Dr. A.S MITTAL is Vice Chairman, Sonalika, Vice Chairman(Cabinet Minister Rank), Punjab Economic Policy and Planning Board, Chairman ASSOCHAM Northern Region Development Council.

Despite its rich legacy of enterprise and manufacturing, Punjab’s industrial engine is stalling. High logistics costs, expensive land, and its distance from seaports have eroded the state’s competitiveness, particularly compared to southern and western coastal states like Tamil Nadu, Maharashtra, and Gujarat. The country’s industrial powerhouses surge ahead, and Punjab risks falling irreversibly behind unless it urgently reinvents its industrial strategy.

Recognising the urgency of the situation, the Punjab government’s early revision of its Industrial and Business Development Policy (2022–2027) signals its intent to undertake a comprehensive overhaul. The new policy must correct course and go beyond grand investment summits and Memoranda of Understanding (MoUs); it must decisively shift its focus from chasing new investments to rejuvenating and strengthening the existing industrial clusters that form the backbone of Punjab’s economy.

A distinct and targeted approach is essential to overcome Punjab’s geographical disadvantages and enhance its competitiveness. This necessitates the implementation of a Punjab-specific Production Linked Incentive (PLI) scheme, designed to address these challenges and unlock the potential of its established traditional industries, with the aim of modernising, scaling, and globalising them.

A Decade of Drift: Punjab’s Industrial Slowdown

Punjab’s industrial growth has stagnated, averaging only a 5% compound annual growth rate (CAGR) from 2014 to 2024. This is significantly lower than states like Tamil Nadu, Maharashtra, and Gujarat, which have experienced double-digit growth.

Once-thriving industrial clusters such as Ludhiana, Jalandhar, Amritsar, and Mandi Gobindgarh have lost momentum, severely undermining their competitiveness. The core issue lies in Punjab’s long-distance freight logistics, as transporting goods from dry ports to seaports incurs additional costs that exporters from coastal states do not face. This geographical disadvantage has made Punjab less attractive to new investors, and existing clusters are shrinking instead of expanding.

Despite implementing traditional incentives, such as SGST rebates, electricity subsidies, exemptions from stamp duty and external development charges, the absence of a differentiated, cluster-based strategy has exacerbated the state’s industrial stagnation. Without bold interventions, including targeted Production-Linked Incentives (PLIs), support for rail freight, modernisation efforts, and incentives for rural industrial land development, Punjab risks losing ground to emerging competitors, not only in the southern and western coastal states but also in inland regions like Madhya Pradesh and Uttar Pradesh, where land prices are lower than in Punjab.

Existing Clusters: Potential for Revival

Punjab contributes only 2% to India’s exports. However, its legacy clusters possess significant potential that could be unlocked with the proper support to enhance competitiveness and position them as global export players.

 Ludhiana: The Bicycle and Textile Powerhouse

Ludhiana dominates India’s bicycle exports, boasting an impressive 80% share. Yet, India’s presence in the $33.3 billion global bicycle market is alarmingly low, at less than 1%, while China commands a substantial 60% share.

Ludhiana’s textile and hosiery industry, once a jewel in India’s crown, has struggled to grow beyond a 5% share of the global market. In contrast, China holds a 37% share in the $1.7 trillion global textiles, apparel, and hosiery sector.

With strategic trade facilitation, strong policy support, and a state-backed production-linked incentive (PLI) scheme, if Ludhiana’s firms are encouraged to scale up production, invest in quality certification, and integrate into global supply chains, even a modest 1% increase in market share for either bicycles or textiles could generate an additional Rs 4,000–5,000 crore in annual exports and help reclaim its status as a global manufacturing hub in these vital sectors.

Jalandhar: The Sports Goods Hub with Global Scope  

Jalandhar produces an impressive 45% of India’s sports goods, accounting for 75% of the country’s sports-related exports. However, India holds a minuscule 0.56% share in the global sports goods market, valued at $220.57 billion, while China captures a staggering 42.2%.

Local producers, primarily micro, small, and medium-sized enterprises (MSMES), require support for automation, compliance with international standards, and marketing assistance. Additionally, they must actively integrate into international supply chains to tap into the high-demand global market, which could trigger an export revolution.

Hoshiarpur and Mohali: Tractor Export Base  

These cities are home to one-third of India’s tractor original equipment manufacturers (OEMS), led by Sonalika ITL, which represents 34% of India’s tractor exports. Nevertheless, India’s share in the global $62.7 billion tractor market is just 2.2%, while Germany holds the top position with a 16% share.

Policy-backed capital infusion, research and development support, and 3–5% PLI incentives on incremental exports can help Indian exporters leapfrog their global competitors. Even a 1% increase in market share could bring in over Rs 4,500 crore in additional foreign exchange earnings annually.

Mandi Gobindgarh: Modernisation Needed in Secondary Steel  

Punjab produces 15% of India’s secondary steel but was excluded from the Centre’s PLI scheme for steel, which focused solely on speciality steel. Despite being a key contributor to national infrastructure, the industry continues to miss out on policy-driven modernisation.

 As power is a significant raw material for steel production, high power tariffs (Rs 6.5/unit compared to Rs 4.5/unit in Gujarat) increase input costs by 15–18%. A Punjab PLI offering for modernisation and incentives for low-carbon steel production can reduce expenses, revive over 200 sick units in Mandi Gobindgarh, boost steel production, and meet new demand in building construction and other infrastructure.

Why a State-Specific PLI?

The central government’s PLI (Production-Linked Incentive) scheme, which amounts to Rs 1.97 lakh crore and was launched in 2020 for 14 sectors, has largely overlooked Punjab’s existing industrial strengths. Over the last five years, only 764 PLI approvals have been granted, with a total of Rs 14,020 crore disbursed, predominantly benefiting sectors such as electronics, pharmaceuticals, and the automotive industries, which are concentrated in states like Tamil Nadu, Karnataka, Maharashtra, and Haryana.

Punjab’s traditional industries, including bicycles, textiles, steel, tractors, agricultural machinery, auto parts, and sports goods, have been largely neglected. To address this policy gap, Punjab must implement its own Production Linked Incentive (PLI) scheme. By offering a 3-5% state incentive on export-linked incremental production, Punjab can foster a significant industrial revival, particularly with the implementation of regulatory reforms and modern infrastructure.

The fiscal burden of the Punjab PLI scheme can be managed by linking incentives strictly to incremental performance. For instance, incentives could only be provided on production exceeding last year’s output and exports. Even a Rs 2,000-2,500 crore scheme over five years could generate over Rs 25,000 crore of additional production and exports.

The Way Forward

Unlike coastal states, Punjab cannot compete based on its location. However, it can—and must—compete through efficiency, innovation, and value. Reviving and upgrading existing industries offers the fastest path to job creation, export growth, and rural economic transformation.

Punjab’s industrial future lies in attracting new investments and scaling up existing operations. There is a paradox in the current model: while new investors are courted with generous incentives, existing businesses struggle to survive.

A state-specific PLI scheme, embedded in the upcoming industrial policy, could help tilt the scales back in Punjab’s favour. If the state wants to regain its prominence, it must support those who have contributed to its growth, even during a severe crisis.

Reviving and enhancing the competitiveness of existing industries is the quickest route to recovery. The foundation is already present in Ludhiana’s bicycle and textile manufacturing, Jalandhar’s sports goods workshops, Mandi Gobindgarh’s furnaces, and the machine floor shops in Hoshiarpur and Mohali. What is needed now is a modern policy toolkit—and the political will to implement it. (Views expressed are personal)