Matching industrial incentives offered by rival states and resolving persistent land constraints that have dogged projects for decades should be key priorities for the incoming government if it hopes to attract investment and break out of Bengal’s long stagnation, multiple stakeholders say.
While the state has done reasonably well in nurturing its small and medium enterprise sector, it has failed to attract big-ticket industrial projects over the past three decades. That task is only getting harder as states like Maharashtra, Tamil Nadu, Uttar Pradesh, Gujarat, Karnataka and Odisha bend over backwards to bag large investments.
Incentives
“The competition among states is so intense that industry will not come without a good incentive package — fiscal as well as on land,” said Abhirup Sarkar, former professor at the Indian Statistical Institute.
Bengal introduced a bill in 2025 to revoke past incentives, prompting several companies to challenge the statute in court. The move followed the state’s earlier decision to stop disbursing incentives — a sequence that amounted to a policy flip-flop of the kind that unnerves investors.
An industry representative, speaking on condition of anonymity, called it a “big blow”: the state was going back on its word. Even though the current government is reportedly working on a new industry policy, it is unlikely to prioritise fiscal incentives. “A policy without a good package means little,” the official said.
Sarkar acknowledged that a democratically elected government has every right to decide on incentives — including the view that rich industrialists don’t need them. “But the fact remains, without them, industry will not come,” he said, pointing to the land and incentives lavished on Tata for the Singur small car plant. Tamil Nadu’s auto hub — home to Hyundai and Renault Nissan — was similarly built on generous state support.
Land
Offering well-connected land with water, sewerage, road and power infrastructure has become a baseline expectation for investors, not a differentiator.
“The Singur episode cast a long shadow: it signalled that land acquisition for industry could be reversed under political pressure regardless of the legal framework,” said Maitreesh Ghatak, professor of economics at the London School of Economics. “What is needed is a transparent, rules-based process that genuinely protects farmers’ legitimate interests — not as a political concession but as a matter of principle — while also giving investors the security they require.”
The state claims to have an adequate land bank, but this has not translated into attracting investment in high-growth sectors such as new energy, semiconductors, electronics, automobiles, or global capability centres (GCCs).
Land remains a contested issue nationally. A recent Confederation of Indian Industry report found that across states, land search, acquisition, allotment and utilisation processes remain fragmented, slow and administratively complex — raising project costs and extending gestation periods. The report called for a GST Council-style institutional platform involving states and the Centre to address the problem. It cited best practices from Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, Gujarat, Maharashtra, Uttar Pradesh and Odisha.
Bengal’s approach stands apart: the state takes a hands-off position on land acquisition, leaving industry entirely to its own devices — a practice it extends to land procurement for roads, rail and pipelines, with predictable delays.
GCCs
Bengal’s land-to-population ratio is roughly one-third the national average. Given that constraint, industry observers argue the service sector may offer more realistic near-term potential than large-scale manufacturing, which demands substantial contiguous land.
Within services, global capability centres or GCCs — the back offices of multinational companies — could be a significant source of employment for Bengal’s educated workforce, much of which currently leaves for other states.
According to real estate consultancy Knight Frank, GCCs drove 38 per cent of India’s office space leasing in 2025, fuelling growth in Bengaluru, Hyderabad, Pune, Chennai and Delhi. In contrast, GCC’s contribution to Calcutta’s office space was only 16 per cent in the first half and nil in the second half of 2025, the report showed.
“The government should formulate incentives and plug-and-play office infrastructure policies for GCCs, benchmarking against competing states like Telangana and Karnataka and building real differentiators,” said Samantak Das, a former chief economist at several international property consultancies. He added that single-window clearances need to function in practice, not just on paper.
MSMEs
Bengal’s micro, small and medium enterprises — concentrated in leather, engineering and plastics — are numerous but low in productivity, stakeholders say, requiring urgent policy attention. In a land-scarce state, they could nonetheless be a significant driver of development, as Kerala’s experience suggests.
“Productivity is low, and technology is often archaic,” said Sarkar, the former ISI professor. Subhodip Ghosh, director-general of the Bengal Chamber of Commerce and Industry, noted that states like Gujarat and Karnataka show stronger MSME productivity and export orientation, with a higher share of small and medium enterprises relative to purely micro units.
Image
Beyond policy, stakeholders stressed the need to rebuild investor confidence — and argued that a visible early win could reset perceptions.
“The government needs to aggressively attract a couple of Fortune 500 companies, like Google or Microsoft,” said Das. GCC ecosystems, he noted, tend to snowball once a few marquee names commit.
Rajeev Singh, director-general of the trade body ICC, made a similar point: the state should go “all out” for “one or two” big-ticket projects to set the tone.
However, the makeover is easier said than done. According to Professor Ghatak of LSE, Bengal needs to rebuild investor confidence. “What investors need above all is predictability,” he said. “This is not an irreversible condition. States that started from a similarly low industrial base have managed to turn it around. Odisha, long considered an investment backwater, turned it around over two decades by offering rules-based engagement with investors and honouring its commitments. Tamil Nadu built its manufacturing reputation partly through administrative consistency, even during periods of political turbulence.”
Fiscal space
Whether the incoming government has the fiscal room to act is another question. Even as Bengal’s own tax revenue has grown 4.6 times over 15 years, it remains heavily indebted, with a debt-to-GSDP ratio of 38.4 per cent in FY23 — well above the states’ median of 32.1 per cent, accordingto Niti Aayog.
One industry observer suggested the state take a leaf from Tamil Nadu, which — despite being in Opposition at the Centre — has consistently tapped central schemes toadvance its own development agenda.
Whether the next government corrects course remains to be seen. May 4 will hold the answer.