A few years ago, Uttar Pradesh was nowhere to be found in India’s growth story. The largest state of India with more than 20 crore population was largely known for exporting labour to the industrialized Western coast (Maharashtra, Gujarat) as far as the economy is concerned.
Despite being the largest state, it received a minuscule portion of the total Foreign Direct Investment (FDI) in India. Over the years since liberalization, FDI in India grew exponentially but it was concentrated only in Western and Southern part of the country. However, the story has changed in the last few years.
In FY 19, the National Capital Region (comprising Delhi and parts of UP, Haryana) overtook Maharashtra as the top destination of FDI in the country. In the first nine months of FY 19, NCR received 57,000 crore rupees in FDI compared to 56,000 by Maharashtra and neighbouring UTs. A large part of the investment in NCR went to Noida and Greater Noida–the IT and electronics hub on Delhi-UP border which comes under Gautam Buddha Nagar district of UP.
The presence of a decisive government and pro-industry policies has only accelerated the flow of investments in Uttar Pradesh in the last few years, and it is becoming a favourite destination for the investors. The Yogi government has organized various investor summits and expos in the last few years to attract private investment. And these events have been quite successful, with the promise of investment worth 4.68 lakh crore rupees in UP Investor summit and more than 70,000 crore rupees in the defence expo which was organized a few months ago.
Moreover, recently Korean Electronic Vehicle maker Edison decided to invest 5,000 crore rupees in Uttar Pradesh to set-up a manufacturing facility and create 5,000 jobs. Many South Korean electronics manufacturers are looking to set-up manufacturing facilities in Uttar Pradesh given the incentives offered by the UP government and large consumer base of the state.
In the new industrial policy floated by the state, the government promised to reimburse State GST to the companies on setting up manufacturing facilities in backward regions such as Purvanchal and Bundelkhand. The new industrial policy is aimed at attracting companies that are shutting down their manufacturing units in China.
The impact of New Industrial Policy of UP is visible as a German military hardware manufacturer Rheinmetall and South Korea electronic vehicle manufacturer Edison announced setting up factories within days of the policy was floated. It has been only a week since the policy was announced; the state has already bagged two big investments and is exploring many other avenues.
UP MSME Minister Siddharth Nath Singh held talks with Indian ambassador to France to attract French companies in the state. “There is a huge opportunity to increase percentage potential of exports from India and UP to France. A large land parcel has been earmarked for maintenance, repair and overhaul (MRO) near the Jewar Airport in Greater Noida which can provide investment opportunities to French companies,” said UP MSME minister.
The state aims to double up the MSME exports to 2.4 lakh crore rupees in the next three years from 1.2 lakh crore rupees as of now. The state of Maharashtra, which has been the undisputed leader in industrialization and attracting investments in the last few decades, remains the most important player for the Indian economy. However, the tri-party alliance government and indecisive leadership since last one year are pushing the state’s economy in the wrong direction and the states like UP are capitalizing on this opportunity to attract companies and investment.
Uttar Pradesh has the existing capacity to replace China as the ‘factory of the world’ with a population of 22 crores and young demography. Unfortunately, the state did not had an investment-friendly government before, but with the arrival of Yogi, things have been moving rapidly. The Yogi government must be applauded for transforming the state from nightmare for industrialists to a heaven for law-abiding companies. We are hopeful that his untiring efforts for the state might soon bear fruits.