Ever promising Odisha’s industrial sector – many more to proffer

Odisha has been a backward and bimaru state for years. It has been cited as one of the poorest of poor states not only in texts but in speeches of who’s who of the countries. But the whole world is in a flux . It is never a stationary subject. Yes time has changed and Odisha is welcoming change. In recent times Odisha is witnessing a rapid transformation in its economy and ushering in all round robust growth and development in most of its GDP parameters.

Talking of growth and in Odisha this is more or less connected to Industrial rejuvenation as the industry sector constitutes nearly 40% of State’s Gross Value Added (GVA) relative to 30% at all-India level. The sector has also experienced strong growth in the recent past. The industry sector also has a significant implication on the overall economic growth, given the sector’s linkages with services like transportation, storage, trade and tourism.

Odisha is pre-dominantly based on medium-tech industries (such as metal and petroleum products). The share of high-tech industries (automobiles, electronics, and pharmaceuticals) in total manufacturing output stands at 10.3%. High-tech industries can fast track economic growth further given the high-value nature of the output and associated productivity gains. Mining and manufacturing are the leading sub-sectors in the industry sector, given the position of Odisha as a mineral hub of India. The State is home to minerals like iron, chromite, coal and bauxite, making it a desirable location for various mining industries as well as manufacturing firms based on minerals.

The State has managed to upscale the quantum of identified mineral reserves through exploration. Production has increased for majority of minerals over the years but overall impact on output is moderated by the decline in mineral prices.

The industry sector comprises of four sub-sectors such as mining and quarrying, manufacturing, electricity, gas and water supply and construction. The manufacturing sector is the largest contributor with a share of over 46.8% in 2018-19, followed by the mining sector (27.3%). Manufacturing and mining are also the largest contributing sub-sectors to the overall GVA of the state. This pattern of the share of the sub sectors has remained constant over the last eight years. A slight dip has been witnessed in the share of the construction sector,majority of which has transferred to manufacturing.

To categorize and accelerate this growth, government has recognized six sectors as its focus sectors for sustainable growth of industries and the economy, of these five are manufacturing sectors, as highlighted below. These sectors were highlighted during the Make in Odisha Conclave 2018. Three of these six sectors are labor intensive in nature and are expected to generate large employment opportunities in the State. They are Food Processing including Seafood, Apparel, Ancillary and Downstream Industries in metals Sector, Chemicals, Plastics and Petrochemicals.

In case of Food processing the State government has established Mega Food Parks at Rayagada and Khurda and a sea food park at Deras. Similarly for Apparel, Odisha is a leader in skilled and quality workforce for the apparel sector. Dedicated apparel parks have been established at Ramdaspur and Chhatabar. For ancillary and downstream industries in Metals Sector, Odisha is the mineral hub of India and the largest aluminum, steel and stainless steel producer in the country. To facilitate growth of ancillary and downstream sectors, a National Investment and Manufacturing Zone has been set up at Kalinganagar along with downstream park at Angul and Jharsuguda. One of the vibrant sectors in the recent times is Chemicals, Plastics and Petrochemicals. One of the four petroleum, chemicals and petrochemicals investments Regions (PCPIR) in India has been established at Paradip.

Our discussion about Odisha’s industrial growth without mentioning the mining sector is incomplete. The mining and quarrying sector contributed nearly 10.79% of state GVA in 2018-19. Odisha occupies a prominent place in the country as a mineral rich state. Abundant reserves of high-grade iron ore, bauxite, chromites and manganese ore, along with other minerals such as Coal, Limestone, Dolomite, Platinum Group Metals (PGM), Nickel, Vanadium, Graphite, Gemstones, Diamond, Dimension and Decorative stones are extensively available in the State. Odisha was the leader in 2017-18 in mineral production in the country. The State contributed 34.3% of total mineral production in the country in India followed by Rajasthan, Chhattisgarh, Karnataka, Madhya Pradesh and Jharkhand. Odisha is a major supplier of raw materials to other States. Odisha is a leader in outward movement of limestone, iron ore, manganese ore and metal products to other states. The State exported nearly 67.5% of iron ore to other states, 31.8% manganese, 21.7% limestone and 26% coal. Low prices of iron-ore and coal have moderated the impact of increased production.

Odisha is the leading state in terms of deposits and production of minerals, as well as exports of basic metals. However, industrial investment is also dependent on the value received from natural resources. Even with increased production, the value from these minerals has been limited owing to the fall in prices of major minerals and metals. This has implications for the State’s GVA. Average price realized for coal and iron-ore has gone down. In other minerals such as bauxite, chromite, limestone and graphite, the average price has either increased or been stable.

In 2018-19, Odisha has registered impressive economic growth in three sectors, namely, Agriculture & Allied Activities, Industries and Services, the second one had registered the fastest growth. Government’s pro-active initiatives like Make-in-Odisha Conclave, Start-up Policy, Ease of doing Business framework etc. have been responsible for this upward swing. Institutional mechanisms are in place for addressing implementation level hurdles and according timely approvals and clearances. This has fast-tracked investments in public infrastructures like highways, railways and power transmission.

Hence the time has come to erase the tarnished image of Odisha as a downtrodden state from the mindset. With a robust 8.4% economic growth rate in last year Odisha has lot to offer not only to the Odia people but to the entire nation including job and employment in the state’s burgeoning industrial sector.

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