Compared to two erstwhile summits, the January summit is expected to reinvigorate hopes, in the backdrop of Chief Minister Mamata Banerjee’s second victory in the State assembly election in May 2016, which was overwhelming. This victory reinforces the confidence of West Bengal people in her leadership.

But, the victory was with a caveat. Chakri Chaee (need jobs) is the growing chorus in the state. People’s confidence in her leadership has been tampered into a new trajectory of growth that is, enhancing employment opportunities. They would like to taste the better living with better earnings. Better earnings mean better employment opportunities. Better employment opportunities can be attributed by growth in manufacturing activities.

To this end, she vied for German heart, BMW, to invest in West Bengal on her way back to Germany from Vatican after attending Mother Teresa’s canonization. This raised eyebrows of investors and think tanks over her volta-face against the earlier posture to Tata, saying goodbye to his Nano car project.

Her call to the investors in her first term in 2011, after taking oath as Chief Minister of West Bengal, exhilarated big domestic investors. A planeload of investors landed at Kolkata airport to have glimpse of her first hand investment friendly image. But, soon the hopes sullied. Not a single big investment flowed into the state during her first term.

Her failure to entice the domestic investors forced her to vow for foreign investment. Now, the big question lies whether it is feasible to set up a big automobile factory in the state. Can West Bengal provide the potential infrastructure required for an automobile giant like BMW , given the present manufacturing practices in the world ?.

Structurally, the automobile is a value-chain or component based industry. In Japanese terminology, it is known as supporting base industry. It is a conglomeration of assembly and component manufacturing units with a close relation of inter-dependence and proximity. Therefore, setting up of a major automobile factory requires development of component and parts industry within the vicinity of the assembly plant.

If BMW sets up a car factory in West Bengal, it needs to develop component and parts manufacturers in West Bengal. West Bengal is a tip in the iceberg in auto component making industry. In near term, it is difficult to develop. The company has to source component and parts from Tamil Nadu and Haryana – the hubs of Indian auto components. Procurement from Tamil Nadu and Haryana are less cost effective because of long distant transit costs. Import of component and parts are not economically viable because of high customs duties and currency fluctuations. Against this backdrop, West Bengal cannot be the appropriate destination for an automobile giant.

Experiences of Suzuki of Japan and Hyundai of South Korea should be important lessons for the state government. Maruti-Suzuki of Japan developed manufacturers of critical component and parts in Haryana near to its plants in Gurgaon and Hyundai Motor of Korea brought 17 subcontractors from Korea in Tamil Nadu, near to its plant in Sriperumbudur

Chief Minister Mamata Banerjee chanted for a large land bank in West Bengal, compared to other states. But, the big investors are dubious over the potential benefit of the land bank. This is because few big land are available in contiguous nature. Mostly they are small plots. According to State government data, there is one lakh acres of land in the land bank. But, it is difficult to find big areas of contiguous land. Against this backdrop, will the German company be tempted by her proclamation of land bank?

Against the backdrop of present industrial structure of West Bengal, the industries with low and middle level investment and of labour intensive criterion are appropriate for industrialization. To this end, experiences of Vietnam and Bangladesh would be pertinent for the growth industries in West Bengal. Success stories of ‘Supporting industry” model in Vietnam and trigger in garment industry in Bangladesh can provide some tips to West Bengal.

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 labour intensive with high-skilled labour.

In Vietnam, Supporting industry proved boon to the growth of domestic automobile industry. The country has reached 90 percent of localization in manufacturing motorbikes. Vietnam is the second biggest manufacturer of motorbikes in ASEAN. Foreign investors played an important role in the development of supporting industry. This led to flow of foreign investment in Vietnam.

Apart automobile, electronic industry is a Supporting base industry. Manufacturing of mobile phone and other electronic equipment industries can be attractive areas in West Bengal. They are labour intensive and low cost industries, owing to almost zero custom duty on cheap components. There are several factors which favour West Bengal as the better destination for mobile phone and electronic manufacturing. Cheap wages, low land price, surplus electricity and availability of highly skilled labour forces, owing to three big technical education institutes can prove propitious for development of mobile and electronic manufacturing in West Bengal

In Bangladesh, garment industry is a major driving force for industrialization. It is the second biggest exporter of garment in the world after China. It contributes 75 percent of Bangladesh exports.

Garment is labour-intensive and low-capital base industry. It provides start-up platform for re-building of industrialization. Low wage is the catalyzing factor for the growth of garment industry. Automation has little scope in garment industry. Given the factors which are favourable for the growth of garment industry, West Bengal can be an ideal place for setting up garment industry.

Therefore, labour intensive and low capital base industries are warranted in West Bengal. To this end, the investors in garment and supporting industry base manufacturing should be incentivized. In the run up, foreign investors can be allured in the development of supporting industries and garment in West Bengal, on the lines of Vietnam and Bangladesh. (IPA Service)