Once one of the most sought-after investment destinations, particularly for skill-driven manufacturing sectors like automobiles, Haryana seems to have lost some of its sheen with its share of new investment projects in the country tripping to a six-year low of 1.06% in 2022-23, down sharply from almost 3% in the year before.
Even as total investment outlays announced in the State fell 30% last year to ₹39,000-odd crore from nearly ₹56,000 crore in 2021-22, pushing it from the ninth-best State in terms of new investment projects to the 13th rank in 2022-23, manufacturing investments declined 60% to just about ₹9,500 crore.
The decline in fresh investment projects in the State coincides with its enactment of a new law in early 2022 that reserved 75% of private sector jobs with monthly salaries up to ₹30,000 for locals. The law is in abeyance after being challenged judicially, but the suspense over its implementation remains a worry for investors.
Maruti Suzuki, one of the State’s largest legacy investors, which announced a ₹18,000-crore project, Haryana’s largest investment in 2021-22, is now eyeing a ₹24,000 crore plant that will come up elsewhere, for instance. Compared to 2021-22, when manufacturing, industrial parks, roadways, and realty projects dominated the State’s largest investments, realty projects dominate the outlays announced in 2022-23.
“Last year, six of the top 10 projects announced in Haryana were in the real estate sector and the 32 new realty projects worth ₹17,986 crore accounted for 46% of the total fresh investment of ₹39,117.31 crore attracted by the State,” Shashikant Hegde, director and CEO of investment monitoring firm Projects Today told The Hindu. Construction projects, incidentally, tend to create more jobs for lower-skilled migrant workers.
Mr. Hegde reckoned that the fall in fresh manufacturing investments in the State could have been partly driven by the mandatory local employment law and the recent history of labour troubles for firms like Maruti. “Moreover, the State has not made much effort to project itself as a progressive State, unlike its rivals like Uttar Pradesh, and the last investor summit [Happening Haryana] was held as far back as 2016,” he pointed out.
Industry captains were guarded about the reasons behind the trend. “It is observed that manufacturing investments have been very volatile over the years and because of such volatility, we don’t see that State has any lacunae in its investment environment per se,” remarked PHD Chamber of Commerce and Industry president Saket Dalmia.
“To encourage more investments, Haryana is focusing on becoming strong internally, especially in the electric vehicles sector, with a robust policy,” noted Anjali Singh, chairperson of CII Haryana and executive chairperson of the Anand group.
“For instance, when Maruti’s 800-acre plant at Kharkhoda comes up, with a large EV unit, it can create immense potential for new business and industrial investment for Tier II and III manufacturers,” she pointed out.
Raaja Kanwar, chairman & managing director at Apollo International, said the State continues to be a top achiever in ease of doing business and is investing in improving infrastructure. But the limited industrial landscape in the belts of Gurugram, Manesar, and Faridabad, “which have reached their saturation points, may have contributed to the decline in investment”, he noted.
On the mandatory local employment law, which is sub-judice, Mr. Kanwar said: “At the moment, it is too early to comment on the sentiments, as we are still sceptical on how it will pan out.”