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Industrial Development & Economic Growth in Punjab

January, 2019

Punjab, one of the northernmost states of India, is bordered by the Pakistani province of Punjab to its west, Jammu & Kashmir in the north, Himachal Pradesh in the northeast, Haryana in the south and southeast, and Rajasthan in the southwest.

The confluence of five rivers makes Punjab’s agricultural land rich and productive. Approximately 82 per cent of the state’s land is under cultivation compared with the national average of 40 per cent.

The state’s GSDP (in Rs) increased at a Compound Annual Growth Rate of 10.2 per cent between 2011-12 and 2017-18 to Rs 4.77 trillion (US$ 74.09 billion). The state provides investment opportunities in sectors such as textiles, agro-based industries, IT & ITeS, automotive and auto components, sports goods and light engineering goods.

Punjab is also known as the ‘Bread Basket of India’ and led to first Green Revolution in the country. By 2025, it is expected that the state will be among the leading producers of non-food grains as well as exporter of various agri-products. During 2017-18, gross area sown was estimated at 7.9 million hectares. Total food grain production during 2017-18 is estimated at 31.38 million metric tonnes, as per state’s economic survey 2017-18. Horticulture production in the state reached 6,956 thousand metric tonnes in 2017-18, as per the first advance estimates. Total merchandise exports from Punjab were US$ 5.79 billion in FY18 and US$ 3 billion between Apr-Sep 2018.

Punjab’s road, rail and air transport network, connectivity, construction of bridges and infrastructure facilities are rated among the best. As of December 2018, Punjab had a total installed power generation capacity of 13,432.44 MW.

The state1 has attracted Foreign Direct Investment (FDI) equity inflows worth US$ 1.472 billion during the period April 2000 to June 2018, according to data released by Department of Industrial Policy and Promotion (DIPP). Punjab has easiest procedures to set up a business, according to a study by the World Bank and KPMG. Punjab had set up a Bureau of Investment Promotion (BIP) in December 2013 for one-stop clearance of investment proposals. BIP has powers to give approvals related to pollution control, excise and taxation, labour issues, factory licences, boiler registrations, town and country planning, land and power-related issues.

Punjab has emerged as a key hub for textile-based industries including yarn, readymade garments and hosiery. With the development of apparel parks, favourable textile policy and other incentives for the creation of textile infrastructure, the state offers opportunities for investment.

Key Sectors:

  • At current prices, the primary sector contributed 29.42 per cent of the state’s Gross Value Added in 2017-18. Food processing is considered to be a focus area in the state and the government has made various efforts in aiding deserving investments for the food processing industry. Basmati rice exports from Punjab reached US$ 991.14 million in FY18 and US$ 455.33 million between Apr-Sep 2018.
  • Punjab’s IT policy and the incentives offered to the IT industry are aimed at promoting Punjab as an attractive destination for the industry. Mohali has been developed as an IT and ITeS hub in the state.
  • Punjab is among the largest producers of cotton and blended yarn as well as mill-made fabrics in India. Ludhiana is often referred to as the ‘Manchester of India. In FY18, Punjab exported cotton yarn worth US$ 593.78 million and Ready Made Garments (Manmade Fibres) worth US$ 332.68 million.

1Includes Chandigarh, Punjab, Himachal Pradesh and Haryana


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