Once the industrial heartland of India, West Bengal is witnessing a concerning trend – the exodus of big companies. The recent announcement by Britannia Industries about closing its historic factory in Taratala, Kolkata, has reignited discussions about the state’s business environment. However, the narrative is not straightforward, and it’s essential to dissect the layers to understand why companies are reconsidering their presence in West Bengal.
Tata Motors, a major company, was the last to exit Bengal, shutting down its Nano car factory following extensive protests led by Mamata Banerjee, then the opposition leader. With her current position as chief minister, another large corporation is also closing its operations.
The History
Historically, West Bengal was a hub for jute, steel, and engineering industries. Post-independence, the state enjoyed a robust industrial growth rate, but this momentum gradually slowed down. As per a Journal by Indian Researcher, West Bengal’s Gross Value Added (GVA) growth was a mere 2.7%, compared to the national average of 6.4% in the last decade. This decline can be attributed to several factors, including political instability, labour unrest, and infrastructural deficiencies.
A significant factor contributing to the industrial decline is the alleged coordination failure between the state and central governments and the absence of a comprehensive industrial policy since 1996. This has led to a crisis of capital creation, with a decline in the formation of fixed assets and an increase in outstanding loans for formal sector firms. Moreover, informal firms, which constitute a large part of the sector, suffer from limited access to capital.
Some of the notable names that took their business away from West Bengal are Jessop & Company, Braithwaite, Burn & Company, Indian Standard Wagon, GKW (formerly Guest Keen Williams), and Metal Box. These companies, once pillars of the state’s industrial strength, faced various challenges, such as labour disputes and lockouts, which marked the beginning of their decline. The trend of industrial flight from West Bengal reflects deeper systemic issues that have led to a re-evaluation of the state as a favourable business destination.
The Britannia’s Closure
The closure of Britannia’s Taratala factory is part of a larger pattern of industrial flight from West Bengal. Over the past few decades, iconic brands have moved out, and the high-profile exit of Tata Motors from Singur in 2008 dealt a significant blow to the state’s industrial image. These departures raise questions about the state’s ability to attract and retain large-scale industries.
However, Britannia has clarified that the company’s decision to close the Taratala plant, which has been operational since 1947, is part of a broader strategy to move manufacturing facilities away from city centres to locations with better logistics. Britannia’s registered office will stay in Kolkata, and it plans to continue its business operations in the state.
The Future Prospect
The West Bengal government has been striving to revive the state’s image as an industrial destination. Efforts include policy reforms, infrastructure development, and incentives to attract investment. However, the challenge remains to create a conducive environment that can reverse the trend of industrial flight.
The situation in West Bengal is a wake-up call for policymakers and industry leaders. Addressing the underlying issues that prevent companies from investing and operating in the state is crucial. While Britannia’s commitment offers hope, a concerted effort is required to ensure that West Bengal can reclaim its status as an industrial powerhouse. The departure of big companies from West Bengal is a multifaceted issue rooted in historical, political, and economic complexities. While the state struggles with these challenges, the commitment of companies like Britannia to continue their operations offers a pathway to revitalisation. It’s crucial for the state to leverage such commitments and work towards creating a stable and attractive business environment that can encourage industrial growth and development.
