why are companies rushing to invest in Uttar Pradesh?

companies rushing
Companies Rushing

Recently, the ‘Uttar Pradesh Investors Summit 3.0’ laid the foundation stone for 1,406 projects worth INR 80,000 crore. This year’s investment is higher than the previous two summits as the state attracted 81 projects worth over INR 61,500 crore in its first summit while 290 projects worth INR 67,000 crore in the second summit. According to the Uttar Pradesh Government, between 2017 and 2021, the state attracted ‘foreign investment commitments’ of INR 1.88 lakh crores. Even PepsiCo, the American snack and beverage company, has chosen Uttar Pradesh for setting up its new plant in India. The company spent over INR 1,000 crores, its largest investment in India, and is further investing INR 200 crores for increasing production. This is unlike the past as Uttar Pradesh hasn’t been an attractive destination for investments. The state boasts a large population – standing higher in the rankings than countries like Brazil, Pakistan, Bangladesh and Russia. The state also has abundant natural resources. However, the state neither has a high per capita income nor high industrial output nor is it located in the coastal region. The literacy rate is low in the state, and thus, crime has been rampant. This hasn’t changed much in recent years and it would take a while for the state to improve on those counts. So why is the state suddenly attracting investments? Political stability. For a state which only once in the past, allowed its Chief Minister to complete the full term of five years (Mayawati in 2012), the current Government has been a major overhaul, as Yogi Adityanath became the only second person to do so. To top of the same, his government has been re-elected with a majority. Change in Governments often leads to changes in policies (and political favours). For companies investing millions and billions, political stability is a must. Business investments take time to reap, and changes in policies can change the forecasted returns or even bring projects to a halt. The stability in Uttar Pradesh politics has increased the confidence of investors. The State Government with support from Central Government has been constructing expressways, subsidising interest and exempting stamp duties. The Uttar Pradesh Government even suspended the labour laws in May 2020 to save businesses from the consequences. However, it’s important to note here that these headlines are about investment commitments and not actual investments. Whether the corporates stick to their commitments or not, only time can tell us!

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