Is Bengal an improved investment destination?

Industrial investment in West Bengal has traditionally been in sectors such as leather, textiles, steel and iron, agro-based industries and chemicals.

In 1981, West Bengal accounted for 9.8% of the industrial output of India. In less than two decades, that figure fell to 5.1%. The state, in its bid to enhance economic development, has provided many incentives.

This led to some flow of foreign direct investment (FDI) in areas such as IT, tourism, telecommunications, and chemicals. Yet, despite efforts by successive state governments, there has been no significant industrial development, particularly since the Singur fiasco.

Land was acquired in Singur by the previous Buddhadeb Bhattacharya-led CPM government in 2006 to facilitate the Tatas in setting up their small car, Nanomanufacturing plant.

However, due to prolonged agitation, the plant could not be set-up and, finally, in 2016, the Supreme Court set aside the Calcutta High Court order upholding the land acquisition for the Tatas’ Nano plant at Singur in West Bengal.

This led to a severe loss of trust between the state authorities and prospective investors. It became a case of bad perception.

Many industry leaders and consuls general of various countries raise this perception issue about West Bengal’s investment climate.

The principal question being: Is perception about West Bengal as an investment destination in eastern India improving now? It may be because strikes and lockouts are no longer heard of in West Bengal, as they were during its over three decades of Communist rule.

Further, the Ministry of Statistics and Programme Implementation has confirmed the economic growth rate of West Bengal at 12.58%, one of the highest in the country. Capex has gone up 11 times and there has been a multi-fold increase in planned expenditure.

There is further confirmatory news that Confederation of Indian Industry members have submitted INR 5.5k crore worth of proposals for investment in West Bengal. These mostly locally established companies have given 58 business proposals across many sectors like steel, power, logistics, battery, infrastructure, engineering, food processing, packaging and so on.

A delegation from the UK, led by UKIBC, said that UKIBC had conducted a survey among its members and other companies about their views on investing in West Bengal and about 25% gave a positive preference. This delegation includes leading companies like Vodafone, British Telecom, RSM, CDC, PwC and Perno Rica among others and, therefore, the focus area appears to be the telecommunication and services sectors.

There is also news that Amazon is doubling storage space in the state, to make it the largest hub. It will run five fulfilment centres in West Bengal, enabling 10% of its Indian on-line logistics business and support customer demand for products like smartphones, consumer electronics, appliances, fashion and consumables.

There is news also that Trump Org is very bullish about its project in Kolkata, Trump Tower, on EM Bypass. It has 137 units in a 38 storied building, out of which 70% has already been sold. Japanese firm Kawasaki Rikuso Transportation Company is investing in setting up temperaturecontrolled solar-powered warehouses for agro-product storage in West Bengal, which can store up to 30 tonnes of vegetables per day. They would install 100 solar-powered, temperature-controlled warehouses in West Bengal, at an estimated cost of INR 300 crore.

All of these indicators clearly suggest that there has been a revival of interest in West Bengal as an investment destination, even in the backdrop of the prevailing slowdown in the country. Things appear to be looking up in West Bengal, with the perception improving.

The principal question being: Is perception about West Bengal as an investment destination in eastern India improving now? It may be because strikes and lockouts are no longer heard of in West Bengal, as they were during its over three decades of Communist rule