Any country, small or big and irrespective of its ideological disposition, will at all times be seeking foreign direct investment and technologies. At the same time, countries will want to trade among themselves on fair terms, low if not zero tariffs. At this point of globalization, Tesla and Apple, among other leading US companies, have manufacturing units in China. In their turn, more and more Chinese companies are seeking listing on US stock exchanges and raising funds through initial public offerings. But haven’t the US companies already put too many eggs in the Chinese basket, specially in the context of tensions building up fast on trade matters following Donald Trump’s accession to power?
The US pursuing China+1 policy for sometime is working to the advantage of countries such as India and Vietnam. While India has set for itself an ambitious export target of $2 trillion by 2030, compared with an expected over $800 billion in 2024-25, it must rapidly grow the production base to also meet rises in domestic requirements. The challenge for India and its 28 states is, therefore, to secure investments in both traditional (including mining) and new age industries. All the states think one way of doing it is to organise mega conferences of investors, domestic and foreign.
One state may call it business summit and another investor meet. But the commonalities in the publicity campaign preceding such conclaves – some states do it annually and some others like West Bengal have opted for once in two years – are striking. States big and small will not spare any efforts with money made available liberally by the concerned exchequers to tell the world in rosiest detail of the advantages of building industries and services centres there. At the end of two or three-day jamborees, state governments are found to be going wild in announcing the number of memoranda of understanding and investment intent received. But as is the experience so far, for most states, only a portion of the investment promised hits the ground and as a consequence, a good number of announced projects remain good on paper.
Winter is the season when states, big and small, will routinely lay out red carpet for investors from within and outside the country. Securing investments to promote growth and create employment remain the principal objectives of the exercise. But over the years, chief ministers have unabashedly used the occasion to promote themselves as heralders of growth. A few weeks ahead of investor meet, in the process of reeling out all the positives of a state such as readiness of infrastructure (power generation capacity, land availability, institutions to promote health and education, etcetera) and good governance, in full page newspaper advertisements, we will invariably see photos of a beaming chief minister. In case, a state is run by BJP led government, then the prime minister will have a bigger profile than the chief minister as regulation. In promoting ‘Utkarsh Odisha – Sunrise of Investment Excellence’ through the recently held investor conclave in Bhubaneswar and as West Bengal is to put up an identical show under the title ‘Bengal Means Business and Innovation’ on February 5 and 6 in Kolkata, photos of Narendra Modi and Mohan Charan Majhi for Odisha and Mamata Banerjee appeared compulsorily in all advertisements.
Indian states remain in competition to get investments, public and private that includes foreign direct investment. The contest to win favour of potential investors is becoming fiercer all the time. International Monetary Fund (IMF) has forecast India will be growing at 6.5 percent both in 2025 and 2026. In the corresponding period, global growth is projected at 3.3 per cent, with an upward revision in the US offsetting downward revisions elsewhere. Whatever that is, the whole world is keeping its fingers crossed over how the US economic policy, particularly relating to trade and tariff will unfold under President Donald Trump’s second term. The US has started putting pressure on New Delhi for what is described as more equitable trade relations.
Companies in India and elsewhere facing generally tepid demand have turned circumspect in making new large investment commitments. In the circumstances, high hopes of new big private investments, domestic and foreign materializing as entertained by state governments, including West Bengal will turn out to be indulgence in a daydream. The other day a senior executive of a leading and pioneering steel group said he would be watchful about resulting debt burden before giving go ahead to big capacity expansion. In fact, this happens to be the secular trend in industry.
West Bengal, perhaps more than any other major state, needs significant investment in industry and information technology sector, including artificial intelligence for job creation, raise the share of manufacturing and mining in state domestic product and generate future revenue sources for the exchequer. Though 13 largest state by area, West Bengal is the fourth largest populous state with a headcount of around 100 million. Urbanisation rate in West Bengal being more than the national average, the state administration remains under growing pressure to create economic opportunities for the ones coming out of colleges and universities.
In one full page advertisement promoting the investor conference, the Mamata Banerjee government has given a long list of new schools, colleges and universities that got created under the current dispensation. But what is frustrating for students with degrees is their not being able to find jobs. Those not tied down by family obligations are migrating to other states, including the neighbouring Odisha, which during the long Navin Patnaik rule emerged as an important hub for education, health and IT.
At the last ‘Utkarsh Odisha’ conclave, the state received MOUs and investment intents worth Rs16.73 lakh crore. While all the major steel groups from Tata Steel to JSPL to ArcelorMittal Nippon Steel to SAIL to Jindal Stainless are raising their production profile in Odisha to make use of its large iron ore, manganese ore and chromite resources. Similarly, all the three country’s producers of alumina and alumina – Vedanta Aluminium, Hindalco and Nalco – continue to invest heavily in Odisha to expand their bauxite mining, alumina refining and metal smelting capacities.
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The presence of all-season deep draft sea ports, including Paradip, Dhamra and Gopalpur and the state government’s identification of another 14 potential sites for building new ports are among the reasons for investors fancying Odisha. While the state backed by New Delhi is going all out to build industries using locally found minerals, including coal, the present Majhi government is to take forward Patnaik regime’s wise decision to diversify the state’s industrial base by focusing on sectors such as textiles and auto ancillaries. No wonder the recent investor meeting was marked by announcement of “593 new projects across 20 diversified sectors.”
Even while West Bengal doesn’t have any iron ore under its earth, the state has besides two large integrated steel mills at Durgapur and Burnpur in the public sector, quite a few electric arc furnaces, foundries and DRI (direct reduced iron) plants. But now as all iron ore and bauxite bearing states are insistent on local processing of minerals, West Bengal has little hope of getting another integrated steel mill. Some years ago, JSW group wanted to build a very large steel mill at Salboni using iron ore mined in Odisha. As sub nationalism is increasingly gaining ground, Odisha didn’t oblige JSW to import iron ore for making steel in West Bengal. Instead JSW is now engaged in building steel capacity in Odisha.
West Bengal is also a sad story of missed opportunities. Tata Motors had to beat a retreat from Singur when it was almost ready to make cars. Along with it left many ancillary producers, including Lord Swaraj Paul owned Caparo. In the past Chief minister Banerjee interceded with BMW of Germany and Zara of Spain to build factories in Bengal but with no success. The last few Bengal Global Summits didn’t yield anything substantial in terms of actual investment. Hopefully, Bengal will fare better this time.
