Infrastructure Today | December 2008

SPECIAL feature | GUJARAT | Modi’s Operandi
When the Tatas announced they were pulling out (the Nano project from West Bengal), I just sent an SMS to Ratan Tata saying ‘Swagatam’. Other states may have written letters to him but I never did that…
Gujarat Chief Minister Narendra Modi

ONE might see a certain economic parallel in the fact that the western state on the Indian map resembles a predator with its jaws wide open and all set to devour its prey. The ease and speed with which the Tata’s Nano project was gobbled up by Gujarat in the face of competition from other states reflects its natural penchant for profit.

The SMS may have done the trick but a whopping Rs 30, 000 crore in sops was reported to have been offered to Tata Motors to bring the project to Gujarat!

Business aggro – opportunism, if you like – is in the Gujarati’s blood and that’s very high on the list of attributes which makes much of India Inc gravitate towards Modi’s Gujarat.

Indeed close on the heels of Gandhinagar making land available for the Rs 1 lakh car project at Sanand there have been announcements of other big ticket investments. An encore of sorts can be seen with Modi, the new poster boy for the country’s industrialists, succeeding in convincing the combine of Singapore based Universal Success Enterprises Ltd and Indonesia based Salim Group to pump in Rs 1 lakh crore in a slew of projects ranging from power plants to SEZs to port development. And then Canadian transportation giant Bombardier would roll out its rail coach manufacturing unit in Vadodara.

As if that were not enough early last month Gujarat Chief Minister went poaching on the neighbour’s turf at the height of global financial turmoil. His address to captains of industry in the country’s financial capital Mumbai, as a build up to the Vibrant Gujarat Investors Summit, 2009, elicited not just rapt attention but reportedly received the promise of much moolah for his state.

Industry experts now expect a renewed surge in investments with Modi strengthening his position at the state’s hot seat. The emerging view is that the entry of the Nano will only add to the already existing rush of investments - the state is already home to some of the biggest industrial projects in the country led by firms like Reliance Industries, Essar and the Adanis, and will have a positive bearing on companies dealing with infrastructure like roads, power, ports and canal development.
But all this has not happened overnight.

For a long time the Modi government has been hardselling the state as the number one destination for investment. The state has fulfilled the target of an annual growth rate of 10.2 per cent over last five years, the highest among all the major states, as set by the Planning Commission of India of India in the Tenth Five Year Plan. In the Eleventh Five Year Plan (2007-12), confident about the growth potential of Gujarat, the Planning Commission has set the annual growth target of 11.2 per cent, again the highest among all the states.

However the state’s minders are eyeing stratospheric heights – a growth target of 14.5 per cent in the industrial sector in the next five years. There is statistical evidence to show that’s possible.

A recent Reserve Bank of India report placed Gujarat No 1 in terms of proposed investments of $17.8 billion from 86 projects – this comprises 25.8 per cent of the total investments of $ 69 billion received during 2007. From three biennial events in 2003, 2005 and 2007 dubbed ‘Vibrant Gujarat’ the state garnered investment proposals to the tune of Rs 8 lakh crore.

Unlike growth rate of agriculture in other states at three to four per cent, Gujarat had a growth rate of more than 10 per cent in this sector. With the government coming back to power, the investor community feels that the efforts to make Gujarat an investor-friendly state will continue, the high growth rate will be maintained with newer projects coming up in the state.

As Modi himself explains, “The people of Gujarat understand the language and importance of business; it is their entrepreneurial spirit which overrides all other considerations”. They have shown this not only in Gujarat and India but in various countries of the world too. That is why in Gujarat, investors feel at home. Our goal is ‘Gujarat’s growth for India’s growth’
Saurabh Patel, Gujarat’s Minister of State for Industries and Energy, is led to say, “Gujarat is the only state to have double digit growth rate for the last five continuous years and we are set for the challenges of the next five year plan target. We have the plan and the strategies to achieve that.”

Financial stability
A major role in achieving macro-economic stability and high growth trajectory has been played by sound fiscal management and good governance. Gujarat’s financial minders have succeeded in transforming the state economy from a revenue deficit of Rs 40.37 billion in 2004-05 to a revenue surplus of Rs 23.40 billion in 2007-08 by introducing prudence and discipline in fiscal management.

Thriving industry
Since its formation forty-seven years ago Gujarat has emerged among the top industrialised states of India. Gujarat houses a number of multinational corporations, large private sector companies, strong public sector enterprises and a large number of medium and small scale units. Gujarat is already globally known in various products like textiles, chemicals, petrochemicals and pharmaceuticals, engineering, diamonds, soda ash and salt and is home to the world’s biggest grassroot oil refinery. It also made a push in ship building and railway coach making. Apart from adding to the investment kitty, the Nano Car project of Tata Motors project will have considerable effect in terms of employment generation, ancillary development, skill up gradation, and strengthening of our base of the engineering industry Gujarat till now has attracted all types of industries “because of the kind of support that they get” declares CB Shetty, General Manager – Marketing, Murudeshwar Ceramics Ltd. Echoing the business friendly atmosphere in the state KG Hariharan, Senior Vice President, Industrial Projects and Utilities sector, Larsen & Tourbo Limited, says, “Gujarat is good for all industries - be it heavy industry, service industry, anything. Here the pressing of the project is not delayed.”

“The pro Gujarat sentiments are a reflection of the confidence companies have shown in Modi’s development plank. The suggestion of continuation of policies will boost investment flow into the state,” says industry analyst Shishir Mandya.

Power punch
The per capita consumption of electricity is very high in Gujarat as compared to other regions and moreover, the state is self-sufficient in power. The present generating capacity of 9,700 mw (excluding 4,000 mw of captive generation) will be doubled to 20,725 mw in the next five years to make Gujarat a power surplus state. The authorities are also planning to set up mini and micro hydel power projects on the dams and canals in the state, besides harnessing the non-conventional and renewable energy resources in wind, solar and bio-fuel sectors.

High on gas
In recent years, Gujarat has emerged as the ‘Petro Capital’ of the country. To capitalise the advantages all across the state, a 2200 km long high-pressure Gas Grid aimed at facilitating gas transmission and distribution from supply points to the demand centres is being laid. All medium and small industries will be supplied gas from the grid to bring down their input cost. In the next two to three years, the Gas Grid is expected to reach all the districts of Gujarat and will cater to the requirements of industrial, commercial and domestic sectors. Two LNG terminals have considerably eased the availability of gas which will further be augmented by two upcoming LNG terminals, planned at Pipavav in Saurashtra and Mumdra in Kutch.

Ports push
Gujarat is blessed with the longest coastline of 1600 km in the country and is dotted with 41 ports many of which serve as the gateway for international trade. The state is now capitalising on this important asset to its economic advantage through port-led development which includes development of new ports, SEZs, connectivity with the hinterland, cold chain, ship-building yards, ship-repair facilities and inter-port transport systems. We are pumping in an additional investment of Rs 150 billion for developing port-related infrastructure at 10 intermediate and minor ports. Gujarat Maritime Board is acting as a facilitator for port-led development with plans for green field investments in ports and ship building yards. Port led development include Greenfield port at Simar, Mithivirdi, Vansi Borsi, Bedi and Maroli.

SEZ thrust
Gujarat was amongst the earliest states to enact an SEZ Act in 2004. It offers complete labour flexibility to the units set up in SEZs in Gujarat. Today, as many as 55 SEZs have been approved in the state. Some of the major SEZ projects in Gujarat include steel and engineering SEZ at Hazira by Essar Group, petroleum and petrochemicals SEZ at Jamnagar by Reliance, Mundra SEZ by Adani Group and high tech engineering SEZ at Vadodara by Suzlon. These are just few from the huge list.

Enabling infrastructure
Gujarat has taken a lead in developing infrastructure to encompass new areas as diverse as gas grid, private railway lines, optical fiber network, water supply network, micro-irrigation systems, 24- hour rural electricity supply, SEZs, airports, finance city, townships and modern medical facilities. It derives its strength from a Public-Private Partnership model evolved, formalized and perfected over a decade. In fact the state was the first to enact a law outlining the system of public-private partnership in infrastructure projects. The government has always encouraged investment and enabled it further with organisations like the Industrial Extension Bureau (iNDEXTb), which provides information to the public in general and entrepreneurs in particular on the opportunities available in the state in industry, commerce and trade. Today, Gujarat is working overtime, benchmarking with the ‘Asian Tiger’ economies to achieve competitiveness on a global scale. It proposes to achieve an average annual industrial growth rate of 15 per cent on a sustained basis to fulfil the overall economic growth target of 10.2 per cent set by the Government of India. With this in view, in 2003, the state government formulated the New Industrial Policy. The policy spells out its strategies for overall economic development of the state. The state has attracted investments equivalent to over $ 30 billion. While sharing just five per cent of Indian population, it contributes 21 per cent in exports and 13 per cent in India’s industrial production. The gross state domestic product (GSDP) of Gujarat at factor cost at constant (1999-2000) prices in 2005-06 was $ 41.3 billion. The GSDP registered a growth of 12.17 per cent at constant prices in the year 2005-06. Gujarat contributed 6.5 per cent to the Gross Domestic Product (GDP) of India in the year 2005-06. “The reasons why we have invested in the state are positive investment climate, good infrastructure. The state is very supportive and provides a lot of growth opportunities and there are not too many hurdles or business risks in the state related to local issues, law & order which help the companies to be more focused on their business,” says Chandar Bansal, President, Transportation, Oil & Gas, Maytas Infra.

Water for all.
The raising of the height of Sardar Sarovar Narmada dam to 121.92 metres has led the waters of Narmada river to flow all across the state through canals and pipelines. The entire project is expected to be completed by 2010. The Gujarat Government has been active in interlinking of rivers and has taken measures to check the depletion of underground water, arresting the flow of rain water and preventing soil erosion through minor water conservation systems and with people’s participation. It has also started popularising micro-irrigation systems. With one of the best water management efforts in the country, it plans to enhance the present area under irrigation in Gujarat to one and half times in the next 2-3 years.

Connectivity boost
Gujarat has always been known for its quality of roads. The village connectivity is as high as 98.86 per cent. While the statewide road network today extends to 74.11 km, the targeted road length in next five years is 1,14,866 km. While India’s first national expressway between the cites of Ahmedabad and Vadodara in Gujarat is already in place, there is also a proposal to extend it right up to Mumbai making it a high speed passenger corridor. In order to harness the potential of ports to their fullest extent, the roads connecting Mundra, Kandla, Pipavav, Khambhat and Dahej and other important Ports are being converted into six-lane roads. Similarly, the railway connectivity is also being upgraded.

Communication network
In terms of development of Information and Communication Technology infrastructure, Gujarat has made some path-breaking progress. We have the country’s longest operational OFC network of more than 50,000 km. The state-owned Wide Area Network (GSWAN) is the largest IP based ICT network in the Asia-Pacific region and the second largest in the world, connecting 26 districts and 225 blocks through 12,000 nodes. GSWAN is capable of voice, video and data transfer. Broadband connectivity has been provided to all the villages of the state

Delhi-Mumbai Industrial Corridor (DMIC)
As part of the Delhi-Mumbai Industrial Corridor (DMIC), six industrial nodes have been proposed for the state of Gujarat. An investment of about $ 100 billion is contemplated in Gujarat on account of DMIC. It is expected to provide employment to 800,000 people. As part of the DMIC project, identified industrial nodes will be developed as global manufacturing and commercial hubs. The Government of Gujarat has identified selected nodes to be developed as mega industrial and investment locations. These include Dholera Special Investment Region and Petroleum, Chemical, Petrochemical Investment Region (PCPIR) at Dahej. A green field international airport is being developed nearby. Further four industrial areas have also been identified at Palanpur-Mehsana, Ankleshwar-Baroda, Surat-Hazira and Vapi-Umergaon.

Gujarat International Finance Tec-City (GIFT)
The Government of Gujarat has decided to set up a Finance City on the bank of Sabarmati river between Ahmedabad and Gandhinagar with an estimated capital outlay of Rs 150 billion on 500 acre of land which will have state-of-the-art IT facilities in addition to landmark buildings and robust infrastructure. The first phase of the project, intended to serve as an international commercial and financial hub like New York and Frankfurt, is expected to be completed by May 2010. The one-stop destination for ‘Global Financial services Industry’ will provide employment for up to 10 million people. “The Gujarat Finance City will put Gujarat and India firmly at the centre of world money markets,” says SG Mankad, Chairman, GIFT

Urban and rural thrust
Ahmedabad is now a mega city and we are developing its infrastructure to the international standards. The state government has taken up the Sabarmati Riverfront Development Project, which is the first of its kind in the country. This project, along with the Metro Rail System being planned and the Bus Rapid Transit System (BRTS) under implementation, will transform Ahmedabad truly into a city of the 21st century. Apart from this, BRTS and LRTS are being developed in other cities of the state.
Gujarat certainly looks to be on a roll


Gujarat: The pluses

• Creation of investor friendly business environment
• Formulation of policies such as Industrial Policy, Mineral Policy, Agro Policy, Tourism Policy, Port Policy, Wind power policy and Gujarat Infrastructure Development Act(GID Act) to enable industrial investment and infrastructure development
• Simplification of procedures to facilitate, speed up and ease the process of doping business
• Bringing in greater accountability and transparency in the Government system
• Presence of an effective judicial system
• Execution of a strong political will
• Creation of land banks
• Creation of information banks having information in the form of District Profile, sector Profile, Investment Region and SEZs Profile and booklet for investor’s guidance entitled ‘Doing Business in Gujarat’
• Centralised availability of information through Investor Support Software System
• Establishment of Gujarat State Wide Area Network (GSWAN), the world’s second largest IP based WAN connecting over 2,800 government offices
• Implementation of SWAGAT, an online public grievances redressal mechanism



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