhamara with private sector participation from Orissa has led the electricity sector reforms in the
Tata Steel and Larsen & Toubro.This US$ 330 million country. In 1996, the erstwhile state-owned electricity
utility was restructured to form separate corporate Industrial infrastructure
entities for generation, transmission and distribution.
Subsequently, the generation company was privatised Orissa has a network of 86 industrial estates
by selling 49 per cent equity stake to AES developed by the Orissa Industrial Infrastructure
Corporation, US in 1998. Of the four distribution Development Corporation. Over 3,000 units have
companies, three are controlled by Reliance Energy already been set-up in these estates.The state has
and the fourth by AES Corporation. sector-specific estates for aluminium and software.
These estates provide good quality infrastructure
Orissa - Installed Capacity (2002-03) support to units located there, including
Total - 3,489 MW
uninterrupted electricity and water supply, sewerage
and common roads. Orissa also has an Inland
Container Depot at Balasore that is well equipped
with modern facilities.
20%
A Memorandum of Understanding has been signed
between Government of Orissa and Software
55% Technology Parks of India (STPI) for setting up an
25% STPI Centre at Berhampur.The Berhampur centre will
open up facilities like high speed data communication,
technology incubation services, training and
consultancy.The centre will provide a conducive
environment to encourage and promote local
State’s share in Central Projects
entrepreneurship.The centre would also take care
Hydro
of all statutory needs of the software exporting
Thermal Source: Economic Survey of Orissa, 2003-04
industries like project approval, import approval
and export certification.
Communications infrastructure
Special Economic Zones
Orissa has witnessed rapid development in the The Orissa government plans to develop Special
telecommunication services during the last decade. Economic Zones at Paradeep and Gopalpur, its port
The number of fixed wire telephone subscribers towns.Tata Steel and the Orissa government will set
in the state grew from 135,000 in 1995 to over up a special purpose vehicle (SPV) for the proposed
701,000 in 2003. Gopalpur Special Economic Zone.

Orissa - Growth in fixed wire telephones

Industrial clusters
Year 1995 1997 1999 2001 2002 2003 Under the Industrial Infrastructure Up-gradation
Fixed wire Scheme (IIUS) of the Government of India, the state
telephones 135 199 334 526 641 701
government is looking at upgrading its industrial
(in ‘000)
clusters and enhancing infrastructure such as roads
Source: CMIE, Infrastructure Report 2004
and water supply.
The state has also seen substantial growth in cellular The major industrial clusters in the state are:
mobile telephony. In 2004, the state had over
336,000 subscribers. Jajpur region
The Jajpur region contributes to over 10 per cent
 ORISSA PAGE 15

of Orissa’s mineral production by value. Mineral-based n Tata Sponge Iron Ltd, the largest sponge iron
activities provide employment to over 5000 people producer in eastern India, plans to invest over
in the region. Jajpur has large deposits of chromite, US$ 2.2 billion within the next 10 years
iron-ore, coal, limestone, etc., and is fast emerging n Vedanta Resources Plc plans to invest
as the principal region for steel industry in the state. US$ 2.7 billion to set up a 5 MT steel plant
The region has excellent connectivity with Paradeep n Jindal Steel plans to invest over US$ 800 million
port which will be enhanced when the proposed in a steel plant
greenfield port at Dhamara is functional.
Talcher region
It is also well connected by land to the Howrah- Talcher is one of India’s major coalfields with large
Chennai railway and road links. Currently, the Jajpur reserves of power grade non-coking coal.The total
region has investment to the tune of US$ 1.1 billion. geological reserve is estimated to be 36,868 million
Leading companies such as Tata Steel and Orissa tonnes, 18.7 per cent of the country’s total reserves.
Mining Corporation are already carrying out In fact, the Talcher region is fast becoming the
operations in the region. Potential investment “energy centre” of Orissa. It already houses the
aggregating over US$ 1.3 billion is expected.The largest thermal electricity plant in the country
state government also proposes to develop a steel with a capacity of 2,500 MW, and this is expected
and metallurgical cluster at Jajpur. to increase to 3,000 MW by 2005.The National
Thermal Power Corporation has a large presence
Banspani-Berbil region in Talcher while Tata Power Company is planning
The Banspani-Berbil region in Keonjhar district in to set up a plant in Talcher.
Orissa is rich in mineral deposits especially iron and
manganese ores.The region has strong road network
and two national highways – NH6 and Express
Highway No.2. Companies that plan to invest in the
region are:
STATE POLICY

Vision & Mission n Becoming the “electricity hub” of the country

by proactively promoting the state as a destination
Orissa has the potential to optimise social and for large coal based electricity generation plants.
economic development through policy reforms and n Increasing services sector base to enhance
investment in physical infrastructure. By improving employment opportunities. In order to provide
the investment climate in the state, Orissa can fully remunerative employment to larger sections
exploit and benefit from its competitive advantages of the state’s population, the state shall promote
in areas such as mineral resources and tourism. development of tourism and IT / ITES sectors.

Orissa’s vision is to pursue economic growth Industrial policy

in a way that leads to a balanced regional
development, generates employment opportunities, To make Orissa more conducive to industrial
facilitates access to public services and leads to investment, the state government has adopted the
poverty alleviation through environmentally Industrial Policy Resolution 2001 to implement the
sustainable practices. following initiatives:

The Tenth Five Year Plan of the state (2002-07) n All clearances within the purview of the state
targets an annual growth of 6.2 per cent per annum, government, required for establishment of
which will require an investment of nearly industrial units, will be accorded within specified
US$ 13 billion.The Plan aims to reduce the poverty time frames
level in the state by 7 per cent by 2007 and n Industrial and Infrastructural Advisory Committee
by 50 per cent by 2015. (IIAC) under the chairmanship of the Chief
Secretary will process clearance to fast track
The strategic thrust areas identified by the state projects and other industrial projects needing
government for accelerating the state’s economic inter-departmental references
development include: n For “mega industrial projects”, special tax
incentives have been provided by way
n Providing an enabling policy framework to facilitate of refund of 50 per cent of the sales tax paid
private sector investment.The state plans to offer (up to a maximum of 100 per cent of the capital
a balanced mix of procedural improvements, investment made) and exemption from entry tax
tax incentives and infrastructure development on import of raw materials
to attract fresh private sector investment. n Rationalisation of inspections to be undertaken
The state shall also review its role in various
spheres of economic activity to minimise direct The process of restructuring Public Sector Enterprise
involvement (through Public Sector Enterprises). in Orissa is well established, having been in existence
n Maximising value addition to mineral resources. since 1989 when OMC Alloy’s charge chrome plant
The state shall facilitate mineral processing and was sold to Tata Steel. At present the state
metal production industries in the state to leverage government is implementing a Public Enterprise
mineral resources to generate maximum economic Reform Programme through a Cabinet Committee
benefit for the state’s economy. on Disinvestment formed in November 2002.
 ORISSA PAGE 17

The state government sold its holdings in the 1 MT partner for the purpose.The project shall cover the
Idcol Cement to ACC Ltd for US$ 40 million and the following public services:
Nayagarh Sugar Mill to ECP Industries Ltd for nearly
US$ 1.2 million. Other public sector enterprises sold n Commercial taxes
to private entrepreneurs are the Orissa Leather n Composite check gates at the state borders
Industries, Orissa Pump Engineering Company and n Land records, stamps and registration
Orissa Ferro Chrome.The state has also closed n Treasuries
11 public sector enterprises till now. n Comptroller of Accounts of Finance department
n Integrated bill collection centres for various
Orissa has led electricity sector reforms in the services
country. In April 1996, the erstwhile state-owned
electricity utility was restructured to form separate Orissa hosted the 8th National e-Governance
corporate entities for generation, transmission and Conference in February, 2005.This conference
distribution. provided an excellent opportunity to showcase
the advances made in this front over the last few
Port policy years. Orissa has taken several new initiatives
in Information & Communications Technology (ICT)
The state government has formed a Port policy and e-Governance sector.The state is making sincere
to increase Orissa’s share in exports and imports efforts to expand e-Governance programmes for the
and in national and international trade and commerce. benefit of the common man. Of this, the GRAMSAT
Its features are: Project implemented under the aegis of the
Department of Space, Government of India is a
n Creation of Orissa Maritime Board (OMB) that unique project connecting 314 blocks of the state
will act as a single window agency for development with a dedicated VSAT network.
of ports and inland waterways.The OMB would
interact and facilitate the development and Single Window Clearance
implementation of an integrated maritime The state government recently decided to introduce
development plan for the state. legislation for implementation of the Single Window
n Encourage private investment in ports through Clearance system.The key features of the system are:
development of greenfield minor ports in the state.
n Privatise services in the following areas: lighterage, n High-level clearance authority under the
dredging, piloting, tug towing service and other chairmanship of the Chief Minister will consider
essential utility services. projects with investment greater than
n For greenfield projects, the cost of private land US$ 11 million
acquisition shall be borne by the developer. n Single Window Clearance Authority (SWA) headed
However, this cost shall be compensated during by the Chief Secretary would consider projects
the concession period by adjusting it against the with investment greater than US$ 0.67 million and
future revenues that would accrue to the state less then US$ 11 million
government / OMB. n District-level Authority (DLA) can clear projects
with an investment up to US$ 0.67 million
e-Governance

The state government is initiating the first phase of its

e-governance initiative by inducting a suitable strategic
BUSINESS OPPORTUNITIES

Key industries The mineral industry is an important source

of revenue for the state government, which earns
Orissa - Key Industries US$ 100 million annually as mining revenue and
(Total NVA - US$ 507 million)
cess.The state government is facilitating proper
exploitation of its mineral wealth by promoting
11% mining and mineral based industries. Prominent
mining companies present in the state are Tata Steel,
7%
Mahanadi Coalfields Ltd, Jindal, Balasore Alloys Ltd
7% and OMC.
48%

Iron & Steel

With over 25 per cent of India’s iron ore reserves,
27%
Orissa accounts for over 10 per cent of India’s steel
production capacity and has a crucial advantage
in the iron & steel industry. Further, the presence
Basic metals
of seaports in the state makes exports and imports
Chemical & chemical products cost effective and more competitive.The government
Food products & beverages has been taking steps to promote the iron & steel
Other non-metallic mineral products industry in the state. Prominent players present in
Others Orissa’s steel industry are SAIL and Neelachal Ispat.

Source: Annual Survey of Industries 2002-03

(NVA stands for Net Value Addition) The state government has signed Memoranda of
Understanding (MoU) with 14 companies for setting
Mining up steel plants of various capacities in the iron-ore
Orissa is one of the largest mineral producing states rich parts of the state.
in India. It is endowed with a variety of mineral
resources, particularly coal, iron-ore and bauxite. These include:
Other significant minerals include chromite and n Posco (Pohang Steel Company), 5th largest
nickel ore. steel producer in the world, signed a MoU
with Government of Orissa to set up a 12 MT
Orissa - Minerals reserves and production
integrated steel plant at Paradeep.
Mineral Proven reserves Production n Tata Steel, India’s largest private steel maker plans
(million tonnes) (million tonnes) to develop a 6 MT steel plant at Duburi with
Orissa India Orissa India an investment of US$ 3.3 billion.
Coal 58,012 234,114 47.8 327.6 n Vedanta Resources Plc plans to set up a 5 MT
Iron Ore 4,177 17,712 16.2 83.3 steel plant in Keonjhar district of Orissa
Bauxite 1,370 2,807 3.60 8.58 at an approximate cost of US$ 2.7 billion.
n Essar Steel plans to set up a greenfield steel plant
Chromite 110 114 1.79 1.81
in Orissa with a capacity of 4.25 MT with a likely
Source: Indian Bureau of Mines, Reserves as on 2000, Production in 2001-02
investment of over US$ 1.5 billion.
 ORISSA PAGE 19

n Jindal Stainless Ltd is setting up a greenfield Exports

stainless steel complex in Jajpur district with
an investment of around US$ 900 million. It will Between 1999 and 2003, exports from Orissa
include a ferro chrome facility of 0.48 MT, stainless increased from US$ 421 million to US$ 648 million -
steel capacity of 1.6 MT and a 500 MW coal-based an annual growth rate of 11.4 per cent
power plant.
n Jindal Steel and Power Ltd has signed a MoU with
Orissa - Export performance
the Orissa government to set up a 2 MT ferro
alloys plant and a 200 MW captive power plant 700

in Keonjhar and Angul districts respectively with 600

US$ million
an investment of over US$ 880 million.
n SAIL has announced a US$ 55 million expansion 500

programme for its Rourkela steel plant.The project 400

envisages capacity expansion from the present
300
1.6 MT to 2.3 MT.
n
1999 2000 2001 2002 2003
Ispat Industries plans to set up a 4 MT pellet plant
Year
in Orissa.
Source: Economic Survey of Orissa, 2003-04

Aluminium
Orissa is the largest producer of aluminium in India.
In 2003-04, it produced over 365,000 tonnes
of aluminium, representing around half of India’s total Orissa - Composition of Exports
aluminium production. Orissa’s key advantage for
aluminium industry is the fact that the state accounts
4%
for half of India’s bauxite reserves. Its location makes
9%
it close to the Chinese and South East Asian markets
and the presence of large ports makes it easier
to access large export markets. 13%
57%
Prominent players in the aluminium industry in Orissa
17%
are NALCO and INDAL. NALCO is expanding its
aluminium capacity from 288,000 TPA to 345,000 TPA.
INDAL is expanding its production capacity
at Hirakud from 65,000 to 100,000 TPA with a total
investment of US$ 130 million. Utkal Aluminium,
Metallurgical products
a joint venture between AV Birla group and Alcan,
Mineral products
Canada, is setting up a 1.5 MT aluminium project
with an investment of over US$ 2.2 billion. Marine products
Computer software, hardware, electronic goods
Vedanta Resources Plc is promoting a 1.4 MT alumina Engineering, chemical & allied products
project at Lanjigarh in Kalahandi district of the state
Source: Economic Survey of Orissa, 2003–04
at a cost of nearly US$ 800 million.
 Orissa - Distribution of investment Though Orissa accounted for only 6.3 per cent
of projects under implementation as on January 2005,
its share of India’s aggregate outstanding projects
2% 10% ‘announced’ has risen to 17 per cent. Its share
4% in manufacturing sector projects announced in India
9% is higher at 38 per cent and the investment value
45%
of projects announced in Orissa has shot up over
four times to US$ 24 billion as on January 2005
12%
from US$ 5.5 billion in January 2004 (Centre for
18% Monitoring Indian Economy).

Foreign Direct Investment

Power During 1991 to 2003, Orissa approved over
Aluminium
Orissa - Cumulative FDI
Iron & Steel
2500
Chemicals
2000
Fertilizers
US$ million

1500
Other metals
1000
Others
Source: Projects Today, data as on July 31, 2004 500

0
Investment 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Year
Source: Directorate of Industries, Government of Orissa
The key industries in Orissa are primarily basic metals
(including iron & steel, aluminium) and chemicals & US$ 2.3 billion of foreign direct investment.
chemical products. Between 1991-04, Orissa attracted The key sectors attracting FDI in Orissa are
0.9 per cent of India’s investment, aggregating to electricity, metals & metallurgical products, chemical
nearly US$ 370 million. and chemical products.
FDI - Sectoral Break-Up
Currently, investment worth US$ 20 billion are
in the pipeline in Orissa and a sector-wise 8%
breakup of these projects indicates that 4%
a majority the investment are in electricity
generation and mineral-based industries including
aluminium and steel. 25%
63%

Orissa can emerge as a hub for metals business

in India and has the potential to attract investment
up to US$ 30-40 billion over the next five years
if it focuses on utilising the opportunity presented
by the current global metals cycle. With its locational Power
advantage, and the current up trend in global Metallurgical products, basic metals
materials, the state can become the metals, mining, Chemical & chemical products
and manufacturing hub of the country.
Others Source: Directorate of Industries, Government of Orissa
 ORISSA PAGE 21

Orissa - Electricity generation projects under implementation

Potential hubs for investment
Location Size (MW)

In addition to its present areas of strength, a number Talcher-II project 500

of sectors are emerging with substantial potential for IB Valley project - Units 3 & 4 420
private investment and business.The most prominent Total 920
among them are power generation and distribution, Source: PwC research
IT and ITES and tourism.

Orissa - Planned electricity generation projects

Power
Location Size (MW)
Orissa has over 58 billion tonnes of coal reserves
amounting to 25 per cent of India’s total reserves. Naraj-Duburi project 1,000

The total power generation potential in the state IB Valley project - Units 5 & 6 420
is 20,000 MW. Hirma Stage I 3,960
Talcher-III project 1,500
With the enactment of legislation in power sector,
Bhimkund project 400
inter-state supply and trading of electricity has been
Hirakud-Chiplima project 1,368
permitted and coal-based electricity generation plants
in the state can supply electricity to deficient markets Hirma Stage II 3,960

in other parts of India at a competitive price. Total 12,608

The state has been working at attracting investment Source: PwC research

in this sector and several power projects are being

expanded or are in the pipeline. IT and ITES
Orissa is fast developing as an important IT and ITES
These include: destination. In 2002-03, Orissa had software exports
n OPGC, a joint venture between AES Corporation in excess of US$ 55 million.The total IT related
and the Orissa government, plans to expand its investment that the state has attracted are over
IB Valley plant’s capacity by 500 MW with US$ 65 million.The state has the vision of achieving
an investment of US$ 400 million an export target of US$ 2.2 billion by 2008.
n NTPC is expanding its Talcher plant by 500 MW.
Reliance Energy proposes to set up a US$ 4 billion, There are over 160 companies present in the
3,960-MW electricity generation plant at Hirma Software Technology Parks of India, Bhubaneswar.
in Orissa The major players present in the state include Infosys
n Orissa Hydro Power Corporation (OHPC) and Satyam.
is considering developing a 500 MW thermal
power project in Jharsuguda district The state government is taking steps to provide
n Neyveli Lignite Corporation (NLC) plans to a conducive policy framework to potential investors
develop a 200 MW power project at Banharpalli, in the sector.The state government recently
near the IB Valley power project announced an Information and Communication
n Tata Power Company is also planning to develop Technology Policy 2004 to attract more IT / ITES
a power project near Talcher investment in the state.The government also has
a single point interface for all approvals for setting
up IT industry in the state.
Orissa offers almost 20-25 per cent savings in cost To provide a fillip to the tourism industry, the state
of operation in comparison to other leading government has announced a progressive tourism
IT destinations in India due to very competitive policy. It is also undertaking a study with the help
rates of infrastructure inputs like land and electricity of Department for International Development,
and low employee cost and cost of living. A strong UK to promote tourism in the state.The state
education network also ensures the availability is undertaking efforts to develop and promote
of a qualified talent pool at lower costs. a Buddhist circuit in Orissa and develop Special
Tourism Areas for promoting tourism.
Tourism
In 2002, Orissa attracted over 23,000 foreign and Infrastructure
over 3.4 million domestic tourists. Currently, Orissa’s In view of the proposals of massive investment lined
share in India’s tourist arrivals (both foreign and up in the metals and minerals sector, the state needs
domestic) stands at nearly 1 per cent. to urgently upgrade its infrastructure.The state
government has signed 35 MoUs for setting up steel
Orissa offers diverse tourism destinations to cater plants and three more for establishment of alumina /
to different types of tourists. It has popular beaches aluminium projects whose combined estimated
at Puri, Gopalpur and Chandipur, popular Buddhist investment is pegged at over US$ 2 billion. These
attractions at Dhauli and Ratnagiri, religious and mega industries need investment in road and rail
cultural attractions at Puri, Konark, Bhubaneswar infrastructure.
and 20 national parks and sanctuaries such
as Chilika, Simlipal.

Orissa has a developed tourism infrastructure,

with over 17,000 hotel rooms spread over more
than 829 hotels.
 ORISSA PAGE 23

PROFILE OF KEY PLAYERS IN ORISSA

AES Corporation a modern dry process kill and pre-dominantly

The US$ 8.4 billion AES is a leading global power manufactures portland cement.
company that generates and distributes electricity
worldwide from 114 power plants and 17 distribution INDAL
businesses in 27 countries. AES came to Orissa in INDAL is a part of the US$ 6 billion AV Birla Group,
1998 when the state invited international bidders to one of India's largest business houses.The company
disinvest the Orissa Power Generation Corporation is vertically integrated through all stages of the
(OPGC) following implementation of its Electricity aluminium business and is part of Hindalco, Asia’s
Reform Act, 1995. AES, holds 49 per cent of shares largest primary producer of aluminium, and among
in OPGC, and manages the corporation’s two the most cost-efficient producers globally.
generation units, each with a capacity of 210 MW. The company enjoys 50 per cent market share
AES has invested over US$ 150 million in the power in primary aluminium and downstream products.
sector in Orissa. AES also holds 51 per cent stake INDAL has bauxite ore mining, aluminium smelting
in CESCO, one of the four electricity distribution and electricity generation plants at different locations
companies in the state.The company has started the in Orissa. Currently, it is expanding the capacity
process of setting up of two more units of 250 MW of its smelter plant at Hirakud from 65,000
each at the IB Thermal Power Station, which will to 100,000 TPA and adding a 100 MW captive
commence operations by 2007-08. Future investment electricity generation plant in the state with
planned by the company in Orissa are to the tune a total investment of US$ 130 million. In India,
of US$ 380 million. INDAL has a nationwide spread of plants and mines,
operating through all stages of the aluminium value
Balasore Alloys Ltd (BAL) chain from bauxite mining, alumina refining, aluminium
Balasore Alloys Ltd, formerly Ispat Alloys Ltd smelting with captive power to downstream sheet
is a member of the renowned Ispat Group and foil rolling and extrusions. It also commissioned
of companies owned by Mittals.The other group India’s first scrap recycling facility to promote
companies are Ispat Industries Ltd, Ispat Metallics aluminium as the eco-friendly metal that can
India Ltd, Ispat Profiles India Ltd, Gontermann Peipers be recycled over and over again, consuming less
India Ltd etc. BAL is an ISO 9002 Company and power and conserving natural resources.
produces various Ferro Alloys.The company
incorporates the most advanced technologies into INDAL’s Hirakud Smelter has received several
its manufacturing process to ensure desired quality rewards for safety and environment conservation
of its products.The advanced process technology and such as the British Safety Sword of Honour presented
sophisticated equipment have been acquired from by the British Safety Council, the National Energy
world leaders of metals and ferro alloy equipment. Conservation Award (Special Prize) for the year 2002,
the National Safety Council Award for developing and
Bargarh Cement Ltd (BCL) implementing effective management systems and
Bargarh Cement Ltd, the newest subsidiary procedures among others.
of ACC Ltd, was formerly called IDCOL Cement Ltd.
BCL has a cement plant located at Bargarh in western Infosys Technologies Ltd
Orissa with a capacity of 0.96 MTPA.The plant has The US$ 1.06 billion Infosys Technologies is India’s
leading software services and IT consulting firm. Paradeep Phosphates Ltd (PPL)
In Orissa, it has a world-class development centre Paradeep Phosphates Ltd is a major manufacturer
at Bhubaneswar with employee strength of 1,200. of phosphatic fertilisers in India and is Asia’s second
Infosys plans to expand its present strength at largest producer of DAP. In 2003-04, the company’s
Bhubaneswar centre to 2,400 by year-end. It recently sales stood at US$ 229 million.The company is part-
acquired 27 acres land at an IT park in the city. owned by the K K Birla Group and the OCP Group
of Morocco. PPL produces one million tonnes of DAP
Mahanadi Coalfields Ltd (MCL) and other complex phosphatic fertilisers annually.
Mahanadi Coalfields Ltd is a subsidiary of Coal India In Orissa, the company’s plant is located in the
Ltd (CIL) and was formed in 1992. It has two port town of Paradeep. PPL’s wide range of products
coalfields Talcher and IB Valley in Orissa.The state cater to almost all agricultural applications.
accounts for 24.6 per cent of reserves in the country PPL is an ISO 9002 and ISO 14001 company.
amounting to 60.98 billion tonnes. Since the inception
of MCL coal production has increased from Pohang Steel Company (Posco)
23.14 million tonnes to 60.98 million tonnes in the South Korean steel major Pohang Steel Company
year 2004-05. (Posco), 5th largest steel maker in the world,
proposes to set up a 12 million tonne steel plant
National Aluminium Company Ltd (NALCO) in Orissa with an investment of US$ 10 billion
National Aluminium Company Ltd is Asia’s largest at Paradeep.The company currently has been given
integrated aluminium complex, encompassing bauxite mining rights for 480 million tones of iron-ore.
mining, alumina refining, aluminium smelting and
casting, power generation, rail and port operations. Reliance Energy Ltd (REL)
In 2003-04, the company’s revenues exceeded The US$ 789 million REL is India’s leading integrated
US$ 730 million. NALCO a public sector enterprise electricity utility company in the private sector.
is India’s leading producer and exporter of alumina REL distributes nearly 16,000 million units of power
and aluminium. In Orissa, NALCO has bauxite mines to over 5 million consumers in Mumbai, Delhi, Orissa
and a alumina refinery at Koraput, and a aluminium and Goa, across an area covering 1,24,300 sq km.
smelter, captive power plant and rolled products unit In Orissa, REL has invested in three electricity
at Angul.The company is currently expanding its distribution companies.The three distribution
operations in Orissa with an investment companies were acquired for US$ 260 million.
of US$ 870 million. NESCO caters to a consumer base of 0.40 million
with an annual energy input of 2,500 MW. WESCO
National Thermal Power Corporation (NTPC) caters to a consumer base of 0.40 million with
National Thermal Power Corporation is India’s largest an annual energy input of 3,700 MW. SOUTHCO
and the world’s sixth largest electricity generation caters to a consumer base of 0.40 million with an
company. In 2003-04, it had a share of 19.4 per cent annual energy input of 1,600 MW.The company has
of installed capacity in India, generating 27 per cent plans to set up a 3,960 MW coal based electricity
of total electricity in the country. NTPC has two plant at Hirma in Orissa.
plants in Orissa at Talcher and Angul in Kahina.
These have an installed capacity of 3,000 MW. Satyam Computers Ltd
NTPC is further expanding the generation capacity Satyam Computers is a global IT services company
of Talcher plant by 500 MW by 2006 with that offers end-to-end IT solutions. Satyam is present
an investment of US$ 75.7 million. in 46 countries, across 6 continents and employs
nearly 20,000 IT professionals. It works with over
 ORISSA PAGE 25

390 global companies, including over 144 Fortune refractories production facility with an installed
500 corporations. In Orissa, Satyam’s Bhubaneswar capacity of 1,23,000 TPA. Besides the production
facility is a dedicated development centre for units,TRL also has a modern research centre and a
the company’s global customers. It has over township with all welfare facilities like hospital, school,
200 employees at this facility and plans to increase clubs, etc.The initial capital investment in TRL was
the number of employees in the near future. US$ 0.85 million which slowly increased to a figure
as high as US$ 30 million in 1999-2000.
Steel Authority of India Ltd (SAIL)
US$ 5.7 billion SAIL is India’s leading steel-making Utkal Aluminium
company. In Orissa, SAIL has the Rourkela steel plant, Utkal Aluminium, is a joint venture between
the first integrated steel plant in the public sector AV Birla Group company INDAL and Alcan, Canada.
in India.The plant has a capacity 2 million tonnes The company is setting up a 1.5 MT greenfield
of hot metal, 1.9 million tonnes of crude steel and aluminium refinery at Doragurha in the Rayagada
1.671 million tonnes of saleable steel. Its wide and district in Orissa.The project is being set up with
sophisticated product range includes various flat, an investment of over US$ 2.2 billion.
tubular and coated products. SAIL has announced
a US$ 55 million expansion programme for the Vedanta Resources Ltd
Rourkela plant.The project, spread over 18 months, The US$ 1.3 billion Vedanta Resources Ltd, the
envisages capacity expansion of 40 per cent from London-based holding company of Sterlite group,
the present 1.6 MTPA to 2.3 MTPA by the end is poised to become a key player in the steel and
of 2005-06. aluminium industry in India.Vedanta operates several
bauxite mines within the aluminium operations at
Tata steel Balco and Malco. Its new operation,Vedanta Alumina,
Tata Steel began mining the iron-one reserves at the is being established in Orissa.The alumina smelter
Joda East Iron Mine in the Keonjhar district in 1955. plant will have a capacity of 1.4 MTPA and will initially
The Joda Mine was modernised in 1944 by produce 1 MTPA of alumina for expanding aluminium
incorporating a wet processing circuit.This resulted facilities at Korba.The remaining alumina will
in an increase in capacity from 0.72 to 2.1 MTPA. be available for sale to third parties.The project
In Joda, iron-one occurs with extensive mechanised also includes setting up a 1,000 MW power plant.
open cast mining. Due attention is paid to ecological The project is expected to be commissioned
factors which helps maintain a pollution-free in March 2007. In Orissa, the company’s mining
ambience in the entire valley. Another iron-ore mine area is spread over 680 hectare of Niyamgiri
in the Tata Steel fold located in the Keonjhar district forests in Kalahandi district.Vedanta also plans to set
is the Khondbond mine. Spread over an area up a 5 MTPA steel plant in Keonjhar district of Orissa
of around 1290 hectares, this mine is being worked at an approximate cost of US$ 2.7 billion.The project
by semi-mechanised open cast mining and is will be implemented in two phases and first phase
recognized for producing rich grade material. is expected to be completed by 2009.

Tata Refractories Ltd (TRL)

Tata Refractories Ltd is the largest refractories
manufacturing company in India. It was promoted
by Tata Steel and Didier Werke, Germany and began
production in 1958. Located at Belpahar in the
Harsuguda district of Orissa,TRL is a modern
DOING BUSINESS IN ORISSA
Indicative list of approvals and clearances

An indicative list of approvals with timeframe for setting up business in Orissa

Procedure Timelines

Building permission 10 days

Power connection 7 days

Allotment of land 21 days

Water connection 21 days

Sanction of loan from IPICOL 30 days

Pollution clearance 10 - 60 days (based on type of industry)

Source: PwC research

Cost of setting up Business

An indicative table on cost of setting up business in Orissa

Indicator Value (in US$)

Industrial land (per sq mt) 0.48 - 9.57

Office space rent (per sq ft per month) 0.287

Residential rent (for a 2,000 sq house, per month) 105.3

5-star hotel room (Single Occupancy, per night) 86

Electricity (per kWh) 0.067

Water (per 1000 litres) 0.287

Source: IDCO, OERC and PwC research

Note: Exchange rate used is INR per US$
 ORISSA PAGE 27

Contact for information

State Government Website

www.orissagov.nic.in/

Confederation of Indian Industry (CII)

Information on markets and opportunities for
investment in Orissa can also be obtained from
Confederation of Indian Industry which works with
the objective of creating a symbiotic interface
between industry and government.

Confederation of Indian Industry State Office

Plot No 8, Forest Park, 1st Floor
Bhubaneswar 751 009
INDIA
Tel +91 674 2531013
Fax +91 674 2530944
Email [email protected]
Web www.ciionline.org
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