Tucked away in a corner of the Phase VI Industrial Area, in a building that has clearly seen better days, is the District Industrial Centre (DIC), the nodal office for industry in Ajitgarh city, better known as Mohali. “We have great infrastructure, regular power supply at competitive rates, ample skilled manpower, an international airport, great work environment, and a government sensitive to the needs of the industry,” said DIC general manager Harjinder Singh Pannu, a jovial, friendly individual who goes out of his way to emphasize that Mohali is the best destination for industry in the North.
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The problem is, all that was true, once. Today, not so much. In recent years, Mohali has been witnessing a steady decline in manufacturing activity with the closure of many units who have moved to more favourable places. Companies like Philips India, Agro Dutch, Fertichem, Milk Specialities Ltd, Cheema Spintex, Spray Engineering, and Sigma are among the large manufacturers that have either totally closed shop or moved to other industrial areas. A majority of the 1500 or so units (mostly in MSME sector) that have closed down over the last 10 years are from manufacturing.
Conservative estimates are that the closure has led to over 17,000 workers getting laid off over the last 10 years across sectors such as auto-parts, agri-business, textiles, pharmaceuticals, food processing and the like. “My company suddenly shut down shop in 2014,” said Mohan Lal, an auto-parts worker who now sells eatables in a cart, “Since then I have taken to selling eatables to office goers. My clientele is mainly people from the computer sector.”
Interestingly, most owners of units that have closed down have retained the land and deployed it for other commercial purposes such as office buildings for the service sector, commercial complexes or residential complexes wherever permitted.
The beginning of growth
Famous for its international cricket stadium, Mohali, along with Panchkula in Haryana forms the Chandigarh tri-city area. The city traces its origins to a cluster of villages adjacent to Chandigarh. The need to develop Mohali as an urban centre was felt after the trifurcation of Punjab into Punjab, Haryana and Himachal Pradesh (certain Punjab areas were transferred to Himachal Pradesh) in 1966 and declaration of Chandigarh (Punjab’s Capital) as a Union Territory. The then Punjab government felt it necessary to have a major urban centre of its own adjacent to Chandigarh for administrative reasons.
In 1967, the area adjoining village Mohali was designated as an industrial area. With the growth of Chandigarh, Mohali too came into its own as a residential and commercial hub. The Punjab government has tried to replicate the planned layout pattern of Chandigarh in the development of Mohali, but with mixed success. In 2006, the government carved out the 1093 square kilometre Mohali district from areas falling in Patiala and Ropar.
Compared to other industrial hubs in the state like Ludhiana, Mohali scores better on infrastructure. Its proximity to Chandigarh – India’s first planned city – ensures that it is able to attract professionals from across the country. But all this has not helped Mohali’s manufacturing units to survive.
From the beginning, the Mohali industrial hub has been dominated by manufacturing, especially auto-parts Original Equipment Manufacturers, mostly in the small and micro sector. But as new technology and automation began to gain ground in manufacturing, Mohali’s manufacturing segment began to feel the pinch and the character of the industrial hub began to change.
Currently, together with the smaller adjoining industrial cluster at Derabassi, the DIC at Mohali caters to a total of 12,587 registered units (data given by DIC, Mohali). Of these 9610 are micro units, 4480 are small scale, 212 medium sized units, and 42 are large scale units. Of the total, the service sector, comprising mainly IT and IT Enabled Service (ITES), now account for 7043 units compared to 4913 in manufacturing. The average turnover of industrial units in Mohali is Rs 1 to Rs 10 crore.
But market conditions have changed, especially with the auto industry slowdown forcing closure of many units. “The manufacturing sector has little scope of further growth in Mohali,” said Says R S Sachdeva, Chairman, PHD Chamber of Commerce and Industry (Punjab), even though he described Mohali as “an industrial hub with comprehensive support systems”.
Decreasing availability and rising cost of land is one reason for the decline of Mohali as a manufacturing hub. The Mohali industrial hub is divided into nine distinct land units, with two of them designated for the IT industry with additional land made available for expansion. IT major Infosys had acquired a 50-acre plot for its Rs 425 crore IT complex, which is now operational. Whereas the government has fixed a price of Rs 16,000 per square yard for industrial land, due to non-availability, the market price is a whopping Rs 30,000.
The opportunity cost of capital involved makes it more attractive for manufacturing units to shift to newer centres like the nearby Kharar in Punjab or Baddi in Himachal Pradesh and use their Mohali land for commercial purposes. “I plan to shift my Mohali unit (manufacturing LEDs) to Kharar in the next one year or so,” said R S Sachdeva.
As per industry sources, the Mohali-based Mahindra group owned Punjab Tractors Limited have cut down production by 25 per cent sending shock waves through the local ancillary units. “I see the slowdown lasting another year or so before we are able to emerge from it,” said Sachdeva.
The new problems
Given Mohali’s landlocked geography, the other issue manufacturing units face is transportation costs, which raises the cost of products as compared to cities that lie on the coastline or are nearer to the ports and other transportation hubs. An issue which Sachdeva would like the state and central governments to address. “We incur extra costs on account of this. The Government of India ought to remove disparities due to such factors between various states,” said Sachdeva.
“Land availability is a major issue,” said B S Anand, Director Jupiter Aqua Lines, a leading bathroom fittings company. “Today even a 1000-square yard plot for expansion is not available.” Manufacturers like Anand also cite lack of skilled manpower as a major hurdle in their growth. “Skilled manpower is simply not available. We have a number of private universities in the region churning out huge volumes of engineers year after year. But they are simply not employable. Most of them cannot even hold a vernier caliper. They come with high expectations, but very low skill quotient. These private institutions are nothing more than glorified education shops”.
It is thus not surprising that the Punjab Government has dropped manufacturing and is now promoting Mohali as a commercial hub, an IT destination, an education hub and a bio-technology hub. Mohali has India’s biggest IT incubator at its Software Technology Parks of India (STPI) facility, which houses a large number of small and medium sized companies mainly engaged in back office, offshore operations for overseas clients. It also boasts of some top line state run educational institutions including Indian School of Business, National Institute of Pharmaceutical Education and Research, and Indian Institute of Science Education and Research, National Institute of Nano-Technology, and National Institute of Bio-Technology among others.
“Mohali is witnessing an upsurge in the IT and ITES sector,” said Connect Broadband Vice President Sanjay Bahl. “Companies providing IT services, especially those providing offshore services have come up well. Presently, a majority of our customers come from that segment.”
In order to boost investment in the state, the Punjab Government is organising its flagship Invest Punjab Summit at Mohali in December 2019, with Mohali being promoted as the state’s flagship investment destination. The government claims to have attracted investments worth Rs 50,540 crore with a potential to generate 1.7 lakh jobs, during its first two years. But the actual ground situation: In 2010, the MSME sector in the Mohali hub accounted for 70 per cent of the total employment, employing 35,689 workers. Nine years later, the employment level has increased marginally to 43,729 (DIC data) with new jobs mainly in the IT and ITES sector.
The way forward
Even during the good times, industry in Mohali industry has done well in patches. Small manufacturing segments such as bathroom fittings, medical aids, solar power and auto-part OEM vendors for railway, and tractor manufacturers have done well in the past. Industry associate Hardeep Singh feels that these industries need to be organised in clusters to take advantage of the numerous schemes for MSME sector.
“On the other hand, IT sector has witnessed an exponential growth and this I feel would be the mainstay of Mohali in the coming years,” said Hardeep. “Mohali is uniquely suited for a Food Park given the agrarian nature of the Punjab economy. It will boost the agri and livestock produce and is a promising sector to take the Punjabi palate in a packaged form to the world.”
Also, Mohali today is the prime manufacturer of sanitary and bathroom fittings in the country. The Central government is setting up its first common facility centre, especially for the bathroom fittings cluster, at a cost of Rs 14 crore in the industrial hub. The Centre is being funded under the GoI’s MSME cluster development programme. It will entail setting up of an Advanced Casting Facility, a Tool room, a laboratory, design centre, and a training centre. “This is the first cluster under the cluster development program in Punjab,” said B S Anand, who is co-ordinating the effort from the industry end.
The Mohali area has around 100 units engaged in the manufacture of bathroom fittings. Most of these are labour-intensive small-scale units. “The small-scale units do not have the wherewithal to access new technology,” said Anand. “The new facility will be available to other units as well apart from bathroom fittings units. We are sure this facility will give a boost to our exports as well”.