The Hindu Business Line : Gujarat: Home to global business

A recent study on the “Outlook for Corporate Investments”, conducted by the Reserve Bank of India, Gujarat ranks first in India with the proposed investments of $17.8 billion in 86 projects, comprising 25.8 per cent of the total investments of $69 billion received in India during 2007.

The other leading States were Andhra Pradesh, Maharashtra and Tamil Nadu, in that order.

With 51 large-sized SEZs set to come up in Gujarat as of now, the western coastal state may well emerge the SEZ capital of India, as the Chief Minister, Mr Narendra Modi, observed at Dalian, China, during a World Economic Forum meet in September 2007. During the “Vibrant Gujarat: Global Investors’ Summit 2007 held in January this year, Mr Ratan Tata, Chairman of the Tata Group, summed up the vibrancy of the financial scene in Gujarat and the business community’s reaction to it in these words: “You are stupid if you are not in Gujarat”.

There are anecdotes galore on how Gujarat progressed faster than Maharashtra of which it was a part until 1960. One famous anecdote is about a cooperative delegation from the neighbouring state visiting Gujarat a few years ago. Impressed, the visitors asked their hosts about the reasons behind rapid rise of this state. “You have history; we have made it,” remarked a Gujarat official.

Few states would have taken the Republic Day earthquake of 2001 in Gujarat as a challenge to human spirit to weather calamities; Gujarat bounced back as never before.

The earthquake had claimed nearly 13,000 lives and flattened properties and infrastructure worth hundreds of crores of rupees.

Now, the three most affected districts — Kutch, Ahmedabad and Surendranagar — hardly exhibit the effects of the killer temblor.

A senior bank official, who had worked at Latur and Kutch when they were struck with earthquakes in the last two decades, observed that while Latur still faced the aftermath of the tragedy, like inadequate rehabilitation of victims, Kutch betrays no such signs at all.

Mr Tata’s observation was hint enough to what Gujarat, already one of the most industrialised and economically vibrant states in India, has achieved between 2001 and 2007.

So far, in the three events of Vibrant Gujarat in 2003, 2005 and 2007, and its related mega-buck activities, such as information technology and urban development, investments to the tune of about Rs 8 lakh crore have been promised in the State by investors, Indian and global.

Many of these proposals are at various stages of implementation.

Industrial peace

In a recent report, released by Teamlease ranking 19 states in terms of labour peace, Gujarat was ranked the second best industrialised State in the country, next only to Delhi, in the matter of the least number of mandays lost due to industrial disputes.

It has not only improved its 1995 position but has narrowed Delhi’s huge lead over others, coming a close second.

This parameter has helped Gujarat in attracting almost 80 per cent of India’s industrial investment in 2005-06.

The number of mandays lost in Gujarat is the least among all states, having declined further from 1.51 lakh in 2004 to 1.18 lakh in 2005.

To abolish the inspector raj, the State government has introduced the annual self-certification and consolidation scheme, rationalising and reducing number of inspector visits considerably.

Policy Initiatives

Water Revolution: Gujarat has created a water revolution in a State major parts of which were reeling with severe drought until the last decade.

The State has utilised the Narmada water for reviving various rivers, including the Sabarmati river in Ahmedabad. Soon, the Narmada water will fill up the seasonal rivers like Banas, Rupen or Saraswati, converting the semi-arid north Gujarat region into a lush-green belt. North Gujarat, to which the Chief Minister, Mr Narendra Modi, belongs, is, in fact, the new happening place in Gujarat.

The Narmada water from the Kevadia-based Sardar Sarovar dam has reached even the distant Kutch, through a 900-km-long pipeline from Vadodara.

The seasonal migrations of men and beast from Kutch has virtually stopped since the last few years.

Not only the State Government, even NABARD has been able to recharge water resources in Kutch district and other dry places. The height of the main dam at Sardar Sarovar Project has been raised to 100 metres plus three metres hump.

The Narmada-based Mangrol-Maliya Group Water Supply Scheme has been completed on a war footing, benefiting 31 villages in the first and 19 villages in the second taluka.

The project to build 271 big check-dams in 21 seasonal rivers of north Gujarat has been taken up under the Narmada-based plans.

Earlier, a700-km long pipeline was laid in 500 days flat to carry the Narmada water to towns and villages in Saurashtra and Kutch region.

The government has also approved the Kalpasar Project to provide new lease of life to the people of Gujarat, reducing the distance between Kathiawad and Gujarat regions by 250 km, besides providing water for irrigation, land reforms and transport facilities.

Infrastructure

With a view to boosting investments in infrastructure projects, the State Government had passed the Gujarat Infrastructure Development (GID)Act, 1999. The Act provided for a framework for participation of private players in financing, constructing, maintaining and operating infrastructure projects.

Before this Act came into being, Gujarat Infrastructure Development Board (GIDB) was set up in 1995 with an objective to attract private sector investments in infrastructure sectors.

Key sector

Clearly, the State Government was a pioneer in identifying infrastructure as a key sector to attract investments.

It also identified power, roads, railways, ports, airports, urban development, water, information technology, industrial development, gas and tourism as the main focus areas for investments.

GIDB’s functions included overall planning of infrastructure requirements in the state, identification and removal of policy impediments, co-ordination among various department of the State Government, and approval of infrastructure projects to be implemented through Private Sector Participation (PSP).

GIDB pioneered in creating an Infrastructure Master Plan for the state, known as Gujarat Infrastructure Agenda - Vision 2010, in 1999.

The vision document specified sector-wise shelf of projects in various sectors of infrastructure, policy interventions required in various sectors, quantum of investment required, etc.

The Vision 2010 had envisaged investment requirements to the tune of Rs 1,17,000 crore.

Much, however, changed since the Vision 2010 document was created.

The outlook of many sectors has also changed during these years.

Electricity Act

Drastic changes took place in the power sector with the new Electricity Act, 2003, following which the transmission and distribution arms of Gujarat Electricity Board (GEB) were separated into half-a-dozen regional companies, with the parent body focusing on power production.

The concept of SEZ became a reality and natural gas is considered to be the fuel of tomorrow.

In the era of global trade, ports will become very important infrastructure and Gujarat has a distinct advantage of its 1-600- km-long coastline.

All these rapid developments led GIDB to revisit the earlier Vision 2010 and create a new Vision for the State in 2003– Blueprint for Infrastructure Development in Gujarat 2020 (BIG2020).

The main objectives of BIG 2020 are:

• To review the Gujarat Infrastructure Agenda – Vision 2010 document looking at the fresh demand-supply scenario, changes in the policy and priorities of the State Government and to prepare a new document for planning of infrastructure projects to be implemented in next 15 years.

•To review the existing legal framework in each sector, including GID Act 1999, in order to assess the impact of various policies on the implementation of the projects.

• To prepare an Infrastructure Action Agenda, that will identify projects to be implemented through Private Sector Participation. BIG 2020 aims to derive demand of various infrastructure services over the next 15 years and to create shelf of projects to meet this demand. These demands will be based on the growth of primary, secondary and tertiary sectors. It also aims at creating driver-linkage relationship among various sectors, identify clusters of development, prioritise the projects and create a five year action plan of projects of utmost priority. This document will also highlight policy level issues in each sector and identify interventions required from Government in order to promote Private Sector Participation in the state. BIG 2020will cover Power, Port, Roads, Urban Infrastructure, Water, Industrial Parks, Railway, Airports and Information Technology sectors.

GIDB also appointed CRISIL Infrastructure Advisory Services to assist it in the preparation of the Infrastructure Master Plan. Clearly, with its focus on infrastructure, the State Government went ahead with a series of steps to create a situation in Gujarat wherein no potential investor could resist the temptation to move in.

And the results of these initiatives have begun to emerge now.

Industrial Policy

In September 2003, the State Government announced its comprehensive industrial policy by giving a futuristic direction to the development of industry and attracting investments through a slew of concessions. Subsequently, it announced sectoral policies in the areas like power, ports, roads, information technology, agro-products, mineral exploration and tourism.

It also identified as focus areas sectors like agro and food processing, textiles and apparels, chemicals, petrochemicals and pharmaceuticals, engineering, auto and ceramics, SEZ and port-led development, power and oil and gas, gems and jewellery, medical tourism, biotechnology, information technology, urban development and tourism.

Two months ago, it also announced a comprehensive urban development policy.

Job Opportunities

Gujarat is now fast emerging as an important destination for IT related activities and therefore, developers like the Rahejas and DLF have shown interest to develop IT parks in the State.

The Raheja Group is planning to set up an IT park near Gandhinagar with an investment of Rs 300 crore as has done the DLF Group.

Joining the league is the Dubai-based Emmar Group which is in dialogue with the State Government to set up an IT park on the Gandhinagar Knowledge Corridor.

The State Government is also planning to commission a study on the potential opportunities that can be created through IT sector.

With several software majors and call centre firms queuing up to Gujarat, this sector is expected to create fresh opportunities for two lakh jobs in the State. Similarly, the Reliance Group’s new refinery at Jamnagar and its initiatives in retail marketing in the State will open up thousands of new job vistas in the State.

RIL is planning to hire around 8,000-10,000 people over the next two years for its retail project alone, which will be the highest recruitment for a retail venture in any state.

In addition, Reliance is also expected to hire another 2,000 persons for its upcoming refinery project at Jamnagar.

Massive investments

In the recent past, the state has witnessed a massive flow of investments both in industrial and infrastructure projects.

Thanks largely to programmes like the Vibrant Gujarat, a large number of job opportunities are expected to be generated in the state for the youths.

Conscious about this fact, the State Industries Department has recently carried out an exercise to assess the requirements of technically trained manpower in sectors like Engineering & Auto,Textiles & Paper and Chemicals, Petrochemicals & Pharmaceuticals in which majority of the investments is slated to come.

For the purpose, three Core Committees comprising Industries Department officers, academicians and industry representatives were constituted to examine the manpower requirements of these sectors mapping with it the technical education infrastructure in the state.

These Committees have examined all the issues pertaining to the human resource development in the context of industrial development in the state and submitted recommendations.

Presentations of the reports were made in three separate workshops organised in Ahmedabad in the presence of industry representatives.

The Committees have recommended introduction of short-term bridge courses, post-degree, post-diploma and post-ITI, and for the purpose evolved an industry-centric PPP Model by creating an SPV to develop the manpower specific to the industry requirements.

This Model has been circulated to the industries and is under consideration by some of the industrial houses for implementation.