It's not just about the hype created by the Narendra Modi-led government or the media reports about Gujarat's positive industrial climate. The ground realities provide enough evidence of how far-sighted policy making has put the state on the right path.

True industrial development for any state or country is not just about making and selling products domestically but also about expanding the reach or creating a footprint outside the internal boundaries. And that's precisely what Gujarat has been doing of late. Take the case of the captains of Gujarat industry attending the meeting between Prime Minister Narendra Modi and China's President Xi Jinping at the Hyatt in Ahmedabad in September. Nearly 50 people from leading companies and industry associations were invited at the MoU signing ceremony and that included the who's who of Gujarat's industry and education sector such as Adani Group's Chairman Gautam Adani, Torrent Power's Chairman Sudhir Mehta, Torrent Pharma's Chairman Sameer Mehta, Zydus Group's Chairman Pankaj Patel, Cadila Pharmaceutical's Chairman Rajiv Modi, IIM-A's Director Ashish Nanda, and others.

Commenting about the occasion, Sudhir Jain, Director, IIT-Gandhinagar, who was present at the Hyatt says, "It was a great opportunity to not only meet the Chinese president but also interact with Modi on an almost one-to-one basis." Equally delighted was Dr H L Trivedi, Director, Institute of Kidney Diseases and Research Centre. "Modi inquired about the research happening at IKDRC and I assured him that the institute was doing excellent work," he says. In fact, there was more to the interaction with the industry leaders than just a formality. Prior to Xi Jinping's visit, representatives from China embarked on a land hunting exercise in Gujarat to set up an industrial park in the state. "Gujarat has become a favoured destination for industrial investments after the then chief minister Narendra Modi's visit to China in 2011. Now China is planning to set up an industrial park in Gujarat and has announced USD 5 billion investment in setting up two industrial parks in Gujarat and Maharashtra," informs Ashish Shah of Hi-Tech Engineering, a company with manufacturing facilities in Pune and Surat for making electronic relay systems.

It is believed that Chinese companies are interested in investing in sectors like automotive, electronics, agro-processing, tourism and manufacturing. According to sources, an investor delegation of 20 members from Zhejiang had visited Gujarat earlier this year and short listed three locations for setting up a China township and industrial park at Sachana, Dalsana and Jakhwada. In June, the ambassador of China, Wei Wei, paid a courtesy visit to Gujarat chief minister Anandiben Patel to strengthen the ties between India and China and to scout for fresh investment opportunities in the state. His visit coincided with the approval of China-India industrial park investment by the Indian Cabinet. "In return, the Chinese government may agree to allow India to set up industrial parks in China," informs Jagat Shah, secretary-general of China India Trade & Investment Centre (CITIC).

In favour of MSMEs

What has really helped Gujarat take giant steps forward toward industrialisation is the state government's keen focus on developing the MSME sector. A few months ago, while announcing a plan outlay of Rs 3,080 crore for industries and mines department, Finance Minister Saurabh Patel in his budget presentation announced a scheme to provide incentives to small industries with a provision of Rs 100 crore. "Incentives shall be given to set up one lakh new units in the next three years," he announced, adding that the state government will provide assistance to Gujarat Industrial Development Corporation (GIDC) and private developers for setting up estates for micro and small units and infrastructural facilities to be created there.

According to a news report, vacant plots in fully developed GIDC estates will not be auctioned. Instead multi-storeyed buildings shall be constructed for small units. New special estates spread over an area up to 50 hectares will be established for small and micro units and in order to ensure that small units get sheds and plots at reasonable rates in GIDC estates, the government shall bear 50 per cent of the cost. The government will also give assistance of up to 50 per cent of capital cost to private developers developing sheds of approximately 500 sq.ft within two hectares for micro and small units. Patel announced a scheme under which small and micro units renting a shed will be provided assistance of up to 50 per cent of rent for three years within an annual limit of Rs 50,000 for urban areas and Rs 25,000 for rural areas. He also announced a provision of Rs 10 crore to help saltpan workers procure solar pumps as an alternative to diesel engines.

This concern for the smaller industrial units can also be seen in other ways. For example, industrial gas prices in Surat, Bharuch and Ankleshwar have been reduced by almost 3.5 per cent by Gujarat Gas Company Limited (GGCL). The price reduction has been made to adjust lower gas cost due to improved liquefied natural gas (LNG) prices and the appreciation of rupee against the dollar. The natural gas supplied to the industries, including the textile dyeing and printing units, has been reduced by 35 paise to Rs 1.70 per standard cubic meter (SCM). Following the costly natural gas, many textile dyeing and printing mills in some of the cities had switched over to coal as an alternative fuel. "All the policy decisions that have been taken so far by the Gujarat government have always kept industrial development at the centre because it helps improve the economy of the state," comments Bhavik Makwana, Managing Director of Rajkot-based Unimak Softwares, which provides services to capital equipment manufacturers and automotive OEMs.

A preferred destination

In fact, this growth curve has not been an overnight miracle. It is the result of almost two decades of constant efforts that has made Gujarat one of the most preferred locations for industrial investment in India. The state has achieved an annual growth rate of over 10 per cent per annum over the past five years and is one of the most industrialised states of India. It accounts for 16 per cent of the nation's industrial production and 22 per cent of its exports. And all this has come about due to several advantages which have enabled it to chart a path of rapid growth, including sound infrastructure facilities, availability of skilled and semi-skilled manpower, excellent domestic and international connectivity, and rich natural resources.

"The key differentiating factor has been the state's investor-friendly policy towards industrial development. This has also resulted in Gujarat evolving as the hub of India's chemical and petrochemical industry with the state accounting for more than half of India's total chemical industry and about 63 per cent of the total national petrochemical production," informs Vinay Marathe, Director of Marathe Infotech P Limited, which organises the annual MahaTech trade fair for Indian industries. According to a study, the state's manufacturing industry is supported by 0.34 million MSMEs. Currently, Gujarat has about 83 product clusters and some of the most successful ones include the ceramic cluster at Morbi, brass parts cluster at Jamnagar, fish processing cluster at Veraval and power loom cluster at Ahmedabad. Gujarat has 184 industrial estates established by the GIDC for specific sectors such as chemicals, electronics, gems, apparels and granite.

Speciality Chemicals

Any mention of Gujarat's industrial growth remains incomplete without a focus on how it has some of the largest global and Indian chemical and petrochemicals manufacturers. Gujarat State Fertilisers & Chemicals Ltd. (GSFC), Gujarat Alkalis & Chemicals Ltd. (GACL) and Gujarat Narmada Valley Fertilisers Company Ltd. (GNFC) are the largest public sector units located in Gujarat. GSFC is the only producer of melamine and largest producer of caprolactum in India. GACL is the market leader in caustic soda whereas GNFC is one of the leading fertiliser companies in the country. Apart from these three PSUs, a large number of domestic and multinational companies across various chemical segments have a significant presence in the state, including Reliance, ONGC, Dow Chemicals, Cheminova, Lanxess, India Oil (IOCL), Indian Petrochemical Corporation Limited (IPCL), Nirma, Essar, BASF, Bayer, Rallis, Novartis, Cadila, Aarti Group and Deepak Nitrite. Gujarat accounts for about 35 per cent of India's pharmaceutical output with more than 3,300 pharmaceutical companies located in the state.

All About Infrastructure

Industrial investment and infrastructure are like twins sharing a deep bond. That is what Akshay Shahani, director of Vasai-based ISG Elastomers feels. And he is right. For decades at a stretch, there has been a constant effort on the part of the Gujarat government to provide as many facilities as possible to create an ever increasing number of entrepreneurs. And many of these erstwhile small-time entrepreneurs have now turned into industry leaders. "It is all about keeping the focus clear," Shahani states. For example, approval has now been given for use of the Centre for Perishable Cargo (CPC) that was built at the Sardar Vallabhbhai Patel International Airport at Ahmedabad in 2012. This will no doubt boost exports of such goods from the state.

According to officials, the CPC will initially be able to handle 30 tonnes of cargo and later, depending on the demand, its capacity will be increased. The centre has as many as four storage chambers where items can be stored at temperatures of 15 to -22?C. Along with four chambers and eight trolleys, two hydraulic Unit Load Device (ULD) stations have also been built. "We have got the necessary approval from the Airports Authority of India and will soon begin handling cargo at the centre," N K Singh, Managing Director of GAIC said to the news media a few weeks ago. After the modalities have been worked out, farmers and agricultural exporters will be able to export as well as import items to and from various foreign destinations.

Looking Ahead

The preparation of the 7th Vibrant Gujarat Summit, which is planned from January 11 to 13, 2015 at Mahatma Mandir, Gandhinagar have began well ahead by the Government of Gujarat after the Vibrant Gujarat 2013 Summit's resounding success. "The sixth edition of the summit provided enormous prospects to the state to display its strengths, progressive stand, initiatives taken to improve governance, investor-friendly climate and the art and culture of Gujarat," says Sanjay Nayyar of Solapur who has a goat farming enterprise and an automotive component business. "I visited the summit last year to get a feel of whether it would be wise to invest in Gujarat and now our company is already in the final stage of a collaborative venture," he adds.

The six summits held so far have been a resounding success that immensely contributed to transformation of Gujarat into a global business hub. The brand 'Vibrant Gujarat' that began as an investors' summit has now evolved into an ideal platform for knowledge sharing, social and business transformation, gradually evolving into a round-the-year investment promotion exercise.