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Situated in the center of India, Madhya Pradesh is the biggest state in the country. The economy of M.P. is primarily agriculture- based. Nearly 80% of the population lives in villages. Madhya Pradesh's Industrial Policy & Action Plan 1994 aims at accelerating and strengthening industrial development, attracting more capital investment, ensuring balanced regional development and providing additional employment opportunities to help improve the standard of living of the people.

Taking into account the rapid economic changes taking place at the national and international levels, the policy aims to reduce the regulatory role of the administration and strengthen, instead, its role as a facilitator. It spells out measures to augment the physical and human resource base and uses taxation as an instrument to increase employment generation and develop synergistic linkages between different sectors.

Land area: 443,446 sq. km.
Population: 66.2 million
Capital: Bhopal
Per Capita Income: Rs 5,845
Inflation Rate: 8.8%

Madhya Pradesh has good law and order situation and labor relations. The state government lends support to the industries and the policies are implemented. Policies are structures so as to attract investment. Low cost labor is an advantage in the state. The state has reasonably well developed road and railway network all over the state. Unfortunately, the state has a severe deficit of power, regular rationing and prohibitive tariff.

Incentives:

• Investment subsidy of between 5% and 15% of fixed cost for small-scale units
• Interest rate subsidy of Rs 25,000 per year for small-scale units
• Special incentive schemes for large and medium-scale units promoting ancillary units
• Special incentive scheme for new units with investment of Rs 500 crore or more
• Exemption from payment of entry tax for 8 years for Export-Oriented Units
• EOU status to NRI projects with capital investments of Rs 2 crore or more
• Sales tax exemption up to 150% of fixed asset investment for District A (5 years)
• Sales tax deferment for 7 years of fixed asset investment for District A (7 years)