Sikkim 190111

SIKKIM
November 2010
SIKKIM November 2010
Investment climate of a state is determined by a mix of factors
• Skilled and cost-effective labour • Procedures for entry and exit of firms
• Labour market flexibility • Industrial regulation, labour regulation,
• Labour relations other government regulations
• Availability of raw materials and natural • Certainty about rules and regulations
resources • Security, law and order situation
Resources/Inputs Regulatory framework

Investment climate
of a state Physical and social
Incentives to industry
infrastructure
• Tax incentives and exemptions • Condition of physical infrastructure such as
• Investment subsidies and other incentives power, water, roads, etc.
• Availability of finance at cost-effective terms • Information infrastructure such as telecom,
• Incentives for foreign direct investment (FDI) IT, etc.
• Profitability of the industry • Social infrastructure such as educational
and medical facilities
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Contents
 Advantage Sikkim
 State economy and socio-economic profile
 Infrastructure status
 State policies and incentives
 Business opportunities
 Doing business in Sikkim
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ADVANTAGE SIKKIM
Sikkim November 2010
Sikkim – State profile

• Covering an area of 7,096 sq km, Sikkim is the least-
populated and third-smallest state after Goa and Delhi.
Sikkim shares its border with the state of West Bengal and
the neighbouring countries of Nepal, Bhutan and Tibet.
• Gangtok is Sikkim’s capital city. The state has four

administrative districts - North, East, West and South.
Gyalshing, Namchi, Mangan, Jorethang, Singtam, Rangpo,
Pakyong, Rhenock, Meli, Chungthang and Soreng are the key
cities and towns in the state.
• Sikkim has 28 mountain peaks, 84 glaciers, 227 lakes, five hot

springs, and eight mountain passes – making it an ideal tourist
location.The Teesta and Rangeet are the two major rivers
with nearly hundred tributaries.
• Sikkim has 15 soil series and eight sub-groups, making it a

fertile land for cultivating rice, maize, wheat, millet, barley,
pulses, soy bean, coriander, cardamom and various fruits.
• Nepali, Bhutia, Lepcha, Limboo, Magar, Rai, Gurung, Sherpa,

Tamang, Newari, Sunuwar (Mukhia) are the commonly spoken
languages. Hindi and English are also widely spoken.
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ADVANTAGE SIKKIM
Advantage Sikkim … (1/2)
Natural resources
Sikkim is naturally endowed with rich flora and fauna. Its
climate and topographical conditions support industries
such as agriculture, horticulture, food processing, tourism
and non-timber forest produce.
Policy and fiscal incentives

The state follows the North East Industrial Investment
Promotion Policy, 2007, which provides several incentives
and concessions for investment in the state.
Institutional support
The state provides excellent institutional support through
various central and state government agencies viz., North
East Council, Ministry of Development of North Eastern
Region, Commerce and Industries Department.
5
ADVANTAGE SIKKIM
Advantage Sikkim … (2/2)
Facilitating infrastructure
Sikkim is well connected by roads. Telecommunication
connectivity compares with the national standards.
Optical-fibre connectivity is being developed. Rail and
air connectivity are also being developed in the state.
Rich labour pool

Sikkim has a high literacy rate; with the establishment
of Sikkim Manipal University and the Sikkim
University, the quality and quantity of employable
graduates has improved in the state.
Stable political environment

The state has a stable political set up with a single-
party government. The State Government is
committed towards creating a progressive business
environment.
6
ADVANTAGE SIKKIM
Sikkim in figures … (1/2)

Parameter Sikkim All-states Source
Economy
GSDP as a percentage of all states’
0.06 100.0 CMIE, as of 2007-08, current prices
GSDP
CMIE, 2000-01 to 2007-08, current
Average GSDP growth rate^ (%) 12.4 11.8
prices
Per capita GSDP (US$) 973.8 992.5 CMIE, as of 2007-08, current prices
Physical infrastructure
Central Electricity Authority,
Installed power capacity (MW) 195.5 159,398.5
as of March 2010
Cellular Operators Association of
GSM cellular subscribers (No) 5,519,150* 456,586,162
India, as of June 2010
Ministry of Road Transport &
National highway length (km) 62 70,548
Highways, Annual Report 2008-09
Social indicators
Literacy rate (%)** 68.7 64.8 Census of India, 2001
Ministry of Health & Family Welfare,
Birth rate (per 1,000 population) 18.4 22.8
RHS Bulletin, March 2008
* Figures for the Northeastern region comprising Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura
**Census 2001
^Calculated in Indian rupee terms
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ADVANTAGE SIKKIM
Sikkim in figures … (2/2)
Parameter Sikkim All-states Source

Ease of doing business
Outstanding investments
4.7 1,972.6 CMIE, as of March 2010
(US$ billion)
Industrial infrastructure
PPP projects (No) 24 515 www.pppindiadatabase.com
PPP: public private partnership
Parameter Sikkim Government

Policy support
Sectors with specific policies IT, Tourism, Industrial development
Availability of labour Adequate skilled labour available
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ADVANTAGE SIKKIM
Key industries in Sikkim with policy thrust and factor advantages

Industry attractiveness matrix
High
Hydro-power
Tourism
Bamboo
Policy thrust
Agriculture and
IT
Horticulture
Medium
Food processing
Minerals
Sericulture Handloom
Low
Medium High
Factor advantage
*Factor advantages include benefits due to geographical location and availability of factors such as talent pool, natural resources and capital
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Contents
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STATE ECONOMY AND SOCIO-ECONOMIC PROFILE
Socio-economic snapshot of Sikkim
Parameters Sikkim
Capital Gangtok
Geographical area (sq km) 7,096
Administrative districts (No) 4
Population density (persons per sq km) 76
Total population (million) 0.54
Male population (million) 0.29
Female population (million) 0.25
Population growth rate 1991-2001 (%) 33.1
Sex ratio (females per 1,000 males) 875
Literacy rate (%) 68.7
Male (%) 76.0
Female (%) 60.4
Sources: Economic Survey, 2006-07, Census 2001
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Sikkim’s GSDP
• At current prices, the total Gross State Domestic Sikkim’s GSDP (US$ million)
Product (GSDP) of Sikkim was about US$ 567.8
million in 2008-09. 2008-09 567.8
2007-08 571.6
2006-07 485.4
• The state’s GDP grew at a CAGR of 11.9 per 2005-06 406.7
cent between 1999-2000 and 2008-09. 2004-05 354.5
2003-04 327.2 CAGR
2002-03 279.8 11.9%
• Sikkim was among the states that recorded high 2001-02 236.7
GSDP growth rates between 1999-2000 and 2000-01 209.9
2008-09. 1999-00 192.2
0.0 200.0 400.0 600.0
Source: CMIE
12
Sikkim’s NSDP
• At current prices, the Net State Domestic Sikkim’s NSDP (US$ million)
Product (NSDP) of Sikkim was about US$ 2008-09 485.7
485.7 million in 2008-09. 2007-08 487.0
2006-07 411.8
• Sikkim’s NSDP grew at a CAGR of 13.4 per 2005-06 342.0
cent between 2000-01 and 2008-09. 2004-05 300.0
CAGR
2003-04 276.7 13.4%
2002-03 236.5
2001-02 199.2
2000-01 177.1
0.0 200.0 400.0 600.0
Source: CMIE
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Sikkim’s economy is driven by the secondary and tertiary sectors
• The secondary sector has been the fastest Percentage distribution of GSDP
growing sector, at a CAGR of 20.3 per cent 100%
CAGR
between 1999-2000 and 2008-09. It is driven
80%
by construction and hydroelectric power 48.2
58.9 10.1%
generation. 60%
40%
• At about 48 per cent, the tertiary sector is 34.7 19.1 20.3%
the largest contributor to Sikkim’s economy, 20%
although its share has been declining over the 17.1 22.0 9.5%
years. It grew at a CAGR of 10.1 per cent and 0%
is driven by trade, hotels, real estate, 2008-09 1999-00
transport and communications. Primary Secondary Tertiary
Source: CMIE
• The primary sector’s share in the GSDP has
also been decreasing, from 22 per cent in
1999-2000 to 17 per cent in 2008-09. It
recorded a CAGR of 9.5 per cent between
1999-2000 to 2008-09.
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Per capita GSDP

• In 2008-09, the state’s per capita GSDP was US$ 954.4.
• The per capita GSDP increased at a CAGR of 11.0 per cent between 1999-2000 and 2008-09. It has more
than doubled during this period.
• Trade, tourism, transportation and agriculture have been the key drivers of the increase in per capita
GSDP.
Per capita GSDP
1200.0
973.8 954.4
1000.0
836.8
800.0 703.6
621.9
(US$)
581.1
600.0 504.1
394.5 428.8
374.0
400.0
200.0
0.0
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Source: CMIE
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Consumer expenditure on household goods and services
• Sikkim is ahead compared to all-India in share Share of average monthly per capita expenditure on
of per capita expenditure on education. household goods and other services
60.0%
• With regards to share of expenditure on food, 52.3% 51.8%
Rural
the state is comparable to the all-India level. 50.0%
40.0%
30.0%
20.0%
10.0% 3.7% 4.1% 6.3%

1.2% 3.6% 0.9%
0.0%
Food Education Medical Durable goods
All-India Sikkim
Source: Household Consumer Expenditure in India, 2007-08

NSS 64th Round
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Key industries in Sikkim

• The Commerce and Industries Department of Key industries in Sikkim
Sikkim is involved in promotion of trade and
industry in the state. Tourism
Agriculture
• The Sikkim Industrial Development & Investment Agro-processing
Corporation Limited (SIDICO) is the state-level
Handlooms and handicrafts
institution engaged in promoting, financing and
developing the tiny and small scale industries (SSI) Hydroelectric power
sector in the state. Tea
Minerals
• Eco-tourism, handicrafts and handlooms, silk
reeling and processing, precision engineering, Sericulture
electronics, IT, medicinal plants, floriculture, tea, Horticulture
spices, honey and biotechnology are thrust areas
identified by the state.
• Being a potentially eco-fragile location, the people

of Sikkim support promotion of pollution-free
industries.
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Rice, maize, oil seeds, orange, tea and spices are the key
agricultural products
• Agriculture and allied sectors contributed 17 per Annual production
cent to the GSDP of Sikkim. Crop
(tonnes)
Rice 22,230
• Sikkim is one of the top producers of large
Maize 65,740
cardamom, contributing 85 per cent to the total
produce of the country. Buck wheat 5,350
Pulses 5,790
• Sikkim aims to make the state’s farming fully Oil-seeds 7,610
organic by 2015. Organic farming demonstrations Cardamom large 2,745
have been made in over 3,000 hectares (ha) of Mandarin orange 17,910
land and bio-fertilisers have been introduced in
Tea* 167
5,340 ha. A bio-fertiliser manufacturing unit has
also been set up. Source: Sikkim Agrisnet
Production as of 2008-09
*As of 2006
• The Sikkim AGRISNET is an Internet-based
agriculture information centre to promote
scientific agricultural methods and convert
research into practice in the agricultural sector.
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Investments
• As of March 2010, the outstanding project Break up of investments by sector
investments in the state were US$ 4.7 billion.
1%
• The bulk of the investments (94 per cent) were
in the power sector. 5%
Electricity
Manufacturing
Services
94%
Source: CMIE
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Contents
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INFRASTRUCTURE STATUS
Roads, railways and airports

• Sikkim has a total road length of 2,873 km with a road
density of 41 km per100 sq km. The state is connected
to West Bengal and rest of India through National
Highway(NH)-31A.
• The state Public Works Department (PWD) and the

Border Roads Organisation (BRO) maintain the roads.
The Sikkim Nationalised Transport (SNT) operates 87
buses and 92 trucks across the state, carrying 60 per
cent of the state’s total freight and covering 43 routes.
• Rail connectivity is being created between Rangpoo

and Siliguri in West Bengal. Airport construction is
underway in Pakyong; helicopter services are available
from Bagdogra (West Bengal) to Gangtok.
Length Length
Road type Road type
(km) (km)
National Highways (NH) 62 District roads 1,795

Source: Public Works Roads and Bridges Department,
Border roads Government of Sikkim
State Highways 184 894
(including NH)
Sources: Economic Survey 2006-07, Government of Sikkim;

Ministry of Road Transport & Highways, 2007-08
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Power
• As of March 2010, Sikkim had a total installed power generation capacity of 195.5 MW, which comprised 5
MW of diesel power, 75.3 MW of hydroelectric power and 47.1 MW of renewable energy sources.
• Sikkim has approved 30 new hydroelectric power plants (HEP), which are at various stages of construction
and would have an installed capacity of 5,352.7 MW when complete.
• About 24 HEPs are being set up under public private partnership (PPP) mode.
• Sikkim has a peak hydroelectric capacity of 8,000 MW with a firm base of 3,000 MW, providing a huge
potential for development.
Installed power capacity (MW)
250
191.1 193.1 195.5

200
150 140.7
(MW)
118.1
100
50
0
2005-06 2006-07 2007-08 2008-09 2009-10
Source: Central Electricity Authority
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Telecom infrastructure
• Sikkim is among the states with the highest tele-
Telecom operators in Sikkim
density in the country.
• BSNL
• The state had more than 49,000 landline phone • Reliance Communications
connections and 15,000 plus mobile connections in • Bharti Airtel
2004.
• Tata Indicom
• Vodafone Essar
• Virtual Private Network (VPN) and 3G-services
have been introduced in Sikkim by state-run
telecom company, Bharat Sanchar Nigam Limited Source: North Eastern Development Finance
Corporation Limited (NeDFI)
(BSNL).
• Forty “Community Information Centres” have been

constructed across the state. They provide
Internet-based interface for implementing various
government programmes and schemes.
• Postal services are available through India Post and

other private courier services.
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Urban infrastructure … (1/2)

Water supply
• The Sikkim Water Security & Public Health Engineering (WS&PHE) department provides water supply
to Gangtok, eight urban towns and 55 notified rural towns.
• WS&PHE supplies 130 litres per capita per day (lpcd) in Gangtok, 90 lpcd in urban towns, and 70 lpcd in
the notified rural towns.
• Gangtok has a requirement of 27 million litres per day and the WS&PHE has a storage and distribution
capacity of 45.5 million litres.
Sewerage
• Gangtok is the only town in Sikkim to have a full-fledged sewerage system. The sewerage system caters
to nearly 50 per cent of the town and expansion works are underway to cover the whole population.
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Urban infrastructure … (2/2)

• Under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), the rehabilitation of sewerage
systems of Gangtok is being undertaken at a cost of US$ 5.3 million. Water treatment and distribution
system upgradation is also being undertaken at a cost of US$ 15.3 million.
• Under the Basic Services to Urban Poor (BSUP) programme, three projects have been approved by the
Government of India, at a cost of US$ 7.4 million, for improvement in sanitation and sewerage and poverty
alleviation of the urban poor.
• With a funding of US$ 4.4 million under the Integrated Housing and Slum Development Programme
(IHSDP), housing facilities are being built for the urban poor.
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PPP projects
• Sikkim has 24 active PPP projects of value US$ 3.8 billion, all for hydroelectric power generation.
Key projects Project cost (US$ million)
Bermelee Khola HEP 4.7
Bhasmey hydro-power plant 32.1
Chujachen hydro-power plant 98.8
Dikchu hydro-power plant 110.7
Hee Khola HEP 5.3
Infrastructure for evacuation of power from IPPs 22.1
Jorathang Loop power project 59.8
Kalez Khola HEP 10.6
Kissim Khola HEP 3.3
Linza HEP 155.0
Panan hydro-power project 199.3
Rangit-IV hydro-power plant 89.7
Ringyang hydro-power plant 2.0
Rongnichu storage hydro-power plant 94.8
Rorathang power plant 33.2
Talem HEP 151.5
Taramchu hydro-power plant 36.1
Teesta - VI power plant 664.3
Teesta -1 hydro-power plant 267.3
Teesta -III hydro-power project 1306.5
Upper Rimbi HEP 13.1
Source: pppindiadatabase.com
IPP: independent power producers
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Education sector
• Sikkim has a literacy rate of 68.7 per cent as per Census 2001. It has increased to 74.3 per cent in 2005.
• The Sikkim Manipal University (SMU) – a partnership between the Government of Sikkim and the
Manipal University – provides technical, healthcare and science education. It is rated as one of the top
universities in the country.
• Distance education is available for students through SMU and Indira Gandhi National Open University
(IGNOU).
No of educational institutions
Primary education statistics
Gross Enrollment ratio (2007-08) Universities^ 11
Class I-V 148.0
Colleges^ 12
Class VI-VIII 74.6
Drop out ratio (I-V class, 2007-08) Polytechnics, ITI and teacher training institutes 6
Girls 12.5%
Boys 26.2% Religious schools 89
Pupil-teacher ratio, secondary education* 18:1 High schools^ 164

*As of 2004-05
Middle schools^ 221
Sources: HRD Ministry of Sikkim, Economic Survey, 2006-07,
Department of School Education and Literacy and Department of Primary schools^ 772
Higher Education, Annual Report, 2009-2010 Sources: HRD Ministry of Sikkim, Economic Survey, 2006-07,
Department of School Education and Literacy and
Department of Higher Education, Annual Report, 2009-2010
^As of 2007-08
27
Health infrastructure
• Sikkim has an impressive health infrastructure, Health indicators
one of the best in the country.
Population-to-bed ratio (2004-05) 530
Birth rate* (2008) 18.4
• The state fares better than the national average in
almost all health indicators. Infant mortality rate** (2008) 33.0
Total fertility rate (2005-06) 2.0
• Health tourism is being promoted in the state to
utilise its medical infrastructure and boost the Sources: NeDFI, Economic Survey, 2006-07, Sample Registration
System (SRS), 2008
economy. *Per thousand persons
**Per thousand live births
Health infrastructure
• Sub-centres: 147
• Primary health centres: 24
• Community health centres: 4
• Tuberculosis centres: 5
• Referral hospitals: 2
• Grant in institutions: 29
• Blood banks: 3
• Leprosy, mental illness and AIDS treatment hospital: 1
Source: NeDFI, 2005
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Cultural infrastructure
• There are three ethnic communities in Sikkim: Lepcha, Bhutia and Nepali. Buddhism and Hinduism are
the two main religions followed in the state. It has nearly 200 monasteries, of which the most well
known Buddhist circuits are the Pemayangste, Tashiding, Rumtek, Enchey, Phensang, Ralong, Phodang and
Tolung.
• Important festivals in the state are Bumchu, Dasain, Losar, Losoong, Maghe Sankranti, Namsoong, Pang-
Labhsol, Saga Dawa, Sakewa, Sonam Lochar, Tamu Lochar, Tendong Lho Ram Faat, Tihar, Trungkar Teschu.
• Sikkim has the steepest rise in altitude over the shortest distance; its temperature varies from tropical
and temperate in the Southern districts to alpine and tundra in the
Northern peaks. Sikkim has lush forests, lakes, hot-springs, glaciers and mountain peaks. Trekking, river-
rafting, mountain biking, mountaineering, yak riding and bird watching are the popular adventure sports
in Sikkim.
• The state is richly endowed with rare and exotic flora and fauna, which includes 4,500 different
flowering plants, 550 types of orchids, 36 varieties of rhodendrons, 28 bamboo species, over144
mammals, 552 species of birds and 600 different butterflies – making it a nature lover’s paradise.
29
Industrial infrastructure
• Sikkim has identified Rangpo-Gangtok, Melli-Jorethang, Jorethang-Rishi and Ranipool-Gangtok as industrial
corridors with provision for giving the land to the investors on a lease basis.
• The strategically important, Nathula Pass, has been opened to provide trade links with Tibet and China;
this has given a fillip to trade and manufacturing in the region.
• Sikkim is a leading Northeastern state in hydroelectric power development with PPPs with 24 different
projects identified.
• The State Government has invited expression of interest (EOI) from interested parties to invest in PPP
projects related to tourism infrastructure.
• Sikkim has identified agro-based industries, horticulture and floriculture, minor forest-based industries,
animal husbandry and dairy products, tourism-related industries, IT including knowledge-based industries,
precision oriented high value low volume products, hydro-power, tea, education and hospitality as thrust
sectors.
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Major projects in the infrastructure sector
• As of March 2010, over US$ 2.9 billion in Investments

investments have been made towards improving Infrastructure type
(US$ million)
Sikkim’s industrial infrastructure. Power* 2,811.6
• Over 95 per cent of the investments in Road 55.6

infrastructure have been made in the area of power Airport 65.2
(both generation and distribution).
Total 2,932.4
*Generation and distribution

Source: CMIE
31
Major industrial projects being implemented

• Twenty four hydro-power plants are being set up at an investment of US$ 3.8 billion, under the PPP mode.
Investment
Promoter Project Location
(US$ million)
Infrastructure
North East Frontier Railway Railway line from Sivok to Rangpo 291.2 Sivok-Rangpo
Teestavalley Power Transmission Transmission line, Teesta region 152.2 Teesta, North Sikkim
Limited
SIDICO Sevoke-Gangtok-Nathula road project 133.8 Gangtok-Nathula
Airports Authority of India Airport project 67.2 Pakyong
Hyatt International Corporation Five-star hotel 43.6 Gangtok
CGH Earth Hotels 21.8 Gangtok
Source: projectstoday.com
32
Major industrial projects being planned
Investment
Promoter Project Location
(US$ million)
Infrastructure
Two-laning of Gangtok bypass road 20.9 East Sikkim
Road upgradation from Thangu to 14.3 North Sikkim
Government of Sikkim Muguthang
Road upgradation from Giagang to 9.7 Sikkim
Kerang
Pharmaceuticals
Torrent Pharmaceuticals Limited Drug formulation unit 27.4 East Sikkim
Source: projectstoday.com
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Contents
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STATE POLICIES AND INCENTIVES
Sector-specific policies … (1/4)
Sikkim Tourism Policy, 2010

Aim: To build Sikkim as an attractive tourist location and promote the sector as an economic growth engine.
Key initiatives and objectives:
• Community based eco-tourism to be promoted with the use of participatory management techniques.
• Rural tourism, adventure/sports tourism, medical tourism, trekking, natural tourism, culture and heritage tourism, cave tourism,
monsoon tourism, tea tourism, etc., to be promoted through PPP projects.
• State to build the infrastructure for connectivity required to access the tourist spots.
• To have a “State Capacity Building Institute” to train and equip locals to serve the tourism sector.
• To participate in international tourist fairs and promote the tourism potential of Sikkim.
• Single-window system for clearance of private investments in the tourism sector.
• To provide concessions in luxury tax, service tax, service charges, electricity and water charges, and financial assistance on the
capital outlay.
• To provide legal support and regulations to protect the industry.
35
North East Industrial and Investment Promotion Policy (NEIIPP), 2007

Aim: To promote the Northeast as an attractive investment destination through several concessions and incentives.
Key features:
• Industries under this policy are eligible for incentives for a period of 10 years from the date of commencement of commercial
production.
• All new units as well as existing units that undergo substantial expansion (minimum 25 per cent increase in fixed capital) and start
production before 2017 would qualify for incentives.
• Incentives would be available for all existing industrial units and upcoming units anywhere in the Northeast.
• A high-level monitoring committee/advisory committee would oversee the implementation of the NEIIPP.
• NEIIPP would not be applicable to peripheral activities such as preservation while storage, cleaning, packing, re-packing, labelling
or re-labelling, sorting, etc.
• The North Eastern Development Finance Corporation (NeDFI) will act as the nodal agency for disbursal of subsidies.
• NEIIPP, 2007, replaced the North East Industrial Policy,1997.
• Sikkim Industrial Promotion and Incentive (Amendment) Act, 2007, follows the NEIIPP, 2007.
36
NEIIPP, 2007 (continued)

Incentives and concessions:
• 100 per cent excise duty exemption on finished products made in the Northeast.
• 100 per cent income tax exemption for industrial units.
• Capital investment subsidy increased from 15 to 30 per cent for plant and machinery up to US$ 360,000 per unit. For units
above US$ 360,000 and up to US$ 7.5 million, an empowered committee approves. For units above US$ 7.5 million, the Union
Cabinet approves.
• Interest subsidy to be given at the rate of 3 per cent on working capital.
• 100 per cent reimbursement of insurance premium.
37
IT Policy of Sikkim, 2006

Aim: To employ IT to provide better governance and generate employment.
Key initiatives and objectives:
• IT to be promoted as an employment generation vehicle for the state.
• To set up software technology parks to promote call centres and business process outsourcing operations out of Sikkim.
• To promote e-governance within the State Government and its schemes to deliver speedy services to the citizens.
• To map all natural resources and the cultural heritage of Sikkim to preserve and promote its unique identity.
• To connect all district headquarters and sub-division headquarters with high-speed optical fibre cable to provide seamless
Internet connectivity across the state.
• Cyber laws, security and Intellectual Property Rights (IPR) to be implemented to protect and promote entrepreneurship and
innovation in the IT industry .
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Contents
39
BUSINESS OPPORTUNITIES
Floriculture
• Sikkim has 4,500 varieties of flowering plants, 550 orchids, 35 rhododendrons and nine tree ferns,
presenting an avenue for investment in floriculture.
• The existing industry is at a nascent stage and has potential to be developed and promoted towards an
export-oriented business.
40
Medicinal plants and bamboo

• The agro-climatic conditions in the state support a wide variety of exotic flora and fauna that have utility
in the medicine sector.
• About 182 different medicinal and aromatic plants are cultivated under contract farming for the National
Medicinal Plants Board, the Department of Ayurveda and the Ministry of Health and Family Welfare,
Government of India.
• The state has identified medicinal plants and bamboo as one of the priority sectors for investment.
• Sikkim has 28 varieties of bamboo, offering potential for developing the handicrafts, construction,
medicine, packaging and food processing industries.
41
Agriculture, horticulture and food processing

• Sikkim has a suitable climate for agricultural and horticultural products. It supports multiple crops, viz.,
rice, maize, millet, barley, urad, pea, soya bean, mustard, potato, sweet potato, tea, mandarin orange, banana,
jackfruit, papaya, passion-fruit, litchi, broccoli, onion, egg-plant, carrot, tomato, radish, pumpkin, potato,
sweet potato, turmeric, coriander, chilly, ginger, garlic and large cardamom.
• The surveyed arable land in Sikkim is 109,000 ha, of which only 9.5 per cent is used; this provides a vast
untapped potential for development. The Sikkim Government is working on an ambitious plan to achieve
100 per cent organic farming by the year 2015.
42
Hydro power
• It is estimated that Sikkim has a peak potential capacity of 8,000 MW and a steady 3,000 MW
hydroelectric power. The state has invited PPP projects in the sector and 24 projects are already being
set up in the state.
43
Tourism
• Sikkim has the perfect blend of natural wealth and topography, which ranges from tropical to temperate
to alpine. The state is richly endowed with thick forests, flora and fauna, lakes, glaciers and mountain
peaks, which makes it a tourist paradise.
• The number of foreign tourists increased by 3 per cent from 2005 to 2007; during the same period the
domestic tourist population increased by 14 percent from 251,744 to 329,075.
• Creation of tourist complexes, eco-tourism, adventure tourism, ethnic-culture tourism, health farms,
hotels, convention centres, tourist travel services, etc., are various avenues for investment in the
tourism sector.
44
IT sector
• Sikkim’s IT policy aims to increase the use of IT in the industrial and government sectors. With a high
literacy rate, affordable cost, strong English-speaking population, improved telecommunications
connectivity and favourable climate, Sikkim is well poised to serve the IT industry.
• The IT policy provides several incentives and concessions for investments in the IT sector.
45
Sericulture
• Mulberry, muga, eri, oak-tussar and silk are cultivated in Sikkim. The Sericulture Department of Sikkim
promotes exports of silk from Sikkim. The state is investing US$ 1.2 million in capacity building of farmers
across 115 villages.
46
Handloom and handicrafts

• Carpet weaving, blanket making, handloom, cane and bamboo, Thanka painting, Lepcha hats-making and
Angora shawl-weaving are the various handlooms and handicraft activities practised in Sikkim.
• Sikkim’s handicrafts are being promoted in various national and international trade fairs and have found
ready buyers.
47
Tea
• Tea grown in the Temi region of South Sikkim is famous by its brand name “Temi” tea. The tea has its
unique flavour and about 100 million tonnes of tea is produced, annually.
48
Minerals and mining

• Sikkim has significant, untapped natural resource reserves of coal, lime stone, marble, quartzite, graphite,
and garnet.
• Contour mapping and survey of minerals is being carried out by the Department of Mines, Minerals and
Geology of the Government of Sikkim.
49
Electronics and precision engineering

• Electronics and precision engineering has been identified as a thrust area by the Sikkim Government
owing to the presence of state-run precision engineering industry.
• Sikkim Precision Industries Limited, Sikkim Jewels Limited and Sikkim Time Corporation are the state-
run precision engineering facilities. The success of these industries and the boost it has provided to the
economy has encouraged the Sikkim Government to support and promote similar industry.
50
Electronics and precision engineering – companies
SITCO was established in 1976 to assemble mechanical watches for Hindustan Machine
Tools (H.M.T.). The company diversified into mechanical crown watches, semiconductors,
Sikkim Time Corporation (SITCO) digital and analog watches and speakers. SITCO employs over 350 persons. It entered into
an agreement with BPL, Bengaluru, to manufacture speakers for television and other
applications.
SJL was established in 1972 to produce watch jewels, cup jewels and rotor magnets. The
company has emerged as a leading player in this segment and has become a preferred
Sikkim Jewels Limited (SJL) supplier to H.M.T. Limited, Titan Industries Limited, Allwyn Watches Limited, Jaipur Meters
and Electricals Limited, VXL India Limited and Andhra Pradesh Electricals and Equipment
Corporation.
Sikkim Precision Industries Limited SPIL was set up in 2001and employs over 100 persons. SPIL manufactures TO-202 package
(SPIL) power devices and has an installed capacity of 10 million per annum.
51
Contents
52
DOING BUSINESS IN SIKKIM
Key approvals required
List of approvals and clearances required Department

Incorporation of company Registrar of companies
Registration, Industrial Entrepreneurs Memorandum, industrial licences
Permission for land use Commerce and Industries Department
Allotment of land
Site environmental approval
No objection certificate and consent under Water and Pollution Sikkim Pollution Control Board
Control Act
Registration under States Sales Tax Act and Central and State Excise
Act Excise department
Commercial taxes
Sanction of power
Power feasibility Energy and Power Department
Power connection
Approval for construction activity and building plan Public Works Department
Water and sewerage clearance
Water Security & Public Health Engineering Department
Water connection
53
Cost of doing business in Sikkim
Cost parameter Cost estimate Source
Cost of land (per acre) US$ 50,000 to US$ 75,000 in Gangtok Industry sources
Hotel costs US$ 10 to US$ 50 per room per night State tourism website
Cost of office space

US$ 75 to US$ 200 per month Industry sources
(2,000 sq ft)
Cost of residential space

US$ 50 to US$ 100 per month Industry sources
(2,000 sq ft)
Unskilled: US$ 2.0 per day Ministry of Labour, Government of

Labour cost (minimum wages)
Skilled: US$ 2.5 per day India
54
Contact details
Key agency Contact information
Government of Sikkim
Gangtok-737101, Sikkim
Commerce and Industries Department Phone: 91-3592-202 670
Website: sikkimindustries.gov.in
E-mail: industriesdept@yahoo.co.in
Energy & Power Department
Energy and Power Department Gangtok, Sikkim
Website: www.sikkimpower.org
E-mail: pbsubba@sikkimpower.org
Bhanu Path,
Sikkim Industrial Development & Investment Gangtok-737103, Sikkim
Corporation Limited (SIDICO) Phone: 91-3592-202 287, 202 637, 229 622
Fax: 91-3592-202 287
E-mail: mdsidico@rediffmail.com
Director, D.H.H, Gangtok
Directorate of Handloom and Handicrafts
East Sikkim
Phone: 91-3592-203 126/202 926
55
Annexure
Exchange rates
Year INR equivalent of one US$

2000 46.6
2001 48.3
2002 48.0
2003 45.6
2004 43.7
2005 45.2
2006 45.0
2007 42.0
2008 40.2
2009 46.0
2010 47.4
Average for the year
56
DISCLAIMER
India Brand Equity Foundation (“IBEF”) engaged presentation to ensure that the information is accurate
ICRA Management Consulting Services Limited (IMaCS) to the best of IMaCS’s and IBEF’s knowledge and belief, the
to prepare this presentation and the same has been content is not to be construed in any manner whatsoever
prepared by IMaCS in consultation with IBEF. as a substitute for professional advice.
All rights reserved. All copyright in this presentation and IMaCS and IBEF neither recommend nor endorse any
related works is solely and exclusively owned by IBEF. The specific products or services that may have been
same may not be reproduced, wholly or in part in any mentioned in this presentation and nor do they assume
material form (including photocopying or storing it in any any liability or responsibility for the outcome of decisions
medium by electronic means and whether or not taken as a result of any reliance placed on this
transiently or incidentally to some other use of this presentation.
presentation), modified or in any manner communicated
to any third party except with the written approval of Neither IMaCS nor IBEF shall be liable for any direct or
IBEF. indirect damages that may arise due to any act or
omission on the part of the user due to any reliance
This presentation is for information purposes only. While placed or guidance taken from any portion of this
due care has been taken during the compilation of this presentation.
57

Sikkim 190111

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Sikkim 190111

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SIKKIM

Investment climate of a state is determined by a mix of factors

Resources/Inputs Regulatory framework

 State economy and socio-economic profile

 State policies and incentives

 Doing business in Sikkim

Sikkim – State profile

• Gangtok is Sikkim’s capital city. The state has four

• Sikkim has 28 mountain peaks, 84 glaciers, 227 lakes, five hot

• Sikkim has 15 soil series and eight sub-groups, making it a

• Nepali, Bhutia, Lepcha, Limboo, Magar, Rai, Gurung, Sherpa,

Advantage Sikkim … (1/2)

Policy and fiscal incentives

Advantage Sikkim … (2/2)

Rich labour pool

Stable political environment

Sikkim in figures … (1/2)

Sikkim in figures … (2/2)

Parameter Sikkim All-states Source

PPP: public private partnership

Parameter Sikkim Government

Key industries in Sikkim with policy thrust and factor advantages

 State economy and socio-economic profile

 State policies and incentives

 Doing business in Sikkim

Socio-economic snapshot of Sikkim

Sources: Economic Survey, 2006-07, Census 2001

0.0 200.0 400.0 600.0

0.0 200.0 400.0 600.0

Sikkim’s economy is driven by the secondary and tertiary sectors

Per capita GSDP

Consumer expenditure on household goods and services

10.0% 3.7% 4.1% 6.3%

Source: Household Consumer Expenditure in India, 2007-08

Key industries in Sikkim

• Being a potentially eco-fragile location, the people

 State economy and socio-economic profile

 State policies and incentives

 Doing business in Sikkim

Roads, railways and airports

• The state Public Works Department (PWD) and the

• Rail connectivity is being created between Rangpoo

National Highways (NH) 62 District roads 1,795

Sources: Economic Survey 2006-07, Government of Sikkim;

191.1 193.1 195.5

Source: Central Electricity Authority

• Forty “Community Information Centres” have been

• Postal services are available through India Post and

Urban infrastructure … (1/2)

Urban infrastructure … (2/2)

Pupil-teacher ratio, secondary education* 18:1 High schools^ 164

Source: NeDFI, 2005

Major projects in the infrastructure sector

• As of March 2010, over US$ 2.9 billion in Investments

• Over 95 per cent of the investments in Road 55.6

*Generation and distribution

Major industrial projects being implemented

Major industrial projects being planned

 State economy and socio-economic profile

 State policies and incentives

 Doing business in Sikkim

Sector-specific policies … (1/4)

Sikkim Tourism Policy, 2010