Regime change in West Bengal seems to have rekindled hopes of an industrial renaissance in the state. How difficult is this?First, some data. Going by NITI Aayog's 2025 report, 'Macro and Fiscal Landscape for West Bengal', its share in national GDP declined from 6.8% to 5.8% between 1990-91 and 2021-22. Its per-capita income in 2021-22 was 20% below national average.Surprisingly, this was not on the back of sluggish manufacturing. In the decade between 2013-14 and 2022-23, 'real' - gross state value added at constant 2011-12 prices - manufacturing growth was 8.1%, higher than the national average of 5.5%. This may not quite square up with the perception of a state in industrial decline, low per-capita income and large outward migration.That most manufacturing growth lies in informal micro-enterprises holds a clue to this puzzle. Bengal houses over 16% of India's unorganised industries. There is, however, a relative dearth of big formal manufacturing and associated better-paying formal blue-collar jobs.So, what thwarted big industry from investing in West Bengal? The biggest constraint is probably land. According to human development ministry, the state's population density is an estimated 1,106 per sq km compared to a national average of 415. The consequence: extreme fragmentation of landholdings.Acquiring freehold private land outside state-designated industrial parks remains a big challenge. The state's much-lauded Land Reform Act of 1955 empowered small farmers, but created a myriad of legal and bureaucratic barriers for industry.The state's highly fertile soil has added to the problem with extensive multi-cropping. Rice, the key crop, has three cropping seasons, unlike one or two in the rest of India. Overall, Bengal's cropping intensity is over 180% compared to the national average of about 142%. That means that most of the state's agricultural land is cropped at least twice. Resistance to the proposed Tata car factory in Singur didn't reveal an irrational attachment of farmers to their land. It was hard economics.Easy solutions like providing 'plug and play' industrial sites, or having a market-based auction for land is not as easy for Bengal than in other states with less population pressure and more arid land. For instance, it's unclear whether free auctions would yield a price for land that is attractive for investors. Remember, Bengal has to compete with other states, some of which have entrenched themselves as popular investor destinations with easy land access.So, the new BJP government may need to ramp up intermediation - getting land for investors, circumventing constraints of the Reform Act and offering it at a competitive price, even if it means providing some subsidies at initial stages.In designing a blueprint for Bengal, it's imperative to take a close look at national trends and patterns of manufacturing growth. Judhajit Chakraborty and R Nagaraj's influential 2020 paper published in EPW, 'Has India Deindustrialised Prematurely?', on post-liberalisation trends in manufacturing is insightful, particularly its district-level analysis focusing on trends in 362 districts. (While the authors look at the 1991-2011 period, it's unlikely that patterns and trends have changed dramatically.)Rising share of manufacturing jobs in total employment of top 50 districts, and progressive deindustrialisation of a large percentage of other districts (particularly in the 2001-11 period), would suggest 'that manufacturing firms are increasingly getting spatially concentrated, perhaps to reap economies of agglomeration'. This is particularly relevant for Bengal's strategy. Instead of a state-wide manufacturing strategy with a little bit of everything for each district, it's important to pick potential winners - districts or clusters that potentially offer agglomeration benefits.This seems to tie in well with Sanjeev Sanyal's views that focusing sharply on Kolkata and its catchment as an engine of growth is the best way to drive the state's new industrial strategy. Hooghly riverbanks around Kolkata are dotted with derelict factory sites of legacy industries like jute. Land acquisition for new industries should be relatively easy in these locations.It would, however, be remiss to ignore the micro enterprises that are the backbone of employment. The 'One District One Product' scheme has identified the competitive advantage of each district - for instance, sports goods and foundry products in Howrah, cashew-processing in Purba Medinipur. So, each district represents a potential mini 'Mittelstand', some of which can be made more viable through right interventions. Bengal's traditional products, its superb artisan work, deserve a larger national and international market.Prima facie, credit availability seems to be a problem. Bengal's credit-deposit ratio in March 2025 was 27%, compared to the national average of 61%. Small enterprises usually have a problem in raising loans. The state's skew towards micro-enterprises may, at least partly, be pulling the aggregate down. A robust credit guarantee scheme provided by the state, with a buffer for initial loan losses, may help rectify this.Boosting investments in formal manufacturing would mean taking on the hubs in the southern and western parts of India, whose incumbency advantage has grown over time. Locational pattern of Indian industry has curiously remained static post-liberalisation, unlike China where there was a significant spatial redistribution of investments after its 1978 reforms. Getting large industrial investments would entail breaking this rigidity.This may seem difficult but it isn't impossible. Bengal is a gateway to both domestic and international eastern markets. It must do its best to evolve from an entrepot to a production hub.The writer is former chief economist, HDFC Bank.(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)