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Forest & environment

Country’s forest capital

  • Madhya Pradesh has a forest area of 94,689.38 square km, ie. nearly 31 per cent of the state. With a share of nearly 13 per cent of the country’s total forest area, it has the largest tree cover among Indian states.
  • The state has a diverse range of forests. The four key types are tropical moist; tropical dry; tropical thorn; sub-tropical broadleaved hill.
  • There are three key forest formations, viz. teak; sal; and miscellaneous. Bamboo bearing areas are widely sprinkled across the state.
  • Forest based industries are key contributors to the state’s economy, and provide employment to a large part of the populace.
  • In 2004-05 forests and logging contribute 2.1 per cent  to the state’s GDP.
  • The total growing stock (volume of timber/wood) in MP is 50 million cubic metre valued worth at $55.5 billion.
  • The state’s forest reserves are a rich source of timber, fuel wood, and bamboo. They are also a key source of minor forest produce such as tendu, harra, sal seed and gums.
  • At 25 per cent, MP is the largest producer of tendu leaves, the key raw material used to make ‘bidi’. The average annual production of tendu leaves in the state is around 2.5 million standard bags.

Key Forest Products
Woody Products
Nationalised Minor Forest Products
Non-Nationalised Minor Forest Products
§Small Timber
§Fuel Wood
§Tendu Patta
§Sal Seeds
§ Kullu Gum
Harra, All other gums, Satawar, Kalmegh, Giloe, Achar, Arjun Bark, Aonla, Gudnar, Chiratia, Nagarmocha, Beheda, Bael, Bhilwa, Mahua, Van, Tulsi, (more than 155)

*One standard bag of Tendu Leaves in Madhya Pradesh means 1000 bundles of 50 leaves each.

Key tree species

  • Teak (Tectona grandis)
  • Salai (Boswellia serrata)
  • Sal (Shorea robusta)
  • Saja (Terminalia)
  • Bija (Pterocaropus marsupium)
  • Haldu (Adina cordifolia)
  • Khair (Acacia catechu)
  • Lendia (Lagerstroemia parviflora)
  • Tinsa (Ougeinia ogeinensis)

Herbal market scenario

  • WHO estimates say nearly 80 per cent of the world’s population depends on herbal medicine for their primary health care needs
  • Global trade in medicinal plants was over $60 billion in 2004 with an annual growth rate of 15 per cent
  • India is rapidly emerging as a key player for supplying medicinal plants to the world
  • The estimated total value of products from ayurvedic production in India is nearly $1 billion
  • Exports of ayurvedic medicines have reached a value of $100 million annually. Of the total exports, about 60 per cent is crude herbs, 30 per cent finished products shipped abroad for direct sales to consumers, and the remaining 10 per cent constitute partially prepared products to be finished abroad.
  • The Indian ayurvedic industry is dominated by around 30 companies. Key suppliers include Dabur, Baidyanath, and Zandu. Together they constitute about 85 per cent of the domestic market. Charak Pharmaceuticals, Vicco Laboratories, Emami Group, Aimil Pharmaceuticals Ltd, Viswakeerthy Ayurvedic Pharmacy etc are also among the well-known names in the sector.
  • Of late, leading players in the FMCG segment like Hindustan Lever Ltd (HLL) are focusing more on ayurveda
  • Contract farming of medicinal plant species in demand abroad is seen as a key growth driver of the domestic herbal industry. Thus with demand for herbal products increasing globally, there are substantial business opportunities for herbal companies in India.

Herbal potential

  • With 11 agro-climatic zones of the total 16, MP is ideally suited for the cultivation of assorted medicinal & aromatic plants (MAPs)
  • The production of MAP’s in the state in 2004-05 was 20,000 tonnes (6.25 per cent) and had more than doubled (8.63 per cent) by 2009
  • 30 per cent of the Indian herbal industry’s demand is met by the state’s herbal collections centres
  • MP is the natural habitat for over 50 per cent of herbs used in the pharmaceutical industry, and the key source of raw material to various herbal processing units across the country. The government is keen to develop MP as the key processing center for herbal products.

Concessions, facilities for the herbal industry

  • Key concessions on offer are capital investment subsidy, interest subsidy, concessional land rates, industrial investment promotion assistance and entry tax exemption etc.
  • Exemption from electricity duty for five years
  • Exemption from stamp duty/registration charges
  • New industries are exempted from paying entry tax for five years from the date of first purchase of raw material
  • Partial reimbursement of expenditure incurred on quality certifications, ISO-9000, patent filing, BIS etc by the industries in the state.
  • Units with fixed capital investment of USD 2.2 million and above will be treated as mega projects. Five to 20 acres of land will be allotted to such units at a concessional rate of 25 per cent of the stipulated rate. Besides all mega projects will be eligible for special incentive packages on a case to case basis
  • An industrial investment promotion assistance equivalent to 50 per cent of the commercial tax and central sales tax (excluding commercial tax on the purchase of raw materials) deposited by the unit in the preceding year, will be given to any company with a fixed capital investment between  $0.2 million to $2.2 million for three years in developed districts and five years in backward districts. The rate of assistance is 75 per cent for investment above USD 2.2 million.

Capital Investment Subsidy
Category of district
% of subsidy on fixed Investment
Upper limit of subsidy (USD)
Backward A
Backward B
Backward C
Special capital subsidy at 25%. To a maximum of USD 0.02-0.05 as per category, if  the investment is more than USD 0.11mn 

Interest  Subsidy
Category of district
Duration (Years)
Interest Subsidy
Upper limit of subsidy (USD)
Backward A
Backward B
Backward C
No Industries Blocks

Industrial Investment Promotion Assistance
Category of district
Minimum eligible fixed capital investment (USD)
Duration (Years)
5.5 million
Backward A
4.4 million
Backward B
3.3 million
Backward C
2.2 million

Key Drivers for Herbal Industry
Abundant availability of raw herbs
Abundant cultivable land available
Mass scale cultivation of large number of species already initiated
Land available for industrial operations at economic rates
Single window clearance system for drug license
Lack of competition in herbal processing

Special incentive package for herbal industry
  • Reimbursement of 50 per cent of the total fees incurred on hiring technical consultancy for getting GMP certification, with an upper limit of  $22,000 per project
  • For participation in international trade fairs and exhibitions, entrepreneurs will be given 50 per cent of the stall charges
  • Registration fees charged by the importing countries for import of herbal products will be reimbursed up to a maximum of $1100 and air fare up to a maximum of $1100
  • All concessions and facilities available to industrial units in backward districts will also be extended to units located in developed districts such as Indore and Bhopal
  • Relevant provisions of labour laws applicable in Special Economic Zones (SEZs) will also be applicable to existing and upcoming herbal parks and herbal and ayurvedic industries.
  • Stamp duty waiver (ayurvedic units are also covered) in case of change in name, collaboration, inclusion of partners, reorganization or amendment in the lease deed for the next three years. Also for entering into agreement with financial institutions for monetary assistance.
  • Small scale pharmaceutical industries will be given priority under store purchase rules
  • Fast track clearances for setting up pharmaceutical and herbal industries

Opportunities in forests & environment
  • Being the largest producer of tendu leaves, MP is strategically the most suitable for manufacturing/processing of tobacco based products. Companies located in MP can save substantially on raw material and transportation by having processing units for bidi and like products
  • The state’s teak and sal forests are the backbone of the furniture industry. Companies can thus set up their furniture units to leverage key location advantages like proximity to raw material, target markets, and ports
  • Given its green cover and scenic beauty, eco-tourism and adventure tourism opportunities abound in MP. The state’s nine natural parks and 25 sanctuaries offer immense potential for the tourism and hospitality industries
  • Significant opportunities exist for the development of the handicraft industry, especially bamboo-based goods. Opportunities for private participation are immense due to the high demand for handicrafts in both the foreign and domestic markets. Companies can also leverage the availability of inexpensive and skilled labour
  • Environment protection and conservation is one of the key concerns of the state government
  • The per capita waste generation in the state’s important towns ranges from 0.20-0.60 kg
  • Urban local bodies spend between $11-33 per ton on solid waste for collection, transportation, treatment and disposal. 60-70 per cent of this is spent on collection, 20-30 per cent on transportation, and less than five per cent on disposal. Most methods used by municipal corporations are unscientific and lack safe disposal techniques.
  • The state is keen to build collection stations for solid waste
  • Good opportunities exist for commercial waste management companies, both for solid waste management and effluent treatment plants
  • MP’s forests resources provides immense business opportunities for forests based product manufacturing
  • To utilize the large amount of waste land in the State, the Government of MP has drawn up plans to convert them into plantation center
  • Paper pulp producing trees would be planted in next 5-7 years over one million hectares of waste land
  • The state’s commercial paper production is pegged at  $1.5-2 billion

Summing up

Key investment opportunities thus exist in:
  • Tobacca industry
  • Timber production
  • Paper pulp
  • Eco-tourism
  • Furniture industry
  • Handicrafts
  • Bamboo products
  • Bio-diesel
  • Solid waste management
  • Recycled goods industry

Way forward
  • The government is keen to develop MP as a key processing centre for herbal products
  • The success of ‘Vindhya Herbal’ has generated considerable confidence among private companies keen to to invest in the herbal industry
  • Key opportunities exist in contract farming, contract collection centres, herbal processing units, collaborative manufacturing, and setting up high quality testing laboratories for testing medicinal plants and products
  • MP has been successful in attracting several large companies in the forest & forest based products segment
  • Investors can join the elite club of companies like Dabur, HLL, Baidyanath, Lupin, ITC. Nothing better reflects the state’s bio-diversity.
  • There are over 32 contract farming companies operating in the state, and their number has been steadily rising
  • Growing output of certain products is indicative of increased activity. For example, lac production has been raised from 3,000 quintals in 2003 to 40,000 quintals in 2005.

Key Investment Opportunities

Key Locations
Lac Processing
Honey Processing

Forest & Environment

Key Locations
Teak & Sal
(Furniture factory)
Jetropa -Bio-diesel Plantations


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20 Feb 2019
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