One of the largest metropolises in the country and one of the fastest growing states, Delhi, is the centre of international politics, trade, culture and literature in India. This help leverage industrial potential of the state, which combines into National Capital Region (NCR). The Gross State Domestic Product (GSDP) of Delhi increased at a CAGR of 12.41 per cent between 2011-12 and 2018-19 to reach Rs 7.80 trillion (US$ 108.06 billion). The per capita GSDP has increased a CAGR of 10.30 per cent between 2011-12 and 2018-19 to Rs 402,173 (US$ 5,574.12).

 

Delhi has an attractive real estate market and is a preferred tourist destination. Owing to its location, connectivity and rich cultural history, Delhi has always been a prime tourist attraction of the country. The Government of Delhi has been committed towards creating a progressive business environment. The new Industrial Policy 2010-21 aims to provide a conducive environment for knowledge-based and hi-tech IT/ITeS industries in Delhi. 

 

Manufacturing sub-sector is the largest contributor in the secondary sector in the economy of Delhi. As per economic survey, the income from manufacturing has increased from Rs 18,907 crore in 2011-12 to Rs 40,557 crore as per advance estimate 2018-19 and number of working factories in Delhi increased from 8968 in 2014 to 9059 in 2017. Likewise, the estimated workers employed in these factories increased from 416,927 in 2014 to 420,156 in 2017.

 

Department for Promotion of Industry and Internal Trade (DPIIT) , FDI inflows in Delhi NCR, which includes part of Uttar Pradesh and Haryana, stood at US$ 84.64 billion from April 2000 to March 2019.The real estate market in Delhi is lucrative and attracts investors from India and abroad. Owing to the advanced infrastructural base, the city meets the requirements of a profitable investment. Real estate sector contributed around 28.49 per cent to Delhi’s Gross State Value Added (GSVA) in 2018-19. Housing sales in Delhi-NCR market increased by 7 per cent year-on-year between Jan-Sep 2018.

 

As per the new Industrial Policy for Delhi 2010-21, the Government is keen on developing and promoting the hi-tech, sophisticated, knowledge-based IT and ITeS industries in the state. For this, the Government has planned to set up ‘Centre of Excellence’ to promote innovation and entrepreneurship in the sectors. In the first half of 2018, startups in Delhi-NCR received the highest funding of US$ 2.6 billion and by end of 2018 the tech startups in Delhi-NCR grabbed 224 deals for the year 2018.

 

In terms of business, Delhi region has industries like machine tools, component manufacturers, equipment providers and many more. As per Industrial Polity unveiled in 2010, Delhi Government has focuses on developing it as an operations and maintenance (O&M) hub. This has promoted Delhi’s economy the needed thrust for such businesses. It is also noted that lot of solar setups have emerged after the launch of the policy. 

 

Challenges

Majority of the MSME units are struggling to get licences and NOCs from Delhi Pollution Control Committee (DPCC), an autonomous body under Central Pollution Control Board, due to its cumbersome procedure. Thus, MSMEs are unable to get the benefit under the various Government schemes. There is lack of availability of timely credit. Entrepreneurs are facing difficulties in getting bank loan. Banks avoid accepting the cases under credit guarantee fund scheme, especially for the new entrepreneurs. The availability of land for industrial use is a major bottleneck for entrepreneurs of Delhi. More flatted factory complexes are needed to overcome this problem. Delhi has excellent overall infrastructure, but the state of infrastructure and facilities available within the industrial estates is poor. The industrial estates suffer from bad quality roads, poor drainage, encroachments and lack of parking facilities. Some of state government agencies /PSUs not recognize NSIC certificates and insist for earnest money. Deficiency of trained operators & service providers for manufacturing and service sector units is another hindrance to grow.

 

Delhi NCR has many IT and IoT-based start-ups but the adoption of such technologies among SMEs and MSMEs is low. Automation is the need of the hour, and SME sector needs to adopt it in order to avoid inefficiencies and improve their productivity. “Business owners now need to start looking at technology as a boon, which can take care of the processes, and allow them to focus on their customers, on their revenues and on their business growth. And in order to do that, you need systems which are fast, systems which are simple, systems which understand you as a business. It will not account to your expenditure rather it is an investment,” Nitil Yadav, CEO, Empire Enterprise Ltd. 

 

“Delhi’s air pollution has doubled in last five years. Pollution control authorities are very strict in its implementation here. New laws are not communicated to the industrial segment. On the contrary, those located in the industrial clusters have profound knowledge about it as they held regular meets to discuss about the same. The coordination of state’s pollution control authority with these clusters gives industries based there an advantage over manufacturers like us,” states Arvind Mondal, Director, Rajshree Tech Systems.

 

Entrepreneurial ecosystem

The Delhi-NCR region now counts more startups than Bengaluru and Mumbai, according to a report released by TiE Delhi-NCR and consulting firm Zinnov in September 2019. The region that comprises the national capital and adjoining cities of Gurugram and Noida now counts more startups and unicorns than Bengaluru and Mumbai. A total of 7,000 startups were founded in Delhi-NCR since 2009, according to the said report. The pace of founding new startups has, however, slowed over the past two years across India, including in the Delhi-NCR region, according to the report. Lack of affordable co-working spaces, less number and quality of accelerators and incubators, shortage of technical talent, lack of seed & early-stage funding, and low corporate participation are some of the reasons which led to slow pace.

 

Rajan Anandan, President, TiE Delhi-NCR, says, “Accelerating growth of the ecosystem will require a lot more seed and early-stage funding, creating more affordable co-working spaces, increasing the number and quality of accelerators and incubators, developing deeper pools of technical talent and developing sector-specific policies."

 

Skill development

Delhi has 11 institutional Incubation centers. Around 100- 150 incubates/ start-up are at work in these incubation centers. Apart from these, five ‘Schools of Excellence’ have become functional from 2018-19 and 556 Special Training Centers have been set up. The state government also involves into CSR initiatives with companies to impart training and skill development on regular basis. 

 

Cluster development

In order to maximise efficiency with the available resources, the Government has decided to develop and maintain industrial infrastructure on a Public Private Partnership (PPP) basis. Operation and maintenance of Bawana and Narela industrial areas have been handed over to the concessionaires on PPP mode. Around 230 crore is the estimated as infrastructure development cost. Government had approved redevelopment and up-gradation of roads & drains in 10 industrial areas at a cost of about 169 crore during 2014-15. Most of the industrial businesses were relocated to government marked industrial clusters so that government can help development initiatives through cluster development programme. Anomalies in relocations like area, services, and cost incurred are still in tussle with the authorities. These clusters will be regulated under Delhi State Industrial Infrastructure Development Corporation (DSIIDC). These industrial clusters will be planned in the outskirts of the newly added territories like Uttar Pradesh, Haryana and Rajasthan. 

 

Changing market

It is to be noted here, much of the state’s manufacturing output travels to Jammu & Kashmir and Ladakh regions, due to the instability in the state. Now that the J&K and Ladakh has been stabilised and government has opened gates for business and manufacturing within the territory of J&K, it may prove to a hit to Delhi’s economy. Machinery and components used in bottling plant, construction, automotive, electronics, paints and coatings, clothing and food will be locally sourced in the years to come.“  

 

Smart planning

The Delhi state government has studied its economy with participations from industry bodies like Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce & Industry (FICCI) and Associated Chambers of Commerce and Industry (ASSOCHAM). The study, conducted in 2015, pointed out that the allocation of resources in the state’s budget needs a revision. “One of the most significant changes was shifting for government developing Power Grid; it diffused subsidies on solar installation. Though subsidies were given by the government since 2011, the reach of it was very limited. State government started fast-tracking proposals which helped in developing solar industry in Delhi,” states Nitin Kumar, Director, Bharat Electric Solar.

 

“Connectivity and interaction among parts, machines, and humans will make production systems as much as 30 percent faster and 25 percent more efficient and elevate customization to new levels. Digitalization will majorly impact and redefine the 'productivity' criteria and measure owing to digital real-time supply chain, digital product definition and digitally crafted and run production lines,” adds Kumar.

 

Upcoming projects

DSIIDC is coming up with a multilevel manufacturing hub at Rani Khera, Mundka for the development of non-polluting light and service industries with world class facilities, in an area of approximately 147. The area will be developed with the state-of-the-art facility, which will be a multilevel manufacturing hub. The project is expected to generate employment for nearly 1.50 lakh people. The project envisages the development of approximately 70 per cent of the land as an open area, out of which 40 per cent will be a green area. Thick plantation has been envisaged to give greenery to the premises to enrich the environment.

 

The tentative cost of the project is 5000 crore and will be built in 892,584 sqm area which includes 19 industrial buildings, 6 warehouse buildings, 5 other industrial buildings and other miscellaneous provisions. This manufacturing hub will also help facilitate fast-track construction permits, electricity connections, registrations with reduced procedural levels using online platforms.In a nutshell, Delhi NCR is inching towards developing a highly-functional entrepreneurial ecosystem. This fact, coupled with expanded territory and excellent infrastructure, will attract foreign investors and pave the way for more job creation which will thereby make a direct contribution to India’s GDP. There are many enterprises in the region that are playing a significant role in enhancing the overall investment climate. In the next segment we will showcase some of the major contributors.