Investing in India’s Madhya Pradesh State: Multi-Sectoral Opportunities for Foreign Companies

We discuss the thriving industrial ecosystem of Madhya Pradesh, located in central India, coupled with its progressive policies that present attractive opportunities. The state government actively encourages foreign investment in key sectors, including manufacturing, infrastructure, and renewable energy, to meet sustainable targets. Following the successful Global Investors Summit held in January 2023, Madhya Pradesh has experienced a substantial influx of investments across various sectors.

Madhya Pradesh at a glance

Madhya Pradesh is the second-largest state located in central India and easily accessible to markets across the country. It occupies a strategic location along the Delhi-Mumbai Industrial Corridor, which facilitates logistics movement.

Madhya Pradesh is home to over 100 industrial zones, seven smart cities, 13 proposed greenfield industrial areas, and a well-developed multimodal transportation system. The state has a robust road network of more than 350,000 km and enhanced air connectivity with five major airports at Bhopal, Gwalior, Indore, Khajuraho, and Jabalpur, which are critical drivers for its economy.

The state’s biggest strengths are the easy availability of land and its infrastructure development capability. The abundance of land provides an opportunity to utilize the state’s manpower and establish an industrial setup.

Industrial ecosystem

Madhya Pradesh is the 10th largest economy in the country, and the state’s GDP increased by 19.74 per cent in FY2022–23.

Madhya Pradesh boasts five prominent industrial regions, namely Bhopal, Gwalior, Indore, Rewa, and Jabalpur. These regions house major industrial units in sectors such as automotive, pharmaceuticals, textiles, food processing, IT/ITeS, electronic system design and manufacturing (ESDM), cement, and mining.

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Along strategic corridors, numerous industrial and investment regions have emerged, including Pithampur-Dhar-Mhow, Ratlam-Nagda, Shajapur-Dewas, and Neemach-Nayagaon, with the state actively fostering their multi-sectoral growth. In the fiscal year 2022-23 (April-January), Madhya Pradesh recorded exports worth US$7.19 billion, further demonstrating its robust economic performance.

Madhya Pradesh occupies the fifth position in India having attracted 7.2 percent of total industrial investments. To develop such robust infrastructure that supports the ecosystem, the state has invested more than US$15.4 billion in the last five years.

Madhya Pradesh has six inland container depots and an international air cargo facility located in Indore and Bhopal.

Ease of doing business

Madhya Pradesh’s business-supportive policies include tax-linked investment assistance, which ranges from 10 percent to 40 percent of investment in plant and machinery, ranging from US$1.3 million (INR 100 million) to US$20.1 million (INR 1500 million), respectively.

The Madhya Pradesh government aims to make the state an agriculture and food processing hub. In addition to this, the government also wants to build an inclusive startup ecosystem in the state. The state has developed policies for some key sectors, mentioned in the table below.

To attract investment in the state, the government has focused on policies for ease of doing business and introduced discounted tariffs, exemptions on duties, and a customized incentive package for mega projects.

Global Investment Summit 2023

The state’s Global Investment Summit (GIS) was held in January this year, in Indore, also known as Madhya Pradesh’s commercial capital. Madhya Pradesh received investment intentions totaling over US$201.5 billion (INR 15 trillion) at GIS 2023, particularly in the renewable energy, urban infrastructure, and food processing sectors. The focus of the GIS is to increase business-to-business (B2B) and government-to-business (G2B) engagements. Around 32 embassies from around the world had registered for participation in the summit.

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The state has a seven-point strategy to facilitate investment per its government in a media statement. This includes “constant communication, cooperation in all circumstances, all possible facilities as per facility policy, approvals will be received without detours, a dedicated helpline for bridge industries, a [simplified] single-window approval system, online system and coordination between various agencies.”

During the GIS summit, the renewable energy sector received US$60 billion, urban infrastructure received US$37.5 billion, agriculture and food processing received US$1.34 billion, the IT and electronics sector received US$ 10.4 billion, chemicals and petroleum US$10.3 billion, and the services sector received US$9.6 billion.  

Key sectors and investment opportunities

Madhya Pradesh possesses significant mineral resources and stands as the country’s leading state in terms of the number of mines. The state plays a significant role in the production of various minerals, including limestone, copper, rock phosphate, manganese, dolomite, glass sand, and pyrophyllite. Notably, Madhya Pradesh is home to Asia’s thickest coal seam coalfield located in Singrauli.

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In terms of agriculture, Madhya Pradesh holds the distinction of being the largest producer of pulses such as orange and garlic, and the second largest producer of food grains such as rapeseed, mustard, and soybean. The state boasts two mega food parks and eight government food parks, with a warehousing capacity of nearly 15 million metric tons and a cold storage handling area spanning over 354,000 square meters. These factors make Madhya Pradesh an ideal destination for investment in the agriculture sector. Furthermore, with 11 agroclimatic zones, the state’s produce remains available for an extended period.

In terms of foreign direct investment (FDI), Madhya Pradesh received inflows totaling US$521.3 million from October 2019 to December 2022. The state currently offers 1,462 existing investment opportunities valued at US$132.73 billion, with a focus on road and highway development. Additionally, the water resources sector presents the highest potential, with investment prospects worth US$29.56 billion. Madhya Pradesh’s diverse investment opportunities and favorable economic climate make it an attractive destination for investors.

Leading multinational and domestic firms have invested in Madhya Pradesh in various sectors. Some of the major companies in key sectors are noted in the below table.

Recent developments

MP Industrial Development Corporation has finalized plot rates and begun land allocation to industries in the new industrial belts of Pithampur Sector 7, which will be developed on 2,186 hectares. The upcoming industrial area will have industrial plots on around 700 hectares and has already received requests for 500 hectares from private owners, out of which 200 hectares have already been transferred.

Investment worth US$919.5 million (INR 68.5 billion) is expected in the state’s Prime Minister Mega Integrated Textile Region and Apparel (MITRA) Park and a further US$1.16 billion (INR 86.75 billion) in other parts of the state, per the commerce minister Piyush Goyal. Under the PM MITRA Scheme, the state government transfers land to a special purpose vehicle (SPV), which is a legal entity where the state has a 51 percent equity and the central government, the remaining 49 percent.

PM MITRA parks are also expected in Karnataka, Uttar Pradesh, Tamil Nadu, Gujarat, Maharashtra, and Telangana. The central government has a budget outlay of INR 44.45 billion (US$596.7 million) for a five-year period for the scheme. The MITRA parks will have plug-and-play infrastructure and will allow businesses to secure easier approvals. On its part, Madhya Pradesh enjoys access to raw materials of cotton fiber and yarn, which can be supplied to textiles sector investors located in the park.

The pharmaceutical sector of Madhya Pradesh is expected to attract US$540.8 million–US$546.8 million (INR 40 billion–INR 45 billion) in investment for drug manufacturing and medical devices.

(With additional research and inputs from Melissa Cyrill.)

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