Madhya Pradesh: Means Business Roads

Overview Overview Madhya Pradesh (MP) – State that means business MP is the second largest State in the Country stretching over 308,000 sq kms. The State is blessed with large mineral resources of coal, diamond, limestone, methane etc. MP is among the top 4 states of the Country for industrial investments. Economic Snapshot Madhya Pradesh is emerging as a key growth center for the Country Per capita GSDP USD 369** Manufacturing sector USD 8.5 bn** (Registered & Unregistered) Gross state domestic product (GSDP) USD 23,983.63 Mn** Average growth rate 5.5% per annum Advantage MP Madhya Pradesh has one of the upcoming industrial base in India The State is centrally located Investor friendly Government policies Total electricity generation capacity 6,449.25 MW* India’s first greenfield SEZ Indore SEZ Industrial Centers 8 Power Electricity generation capacity at present is 6,449.25 MW and estimated to rise to a surplus in 2008-09 MP is rich in low grade coal suitable for power generation. Potential of hydro-energy generation. Installed power capacity (MP’s share) Hydel Power Generation: 852.7 MW* Thermal Power Generation: 2,147.5 MW* *Ministry of Power (powermin.nic.in) **Source: Indiastat.com (as on 23 Feb 2006)

Enabling Infrastructure The State is well connected with the rest of India with almost 425 trains passing through the State on a daily basis. Of these 175 trains pass through the State capital Bhopal alone. MP IS CENTRALLY LOCATED AND WELL CONNECTED WITH ALL MAJOR CITIES IN INDIA RAILWAY NETWORK 25 airstrips.** Convenient air links from key Indian cities like Delhi & Mumbai to Bhopal, Jabalpur, Gwalior, Indore and Khajuraho. 5 operational airports. Indore airport has the capability of handling international cargo. An international airport proposed in Bhopal. GWALIOR AIRPORTS KHAJURAHO INDORE BHOPAL JABALPUR The total length of roads spanning MP is 67,600 kms.** National highways of 5,200 kms run through the State.* 18 National highways including trunk routes of Delhi-Mumbai, Delhi-Chennai, Delhi-Bangalore, Delhi- Hyderabad. The total length of State highways in the State is 9,885 kms.** Convenient linkages to western ports i.e. Kandla Port, Jawahar Nehru Port Trust. ROAD NETWORK *Source: Department of Road Transport & Shipping (morth.nic.in) **Source: www.destinationmadhyapradesh.com

Madhya Pradesh: A Preferred Investment Destination 31% of the State under forest cover with a largely unexploited species of rare, valuable medicinal- herbal plants Over 2,000 kms of roads being developed with Private Partnership (BOT) India’s 1st operational Greenfield SEZ at Indore Offers diverse tourists destinations catering to various segments of tourism such as religious (Bhojpur), eco/ adventure (Panchmari), heritage (Sanchi, Khajuraho) tourism etc. Over 100 agricultural farms with an area of over 20,000 acres is available on lease to investor Third largest producer of cement in India* Favourable climatic conditions for cotton and over 40,000 power-looms are driving the textile industry Various blocks available for power, cement, iron and steel units Largest producer of pulses and oilseeds in the Country (~75% of soyabean production) Over 18,000 technical graduates and 230,000 graduates add to workforce each year Availability of coal and natural gas (G.A.I.L pipeline) along with support from Government to make investment in Thermal Power Plants lucrative Over 144 BCM of coal bed methane reserves available 12 blocks with reserves totalling 2,585 million tons of coal has been identified *Source: www.mpsidc.org & Brochure: MP Means Business

MP: The Right Place with the Right Environment Savings in Office Space Rates (A comparison of rates in Central Business Districts) DESTINATION MADHYA PRADESH Fastest mover* in overall performance among the big States in the Country. (780 Kms) Mumbai (MPV - 1000) (800 Kms) Pune (MPV - 206.51) (1400 Kms) Bangalore (MPV - 254.52) (1430 Kms) Chennai (MPV - 362.84) Hyderabad (840 Kms) (MPV - 257.9) Delhi (740 Kms) (MPV - 789.5) Ahmedabad (570 Kms) (MPV - 220.63) (1350 Kms) Kolkata (MPV - 613.19) Key Markets (Distance From Bhopal) MPV – Market Potential Value Fastest mover in agriculture Fastest mover in infrastructure development. Bhopal and Indore have substantial cost advantages, even when compared to other Tier III and IV cities. Savings in Land Cost Ranks 2nd in terms of governance. (Estimated Values for Multi-product SEZs) Ranks 3rd in terms of law & order Cost of skilled labour is USD 2.4/day vis-a-vis USD 3.5 – USD 4.0/day in metros The cost of land is one of the lowest in the Country. Even central hubs such as Indore and Bhopal fare well against other cities in terms of low land cost. MP is centrally located. The State is at an easy distance from all the key consumer markets in the Country. * Fastest mover is the State where the rate of improvement between 2003 & 2006 was greater than that between 1991 & 2003 **Source: India Today (September ‘06 Issue) Source: (Reference: RK Swamy) - Distances rounded off

SPECIALIZED INFRASTRUCTURE Industrial Policy: Catalyst for the Investments The Government of MP has devised an investor friendly industrial policy, which is aimed at achieving global competitiveness. The policy emphasizes on industrial growth in the state through adopting cluster approach, establishing specialized infrastructure and offering favourable incentives. The main thrust of this policy is: Establishment of a Madhya Pradesh Trade and Investment Facilitation Corporation which would take decisions about rationalization of taxes, facilities of mega projects and other related matters. Enacting an Industrial Facilitation Act and to change the rules of business with a view to make single window system decisive and result oriented. Developing infrastructure for supporting the identified industrial clusters Reviving closed down/ sick industrial units by granting special packages. Attractive incentive schemes. SPECIAL INCENTIVES Special package for Mega Projects on project basis by apex level investment promotion empowered committee headed by the Chief Minister. Industrial investment promotion assistance – 50% to 75% of commercial tax for 3-10 years Concessional registration charges and stamp duty exemption for Term Loans. Interest subsidy on term loan for 5 – years @ 3% to 5%. For thrust sector industries, 25% capital subsidy would be provided limiting up to a maximum of USD 56,000 Land on 75% concessive rate for Mega Projects limited to USD 4.4 million. Entry tax exemption for 5 years. 5 years electricity duty exemption on captive power generation 15% capital subsidy to SSI up to USD 33,000 in backward areas Infrastructure grant up to USD 0.22 million crore for developing private sector industrial parks Partial reimbursement for Project report, ISO Certification, Patent and Technology Purchase cost CLUSTER APPROACH Indore – Pharmaceutical, Textile, Food Processing, IT, Auto Components Bhopal – Engineering, Biotechnology, Herbal, IT, Food Processing Jabalpur – Garment, Mineral, Forest & Herbal, Food Processing Gwalior – Electronics, IT, FMCG, Engineering, Food Processing Rewa – Refractories, Lime Stone, Forest Based Sagar – Mineral Processing Crystal IT Park Indore Food Parks Mandsaur, Khargone, Chhindwara, Hoshagabad, Mandla and Bhind Stone Park Katni Herbal Park Rewa Granite Park Chhatarpur Life Sciences Project Bhopal Apparel Park Indore (SEZ) Gems & Jewellery Park SPECIALIZED INFRASTRUCTURE

Total units established Doing Business Made Easy Through MPAKVN In a bid to build a competitive environment; industries and their ancillaries would be promoted in clusters based on the availability of raw materials, skilled labour and market potential. Under this Industrial Policy through Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd (MPAKVNs) scheme, the State Government, has identified industrial clusters. Many of the industrial giants have their establishments in these areas, however 44% of developed area is still untapped and open for investment. Area Developed: 1,330 Hectares Allotted: 618 Hectares Units established: 286 Major Groups:HEG, Crompton Greaves, P&G, Godrej, Lupin, IFB, Oswal, Nahar Special Infrastructure: ICD, Food Park Area Developed: 2,262 Hectares Allotted: 800 Hectares Units established: 326 Major Groups: JK, Surya Roshini, Godrej, Grasim, Cadbury, Hotline, Crompton Greaves Special Infrastructure: ICD, Food Park Area Developed: 790 Hectares Allotted: 125 Hectares Units established: 52 Major Groups: Raymond, Hindustan Petroleum, PBM, Ayur Special Infrastructure: Stone Park, Food Park Area Developed: 273 Hectares Allotted: 115 Hectares Units established: 121 Major Groups: Birla, Jaypee Special Infrastructure: Integrated infrastructure development centres (IIDC) BHOPAL AKVN GWALIOR AKVN JABALPUR AKVN REWA AKVN Area Developed: 2,492 Hectares Allotted: 1431 Hectares Units established: 575 Major Groups: Tata, Ranbaxy, Eicher, Bridgestone, Hindustan Motors, Kinetic, SRF, S Kumars, Gajra, Nicholas Piramal, Indorama, IPCA, Bhilwara Special Infrastructure: SEZ, Crystal IT Park, Food Park, Apparel Park Malanpur, Malanpur Phase II, Banmore, Chainpura, Siddhgawan, Pratappura Total developed area 7,147 Hectares Total allotted area 3,089 Hectares Total units established 1,360 Growth centres 19 Rewa, Waidhan INDORE AKVN Source: Mandideep, Pillukhedi, Mandideep Phase II Borgaon, Maneri, Purena Pithampur, Kheda, Dewas, Maksi, Megh Nagar Source: MPSIDC

Roads

Sector Profile: Roads Roads: Motoring Away MP: Connecting India MP: Offering Specific Incentives Government Initiatives: MP Road Policy MP: An Investment Destination Way Forward Connecting Further

Roads - Motoring Away India has one of the largest road networks in the world (over 3.3 million km). The roads carry nearly 70% of freight and 85% of passenger traffic in the country. Government expenditure on roads in India is significant - 12% of capital and 3% of total expenditure. Investment in the road sector is expected to touch USD 66.50 billion in 2005-07. As per National Highways Authority of India (NHAI), a total of 23,546 kms of roads would be constructed in the next two years. This construction would be conducted under following four programs, namely: Golden Quadrilateral (Program Under NHAI) North-South and East-West (Program Under NHAI) Port connectivity and other projects Non NHDP (National Highway Development Program) Projects. The focus of successive Governments on improving road connectivity across the country, has brought about significant investments in road development. As per a recent World Bank study, the cumulative funding shortfall over the 10 year period is estimated at USD. 23.22 billion , approximating 39% of the total requirement. The funding gap assumes that all the road user charges generated on the highways are returned to the highway sector. If the current proportion of road-user charge revenue is returned (56%), then available funding for highways would be less than the maintenance needs, and the funding gap would rise to USD 39.11 billion. Indian Road Network* Indian road network of over 3.31 million Km. is second largest in the world and consists of : Length (In Km) Expressways 200 National Highways 66,590 State Highways 1,28,000 Major District Roads 4,70,000 Rural and Other Roads 26,50,000 Total Length 3.31 million km (Approx) Status of National Highways as on 31st July, 2006* Single Lane/Intermediate Lane 32% Double Lane 56% Four or more Lanes 12% *Source: National Highway Authority of India (www.nhai.org)

DISTANCES OF MAJOR CITIES FROM THE STATE CAPITAL* MP: Connecting India MP has a well developed transport infrastructure of roads, rails and airports. 5200 km* of National Highway runs across the state with total length of the roads estimated around 67,600 km*. MP has the 3rd largest network of National highways in the Country after Uttar Pradesh and Rajasthan. Since MP is centrally located within the country, most of the long haul road traffic in the north-south and east-west direction in the country has to pass through the state. 18 National Highways including trunk routes of Delhi-Mumbai, Delhi-Chennai, Delhi-Bangalore, Delhi- Hyderabad complete their stretch by passing through the State. State highways are of 9885 kms* length, connecting key urban and tourist centers within the state State roads provide convenient linkages to Kandla Port, Jawahar Nehru Port Trust. ROAD MAP OF MP DISTANCES OF MAJOR CITIES FROM THE STATE CAPITAL* FROM TO DIST. Bhopal Delhi 740 Km Mumbai 780 Km Chennai 1435 Km Bangalore 1400 Km Hyderabad 840 Km Kolkata 1350 Km Kandla 930 Km Ahmedabad 570 Km Source: NHAI (www.nhai.org) Distances rounded off

MP: Offering Specific Incentives In terms of infrastructure, roads in particular has been recognised as the thrust area by the Government of MP. In order to promote involvement of the private sector in construction and maintenance of roads, the Government has decided to offer projects on a Build-Operate-Transfer (BOT) basis. Private sector participation initiative has been taken by MP Government as large funding amounts are required for such mega ventures. Type Of Projects Identified For Private Sector Participation Considering the usefulness to serve the economy, the intention of the Government is to involve Private Sector for taking up development of following type of projects on State Highways : (i) By passes (ii) Bridges (iii) Railway Over Bridges (iv) Widening of existing roads (v) Ring Roads near big cities. (vi) Improvement/ maintenance of existing roads etc. There is a significant opportunity for BOT in the national highways segment as they carry more than 40% of the traffic even though they constitute just about 2% of the total road network in the country. FEATURES OF MP BOT SCHEME Foreign investments in the development of selected stretches of State Highways to maintain and operate them generally for a period up to 30 years (concession period) after opening the facility for traffic and the entrepreneur is permitted to collect and retain toll as approved by the Government Private entrepreneurs will design, construct, maintain and operate the facility from their own resources or funds borrowed from financial institutions, banks, open market etc. To ensure free flow of traffic, the normal checks by the authorities will be conducted at entry and exit points only. The traffic on such facilities will be normally regulated by the entrepreneur. Basic facilities for the traffic en route, provision for developing and operating highway related facilities such as restaurants, motels, fuel stations, rest/parking areas, shopping malls, transport nagars and other related facilities could be made. The income from such facilities will also enhance the viability of the project. The Government is paying special attention towards the quality of roads being constructed. With the number of projects proposed, the private sector participation is foreseen for the overall development of the State.

MP: Offering Specific Incentives The State Government is also focusing on the development of the National Highways that run through the State to promote the participation of private investors. These works include the following: Rehabilitation of the roads Maintenance Construction of new patches For NHDP in particular, the private sector has responded enthusiastically. Under this programme, projects valued at over USD 1.33 billion are being implemented. The NHDP has been extended to cover a 50,000 km road network, and these future works will be undertaken on a BOT basis (through toll or annuity). GOVERNMENT DIRECT SUPPORT The State Government will identify priority projects, and allow the private sector to design, construct and operate the toll roads. The choice of entry/ exit points may be mutually agreed between the Government and the entrepreneur. The land for highway development will be acquired by the Government and given to the entrepreneurs on certain terms and conditions for the land. Tax holiday for five years for road infrastructure development project as per the policy decision of Central Govt. OTHER SUPPORT FROM THE GOVERNMENT Project Implementation The entrepreneurs will enjoy full freedom in carrying out the assigned project. However, they will have comply with certain standards, safety of structures, specifications, satisfactory operations and management as laid by the Government. The Public Works Department (PWD) will play a major role in approvals and implementation. Registration of entrepreneurs under special category The State Government has registered entrepreneurs for carrying out work on a B.O.T. basis. 35 firms have already been approved under this category Modification in B.O.T. contract Further to the inputs received from the entrepreneurs, the contract agreement to be used for the B.O.T. scheme has been modified and made more comprehensive to facilitate smooth working and execution. Source: www.mp.nic.in/pwd

MADHYA PRADESH ROAD POLICY Government Initiatives: MP Road Policy The main aim of the MP Road Policy is to work towards the up gradation of the existing road infrastructure so as to provide an efficient road network system along the length and breadth of the State keeping in mind that the accruing benefits may be passed on evenly to all sections of the society Government of MP has made recent amendments in the Indian Tolls Act of 1932, so as to encourage private sector participation in mega ventures. The major roads in the State have been rehabilitated or have been taken up for rehabilitation. The State has come up with road renewal programmes under which maintenance of the existing road infrastructure will be undertaken. The envisaged activities will be according to the following renewal regime: National Highways - One third of the road length every year State Highways - One fifth of the road length every year Major District Roads - One sixth of the road length every year Village Roads - One eighth of the road length every year All the major towns and district headquarters are linked with roads having high quality surfacing and riding comfort MADHYA PRADESH ROAD POLICY The main objectives of the Road Policy are: To provide connectivity to villages with a population of more than 1000. The road network for villages having population less than 500, will be so planned that an all weather road will be available at a distance of 3 km in plain areas and at a distance of 5 km in hilly areas. Improvement of existing State road network system to 2 lane/ 4 lane roads to cater the need of the projected traffic. To enhance the road infrastructure in towns and cities. To effectively utilise the present resources. To constantly update the highway technology by adopting modern techniques of construction and training of department personnel. To ensure high standard of road safety and travel comfort.

SOME SUCCESSFULLY COMPLETED BOT PROJECTS MP: An Investment Destination The State Government of MP has taken initiatives to improve the condition of the roads on a priority basis. The budgetary allocation for roads has been increased from USD 90 Mn in 2003-04 to around USD 210 Mn in 2005-06. In the past 2 years, 12,500 kms of roads were constructed which is now projected to increase to 40,000 kms more in the next 3 years The State Government is encouraging the involvement of private sector to take up the projects on a BOT basis. These initiatives by the Government are showing immediate results, with the traveling time being decreased significantly. All the divisional headquarters have been connected to the State capital by road. It is now proposed that all the district headquarters will be connected to the Divisional headquarters. SOME SUCCESSFULLY COMPLETED BOT PROJECTS Name of the Project Length (Kms) Project Cost (Mn USD) Dewas – Ujjain - Badnawar 98.26 11.09 Hoshangabad – Piparia - Panchmarhi 126.00 12.66 Hoshangabad – Harda – Khandwa 185.00 18.00 Satna – Maihar – Umaria 141.00 11.84 Rewa – Amarkantak 246.00 24.72 Indore – Edelabad 203.00 27.56 Ujjain – Jhalawad 134.00 14.82 Jabalpur – Narsinghpur – Piparia 140.00 16.65 Raisen – Rahatgarh 101.40 12.82 Distance Before At Present Hoshangabad - Harda 100 km 8 hrs 2 hrs Hoshangabad - Seoni 90 mins 45 mins At present 1000 kms of roads have already been laid down on a B.O.T. basis and construction of another 1100 kms is in progress. Madhya Pradesh Road Development Corporation (MPRDC) is the nodal agency carrying out all the developmental work in association with the private sector. It is proposed that MPRDC will carry out the development of 3000 kms of road in the next 3 years with assistance from NABARD and the Central Government. Leading Road Developers such as Ramky Infrastructure Construction Private Limited, Unitech Limited, KNR Constructions Limited, Madhucon Projects have sizeable presence in the State and are involved in several National and State Government projects. The peaceful environment in the State and the cooperative State Government facilitates faster implementation of the project thereby increasing the profitability of the project.

Way Forward… The State Government has already completed the work on a total of 2977.25 km length of roads with the total cost of USD 361.22 bn*. There are various projects where the Government is seeking private partner investment. Following are some of the identified projects that are proposed to come up in the near future. Many of these high density roads will be developed under BOT/ private development methods. This offers a significant opportunity for infrastructure players to invest in the sector. B.O.T. PROJECTS (PROPOSED) S.No Name of project Length (kms) Estimated cost (Mn USD) 1 Sehore – Dewas 142 ~103.00 2 Lebad – Nayagaon 250 ~184.00 3 Chandrapur – Badwani 100 ~12.50 4 Matkuli – Tamia – Chindwada 108 ~21.00 5 Mandsaur – Sitamau (up to Rajasthan Border) 44 ~5.60 ADB PHASE III (STATE HIGHWAY PROJECTS COMING UP) S.No. Name of project SH no. Total length (kms) 1 Shivpuri – Sheopur – Pali 06 143.60 2 Kurwai – Chanderi – Pichoore 19 183.00 3 Bareli – Piparia 32.00 4 Damoh – Hata – Amanganj 49 112.00 5 Chhilpi – Baiihar – Balaghat 26 135.00 6 Khandwa – Khargone 87.00 7 Satna – Chitrakoot 11 74.00 8 Chiraidongri – Seoni 11A 97.00 9 Malhara – Amanganj 10 90.00 Hoshangabad – Nasarrullaganj – Khategaon 22 Silvani – NH12 Junction 16 53.00 12 Banher – Bistan (Maharashtra) 31 25.00 13 Khargone – Mandleshwar – Mhow 01 119.00 14 Balaghat – Nainpur 75.00 15 Tala – Shahdol 85.00 Morena – Porsa 02 50.00 17 Indore – Ujjain 55.00 18 Shyampur – Goras 23 58.00 Dindori – Mandla – Lakhnadon 40 134.00 20 Katni – Barhi – Tala 60.00 21 Gairatganj – Gadarwra 44 Bela – Govindgarh – Churhat 52 63.50 NATIONAL HIGHWAY PROJECTS (PROPOSED) S.No Name of project Length (kms) Estimated cost (Mn USD) 1 NH 75 (Km 0 to 85) 108 ~120.00 2 NH 7 (Km 544 to 652) 104 ~115.50 3 NH 3 (Khalghat to Maharashtra Border) 88 DPR IN PROGRESS 4 NH 12 (Bhopal – Deori – Jabalpur) 297 5 NH 59 (Indore – Jhabua – Ahmedabad) 169 6 NH 69 (O’ganj – Bhimbhekta) 13 7 NH 75 (Jhansi to Khajuraho) 100 8 NH 86 Ext (Bhopal to Sanchi) 40 Considering the successful completion of other mega projects and the potential lying in the up coming ventures, the road sector in MP is poised to become the most lucrative areas for private investors in times to come. BOT Source: mprdc.nic.in

Connecting Further National Highways Authority of India www.nhai.org Public Works Department, Madhya Pradesh www.mp.nic.in/pwdmp Madhya Pradesh Road Development Corporation mprdc.nic.in