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Why Gujarat is home to India's wealth-creators

Last updated on: August 4, 2010 19:53 IST

Image: Ratan Tata (L), chairman of the Tata Group, and Gujarat's chief minister Narendra Modi wave as they stand beside the Tata Nano car during the inauguration ceremony of a new plant at Sanand.
Photographs: Amit Dave/Reuters Maulik Pathak & Kalpesh Damor

Gujarat's investor-friendly policies have spawned a thousand wealth-creators.

Gujarat's Gross State Domestic Product grew by 10.2 a year in the Tenth Five-Year Plan (2002-07) and the growth target for the Eleventh Plan (2007-12) has been set at 11.2 per cent a year.

To accomplish this target, the state government is leaving no stone unturned in providing policy and infrastructure support to industry.

According to Gujarat Chief Minister Narendra Modi, "The state government's investor-friendly policies are helping Gujarat grow at this pace. This is reflected in the fact that there is zero labour-hour loss in the state. Gujarat is not rich in several minerals like coal. Notwithstanding this, power and steel companies are still flocking to the state."

Gujarat accounts for 15.14 per cent ($114.52 billion) of the total investments in India, highest amongst all states in India, according to the Vibrant Gujarat web site.


Why Gujarat is home to India's wealth-creators

Powerful state

Gujarat, one India's most industrialised states, has powered its way from a power-deficit to a power-surplus state.

Almost all leading power project developers have either set up projects in the state or have expressed their intentions of doing so.

That Gujarat has emerged as the power hotspot of the country is indicated by the fact that 31 national and international companies inked MoUs with the state government during the Vibrant Gujarat Global Investors' Summit 2009 for setting up a total generating capacity of 43,000 Mw.

The state government plans to double its power generation capacity from the current 10,000 Mw to 20,000 Mw by 2012.

Singapore-based infrastructure firm Universal Success Enterprises, promoted by Prasoon Mukherjee, has committed an investment proposal of Rs 50,000 crore (Rs 500 billion) for a 10,000 Mw power station.

The Reliance-Anil Dhirubhai Ambani Group is setting up a new power plant with a capacity in the range of 6,000-8,000 Mw.

The Tata Group is already in an advanced stage of setting up a coal-fired ultra mega power project at Mundra in Kutch, slated to be operationalised by September 2011.

Last year, the Adani Group commissioned the first unit of its 4,620 Mw coal-based power project at Mundra. The company has planned an investment of close to Rs 20,000 crore (Rs 200 billion) for the project.

Torrent Power, which supplies power to more than 2 million customers in Ahmedabad, Surat and Gandhinagar, dedicated the Sugen mega power project with a total installed generation capacity of 1147.5 MW to the nation in September last year.

The company plans to expand generating capacity by 3,000 Mw.


Why Gujarat is home to India's wealth-creators

Going green

Green energy is another focus area of the state government, and Gujarat came up with a separate Solar Power Policy in 2009.

The Clinton Foundation, Tata Power, NTPC and the Adani Group have expressed the intention of setting up solar projects in the state.

And Gujarat Urja Vikas Nigam Ltd, an apex electricity company in the state,  has inked power purchase agreements with over two dozen companies to procure solar power totalling 420 Mw.

Gujarat also has wind power generation capacity of 1,864 Mw and potential for 10,645 Mw, and GUVNL has inked PPAs for wind power totalling 925 Mw.


Why Gujarat is home to India's wealth-creators


Gujarat is home to 41 ports and handles 25 per cent of the country's sea cargo.

The state government  envisages development of 10 green-field ports, six of them in the private sector and four as joint-sector ports.

The new private and joint sector ports will be operated on the Build-Own-Operate-Transfer principle.

The Adani Group, Pipavav Shipyard, Gujarat Pipavav Port and ABG Group have entered the ports business.

The state government is also focusing on shipyards, and Jindal Shipyard, Bharati Shipyard, Afcons and Dolphin group have expressed interest in investing in the sector.


Why Gujarat is home to India's wealth-creators

It's SEZzzzzling!

Exports from Gujarat's special economic zones accounted for over Rs 100,000 crore (Rs 1 trillion) of the total exports of Rs 200,000 crore (Rs 2 trillion) from all of India's SEZs in 2009-10.

Reliance Industries' Jamnagar SEZ became the single largest SEZ in the country, with its exports crossing Rs 75,000 crore (Rs 750 billion), while the Surat SEZ emerged second with its exports crossing Rs 22,000 crore (Rs 220 billion).

The state has about 10 operational SEZs and close to 60 notified SEZs.


Why Gujarat is home to India's wealth-creators

Oil is well here

Gujarat outranks all other states in production of crude oil and natural gas in India. Reliance Industries' refinery at Jamnagar is India's largest and the biggest grassroots refinery in the world.

The Essar group has also set up a refinery in Jamnagar.

About 36 per cent of India's installed refining capacity is in Gujarat. The state houses the only two operational LNG terminals in the country, at Dahej and Hazira.


Why Gujarat is home to India's wealth-creators

Image: Delhi Mumbai Industrial Corridor through Gujarat.


The Gujarat government enacted the Special Investment Region Act in March 2009 for setting up new cities in the state.

About 12 such special investment regions -- including Dahej, Sanand, Dholera, Changodar, Santalpur and Hazira - have been identified and master plans are being prepared. Each will be at least 100 sq km in area.

Gujarat has also taken the lead in chalking out the master plan for the Delhi-Mumbai Industrial Corridor, a $130 billion infrastructure project being developed by the Central government in partnership with Japan. About 38 per cent of the DMIC's potential investment area is in Gujarat.

Dholera, in the DMIC, will be the first city to be developed by the Gujarat Industrial Development Board.

With an area of 360 sq km, Dholera will see an investment of Rs 55,000-60,000 crore (Rs 550-600 billion), of which Rs 38,000 crore (Rs 380 billion) will be on a public-private partnership basis.

Dholera's first phase is likely to be completed in 2016 and the aim is to attract a population of two million.


Why Gujarat is home to India's wealth-creators

Vibrant Summit

Held biannually since 2003, the Vibrant Gujarat summit aims to attract foreign investment and knowhow into the state.

Japan and Canada have agreed to be the official partners for Vibrant Gujarat Global Investors' Summit 2011 (to be held on January 12 and 13 next year).

VGGIS 2009 saw a mammoth investment commitment of Rs 12 lakh crore (Rs 12 trillion) through the signing of over 8,500 memoranda of understanding.


Why Gujarat is home to India's wealth-creators

The way ahead

The government has infrastructure projects worth Rs 11.81 lakh crore (Rs 11.81 trillion) lined up for the next 10 years, according to an authoritative three-volume project report, Blueprint for Infrastructure in Gujarat 2020, released recently by Chief Minister Narendra Modi.

The report says that the share of the power sector will be Rs 223,000 crore (Rs 2.23 trillion), that of ports and shipbuilding Rs 119,000 crore (Rs 1.19 trillion), gas Rs 123,000 crore (Rs 1.23 trillion), urban infrastructure Rs 112,000 crore (Rs 1.12 trillion) and that of the Dholera SIR Rs 109,000 crore (Rs 1.09 trillion).

Source: source