WHY IS GUJARAT UNBEATABLE?-A SUMMARY:MUNISH ALAGH
I. A SUMMARY OF STRENGTHS OF GUJARAT ECONOMY-NUMBERS
REFERENCE-CMIE, STATES OF INDIA DATABASE
The cumulative average rate of growth in % of Per Capita Net State Domestic Product of Gujarat in a comparative level in the last three decades is the following
DOMESTIC PRODUCT IN CONSTANT PRICES CAPITA NET STATE
CARG (% p.a.)
CLEARLY THERE CAN BE NO MORE CLEAR PROOF REQUIRED FOR GUJARATS GROWTH BEING HIGHER IN LAST TEN YEARS THAN THE FACT THAT THE GROWTH IN PER CAPITA NSDP IS HIGHEST IN LAST TEN YEARS
CARG (% p.a.)
MAHARAHTRA-CUMULATIVE AVERAGE RATE OF GROWTH % OF PER
DOMESTIC PRODUCT IN CONSTANT PRICES CAPITA
CARG (% p.a.)
MAHARASHTRA- CUMULATIVE AVERAGE RATE OF GROWTH %
INDUSTRY IN CONSTANT PRICES GROSS
CARG (% p.a.)
GUJARAT HAS ALWAYS BEEN A HIGHER GROWING STATE THAN
BOTH OVERALL AND IN INDUSTRY AND THIS CONTINUES.
GUJARAT-ALL INDUSTRIES SUMMARY
- WAGES TO WORKERS HAVE INCREASED BY 9.7% PER ANNUM CAGR BETWEEN 2000-2008
- INVESTED CAPITAL HAS INCREASED 5% CAGR BETWEEN 2000-8
- GROSS VALUE OF OUTPUT HAS INCREASED 18.1% BETWEEN 2000-8 CAGR
- NET INCOME HAS INCREASED BY 20.3% CAGR BETWEEN 2000-8
- PROFITS HAVE INCREAD 26.4% CAGR BETWEEN 2000-8
II. A SUMMARY OF STRENGTHS OF GUJARAT ECONOMY-FACTS IN DETAIL
BASIC SUMMARY OF SOCIO ECONOMIC REVIEW OF GUJARAT STATE 2011-12 and OTHER GOVERNMENT DOCUMENTS
According to the Industrial policy of Gujarat State for 2009, Gujarat is one of the most industrialized state in India, this document also states that Gujarat has the reputation of being a highly investor-friendly state and has become the most favoured investment destination. How far is it true? Below, we study this.
The Annual Survey of Industry (ASI), 2009-10 carried out by the Central Statistical Organization (CSO), under Ministry of Statistics and Program Implementation, Government of India, reinforced the position of Gujarat as the most industrially developed state in India in respect of first ranking in industrial investment and second in terms of value of production and value addition in industrial sector.
Over the years, Gujarat has diversified its industrial base substantially. In the year 1960-61, textiles and auxiliaries were the major contributor to industrial economy of the state. In the span of over 52 years, the industrial spectrum has completely transformed and today 13 major industry groups together account for 83% of factories, 94% of fixed capital investment, 93% of value of output and 93% of value addition in the state’s industrial economy. In the recent years, refined petroleum products has emerged as one of the largest industrial groups having 37% share, followed by chemicals having 14% share. Other important groups Basic Metal(8%), food products (7.14%), textiles (5%), machinery and equipment (3.36%)
Industrial units having investment exceeding Rs. 10 Crore in plant and machinery are classified as large industrial units. industries are required to file Industrial Entrepreneur’s Memorandum (IEM) with Secretariat for Industrial Approval, Ministry of Commerce & Industry, Government of India, on observing certain requirements with respect to location and environment.
The filing of IEM with Secretariat of Industrial Approvals (SIA), GOI is considered as an important parameter to assess the degree of industrial development in a state. The details of IEMs filed for Gujarat since the introduction of liberalization process in August 1991 till the recent time (to March 2012) are as follows:
10537 IEMs having an aggregate investment of Rs. 10,33,314 Crores have been acknowledged for locations in Gujarat. In addition, the state has also received 471 Letters of Intent entailing an investment of Rs. 27,534 Crores, over the same period. The Government has put in place an effective mechanism for monitoring of all the industrial approvals, in order to know the status of these approvals and provide effective intervention in the speedy implementation of these projects.
Of these approvals, as on 31st March. 2012, 5276 projects with an investment of Rs.1,87,066 Crores have been Commissioned. In addition, 3287 projects having investment of Rs. 7,35,736 Crores are Under Implementation.
The state has implemented Micro, Small and Medium Enterprises (MSMED) Act 2006
from 2nd October, 2006. During the year 2011-12 (Up to November 2011), 29089
units have been registered having investment of Rs. 8465.92 crore and employment
generation of 218054.
Vibrant Gujarat - Global Investors'Summit : "Vibrant Gujarat Global Investors'
Summit - 2011" was organised on 12-13 January-2011 at Mahatma Mandir, Gandhinagar to attract the investors to establish projects in the State. In all 8380 MoUs have been signed/announced in different sectors with total proposed investment of Rs. 20.83 lakh crore.
Preparations have begun for the Vibrant Gujarat 2013 .This time, the event will be
organised , during 11 to 13 January, over an area of about one lakh square metres or
four times larger than the one organised in January 2011.
SEZ’s:Gujarat has the distinction of being the first state to enact the Special Economic Zone (SEZ) Act,
2004. Special Economic Zones (SEZs) are growth engines that can boost manufacturing, augment exports and generate employment. Board of Approval (BOA) in Ministry of
Commerce and Industries (MoCI), New Delhi has accorded approvals to 60 SEZs in
Gujarat at the end of March-2011. The total proposed investment by the SEZ Developers
is around Rs.267373.45 crore.
The number of factories has increased from 14863 in 2008-09 to 15576 in 2009-10,
showing an increase of 4.80 percent over the previous year.
The total length of roads (except Non-plan, Community, Urban and Project roads) in the State has increased to 74117 kms. at the end of 2008-09 from 74112 kms. at the end of 2007-08. On the lines of Ahmedabad-Vadodara expressway, constructed by Central government undertaking National Highways Authority of India (NHAI), Gujarat government has chalked out plans to build its own expressway between Ahmedabad and
The number of registered motor vehicles has increased from 129.93 lakh at the end of 2010-11 to 136.36 lakh at the end of September-2011, showing an increase growth of 4.95 percent.
The State of Gujarat, located on the West Coast of India, has about 1600 Km. long
coastline. Gujarat is strategically positioned to serve the vast north and central Indian
The State has 41 minor and intermediate ports, geographically dispersed across South
Gujarat (14 ports), Saurashtra (23 ports) and Kachchh region (4 ports). Besides, in the
State of Gujarat there is a major port of Kandla, under the administrative control of
the Central Government.
it was a port policy that opened the doors for a port-led development in Gujarat. The port policy calls for public-private partnership (PPP) in port development and management.
Gujarat Maritime Board will construct a jetty and allied infrastructure near Bagsara,
Rajkot, in the Gulf of Kutch for salt export through sea route at an investment of over
Rs 80 crore.
The Gujarat Maritime Board (GMB) is working to interlink all ports of the state
using the Integrated Port Management System, wherein the data regarding cargo
handled, arrival and departure of the ships will be updated daily. GMB intend to
interlink all ports of GMB including private ports of Mundra, Pipavav, Dahej and Hajira
through information technology (IT) network.
Japan and the Gujarat Maritime Board (GMB) have signed an MoU for Rs 100 croreto upgrade the Alang ship breaking yard to international requirements by way of
technology transfer and financial assistance under a Private-Public Partnership (PPP).
The modernised Alang yard will be ready by 2012-13.Gujarat government is all set to begin a
commercial ferry service for passengers and vehicles across the Gulf of Khambhat.
The Pipavav Shipyard, an integrated shipbuilding facility on the Saurashtra coast of Gujarat, was dedicated to the nation during the year. The shipyard has been developed
to have one of the largest dry dock and wet dock facilities in the world, with state-ofthe-
art technology which can be used for construction of vessels relating to the oil, gas
and defense sectors.
The estuary of Narmada river, considered lifeline of Gujarat, will now become the
lifeline for ship-building activities of India. The state government has decided to set up
world-class maritime park on the seacoast.Gujarat Maritime Board (GMB) worked out
a complete plan for a 25 km. stretch, starting from the south of Dahej in Bharuch district
upto the point where the Gulf of Khambhat and Narmada river meet - for the maritime
park. GMB proposes to spend Rs 1000 crore in infrastructure for developing the park. At
least a dozen shipyards are proposed to be set up in the area, each with an investment
ranging from Rs 300 crore to Rs 1200 crore.
With the decision to develop the maritime park at Bharuch and
five others in different locations in Kutch and Saurashtra, Gujarat may well fulfill the
government of India's shipbuilding policy perspective of taking it to 10 per cent. The
maritime park in Bharuch will get extra fillip on account of Petroleum, Chemicals and
Petrochemicals Investment Region (PCPIR) set up in Dahej.
The total installed capacity of the State as on October, 2011, it
has touched to 13314 MW (comprising of 4996 MW by Gujarat State Electricity Corporation Ltd. (GSECL), 5318 MW byPrivate Sector and 3000 MW by CentralSector Share).
The Blueprint for Infrastructure in Gujarat 2020 (BIG 2020) is an integrated plan for
the state's infrastructure development, to make Gujarat a globally preferred place to
live in and to do business through accelerated, balanced, inclusive and
sustainable growth driven by robust social, industrial and physical infrastructure. It
envisages an investment of Rs. 11,80,912 crore across 19 infrastructure sectors, is an
integrated plan for the state's infrastructure development.
The state government issued a notification for the setting up of the Gujarat's Special Investment Region (SIR) that will have an investment of Rs. 1 lakh crore (Rs. 1 trillion).
The notification was issued to the Dholera SIR Regional Development Authority
(DSRDA). The government has already notified 99,000 hectares of land in 22 villages in the region and an investment of Rs.1 lakh crore is on the anvil.
The Gujarat Infrastructure Development Board (GIDB) has decided to development
Dholera Special Investment Region (SIR) as a new age city with world-class infrastructure
and high quality of life. GIDB was the first entity in the country to enact an SIR Act in 2009, as the state has issued notification for developing four more SIRs at PCPIR-Dahej, Halol-Savli, Aliabet and Santalpur. GIDB will be the apex authority to develop the SIRs.
The Gujarat Government has decided to transfer 662 acres of prime land across the
Sabarmati in Gandhinagar district to the Gujarat International Financial Tec-City
(GIFT) Company Ltd., a joint venture between Infrastructure Lease & Finance
Services (IL&FS) and state-run Gujarat Urban Development Company (GUDC), to
kick-start the construction of GIFT city- the high-tech financial hub.
GIFT is the country's first multi-service SEZ with special focus on financial services. GIFT alone is likely to attract investment proposals, in the form of
MoUs, for Rs 50,000 crore.
GIFT gets IFSC status : The Union Ministry of Commerce and Industry has
given its approval to the Gujarat International Finance Tec-City (GIFT) SEZ, Gandhinagar,
for setting up the first operational International Financial Services Centre (IFSC) in the country. Now, instead of setting up branches in other countries, banks or companies just need to visit GIFT SEZ to conduct their business in international currency denominations. This will be the first
operational IFSC in the country and it will facilitate financial services for Indian entities
across the world.
The GujaratInfrastructure Development Board (GIDB) has taken up the study to develop
Surendranagar-Wadhwan, Morbi-Wakaner and Bharuch-Ankleshwar as twin cities.
In a first ever initiative of its kind, Gujarat Government has announced a novel
'Participative Policy for Land Development in Industrial Estate', offering a slew of
incentives for the affected landowners over and above the prevailing policies or practices
elsewhere in the country. The first policy, termed 'Participative Policy for Land Owners
in Industrial Estates', is to make the landowners as partners with GIDC in the
economic growth on their land. The other, termed 'GIDC Developing Estates on PPP
model', is to develop Industrial Estates on Public-Private Partnership (PPP) model on
land purchased privately by Industries Associations. The twin new land development policy is implemented by Gujarat Industrial Development Corporation(GIDC). It has been necessitated due to growing demand for land for up-and-coming for projects signed during the four editions
of Vibrant Gujarat Global Investors Summit (GSSIS) already under various stages of
implementation. It takes care of the industry demand as well as adequate compensation
for the farmers selling their land.
After Tata Motors and Ford, French car maker Peugeot has decided to set up a
manufacturing facility at Sanand, which is becoming country's most preferred auto hub.
India's leading car maker Maruti Suzuki and Gujarat government has also finalised the
deal to set up the automobile major's new manufacturing plant at Becharaji in Mehsana
The state government set up an international level Automotive Skill Development
Institute on PPP mode with PSA Peugeot, to generate skilled manpower for the
Gujarat government has moved to set up seven new Special Investment Regions
(SIRs) at Sanand and Changodar, both in Ahmedabad district; Aliabet, an island in the
mouth of Narmada river falling in the Gulf of Khambhat; Navlakhi, a port on the eastern
tip of the Gulf of Kutch; Pipavav and Simar along the southern Saurashtra coast; and
Anjar in Kutch district. Once through, it will take the total number of SIRs in Gujarat to
13. SIRs are especially notified industrial cum- residential zones, each 100 sq km or
more, to be developed under the public private partnership (PPP) model.
The Centre has signed an agreement with the Government of Gujarat for setting up a
Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) at Dahej in the
With the state experiencing rapid industrial development and the need for industry
responsive skilled manpower ever on the rise, the state government has set an
ambitious goal to provide specialised training to two lakh people every year,
starting from 2013.
The State Government decided to establish the Centre of Excellence for
Entrepreneurship and Technology or iCreate to create an 'ecosystem' that encourages
young entrepreneurs. The centre, set up in collaboration with the Confederation of
Indian Industry (CII) and Deloitte, aims to identify, nurture, mentor and grow the spirit
of the new-age entrepreneurship and innovation among youth. The Centre of
Excellence (CoE), with an incubation centreiCreate- will come up on the outskirts of
Gujarat State Disaster Management Authority (GSDMA) is coming up with five
Emergency Rescue Centres (ERC) strategically located at five places in the state
to deal with man-made and natural disasters including terrorist attacks. These five ERCs
will be located at Gandhidham, Rajkot, Vadodara, Surat and Ahmedabad. These
centres will be equipped with state-of-art facilities, rescue vehicles, special outfits for
rescuers who venture into high temperature zones, obnoxious gases among other
dangerous situations. GSDMA authorities have mapped every village in the state in
view of natural disasters and also for chemical and industrial hazards. It has
prepared a blue book for each of the village focusing on management and mitigation plan
in case of any disasters.
Institute of Seismological Research (ISR), the institution specializing in geo sciences,
is profiling all major economic zones in the state to predict their future sustainability. The
suggestions given by the Raisan-located institute will be woven into state
government's construction policies made and provide due input to the Gujarat State
Disaster Management Authority (GSDMA).
III. A SUMMARY OF STRENGTHS OF GUJARAT ECONOMY-FACTS IN BRIEF.
According to a report prepared for “Investing in Gujarat” for Vibrant Gujarat by Industrial Extention Bureau of Government of Gujarat the following reasons are stated for Investing in Gujarat:
1. Strategic Location: Strategic location providing access to major international and
- Located on the west coast of India and connected to major ports of UK, Australia,
Middle East and East Asian economies
- 1,600 km coast line –offers numerous opportunities for port based industries.
2. Strong Economy
Leading investment destination with highly competitive investment climate. Gujarat's share in India – 5th largest economy.
No. of factories-10%
Net Manufacturing value-12%
Value of output-16%
Fixed capital investment-17%
· Ahmedabad is rated as the third fastest growing city in the
world (2010) by Forbes magazine
· Top contributor to Indian economy, around 22 % of Indian
exports contributed by Gujarat
· One of the most industrialized state, with 38 % of GDP
contributed by secondary sector
· Sustained investor confidence, the state with the highest number of proposals in India
· Delivering promises, the state with highest number of MoU
and IEM realization.
Contribution of Gujarat to India
Gujarat’s excellent trade and transportation networks create better
market access and trade flows for companies
- The Sardar Sarovar Narmada river linkage project, to create continuous
water supply throughout the state
- High teledensity and excellent internet connectivity in the state
- A power sufficient state with one of the highest per capita power consumption.
- The only Indian state with an integrated state-wide Gas Grid
- State with the highest number of ports and airports
- Excellent road and rail network
4. Impetus to Industries
Taking a lead in creating the right kind of infrastructure with a
focus on the future
· 12 Special Investment Regions of more than 100 sq km each being planned
· 1 Petrochemical and Petroleum Investment Region, 60 Special Economic Zones and existing 200 industrial areas, creating opportunities across sectors
· 38% of the planned Delhi Mumbai Industrial Corridor route is through Gujarat
· Development of new industrial areas for agro parks, tourism , recreation and information.
5. Doing Business
- A Globally competitive business destination with outstanding human capital
- The land of entrepreneurs who are spread across the globe
- Home to some world renowned institutes in management, engineering and design
- Availability of high quality health care facilities
- Government initiated schemes for womenempowerment, reducing infantile
mortality and primary education support
6. Government Initiatives
- Awarded 2nd best state in Asia pacific category in ‘Improving
transparency, transparency, accountability accountability and and responsiveness responsiveness inin public public
service’ by UN in 2010
- Stable political climate
- Urban development initiatives for high quality living
- Simpplification of pprocesses and singgle window apppproach for investors
- International campaigns for investment promotion across sectors
- Wide array of choices for tourists right from heritage monuments,archeological sites , wild life and beaches
A land of immense opportunities, an opportunity for everyone
· Industry specific advantages – in a slew of sectors
· Presence of more than 370,000 MSMEs in the state
· Strong growth of agriculture and horticulture - creating opportunities in agro processing.
- Historically strong gems and jewelry sector
- Strong mineral base
- Large investments requirement in infrastructure
- Opportunities in ports and port based industries
- Opportunities in the tourism industry spread across the value chain
- Opportunities in sunshine sectors like solar power and Biotechnology
- Hub of chemical industry in India, contributes to more than 62 % of national petrochemicals and 51% of national chemical sector output
- More than 9% to national engineering output. More than 30 industrial clusters in the engineering sector
- State accounts for 30% of India’s stock market capitalization
- Contributes 80% of total diamonds processed in India. Gujarat’s comparatively cheaper and skilled workforce can be effectively utilized to setup large low cost production bases for domestic and export markets
- Over 70% of total Gems and Jewellery exports of India
- 85% of unique handmade silver jewellery production of India.
Niti Mehta and SP Kashyap write in Gujarat 2020:Viewpoints and a vision that there are large spatial imbalances in the levels of development. Development is biased in favour of areas having proximity to the urban corridors, which also attract the largest magnitude of investment flows. The remote hilly areas in the east and to the south have witnessed little growth of per capita income or employment matching the growing workforce. They also state that right from the onset, Gujarat has made a clear choice of encouraging the
secondary sector activities over the primary and tertiary sector activities.
Productive labour force, stable industrial relations and a prolonged record of pro-business government have been the initial advantages thattriggered a growth spurt in the 90s over the 80s decade. In fact Gujarat contributed almost one quarter of the total growth acceleration achieved in the nation during the reform period (R Dholakia, 2006). Experience of the 90s also show that “the state has developed capabilities to absorb the negatively large adverse shock on its primary sector not allowing its aggregate real income to fall....national liberalisation process seems to have a stabilizing and growth accelerating impact on the Gujarat economy” (R Dholakia, 2001, pp181). According to Mehta and Kashyap, this was manifested in the growth of the non primary sectors during the nineties, even though agriculture and allied sectors did not witness any positive impact. Moreover within the manufacturing sector, registered manufacturing showed growth acceleration, but the unregistered manufacturing (including cottage and tiny sector enterprises) that employ the largest shares, did not grow significantly.