It is unfortunate that those who mindlessly argue that big business cannot unfold in Bengal have never heard of the economic dreams of men like Dwarkanath Tagore, Ramdulal Dey, Mutty Lall Seal, Raja Rajakrishna Deb and others of the 19th and 20th centuries, a period when the idea that the industrial revolution would unfold on the banks of the Hooghly seemed not only likely but imminent.
But since then there has been a comfortable fatalism in discussions about West Bengal’s economic future. The argument goes something like this: The country is too fragmented, the workforce too militant, and the politics too chaotic for any serious industry to ever regain its footing. This fatalism is historically uneducated and economically lazy. The de-industrialization of Bengal was not a geographical inevitability – it was a political choice made repeatedly by successive regimes. And political decisions can be reversed.
Let’s start with the story that the fatalists conveniently forget.
Proof of what Bengal once was
At the time of independence, West Bengal was India’s undisputed industrial nerve center. According to the Manufacturing Census (1951), there were 1,493 registered factories in the state – the highest in the country, surpassing the totals of Maharashtra and Gujarat. Employment in the organized sector was 27% of the national share and industrial production was 24%. The Hooghly belt was home to world-class jute processing plants, heavy engineering workshops and port infrastructure, making Calcutta the commercial capital of the eastern half of the subcontinent.
That wasn’t a coincidence. It reflected Bengal’s structural advantages: a deep-water port with direct access to global shipping routes, a dense railway network, a highly educated and commercially sophisticated workforce, and proximity to the coal and steel belts of present-day Jharkhand. These benefits have not gone away. They were simply buried under decades of mismanagement.
The decline was politically caused. The Freight Equalization Policy of 1952, which was fully implemented in 1956, deprived Bengal of its locational advantage by uniformly subsidizing the transport of raw materials across the country. Before equalization, the railways charged Rs 30 per tonne-kilometer for steel from Jamshedpur to Howrah, against Rs 120 to Bombay. With equalization, this price difference diminished and the competitive advantage that had made the Hooghly belt viable disappeared. Bengal’s share of industrial production fell from 27% in 1947 to 17.2% in 1960-61, and its per capita income collapsed from first to eighth place in 1966. East India was consciously repositioned as a supplier of raw materials rather than an industrial processor.
Then came 34 years of mismanagement by the Left Front, which worsened the damage. CPI(M) affiliated unions normalized gherao, the physical detention of managers on factory premises. In 2008, West Bengal alone accounted for 58.54 lakh of the 68.35 lakh man-days lost nationwide due to politically motivated industrial closures – a staggering 85.6% of the national total in a state with 7.6% of the population. The investors no longer came because there was no land or infrastructure in Bengal, but because production planning had become hostage to the political theater. The Left’s 1978 industrial policy explicitly banned multinational investment and treated private capital as an enemy rather than an engine of growth.
The Trinamool Congress (TMC) years after 2011 brought different language but similar structural results. According to parliamentary disclosures from the Ministry of Corporate Affairs, over 6,688 companies relocated from West Bengal between 2011 and 2025, including 110 listed companies. The state’s share of national GDP has fallen further from 10.5% in 1960-61 to 5.6% in 2023-24 – the sharpest long-term decline of any major Indian state. Per capita income was once 127.5% of the national average and is now 83.7%. Although many of TMC’s welfare programs have helped disadvantaged populations, they have not addressed structural decline.
THE MYTH OF LAND FRAGMENTATION
Critics point to land fragmentation as an insurmountable hurdle. This argument collapses upon closer inspection. Land fragmentation is a political problem with political solutions, not a geological fact.
The core instrument required is a Land Bank Authority – a government-backed entity empowered to assemble contiguous parcels of land through transactions with willing sellers, the bundling of long-term leases with compensation packages, and the conversion of degraded or derelict agricultural land. Several mechanisms already exist and have proven successful elsewhere. The development of an industrial corridor in Odisha enabled land to be acquired quickly by offering displaced farmers multi-year crop compensation, alternative livelihood arrangements and equity participation in industrial parks. Gujarat’s GIDC (Gujarat Industrial Development Corporation) model created dedicated industrial zones with pre-released land, plug-and-play utilities and government approval in a single window, reducing the time to set up a business to under 30 days. Kolkata currently takes 258 days to set up a medium-sized business as against 143 in Chennai and 144 in Ahmedabad – this gap can be completely closed through administrative reform.
The specific legal barrier for West Bengal, Section 14Y of the West Bengal Land Reforms Act, which requires state approval for land ownership over 24 acres for industrial purposes, needs to be amended to enable acquisition of Land Bank Authority in a transparent, rules-based framework rather than discretionary policy approval. This single change in the law would significantly change the investment calculation.
The Singur lesson was misunderstood by almost everyone. The problem in Singur was not that a large industry could not emerge in Bengal. The problem was that the acquisition process was coercive, underpaid, and supported by a political movement that had electoral incentives to resist it. A land bank model with willing market price and community equity ownership avoids each of these points of failure.
The structural advantages that Bengal still has
Apart from the land, the case for Bengal as an industrial hub rests on fundamentals that cannot be replicated by other states. The Syama Prasad Mookerjee Port in Kolkata is India’s only major river port and the main sea gateway for Nepal, Bhutan, Bangladesh and the entire northeastern part of India. At a time of regional supply chain integration under the BBIN connectivity framework and India’s Act East Policy, this is a geopolitical advantage of the first order. Port-led logistics, agro-processing for exports and component manufacturing for Southeast Asian supply chains represent sectors where Bengal has natural location advantages that no incentive package can provide elsewhere.
Calcutta’s intellectual infrastructure – IIT Kharagpur, IIM Calcutta and Jadavpur University – represents one of the densest concentrations of engineering and technical talent in India. Tamil Nadu essentially built its automotive and electronics clusters on institutional talent pipelines. Bengal has the same raw material and has time and again failed to convert it into industrial anchor.
WHAT REAL POLITICS LOOKS LIKE
The policy architecture for industrial revival in Bengal requires five interlocking components. First, the Land Bank Authority with transparent, rules-based meeting mechanisms replacing discretionary political consent. Secondly, a true single-window clearance system with statutory timelines for approvals, on the lines of the Real-Time Governance Society of Andhra Pradesh. Third, industrial relations reform that upholds workers’ rights while eliminating politically motivated production disruptions – this means reforming the contract enforcement framework and depoliticizing the labor dispute resolution machinery. Fourth, a strategy for a port-industrial corridor connecting Haldia, Kolkata and proposed logistics hubs along NH-12 into an integrated cargo and manufacturing zone, actively co-funded by Prime Minister Gati Shakti rather than receiving passive central schemes. Fifth and most importantly, restoring contractual credibility: The retroactive cancellation of the 1993 industrial incentive schemes in September 2025, which cost Birla Corporation and Dalmia Bharat alone an estimated Rs 430 billion, sent exactly the wrong signal. No investor commits capital to a jurisdiction where legally documented obligations are politically available.
Bengal’s development since 1947 is fundamentally a story of wasted advantages – not of inherent limitation. The equalization policy, the hostility of the left industry and the TMC’s welfare over investment model all led to decisions that worsened the decline. Decisions can be reversed. The harbor is still there. The talent is still there. The commercial story is still there. What Bengal lacks is not the conditions for industrial revival – it lacks the political will to create the conditions under which capital and government can productively coexist. This is a more difficult problem than fragmented land parcels, but it is also far easier to manage.
- Hindol Sengupta is the former Vice President (Research and Strategy) of Invest India, the national investment promotion agency of the Government of India.)
