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Industrial Development & Economic Growth in Sikkim

December, 2018

Sikkim is one of the fastest growing states in India. The state has favourable agro-climatic conditions, which support agriculture, horticulture and forestry. As per the state budget 2016-17, Sikkim got certified as first fully organic state in India by the Central Ministry of Agriculture and Farmers’ Welfare as well as other recognized agencies of the country. It is home to around 5,000 species of flowering plants, 515 rare orchids, 60 primula species and 36 rhododendron species. This makes it one of the leading states in the Northeast region in terms of production and supply of cut flowers to mainland consumer markets. The state is also considered as a huge cardamom epicentre of the world, producing around 80 per cent of large cardamom in the country.

Between 2011-12 and 2017-18, Gross State Domestic Product (GSDP) expanded at a Compound Annual Growth Rate (CAGR) of 12.18 per cent to Rs 0.22 trillion (US$ 3.45 billion) whereas the Net State Domestic Product (NSDP) expanded at a CAGR of 12.21 per cent to Rs 0.19 trillion (US$ 3.02 billion).

According to the Department of Industrial Policy & Promotion (DIPP), FDI inflows in Sikkim* totalled US$ 4.78 billion between April 2000 and June 2018. Merchandise exports from Sikkim have increased from US$ 3.91 million in 2014-15 to US$ 13.96 million in 2017-18. During 2018-19**, the exports stood at US$ 4.30 million from the state.

The state's economy is largely agrarian, based on the terraced farming of rice and the cultivation of crops such as maize, millet, wheat, oil seeds, pulses, spices, cereals barley, oranges, tea and cardamom.

Brewing, distilling, tanning and watchmaking are the main industries located in the southern regions of Sikkim. A small mining industry exists in the state, extracting minerals such as copper, dolomite, talc, graphite, quartzite, coal, zinc and lead.

Some of the major initiatives taken by the government to promote Sikkim as an investment destination are:

  • Government of India has introduced North East Industrial Development Scheme 2017 under which all new industrial units located in eight north-eastern states in manufacturing and services sector of the state will be eligible for various incentives.
  • In September 2018, Prime Minister of India inaugurated Pakyong airport in Sikkim, the state’s first airport, which is expected to significantly boost the state’s connectivity. Passenger traffic during October 2018 at the airport stood at 2,771.
  • The state government launched Sikkim AGRISNET, an internet-based agriculture information centre, to promote scientific agricultural methods and convert research into practice in the agricultural sector.
  • In May 2018, Indian Railways has plan several projects worth of Rs 40,000 crore (US$ 6.21 billion) to construct rail links which will connect capital cities of northeast states such as Manipur, Mizoram, Meghalaya, Sikkim and Nagaland.
  • Pharmaceutical is an emerging industry in Sikkim due to tax incentives offered by the state government as well as low manufacturing and labour costs. Sikkim is home to 14 major pharma companies, which have significant investments in the state. These include Cipla, Sun Pharma, ZydusCadila, Alembic, IPCA, Alkem Lab, Intas Pharma, Torrent Pharma and Unichem.
  • During 2017-18, drug formulation and biological exports from the state stood at US$ 9.33 million. The exports stood at US$ 1.09 million during 2018-19**
  • The Sikkim government has announced a technical collaboration with floriculturists from the Netherlands and Thailand to develop the state's potential in floriculture and market cut flowers from the state globally.

Note: * - Including West Bengal and Andaman & Nicobar Islands, ** -Upto September 2018

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