Despite push to lure investors, exit of units continues

With few new industries having been set up, the industrial atmosphere remained grim in the state even as efforts to rope in new investment by improving infrastructure remained high on the government’s agenda.

The migration of industry owing to inimical policies like hike in electricity duty as well as tariff generated much debate in Assembly sessions. With as many as 115 industrial units having closed in Himachal Pradesh from August 2022 to July 2025, as many as 3,350 people were rendered unemployed. The governments, however, asserted that 55 of those units had resumed operations after takeover and 3,918 persons were employed.

The state government constantly criticised the previous BJP government for giving out the state’s valuable resources to investors at a pittance in the garb of customised package. While only one unit had utilised the package to set up India’s first active pharmaceutical ingredients unit based on fermentation, no industrial activity had come up on the other two projects — SMPP Ammunition Private Ltd and Indo Farm Equipment Limited —located in the Baddi-Nalagarh industrial area despite lapse of nearly three years.

SMPP was supposed to fetch an investment of Rs 3,000 crore and employ 5,000 persons directly and indirectly while the Indo Farm Equipment Limited was supposed to set up an automobile components factory for tractors and cranes, etc. where 30 to 40 ancillary units were supposed to be set up. Despite the Chief Minister persistently announcing review of these projects, nothing has been done to retrieve the unused land.

The new investment has shrunk considerably, notwithstanding the expansion plans of some existing industries. While the stamp duty has doubled, the electricity duty and power tariff were among the highest in the region, keeping investors at bay.

A total of 189 plots were carved out in 20 industrial areas in the state in the past three years. The work on creating the basic infrastructure is under way on 149 plots, while land development and construction of buildings are under way on 38 plots.

Industries Minister Harshwardhan Chauhan ventured for an international outreach visit to Japan, Hong Kong and Vietnam in September-October. Aimed at highlighting the state as an ideal investor destination, it showcased potential opportunities across sectors with a focus on pharmaceuticals, manufacturing, tourism and electric vehicles.

Facing a severe cash crunch, the endeavour of the state Industries Department to provide ready-to-use industrial plots equipped with basic facilities like road, power, sanitation, etc stood defeated even as it was trying to create a land bank in the state.

The central government’s initiative of boosting domestic production through a medical device park at Nalagarh came a cropper after the state government returned the Rs 30 crore granted as initial financial assistance. The work on this 1,623-bighas land at Gheed and Teliwal villages of Manjholi gram panchayat in Nalagarh subdivision was halted in November last year. Though a Cabinet sub-committee has been pondering over gainful utilisation of its 300 acres, no headway has been made in this direction. Putting the land to any other use will, however, be fraught with technicalities and will be contrary to the environmental clearance secured for setting up the device park.

On the other key central project of setting up a bulk drugs park in Una district, securing the environmental clearance more than three years after the project was approved is its lone achievement. Aimed at attaining self-reliance in manufacturing pharmaceutical raw material, the project is nowhere near completion through some infrastructure work is under way.

In the past three years, 407 start-ups have been incubated with 107 ventures having been commercialised, reflecting an amicable startup-ecosystem though officials were reluctant to share details of this year’s success.

The state government is yet to bring out its new industrial policy in the last three years even as the Himachal Pradesh Industrial Investment Policy-2019 expired on December 31. Investors are eagerly awaiting amendments in the industrial policy of 2019 after the Chief Minister announced to grant incentives and concessions, including subsidised power to attract investment.

With no central incentive available to the investors for setting up their units in the state, the investors pinned their hopes on state-level incentives.

In a major relief to the state’s industry, the High Court restrained the state government from collecting additional goods tax (AGT) in May. Imposed for dispatch of goods for transport for every slab of 250 km being covered by the road within the state, this state-level levy was termed illegal, unjust and contrary to the objective and spirit of the GST Act, 2017 besides being a violation of the provisions of the Constitution. Industry has been seeking a similar relief in the other-level levy — Certain Goods Carried by Road Tax —which too has made their business uncompetitive in the region.

The icing on the cake has been 90 new industrial and 42 old projects receiving the single window clearance this year which will fetch an investment of Rs 2,125 crore and Rs 2,375 crore, respectively, while employing 15,100 people when those commence production after years.