Notwithstanding Chief Minister Mamata Banerjees’ thrust on industrial development, her first five years failed to allure the investors. This was despite the fact that West Bengal has an edge over other states in terms of abundant natural resources, surplus electricity, big land bank and skilled manpower (owing to three big technical and academic institutions in Kolkata).

Why were the investors reticent to Mamata’s call for investment? Was the Singur hangover looming large, or, the investor’s hopes were sullied after the Mamata government failed to announce any concrete industrial policy. To attract investors, It is a prudent practice for any new government to draw an well articulated industrial policy, including incentives and the roles of public and private sector. Andhra Pradesh is a case in point where the Chief Minister N. Chandrababu Naidu announced a new industrial policy within a year after the bifurcation of the State in June 2014.

Chief Minister Mamata Banerjee’s hell-bent to re-model the West Bengal’s industrial map based on automobile growth raises more eyebrows than hope, from the viewpoint of viability. Her assertiveness to make the State an automobile hub by inviting BMW against her global image of anti-industry, needs to be viewed through lenses from the angle of persuasion of global auto leader.

In her support, she proclaimed that the State has a big land bank. Land has become a crucial factor for the investors in the country, after the Land Bill failed an easy passage in the Parliament. But, the experts are dubious over her claim. According to State government data there is one lakh acres of land in the land bank. But, it is difficult to find a big area of contiguous land , required for setting an automobile plant , according to the experts. Given the situations, will the German be tempted to invest in West Bengal, even though the State is equipped with surplus electricity, big land bank, big potential for border trade with Bangladesh , which does not have any automobile plant and the new Myanmar , an emerging market after the change of the government ?.

Time is not ripe to churn out a big hope for auto giants and MNCs to invest in West Bengal, given the high risk factor. Financial institutions and banks will be reluctant to render their support. In this scenario, the industries with low and middle level investment, coupled with high potential for employment opportunities, are more viable for the State. To this end, the lessons from Bangladesh garment industry and Vietnam supporting industry are warranted.

Today, Bangladesh is the second biggest manufacturing base for garment in the world. Even the Chinese are now turning to Bangladesh to make clothes, despite China is the global leader in clothing manufacturing and exporting. The appreciation of Chinese currency, renminbi, led China lose its paradise for cheap production. Wages in Bangladesh clothing factory is one-fourth of China and is expected to be more cheap with the unabated appreciation of renminbi .

The garment industry is a major force in Bangladesh economy. It is the biggest source of export earning, contributing over 75 percent of Bangladesh exports.

Garment is one of the major labour –intensive and low-capital intensive industries that provides gateway for the industrialization of the premises which can be re-built from the scratches. It offers important opportunities to start industrialization of the dormant economies. Low wage is the key factor to catalyze the growth of garment industry. Automation has little scope in garment industry.

Wages in West Bengal are very low. Given this opportunity and with surplus land, West Bengal can be the hub for development of garment industry. It will have large impact on employment opportunities , especially for women, and the development of small-and medium scale industries, having a spill-over impact on the informal industries. In Bangladesh, the garment industry employs about 3.6 million people directly.

Success stories of supporting industry in Vietnam should provide some tips to West Bengal to leverage its industrial growth. Supporting industries are group of manufacturing industries within a country that supply parts and components or process them for the assemblers, such as automobile, electronics and precision equipments. Supporting industry is low cost capital intensive and high –skilled labour intensive industry.

In Vietnam, supporting industry proved to be boon to the growth of domestic component and parts industries. For instance, the country has reached 90 percent of localization in manufacturing motorbikes. While developing supporting industry, foreign investors played an important role. In the localization process, most of the investors in first tier for motorbike were Japanese and Taiwanese firms. Vietnam is the second biggest manufacturer of motorbikes in ASEAN. Thus, FDI leveraged the success of supporting industry in Vietnam.

Mobile phone manufacturing is a supporting base industry. In India, until two years ago, a few were manufacturing mobile phones, despite it being the second biggest user in the world. Today, the country is meeting nearly 45 percent of the mobile phone demand in the country. According to Telecom Minister Ravi Shankar Prasad.

The dramatic jump –start in manufacturing of mobile phones represents the country’s zeal to make India a hub for electronic industry. A wide gap exists between demand and domestic supply in the electronic industry. Nearly 59-60 percent of the domestic demand for electronic industry is met by imports. West Bengal can be an ideal place for manufacturing or assembling mobile phones in the country.

There are several factors which can favour West Bengal as the destination for mobile phone and electronic hardware manufacturing. Low wage, big land bank with low land price and surplus electricity can prove propitious for development of supporting industries for electronic goods in West Bengal.

Therefore, to start with, labour intensive and low capital industries are warranted in West Bengal. To this end, the investors in garment and supporting industries should be allured. In the run up, foreign investors can be allured in the development of supporting industries in West Bengal. (IPA Service)