TMCnet News
Sun, sand & A tax holiday(The Economic Times (India) Via Thomson Dialog NewsEdge) PANAJI: Tourism and mining have, since ages, been the backbone of the Goan economy. During the last tourist season (October-April), 22 lakh people visited Goa, the highest so far. While there are no studies available to show the actual revenue generated through tourism, researchers estimate that 15% of the gross state domestic product (GSDP) comes from trade, hotels and restaurants; all of which depend on tourism. Goa also earns a lot of foreign exchange from mining exports, especially export of iron ore to steel markets like China. Last year saw a record 35.4m tonne of mining exports. Of this, iron ore exports comprised nearly 23m tonne that brought in $733m of foreign exchange. The last four decades have seen industrial sectors in Goa grow in leaps and bounds contributing to 33% of the GSDP. According to official statistics, Goa has 154 medium and large scale units, most of which are processing units providing value additions to export oriented units. Industries first came up in Goa around 1975. The period till 1991 witnessed a 28% growth in new companies across the state. A major leap was witnessed during 1993 to '04, when the state enjoyed a tax holiday. Many foreign multinationals like US-based Kodak, Richardson Vicks and Germany's Benchemie, BASF group, Siemens and Cipla set up units in Goa. At present, Goa has 20 industrial estates, and the main thrust has been to develop pharmaceuticals, electronics and other non-polluting industries. The state is hoping to create industrial pockets that, in addition to earning foreign exchange, will also generate employment opportunities for local Goans. According to industry analysts, Goa enjoys many inherent advantages like having an urban set-up, harmonious culture and a largely English speaking crowd, which makes it an attractive destination for companies, especially export-oriented companies. Besides, the state's charisma as one of the most sought after tourist destination in India also makes it a doubly attractive proposition to set up a base here. According to N Sriram, Chairman, CII Goa Council, "People want to come to Goa as it is a tourist destination. We must capitalise on this advantage." Goa has a sizeable small and medium enterprises (SME) base spread across diverse industries. The pharmaceutical cluster in South Goa at Margao has reportedly about a 100 units that employ between 1,000-1,00,000 persons and have revenues of about Rs 10-100 crore, according to industry estimates. But Goa has a long way to go since it does not have too many clusters. A study of India's clusters had shown only one cluster in Goa compared to some other states that had as many as 48 clusters. However, Goa also suffers from lack of proper infrastructure and political instability that serve as major deterrents for further investments. Adds Sriram, "We need good quality power, water and also good roads. Besides, there needs to be consistency in the state's policies which is not happening." At present most industries have bore wells to meet their water requirements and purchase quality power directly from private players like Reliance at Rs 8.90 per unit as against the government's Rs 3.60 per unit. Ironically, while Goa's airport and harbour are an hour's drive from the most industrial estates, these places have not been notified by the central government, thereby barring import/export of pharma and bio-tech products. These companies currently are exporting their products from Mumbai. The ending of the tax holiday changed the trend as many companies either put their expansion plans on hold or chose to relocate elsewhere. Proctor & Gamble and Dr Reddy's are two companies that shut shop and moved to other lucrative options like Himachal Pradesh that still enjoys tax concessions. During the tax holiday, over 30 multinationals had set up shop. After the tax holiday ended, only seven have set up shop in India. Nitin Kunkoliker, chairman of Goa Chamber of Commerce and Industries says, "India lacks a good export base and the special economic zone (SEZ) can be used to develop Goa into an internationally competitive exporting hub." The state government has drafted a policy for developing SEZ pockets to boost exports and industrial growth. The SEZs may provide several incentives, including full exemption of electricity duties, exemption on sales tax, turnover tax and other duties, income tax exemptions and creating offshore banking units. Developing SEZs in Goa would help to improve its road, water and air linkages, thereby aiming for international competitive and hassle-free environment. The government plans to invite many international companies in sectors like food processing industries, pharmaceuticals and even an apparel park to boost trade and fashion. Besides, plans also include an SEZ for education. Goa already has a premier institute for MBA - The Goa Institute of Management and India's leading engineering institute, BITS Pilani, has a branch in Goa. The state government is keen on developing bio-tech and IT hubs and has drafted policies for the same, which include sops like exemption of custom duties for research and development (R&D) equipment, exemption from entry tax, budgetary allocation for setting up world class accreditation agency for biotechnology products and also subsidy scheme allowing farmers to access generic seeds. Talks are on with Wipro Technologies to begin Goa's first BPO in the IT sector. The state government is also promoting bio-technology in areas like healthcare, vaccines, animal healthcare products, fermentation of beverages, bakery and dairy products and bio-energy besides areas like bioinformations and marine biotechnology. Industrialists have welcomed the government's initiative. They feel that the government should chalk out a road map for the industrialisation of Goa over the next 20 years. Considering that Goa has a large number of small and medium category business enterprises, the SMEs could take the lead in making Goa more than just a tourist spot. |