With his name now becoming synonymous with industrial development, Chief Minister Narendra Modi has turned Gujarat into a truly vibrating state that has got both domestic and international industry players charged with high doses of adrenaline, reports Huned Contractor

The only constant thing, it is often said, is change. And the best proof of this is to be found in Gujarat. Over the years, in the fight for supremacy between the various States of India, it has been Gujarat that has swiftly and surely turned out to be the dark horse stealing the thunder from the under the hooves of others. This has been achieved with its economy racing ahead at an amazing pace thanks to its pulsating growth in business and industry. Its GSDP (gross State domestic product) has increased by a huge 10.2 per cent annually between 2004 and 2010 - far above the growth rate of the country's aggregate gross domestic product which grew by an annual compound rate of about 8.5 per cent during the same period. Among the top five States, only Maharashtra had a higher GSDP growth during this period.

Much of this growth in Gujarat's GSDP came from the industry sector - in fact, as much as 40.62 per cent of the State's GSDP was accounted for by the industry in 2009-10 against only 28.08 per cent for the country as a whole. Its share in the manufacturing net value of the nation was as high as 11.5 per cent during this period. And according to a report by the Centre for Monitoring Indian Economy, Gujarat's share in fixed capital investment of the country was 16.5 per cent in 2009-10. On a parallel note, the agriculture sector too increased its contribution significantly during this period. The aggregate food grain production of the state increased by over 15 per cent from 5.25 million tonnes in 2004-05 to 6.06 million tonnes in 2009-10. Interestingly, scripting this astounding success story is none other than Gujarat's Chief Minister Mr Narendra Modi who has otherwise been trying hard to shed his alleged link to religious fundamentalism that have often led to caste-driven brutal massacres in the state. The fact that the United States of America, a country that has made Mr Modi persona non grata since 2005, has now praised him for his leadership skills has no doubt added a dose of steroids to the already healthy state. Mr Modi may have been denied entry into the US but that hasn't stopped Gujarat from turning into an investment magnet for US businesses. "Of US-India Business Council's 400 member-companies, as many as 200 of them are present in some shape or form in Gujarat," informs Mr Ron Somers, president of the influential American trade group.

The US also dominated the Vibrant Gujarat Global Investors Meet held in January this year, sending 26 delegations made up of 156 representatives. US companies signed MoUs for investments worth Rs 13,574 crore during the meet in sectors as diverse as pharmaceuticals and tourism, according to the Industrial Extension Bureau, a government-run body that looks to promote investments in the State.

Mr Modi deserves the credit, say US entrepreneurs, because he has almost single-handedly made it easy to do business in Gujarat. The most important factor that has helped industry mushroom in the state has been the weeding out of red tape and corruption. There is also the improving infrastructure. "Companies do not have to pay bribes for approvals because the CM is watching. Further, Gujarat has an administrative model where targets are met and action is taken against complaints," says Mr Vipul Shah, Director, Lecmec Engineering.

Skeptics though would like to ask if Gujarat's economic success in post-reform years would be ustained over the coming years. According to industry observers, the answer is yes. There are figures to back this statement: During August 1991 to March 2011 Gujarat has implemented 1,573 Industrial Entrepreneur Memorandums (IEMs) involving a huge investment of Rs 86,458 crore. These industries have created 2.26 lakh new jobs ensuring the multiplier effect of industrial growth on the economy. In terms of the number of IEMs implemented, the State's share in national aggregate was more than 17 per cent and in terms of investment the share was about 27 per cent during the period.

Given the scenario wherein news about fresh industry proposals and investments in Gujarat regularly hit the headlines, the feeling is one of absolute positivity. The latest in this series is that Suzuki Motors is likely locate a new USD 1.3 billion passenger car factory in the state, as reported by Japan's Kyodo News Agency. The report came two days after the company said it wanted to end its alliance with Volkswagen, a tie-up that had been expected to help Europe's biggest car maker expand on the Indian subcontinent. "We haven't come to a decision yet. We plan to announce the location of the plant by the end of October," Suzuki spokesman Mr Ei Mochizuki said. He added, however, that the automaker's chairman and CEO, Mr Osamu Suzuki, visited Gujarat last week. Suzuki controls about half the Indian car market through majority-owned unit Maruti Suzuki.

Meanwhile, the state-promoted Gujarat Alkalies and Chemicals Ltd (GACL) is considering setting up a project to manufacture 1.5 lakh tonne per annum of propylene oxide and its downstream products. Addressing the listed company's 38th annual general meeting held at Vadodara in the third week of September, its chairman, Mr A K Joti, said the proposed plant would manufacture propylene oxide as also propylene glycol and polyols with world-renowned technologies. About the company's ongoing projects, he said the 20,000 TPA sodium chlorate project, 21 MW wind farm, 8,000 TPA hydrazine hydrate project, 2 lakh TPA caustic soda project and 2 lakh TPA chloromethane project would be completed as scheduled over the next three to four years. Another important factor that has contributed a lot to the state's increasing industrial prosperity is that it has been proactive in creating business platforms. Vibrant Gujarat is one example. Now a two-day international exhibition and conference on specialty chemicals, agro chemicals and colorants will be held in Gujarat in October. The event INDIACHEM Gujarat 2011 will start on October 13 in Gandhinagar. Along with the exhibition there will also be a conference on investment opportunities in Gujarat and international buyers-sellers meet. During a media interaction, Mr M Sahu, Principal Secretary-Industries, said that the conference will cover different segments like innovation and new challenges for the chemical industries, emerging business opportunities in Gujarat in the sub sectors of chemical industries, new applications and focus on dyes and dye intermediates and environmental issues.

Gujarat contributes to more than 62 per cent of the national petrochemical and 51 per cent of the national chemical sector output. The manufacturing of chemicals and chemical products contribute to around one-fifth of the total employment in Gujarat. Some of the largest chemical and petrochemical complexes of the world like Reliance Refinery at Jamnagar, Chemical and LNG terminals at Hazira, chemical fertiliser plants of GNFC and GSFC are located in Gujarat.

Meanwhile, if any further evidence was required of how the scale of industrial operations in Gujarat are touching new highs, one has only to visit the Bombardier Transportation factory at Savli near Vadodara where five robots, towering 15 feet and more are at work on the newest assembly line of the world's biggest train maker. The project is to complete a 424-coach order placed by Delhi Metro before the deadline of October 2011. According to Mr Rajeev Jyoti, Managing Director India, Bombardier Transportation, "Gujarat scored high when it came to certain critical parameters as compared to other states like Andhra Pradesh and Delhi which were on our list too. The balance finally tilted in favour of Gujarat because apart from the Mundra port, the railway track connecting Delhi was right behind the proposed factory area." What also helped sealed the deal was the local vendor eco-system. The company sources supplies from about 60 companies located close to Savli. What happened next is worth noting too. Once the decision was finalised by Bombardier Transportation, the Gujarat administration, cutting through all kinds of bureaucratic hurdles, allotted the land in a week and the company built a 1,60,000 sq metre factory in just 18 months.

The amazing part of the state's meteoric rise is that some of Mr Modi's harshest critics too have chosen to invest in Gujarat. Ms Anu Aga, director of Thermax, was quite vocal about the Godhra riots in 2002 and the alleged role played by Mr Modi but that did not stop the company from setting up a plant that is located next to Bombardier Transportation. The Pune-based boiler manufacturer is thinking of another one at Jhagadia, north of Surat.

The speed of governance apart, Gujarat, according to Mr Anant Goenka, CEAT's deputy managing director, also offers reliable power supply, availability of natural gas, water from the Narmada canal and proximity to ports for importing raw materials as well as exporting finished goods. CEAT has set up a plant in Halol to make radial tyres.

The first-mover card that Mr Modi has played for the benefit of the state is what has always worked the trick. The Tata Nano project is one prime example. When Mr Ratan Tata decided to pull a half-built Nano factory out of Singur in West Bengal, Mr Modi and his team were preparing a strong pitch for a shift to Gujarat. No sooner had the company made its decision to leave West Bengal, he sent a one-word text message to Tata's cell phone that said 'Suswagatham' (welcome). It took just 14 months for the first Nano car to roll out from a new factory at Sanand, 40 km west of Ahmedabad. On similar lines, a joint venture Bharat Forge has with France's Alstom for power equipment has shifted to Mundra from West Bengal. "We took this decision because the Gujarat government is very straightforward and transparent in its processes," said Mr Baba Kalyani, Chairman, Bharat Forge.With manufacturing slated to be the next big wave in taking India's economy forward, Gujarat is poised to reap the richest harvest. Already in place is a policy that envisions the setting up of huge industrial zones with incentives like zero income tax and excise duties. "These will be comparable in size and strength to those of Shenzen or Hainan special economic zones in China. The government plans 13 such regions, several lying along the proposed high-speed Delhi-Mumbai Dedicated Freight Corridor," says Purvesh Jariwala of the Surat-based Walson Woodburn Wire Dies. More than one-third of the corridor passes through Gujarat and that is reason enough for the State to focus on it. With all such activities in the pipeline, an estimate states that in the upcoming financial year 2011-12, the size of Gujarat's GSDP is likely to achieve a mark of Rs 5,88,102 crore and Rs 6,73,377 crore by 2012-13.

Meanwhile, for those who assume that Gujarat has been lacking in making inroads in the ICT sector, here's some latest news. Gujarat Electronics & Software Industries Association (GESIA), the only nodal representative association of the ICT industry in Gujarat with more than 280 members recently announced that it has charted out a blueprint for agenda-driven growth with focused approach to overall increase the footprints of the ICT industry in the State. While announcing the roadmap, newly elected president of GESIA, Mr Sunil Kakkad, said, "A five-point agenda with value addition, bridging the gap, recognition, spread and acting as catalyst has been developed to provide a long-term vision to the association. The aim is to provide tangible and non-tangible value to our members by interacting and convincing the Government of Gujarat for policies which can stimulate growth of the local industry." And finally, establishing the fact that it is going to pull out all the stops to promote Gujarat as a premier industrial hub in India, there is a plan afoot to organise a Vibrant Gujarat in a foreign country, ahead of the next such event in the State. According to a government source, this may happen in July 2012. For now though no official statement has been released yet. "What this goes to prove is that the Gujarat government is not only taking the right steps in the right direction but also the fact that it has in place a long-term mission. The results are already beginning to show," Mr Jariwala states.