Odisha now preffered biz destination, beats Maharashtra, Gujrat

Western India — Maharashtra and Gujarat seem to have lost their status of the most preferred destination for investment. While Orissa, a state, which was until recently not known to be very investor friendly, has grabbed maximum amount of investments in FY10, thanks largely to capital intensive mining projects coming up in the state.

A Reserve Bank of India (RBI) study on corporate investment, which studied 796 projects in FY10 which involved bank/FI fundings, Odisha attracted highest investments of `74,757 crore in 31 projects, accounting for 13.4% of total investment intentions during the year. Maharashtra was a distant second with investments worth about `49,480 crore in 124 projects. Gujarat which used to be a top investment destination earlier, managed to attract only `16,572 crore in 72 projects during FY10 compared with `59,887 crore in 77 projects in the previous year. The other top investment destination during the year were Andhra Pradesh and Chhattisgarh.

“Much of these investments are in mining projects that are coming up in the state, as the state has opened up this sector and a number of hurdles are also being addressed. these are typically very high value projects. This could result in investment in projects already cleared picking up,” said an economist with a large corporate house requesting anonymity. More recently, among the large high value projects that have taken off in the state are in the mining sector like Hindalco’s alumina project and Vedanta’s bauxite mining project.

The RBI has noted that the location of high value projects tends to change the spatial pattern considerably from year to year. The location, in turn, depends on a host of other factors like the nature of the project, market size, growth prospects, availability of skilled labour, suppliers’ adequate infrastructure etc, it said.

Another notable feature on the pattern of project investments is that the geographical distribution of the projects was seen to be broadbased in FY10 with growing investment prospects in Chhattisgarh, Orissa, Tamil Nadu, Arunachal Pradesh and Rajasthan as reflected in the increasing share of project expenditure intentions in these states in relation to last year.

More importantly, the share of multi-state projects increased sharply to 30.6% in 2009-10 from 17.8% in 2008-09. The central bank has noted that these multi-state projects largely cover telecom sector either directly or indirectly through telecom infrastructure.

Source: ET