HP Economic Survey 2025-26 Chapter 9 Industry

9.1 Introduction — Industry Sector

The structural transformation of Himachal Pradesh from a predominantly agrarian economy to an industrialized powerhouse is one of the most significant chapters in its economic history.

9.1.1 The Structural Shift (1950–51 vs. 2024–25)

• GSDP Share Exponential Growth: The share of the secondary sector in the State’s Gross State Domestic Product (GSDP) has risen from a mere 7.00 per cent in 1950–51 to a massive 40.11 per cent in 2024–25.
• Drivers of Transformation: This structural shift has been systematically supported by progressive industrial policies, a highly favorable investment climate, and robust active participation from the private sector.

9.1.2 The Early Pioneers vs. Modern Diversification

• The Early Era: In the initial decades post-independence, industrial activity was highly localized and confined to just a few notable units:
  • Mohan Meakins
  • Salt Mines (Mandi)
  • Nurpur Silk
  • Palampur Cooperative Tea Factory
• Modern Sectoral Expansion: Over time, the manufacturing landscape diversified into high-value, steady-growth sectors including:
  • Pharmaceuticals (The State's modern economic anchor)
  • Textiles
  • FMCG and Food Processing
  • Cement Production
  • Auto & Engineering
  • Electrical & Electronics

9.1.3 The 2003 Turning Point & Regional Clustering

• The Special Industrial Package (2003): The defining milestone for accelerated industrialization occurred in 2003 with the announcement of the Central Government's Special Industrial Package.
• Investment Inflow: This package offered substantial fiscal incentives, attracting massive capital investments and leading to intense industrial clustering primarily in three districts:
  • Solan (BBN Belt)
  • Sirmaur (Paonta Sahib/Kala Amb)
  • Una (Tahliwal/Haroli)

9.1.4 Global Export & Pharma Footprint

• The Pharma Capital: Himachal Pradesh has firmly established itself as a premier global manufacturing destination, boasting over 650 operational pharmaceutical units.
• Export Valuation: The total exports from the state have reached a valuation of ₹20,414 crore.
• Global Trade Footprint: The state has successfully established active trade linkages with nearly 60 countries, solidifying its position on the international trade map.

9.2 Industrial Scenario in Himachal Pradesh

The industrial structure of Himachal Pradesh is highly decentralized and predominantly driven by the MSME ecosystem, supported by massive state-led infrastructure megaprojects.

• MSME Dominance: Micro, Small, and Medium Enterprises (MSMEs) form the absolute backbone of the state's industrial footprint, accounting for about 99 per cent of the total industrial units.

9.2.1 Snapshot of Industrialization: Bulk Drug Park, District Una

Himachal Pradesh is a crucial pillar of national healthcare, producing over 35 per cent of India’s total medicines. The state's pharmaceutical sector consumes bulk drugs and raw materials worth more than ₹35,000 crore annually, establishing a critical requirement for a dedicated backward-integration facility.

• Location: Developed at Haroli in District Una under the Government of India’s national scheme.
• Financial Breakdown: The total revised project cost is ₹2,071 crore:
  • Government of India Share: ₹996.45 crore
  • State Government Share: ₹1,074.55 crore
• Economic Impact: It is projected to attract ₹8,000–10,000 crore in private investments and generate direct employment for about 20,000 persons.
• Statutory Milestone: Environmental Clearance was officially granted in September 2025.

Table 9.1: Infrastructure Works Initiated for the Bulk Drug Park

The State Government is executing the park in a time-bound manner with the following component-wise allocations:

• Utility Status: Infrastructure for securing a water supply of 15 MLD is almost complete. External power-related works outside the park are at an advanced stage.
• Acreage Expansion: The State Government has earmarked a dedicated land parcel of 175 acres in the immediate vicinity for residential, commercial, and institutional support zones.

9.3 Investment Scenario

To tap into global supply chain realignments post-COVID-19, Himachal Pradesh has pioneered the “Industry through Invitation” model.

• Investment Inflows: Direct investor interactions led by the Industries Minister in Dubai and Mumbai over the past three years have resulted in signed Memorandums of Commitment (MoC) worth ₹5,000 crore.
• International Outreach Tour: A high-level delegation visited Japan, Hong Kong, and Vietnam from 29 September to 9 October 2025 to project Himachal as a preferred investment destination for pharmaceuticals and allied units.
• Single Window System Delivery: During the current tracking period, 135 industrial proposals were approved, bringing in an investment of ₹3,118.91 crore and generating employment for 12,947 persons.
• Identified Sunrise/Priority Sectors: Green energy, Hydrogen, Solar, Ethanol, Dairy, Food processing, IT & ITES, and Electric Vehicles (EVs).

9.4 Export Scenario in Himachal Pradesh

The historical growth trajectory of state exports highlights the immense expansion of its manufacturing capabilities.

• Exponential Value Shift: Total exports surged from ₹550 crore in 2003 to an impressive ₹20,414 crore in 2024–25.
• Pharmaceutical Dominance: The pharma sector alone dominates the state export landscape:
  • Annual Export Value: ₹13,000 crore
  • Share of State's Total Exports: 70 per cent
  • Share of the Entire Northern Region's Pharma Exports: 45 per cent

Section 9.2–9.4 Key Data Point 

9.5 Policy Reforms for Attracting Investment

The State Government has implemented deep structural and regulatory updates under its Compliance Reduction and Deregulation initiative to maximize land-use efficiency and lower entry barriers for businesses.

• CLU (Change of Land Use) Relaxations: Approval channels have been fully digitized and streamlined to eliminate procedural delays.
• The 3-Metre Road Width Norm: In a major relief for hilly terrains, recognizing a minimum 3-metre road width for industrial access has been officially adopted and is recognized as a national best practice.
• Setback & Plot Optimization: Setback norms have been significantly reduced. This adjustment has cut land wastage/loss by up to 30 per cent, drastically improving commercial plot utilization.
• FAR (Floor Area Ratio) Liberalization: FAR guidelines have been expanded to allow vertical structural expansions, compensating for the state's limited flat land surfaces.
• Green/White-Category Industry Expansion: The state has expanded its list of zero-pollution "White-Category" industries from 54 to 57, exempting these setups from routine environmental consent clearances.
• Labor Reform for Women: To provide an equal-opportunity environment, the state completely removed the one-year validity clause for the night-time employment of women, establishing a permanent framework for women working night shifts in secure industrial units.

9.6 Land Bank for Industrialisation

To provide immediate plug-and-play access for incoming projects, the State Government has officially notified five new large and micro-industrial areas in 2025–26:

1. Industrial Area Haar: Tehsil Barsar, District Hamirpur
2. Industrial Area Kishanpura: Tehsil Baddi, District Solan
3. Industrial Area Makhun Majra: Tehsil Baddi, District Solan
4. Industrial Area Bersan: Tehsil Nalagarh, District Solan
5. Industrial Area Androla Upperla: Sub-Tehsil Panjhera, District Solan

Land Expansion Alert: Outside of these five industrial zones, the formal transfer of massive government land parcels measuring 1,383 bighas at Bir Plassi and Dhabota (Solan district) is currently at the stage of final executive approval.

9.7 PM Vishwakarma Scheme — Himachal Pradesh

This central flagship program is being aggressively executed across the state to uplift traditional artisanal economies through end-to-end institutional packaging.

• Skilling Benchmarks: Precisely 12,728 artisans and craftspeople have been successfully trained and certified through specialized skill-upgradation programs.
• Asset Distribution: Over 6,000 customized modern toolkits have been delivered directly to the certified artisans to improve their product finish and daily productivity.

9.8 Encouragement for Self-Employment Ventures

The state has shifted focus toward making the local youth "employment providers instead of employment seekers" through two main credit-linked subsidy routes:

1. Mukhyamantri Swavalamban Yojana (MMSY)

• Sanctioned Profile: A total of 396 self-employment cases were sanctioned during the cycle, bringing in an investment of ₹110.70 crore and generating employment potential for 1,361 persons.
• Established Base: Concurrently, 628 micro-units were fully established on the ground with a total capital investment of ₹111.59 crore, creating immediate direct employment for 1,413 persons.

2. PM Formalisation of Micro Food Processing Enterprises (PMFME)

• Core Mandate: Focuses on upgrading unorganized local food units through credit-linked capital subsidies, standardized training, and shared seed capital.
• Subsidies Sanctioned: 780 business cases were approved under this framework, securing direct subsidies worth ₹51.65 crore.
• Women Self-Help Groups (SHGs) Support: Special financial handholding was extended to 289 women SHGs, who were provided collective seed capital amounting to ₹1.46 crore to expand local food products.

9.9 Rural Industrialisation through Cluster Approach

The State Level Steering Committee (SLSC), operating under the Government of India’s Micro and Small Enterprises Cluster Development Programme (MSE-CDP), has deployed heavy capital funding to decentralize economic growth across rural belts.

• Common Facility Centres (CFCs): The SLSC has officially approved 16 cluster projects worth ₹200.08 crore to establish shared infrastructure networks (CFCs). These projects provide rural artisans and farmers access to high-tech machinery they could not afford individually. The clusters target the following sectors:
  • Agro and Food Processing, Dairy, and Sericulture
  • Textiles, Handlooms, and Handicrafts
  • Waste Management, Furniture, Wood Carving, and Tourism
• Industrial Area Infrastructure: Parallelly, the SLSC approved 10 infrastructure projects worth ₹110.19 crore under the same MSE-CDP framework to upgrade basic civic amenities, road networks, and power lines inside existing rural industrial estates.

9.10 National Accolades & Governance Rankings

Himachal Pradesh's business ecosystem has achieved top-tier national validation across multiple Central government assessments:

• State Startup Ranking 5.0: The state was officially recognized as a "Top Performer" by the Central government for its proactive network of incubators, venture policy frameworks, and direct angel investor connectivity.
• DPIIT EoDB Awards (2025): The Department for Promotion of Industry and Internal Trade (DPIIT) conferred three prestigious national awards to Himachal Pradesh for structural excellence under the Ease of Doing Business (EoDB) parameters:
  1. Construction Permit Enablers (Recognizing the digitization and speed of building plan sanctions)
  2. Sector-Specific Healthcare 3. The Services Sector
• Historical Benchmarks: The state was ranked as an EoDB Aspirer State in 2024 and secured the undisputed 1st position nationally in the PMFME Scheme in 2023 for micro food processing execution.

9.11 Mining Wing & Regulatory Amendments

To ensure systematic, scientific extraction while checking environmental leaks, the State Government executed the 5th Amendment Rules, 2024 to the Himachal Pradesh Minor Minerals (Concession) and Minerals (Prevention of Illegal Mining, Transportation and Storage) Rules, 2015.

Key Amendments & Fiscal Provisions:

• Non-Mining Sourced Materials: If commercial construction or excavation work sources minerals outside a designated mining lease area, an additional processing charge matching 75 per cent of the baseline payable royalty is levied.
• New Statutory Cesses (Per Tonne Basis): To fund state welfare and digital tracking infrastructure, three new line-item charges have been added to transit passes:
  • EV Charges: ₹5 per tonne
  • Online Processing Charges: ₹5 per tonne
  • Milk Cess: ₹2 per tonne
• Scientific Riverbed Depth Relaxation: To clear heavy siltation and optimize extraction paths, the permitted riverbed mining depth has been increased from 1 metre to 2 metres, doubling the valid extraction volume per surface acre under scientific supervision.
• Shale Royalty Revision: The royalty rate for Shale was increased from ₹60 per tonne to ₹80 per tonne—marking the first revision for this mineral in 10 years.
• The Himachal Pradesh Mineral Policy, 2024: Replacing a decade-old framework, this updated policy enforces strict geo-fencing and scientific extraction patterns.

Mining Revenue Trajectory:

• FY2024–25 Actuals: Collected revenue surged to ₹354 crore.
• FY2025–26 Projections: Estimated to reach an all-time high of ₹360 crore.

Sections 9.9–9.11 Master Data Grid

9.12 Classification of MSME

The classification criteria for Micro, Small, and Medium Enterprises (MSMEs) follow a unified, composite formula combining capital investment and annual turnover thresholds. This structure applies equally to both manufacturing and service-rendering enterprises across India and Himachal Pradesh.

Table 9.2: Composite Criteria for MSME Classification

• Growth Implications: This composite characterization removes the fear of outgrowing fiscal benefits, encouraging units to scale up efficiently, achieve economies of scale, and remain competitive.
• Udyam Registration Portal: The onboarding process is completely online, paperless, and digital, based purely on self-declaration. This has significantly cut down administrative transaction times and operational costs for new startups.

9.12.1 Him MSME Fest 2026

The HIM MSME Fest 2026 was organized on 3rd and 4th January 2026 at Shimla. The festival was anchored in the strategic central theme: "Rooted in Himachal, Ready for the World". It highlighted the state's potential in agri-tourism, handlooms, value-added products, and sustainable agriculture.

Key Highlights of the Event:

1. Guinness World Record Achievement (Handloom Heritage)

• The Feat: Himachal Pradesh officially entered the Guinness World Records for the largest handmade shawl display at a single venue.
• Timeline & Location: Executed on 3rd January 2026 at The Ridge, Shimla.
• Scale: A total of 4,023 handmade Himachali shawls were displayed simultaneously.
• Participation: The shawls were woven by local artisans and women Self-Help Groups (SHGs) across all 12 districts, exhibiting the diverse cultural motifs and textile legacy of the state.

2. Reverse Buyer–Seller Meet under ODOP

• The Setup: A targeted One District One Product (ODOP) platform designed to link grassroot hill producers with national and global export procurement networks.
• Exhibitor Footprint: Featured 14 distinct exhibitors, composed of 1 departmental stall and 13 individual enterprise displays.

3. Women Networking Meet

• Event Date: Held on 4th January 2026 at Shimla.
• Footprint: Convened over 100 aspiring women entrepreneurs from across the state's remote areas.
• Focus: Direct, interactive mentorship sessions with senior State and Central Government officials to remove operational bottlenecks for women-led Micro and Small Enterprises (MSEs).

4. Advancing the Startup Ecosystem

• Startup Exhibition: Organized at The Ridge, allowing 32 curated startups specializing in IT, manufacturing, green sustainability, and food processing to pitch directly to active angel investors.
• Recognition: Distributed the Annual Startup Entrepreneurship Awards to leading players for the cycles of 2022–23 and 2023–24.
• Key Policy Recommendations:
  • Introducing foundational entrepreneurship courses in schools and ITIs.
  • Forming dedicated industrial advisory committees and setting up regional acceleration hubs.

5. CEO’s Roundtable with Chief Minister

• The Climax: A high-level business negotiation round chaired by the Chief Minister and the Industries Minister.
• Fiscal Commitments: The roundtable concluded with the signing of Memoranda of Commitment (MoC)/MoUs where 37 companies pledged investments exceeding ₹9,619 crore.

Section 9.12 Key Milestones

13 Himachal Pradesh Industrial Investment Policy

The strategic framework governing enterprise development operates under the extended guidelines of the Industrial Investment Policy 2019, which was extended through December 2025.

Vision Statement: “To create an enabling ecosystem to enhance the scale of economic development and employment opportunities; ensure sustainable development and balanced growth of industrial and service sectors to make Himachal one of the preferred destinations for investment.” 

Core Execution Strategies:

• Regulatory Modernization: Lowering barriers by streamlining complex laws and digitizing administrative processes.
• Infrastructure Upgrades: Allocating capital to build specialized, plug-and-play industrial estates.
• Utility Reliability: Assuring uninterrupted, cost-effective power supply to high-load manufacturing units.
• Incentive Allocation: Standardizing the delivery of state-level concessions, fiscal subsidies, and common facility usage.
• The Bonafide Employment Clause: To ensure localized wealth distribution, the state mandates that the grant of any state incentives, concessions, or facilities is strictly conditional upon providing employment to at least 80 per cent Bonafide Himachalis at all levels of the company hierarchy.
• Net SGST Rebate Restructuring: The investment thresholds for Net State Goods and Services Tax (SGST) reimbursement have been aggressively revised:
  • General Category Units (A, B, and C Zones): The fixed capital investment limit for Net SGST reimbursement (excluding steel manufacturing) has been raised up to a maximum of 100 per cent of Fixed Capital Investment (FCI) for a tenure spanning 7 to 10 years.
  • Anchor Units (B and C Zones): To attract large-scale flagship companies, this reimbursement ceiling has been increased to 250 per cent of FCI for a fixed period of 10 years.

9.14 Focus Sectors for Investment in Himachal

The Government of Himachal Pradesh has targeted eight priority industries as the primary engines of economic growth and employment generation.

Strategic Spatial Zoning:

To prevent haphazard industrial sprawl, the state has earmarked specific zones for high-impact commercial activity:

• Information Technology: Dedicated IT Parks integrated with high-tier data centers.
• Tourism & Wellness: Adventure tourism clusters, premium health hubs, AYUSH setups, and holistic wellness centers.
• Social Infrastructure: Educational institutions, integrated industrial townships, organized real estate/housing projects, and dedicated worker hostels near manufacturing zones.

9.14.1 Sector Highlights: Manufacturing and Pharmaceuticals

1. Industrial Estate Footprint

• State-Led Infrastructure: The state has developed a massive physical network consisting of 64 Industrial Areas and 17 Industrial Estates.
• Public-Private Partnerships (PPP): Private sector participation is actively leveraged, a prime example being the successful operation of the Cremica Food Park. The state intends to establish additional Food Parks by leveraging its high agricultural output and expanding highway connectivity.

2. Proposed Master Industrial Megaprojects

The policy lists the specific geographical locations for upcoming high-value projects under the 2019 framework:

• Kangra: Integrated Industrial Township and Software Technology Park.
• Una: Mega Food Park, Mega Textile Park, and the flagship Bulk Drug Park (Haroli).
• Solan (Nalagarh Belts): Biotechnology Park at Aduwal and the Gheer Industrial Area at Nalagarh.
• Shimla: Software Technology Park at Mehli.

3. Advanced Pharma Infrastructure

• Asia's Leading Hub: Himachal Pradesh generates nearly 35 per cent of India's total national pharmaceutical production.
• Quality Infrastructure Upgrade: To transition from basic formulation manufacturing to high-end drug discovery, an ultra-modern Pharmaceutical Testing and Research Laboratory is proposed at Baddi, being developed with institutional technical support from NIPER (National Institute of Pharmaceutical Education and Research).

4. "Industry through Invitation" & Project Clearances

• MoU Momentum: The innovative investment outreach model has successfully secured facilitated MoUs worth ₹2,500 crore.
• Crisis Resilience: Despite suffering severe disruptions due to heavy seasonal rains and flash floods, the state successfully cleared over 450 industrial projects.
• Unlocked Potential: These approved cases represent an investment influx of approximately ₹9,800 crore and are projected to generate around 30,000 employment opportunities.
• Sustainability Priorities: Strategic investment focus has pivoted toward eco-friendly sunrise sectors, specifically: Green Energy, Green Hydrogen, Solar Power, Ethanol production, organized Dairy technology, and Electric Vehicles (EVs).
• Land Bank Augmentation: To meet the immediate spatial demands of these incoming units, 1,350 bighas of premium government land parcels across Dhabota and Bir Plassi (Tehsil Nalagarh) are currently entering the final execution stage of administrative transfer.

Sections 9.13–9.14 

9.15 Government Initiatives: State Sponsored Schemes

9.15.1 Mukhya Mantri Swavalamban Yojana (MMSY)

Launched in 2018, MMSY is a transformative self-employment initiative designed to provide sustainable livelihoods to the bonafide youth of Himachal Pradesh.

• Eligible Age Group: 18–45 years for general applicants; extended up to 50 years for women.

9.15.1.1 Salient Features and Benefits:

1. Composite Capital Subsidy Structure:
   • 35 per cent for Women and Divyangjan-led enterprises.
   • 30 per cent for SC and ST entrepreneurs.
   • 25 per cent for All other categories.
   • Ceiling Matrix: Applicable up to a maximum machinery investment ceiling of ₹60 lakh, with the total aggregate project cost not exceeding ₹1.00 crore.
2. Interest Subvention: Provided @ 5 per cent for 3 years on institutional bank loans up to ₹60 lakh.
3. Industrial Land Concessions: Allotment of industrial plots, sheds, and commercial shops within Category 'C' industrial areas is subsidized at 25 per cent of the prevailing allotment premium.
4. Private Land Stamp Duty: Reduced to a concessional rate of 3 per cent of the applicable circle rate if private land is purchased under this scheme.
5. Collateral-Free Handholding: The State Government fully reimburses the actual fee and expenses incurred on payment of the guarantee fee under the CGTMSE framework of the Government of India.
6. Diversified Activities Covered: The scheme spans 103 notified service-sector activities alongside manufacturing setups, including:
   • Agri & Rural Allies: Silage Units, Cold Storage for Milk Products, Vegetable Nurseries, Warehousing, and Silk Processing Units.
   • Tourism & Tech: Eco-Tourism, Camping Sites, Computer Graphics, Data Processing, and EV Charging Stations.

9.15.2 State Mission on Food Processing (SMFP)

Implemented since August 2015, SMFP strengthens local agricultural value chains by financially supporting food preservation and processing projects.

• Technology Up-gradation & Modernization of FPIs: Units are provided a 33.33 per cent Grant-in-Aid, subject to an upper limit of ₹75 lakh.
• Cold Chain & Preservation (Non-Horticulture): Eligible for a 50 per cent Grant-in-Aid, with an upper ceiling of ₹5.00 crore.
• Primary Processing/Rural Collection Centers: Receives an aggressive 75 per cent Grant-in-Aid, up to a maximum of ₹2.50 crore.
• Modernization of Meat Shops: Provided a 75 per cent Grant-in-Aid, with a cap of ₹5 lakh.
• Reefer Vehicles: Eligible for a 50 per cent Grant-in-Aid, up to a maximum limit of ₹50 lakh.

9.15.3 Chief Minister’s Startup/ Innovation Projects/ New Industries Scheme

This scheme drives human capital development, incubation space creation, and venture funding for early-stage entrepreneurs.

• Founder Sustenance Allowance: Eligible startup founders receive a monthly allowance of ₹25,000 for one year, along with free incubation space matching modern plug-and-play standards.
• HIMSUP (Himachal Startup) Yojana: A dedicated institutional funding platform featuring a venture capital corpus of ₹10 crore created for a period of 5 years.
• Core Milestones & Institutional Framework:
  • 14 Authorized Business Incubators are fully operational across the State.
  • 365 Startups have been selected for formal incubation, out of which 120 have successfully commercialized their products.
  • ₹6.74 crore has been disbursed directly to incubation centers for infrastructure upgrades.
  • ₹2.73 crore in capital support has been extended to 12 promising startups under the HIMSUP Yojana.
  • During FY2025–26 alone, a sustenance allowance of ₹57.94 lakh was disbursed.
  • HPCED (HP Centre for Entrepreneurship Development): Functioning under the aegis of the Department of Industries, this society serves as the primary executing agency for the Startup Scheme.

9.15.4 Ease of Doing Business (EoDB)

Himachal Pradesh has modernized its regulatory environment, implementing deep systemic reforms over the past three years.

• Single Window Matrix: Over 120 inter-departmental services are integrated into the state's unified digital single window portal.
• BRAP 2024 Performance: The State successfully executed all 434 reforms recommended by the DPIIT, securing an overall implementation score of 98 per cent.
• National Distinctions: This high score positioned Himachal in the Aspirers category and earned recognition as a Top Achiever across three critical sectors: Healthcare, Service Sector, and Construction Permit.
• Gender-Inclusive Labor Reforms: To empower women and improve industrial productivity, the State allows women (excluding pregnant and lactating mothers) to work across all occupations (except industry involving lead extraction), provided their workplace safety aligns with the Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code).
• Digital Land Mapping: Industrial land parcels are mapped using GIS and integrated with the Indian Industrial Land Bank (IILB), enabling real-time tracking of vacant plots alongside auto-renewals and deemed approval systems.
• Industrial Advisory Council (IAC): Formed to ensure industrial stakeholders are actively involved in the state's economic decision-making processes.

9.16 Centrally Sponsored Schemes

9.16.1 Prime Minister Formalization of Micro Food Processing Enterprises (PMFME)

The PMFME Scheme was rolled out in Himachal Pradesh in June 2020 with an asymmetric funding architecture of 90:10 (Centre:State). The scheme targets the technical, structural, and financial formalization of self-help groups (SHGs), Farmer Producer Organizations (FPOs), cooperatives, and individual micro-enterprises.

9.16.2 Achievements under PMFME Scheme (April to 31st December, 2025)

• Seed Capital Component: Micro food processing units are provided a seed capital fund of ₹40,000 per SHG member for small tools and baseline working capital.
  • Beneficiary Reach: 289 SHG members received a total disbursed seed capital fund of ₹1,46,13,400.
• Credit Linked Subsidy Component: Individual micro-units receive a credit-linked capital subsidy @35 per cent of the eligible project cost, subject to a maximum ceiling of ₹10.0 lakh per unit.
  • Sanction Metrics: 780 individual cases were sanctioned with a total aggregate project cost of ₹51,65,06,806.
  • Release Metrics: Under this component, ₹15.43 crore in total subsidy was released to 598 active beneficiaries.
• Beneficiary Training: 5,870 combined Seed Capital and Credit-Linked beneficiaries received capacity-building training covering Entrepreneurial Development Programmes (EDP), book-keeping, regulatory compliance, and marketing.
• Incubation Centres: Three dedicated processing incubation facilities are being set up to upgrade quality standards and promote technological adaptation:

Table 9.5: Processing Incubation Centres and Funding

9.16.3 Prime Minister’s Employment Generation Programme (PMEGP)

Launched on 15th August, 2008, through the merger of PMRY (Prime Minister Rozgar Yojana) and REGP (Rural Employment Generation Programme), PMEGP serves as a credit-linked margin money subsidy vehicle for manufacturing and service setups.

• Project Cost Upper Limits: ₹50.00 lakh for the manufacturing sector and ₹20.00 lakh for the service/business sector. Cost overflows can be financed by banks without a government subsidy component.
• Subsidy & Contribution Matrix:
  • General Category: Eligible for a 15 to 25 per cent subsidy (based on rural vs. urban location), requiring a mandatory 10 per cent personal beneficiary contribution.
  • Special Categories (SC, ST, OBC, Minorities, Women, Ex-servicemen, Divyangjan): Eligible for a 25 to 35 per cent subsidy, with a reduced personal contribution of 5 per cent.
• Implementing Channels: Jointly executed via the State Department of Industries (District Industries Centres - DICs), the Himachal Pradesh Khadi and Village Industries Board (HPKVIB), and the Khadi and Village Industries Commission (KVIC).

9.16.4 Pradhan Mantri Vishwakarma Yojana (PMV Scheme)

The PMV scheme focuses on supporting traditional artisans across 18 identified trades. Artisans receive ₹15,000 for toolkits, collateral-free loans up to ₹3.00 lakh at a concessional interest rate of 5 per cent, and onboarding onto digital marketing platforms.

• Gram Panchayat Onboarding Status: Out of 3,615 total GPs in the state, 3,613 have been successfully onboarded on the PM Vishwakarma portal (only 2 pending).
• Application Approval Pipeline:
  • Total Received: 1,79,040 applications.
  • Stage 1 Approved (GP Level): 1,27,191 (71%).
  • Stage 2 Approved (District Level): 36,160 (28%).
  • Stage 3 Approved (State Level): 19,701 (54%).
• Skill Development Infrastructure: 59 institutions are empaneled, with 35 actively training. A total of 14,249 beneficiaries are enrolled, and 12,728 artisans have completed their training.
• Digital Incentive & Toolkits: 14,249 toolkits were applied for, with 5,969 received. 3,514 QR codes were generated for digital transaction enablement.

9.16.5 Unity Mall: Dharamshala

The Government of India has approved the setting up of a Unity Mall at Mohal Chakvan Dhagwar, Dharamshala (District Kangra) under Part-VI of the Scheme for Special Assistance to States for Capital Investment 2023–24.

• Fiscal Sanction: Approved at an outlay of ₹132 crore by the Ministry of Finance, with ₹66 crore released as the first installment.
• Mandate: Showcase and retail indigenous One District One Product (ODOP) goods, handlooms, and traditional crafts.
• Timeline: The Concession Agreement was signed on 31st July, 2025, mapping out a 32-year operational horizon (2 years construction + 30 years O&M). The project is scheduled for completion by July 2027.

Table 9.8: 

9.17 Sericulture Industry (Resham Palan)

Sericulture has evolved into a prominent agro-based cottage industry in Himachal Pradesh, providing an essential supplementary income stream to rural households. The state’s agro-climatic conditions are highly suitable for producing high-quality bi-voltine cocoons.

• Footprint: The sector supports 10,221 families across 1,691 villages, with active production concentrated in Bilaspur, Mandi, Hamirpur, Kangra, Una, and Sirmaur districts.
• Production Share by District:
  • Bilaspur: The undisputed leader, contributing 35 per cent of the state's total cocoon volume.
  • Mandi: 25 per cent
  • Kangra: 22 per cent
  • Hamirpur: 16 per cent
• Institutional Setup: The Department of Industries runs 8 Sericulture Divisions across 11 districts, managing 79 Government Sericulture Centres-cum-Chawki Rearing Centres and 64 mulberry farms.

9.17.1 Sub-Sectoral Technical Interventions

i. Mulberry Sector

• Nalagarh Nursery Expansion: The Government has set up a State Mulberry Production-cum-Demonstration and Training Centre at Nalagarh (Solan) on 32 bighas of land, propagating 5.00 lakh high-yielding sapling varieties during the winter season.
• Silk Seed Distribution Framework: Out of 6.00 lakh silkworm seeds distributed to farmers in FY2025-26:
  • 2.20 lakh seeds were produced locally at the State Silk Seed Production Centres in Palampur (Kangra) and Thunag (Mandi).
  • The remaining seed balance was procured from the Central Silk Board (CSB), Government of India.
• New Scientific Infrastructure: A modern, scientifically equipped Chawki Rearing Centre (CRC) has been established at Anni (Kullu) to ensure high-quality silk production tracking in the outer-Seraj belt.

ii. Oak Tasar Activities

• Host Tree Propagation: 10,000 saplings of Quercus serrata (Manipur Banj) were distributed to 100 farmers across the Tutu block (Shimla) and Gohar block (Mandi).
• Seed Output: Local basic silkworm seed production yielded 1,010 Disease-Free Layings (DFLs).
• Harvest Scale: 90 farmers across 17 villages successfully produced 18,764 units of Oak Tasar cocoons.

iii. Eri Sericulture

• Introduction: Eri culture has been successfully introduced to the state's textile stream. Rearing was successfully executed by 52 farmers across 12 villages in District Bilaspur.
• Castor Plantation Farms: Dedicated castor host infrastructure and CRC buildings are being established at Ghumarwin and Ladda (Bilaspur), Dhaulakuan (Sirmaur), and Nadaun (Hamirpur).
• Central Scheme Integration: The government approved a targeted cluster program for 100 Eri Sericulture farmers in Bilaspur under the Central Government's Silk Samagra-II Scheme.

Table 9.9: Present Status of Sericulture Activities (FY2025-26)

9.18 Share of Industry Sub-Sectors in Gross State Value Added (GSVA)

The secondary sector is a pillar of the state's economy. According to Advance Estimates (AE), the overall value of the Industry Sector (including Mining and Quarrying) at current prices for FY2025-26 stands at ₹94,381 crore.

9.18.1 Composition of the Industrial Pool

• Manufacturing Domination: The manufacturing sub-sector contributes 63.36 per cent of the nominal GVA within the industrial pool.
• Other Sub-Sectors: The remaining 36.64 per cent is shared between construction, electricity & utilities, and mining.

9.18.2 Total Contribution to State GSVA (Current Prices - FY2025-26)

The overall industrial sector accounts for 39.96 per cent of Himachal Pradesh's total current-price GSVA. The internal sub-sector breakdown is as follows:

• Manufacturing (Organized & Unorganized): 25.32 per cent of total state GSVA.
• Construction: 8.42 per cent of total state GSVA.
• Electricity, Water Supply & Utilities: 6.22 per cent of total state GSVA.
• Mining & Quarrying: 0.60 per cent of total state GSVA (up from 0.33 per cent in 2021-22).

9.18.3 Real Growth Velocity Profiles (Constant Prices)

According to Advance Estimates, the industrial sector's GSVA is projected to expand by 7.77 per cent in real terms during FY2025-26, outpacing the national industrial GVA growth of 6.15 per cent.

Industrial Sub-Sector Real Growth Velocities (FY2025-26)

• Construction: 12.56% (Undisputed Leader)
• Mining & Quarrying: 10.08%
• Electricity & Utilities: 10.07%
• Manufacturing: 5.74% (CAGR 2015-26: 5.19%)

1. Manufacturing Sector (5.74% Real Growth)

Driven by business reforms, infrastructure upgrades, and fiscal concessions, manufacturing registered a steady long-term Compound Annual Growth Rate (CAGR) of 5.19 per cent from 2015-16 to 2025-26.

2. Construction Sector (12.56% Real Growth)

This sub-sector recorded the highest growth rate across the industrial block, driven by state spending on high-altitude roads, tunneling, and public utilities. This expansion heavily drives income generation in both organized and unorganized labor sectors.

3. Electricity, Water Supply & Utilities (10.07% Real Growth)

This sub-sector posted the second-highest growth velocity, supported by the addition of hydro units to the grid and the expansion of the rural water network.

4. Mining and Quarrying (10.08% Real Growth)

Maintained steady real production values, driven by domestic raw materials like limestone to support construction demand.

Industrial Value Ledger (Current Prices in ₹ Crore)

The absolute financial values highlights how the manufacturing sector forms the core of the state's industrial output.

Sub-Sector wise GSVA Valuation over Time

9.19 Himachal Pradesh Khadi and Village Industries Board (HPKVIB)

The HPKVIB is a statutory body established under an act of the Legislative Assembly passed on November 8, 1966, officially coming into existence on January 8, 1968.

• Operational Focus: The board implements the Prime Minister’s Employment Generation Programme (PMEGP) across rural and urban pockets to provide local, doorstep employment to unemployed youth and artisans.

9.20 Himachal Pradesh State Industrial Development Corporation (HPSIDC)

Incorporated in November 1966, HPSIDC is wholly owned by the State Government and serves as the principal institutional engine for setting up physical infrastructure, executing public civil works, and deploying industrial credit.

• Expanded Institutional Scope: Following the administrative merger of the HP State Small Industries & Export Corporation and Nahan Foundry Limited, HPSIDC's portfolio expanded into:
  • Commercial trading of steel and bitumen.
  • Management of industrial shed rentals.
• Credit & Equity Windows: Delivers industrial term loans up to ₹5.00 crore, alongside selective equity participation flags for small, medium, and large-scale enterprises.
• Core Land Infrastructure Project: Developed the specialized Industrial Area at Davni (Tehsil Nalagarh, Solan district) spanning 426.12 bighas, with active plot allotments ongoing.
• Apex Nodal Designations: Appointed as the official State Implementing Agency for the Medical Device Park (Nalagarh), an infrastructure contributor for the Bulk Drug Park (Una), and the construction vehicle for the centrally sponsored Unity Mall (Kangra) under the ODOP framework.

9.20.1 Infrastructure Projects Under Active Implementation (2025–26)

1. Macro Parks Asset Operations: Operation and management of the Bulk Drug Park (Una) and the Medical Device Park (Nalagarh).

   Official Note: Certain secondary civil construction works at the Nalagarh Medical Device Park are currently on hold due to a temporary shortage of funds.

2. Pharma Testing Laboratory: Direct operation and infrastructure management of the state-of-the-art Pharma Testing Laboratory at Baddi (Solan).
3. Educational Asset Building: Constructing a network of digital libraries across various districts under the Directorate of Higher Education, Shimla.
4. Working Women Hostels (WWHs): Construction of six new hostels to support working women in manufacturing corridors:
   • MDP Nalagarh (Solan)
   • Gagret (Una)
   • Daruhi (Hamirpur)
   • Chanour (Kangra)
   • Nagrota Bagwan (Kangra)
   • Panjuana (Una)
5. State Civil Supplies and Veterinary Assets: Constructing food grain warehouses for the State Civil Supplies Corporation and setting up regional Animal Husbandry Hospitals across the state.

9.20.2 Other Strategic Initiatives & Digital Reforms (2025–26)

• Liquor Vends Rationalization: The State Government has assigned a new commercial mandate directing HPSIDC to operationalize liquor vends across District Mandi.
• One-Time Settlement (OTS) Revision: The corporation is updating its current OTS Policy to recover old, outstanding industrial term loans faster.
• Digital Land Allocation: E-auctioning of industrial plots officially commenced in January 2026, shifting land allocation away from manual allotments.
• Integrated Payment Gateway: Transitioning the billing system online to handle collection tracking for Annual Maintenance Charges (AMC), water delivery charges (for the Baddi and Davni industrial zones), and commercial shed rentals.

9.21 Himachal Pradesh Infrastructure Development Board (HPIDB)

The HPIDB was established on 28th January 2002 under Section 2 of the Himachal Pradesh Infrastructure Development Act, 2001.

• Dual Mandate: 1. Functions as a Special Purpose Vehicle (SPV) to mobilize financial resources for financing development expenditure under the State Plan.

  2. Serves as the designated apex Public-Private Partnership (PPP) Cell of the State Government.

9.21.1 Projects under Active Implementation (PPP Mode) during 2025–26

The board regulates and coordinates infrastructure assets leased out to private developers:

• Shimla Urban Transport: Operation and management of critical parking facilities at various congested locations in Shimla.
• National Capital Asset: Operation, management, and maintenance of Himachal Niketan (located at Sector-19, Dwarka, New Delhi).
• Smart City Asset Integration: * Managing infrastructure developed by Dharamshala Smart City Limited.
  • Managing building premises under the high-priority “Stabilization of Ridge” project developed by Shimla Smart City Limited.
• Rural & Agro-Tourism: Selection of a dedicated private developer/operator for the Mata-Ka-Bag project at Kinnu (District Una).
• Skill Infrastructure: Operation, management, and maintenance of the high-tech Centre of Excellence (CoE) at Waknaghat (Solan).
• Aviation Technology: Overseeing pilot commercial operations of drones in the State for logistics, medical deliveries, and agricultural monitoring.

9.21.2 Financial Initiatives & Capital Borrowings during 2025–26

• The Kangra Airport Expansion Funding: As mandated by the Finance Department, HPIDB is raising a mega-loan of ₹2,680 crore from the Housing and Urban Development Corporation (HUDCO) to fund the land acquisition and expansion of Kangra Airport.
• State Guarantee: The borrowing complies with the HPIDB Act, 2001, and is completely backed by an unconditional and irrevocable guarantee of the Government of Himachal Pradesh.
• Execution Timeline: The loan agreement with HUDCO was formally signed on 24th December 2025. The first structural installment of ₹1,000 crore has already been received in the designated ESCROW account of HPIDB.
• Debt Mobilization Panel: HPIDB is in the process of establishing a official Panel of Merchant Bankers-cum-Arrangers. This empanelment will create a centralized pool of certified financial professionals to assist various state PSUs and departments in raising debt capital efficiently.

District-wise Industrial Strengths in Himachal Pradesh

The mapping below outlines the localized economic specializations across the state:

9.22 Index of Industrial Production (IIP)

The IIP serves as the standard statistical yardstick to gauge short-term changes in the volume of industrial production across Himachal Pradesh relative to a chosen base period.

• Base Year: Currently compiled using 2011–12 as the statistical baseline.
• Compilation Frequency: Estimated on a quarterly basis by the Department of Economics and Statistics. Data is pooled directly from representative manufacturing, mining, and electricity-generating units.
• Primary Objective: To compute the precise, real-time value addition of industrial output to the overall Gross State Domestic Product (GSDP).

Table 9.11: Index of Industrial Production (Base: 2011–12)

The table highlights a massive post-monsoon surge in the electricity sector during the 2025 reporting cycle:

IIP Performance Analysis:

• FY2023–24 to FY2024–25: The General Index grew from 248.18 to 263.13, registering a steady 6.02 per cent expansion.
• FY2025–26 Partial Horizon: Driven heavily by hydro-utility additions tracking an electricity index spike to 792.20, the partial General Index reached 328.55. This represents a 24.86 per cent increase over the previous annualized period.
• Quarter-on-Quarter Check: Comparing the June and September quarters of 2025 directly with the corresponding quarters of 2024 shows an upward production trajectory across all tracked sectors (General, Electricity, Mining, and Manufacturing).

9.23 Main Issues and Challenges

The economic survey outlines several systemic bottlenecks that limit the state's industrial potential.

A. State-Specific Issues and Challenges

• Industrial Concentration & Spatial Imbalance: Industrial output is heavily clustered around the southern borders (Solan, Sirmaur, and Una). This concentration leaves the interior mountain districts underdeveloped and limits economic opportunities across the rest of the state.
• Heavy Structural Product Vulnerability: With over 650 operational units, the state is heavily dependent on the pharmaceutical sector (which accounts for 35 per cent of India's medicines and 70 per cent of state exports). This concentration exposes the state's economy to sudden global supply chain challenges or regulatory updates by international bodies like the USFDA.
• Infrastructure Deficits in New Zones: While five new industrial areas have been legally notified, their physical support assets—such as road grading, high-load power lines, and industrial water mains—remain under development.
• Environmental Compliance Constraints: Flagship initiatives like the Haroli Bulk Drug Park require major capital investments to build and operate Zero Liquid Discharge (ZLD) plants, Common Effluent Treatment Plants (CETPs), and specialized hazardous waste containment areas.
• Scale and Automation Limits in MSMEs: MSMEs comprise 99 per cent of total state units, but many lack the scale needed to adopt modern automation, digital supply chains, and global quality certifications.
• Land Bank Allotment Backlogs: Large, strategically vital land parcels—including 1,383 bighas across Bir Plassi and Dhabota—face long administrative delays for final executive clearances.

B. District-Specific Challenges Matrix

The survey maps out localized operational bottlenecks across the state's industrial landscape:

9.24 Way Forward

To build a resilient, sustainable, and export-oriented economy, Himachal Pradesh's future strategy focuses on three core pillars:

  1. Structural Sectoral Diversification

The state must diversify its industrial base beyond pharmaceuticals to mitigate concentration risks. Investments should be targeted toward sunrise sectors, including medical devices, green hydrogen production, renewable energy equipment, IT-enabled services (ITeS), and high-value food processing units.

Accelerating the development of the Una Bulk Drug Park and Nalagarh Medical Device Park will help establish an integrated life-sciences ecosystem supported by robust R&D linkages with institutions like NIPER.

2. Logistics and Ease of Doing Business (EoDB)

Improving logistics efficiency is essential to overcome the state's topographical challenges. This requires prioritizing multimodal connectivity (such as the Baddi and Bilaspur rail links), establishing shared warehousing hubs, and adopting digital supply chain systems.

The state will continue to expand its land bank with plug-and-play infrastructure, provide secure housing for workers, and implement time-bound deemed approvals under the Single Window Clearance framework.

3. MSME Competitiveness & Skill Alignment

The competitiveness of the MSME sector can be enhanced by setting up cluster-based common facility centers (CFCs), providing technology upgradation subsidies, and integrating local units into national supply chains.

Educational and training curricula at ITIs and universities must align with emerging industries, including automation, biotechnology, and clean energy. Finally, introducing targeted incentives for low-carbon manufacturing ensures that industrial expansion remains aligned with the state's environmental goals.