Update on India’s States: January 22, 2016

This week: Andhra Pradesh liberalizes labor laws in the retail sector, and its Chief Minister attends Davos; Maharashtra is moving forward with an SEZ for financial services; Rajasthan budgets millions to improve small-city infrastructure; West Bengal announces a new entrepreneurship policy.

Center-State relations

Union civil aviation minister Ashok Gajapathi Raju will ask state governments to reduce the value-added tax (VAT) on aviation turbine fuel at a meeting next week of state civil aviation ministers. Fuel costs currently account for half of the operating costs of India’s airlines, and state taxes on fuel vary from 4 to over 30 percent. The draft aviation policy is due to be presented to the Cabinet in the last week of January. Source: Business Standard

Andhra Pradesh announced a new retail policy designed to attract increased investment in the sector. The policy makes it legal for business in the retail sector to operate up to 15 hours a day, seven days a week; hire part-time employees; and operate warehouses all day. The policy discourages strikes by covering food and grocery retail enterprises under the Essential Services Maintenance Act and declaring retail distribution centers and warehouses public utilities under the Industrial Disputes Act, 1947. Source: Economic Times

Andhra Pradesh received 331 investment proposals worth $70 billion during the Confederation of Indian Industry (CII) Partnership Summit. The central government also pledged to build new branches of several national institutions, including the National Institute of Pharmaceutical Education and Research and the Central Institute of Plastics Engineering and Technology, at a cost of over $10 billion. Source: Economic Times

Andhra Pradesh chief minister N. Chandrababu Naidu will participate in the World Economic Forum’s 46th annual meeting in Davos, Switzerland. Source: Business Standard

Essel Group, in partnership with Chinese company Golden Concord Holdings Ltd., signed two memoranda of understanding with the Andra Pradesh state government to establish Smart Industrial Parks and a new manufacturing hub for renewal energy equipment manufacturing. The projects, worth a total of $11 billion, are expected to generate more than 100,000 new skilled jobs. Source: The Hindu

The Delhi government will waive user charges on various activities, including diagnostic tests, and ensure the availability of medicines and consumables at all government hospitals beginning February 1. Source: Economic Times

Delhi’s odd-even car rationing scheme ended its 15-day trial period on January 15, during which time Delhi Traffic Police fined 9,144 violators at a total penalty amount of $280,000. Debate continues on the policy’s impact on air quality, and the government is yet to announce a second phase. Source: The Hindu


Gujarat chief minister Anandiben Patel broke ground on a commuter rail project connecting Gandhinagar, the state capital, with Ahmedabad, its economic hub. The 12-mile corridor is due to be completed within four years. Source: Economic Times

Seven districts in Gujarat will be included in the pilot test for Direct Benefit Transfer of kerosene subsidy. Participants will receive a direct cash grant to purchase kerosene on the open market rather than receive an allotment of subsidized canisters. Source: Financial Express


Karnataka received investment proposals worth $1.8 billion during the “Invest Dakshina Kannada 2016” meet in Mangaluru. The event was part of the lead-up to the “Invest Karnataka 2016 Global Investors Meet,” which is scheduled to be held in Bengaluru from February 4-6. Source: Hindu Business Line

The Japanese government will partner with Karnataka to develop an exclusive Japanese township-cum-industrial zone. A pilot project for the park is already under way in the Tumkuru district. Source: Hindu Business Line


The Maharashtra government has begun meeting with multiple stakeholders, including central government departments, to discuss creation of an international financial district in a Special Economic Zone in the state. A committee headed by Union minister of state for finance Jayant Sinha is preparing a master plan for the area, which will have a separate tax structure. Source: Economic Times

Congress registered an impressive performance in local elections, winning 105 wards in the municipal council and nagar panchayat (town council) polls held in 345 wards across Maharashtra. The Bharatiya Janata Party, which controls Maharashtra, won only 39 seats, finishing fourth in the overall tally. Source: Economic Times

The state government issued an order calling on officials to crack down on private bus operators that provide inter-city bus services. Only the Maharashtra State Road Transport Corporation is allowed to operate inter-city routes, but the law was previously not enforced. Source: DNA

The Maharashtra government has sought the center’s intervention in moving forward the $883 million Tapi River Recharge Irrigation Project, which involves the three states of Maharashtra, Madhya Pradesh, and Gujarat. Maharashtra hopes that the project, which is designed to raise the water tables in the target area, will help address its water shortage. Source: Indian Express


Chief minister Vasundhara Raje has sanctioned $619 million for the fourth phase of the Rajasthan Urban Infrastructure Development Project. The bulk of funds under the project will be spent on improvements to 27 cities with populations between 50,000 and 100,000 and on ten smaller “heritage cities.” Source: Hindustan Times


Tamil Nadu chief minister Jayalalithaa unveiled several measures to help out small traders hit by recent floods in Chennai, including a moratorium on principal payments on government loans, interest-free loans, and relaxed requirements for government support of self-employment ventures. Source: Economic Times

Three months ahead of state elections, the Tamil Nadu government has announced the reference price for sugarcane will be $42 a metric tonne (1.1 tons), $8 more than the central government’s advisory price. The announcement will please cane farmers, but it is not clear that the state’s sugar mills, which are already deep in debt, will be able to pay the suggested price. Source: Economic Times

The central government approved central assistance of $117 million to Telangana to help the state cope with the drought situation. Source: Economic Times

Wind turbine manufacturer Suzlon has announced it will make a foray into solar power with a total of 210 MW-worth of projects in Telangana. The company won the projects from the state utility through a competitive bidding process. Suzlon will build six different capacity projects across the state, to be commissioned in FY2017. Source: Economic Times

The cash-strapped Hyderabad Metropolitan Water Supply and Sewerage Board has asked the state government to include its power bills in the 2016-17 state budget. The Board’s monthly power bill has increased nearly three-fold, to $13 million, since it began drawing water from more far-flung sources. Telangana recently waived nearly $70 million in consumer water dues. Source:Times of India


State-run power-plant builder Bharat Heavy Electricals Ltd. (BHEL) commissioned the second 660 megawatt (MW) supercritical unit of the Lalitpur Super Thermal Power Project (STPP) in Uttar Pradesh. In December, BHEL also successfully commissioned the first unit of a planned 3×660 MW STPP in the state’s Allahabad district. Source: Economic Times


The West Bengal government announced the state’s new start-up policy at the Bengal Global Business Summit. The policy, which came into effect January 1, has the goal of encouraging 10,000 start-ups in the next ten years. Among the highlights include a network of Entrepreneurship Development centers, land leases on preferential terms, and access to government research labs. Source: Economic Times

KIOCL, the state-owned iron ore mining company, announced a $125 million joint venture with the West Bengal Mineral Development & Trading Corporation to explore iron ore deposits in West Bengal. Source: Economic Times


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