West Bengal’s long-standing image as a difficult destination for industry continues to weigh on investment decisions, with business leaders and economists arguing that the perception is rooted in real structural challenges but can be reversed through sustained policy action, competitive incentives, better land acquisition and rehabilitation, and the creation of a stronger ecosystem around large industries.
At a panel discussion on investment opportunities and bottlenecks in the state, experts said West Bengal needs not merely one or two marquee investments but a pipeline of large businesses and hundreds of ancillary and MSME units.
Umesh Chowdhary, vice-chairman and managing director of Titagarh Rail Systems Ltd, said the perception that West Bengal is not industry-friendly cannot be dismissed as merely a misconception. “There is no smoke without fire,” Chowdhary said, arguing that perceptions are created over time and generally have some basis in reality.
He pointed out the state’s inability to attract and retain engineering talent as one indication of the problem. Titagarh operates three design centres — one each in Kolkata, Hyderabad and Bengaluru — and, according to Chowdhary, a large number of Bengali engineers working at the latter two centres are reluctant to return to Kolkata. “Obviously there must be some good reason for them not to be able to do that or not to be wanting to do that,” he said.
Rudra Chatterjee, managing director of Luxmi Group and chairman of Obeetee, said the issue was not merely whether West Bengal was an average destination for business, but whether it could regain its earlier position among India’s leading industrial states. Available data suggests that the state is around the national average, but it does not figure among the top three states for business and investment, he said.
Chatterjee said the state’s strategy should not revolve solely around attracting a single large corporate investor. “It is great to bring in one large corporate investor, but there should be a hundred other at least Rs 1,000 crore businesses,” he said. The challenge, he added, was to enable existing MSMEs to graduate into larger enterprises.
Drawing a comparison between West Bengal and Kerala, Abhirup Sarkar, former Indian Statistical Institute professor of economics, pointed out that both states had introduced new industrial policies in the mid-1990s when they were under Left rule and the CPI(M) had decided to pursue industrialisation.
“However, the two states adopted different approaches. While West Bengal focused on attracting large industries, including the Tatas, Kerala concentrated more on medium-sized enterprises. Kerala’s subsequent economic performance showed that the model could work, with the state’s per-capita income rising from around 60 per cent of the all-India level in the mid-1990s to almost twice the national average,” he said.
But Sarkar cautioned against simply replicating Kerala’s model. A major factor behind Kerala’s growth, he said, was investment from the Gulf, which West Bengal did not have to the same extent. Moreover, while some MSMEs in Bengal are strong, a large number continue to operate with outdated technology and are essentially surviving rather than expanding.
A major opportunity, according to Chowdhary, lies in building industrial ecosystems around large companies. He cited the automobile industry as an example, where companies that began as small ancillary units supplying larger manufacturers such as Maruti have grown into billion-dollar businesses. “Similar model in West Bengal is not only possible but inevitable,” he said.
Land availability and industrial incentives, however, remain critical bottlenecks. Sarkar said the land problem could be addressed if the government had adequate financial resources to offer proper compensation and rehabilitation to landowners. Referring to Tamil Nadu’s automobile hub, he said substantial incentives had been necessary to attract investment.
“Without incentives no one is going to come. This is the reality,” Sarkar said, pointing out that companies can choose locations where governments offer better investment conditions. Proper compensation and rehabilitation, he added, could make land acquisition considerably easier because most landowners would respond to adequate economic incentives.
Chowdhary agreed that incentives have become an essential component of industrial policy because companies in most sectors begin at a competitive disadvantage if rival states offer more attractive packages. Unlike the software industry, where policy support has historically been less central to competitiveness, manufacturing investments are increasingly influenced by the incentives offered by competing states.
Chatterjee, however, stressed that incentives cannot become the foundation of a business model. Large companies must ultimately be competitive on their own and cannot depend indefinitely on government support. “Incentives can go away,” he said, highlighting that even incentives announced by governments are sometimes not actually paid.
Arguing that incentives should instead be targeted at creating ecosystems, he called for a sector-specific industrial strategy, identifying food processing, textiles, an integrated tea policy linked to furniture and allied activities, tourism and deep technology as areas where Bengal has natural advantages. Deep-tech investments, he said, could be particularly important because they would help attract and retain talent.
“It is impossible for the government to generate employment. It is important for every government to create employable people,” Chatterjee added.
