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Development of Special Economic Zone for Agro & Agro Based Products at Umariya-Dungariya, Dist.

Jabalpur, Madhya Pradesh on PPP Basis


Abridged Market Assessment Report

M.P. AUDYOGIK KENDRA VIKAS NIGAM (JABALPUR) LTD. (A Government of M.P. Undertaking)

April 2010

Deloitte Touche Tohmatsu India Pvt. Ltd.

DISCLAIMER
This Report is subject to the Disclaimer as contained in the Request for Qualification (RFQ) dated 20 September 2010 issued by M.P. Audyogik Kendra Vikas Nigam (Jabalpur) Ltd. for invitation of RFQ Applications for Development of Special Economic Zone for Agro & Agro Based Products at UmariyaDungariya, District Jabalpur, Madhya Pradesh on Public Private Parternship.
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The information contained in this Report is provided to Applicant(s) on the terms and conditions set out in the RFQ and such other terms and conditions subject to which such information is provided. The purpose of this Report is to provide interested parties with information that may be useful to them in the formulation of their application for qualification pursuant to this RFQ (the Application). This Report includes statements, which reflect various assumptions and assessments arrived at by the Authority in relation to the Project. Such assumptions, assessments and statements do not purport to contain all the information that each Applicant may require. This Report may not be appropriate for all persons, and it is not possible for the Authority, its employees or advisors to consider the investment objectives, financial situation and particular needs of any Applicant who reads or uses this Report. The assumptions, assessments, statements and information contained in this Report may not be complete, accurate, adequate or correct. Each Applicant should therefore, conduct its own investigations and analysis and should check the accuracy, adequacy, correctness, reliability and completeness of the assumptions, assessments, statements and information contained in this Report and obtain independent advice from appropriate sources. The Authority accepts no responsibility for the accuracy or otherwise for any interpretation or opinion on law expressed herein. The Authority, its employees and advisors make no representation or warranty and shall have no liability to any person, including any Applicant or Bidder, under any law, statute, rules or regulations or tort, principles of restitution or unjust enrichment or otherwise for any loss, damages, cost or expense which may arise from or be incurred or suffered on account of anything contained in this Report or otherwise, including the accuracy, adequacy, correctness, completeness or reliability of the Report and any assessment, assumption, statement or information contained therein or deemed to form part of this Report or arising in any way with pre-qualification of Applicants for participation in the Bidding Process. The Authority and its advisors also accept no liability of any nature whether resulting from negligence or otherwise howsoever caused arising from reliance of any Applicant upon the statements contained in this Report. The Authority may, in its absolute discretion but without being under any obligation to do so, update, amend or supplement the information, assessment or assumptions contained in this Report.

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Table of Contents

TABLE OF CONTENTS .................................................................................................................................... II LIST OF ABBREVIATIONS .............................................................................................................................. 4 CHAPTER 1: INTRODUCTION AND BACKGROUND................................................................................ 5 1.1 1.2 INTRODUCTION ......................................................................................................................................... 5 BACKDROP................................................................................................................................................ 5

CHAPTER 2: AGRO-PROCESSING INDUSTRIES IN INDIA ..................................................................... 6 2.1 2.2 2.3 2.4 2.5 INTRODUCTION ......................................................................................................................................... 6 CLASSIFICATION OF AGRO PROCESSING INDUSTRIES ................................................................................ 6 AGRO PROCESSING INDUSTRIES IN INDIA ................................................................................................. 7 EXPORTS OF AGRICULTURAL & FOOD PRODUCTS .................................................................................... 8 SWOT ANALYSIS OF AGRO PROCESSING INDUSTRY IN INDIA .................................................................. 10

CHAPTER 3: AGRICULTURE SECTOR IN MADHYA PRADESH ......................................................... 11 3.1 3.2 3.3 3.4 3.5 3.6 AGRICULTURAL SECTOR IN MADHYA PRADESH ..................................................................................... 11 MAJOR CROP/ CROP GROUP GROWN IN MP ........................................................................................... 11 SOIL TYPES ............................................................................................................................................. 12 AGRO CLIMATIC ZONES IN MADHYA PRADESH ...................................................................................... 13 CROP ZONES IN MADHYA PRADESH ....................................................................................................... 13 RECENT DEVELOPMENTS IN AGRICULTURE SECTOR IN MADHYA PRADESH ........................................... 14

CHAPTER 4: PROFILE OF JABALPUR ....................................................................................................... 16 4.1 4.2 4.3 INTRODUCTION ....................................................................................................................................... 16 AGRICULTURE PROFILE OF JABALPUR .................................................................................................... 19 LOCATION ANALYSIS PROPOSED AGRO & AGRO BASED PRODUCTS SEZ ................................................ 21

CHAPTER 5: SECTOR ASSESSMENT AGRO & AGRO BASED PRODUCTS ................................... 23 5.1 5.2 5.3 5.4 5.5 5.6 5.7 CONCEPTUAL FRAMEWORK .................................................................................................................... 23 EVALUATION .......................................................................................................................................... 23 CATEGORIZATION ................................................................................................................................... 24 AREA REQUIREMENT DEMAND POTENTIAL & CORRESPONDING OFF-TAKE......................................... 25 PHASING OF OFF-TAKE POTENTIAL ......................................................................................................... 26 UTILITIES (WATER AND POWER) REQUIREMENT FOR THE PROPOSED SEZ .............................................. 28 EMPLOYMENT GENERATION ................................................................................................................... 28

LIST OF ABBREVIATIONS

AKVN Bn. CAGR Cr. EU FAO GoI GoMP Ha HP JnPT KIADB KL km KW KWH Ltrs. LMI ME Mn. MoFPI MP MP SEZ MPSIDC MT MW SEZ Sq.Ft. Sq.Mt. SSI TPA TPD USD

Audyogik Kendra Vikas Nigam Billion Compounded Annual Growth Rate Crore (s) European Union Food and Agriculture Organization of United Nations Government of India Government of Madhya Pradesh Hectares Horse Power Jawaharlal Nehru Port Trust Karnataka Industrial Areas Development Board Kilo Litres Kilo Meters Kilo Watt Kilo Watt Hour Litres Large and Medium Industries Middle East Countries Million Ministry of Food Processing Industries Madhya Pradesh Madhya Pradesh Special Economic Zone M.P. State Industrial Development Corporation Metric Tonnes Mega Watt Special Economic Zone Square Feet Square Meter Small Scale Industries Tonnes per Annum Tonnes per Day US Dollar

CHAPTER 1: INTRODUCTION AND BACKGROUND


1.1 INTRODUCTION

Deloitte Touche Tohmatsu India Pvt. Ltd. (Deloitte) has been engaged by M P Audyogik Kendra Vikas Nigam (Jabalpur) Ltd, a Government of M.P. Undertaking (AKVN), to act as a Transaction Advisor for the development of an Agro and Agro Based Products SEZ, proposed at Umariya Dungariya, District Jabalpur, Madhya Pradesh on Public-Private Partnership basis. This abridged report presents Conceptualization and Market Feasibility Analysis of the Proposed Development of agro and agro based product SEZ at Jabalpur. The key highlights of this report are: Assessment of agro processing industries in India Agriculture climate and agro based industries in Madhya Pradesh in general and specific to the Jabalpur region Assessment of agro and agro based products industries, which have the potential to come up in the proposed SEZ and also the potential in terms of exploiting existing agricultural raw materials of the region

1.2

BACKDROP

M.P. Audyogik Kendra Vikas Nigam (Jabalpur) Ltd, one of the subsidiaries of M.P. State Industrial Development Corporation Ltd. (MPSIDC), is engaged in sustained and balanced industrial development in its selected area of jurisdiction. It also has the focus for infrastructure development to attract and promote industries, both domestic and foreign, hence boosting employment opportunities in the region. Some of the ongoing projects (as of April 2010) of MP AKVN Jabalpur include development of Food Parks, development of Stone Park, etc. The Nigam also manages Industrial Growth Center (IGC) at Borgaon and Maneri in the state of Madhya Pradesh. To further boost industrial development in the region, MP AKVN has proposed to set up Agro and Agro based products SEZ in Jabalpur district. This proposed SEZ with the plot size of 101.21 Ha is situated 28 km from Jabalpur city and 12 km from NH 7 (Varanasi to Kanyakumari). AGRICULTURE CLIMATE IN JABALPUR REGION Jabalpur falls under the Central Narmada valley climactic zone. In terms of land use, more than 50% of the land is used for agricultural production (i.e. sown area). 15% of the land is under forest cover. Some of the agricultural land in the region is extremely fertile and hence boosting the agricultural productivity of the region NEED FOR AN AGRO & AGRO BASED PRODUCT SEZ Agriculture is predominant in the state, with around 75% of the rural population highly dependent on it. Madhya Pradesh also has a significant contribution in the agriculture GDP of the country and also in the agriculture produce of the country. Development of the proposed SEZ would act as a catalyst in the sustainable development of the agriculture economy of the region in particular and the state in general. The SEZ would also support the objective of creating employment opportunities and diversifying the economy. The SEZ would also have a positive impact on the farming community of the region as the units in the SEZ would procure most of their raw material produce from the region itself. .

CHAPTER 2: AGRO-PROCESSING INDUSTRIES IN INDIA


2.1 INTRODUCTION

Agro-processing is defined as a set of techno-economic activities, applied to all the produces, originating from agricultural farm, livestock, aquacultural sources and forests for their conservation, 1 handling and value-addition to make them usable as food, feed, fibre, fuel or industrial raw materials. The processing of agriculture produce to obtain edible products is called as Food Processing Industry. Since most food items are perishable, the post harvest management is crucial in the food processing industry. The various food processing industries are: Marine Products Bakery and Confectionery Ready To Eat Food Drinks and Beverages Foodgrain Milling Edible Oil Medicinal products Some of the agriculture processing sectors that fall under non-food processing are: Fibres Feeds Fuels The various processes in the agro-processing industry are shown below:

Raw Material Procurement

Processing of Raw Material

Packing and Storage

Finished Product Shipment Some of the

Raw materials are primarily agriculture produce such as:


Cereals Pulses Dairy Fisheries Forestry Vegetables and Fruits Spices Cotton, etc

Raw material is then processed processing can be primary or secondary processing Some of the processes are:

Raw material is

Cutting Milling Moulding Fermenting, etc

then packed Food products generally require to be stored at specified temperatures Many products such as frozen fruits and vegetables require cold storage

finished products are:


Wheat Flour Dairy Products

Milk Powder, Ghee, etc Bakery and Confectionary Items Ready to eat snacks, etc

2.2

CLASSIFICATION OF AGRO PROCESSING INDUSTRIES

The Agro-processing industry can be classified based on raw material or final product. Classification of Agro-Processing industry based on raw material is shown in the Exhibit 1 below:

(This space has been intentionally left blank)

Source: Article on Agro Processing Industries in India Growth, Status & Prospectus, R.P. Kachru, Asstt. Director General, ICAR, New Delhi; Department of Agriculture and Cooperation, Ministry of Agriculture

Exhibit 1: Categorization of Agro Processing Industry


Category (Based on Raw Material) Cereals Based Industry a) b) c) d) e) f) g) h) a) b) c) d) a) b) c) a) b) c) d) e) f) g) a) b) c) a) a) a) b) c) a) b) c) a) b) a) b) a) b) a) b)

Sl. No. 1

Finished Products Wheat Flour Biscuit Manufacturing Confectionary and Bakery Items Rice (puffed and flaked) Rice Bran and Rice Bran Oil Corn flakes Canned Baby Corn Starch Material Gram Flour (Basen) Namkeens (ready to eat snacks) Papad Whole or Split Dal Edible Oil Animal Feed Processed Seed (Sesame) Frozen fruits & Vegetables Chips & Wafers (Ready to Eat snacks) French Fries (Ready to Eat snacks) Dehydrated Vegetables Ketchups, Purees & Concentrates Juices Pickles Pastes & Powders Oleoresins Aromatic Extractions Skimmed Milk Powder, Ghee, Curd ,etc Fresh & Dried Flowers Fish Processing Fish meal Fish / Prawn Pickle Processed Poultry Products Meat Gravy Concentrates Mutton & Lamb Processing Medicinal Products Fibres processing Jaggery Confectionary & Bakery Products Tea Powder Coffee Powder Honey Mushrooms

Pulses Based Industry

Oilseed Based Industry

Fruits & Vegetables Based Industry

Spices Based Industry

6 7 8

Dairy Based Industry Floriculture Based Industry Fisheries Industry

Livestock & Poultry

10 11 12 13 14

Medicinal Herbs Based Industry Cotton & Jute Based Industry Sugarcane Based Industry Plantation Crops based Industry Others

2.3

AGRO PROCESSING INDUSTRIES IN INDIA

Agriculture is an important sector in the Indian economy. Worldwide India ranks second in farm th output. Agriculture and allied sectors like forestry and logging accounts for nearly 1/5 of the GDP. The sector employs ~60% of the total workforce. Although the share of agriculture in GDP has been declining, it is still an important economic sector and plays a significant role in the economic development of India.

Although India is one of the largest producers of Agricultural products, the processing of these produce is extremely low. The level of processing in sectors such as Fruits and Vegetables is as low as 2% - the level of processing in developed countries in Fruits and Vegetables is well over 50%. The level of processing for some of the products is given in the Exhibit 2 below:

Exhibit 2: Level of Processing in various Sectors Items Dairy products Meat Marine Fish Poultry Fruits & Veg. Level of Processing 37.0% 21.0% 10.7% 6.0% 1.8%
(Source: Ministry of Food Processing Industries (MoFPI)

Some of the facts about the Indian agro processing industries are: According to some estimates, output of the food processing industry was ~Rs. 460,000 Cr in 2003-04. The output of primary processing was around Rs. ~280,000 Cr; the output of value added products was around Rs. 180,000 Cr Organized players account for ~25% of output in terms of volume, while the unorganized and small scale industries account for ~75% The industry grew at a rate ~7% from 1998-99 to 2003-04 (MOFPI annual report 2005-06) The wastage of food products is estimated to be worth ~Rs. 60,000 Cr The ministry of Food Processing Industries in its Vision 2015 document wants to treble the size of the food processing sector by 2015

2.4

EXPORTS OF AGRICULTURAL & FOOD PRODUCTS

Indias exports of agricultural & food products are about ~USD 8.3 billion - which is ~1.6% of the global trade of ~USD 520 billion. Although exports of agriculture & food products grew at 15% annually from 1993-94 to 2003-04, the share of agriculture & food products in total exports has decreased from 19% to 13% in the same period. The Ministry of Food Processing Industries wants to increase Indias share in global trade to 3% by 2015 from current ~1.5%. Among the products, Marine products and Rice were the largest export category in 2003-04. Some of the Indias major export categories are shown in Exhibit 3 below. Exhibit 3: Indias Export of Agricultural Products

(Source: Ministry of Food Processing Vision Document 2015)

The food processing industry does face a number of constraints in exports. Some of them are: low product quality, lack of economies of scale, deficient technology, insufficient market and brand building. Keeping in mind the drawbacks faced by the Indian food processing industry, a number of measures are being taken by the central and state governments to boost the. Considering the potential existing in the sector, the Ministry of Food Processing in its Vision 2015 document envisages an increase in Indias share of global trade from current 1.5% to 3%. SPECIAL ECONOMIC ZONES AGRO & FOOD PROCESSING There are 8 agro and food processing SEZs that have been notified as of April 2010 across India. The location of the 8 SEZs are shown in Exhibit 4 below: Exhibit 4: Location of Notified Agro & Food Processing SEZ in India*

Jabalpur, MP M. P. AKVN (J) Area 101 Ha Date of Notif ication: 25th Aug 2009 Status: Not Operational Demapur, Nagaland Nagaland Industrial Development Corporation Limited Area 50.7 Ha Date of Notif ication: 9th July 2009 Status: Not Operational

Akola, Maharashtra Maharashtra Industrial Development Corporation Area 100 Ha Date of Notif ication: 17th June 2008 Status: Not Operational

Latur, Maharashtra Maharashtra Industrial Development Corporation Area 200 Ha Date of Notif ication: 15th Jan 2007 Status: Not Operational Hassan, Karnataka M/s Karnataka Industrial Area Development Board Area 160 Ha Date of Notif ication: 12th April 2007 Status: Not Operational Calicut, Kerala Kerala Industrial Inf rastructure Dev. Corpn. (KINFRA) Area 12 Ha Date of Notif ication: 13th June 2007 Status: Land ready f or allotment

Kakinada, Andhra Pradesh Parry Inf rastructure Company Private Limited Area 101 Ha Date of Notif ication: 20th Dec 2007 Status: Operational

Tuticorn, Tamil Nadu CCCL Inf rastructure Limited Area 120 Ha Date of Notif ication: 23rd April 2009 Status: To be operational by Q1 CY10

* As of April 2010

Out of the 8 zones, 6 of the zones are located in Maharashtra and the Southern states. Currently, only the SEZ in Kakinada is operational; the SEZ at Tuticorin is expected to be operational by first quarter end of 2010. In the Kakinada SEZ, a sugar refinery has been set up and in the Hassan SEZ, a unit for processing Gherkin has been commissioned. Apart from Food Processing specific SEZs, a multi-product SEZ at Dabra (being developed by Gwalior Agriculture Company) has identified Agro Products as one of the possible industries that can come up in the SEZ.

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2.5

SWOT ANALYSIS OF AGRO PROCESSING INDUSTRY IN INDIA


Exhibit 5: Agro Processing Industry in India SWOT Analysis

The Exhibit 5 below shows the highlights of the SWOT analysis of Agro-processing industry in India.

Strengths Availability of raw materials Recognition of agro-processing as an important sector Vast network of manufacturing facilities all over the country Vast domestic market

Weakness Lack of scale of operations Inadequate automation w.r.t. information management Inability to attract young talent Inadequately developed linkages between R&D labs and Industry Lack of adequate marketing

Opportunities Wide variety of crop availability Integration of developments in contemporary technologies such as electronics, material science Branding of agro-products Availability of labourers

Threats Competition from global players Loss of trained manpower to other industries and other professions better pay in other sectors

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CHAPTER 3: AGRICULTURE SECTOR IN MADHYA PRADESH


3.1 AGRICULTURAL SECTOR IN MADHYA PRADESH

Madhya Pradesh is the second largest state in India with an area of about 308 Lakh Ha. Total land under cultivation is around 150 Lakh Ha or ~49% of the net area. Around 31% of the state is under forest cover with a largely unexploited species of rare, valuable medicinal - herbal plants. Agriculture is predominant in the state with ~75% of rural population largely dependent on it. Agriculture sector forms almost one-third of the GSDP (Gross State Domestic Product) (State GSDP at current price for 2007-08: Rs 1,232.3 bn) and hence, is the backbone of MPs economy. Being majorly an agrarian economy, the presence of industrial centers specifically based on agro processing like SEZ, AEZ or Food Parks, would act as an advantage to the growth of agriculture economy in the state. The state has 5 crop zones, 11 agro climatic regions and 4 soil types, which add to its biodiversity and acts favourable for the production of various crop types. The Exhibit 6 below shows the cropped area and cropping intensity for Madhya Pradesh. Out of the total gross cropped area, 59% is sown in the Kharif season and 41% in the Rabi season. Exhibit 6: Cropped Area and Cropping Intensity Parameter Figure (Year 2002-03) 146.21 35.6 181.81 108.28 74.53 46.31 132%

Net area sown (in Lakh Ha) Double cropped area (in Lakh Ha) Total cropped area (in Lakh Ha) a) Area under Kharif b) Area under Rabi Gross irrigated area (in Lakh Ha) Cropping intensity

(Source: Commissioner, Land Records, MP; Deptt. of Economics & Statistics, MP)

3.2

MAJOR CROP/ CROP GROUP GROWN IN MP

Major agricultural and horticultural crops grown in Madhya Pradesh are as shown in the Exhibit 7 below. Exhibit 7: Major Agriculture & Horticultural Crops grown in MP

Cereals Oilseeds Pulses Vegetables Fruits

Wheat, Sorghum (Jowar), Maize, Paddy Soybean, Mustard, Linseed Gram, Pigeon Pea (Tur), Lentil (Masoor) Green Peas, Cauliflower, Okra, Tomato, Onion, Potato Mango, Guava, Orange, Papaya, Banana 11

Spices

Chillies, Garlic, Coriander, Ginger, Turmeric


(Source: MP Agro Industries Development Corporation Ltd.; MP Mandi Board)

Madhya Pradesh leads in spices production with the largest production of garlic, accounting for ~37% of the total production in India. The state is the second largest producer of coriander in the country. Malwa potato grown in the western part of the state (Malwa region) is used for potato chips processing. MP is also a leading producer of peas and contributes ~15% to the national production. Madhya Pradesh is the largest producer of pulses and oilseeds in the country. About 22% of pulses and 40% of grams are grown in the state. The State is also the largest producer of soya bean and second largest producer of Jowar and Masoor in the country. The statistical data about the position of MP with respect to the major crops in comparison to the other states is shown in Exhibit 8. The percentage share refers to the contribution of the state towards the total national production of the respective commodity. Exhibit 8: Crop/ Crop Group grown in MP and their share in Indias Production

Crop/ Group

Crop

First Position Madhya Pradesh Gujarat

% Share

Second Position Uttar Pradesh Madhya Pradesh Madhya Pradesh Rajasthan

% Share

Third Position Maharashtra

% Share

Total Pulses Total Oilseeds Jowar

21.38

19.77

18.51

22.42

22.10

Rajasthan

15.82

Maharashtra Andhra Pradesh Maharashtra Madhya Pradesh Uttar Pradesh Madhya Pradesh

46.09

14.11

Karnataka Madhya Pradesh Madhya Pradesh Maharashtra

11.03

Maize

16.61

13.86

12.39

Arhar

29.11

Uttar Pradesh

17.30

11.39

Gram

40.33

Uttar Pradesh Madhya Pradesh Maharashtra

18.40

10.61

Masoor

48.54

23.30

Bihar

15.53

Soya bean

59.92

28.14

Rajasthan

8.78

(Source: MP Agro Industries Development Corporation Ltd.; MP Mandi Board)

3.3

SOIL TYPES

The state has 4 different soil types available in four distinct parts. The western and central regions are covered by medium and deep soils constituting 53% of the soil area. The eastern part of the state is primarily covered by black soils which comprises of 25-26% of the total geographical area.

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Exhibit 9: Soil Types in Madhya Pradesh

(Source: MP Agro Industries Development Corporation Ltd.)

Most of MPs potential in agriculture lies in the central and western zones which are rich in medium and deep soil.

3.4

AGRO CLIMATIC ZONES IN MADHYA PRADESH

Madhya Pradesh is divided into 11 Agro Climatic zones depending on the climatic variability and diverse soil types, as show in the Exhibit 10 below. These Agro Climatic Zones add to the biodiversity of the state and acts favorably towards the production of various agriculture and horticulture crops. Exhibit 10: Agro Climatic Zones in Madhya Pradesh
Grid Region

Malwa Plateau

Bundelkhand

Kymore Plateau Satpura Hills

Vindhya Plateau

North Hill Region of Chattisgarh Jhabua Hills Nimar Plains Central Narmada Valley Satpura Plateau
Chattisgarh Plain Balaghat

(Source: MP Agro Industries Development Corporation Ltd.)

3.5

CROP ZONES IN MADHYA PRADESH

The 5 crop zones in Madhya Pradesh are suitable for the production of a variety of crops in different parts of the state during different seasons, thereby sustaining agricultural activities throughout the year.

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Exhibit 11: Crop Zones of MP

(Source: MP Agro Industries Development Corporation Ltd.)

Cotton/ Jowar Cotton/ Jowar crops can be grown in the western, north-western and south-western part of MP. Such crops are grown in regions having medium & deep soils. Wheat/ Jowar Wheat/ Jowar crop zones are grown predominantly in the northern part of the State. Some southern areas of the State can also be tapped for such commodities. Rice Zone This zone is confined to the eastern part of the State where black soil type present. Only five districts/ centers produce this crop. Wheat/ Rice Zone These crop zones are present in the eastern part of MP, where the soil type is black soil. Wheat Zone This crop zone is in the central part of the state. Again it is evident that these crops have the potential to grow in diverse soil types.

3.6

RECENT DEVELOPMENTS IN AGRICULTURE SECTOR IN MADHYA PRADESH

Some of the steps which have been taken by the GoI and MP Government for giving thrust to the agriculture sector in Madhya Pradesh are as follows. To facilitate promotion and development of specific products, five AEZs (Agri Export Zones) have been identified in Madhya Pradesh. These zones have been set up for facilitating export of specific products from a geographically contiguous area. The AEZs are present at such a location that it is easy to source the raw materials and hence to develop the final product. The commodities that have potential are potato, spices (in the western parts), pulses (in the central part of the State), wheat (in the western and central regions) and oranges (southern districts). Other than Agri Export Zone, the state government has given sanction for setting up 6 Food Parks for the state. These food parks are located in Mandsaur, Khargone (formerly West Nimar), Hoshangabad, Chhindwara, Mandla and Bhind. The main objective of the state and central government in setting up these parks is to help establishment of food processing industrial estates/ infrastructures by providing assistance for the common facilities such as research laboratories, cold storages, warehousing facilities etc. 14

Besides establishments of Agri Export Zones and Food parks, government has also initiated development of Special Economic Zones (SEZ) focusing on agro and agro based products. The sector specific SEZs would provide various incentives to the investors, attracting investment, supporting overall growth of the agricultural economy of the region. These largely export focused units in the SEZs would be instrumental in creating foreign exchange reserves for the country through exports and would establish global foot print in the agriculture export market. Detailed review on SEZ is provided in subsequent chapters.

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CHAPTER 4: PROFILE OF JABALPUR


4.1 INTRODUCTION
Jabalpur District is located in the centre of the state of Madhya Pradesh, India, along the Narmada River. The city of Jabalpur is the headquarters of the district. The city is also the headquarters of the Jabalpur division. Exhibit 12: Location of Jabalpur

Delhi

Jabalpur
Bhopal Kolkata

Mumbai

Chennai

Jabalpur is an important district in the region. Jabalpur is the second most populous district in the state and is an important educational center with a high literacy rate of 75%. It also has a number of industries such as the ordinance factories, steel structural works, etc. The soil of Jabalpur and surrounding region is fertile and is suitable for growing a number of crops. Jabalpur is also home to one of the countrys largest Poultry and Hatcheries farm.

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The snapshot of Jabalpur district is shown in the Exhibit 13 below: Exhibit 13: Snapshot of Jabalpur District Parameter Area Population Literacy Rate Figure 5,211 Sq. km 2.1 million 75% Comments Is ranked as the 33 largest district in MP (50 districts) It is the second most populous district in MP Literacy rate is higher than state average of 64% and national average of 65% There is one Mineral and Mineral Based SEZ being developed at Jabalpur There are 4 Ordinance / defense equipment factories Some of the other major industries are
Bidi Manufacturing Ready Made Garments Steel Structural Works Food processing
rd

Industrial Activity

Large & Medium Scale Industries (LMI) -10 Nos. Small Scale Industries (SSI) 14,423 Nos.

Education Engineering Colleges 17 Nos. Universities - 2 Nos.

Jabalpur is an important educational centre in the region There are over 1,300 engineering students and doctors graduating each year There is an agricultural university in the city

Hotels

6 Luxury Hotels

There is a shortage of luxury hotel rooms as there are only 226 luxury rooms Population per health centre in Jabalpur is 6,173; which is lower than state average of 6,645 There are flights connecting Jabalpur to Delhi and Gwalior

Hospitals

393 health centers

Airport

Domestic

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PREVAILING LAND AND OTHER RATES

The Exhibit 14 provides the prevailing land rates in the Industrial Zones of MP. Exhibit 14: Land Rates in Industrial Zones of MP
Upfront Payment Sl. No. Type of area Type of Unit Land Premium (Rs. per sq Meter) Development Charges (Rs. Per sq Meter) Total Lease Rent % of Premium (Annual) Maintenance Charge (Rs. Per sq Meter) (Annual)

Commercial Plots: 1,000 1,200 SSI 1 Indore SEZ Commercial Plots: 1,000 1,200 LMI Processing Plots: 800 900 450 500 50 70 50 80 Processing Plots: 800 900

8001200 2.5% 8001,200

Commercial 30 to 36 Industries 24 to 27

Hargarh SEZ Land 1 Rates

SSI LMI SSI LMI

450 500 100 150

3%

17

Industrial 2 Land Rates

3% Refer the Exhibit 15

[1] Mineral based SEZ in Jabalpur [2] Industrial Growth Center *Source: MP AKVN (Jabalpur) MP AKVN (Indore)

The maintenance charges for the Industrial area are given below: Exhibit 15: Maintenance Charges for Industrial Growth Center and other Industrial Area
Particular up to 10,000 Sq Meter from 10,001 to 1,00,000 Sq Meter from 1,00,001 to 10,00,000 Sq Meter more than 10,00,000 Sq Meter Rate Rs 4.00 per Sq.M. per annum Rs 3.50 per Sq.M. minimum Rs 40,000 per annum Rs 2.50 per Sq.M. minimum Rs 3,50,000 per annum Rs 2.00 per Sq.M. minimum Rs 25,00,000 per annum

The power rates in Madhya Pradesh are shown below: Exhibit 16: Power Charges in MP
Monthly Fixed Sl. No. 1 2 3 Supply Line Charges (Rs/ KVA per month) 11 KV 33 KV 132 KV 160 250 340 Energy charges Consumption up to 50% load factor (Paise / unit) 400 380 350 Energy charges for consumption in excess of 50% load factor (Paise / unit) 335 315 300

(Source: MP State Electricity Regulatory Commission)

Water charge in Jabalpur is Rs. 20 per KL (for industrial purposes) The daily minimum labour rates as prescribed by the MP labour department are shown below:

18

Un-Skilled Semi Skilled Skilled

Rs 135 per Day Rs 140 per Day Rs 146 per Say


(Source: MP Labour Department)

4.2 AGRICULTURE PROFILE OF JABALPUR


Jabalpur falls under the Central Narmada valley climactic zone. In terms of land use, more than 50% of the land is used for agricultural production (i.e. sown area). 15% of the land is under forest cover. The following pie-chart (Exhibit 17) shows the land use in Jabalpur district. Exhibit 17: Land Use Classification in Jabalpur

(Source: Human Development Report 2007, MP)

Cereals and Foodgrains are the major crops that are produced in the district. In Horticultural crops, Peas, Amla and Tomatoes are also grown in plenty. Wild Medicinal & Aromatic Plants are also grown in the forest region of the district. The following Exhibit 18 gives the details of the major crop production in the district. Exhibit 18: Major Crop Produce in Jabalpur District
Crop Cereals and Foodgrains Pulses Oilseeds Production (in 000 MT) 620 129 7.31 Share in MP production 3% 4% 0.14%
(Source: MP Department of Agriculture)

Some of the horticultural crops that are grown significantly in Jabalpur district are: Brinjal Tomatoes Mangoes Guava Musk Melon Amla Apart from agricultural and horticultural crops, there is significant production of poultry, livestock, milk and fisheries. Jabalpur is home to one of Indias largest hatcheries. The following Exhibit gives the details of production in Jabalpur:

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Exhibit 19: Major Animal Produce in Jabalpur District


Category Poultry (in 000 nos) Fisheries (in 000 MT) Milk (in 000 MT) Goats (in 000 nos) Buffaloes (in 000 nos) Pigs (in 000 nos) Sheeps (in 000 nos) Production 2640 3.7 177 116.5 95.2 15.1 4 % Share in Madhya Pradesh 23% 6% 3% 2% 1% 1% 0.7%
(Source: Secondary resources, Deloitte Research)

Food Processing Industries in Jabalpur Currently, some of the food processing industries that exist in Jabalpur are Biscuit manufacturing, Pickle & Ketchup manufacturing, and Papad manufacturing. There is also a food park in the adjacent district of Mandla. The nodal agency for the 50 acre food park is AKVN Jabalpur. Four plots in the park have already been allotted. Potential Industries that can come up in the Jabalpur region Considering the availability of raw materials in Jabalpur and its surrounding regions, the industries with export potential that can come in Jabalpur are: Paddy Basmati Poultry Processing Industries Mutton and Lamb Processing Industries Dairy Products Industry Frozen Peas Individual Quick Freezing Frozen Vegetables (other than peas) Soybean Based products Industries Herbal Based Products Biscuit Manufacturing Ketchups / Purees / Concentrates Pickles and Chutneys

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4.3 LOCATION ANALYSIS PROPOSED AGRO & AGRO BASED PRODUCTS SEZ
The Exhibit 20 below shows the location of the proposed SEZ on the Jabalpur map. Exhibit 20: Location of the Proposed SEZ

Narmada River (Nearest Railway Station 10 Km) (Narmada River 11 Km) (NH 7 12 Km)

Location of the Proposed SEZ


Narmada River

(Note: Map for illustrative purpose only, not to scale)

(Source: Google maps)

The table below gives details of some of the important parameters relating to the proposed SEZ: Exhibit 21: Analysis of the SEZ Parameter Location Area Distance from City Distance from Airport Distance from Seaport Jabalpur Agro SEZ Umariya-Dungariya Village 101 Ha (250 acres) 28 km (from Jabalpur) 35 km JNPT 1,000 km Kandla Port 1200 km Vishakapatnam 960 km Distance Line from Rail Nearest Railway Junction - Jabalpur 28 km Nearest Station Shahpura 10 km 12 km away from NH-7 Labour is available from Jabalpur & surrounding areas Power is expected to be provided at the battery limits of the site by the state government Narmada River is 11 km away from the site and Treated water to be discharged through open drainage (Nallhas) in to the Narmada River

Road Connectivity Access to Labour Power Availability

Water Availability Drainage Sewerage

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Very Bad

Bad

Average

Location Rating

Based on the above considerations, the SEZ location has been rated based on certain important parameters. Based on rating for individual parameters, the overall rating has been arrived at. The following table shows the rating assigned to the various parameters. Exhibit 22: Rating of Location based on various parameters Parameter Raw Material Rating Comments
The region has fertile land and there is scope for a number

Very Good

Good

of food processing industries to be set up Labour Plenty of labour available in and around Jabalpur

Water Availability

Close to Narmada River

Power Availability

There are no major power outages faced by the industries at Jabalpur Food parks located in the adjoining districts Limited cold storage facility

Industrial Infrastructure (Agro related) Drainage

Treated water can be discharged to Narmada River

Connectivity

Although nearest port is ~1,000 km away, Jabalpur can serve both the east & west port as it is equidistant Jabalpur with a number of educational institutions and good medical facilities provides good social infrastructure Major industrial establishments are Government run Few food processing companies do exist
There is considerable potential for the SEZ

Social Infrastructure Entrepreneurial Activity Overall

Based on analysis of the above parameters, the location is considered to be conducive for the development of Agro and Agro based product SEZ.

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CHAPTER 5: SECTOR ASSESSMENT AGRO & AGRO BASED PRODUCTS


5.1 CONCEPTUAL FRAMEWORK
The broad framework for carrying out the sector analysis is shown in Exhibit 23 below. A three step process was employed to arrive at industries with potential to come up in the proposed SEZ. A detailed industry analysis was then performed on these industries. Exhibit 23: Conceptual Framework for Sector Assessment

Step 1: Low Potential Industries

Step 2: Categorization

Based on Raw Material Availability (in the Jabalpur region within 150 km from Jabalpur District) and Export Potential of the products, certain industries have been classified as Low Potential Industries

The industries with potential (other than those with low potential) are analysed based on Raw Material Availability, Product Demand, and Growth Rates of the industry Based on above analysis, industries are classified as either High or Medium Potential Industries

Step 3: Detailed Sector Assessment

High & Medium potential industries are then analyzed in detail The number of units that can come, their size and utilities requirements are then determined

5.2 EVALUATION
The elimination of the certain industries has been performed based on the following two parameters: Raw Material Availability and Export Potential: Those industries in which raw materials are not available in Jabalpur region (Jabalpur district and its adjacent districts) have been eliminated Also, those products which have been banned from export have been eliminated. The Exhibit 24 below gives list of eliminated industries. Exhibit 24: Elimination Criteria and Low Potential Industries

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5.3 CATEGORIZATION
The remaining identified industries after elimination, have been categorized under High and Medium Potential. The eliminated Industries are categorized under low potential. The categorization into High and Medium Potential is done based on the following: Raw Material Availability, Trends in Production, and Expected Growth Rates of the Industry over next 5-6 years. Based on the above, the categorization is shown in the Exhibit 25 below.

Exhibit 25: List of High and Medium Potential Industries High Potential Industry Paddy Basmati Rice Frozen Vegetables Green Peas Poultry/ Meat Processing Poultry Processing Sheep & Goat Meat Meat Curry Powder Dairy Products Fisheries Fish Meal Pickles & Chutneys Tomatoes Processing Purees/ Concentrates Biscuit Namkeens Sesame Seed Processing Egg Powder Frozen Vegetables Other than Green Peas Ketchup/ Medium Potential Industry

Soy bean Processing High Protein Meal (TVP) Animal Feed Grade Meal Soy Milk

Apiculture Honey Processing Mushroom Medicinal/ Herbs

The High and Medium Potential industries are then analyzed in detail. For every industry, the following are analyzed: World Market Overview Industry in India including exports Competitive Advantage offered by Jabalpur Unit Size Utilities Requirement (for a single unit)

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5.4 AREA REQUIREMENT DEMAND POTENTIAL & CORRESPONDING OFF-TAKE


This section shows the area requirements of the different industrial units (categorized under high and medium potential) and demand potential of such units (nos.). Further, it also shows the corresponding Off-take for the proposed SEZ. Demand potential for a particular industry refers to the number of industrial units and the area covered, that can come up in the region based on: Availability of raw material Growth in the industry Off-take refers to the number of units that are expected to come up in the proposed SEZ based on Demand potential for particular industry Current set-up of the industry in the region SUMMARY OF AREA REQUIRED BY HIGH & MEDIUM POTENTIAL INDUSTRIES DEMAND AND OFF-TAKE
POTENTIAL

The total demand potential is 81 industrial units covering 341 Acres and the Off-take potential is 46 units covering 190 Acres. The Exhibit 26 below summarizes the demand potential and the corresponding Off-take for the industrial units categorized under High & Medium potential to come up in the proposed SEZ. Exhibit 26: Summary of High & Medium Potential Industries Demand & Off-take Potential Demand Potential Sl. No. Industry No. of Units
Paddy-Basmati Poultry Frozen Peas - Individual Quick Freezing (IQF) Apiculture Soy Milk from Raw Soy beans & Allied products Mutton & Lamb Processing Soybean - Texturised Vegetable Product (TVP) (Food Grade Meal) Soybean - Animal Feed Grade Meal Mushrooms Medicinal/ Herbs Meat Curry Powder

Off-take Potential No. of Units 4 2 5 3 3 2 Total Area (in Acres) 40 20 10 15 15 10

Total Area (in Acres) 70 30 20 25 30 10

1 2 3 4 5 6

7 3 10 5 6 2

12

8 9 10 11

4 4 5 2 54

8 8 10 4 227

4 2 3 2 34

8 4 6 4 140 25

Total of High Potential Industries

Demand Potential Sl. No. Industry No. of Units


Biscuits Dairy Products Egg Powder Ketchups/ Purees/ Concentrates Namkeen Frozen Other Vegetables Fish Meal Pickles & Chutneys Seasame Seed

Off-take Potential No. of Units 1 2 2 1 1 2 1 1 1 12 46 Total Area (in Acres) 10 10 10 5 5 4 2 2 2 50 190

Total Area (in Acres) 30 20 15 10 15 8 4 4 8 114 341

12 13 14 15 16 17 18 19 20

3 4 3 2 3 4 2 2 4 27 81

Total of Medium Potential Industries Total Potential

5.5 PHASING OF OFF-TAKE POTENTIAL


The development of the proposed SEZ can take place in two phases. Phase 1 is assumed to start in 2010 and is expected to continue till 2014. Phase 2 is expected to start towards the end of phase 1 approximately when 80% of the land area demarcated for Phase 1 is allotted (lease/sell) to industrial units. The approximate year for the completion of Phase 2 would be 2016, so that whole area under both the phases is let out towards the end of 2015. Off-take potential for the industries in phase 1 is based on their respective immediate potential and for phase 2 is based on the potential during the start of phase 2 period (2013) and the attractiveness of the proposed SEZ. In Phase 1, 21 units covering 92 Acres and in Phase 2, 25 units covering 98 Acres are expected to be developed. The industry wise estimated Off-take of short-listed industries in Phase1 and Phase 2 has been indicated in Exhibit 27. Exhibit 27: Phasing of the Off-take Potential Phase 1 (2010-2014) Industry No. of Units Total Area (in Acres) Phase 2 (2013-2016) No. of Units Total Area (in Acres) Phase 1+ Phase 2 No. of Units Total Area (in Acres)

Sl. No.

High Potential Industries 1 2 3


Paddy-Basmati Poultry Frozen Peas - Individual Quick

2 1 2

20 10 4

2 1 3

20 10 6

4 2 5

40 20 10

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Sl. No.

Phase 1 (2010-2014) Industry No. of Units Total Area (in Acres)

Phase 2 (2013-2016) No. of Units Total Area (in Acres)

Phase 1+ Phase 2 No. of Units Total Area (in Acres)

Freezing (IQF)

4 5 6 7 8 9 10 11

Apiculture Soy Milk from Raw Soy beans & Allied products Mutton & Lamb Processing Soybean - Texturised Vegetable Product (TVP) (Food Grade Meal) Soybean - Animal Feed Grade Meal Mushrooms Medicinal/ Herbs Meat Curry Powder

1 1 1 2 2 0 1 1 14

5 5 5 4 4 0 2 2 61

2 2 1 2 2 2 2 1 20

10 10 5 4 4 4 4 2 79

3 3 2 4 4 2 3 2 34

15 15 10 8 8 4 6 4 140

Total of High Potential Industries Medium Potential Industries 12 13 14 15 16 17 18 19 20


Biscuits Dairy Products Egg Powder Ketchups/ Purees/ Concentrates Namkeen Frozen Other Vegetables Fish Meal Pickles & Chutneys Seasame Seed

1 1 1 1 0 1 1 0 1 7

10 5 5 5 0 2 2 0 2 31

0 1 1 0 1 1 0 1 0 5

0 5 5 0 5 2 0 2 0 19

1 2 2 1 1 2 1 1 1 12

10 10 10 5 5 4 2 2 2 50

Total of Medium Potential Industries

Total of High and Medium

21

92

25

98

46

190

Based on the above table, requirement of land for leasing according to the slot size in the proposed SEZ is summarized in Exhibit 28 below. Exhibit 28: Requirement of Land Slot Size
Off-take of the High Potential Industries No. of Units 8 3 3 Total Area (Acres) 16 15 30 Off-take of the Medium Potential Industries No. of Units 3 3 1 Total Area (Acres) 6 15 10 Total Off-take for High and Medium Potential Industries Total No. of Units Area (Acres) 11 22 6 4 30 40

Phase

Land Slot (Acres)

Phase 1 (2010-2014)

2 5 10

27

Total of Phase 1 2 Phase 2 5 (2013-2016) 10 Total of Phase 2 Total of Phase 1 and Phase 2

14 12 5 3 20 34

61 24 25 30 79 140

7 2 3 0 5 12

31 4 15 0 19 50

21 14 8 3 25 46

92 28 40 30 98 190

5.6 UTILITIES (WATER AND POWER) REQUIREMENT FOR THE PROPOSED SEZ
The daily water and power requirements for the SEZ have been determined based on the off-take industrial units that are expected to come up in the SEZ. Exhibit 29: Utilities Requirement for the Industrial Units in the SEZ
Sl. No. 1 2 Particulars Water (in KL) per Day Power (in MW) Phase 1 1,500 11 Phase 2 1,500 12 Total 3,000 23

5.7 EMPLOYMENT GENERATION


The industrial units in the SEZ are expected to generate employment of nearly 4,000. Units in phase 1 are expected to generate employment of nearly 1,900 and in phase 2 are expected to generate employment of nearly 2,100.

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