To rejuvenate the industrial scenario in a strategically located eastern Indian province of West Bengal, a global business summit was organized by the provincial administration in state capital Calcutta last week. This much publicized meet brought to the fore Bengal’s willingness to seek partnership with investors, business community and intellectual minds from India and abroad for the province’s brand makeover.
As the global economy is expected to pick up speed in 2015 and expand by 3.4 percent, this is the right time to prepare a blueprint for triggering future growth in Bengal — appropriately touted as a “land of immense opportunities.” Now that industrial sector growth in Bengal has surpassed the national average, exploring ways and means of taking the state to a new height through proper policy implementation and practice, infusion of technology and huge dose of investment is the prime objective of the local administration today. According to Indian government’s Central Statistical Office, Bengal recorded an industry sector growth of 8.74 percent as against the national average of 0.4 percent in 2013-14.
Accordingly, the well-attended event focused on sectors like urban infrastructure, housing, information technology, food processing, horticulture, floriculture, MSME (Micro, Small and Medium Enterprises), textiles, health care, education and skill development, manufacturing, energy and infrastructure, hospitality, tourism, entertainment and financial services where there are potential for attracting greater foreign and domestic investments. Notwithstanding the relentless negative propaganda (which is essentially of political nature and normal in any evolving third-world multi-party democracy), Bengal recorded a gross state domestic product (GSDP) of $117.4 billion in 2013-14 alone. Being India’s sixth largest economy, the state’s GSDP expanded at a compound annual growth rate of 14.5 percent during 2005-14. NASSCOM–Gartner also ranked West Bengal’s power infrastructure, the best in the country. Moreover, Bengal not only boasts of a huge consumer base with fat pocket but also acts as a conduit to the traditional market hub in India’s east and northeastern region as well as the neighboring nations of Nepal, Bhutan and Bangladesh. Most importantly, the province’s unique locational advantage makes it a strategic gateway to markets in Southeast Asia. Since an economic powerhouse like China has turned into India’s largest trading partner and New Delhi’s merchandise trade with Asian nations — particularly East Asian ones — growing significantly, Bengal is going to be the fulcrum of all business activities in the near future. A recently conducted study reveals that the capacity share of western ports in India will decline by a significant 10 percent by the end of 2014 due to concentration of business opportunities in the eastern coast, which is proximate to Far East. To benefit from this rapidly changing scenario, Bengal is seeking to augment physical and social infrastructure for which it has opened its arms to private investors — both domestic and from foreign shore. Also, leveraging its position in agriculture (Bengal ranks third in India in agricultural output), the state government plans to tap the tremendous potential in agro-business due to high soil fertility and suitable climatic conditions. There is incredible opportunity for public-private partnership in areas like agro-logistics apart from obtaining foreign assistance for infusion of relevant technology in export quality management of processed fruits (especially mango) and vegetable items. Bengal’s chief minister has shown inclination to adopt hub-and-spoke model, by way of which district towns and surrounding villages are interlinked to encourage effective distribution of agro-commodities, reducing transportation cost and increase competition for the benefit of both producers and consumers. Such a model in fact helps to resolve the nagging supply-side problems and consequently strengthen the entire supply chain management.
Bengal government is quite serious about initiating appropriate measures to develop manufacturing excellence through creation of manufacturing hubs. However, given Bengal’s small and highly segregated land holding pattern (owing to agrarian-reform of 1978), Germany’s Mittelstand would be an ideal model for hastening industrialization and living up to the expectations of young jobseekers. It is not anybody’s argument to keep big manufacturing at arm’s length. Automotive, iron and steel, engineering, petroleum products, leather and textile goods manufacturing can indeed revolutionize Bengal’s economy. But then, as this author reasoned with a senior German foreign office functionary, a thriving Mittelstand-like MSME sector is the best bet for a land-starved Bengal with high population density. Bengal’s very own Mittelstand model comprising vibrant MSMEs would no doubt solve the unemployment problem drastically and can drive the Indian economy as well if only Germany lend a helping hand to transform this vital sector. With Berlin’s active collaboration and professional guidance, MSMEs in Bengal (constituting 10 percent of national MSME strength) can surely outgrow all other segments with innovative products and services.
For serious investors nothing could be commercially more luring than the fact that the cost of operating a business is on the lower side in Bengal, which attracted merchants and travelers from across the globe throughout history. Besides, Bengal’s public finances have undergone sea changes in the last few years. Abandoning financial profligacy, Bengal is now committed to adopting principles of fiscal prudence in governance. With an almost negative industrial man-day-loss, established land-bank and attractive regulatory framework, Bengal should be the next investment destination for global industry if only Modi’s government eliminates inequality in foreign-direct-investment distribution in India resulting from favoritism shown to ruling-party or ally-partners-ruled provinces.
