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Industrialization in the state

  • The sector-wise GDP contribution in the state for the year 2018-19 as per the UP Economics and Statistics division is as follows: with a contribution of 47.20% to the total GDP of the state, Tertiary sector is leading in income generation followed by 27.20% contribution from Secondary sector and 25.78% contribution was from Primary sector. Manufacturing has a share of 14.54% in the GDP of the state. The state is home to a wide variety of industries as it is endowed with abundant natural wealth, strategic advantage of being located close to the national capital; good connectivity with the longest rail and road networks in the country; established industrial corridors; availability of utilities required for the setup of industries like power, water; demographic dividend of 56% of population being in working age group providing for skilled manpower; and a conducive environment created by the government for encouraging investments in the state made the state most preferred destination of investment in India. The main industries in the state constitute agro-based and food-processing industry, IT, light engineering goods, sports goods, textiles, leather-based industry, tourism and biotechnology. The Uttar Pradesh State Industrial Development Corporation (UPSIDC) and the Department of Infrastructure and Industrial Development are responsible for the development of industrial infrastructure in the state. The state has a robust industrial infrastructure, including 15 industrial areas, 12 specialised parks, four growth centres and industrial infrastructure development centres (IIDC). As of February 2020, Uttar Pradesh had 20 notified, 13 operational SEZs and 23 formally approved SEZs. Merchandise exports from Uttar Pradesh reached US$ 16.29 billion in 2018-19 and US$ 12.82 billion in April-December, 2019. The DMIC (Delhi Mumbai Industrial Corridor) and ADKIC (Amritsar-Delhi-Kolkata Industrial corridor) are ambitious projects which pass through UP and will benefit the industrial activity in the state. Uttar Pradesh has highest share of around 57% of EDFC (Eastern Dedicated Freight Corridor) facilitating uninterrupted transportation of goods to sea ports. In 2018, domestic tourist arrivals in the state were 285 million and stood second in the country. Foreign tourist arrivals had crossed over 3.78 million and ranked third in the country

A brief about the key industries of the state is given below: (Source: Directorate of Industries, GoUP)

  1. Leather : The largest livestock population acted as a lucrative for the leather industry to flourish in the state & UP is the second largest producer of leather goods after Tamilnadu. Items of major exports are finished leather, leather footwear, saddlery & harness items. Kanpur (saddlery products) & Agra (shoes) have been notified as “Towns of Export Excellence” for leather products. Leather Technology Park has been developed at Banthar, Unnao to accommodate leather tanneries and leather goods units.
  2. Textiles : The state ranks fifth in total silk production in the country and has the fifth largest number of handlooms in India. The state is having the distinction of being able to offer a complete range of handloom products like home furnishing, floor coverings, bed covers, bed sheets, dress materials etc. and a vast range of woven & printed sarees made of cotton & silk. Mirzapur & Bhadohi are the major centres for the production of carpet floor coverings & Varanasi is famous for silk sarees.
  3. Food processing: The Food Processing sector in Uttar Pradesh is in a nascent stage. Most units fall under un-organized private sector. The food fortification and processing of cereals, pulses, oilseeds and some spice and condiments constitute the Food Processing industry in the state. Two Agro Parks (over 180 acre of land) have been developed for food processing industry at Lucknow & Varanasi. These parks have been designed to meet the specific needs of the agro and food processing industry. These specialized Infrastructures include Multi Chamber Cold Store with Controlled Atmosphere facility and Washing-sorting- grading line. As the state is a major producer of various crops like Wheat, Rice, Mangoes, Milk & Meat there is a huge potential for this industry.
  4. Sugar: The state better known as sugar bowl of the country is the largest sugarcane producer of India. Further, it has easy access to raw material & has huge potential to establish new units in eastern UP. The state also being the second largest producer of rice in India, the by-products bagasse and rice-husk form an abundant raw material base for power production in the state.
  5. Engineering Goods: The state is a leading producer in engineering goods sector. Several Engineeering & Auto components are manufactured in Lucknow, Noida & Ghaziabad. The state has become a hub for the semiconductor industry with several major players having their R&D centres in Noida and Greater Noida.
  6. Chemicals & Fertilisers: There is huge availability of raw materials for production of fertilizer in Bundelkhand region. Rock phosphate found in Lalitpur is sold as direct fertilizer & also used as raw material for phosphorus plants.
  7. Information Technology: UP is a forerunner in India’s IT/ITES sector. The state is considered as the IT hub of North India. Noida &Greater Noida have earned the recognition of major IT /ITES destination in the country with three SEZs & one Software Technology Park.

MSME Sector in the state

  • Micro, Small and Medium Enterprises (MSME) sector is of strategic importance for Uttar Pradesh. These enterprises not only play a crucial role in providing large scale employment opportunities at lower capital cost, but also help in industrialization of rural and backward areas, thereby reducing regional imbalance, assuring more equitable distribution of national income and wealth. These enterprise units are supplementary and complementary to large and medium scale units as ancillaries. As per the 73rd round of NSSO survey (2015-16), Uttar Pradesh had the largest number of MSME establishments in the country with an estimated figure of 89.99 Lakh units, 14.2% of India’s total 633.88 Lakh MSME units. Of the total 89.99 Lakh units, there are 89.64 Lakh Micro units & 0.36 Lakh Small units. Western region of the state has more number of MSME units and the highest number of people employed when compared with the other three economic regions of the state. The estimated number of employees in the MSME units in the state was 165.26 Lakh as per the NSS survey (2015-16). This accounts for 14.9% of the total MSME employment of the country. Among all the industries, the repairing & servicing industries enjoy the highest share of the number of MSME units as well as employment in the state followed by food products. There are many specialised clusters in the State that provide large scale employment and also add significantly to the export from the State. The marble industry of Agra, woodcraft of Saharanpur, Chikan industry of Lucknow, leather industry of Kanpur and Agra, brass industry of Moradabad, glass industry of Firozabad, Ceramic and Pottery industry of Khurja and the Carpet industry of Bhadohi are of world fame. Mughalsarai is home to a number of major locomotive plants. Other local specialties are the silks and brocades of Varanasi, ebony work from Nagina, etc.,

MSME Clusters

  • Each Lead bank is required to identify and adopt at least one MSE cluster in each district to ensure adequate credits to the unit of cluster in terms of para 5.6 (iv) of RBI Master Direction FIDD.MSME & NFS BC. No. 12/06.02.031/2017-18 dated July 24, 2017 (updated as on April 25, 2018) on “Lending to Micro, Small & Medium Enterprises (MSME) Sector”. UNIDO has identified 388 clusters in India, out of which 39 clusters are in the State of Uttar Pradesh.

Specialised MSME Branches

  • In terms of para 5.1 of RBI Master Direction FIDD.MSME & NFS.BC.No.12/06.02.31/2017-18 dated July 24, 2017 (Updated as on April 25, 2018) on “Lending to Micro, Small & Medium Enterprises (MSME) sector”, public sector banks are advised to open at least one specialized branch in each district. Further, banks have been permitted to categories their general banking branches having 60% or more of their advances to MSME sector as specialised MSME branches. There are 548 specialized MSME branches of Public sector banks in the state of Uttar Pradesh as on March 31, 2020.

Status of Revival and Rehabilitation of MSMEs

  • As per RBI circular FIDD.MSME & NFS.BC.No.21/06.02.31/2015-16 dated March 17, 2016 before a loan account of a Micro, Small and Medium Enterprise turns into a Non-Performing Asset (NPA), banks or creditors should identify incipient stress in the account by creating three sub-categories under the Special Mention Account (SMA) category. This circular superseded the earlier guidelines on Rehabilitation of Sick Micro and Small Enterprises issued on November 01, 2012 where the units staying NPA for 3 months were classified as Sick units. The number of accounts in the three SMA categories along with the amount involved at the start of the March 31, 2020 quarter (based on the data of 23 major commercial banks in the state) is given in the table below:

    Table-13: Framework for Revival and Rehabilitation of MSMEs

    (Amount in ₹Crore)
    Type of Account Number of Accounts Amount involved
    SMA-0 3,60,116 12,432.72
    SMA-1 70,753 3,246.52
    SMA-2 66,443 3,047.68

    For the quarter ended March 31, 2020 NPA accounts in the MSME sector comprised 22.56% of the total MSME accounts while it was 22.95% for the previous quarter. The total NPA amount was ₹12,704.01 Crore in the MSME sector as at the end of March 31, 2020 in the state.

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