SIKKIMNovember 2010
2
Investment climate of a state
• Skilled and cost-effective labour
• Labour market flexibility
• Labour relations
• Availability of raw materials and natural
resources
• Tax incentives and exemptions
• Investment subsidies and other incentives
• Availability of finance at cost-effective terms
• Incentives for foreign direct investment (FDI)
• Profitability of the industry
• Procedures for entry and exit of firms
• Industrial regulation, labour regulation,
other government regulations
• Certainty about rules and regulations
• Security, law and order situation
• Condition of physical infrastructure such as
power, water, roads, etc.
• Information infrastructure such as telecom,
IT, etc.
• Social infrastructure such as educational
and medical facilities
Resources/Inputs
Incentives to industryPhysical and social
infrastructure
Regulatory framework
Investment climate of a state is determined by a mix of factors
SIKKIM November 2010
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Contents
Advantage Sikkim
State economy and socio-economic profile
Infrastructure status
State policies and incentives
Business opportunities
Doing business in Sikkim
SIKKIM November 2010
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Sikkim – State profile• Covering an area of 7,096 sq km, Sikkim is the least-
populated and third-smallest state after Goa and Delhi. Sikkim shares its border with the state of West Bengal and the neighbouring countries of Nepal, Bhutan and Tibet.
• Gangtok is Sikkim’s capital city. The state has four administrative districts - North, East, West and South. Gyalshing, Namchi, Mangan, Jorethang, Singtam, Rangpo, Pakyong, Rhenock, Meli, Chungthang and Soreng are the key cities and towns in the state.
• Sikkim has 28 mountain peaks, 84 glaciers, 227 lakes, five hot springs, and eight mountain passes – making it an ideal tourist location. The Teesta and Rangeet are the two major rivers with nearly hundred tributaries.
• Sikkim has 15 soil series and eight sub-groups, making it a fertile land for cultivating rice, maize, wheat, millet, barley, pulses, soy bean, coriander, cardamom and various fruits.
• Nepali, Bhutia, Lepcha, Limboo, Magar, Rai, Gurung, Sherpa, Tamang, Newari, Sunuwar (Mukhia) are the commonly spoken languages. Hindi and English are also widely spoken.
Sikkim November 2010
ADVANTAGE SIKKIM
5
Natural resources
Policy and fiscal incentives
Sikkim is naturally endowed with rich flora and fauna. Its
climate and topographical conditions support industries
such as agriculture, horticulture, food processing, tourism
and non-timber forest produce.
The state follows the North East Industrial Investment
Promotion Policy, 2007, which provides several incentives
and concessions for investment in the state.
Advantage Sikkim … (1/2)
The state provides excellent institutional support through
various central and state government agencies viz., North
East Council, Ministry of Development of North Eastern
Region, Commerce and Industries Department.
Institutional support
ADVANTAGE SIKKIM
Sikkim November 2010
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Facilitating infrastructure
Sikkim is well connected by roads. Telecommunication
connectivity compares with the national standards.
Optical-fibre connectivity is being developed. Rail and
air connectivity are also being developed in the state.
Advantage Sikkim … (2/2)
Sikkim has a high literacy rate; with the establishment
of Sikkim Manipal University and the Sikkim
University, the quality and quantity of employable
graduates has improved in the state.
Rich labour pool
Stable political environment
The state has a stable political set up with a single-
party government. The State Government is
committed towards creating a progressive business
environment.
ADVANTAGE SIKKIM
Sikkim November 2010
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Sikkim in figures … (1/2)
Parameter Sikkim All-states Source
Economy
GSDP as a percentage of all states’
GSDP0.06 100.0 CMIE, as of 2007-08, current prices
Average GSDP growth rate^ (%) 12.4 11.8CMIE, 2000-01 to 2007-08, current
prices
Per capita GSDP (US$) 973.8 992.5 CMIE, as of 2007-08, current prices
Physical infrastructure
Installed power capacity (MW) 195.5 159,398.5Central Electricity Authority,
as of March 2010
GSM cellular subscribers (No) 5,519,150* 456,586,162Cellular Operators Association of
India, as of June 2010
National highway length (km) 62 70,548Ministry of Road Transport &
Highways, Annual Report 2008-09
Social indicators
Literacy rate (%)** 68.7 64.8 Census of India, 2001
Birth rate (per 1,000 population) 18.4 22.8Ministry of Health & Family Welfare,
RHS Bulletin, March 2008
* Figures for the Northeastern region comprising Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura
**Census 2001
^Calculated in Indian rupee terms
ADVANTAGE SIKKIM
Sikkim November 2010
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Parameter Sikkim All-states Source
Ease of doing business
Outstanding investments
(US$ billion) 4.7 1,972.6 CMIE, as of March 2010
Industrial infrastructure
PPP projects (No) 24 515 www.pppindiadatabase.com
Parameter Sikkim Government
Policy support
Sectors with specific policies IT, Tourism, Industrial development
Availability of labour Adequate skilled labour available
Sikkim in figures … (2/2)
PPP: public private partnership
ADVANTAGE SIKKIM
Sikkim November 2010
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Key industries in Sikkim with policy thrust and factor advantages
Medium High
Low
Medium
High
Industry attractiveness matrix
SericultureHandloom
Food processing
Tourism
IT
*Factor advantages include benefits due to geographical location and availability of factors such as talent pool, natural resources and capital
Bamboo
Agriculture and
Horticulture
Hydro-power
Minerals
ADVANTAGE SIKKIM
Factor advantage
Polic
y th
rust
Sikkim November 2010
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Contents
Advantage Sikkim
State economy and socio-economic profile
Infrastructure status
State policies and incentives
Business opportunities
Doing business in Sikkim
SIKKIM November 2010
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Socio-economic snapshot of Sikkim
Parameters Sikkim
Capital Gangtok
Geographical area (sq km) 7,096
Administrative districts (No) 4
Population density (persons per sq km) 76
Total population (million) 0.54
Male population (million) 0.29
Female population (million) 0.25
Population growth rate 1991-2001 (%) 33.1
Sex ratio (females per 1,000 males) 875
Literacy rate (%) 68.7
Male (%) 76.0
Female (%) 60.4
Sources: Economic Survey, 2006-07, Census 2001
STATE ECONOMY AND SOCIO-ECONOMIC PROFILE
Sikkim November 2010
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Sikkim’s GSDP
Sikkim’s GSDP (US$ million)
Source: CMIE
• At current prices, the total Gross State Domestic Product (GSDP) of Sikkim was about US$ 567.8 million in 2008-09.
• The state’s GDP grew at a CAGR of 11.9 per cent between 1999-2000 and 2008-09.
• Sikkim was among the states that recorded high GSDP growth rates between 1999-2000 and 2008-09.
STATE ECONOMY AND SOCIO-ECONOMIC PROFILE
192.2
209.9
236.7279.8
327.2
354.5
406.7
485.4
571.6
567.8
0.0 200.0 400.0 600.0
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
CAGR
11.9%
Sikkim November 2010
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Sikkim’s NSDP
Sikkim’s NSDP (US$ million)
Source: CMIE
• At current prices, the Net State Domestic Product (NSDP) of Sikkim was about US$ 485.7 million in 2008-09.
• Sikkim’s NSDP grew at a CAGR of 13.4 per cent between 2000-01 and 2008-09.
STATE ECONOMY AND SOCIO-ECONOMIC PROFILE
177.1
199.2
236.5
276.7
300.0
342.0
411.8
487.0
485.7
0.0 200.0 400.0 600.0
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
CAGR
13.4%
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Sikkim’s economy is driven by the secondary and tertiary sectors
CAGR
• The secondary sector has been the fastest growing sector, at a CAGR of 20.3 per cent between 1999-2000 and 2008-09. It is driven by construction and hydroelectric power generation.
• At about 48 per cent, the tertiary sector is the largest contributor to Sikkim’s economy, although its share has been declining over the years. It grew at a CAGR of 10.1 per cent and is driven by trade, hotels, real estate, transport and communications.
• The primary sector’s share in the GSDP has also been decreasing, from 22 per cent in 1999-2000 to 17 per cent in 2008-09. It recorded a CAGR of 9.5 per cent between 1999-2000 to 2008-09.
Percentage distribution of GSDP
Source: CMIE
STATE ECONOMY AND SOCIO-ECONOMIC PROFILE
17.1 22.0
34.7 19.1
48.258.9
0%
20%
40%
60%
80%
100%
2008-09 1999-00
Primary Secondary Tertiary
Sikkim November 2010
10.1%
20.3%
9.5%
15
Per capita GSDP• In 2008-09, the state’s per capita GSDP was US$ 954.4.
• The per capita GSDP increased at a CAGR of 11.0 per cent between 1999-2000 and 2008-09. It has more than doubled during this period.
• Trade, tourism, transportation and agriculture have been the key drivers of the increase in per capita GSDP.
Source: CMIE
Per capita GSDP
(US$
)
STATE ECONOMY AND SOCIO-ECONOMIC PROFILE
374.0 394.5 428.8504.1
581.1621.9
703.6
836.8
973.8 954.4
0.0
200.0
400.0
600.0
800.0
1000.0
1200.0
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Sikkim November 2010
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Consumer expenditure on household goods and services
Source: Household Consumer Expenditure in India, 2007-08
NSS 64th Round
Share of average monthly per capita expenditure on
household goods and other services
• Sikkim is ahead compared to all-India in share of per capita expenditure on education.
• With regards to share of expenditure on food, the state is comparable to the all-India level.
STATE ECONOMY AND SOCIO-ECONOMIC PROFILE
52.3%
3.7% 6.3%3.6%
51.8%
4.1%1.2% 0.9%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Food Education Medical Durable goods
All-India Sikkim
Rural
Sikkim November 2010
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Key industries in Sikkim
• The Commerce and Industries Department of Sikkim is involved in promotion of trade and industry in the state.
• The Sikkim Industrial Development & Investment Corporation Limited (SIDICO) is the state-level institution engaged in promoting, financing and developing the tiny and small scale industries (SSI) sector in the state.
• Eco-tourism, handicrafts and handlooms, silk reeling and processing, precision engineering, electronics, IT, medicinal plants, floriculture, tea, spices, honey and biotechnology are thrust areas identified by the state.
• Being a potentially eco-fragile location, the people of Sikkim support promotion of pollution-free industries.
Key industries in Sikkim
Tourism
Agriculture
Agro-processing
Handlooms and handicrafts
Hydroelectric power
Tea
Minerals
Sericulture
Horticulture
STATE ECONOMY AND SOCIO-ECONOMIC PROFILE
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Rice, maize, oil seeds, orange, tea and spices are the key
agricultural products
CropAnnual production
(tonnes)
Rice 22,230
Maize 65,740
Buck wheat 5,350
Pulses 5,790
Oil-seeds 7,610
Cardamom large 2,745
Mandarin orange 17,910
Tea* 167
• Agriculture and allied sectors contributed 17 per cent to the GSDP of Sikkim.
• Sikkim is one of the top producers of large cardamom, contributing 85 per cent to the total produce of the country.
• Sikkim aims to make the state’s farming fully organic by 2015. Organic farming demonstrations have been made in over 3,000 hectares (ha) of land and bio-fertilisers have been introduced in 5,340 ha. A bio-fertiliser manufacturing unit has also been set up.
• The Sikkim AGRISNET is an Internet-based agriculture information centre to promote scientific agricultural methods and convert research into practice in the agricultural sector.
Source: Sikkim Agrisnet
Production as of 2008-09
*As of 2006
STATE ECONOMY AND SOCIO-ECONOMIC PROFILE
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Investments
• As of March 2010, the outstanding project investments in the state were US$ 4.7 billion.
• The bulk of the investments (94 per cent) were in the power sector.
Break up of investments by sector
Source: CMIE
STATE ECONOMY AND SOCIO-ECONOMIC PROFILE
94%
1%
5%
Electricity
Manufacturing
Services
Sikkim November 2010
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Contents
Advantage Sikkim
State economy and socio-economic profile
Infrastructure status
State policies and incentives
Business opportunities
Doing business in Sikkim
SIKKIM November 2010
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Roads, railways and airports • Sikkim has a total road length of 2,873 km with a road
density of 41 km per100 sq km. The state is connected to West Bengal and rest of India through National Highway(NH)-31A.
• The state Public Works Department (PWD) and the Border Roads Organisation (BRO) maintain the roads. The Sikkim Nationalised Transport (SNT) operates 87 buses and 92 trucks across the state, carrying 60 per cent of the state’s total freight and covering 43 routes.
• Rail connectivity is being created between Rangpooand Siliguri in West Bengal. Airport construction is underway in Pakyong; helicopter services are available from Bagdogra (West Bengal) to Gangtok.
Road type Length
(km)Road type
Length
(km)
National Highways (NH) 62 District roads 1,795
State Highways 184Border roads
(including NH)894
Sources: Economic Survey 2006-07, Government of Sikkim;
Ministry of Road Transport & Highways, 2007-08
Source: Public Works Roads and Bridges Department,
Government of Sikkim
INFRASTRUCTURE STATUS
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Power• As of March 2010, Sikkim had a total installed power generation capacity of 195.5 MW, which comprised 5
MW of diesel power, 75.3 MW of hydroelectric power and 47.1 MW of renewable energy sources.
• Sikkim has approved 30 new hydroelectric power plants (HEP), which are at various stages of construction and would have an installed capacity of 5,352.7 MW when complete.
• About 24 HEPs are being set up under public private partnership (PPP) mode.
• Sikkim has a peak hydroelectric capacity of 8,000 MW with a firm base of 3,000 MW, providing a huge potential for development.
Installed power capacity (MW)
Source: Central Electricity Authority
INFRASTRUCTURE STATUS
(MW
)
140.7
118.1
191.1 193.1 195.5
0
50
100
150
200
250
2005-06 2006-07 2007-08 2008-09 2009-10
Sikkim November 2010
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Telecom operators in Sikkim
• BSNL
• Reliance Communications
• Bharti Airtel
• Tata Indicom
• Vodafone Essar
Telecom infrastructure
• Sikkim is among the states with the highest tele-density in the country.
• The state had more than 49,000 landline phone connections and 15,000 plus mobile connections in 2004.
• Virtual Private Network (VPN) and 3G-services have been introduced in Sikkim by state-run telecom company, Bharat Sanchar Nigam Limited (BSNL).
• Forty “Community Information Centres” have been constructed across the state. They provide Internet-based interface for implementing various government programmes and schemes.
• Postal services are available through India Post and other private courier services.
Source: North Eastern Development Finance
Corporation Limited (NeDFI)
INFRASTRUCTURE STATUS
Sikkim November 2010
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Urban infrastructure … (1/2)
Water supply
• The Sikkim Water Security & Public Health Engineering (WS&PHE) department provides water supply to Gangtok, eight urban towns and 55 notified rural towns.
• WS&PHE supplies 130 litres per capita per day (lpcd) in Gangtok, 90 lpcd in urban towns, and 70 lpcd in the notified rural towns.
• Gangtok has a requirement of 27 million litres per day and the WS&PHE has a storage and distribution capacity of 45.5 million litres.
Sewerage
• Gangtok is the only town in Sikkim to have a full-fledged sewerage system. The sewerage system caters to nearly 50 per cent of the town and expansion works are underway to cover the whole population.
INFRASTRUCTURE STATUS
Sikkim November 2010
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• Under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), the rehabilitation of sewerage systems of Gangtok is being undertaken at a cost of US$ 5.3 million. Water treatment and distribution system upgradation is also being undertaken at a cost of US$ 15.3 million.
• Under the Basic Services to Urban Poor (BSUP) programme, three projects have been approved by the Government of India, at a cost of US$ 7.4 million, for improvement in sanitation and sewerage and poverty alleviation of the urban poor.
• With a funding of US$ 4.4 million under the Integrated Housing and Slum Development Programme (IHSDP), housing facilities are being built for the urban poor.
Urban infrastructure … (2/2)
INFRASTRUCTURE STATUS
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PPP projects
• Sikkim has 24 active PPP projects of value US$ 3.8 billion, all for hydroelectric power generation.
Key projects Project cost (US$ million)
Bermelee Khola HEP 4.7
Bhasmey hydro-power plant 32.1
Chujachen hydro-power plant 98.8
Dikchu hydro-power plant 110.7
Hee Khola HEP 5.3
Infrastructure for evacuation of power from IPPs 22.1
Jorathang Loop power project 59.8
Kalez Khola HEP 10.6
Kissim Khola HEP 3.3
Linza HEP 155.0
Panan hydro-power project 199.3
Rangit-IV hydro-power plant 89.7
Ringyang hydro-power plant 2.0
Rongnichu storage hydro-power plant 94.8
Rorathang power plant 33.2
Talem HEP 151.5
Taramchu hydro-power plant 36.1
Teesta - VI power plant 664.3
Teesta -1 hydro-power plant 267.3
Teesta -III hydro-power project 1306.5
Upper Rimbi HEP 13.1
Source: pppindiadatabase.com
IPP: independent power producers
INFRASTRUCTURE STATUS
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Education sector• Sikkim has a literacy rate of 68.7 per cent as per Census 2001. It has increased to 74.3 per cent in 2005.
• The Sikkim Manipal University (SMU) – a partnership between the Government of Sikkim and the Manipal University – provides technical, healthcare and science education. It is rated as one of the top universities in the country.
• Distance education is available for students through SMU and Indira Gandhi National Open University (IGNOU).
Sources: HRD Ministry of Sikkim, Economic Survey, 2006-07,
Department of School Education and Literacy and
Department of Higher Education, Annual Report, 2009-2010
^As of 2007-08
No of educational institutions
Universities^ 11
Colleges^ 12
Polytechnics, ITI and teacher training institutes 6
Religious schools 89
High schools^ 164
Middle schools^ 221
Primary schools^ 772
Primary education statistics
Gross Enrollment ratio (2007-08)
Class I-V
Class VI-VIII
148.0
74.6
Drop out ratio (I-V class, 2007-08)
Girls
Boys
12.5%
26.2%
Pupil-teacher ratio, secondary education* 18:1
*As of 2004-05
Sources: HRD Ministry of Sikkim, Economic Survey, 2006-07,
Department of School Education and Literacy and Department of
Higher Education, Annual Report, 2009-2010
INFRASTRUCTURE STATUS
Sikkim November 2010
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Health infrastructure
• Sikkim has an impressive health infrastructure, one of the best in the country.
• The state fares better than the national average in almost all health indicators.
• Health tourism is being promoted in the state to utilise its medical infrastructure and boost the economy.
Source: NeDFI, 2005
Health indicators
Population-to-bed ratio (2004-05) 530
Birth rate* (2008) 18.4
Infant mortality rate** (2008) 33.0
Total fertility rate (2005-06) 2.0
Health infrastructure
• Sub-centres: 147
• Primary health centres: 24
• Community health centres: 4
• Tuberculosis centres: 5
• Referral hospitals: 2
• Grant in institutions: 29
• Blood banks: 3
• Leprosy, mental illness and AIDS treatment hospital: 1
Sources: NeDFI, Economic Survey, 2006-07, Sample Registration
System (SRS), 2008
*Per thousand persons
**Per thousand live births
INFRASTRUCTURE STATUS
Sikkim November 2010
29
Cultural infrastructure
• There are three ethnic communities in Sikkim: Lepcha, Bhutia and Nepali. Buddhism and Hinduism are the two main religions followed in the state. It has nearly 200 monasteries, of which the most well known Buddhist circuits are the Pemayangste, Tashiding, Rumtek, Enchey, Phensang, Ralong, Phodang and Tolung.
• Important festivals in the state are Bumchu, Dasain, Losar, Losoong, Maghe Sankranti, Namsoong, Pang-Labhsol, Saga Dawa, Sakewa, Sonam Lochar, Tamu Lochar, Tendong Lho Ram Faat, Tihar, TrungkarTeschu.
• Sikkim has the steepest rise in altitude over the shortest distance; its temperature varies from tropical and temperate in the Southern districts to alpine and tundra in theNorthern peaks. Sikkim has lush forests, lakes, hot-springs, glaciers and mountain peaks. Trekking, river-rafting, mountain biking, mountaineering, yak riding and bird watching are the popular adventure sports in Sikkim.
• The state is richly endowed with rare and exotic flora and fauna, which includes 4,500 different flowering plants, 550 types of orchids, 36 varieties of rhodendrons, 28 bamboo species, over144 mammals, 552 species of birds and 600 different butterflies – making it a nature lover’s paradise.
INFRASTRUCTURE STATUS
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30
Industrial infrastructure
• Sikkim has identified Rangpo-Gangtok, Melli-Jorethang, Jorethang-Rishi and Ranipool-Gangtok as industrial corridors with provision for giving the land to the investors on a lease basis.
• The strategically important, Nathula Pass, has been opened to provide trade links with Tibet and China; this has given a fillip to trade and manufacturing in the region.
• Sikkim is a leading Northeastern state in hydroelectric power development with PPPs with 24 different projects identified.
• The State Government has invited expression of interest (EOI) from interested parties to invest in PPP projects related to tourism infrastructure.
• Sikkim has identified agro-based industries, horticulture and floriculture, minor forest-based industries, animal husbandry and dairy products, tourism-related industries, IT including knowledge-based industries, precision oriented high value low volume products, hydro-power, tea, education and hospitality as thrust sectors.
INFRASTRUCTURE STATUS
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Major projects in the infrastructure sector
• As of March 2010, over US$ 2.9 billion in investments have been made towards improving Sikkim’s industrial infrastructure.
• Over 95 per cent of the investments in infrastructure have been made in the area of power (both generation and distribution).
INFRASTRUCTURE STATUS
Infrastructure typeInvestments
(US$ million)
Power* 2,811.6
Road 55.6
Airport 65.2
Total 2,932.4
*Generation and distribution
Source: CMIE
Sikkim November 2010
32
Major industrial projects being implemented
Promoter ProjectInvestment
(US$ million)Location
Infrastructure
North East Frontier Railway Railway line from Sivok to Rangpo 291.2 Sivok-Rangpo
Teestavalley Power Transmission
Limited
Transmission line, Teesta region 152.2 Teesta, North Sikkim
SIDICO Sevoke-Gangtok-Nathula road project 133.8 Gangtok-Nathula
Airports Authority of India Airport project 67.2 Pakyong
Hyatt International Corporation Five-star hotel 43.6 Gangtok
CGH Earth Hotels 21.8 Gangtok
• Twenty four hydro-power plants are being set up at an investment of US$ 3.8 billion, under the PPP mode.
INFRASTRUCTURE STATUS
Source: projectstoday.com
Sikkim November 2010
33
Major industrial projects being planned
Promoter ProjectInvestment
(US$ million)Location
Infrastructure
Government of Sikkim
Two-laning of Gangtok bypass road 20.9 East Sikkim
Road upgradation from Thangu to
Muguthang
14.3 North Sikkim
Road upgradation from Giagang to
Kerang
9.7 Sikkim
Pharmaceuticals
Torrent Pharmaceuticals Limited Drug formulation unit 27.4 East Sikkim
INFRASTRUCTURE STATUS
Source: projectstoday.com
Sikkim November 2010
34
Contents
Advantage Sikkim
State economy and socio-economic profile
Infrastructure status
State policies and incentives
Business opportunities
Doing business in Sikkim
SIKKIM November 2010
35
Sikkim Tourism Policy, 2010
Aim: To build Sikkim as an attractive tourist location and promote the sector as an economic growth engine.
Key initiatives and objectives:
• Community based eco-tourism to be promoted with the use of participatory management techniques.
• Rural tourism, adventure/sports tourism, medical tourism, trekking, natural tourism, culture and heritage tourism, cave tourism,
monsoon tourism, tea tourism, etc., to be promoted through PPP projects.
• State to build the infrastructure for connectivity required to access the tourist spots.
• To have a “State Capacity Building Institute” to train and equip locals to serve the tourism sector.
• To participate in international tourist fairs and promote the tourism potential of Sikkim.
• Single-window system for clearance of private investments in the tourism sector.
• To provide concessions in luxury tax, service tax, service charges, electricity and water charges, and financial assistance on the
capital outlay.
• To provide legal support and regulations to protect the industry.
Sector-specific policies … (1/4)
STATE POLICIES AND INCENTIVES
Sikkim November 2010
36
Sector-specific policies … (2/4)
North East Industrial and Investment Promotion Policy (NEIIPP), 2007
Aim: To promote the Northeast as an attractive investment destination through several concessions and incentives.
Key features:
• Industries under this policy are eligible for incentives for a period of 10 years from the date of commencement of commercial
production.
• All new units as well as existing units that undergo substantial expansion (minimum 25 per cent increase in fixed capital) and start
production before 2017 would qualify for incentives.
• Incentives would be available for all existing industrial units and upcoming units anywhere in the Northeast.
• A high-level monitoring committee/advisory committee would oversee the implementation of the NEIIPP.
• NEIIPP would not be applicable to peripheral activities such as preservation while storage, cleaning, packing, re-packing, labelling
or re-labelling, sorting, etc.
• The North Eastern Development Finance Corporation (NeDFI) will act as the nodal agency for disbursal of subsidies.
• NEIIPP, 2007, replaced the North East Industrial Policy,1997.
• Sikkim Industrial Promotion and Incentive (Amendment) Act, 2007, follows the NEIIPP, 2007.
STATE POLICIES AND INCENTIVES
Sikkim November 2010
37
NEIIPP, 2007 (continued)
Incentives and concessions:
• 100 per cent excise duty exemption on finished products made in the Northeast.
• 100 per cent income tax exemption for industrial units.
• Capital investment subsidy increased from 15 to 30 per cent for plant and machinery up to US$ 360,000 per unit. For units
above US$ 360,000 and up to US$ 7.5 million, an empowered committee approves. For units above US$ 7.5 million, the Union
Cabinet approves.
• Interest subsidy to be given at the rate of 3 per cent on working capital.
• 100 per cent reimbursement of insurance premium.
Sector-specific policies … (3/4)
STATE POLICIES AND INCENTIVES
Sikkim November 2010
38
IT Policy of Sikkim, 2006
Aim: To employ IT to provide better governance and generate employment.
Key initiatives and objectives:
• IT to be promoted as an employment generation vehicle for the state.
• To set up software technology parks to promote call centres and business process outsourcing operations out of Sikkim.
• To promote e-governance within the State Government and its schemes to deliver speedy services to the citizens.
• To map all natural resources and the cultural heritage of Sikkim to preserve and promote its unique identity.
• To connect all district headquarters and sub-division headquarters with high-speed optical fibre cable to provide seamless
Internet connectivity across the state.
• Cyber laws, security and Intellectual Property Rights (IPR) to be implemented to protect and promote entrepreneurship and
innovation in the IT industry .
Sector-specific policies … (4/4)
STATE POLICIES AND INCENTIVES
Sikkim November 2010
39
Contents
Advantage Sikkim
State economy and socio-economic profile
Infrastructure status
State policies and incentives
Business opportunities
Doing business in Sikkim
SIKKIM November 2010
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Floriculture
• Sikkim has 4,500 varieties of flowering plants, 550 orchids, 35 rhododendrons and nine tree ferns, presenting an avenue for investment in floriculture.
• The existing industry is at a nascent stage and has potential to be developed and promoted towards an export-oriented business.
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Medicinal plants and bamboo
• The agro-climatic conditions in the state support a wide variety of exotic flora and fauna that have utility in the medicine sector.
• About 182 different medicinal and aromatic plants are cultivated under contract farming for the National Medicinal Plants Board, the Department of Ayurveda and the Ministry of Health and Family Welfare, Government of India.
• The state has identified medicinal plants and bamboo as one of the priority sectors for investment.
• Sikkim has 28 varieties of bamboo, offering potential for developing the handicrafts, construction, medicine, packaging and food processing industries.
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Agriculture, horticulture and food processing
• Sikkim has a suitable climate for agricultural and horticultural products. It supports multiple crops, viz., rice, maize, millet, barley, urad, pea, soya bean, mustard, potato, sweet potato, tea, mandarin orange, banana, jackfruit, papaya, passion-fruit, litchi, broccoli, onion, egg-plant, carrot, tomato, radish, pumpkin, potato, sweet potato, turmeric, coriander, chilly, ginger, garlic and large cardamom.
• The surveyed arable land in Sikkim is 109,000 ha, of which only 9.5 per cent is used; this provides a vast untapped potential for development. The Sikkim Government is working on an ambitious plan to achieve 100 per cent organic farming by the year 2015.
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Hydro power
• It is estimated that Sikkim has a peak potential capacity of 8,000 MW and a steady 3,000 MW hydroelectric power. The state has invited PPP projects in the sector and 24 projects are already being set up in the state.
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Tourism
• Sikkim has the perfect blend of natural wealth and topography, which ranges from tropical to temperate to alpine. The state is richly endowed with thick forests, flora and fauna, lakes, glaciers and mountain peaks, which makes it a tourist paradise.
• The number of foreign tourists increased by 3 per cent from 2005 to 2007; during the same period the domestic tourist population increased by 14 percent from 251,744 to 329,075.
• Creation of tourist complexes, eco-tourism, adventure tourism, ethnic-culture tourism, health farms, hotels, convention centres, tourist travel services, etc., are various avenues for investment in the tourism sector.
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IT sector
• Sikkim’s IT policy aims to increase the use of IT in the industrial and government sectors. With a high literacy rate, affordable cost, strong English-speaking population, improved telecommunications connectivity and favourable climate, Sikkim is well poised to serve the IT industry.
• The IT policy provides several incentives and concessions for investments in the IT sector.
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Sericulture
• Mulberry, muga, eri, oak-tussar and silk are cultivated in Sikkim. The Sericulture Department of Sikkim promotes exports of silk from Sikkim. The state is investing US$ 1.2 million in capacity building of farmers across 115 villages.
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Handloom and handicrafts
• Carpet weaving, blanket making, handloom, cane and bamboo, Thanka painting, Lepcha hats-making and Angora shawl-weaving are the various handlooms and handicraft activities practised in Sikkim.
• Sikkim’s handicrafts are being promoted in various national and international trade fairs and have found ready buyers.
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Tea
• Tea grown in the Temi region of South Sikkim is famous by its brand name “Temi” tea. The tea has its unique flavour and about 100 million tonnes of tea is produced, annually.
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Minerals and mining
• Sikkim has significant, untapped natural resource reserves of coal, lime stone, marble, quartzite, graphite, and garnet.
• Contour mapping and survey of minerals is being carried out by the Department of Mines, Minerals and Geology of the Government of Sikkim.
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Electronics and precision engineering
• Electronics and precision engineering has been identified as a thrust area by the Sikkim Government owing to the presence of state-run precision engineering industry.
• Sikkim Precision Industries Limited, Sikkim Jewels Limited and Sikkim Time Corporation are the state-run precision engineering facilities. The success of these industries and the boost it has provided to the economy has encouraged the Sikkim Government to support and promote similar industry.
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Electronics and precision engineering – companies
Sikkim Time Corporation (SITCO)
SITCO was established in 1976 to assemble mechanical watches for Hindustan Machine
Tools (H.M.T.). The company diversified into mechanical crown watches, semiconductors,
digital and analog watches and speakers. SITCO employs over 350 persons. It entered into
an agreement with BPL, Bengaluru, to manufacture speakers for television and other
applications.
Sikkim Jewels Limited (SJL)
SJL was established in 1972 to produce watch jewels, cup jewels and rotor magnets. The
company has emerged as a leading player in this segment and has become a preferred
supplier to H.M.T. Limited, Titan Industries Limited, Allwyn Watches Limited, Jaipur Meters
and Electricals Limited, VXL India Limited and Andhra Pradesh Electricals and Equipment
Corporation.
Sikkim Precision Industries Limited
(SPIL)
SPIL was set up in 2001and employs over 100 persons. SPIL manufactures TO-202 package
power devices and has an installed capacity of 10 million per annum.
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Contents
Advantage Sikkim
State economy and socio-economic profile
Infrastructure status
State policies and incentives
Business opportunities
Doing business in Sikkim
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Key approvals required
List of approvals and clearances required Department
Incorporation of company Registrar of companies
Registration, Industrial Entrepreneurs Memorandum, industrial licences
Commerce and Industries DepartmentPermission for land use
Allotment of land
Site environmental approval
Sikkim Pollution Control Board No objection certificate and consent under Water and Pollution
Control Act
Registration under States Sales Tax Act and Central and State Excise
Act Excise department
Commercial taxes
Sanction of power
Energy and Power DepartmentPower feasibility
Power connection
Approval for construction activity and building plan Public Works Department
Water and sewerage clearanceWater Security & Public Health Engineering Department
Water connection
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Cost parameter Cost estimate Source
Cost of land (per acre) US$ 50,000 to US$ 75,000 in Gangtok Industry sources
Hotel costs US$ 10 to US$ 50 per room per night State tourism website
Cost of office space
(2,000 sq ft)US$ 75 to US$ 200 per month Industry sources
Cost of residential space
(2,000 sq ft)US$ 50 to US$ 100 per month Industry sources
Labour cost (minimum wages)Unskilled: US$ 2.0 per day
Skilled: US$ 2.5 per day
Ministry of Labour, Government of
India
Cost of doing business in Sikkim
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Key agency Contact information
Commerce and Industries Department
Government of Sikkim
Gangtok-737101, Sikkim
Phone: 91-3592-202 670
Website: sikkimindustries.gov.in
E-mail: [email protected]
Energy and Power Department
Energy & Power Department
Gangtok, Sikkim
Website: www.sikkimpower.org
E-mail: [email protected]
Sikkim Industrial Development & Investment
Corporation Limited (SIDICO)
Bhanu Path,
Gangtok-737103, Sikkim
Phone: 91-3592-202 287, 202 637, 229 622
Fax: 91-3592-202 287
E-mail: [email protected]
Directorate of Handloom and HandicraftsDirector, D.H.H, Gangtok
East Sikkim
Phone: 91-3592-203 126/202 926
Contact details
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Exchange rates
Year INR equivalent of one US$
2000 46.6
2001 48.3
2002 48.0
2003 45.6
2004 43.7
2005 45.2
2006 45.0
2007 42.0
2008 40.2
2009 46.0
2010 47.4
Annexure
Average for the year
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India Brand Equity Foundation (“IBEF”) engaged
ICRA Management Consulting Services Limited (IMaCS)
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prepared by IMaCS in consultation with IBEF.
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SIKKIM November 2010