Industries of Odisha

Industries of Odisha: Odisha, is blessed with abundant and diverse mineral resources, making it one of the mineral-rich states in the country. The region is known for its vast reserves of high-grade iron ore, bauxite, chromite, and manganese ore, along with several other minerals like coal, limestone, dolomite, tin, nickel, vanadium, lead, graphite, gold, gemstones, diamonds, and dimension stones.

The presence of such a wide range of minerals in Odisha has created significant opportunities for establishing mineral-based industries. The state offers a favorable environment for the manufacture of various products such as steel, ferro-alloys, cement, alumina/aluminum, refractories, and thermal power generation. These industries benefit from the availability of raw materials in close proximity, reducing transportation costs and ensuring a steady supply.

The abundance of high-grade iron ore in Odisha has attracted major investments in the steel industry. Several large steel plants have been set up in the region, utilizing the state’s rich iron ore reserves to produce steel in various forms, catering to both domestic and international markets. The presence of other essential minerals like manganese ore and chromite further supports the production of ferro-alloys, which are crucial additives in steelmaking.

Bauxite, another significant mineral found in Odisha, is used in the production of alumina and aluminum. The state’s reserves of bauxite have led to the establishment of alumina refineries and aluminum smelters, contributing to the production of aluminum-based products for industries such as construction, transportation, packaging, and electrical sectors.

Odisha’s mineral wealth also supports the production of cement, a vital building material. Limestone and dolomite, essential components for cement manufacturing, are readily available in the state. Numerous cement plants have been set up, supplying cement to meet the growing demands of infrastructure and construction projects in the region.

The presence of minerals like coal and nickel has encouraged the establishment of thermal power plants and nickel-based industries, respectively. Coal is a primary source of energy for power generation, and Odisha’s coal reserves contribute to the generation of electricity to meet both local and regional needs. Nickel, a versatile metal with numerous industrial applications, is utilized in sectors such as stainless steel production, batteries, aerospace, and electronics.

Odisha’s mineral resources have also paved the way for the development of downstream industries. Various auxiliary and ancillary industries have emerged, providing support services, equipment, and materials to the primary mineral-based industries. These include mining equipment manufacturers, logistics and transportation companies, mineral processing units, and research and development institutions focused on mineral extraction and utilization.

Furthermore, the state’s rich deposits of gemstones, diamonds, and dimension stones have fostered the growth of the gem and jewelry industry and the production of ornamental and decorative stones. Odisha is known for its exquisite gemstones such as garnets, sapphires, emeralds, and alexandrites, which are used in jewelry and high-end luxury items.

Overview

Odisha’s economy thrives on a robust industrial base, which acts as a driving force for both the primary and tertiary sectors. The industrial sector in the state has consistently outperformed the overall Gross State Value Added (GSVA) growth, with an average annual growth rate of 6.6 percent since 2012-13, compared to the overall growth rate of 5.7 percent. In contrast, the services sector and agriculture sector have grown at rates of 5.7 percent and 4.8 percent, respectively. This average industrial growth in Odisha surpasses the national average growth rate of 4.8 percent during the same period. The state’s success in achieving higher industrial growth can be attributed to the establishment of a progressive ecosystem governing the industry sector, facilitated by the state government’s initiatives to attract investors and make Odisha an attractive investment destination.

According to the advance estimates for 2022-23, Odisha’s industrial sector has performed significantly better than the national average, growing at six percent compared to India’s four percent. Each year, the pace of industrialization in Odisha continues to accelerate as various industries contribute to its growth.

Odisha’s extensive 480-kilometer coastline presents additional opportunities for the development of maritime industries. The state is supported by three important seaports – Paradip, Gopalpur, and Dhamara – which provide a strategic platform for international trade, essential for marketing industrial goods. Furthermore, industrial diversification is a key aspect of the state government’s new industrial policy, attracting investments in various sectors such as food processing, chemicals, textiles, and IT. These industries not only add significant value but also generate employment opportunities.

A report by the Asian Development Bank (ADB) highlights that Odisha offers one of the lowest costs of doing business in India, considering factors such as industrial electricity tariffs, industrial land costs, water tariffs, and competitive skilled labor wages. The state’s “GO-SWIFT” initiative, a single-window system supporting industries throughout their investment lifecycle, has been recognized as a best practice by the Government of India.

Odisha has made significant strides in developing its logistics infrastructure and services and has emerged as a power-surplus state. These factors are expected to attract more investments and contribute to the state’s long-term growth. The promotion of Micro, Small, and Medium Enterprises (MSMEs) has also gained momentum through various policies and facilitation measures, including initiatives under the Start-up Policy and the establishment of the O-Hub. These efforts aim to ensure that the benefits of economic growth reach the local level. To meet the demands of MSMEs, the financial sector can introduce customized and innovative collateral-free lending products, such as cash-flow-based lending, which focuses on the business’s cash flow rather than physical assets. Fintech has emerged as a viable alternative to traditional financial institutions in this lending market. The Government of Odisha is also implementing several Government-to-People (G2P) transfer schemes to enhance the digital footprint of underserved populations and MSMEs.

Sectoral performance

As of the fiscal year 2022-23, the manufacturing sub-sector has become the largest sub-sector within the industry sector in Odisha. It is followed by mining and quarrying, construction, and electricity, gas, water supply, and other utility services. To analyze the growth trends in different periods – pre-Covid, during Covid, and post-Covid – the growth rates of these sub-sectors and the overall industry sector have been observed for four distinct periods: 2001-02 to 2010-11, 2011-12 to 2018-19, 2019-20 to 2020-21, and 2021-22 to 2022-23.

During the period from 2001-02 to 2022-23, the industry sector in Odisha experienced a growth rate of 7.7 percent. The growth rate was 9.6 percent from 2001-02 to 2010-11, which was higher than the 8.1 percent growth rate observed during the period from 2011-12 to 2018-19. A similar pattern is observed in the other sub-sectors of the industry sector. The growth rate from 2011-12 to 2018-19 was relatively lower compared to the growth rates observed from 2001-02 to 2010-11. The reasons for this lower growth may be attributed to macro-level decisions at the national level.

During the Covid-affected years of 2019-20 and 2020-21, the industry sector, along with its sub-sectors of mining and quarrying, manufacturing, and construction, experienced contraction, with average contractions of -4.2 percent, -8.1 percent, -2.8 percent, and -5.3 percent, respectively. The mining and quarrying sub-sector was particularly impacted more severely compared to the other two sub-sectors. The restrictions imposed during the Covid pandemic resulted in a complete halt in extraction activities, which greatly affected the mining sub-sector in Odisha.

In addition to the impact of the Covid pandemic, the slow growth observed in the sub-sector of electricity, gas, water supply, and other utility services may be attributed to the growth of captive power plants. Captive power plants are industrial units that generate power for their own consumption, reducing the industrial demand for power from distribution utilities. However, apart from the sub-sector of electricity, gas, water supply, and other utility services, all other sub-sectors of the industry contracted during the Covid pandemic period, albeit with varying proportions.

Structural shift of sub sectors of Industry

It is noteworthy that among the four sub-sectors of the industry sector, the manufacturing sector holds the highest contribution, followed by mining and quarrying, construction, and electricity, gas, water supply, and other utility services. The industry sector’s share of the state’s Gross State Value Added (GSVA) was 35.7 percent in 2000-01, which increased to 43.1 percent in 2006-07 and remained at 42.5 percent in 2018-19. On average, the industry sector contributes between 35-40 percent to the GSVA, with the manufacturing sub-sector showing a growing trend. The manufacturing sub-sector’s contribution increased from 14 percent in 2000-01 to 23.2 percent in 2018-19, with a slight decline to 21.5 percent in 2021-22, fluctuating in between.

The share of the mining and quarrying sub-sector, which was 8.37 percent in 2006-07, reached 10.8 percent in 2021-22. Since 2006-07, its contribution has remained within the range of 8-11 percent. The construction sector’s contribution has remained between 6-9 percent, except for the year 2000-01 (11 percent). On the other hand, the electricity, gas, water supply, and other utility services sector, which had a contribution of 6-7 percent from 2000-01 to 2006-07, declined to a minimum level of 2.9 percent in 2022-23, indicating a downward trend. Overall, it can be concluded that within the industry sector, the manufacturing sector is expanding, while the electricity, water supply, and other utility services sector is contracting. The mining and quarrying sub-sector and the construction sub-sector have approximately remained static with slight year-to-year fluctuations.

In terms of the industry sector’s composition, the manufacturing sub-sector accounted for 39 percent in 2000-01 and increased to 54.7 percent in 2022-23 (advance estimates). The share of electricity, gas, water supply, and other utility services, which contributed 16.6 percent of the total industrial output in 2000-01, reduced to 6.9 percent in 2022-23. The mining and quarrying sub-sector’s contribution within the industry sector remained around 19-27 percent, except for the year 2000-01. Similarly, the share of the construction sub-sector in the industry sector ranged from 14-23 percent, except for the year 2000-01.

Mineral Based Industries

Located strategically on the map of India, Odisha holds significant mineral reserves, including 28% of the country’s iron ore, 24% of its coal, 59% of its bauxite, and an astonishing 98% of its chromite deposits. This abundance of minerals has attracted the attention of numerous mining and metallurgical companies to the state, capitalizing on its comparative advantage in this domain. Industrialization in Odisha commenced shortly after India gained independence, with the state’s oldest mines situated in Talcher and the Ib Valley. Following the nationalization of coal in 1975 and the subsequent implementation of national energy sector policies, a multitude of power plants emerged throughout the state.

Presently, major industries in Odisha encompass integrated steel plants in Rourkela, Kalinga Nagar, Jharsuguda, and Angul, while NALCO (National Aluminium Company Ltd.) operates an alumina plant in Damanjodi and an aluminum smelting complex in Angul. The state is also home to thermal power plants in Talcher and the Ib Valley area, as well as fertilizer plants, pulp and paper industries, ferro alloy plants, cement plants, and more scattered across different regions. Industrial growth in Odisha has primarily occurred in areas where there is ready availability of raw materials, water, and power. Based on the distribution of minerals, the state can be divided into twelve industrially active zones or areas:

Rajgangpur Area: Specializing in iron and steel, sponge iron, cement, secondary steel, melting and rolling mill, refractories, and chemicals.
Ib Valley Area: Focused on thermal power, sponge iron, refractories, and coal mines.
Hirakud Area: Engaged in aluminum production and rolling mills.
Talcher-Angul Area: Home to thermal power plants, aluminum facilities, coal washeries, ferro alloy units, and coal mines.
Choudwar Area: Known for ferro alloy production, thermal power generation, pulp and paper manufacturing, and coke oven operations.
Balasore Area: Housing pulp and paper industries, ferro alloy plants, and rubber manufacturing facilities.
Chandikhol: Dominated by stone crusher units and coke ovens.
Duburi: Hosting integrated steel plants, ferro alloy factories, and rubber industries.
Paradeep Area: Specializing in fertilizer production, seafood processing, and petroleum coke manufacturing.
Khurda Tapang Area: Focused on stone crusher operations.
Joda Barbil Area: Engaged in iron ore mining, sponge iron production, ferro alloy manufacturing, iron ore crushing, and mineral processing.
Rayagada Area: Involved in pulp and paper production and ferro alloy processing.

Keonjhar, a prominent mineral-producing district in Odisha, holds a significant place on the country’s mineral map. Iron ore formations cover a major portion of the district, extending from the Bihar border in the north to the Jajpur border in the south. Extensive deposits of manganese ore can be found in Thakurani and Joda East hills of Barbil. Two important mineral-based industries in the district are the “Kalinga Iron Works” in Barbil and the “Ferro-Manganese Plant” in Joda. Notably, the Boula area near the village of Nuasahi in the Anandapur subdivision houses significant deposits of chromite, a valuable and strategic mineral. Additionally, the district boasts other mineral deposits such as quartzite, bauxite, gold, pyrophyllite, and limestone.

Aluminium Industries

Odisha, known for its rich mineral resources, has emerged as the highest producer of aluminum in the country. The state has witnessed significant investments and expansion plans in the aluminum sector, further strengthening its position as a major player in the industry.

One of the key players in the aluminum sector in Odisha is the National Aluminium Company Limited (NALCO). To boost aluminum production, NALCO has undertaken ambitious expansion projects:

Angul District: Plans to expand its aluminum smelter by 0.5 million metric tonnes per annum (MMTPA) with an estimated investment of INR 10,000 crore.
Damanjodi: Expanding its alumina refinery from 2.275 MMTPA to 3.275 MMTPA, investing more than INR 4,000 crore.

The private sector has also made substantial investments:

Hindalco Industries Limited: Establishing a 0.375 MMTPA Aluminium Flat Rolled Product plant at Lapanga with an investment of INR 5,000 crore.
Vedanta: Expanding its alumina refinery capacity by 5 MMTPA at Kalahandi and its aluminum smelter capacity by 0.2 MMTPA at Jharsuguda. This expansion is expected to create employment for approximately 7,700 people.

To promote downstream industries, NALCO has allocated 50,000 tonnes of hot metal to the Aluminium Park at Angul, a joint venture with the Industrial Development Corporation of Odisha (IDCO).

Textiles and Apparel

Odisha has a rich history in textiles, renowned for designs like Sambalpuri, Bomkei, and Berhampuri, and the Ikat weaving technique. The “Odisha Apparel & Technical Textiles Policy, 2022” aims to boost employment in:

Garments, apparel, and made-ups.
Technical textiles: Agrotech, clothtech, hometech, meditech, sportech, etc.
Support activities like ginning, spinning, and weaving.

Major players attracted to the state include M/s. Sahi Exports Pvt. Ltd., M/s. Aditya Birla Fashion & Retail Ltd., M/s. Wild Lotus Ltd., and Jockey India Pvt. Ltd. Infrastructure includes the Apparel Training and Design Centre (ATDC) and a center of the National Institute of Fashion Technology (NIFT) in Bhubaneswar.

New Developments:

Dhamara Port: A Textiles and Apparel Park (1,000 acres, INR 6,500 crore investment).
Malipada (near Bhubaneswar): A park covering 800 acres (INR 6,000 crore investment).
Bhadrak: A Technical Textile Park anchored by a 300 KTPA IOCL Polyester and Fiber plant.

Chemicals, Plastics and Petrochemicals

This sector has emerged as a key focus area, largely driven by the Indian Oil Corporation (IOCL).

Paradip Refinery: A massive 15 MMTPA refinery that serves as a crucial hub.
Polypropylene Unit: Provides raw materials for the Plastic Park in Paradip.
Ongoing Projects: Mono-Ethylene Glycol (MEG) and Paraxylene-PTA units are in various stages of implementation.

Food Processing (Including Seafood)

With ten agro-climatic zones and over 60 lakh hectares of cultivated land, Odisha is an agricultural powerhouse. The Food Processing Policy (2016) provides incentives to tap into this potential.

Key Infrastructure:

Food Parks: Established in Khordha and Rayagada.
Seafood Park: A dedicated facility in Deras catering specifically to seafood processing.

Economic Impact: The Gross Value Added (GVA) in food product manufacturing saw a massive jump from INR 49,089 lakhs in 2016-17 to INR 1,48,100 lakhs in 2017-18, generating significant new employment and reducing post-harvest losses for farmers.

Electronics & IT Sector

The Government of Odisha is actively promoting the Electronics and IT sector through various strategic policies and infrastructure developments.

Policy Support: The Odisha IT Policy, 2022, and the Odisha ESDM (Electronic System Design and Manufacturing) Policy, 2021, have been implemented to create a conducive ecosystem for investment.
Key Infrastructure:
- Infocity and Infovalley: Dedicated IT hubs in Bhubaneswar providing world-class infrastructure.
- OCAC Tower: A state-of-the-art facility for IT/ITES companies.
- STPI (Software Technology Parks of India): Multiple centers across the state, including Bhubaneswar, Rourkela, Berhampur, and Balasore.
Emerging Areas: Focus is being placed on Data Centers, Cyber Security, and BPO/KPO services.
Prominent Players: Global leaders like TCS, Infosys, Wipro, Tech Mahindra, and Mindtree have established a significant presence in the state. Recent additions include Deloitte and IBM, further strengthening Odisha’s position as an emerging IT hub in Eastern India.

Tourism Industry

Odisha’s tourism industry is a major contributor to the state’s economy and employment. Known as the “Soul of Incredible India,” the state offers a blend of heritage, nature, and adventure.

Niche Tourism Segments: The state is shifting focus toward high-value niche segments:
- Eco-Tourism: Utilizing the state’s 31% forest cover and wetlands (e.g., Chilika Lake).
- MICE Tourism: Meetings, Incentives, Conferences, and Exhibitions.
- Sports Tourism: Bhubaneswar is recognized as the “Sports Capital of India,” hosting international events like the Hockey World Cup.
Key Circuit: The Swarnatribhuja (Golden Triangle) comprising Bhubaneswar, Puri, and Konark remains the most visited circuit.
Infrastructure Initiatives: The “Eco-Retreat” model has been successful in promoting luxury glamping at various scenic locations across the state.

MSME Sector

The Micro, Small, and Medium Enterprises (MSME) sector is the backbone of Odisha’s industrial landscape, providing maximum employment opportunities next only to agriculture.

Policy Framework: Governed by the Odisha MSME Development Policy, 2022, which focuses on ease of doing business and credit facilitation.
Start-up Odisha: An initiative to foster innovation, with the O-Hub serving as a central incubator for young entrepreneurs.
Cluster Development: Development of specific clusters for Handicrafts, Cashew Processing, and Engineering products to improve competitiveness.
Financial Inclusion: Emphasis on collateral-free lending and digital G2P (Government-to-People) transfer schemes to enhance the digital footprint of underserved populations.

Odisha has transitioned from being a purely mineral-based economy to a diversified industrial state. With its 480-km coastline, strategic ports like Paradip, Dhamra, and Gopalpur, and a proactive governance system (GO-SWIFT), the state is well-positioned to become a global manufacturing and services hub. The focus on downstream industries, food processing, and the IT sector ensures that the benefits of industrialization are broad-based and sustainable.

Start-up Odisha

The Government of Odisha has launched the “Start-up Odisha” initiative to create a holistic and world-class ecosystem for innovation and entrepreneurship. The primary goal is to rank among the top three “Start-up Hubs” in India by supporting at least 1,000 start-ups in the state.

O-Hub: A state-of-the-art incubation center located in Bhubaneswar, serving as a central node for the start-up ecosystem. It provides co-working spaces, mentorship, and shared resources.
Funding Support: The policy offers monthly allowances for recognized start-ups, product development and marketing grants, and need-based assistance.
Institutional Network: It connects academic institutions, industries, and mentors to foster a culture of innovation among students and young professionals.

Industrial Promotion and Investment

The state’s industrial strategy is built on the “5T” framework (Teamwork, Technology, Transparency, Time, and Transformation). Key mechanisms include:

GO-SWIFT (Government of Odisha – Single Window Investor Facilitation and Tracking): A first-of-its-kind portal in the country that tracks the entire investment lifecycle, from land allotment to post-allotment services.
IPICOL (Industrial Promotion and Investment Corporation of Odisha Limited): Acts as the single point of contact for all investment-related activities in the state.
Land Bank: The state has created a dedicated land bank to ensure the ready availability of encumbrance-free land for industrial projects.
Skilled-in-Odisha: A global brand for the state’s technical workforce, ensuring that industries have access to high-quality, industry-ready human resources.