CHAPTER IV THE GROWTH OF ENGINEERING INDUSTRIES IN GUJARAT: A PROFILE OF ENGINEERING CORPORATE SECTOR IN BHARUCH DISTRICT

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1 CHAPTER IV THE GROWTH OF ENGINEERING INDUSTRIES IN GUJARAT: A PROFILE OF ENGINEERING CORPORATE SECTOR IN BHARUCH DISTRICT 4.0 Introduction Gujarat on the west coast of India is an important State having a geographical area of 1, 96,024 sq.kms and a population of (Gujarat; s population 2013). In the post-reform period, Gujarat in particular has witnessed high growth in engineering along with the other industries. The demographic trends in Gujarat, especially a slowing population growth rate and a rising share of the population of working age, contribute to the rising per capita income. Gujarat is continuing improvements in the state s investment climate. It is one of the most attractive states for domestic private investors, setting-up Special Economic Zones (SEZs), availability of large skilled managerial and technical manpower, exporting almost 20 percent of India s total exports. And last, but not the least, being a coastal state, with almost 1600 Kms of coastline, the State of Gujarat can become a major platform for labor-intensive manufacturing exports in the country, similar to what the coastal Chinese provinces have achieved during the last two decades. To put it briefly following an export-led growth strategy, Gujarat can get set for takeoff into a period of sustained high growth. 131

2 4.1 Augmentation of Engineering Industries in Gujarat The industrial sector plays an important role in economic development. The Government of Gujarat has accorded high priority to industrial development, with the objective of achieving balanced growth and generating large scale employment for youth both in urban and rural areas and, thereby, improving the living standard of the people. Gujarat has witnessed impressive industrial development since its formation as a state in The Share of the manufacturing sector has increased to 37.2% in the Gross State Domestic Product (GSDP) during at constant ( ) prices, as against 20% in The industrial sector at present comprises of over 2000 medium and large units and over small scale units. Gujarat accounts for 20.4% of fixed capital investment, 15.3% of value of industrial production and 11.4% of value added in the industrial sector of the country. Gujarat has achieved the distinction of being the second largest industrially developed state in the country. 132

3 Fig 4.1:- Industrial Centres in Gujarat Over the years, Gujarat has diversified its industrial base. The state has become an important producer of various products in the country such as Soda Ash (96%), Salt (68%), Polyester Filament Yarn (55%) and Refined Petroleum products (50%), Phosphate Fertilizers (45%), Textile Fabrics (34%), Sponge Iron (31%), Caustic Soda (28%), Cement (9%) and Sugar (8%). The state has also achieved industrial dispersal. In 1960s only four cities namely Ahmedabad, Vadodara, Surat and Rajkot and some isolated locations such as Mithapur and Atul were the industrial centers. Today, almost all the districts have registered industrial development. The main reason for the fast development is due to a judicious exploitation of natural resources such as minerals, gas, marine, agriculture and animal wealth. 133

4 The discovery of oil and gas in Gujarat has played an important role in setting up of petroleum refineries, fertilizer plants and petrochemical complexes. The state government has also established a good institutional network. Important amongst them is the Gujarat Industrial Development Corporation (GIDC), which has developed industrial estates providing developed plots and ready sheds for setting up industries throughout the state. Institutions were also set up to provide term finance assistance for purchase of raw materials, plant and equipment and marketing of products. Later the District Industries Centers (DICs) were set up in all the districts to provide assistance in setting up industrial units and for support services. The state also developed the infrastructure required by the industries, such as power, roads, ports, water supply and technical education institutions. The state government has also introduced incentive schemes, from time to time, to promote industries. 4.2 The Growth Initially, the development of the textile industry led to the development / promotion of units manufacturing textile parts, castings & spares, and came to be known as textile stores. These developments, therefore, were restricted within the small and medium scale industries, known as SMEs. With the growing investments in other sectors like pharmaceuticals, chemicals and dairy, the engineering sector continued to witness growth in Gujarat. Since August 1991 up to April 2005, Engineering Industry including Metallurgical Products, Industrial Machinery, Transport Equipments and Electrical Equipments and Electronics accounts for an investment of Rs. 772 billion which is 20.70% of total investment 134

5 of the state. Similarly 869 projects of the Engineering Industry involving an investment of Rs. 184 billion have been commissioned / concluded, accounting for about 17.15% share in investment of the total projects commissioned. Also 371 projects envisaging an investment of Rs. 212 billion are under implementation in the Engineering and Allied Industry. The Small Scale and Factory Sector industry in Engineering and allied field has also shown an impressive contribution with more than functioning SSI Units which is about 20% of the total functioning small scale units and 5320 Factory Sector Units in this sector. 4.3 Gujarat s engineering goods and its share in National Production goods. Table 4.1 depicts Gujarat s share in the national production of engineering The industrial clusters in Gujarat are very highly developed. Gujarat s engineering industry has many achievements to its credit, viz., Largest producer of sponge iron in the country with 35% share. Largest exporter of clocks in the world All requirements of brass parts in the country are met by Gujarat. Largest manufacturer of glass shells for TV tubes production. Important manufacturer of power generation plants, switch gears and transformers Important production center for Textile & Chemical machinery, Pollution control equipment, printing machinery, air & gas compressors and bearings, oil engines & electric motors, submersible valves. 135

6 Largest ship breaking yard, largest producer of SAW and ERW pipes. Table 4.1: Gujarat s share in National production Sl. No. Engineering Goods Share (In Percentage) 1 Largest producer of sponge iron in the 35 % country 2 Fabrication of metal products 10.4 % 3 Machinery and Equipment 10.4 % 4 Metallurgical industry 10 % 5 Electricals 7.3 % 6 Automotive including transport equipment 3.7 % Engineering is the backbone of all the sectors of industry and therefore is rightly reckoned as the Mother Industry, as it supplies plant and equipment to all the industries. Gujarat over the years, has witnessed an impressive development in the engineering sector, especially in the manufacture of foundry products, electrical equipments machine tools and precision engineering products. The Industrial machinery is another important segment, which has also recorded a sizeable growth especially in the sectors like chemical machinery, textile machinery, dairy machinery, paper machinery, material handling equipments, plastic procession machinery, packaging machinery, Pharmaceutical machinery and so on. Another important sector that has emerged in Gujarat is ship-breaking yard at Alang, near Bhavnagar. Alang can boast of being the largest ship-breaking yard in Asia. 136

7 Being a maritime state, the potential for shipbuilding and ship-repairing also exist in Gujarat. With the large investment in pipeline, the engineering industry has immense potential in industrial machinery, construction and fabrication work. Bright potential also exists for setting up engineering ancillaries. With the development of chemical and petrochemical sector in the state, the pollution control equipment also offers investment opportunities. Gujarat in fact has witnessed a remarkable growth in the engineering sector, especially in the areas of foundry products, industrial machinery, electrical equipment and precision engineering products. It also manufactures various products like industrial valves, diesel engines, submersible pumps, forged components, rolled products, ball and roller bearings. The areas which offer high growth potential include auto ancillaries, investment castings, sintered products and lightweight precision machine tools. There is, therefore a vast potential in these sectors and Gujarat is better placed to cater to the needs and business viabilities of such projects. The major international engineering firms have shown interest in outsourcing production requirements from India due to its huge, inexpensive pool of technical manpower. Also, there is a wide scope for setting up projects in areas with high growth potential - auto ancillaries; investment, castings, sintered products and light weight precision machine tools. Transnational companies should explore the option of setting up manufacturing units in Gujarat, as it is ideally situated and labour problems are virtually non-existent. Gujarat offers 137

8 excellent base for heavy engineering industry, automobile industry including ancillaries, precision, electronically computer operated machine tools, farm and farm equipment industry etc. Again, the developed ports in the State offer an added advantage in the form of easy access to other ports of the world - an important factor for transportation of capital goods and heavy machinery. 4.4 Factors responsible for the growth of Engineering Industry in Bharuch District The credit for right kind of evaluation and subsequent execution of infrastructure projects benchmarked with the best in the world including roads, rail and ports goes not only to the successive bureaucrats but also to the people of this land who crystallized economic development with Pragmatic planning, Even distribution of funds, Apt fiscal policies, Resurgence of technology-oriented agricultural growth etc The Status of Economy Gujarat accounts for 16 per cent of the country s total investment and 10 per cent of expenditure. This is primarily due to the entrepreneurial spirit of its people. The state s Gross Domestic Product (GSDP) grew at an average rate of 12.4 per cent per annum in the period Its GSDP was estimated at US$ 22 billion in as against US$19 billion in as against US$ 19 (Better to be in rupees) billion in , which is a growth of 15.4 per cent during the year. 138

9 A strong manufacturing sector is the bedrock of economic activity in Gujarat. In the last two decades, the state witnessed an accelerated pace of industrialization. The contribution of the manufacturing sector in the state economy has doubled in the past decade because of its strategic location, excellent infrastructure support, extensive natural resource base and a proactive government. Figure 4.2: Sectoral Contribution to GDP As of October 2004, the state has received the acknowledgments of 6,850 industrial entrepreneurs memorandum for an estimated investment of US$ million. According to the Annual Survey of Industries ( ), Gujarat ranks second in respect of state-wise percentage share in Net Value Added by 139

10 manufacturing in the factory sector in the country. Some of the features are listed below: Gujarat is India s most industrialized state. It accounts for 20 per cent of India manufacturing output, 21 per cent of its exports and 30 per cent of its stock market capitalization. Gujarat ranks third in number of factories in the country It is a leading state in terms of per capital gross output and per capita value added in industries. Projects worth US$ 7.3 billion are under implementation. Gujarat is endowed with a rich and diverse mineral base. The principal minerals found in the state are limestone, lignite and low-grade bauxite. It is the second largest producer of lignite in the country producing 6.7 million tons. It is the second largest producer of oil and natural gas producing 6.13 million tones and 3.42 million cubic meters respectively.. The state produced million tons of limestone and is one of the largest producers of soda ash. The recent success in natural gas explorations in the state has made an immense impact on the industry. Riding on the wave of the recent gas discoveries, India s first LNG terminal has been commissioned at Dahej port and a gas pipeline grid is under construction. Both these initiatives would provide inexpensive and clean fuel to industry in Gujarat giving it a distinctive advantage. 140

11 4.4.2 Infrastructure Gujarat was the first state in the country to enact the Gujarat Infrastructure Development Act. The Gujarat infrastructure Development board set up in 1995.The provision made in this act facilitates the flow of funds from the private sector into the infrastructure sector and ensures coordination among various agencies. Gujarat was one of the first states to set up the industrial parks in India and is now in the process of upgrading the infrastructure support for these parks. The state is now focused on setting up industry specific parks which can offer specialized services Social Infrastructure The state leads in labour productivity in the country and the highest proportion of the state s populace is engaged in running the owned businesses. The state s literacy rate stands at 69.1 per cent, which is higher than the national average of per cent. Gujarat is home to India s leading business school, the Indian Institute of Management and other important institutions such as National Institute of Design (NID), National Institute of Fashion Technology (NIFT), Entrepreneurship Development Institute of India (EDI) and Ahmedabad Management Association (AMA) among others. The state also has 25 engineering colleges, 26 management institutions and 300 technical institutes. The State Government plans to establish a shipbuilding university, a first of its kind in the country in the district of Kutch. Further, the industrial development in the state provides vast potential for setting up of new educational institutes in the areas of marine engineering, port management, gems and jewelry design, fishery and fish 141

12 processing, urban planning, disaster management and biotechnology. The state has high life expectancy levels, low birth and death rates and a low infant mortality rate per cent of Gujarat s population is below the age of 45. The state has 1,637 government hospitals and 1,070 primary health centers Access Infrastructure Gujarat has 1,600 km indented coastline with 11 intermediate, 1 major and 29 minor ports, which handle over 80 per cent of the port traffic in the country. Gujarat was the first state to announce a separate Port Policy, which integrates the development of ports with industrial development, power generation and infrastructure development. It was also the first state to privatize the construction of ports in the country. Gujarat s ports handle 20 per cent of the total cargo of the country. Other ports in the state, the Gujarat Pipavav Port at Pipavav (Saurashtra) and the recently commissioned Gujarat Adani Port at Mundra (Kutch) were the country s first Greenfield ports to be developed on a Build-Own-Operate-Transfer (BOOT) basis. Mundra is a state-of-the-art-port that facilitates berthing of large vessels while Dahej in Gujarat is the country s only chemical handling port. It is estimated that by 2015, Gujarat s port will handle 39 per cent of the country s total cargo. Gujarat also has a road network spanning across 74,000 km. It is also well connected by rail with 5, 310 km of rail lines. Though Gujarat is selfsufficient in its needs for domestic and commercial water consumption, it has initiated plans for the maximum development and utilization of water resources in 142

13 the state. The Sardar Sarovar project is one of the largest hydel and irrigation projects of the country Industrial Infrastructure The Gujarat Industrial Development Corporation (GIDC) has set up 168 industrial estates and another 106 are being developed in different parts of the state. The state government has Special Economic Zones at Kandla and Surat and a software technology part at Gandhinagar. GIDC plans to set up an apparel park in Surat. Additionally, GIDC has developed an industrial part at Dahej, which includes a petrochemical complex and facilities like a private airstrip, effluent collection and disposal, liquid chemical port and railway lines. To encourage investment in the state, Gujarat also gives autonomy and funds to industrial estates to implement maintenance and modernization measures. It is also encouraging organizations to set up units in these zones by giving them tax holidays and subsidies like exemption from stamp duty and registration fees. Leading Industrial Sectors The Central Statistical Organization (CSO) undertakes an annual survey of industries (ASI) of industrial units covered under the Factories Act Information is collected every year to know the performance of the industrial sector. As per ASI results, the value of output in the industrial sector in Gujarat was Rs crore in , Rs crore in and Rs crore in It further improved to Rs crore in (Table 2). 143

14 4.5 Power Power is the key to industry and Gujarat has a good record of consistent power supply for commercial use. The state has planned several initiatives to build adequate capacity in generation, transmission and distribution of power supply. These include rationalizing the power tariff structure, encouraging power generation from non-conventional sources, focusing on energy conservation and improving the quality of services to consumers. As the largest producer of natural gas in India, Gujarat intends to set up an extensive state-wide gas grid to augment its exiting power capacity. The grid will use gas supplied by the recently commissioned LNG terminals at Dahej. In fact by 2020, 20 percent of the country s energy needs will be met by natural gas and Gujarat would play a crucial role in fulfilling these requirements. 4.6 The share of important sectors in industry: Table 4.2: The share of important sectors in industry SL. Sector No. of Employment Fixed Value of Net Value No. factories Capital Output Addition Investment (Rs. in (Rs. in (Rs. in crore) crore) crore) 1 Chemicals & Petrochemicals (22%) (60.8%) 2 Textile 1863 (13.4%) (10.2%) Engineering

15 (26%) (9.5%) 4 Food Processing 1330 (9.5%) 5 Metallurgy 1025 (7.4%) 6 Non-metallic 1411 Mineral based (10%) Industry 7 All Industry (100%) (8.6%) (3.9%) (2.6%) (100%) Figure 4.3: The share of important sectors in industry (District-wise) The SSI sector has developed in different industries. The trend is similar to the overall industrial scenario in the state. The textiles and textile machinery have played a major role. The Chemicals, followed by plastic processing, are also placed high. The Engineering, paper and mineral based industries have also 145

16 developed in the SSI sector. The important industrial sectors within SSI are as under: Figure 4.4: The important industrial sectors within SSI Medium and Large Industries All industrial units other than the small scale are classified as Medium and Large Industry (MLI). An entrepreneur desirous of setting up a MLI project needs an approval from Government of India (GOI) under the Industries (Development and Regulations) Act. In July 1991, GOI liberalized the licensing procedure and exempted almost all the industries from taking industrial license, except few which are of strategic importance. As per the present licensing procedure, only two industries are reserved for the public sector and four industries, which are of strategic importance, need an industrial license to start the project. The remaining industries are required to file Industrial Entrepreneur Memorandum (IEM) with GOI, after observing certain requirements with respect to location and 146

17 environment. Thus, the procedure for starting a MLI are simple - filing of IEM, obtaining Letter of Intent (LOI) for licensed industries (which are very few) and obtaining License of Production (LOP) for starting 100% Export Oriented Unit (EOU).In order to assess the level of industrial development of a state, the number of IEMs filed with the Secretariat of Industrial Approvals (SIA) of GOI is considered an important parameter. The number of IEMs filed for Gujarat since the liberalization process began in 1991 is given below. Sector-wise analysis of the projects implemented and projects under implementation indicates that the chemicals and petrochemical sector is dominant in investment in MLI. The other important sectors are engineering, mineral based industry, food processing, infrastructure projects and others. Engineering Sectors in Gujarat state plays an important role in enhancing the revenue to the state as well to the country by way of its contribution to their exchequer. This can be viewed its percentage of compared to the other states in India. Therefore the main focus of this study will be on the Electronic Information Resources and the services available in these sectors. The population for the study is selected from the total number of the institutions and corporate sectors. Almost all the areas Cities are covered so as to collect the data from across the Bharuch district of Gujarat State by maintaining the uniformity. In addition to the engineering sectors, the SEZs Specialized Economic Zones are also covered for the profile study as these are the latest developments in the Industrial growth. 147

18 4.7 Business opportunities Several factors contribute to making a state an attractive investment destination. Major factors impacting evolution of industry in Gujarat are: Proactive policies: The policy the State Government adopts towards a sector directly affects the investment. For instance, the investment in infrastructure can be related to the government policy seeking private investment. This has given the state a head start in the sector. Availability of natural resources: Certain industries like petrochemicals have a high dependence on availability of natural resources. The recent discoveries of gas reserves have provided a fillip to the industries in the state. Capability: The Engineering, gems and jewelry industry in Gujarat rallies on the skilled manpower available in the state. The state is a leader in terms of labour productivity. This has been a major factor enabling the success of Gujarat in sectors like petrochemicals, textiles etc. 148

19 Figure 4.5: Qualitative assessment to highlight relative attractiveness of different sectors (Investment) Economic and Industrial Scenario in Gujarat Economic Cycles: Rolling down the years since ancient trade, the changes were not only Industrial but social and intellectual s had great Merchant Traders and money lenders who possessed high status in the world of business. By 1700s, Surat flourished and it had pre-eminent position as chief trading center of India. In present Business scenario, Gujarat is the home for Dynamic Industrialists and Business Entrepreneurs. It is emerging as EVA (Economic Value Added) State with sustainable Industrial Growth. The Industrial Policy acts as a catalyst to face the challenges to manage the inevitable volatility of Industrial Cycles. The remarkable resilience of the Economy of Gujarat as the fastest growing state in the country, the fundamentals of its Economy is strong and 149

20 vibrant. The pro business approach of the Government has felicitated Gujarat s relentless drive towards Industrialization by making the state an ideal Business and Investor friendly destination, both for domestic and foreign Industries in Gujarat Gujarat s Industrial Policy 2009 is geared for catalyzing Robust, Sustainable and Inclusive Growth. The only state to emerge as Investor friendly, Gujarat has achieved the distinction of being the top most industrially developed state in India in respect of investment in industrial sector and second among states in respect of value of production and value addition in industrial sector in India. Growth in the Industrial sector is as high as 12.5%. Overall, it contributes to 16% of the Industrial production in the country. Gujarat also proves the Investment-worthiness by mobilizing the highest share (22%) of investments in Gujarat is a contributing State which accounts only for 5% of the country s population and 6% of its geographical area. By exercising financial discipline and rationalizing the tax structure, Gujarat is a revenue plus state Some highlighted fields: A Petro-capital State of India, Gujarat offers 30% of Petrochemicals, 50% Chemicals and Pharmaceuticals business. Gujarat tops Agri Growth table at 9.6% with Agriculture Infrastructure achieving maximum growth between

21 Gems and Jewellery Business in Gujarat is the fastest growing sectors in the country. Supported by Policy Initiatives by the Government, in addition to cutting and polishing of Diamonds, processing and jewellery design has also gained prominence. It is the largest producer (35%) and exporter (60%) of cotton and is the third largest denim producer in the world. It offers India s 12% textile exports. Known as the Manchester of the East and Denim City. Gujarat s six percent of total Industrial Production comes from textile industry Large Units Industrial Units with Investment exceeding over 10 Crores in Plant and Machinery are classified as Large Scale Units. Approved by Government of India, other remaining Industries are required to file under IEM (Industrial Entrepreneur Memorandum) and SEZ (export oriented or setting up a Project) require permission from Development Commissioner, SEZ. Gujarat has major 1200 large scale Industries and growing, thereby witnessing Industrial development since its formation as a State in Micro, Small and Medium Scale Units The micro, Small and Medium Scale Units classify with Investments ranging from various Investments in Plant and Machinery and Equipment. Gujarat witness impressive development in SME sector. In 1961, the State had upto over 2000s of Industrial Units with a sharp rise as years roll down, leading to a whooping 4 Lac SMEs catering to deal business expansions and robust leap 151

22 towards development. SMEs have the potential to provide support to the larger units, provide employment and provide cost effectiveness. The Industrial Policy provide special thrust on cluster development for SMEs Hi Tech Parks Investor Friendly Gujarat: Gratifying Journey with 61% projects implemented with US $ 200 Billion received in previous three summits Global Investors Summit 2009 : Intentions of Investment expressed worth : Rs. 12 Crores, Total 8,500 MOUs Generating 25 Lac employments Industrial Clusters Industrial Clusters in Gujarat owe its impressive growing identity with the rise of small and medium enterprises. Over a hundred Industrial Clusters are identified with different types of Industrial activities and are being developed at various locations. Cost competitiveness is enhanced as these Industrial Units are supportive to common facilities, creating brands and developing market centers and entrust skill enhancement. 4.9 Exports and Economic Zones High on Exports with impressive performance, Gujarat s Export share in India is highest contributing to an average over 14% share in India. Gems and Jewellery deem for a rise to 25% and over. The Government is encouraging SEZ 152

23 (Special Economic Zones) considered as growth engines that can boost manufacturing, augments exports and generate employment. These include multi product SEZs and sector specific SEZs covering textiles, pharma, engineering, chemicals, ceramics, gems and jewellery and IT/ITES sectors Industrial Projects in Gujarat Agro Based & Food Processing Industry Chemical & Petrochemicals Information Technology Mineral-Based and Allied Industries Plastic and Allied Industries Port-Related Activities & Infrastructure Textile & Apparels Industry Gems and Jewellery Other Sectors Other Development Projects Tourism Development Projects Infrastructure With Focus On Sirs (Special Investment Regions) Development And Environment Urban Development Engineering And Auto Bio Technology And Pharma Oil Gas Power Sector Social Infrastructure Gujarat has the distinction of being the first state to enact the Special Economic Zone (SEZ) Act, Special Economic Zones (SEZs) are growth engines that can boost manufacturing, augment exports and generate employment. 153

24 The Government has introduced the scheme of SEZs in order to provide a hassle free operational regime and encompassing state of the art infrastructure and support services. Special Economic Zone (SEZ) is a specifically delineated duty free enclave and shall be deemed to be foreign territory for the purpose of trade and operations and duty and tariffs. SEZ units may be set up for manufacture of goods and for rendering of services public, private or joint sector or by the State Government. SEZs, cover industrial and labour aspects, including flexible labour laws and exit options. The Gujarat SEZ Act, 2004 has made key provisions with respect to the appointment and termination of labour for units established in SEZs. The concept of Fixed Term Employment introduced by the SEZ Act has helped in accounting for the least manpower days lost due to labour strife, among comparable industrial states SEZs in Gujarat approved by the MoCI, New Delhi as on 30/09/2008 Formal approval to SEZs Land recommendation Totalby GOG for SEZs (in hectare) Functional SEZs before enactment of Act *Notified and Functional * Notified SEZs Formal approval to SEZs In-principle approval to SEZs Total

25 LOA issued by GoI to the units in SEZs is considered as Notified and operational Figure- 4.6 Key Sector wise break up of Special Economic Zones: Electronics, IT/ ITES 17 Engineering 10 Pharma 4 Textiles & Apparels 4 SEZ Approval Sectors Multi Product SEZ 12 Electronics and IT / ITES 17 Engineering 10 Pharmaceuticals 4 Chemicals 4 Apparel and Textiles 4 Biotech 1 Port Based Multi Product SEZ 1 Power : 1 Gems and Jewellery 1 Handicrafts and Artisan 2 Non conventional Energy 1 Multi services (GIFT) 2 Ceramic SEZ (GIDC) 1 FTZW (LMJ Warehousing 1 Total

26 SEZ may be established under SEZ Act, either jointly or severally by the Central Government, state Government, or any person for manufacture of goods or rendering Services or for both or as a Free trade and Warehousing Zone Investment regions In 21 st Century, For India s Development, Gujarat s Progress led to Gujarat as Petro Capital to Good Governance, Pro-Active Governance and SEZ NOW SIRs Model for Growth Pro Advantage Features: 'Business Friendly' Environment Government Facilitates, Encourages Investment and Holistic Growth Inherent Entrepreneur skills Skilled, Educated and hard working Man Power Efficient Power Sector Natural resources in abundance Connectivity by Road, Rail, Air, Sea Large Consumer base The SEZ Growth engines that can boost manufacturing, augment exports and generate employment SME Backbone of the economy. Sector playing a key role in shaping the manufacturing industry PPP Public Private Partnership. A winning combination for Investments Social Infrastructure and HDI Urban Development Led by visionary Political Leaders Investor's Paradise Focus Areas Biotech and Pharma Chemicals and Petrochemicals Development and Environment Engineering and Auto Food and Agriculture business 156

27 Gas, oil and Power Gems and Jewellery Information Technology Textiles and Apparels Tourism Gujarat has a robust Infrastructure and fast track Economic Development of the State. It takes to it s credit as Asia s Biggest Investment Infrastructure Opportunity Centre. Gujarat s Industrial Policy 2009 is geared for catalyzing Robust, Sustainable and Inclusive Growth. The Industry in Gujarat has evoked new models of development. Enhancing IRs (Investment Regions) and SIRs (Special Investment Regions) while traversing through Product Clusters, Industrial Estates, Industrial Parks and SEZ, these phases have met with success and co-exist as Gujarat plunges to expansion with Business growth. Increasing Industrial activity in Gujarat has led to vast Investment Regions and immense prosperity for the people of Gujarat. Gujarat one of the most preferred Investment Destinations of the nation, providing opportunities in almost all the sectors. Development is a mass movement in Gujarat. Gujarat is a Power surplus state and with good infrastructure, quick rederessal of business issues, pro-active and co-operative Governance, Gujarat is a preferred Investment destination for almost every business venture for which, there is transparency and openness. 157

28 4.13 Investment Regions (IRs) Government of India announced the establishing the Dedicated Freight Corridor between Delhi and Mumbai, covering an overall length of 1483km and passing thru the States of U.P, NCR of Delhi, Haryana, Rajasthan, Gujarat and Maharashtra, with end terminals at Dadri in the National Capital Region of Delhi and Jawaharlal Nehru Port near Mumbai. An Investment Region (IRs) are specifically delineated Industrial Region with a minimum area of over 200 square kilometers (20,000 hectares), while an Industrial Area (IAs) would be developed with a minimum area of over 100 square kilometers (10,000 hectares). (In Gujarat, as per the Ordinance Act, An Investment Region will be developed in an area of more than 100 sq. kms and an Industrial area will be developed in an area of more than 50 sq. kms.) 24 such nodes - 9 IRs and 15 IAs spanning across Six States have been identified after wide consultations with the stakeholders i.e the State Governments and the concerned Central Ministries. Six Investment Regions and six Industrial Areas would be taken up for implementation in the 1 Phase during and rest of the development would be phased out in the next 4 years The nodes identified for Phase-1 for Gujarat are: Bharuch-Dahej Investment Region: As Petroleum, Chemical and Petro- Chemical Investment Region (PCPIR) Vadodara-Ankleshwar Industrial Area: As General Manufacturing 158

29 4.15 Special Investment Regions (SIRs) In January 2009, the State Government promulgated a legal framework - The Gujarat Special Investment Regional Ordinance, State Government has passed the SIR ordinance particularly to create large size Investment Regions and Industrial Areas in the State of Gujarat; and to specially enable their development as global hubs of economic activity supported by world class infrastructure, premium civic amenities, centers of excellence and pro-active policy framework; and to set up an organizational structure with that purpose. This strategy of the State Government is complimented with the strategy of the Government of India. Government of India has proposed a project of Dedicated Freight Corridor (DFC) between Delhi and Mumbai. The area of 150 kms on both sides of the DFC will be developed as the Industrial Corridor. 38% of the length of the DFC is falling in Gujarat. As part of this Delhi-Mumbai Industrial Corridor (DMIC), six mega industrial nodes (four industrial areas and two investment regions) have been proposed for the State of Gujarat. Almost one third of the proposed investments of about 90 billion US dollars in DMIC is expected to take place in Gujarat alone. As part of the DMIC project, identified industrial nodes have to be developed as Global Manufacturing and Commercial Hubs. All kinds of infrastructure both within and outside the nodes also have to be developed with global standards; Government of Gujarat has not only given its full commitment for the DMIC project but has been actively working with the Government of India on the same. 159

30 The DMIC (Delhi-Mumbai Industrial Corridor) is strategically planned Project of the Government covering 1483 kms, of which, 546 kms long route covers Eighteen (18) Regions of Gujarat. Gujarat Government has incredible development plans under this Project. Six mega Investment Regions/Industrial nodes (four industrial areas and two investment regions) in the DMIC Area Focus: Dholera Vadodara Palanpur Bharuch Surat Valsad Ahmedabad Investment Region Ankleshwar Industrial Area Mehsana Industrial Area Dahej Investment Region as PCPIR Hazira Industrial Area and Umergam Industrial Area World class infrastructure facilities would be managed in these regions with Industrial Policy framed for Global Manufacturing and Trading Hub. Investments with more than one Lac Crores and immense opportunities for man power and service sector. Moreover, Gujarat Government has implemented Single Window Clearance Act with first of its initiative in the country. This reduces Red Tapism and help in delayed permission procedures. Project proposals can be made online. All necessary permissions can be obtained under single window, making easier procedures. 160

31 Table- 4.3 District wise Investment in Gujarat Sr No District Project Investment(Rs In Crore) Employment 1 Ahmedabad Anand Bharuch Dahod Dang-Ahwa Godhra Kheda Narmada Navsari Surat Vadodara Valsad Banaskantha Gandhinagar Mehsana Patan Sabarkantha Amreli Bhavnagar Jamnagar Junagadh Porbandar Rajkot Surendranagar Kachchh Not Classified Total

32 4.16 Vibrant Gujarat 2015 The preparation of 7th Vibrant Gujarat Summit, which is planned during 11th to 13th January 2015 at Mahatma Mandir, Gandhinagar, Gujarat, India have began well ahead by the Government of Gujarat after the Vibrant Gujarat 2013 Summit resounding success. Last summit has given an example of a visionary approach of the Government of Gujarat towards inclusive and sustainable development. 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 art & culture of Gujarat. 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" began as an "investors' summit" has now evolved into an ideal platform for knowledge sharing, social and business transformation. The Summit gradually evolved into a round-the-year investment promotion exercise with events scheduled well in advance of the main Summit planned in The prime focus of Government of Gujarat is Inclusive development and the key areas for development identified included: Innovation, Sustainability, Youth & Skill Development, Knowledge Sharing and Networking. Also, this Summit is an ideal convergence for other states and other countries to showcase their strengths, highlight business opportunities, facilitate knowledge dissemination etc. It also provides an attractive opportunity to its participants to understand the potential of Gujarat in various sectors. Besides, it provides 162

33 platform to interact with policy makers, industry leaders, and renowned academicians from all over the world Special Economic Zones in Gujarat SEZs in Gujarat approved by BOA as on 15/05/2013 Special Economic Zones (SEZs) are growth engines that can boost manufacturing, augment exports and generate employment. The Government has introduced the scheme of SEZs in order to provide a hassle free operational regime and encompassing state of the art infrastructure and support services. Special Economic Zone (SEZ) is a specifically delineated duty free enclave and shall be deemed to be foreign territory for the purpose of trade and operations and duty and tariffs. The goods and services going into Special Economic Zone area from DTA shall be treated as exports and goods coming from Special Economic Zone area into DTA shall be treated imports. SEZ units may be set up for manufacture of goods and for rendering of services. Special Economic Zones (SEZs) Scheme Special Economic Zones Government of Gujarat Gujarat Special Economic Zone Act Industrial Disputes (Gujarat Amendment) Act Gujarat Special Economic Zone Rules Gujarat Special Economic Zone Regulations General development Control regulations for SEZ Guideline for Preparing Master Plan of SEZ Area. 163

34 Gujarat Special Economic Zone (Amendment) Act GRs related to SEZ and etc Gujarat Government to offer lignite for SMEs via NSIC The state government is considering allocating lignite directly to the small and medium industries through the National Small Industries Corporation (NSIC) from Rajpardi mines in south Gujarat. According to top government officials, the state government has given inprinciple approval to the plan, which will ensure cheap fuel for the small industries. The government has appointed NSIC, a government of India enterprise as nodal agency to distribute lignite among the small units Semiconductor wafer plants worth $10 billion to be set up in Delhi and Gujarat India has approved the setting up of semiconductor wafer plants by the consortia, including IBM, Israel s TowerJazz and STMicroelectronics, costing a total of INR 63,410crore. The groups had proposed building plants in India in September, which the government had approved. One of the consortia is made up of Jaiprakash Associates and TowerJazz and IBM. According to a government statement, it plans to set up a plant near New Delhi at a cost of INR 34,399crore. The second comprises HSMC Technologies India, Malaysia s Silterra and STMicroelectronics. The group has proposed investment of INR 29,013 crore for 164

35 a plant in Gujarat. The final agreements for the two plants are expected to be signed by August this year. With a view to attract chipmakers to set up plants in India, the government is offering concessions including 25 percent subsidy on capital spending, tax breaks, and interest-free loans of about INR 5124 crore to each plant. India, today consumes close to $7 billion of semiconductor products every year. By 2020, when the total Electronic System Design and Manufacturing (ESDM) market is expected to reach $ 400 billion, this consumption is expected to rise to $55 billion. With the location of a fab in India, the country could potentially achieve a degree of self-sufficiency in electronics, and partially reduce the very high supply chain risks that India is exposed to, without an alternate source for procurement Auto Expo 2014: Honda Motorcycle & Scooter India to invest INR 1,100 crore to set up new plant in Gujarat Honda Motorcycle & Scooter India (HMSI) will invest about INR 1,100 crore to set up its fourth facility in Ahmedabad for manufacturing scooters.the company, which has three facilities in Haryana, Rajasthan and Karnataka, expects the new plant to be operational by second half of HMSI President and CEO Keita Muramatsu informed that Honda is going to establish a fourth facility to produce scooters in India. He further added that the plant will be set up in Ahmedabad and will have a capacity of 1.2 million units. 165

36 The new facility will have two assembly lines for scooters and would create employment for 3,000 people.the company's current capacity is 4.6 million units. HMSI, which manufactures motorcycles like CB Unicorn and CB Shine in India, today unveiled a new scooter Activa 125 and CBR 650F (bike). Activa 125 is expected to be available in India in the first quarter of FY'15, while CBR 650F will be available from Gujarat Government has implemented Single Window Clearance Act with first of its initiative in the country. This reduces Red Tapism and help in delayed permission procedures. Project proposals can be made online. All necessary permissions can be obtained under single window, making easier procedures. The 2011 Summit alone generated MOUS worth Rs trillion (one trillion is equal to 100,000 crore). However, according to the Reserve Bank of India, Gujarat was fifth among the states in cumulative foreign direct investment (FDI) inflows between April 2000 and November Maharashtra, Delhi- National Capital Region, Karnataka and Tamil Nadu were ahead. Gujarat has an installed power capacity of 20,000 megawatt and consumes 12,400 MW. It has no power cuts. There is an uninterrupted power, which is something, very few states in the country. 166

37 Table 4.4 Investments done in the earlier Vibrant Gujarat The state's industrial parks are expanding. The Dahej GIDC estate is getting ready for its third and fourth phases. In Sanand, Hitachi Hirel Power has started operations and construction is in full swing by Colgate Palmolive. There is a plan to make Dholera, 140 km from Ahmedabad and near the Gulf of Cambay, a special investment region with several industrial parks and knowledge centres. It would have world-class infrastructure including an international airport. But there is nothing tangible yet, with the Dholera draft town plan yet to be finalised Future investment Investment works US$ 23.4 billion were planned for Gujarat. This infrastructure investment alone amounted to US$ 17.5 billion and a majority of this was for developing the ports infrastructure. A number of multinationals are also investing in gas grid and building LNG terminals in the state. The minerals giant Hindalco intends to invest US$ 44 million for increasing its copper smelting capacity to 500,000 tons per year. 167

38 4.22 Bharuch Brief Background / Profile There are 26 Districts in the State of Gujarat. Table 4.5: Geographical features of Bharuch District Geographical location 72.45o to 73.15o East (Longitude) 21.30o to North (Latitude) Area 5,253 sq. km District Headquarter Bharuch Population 13,70,104 (As per 2001 Census) Population Density 261 persons per sq. km Sex Ratio 920 Females per 1000 Males Literacy Rate 74.79% Nearest Airport Vadodara Nearest Port Dahej Port Languages Gujarati, Hindi and English Seismic Zone Zone III Major Industrial 8 Special Economic Zones (SEZ), 16 Industrial estates and Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) 168

39 Figure 4.7: Tehsil map of Gujarath District Profile Ahmedabad Amreli Anand Banaskantha Bharuch Bhavnagar Dahod Dang Gandhinagar Jamnagar Junagadh Kutch Kheda Mehsana Narmada Navsari Panchmahal Patan Porbandar Rajkot Sabarkantha Surat 169

40 Surendranagar Tapi Vadodara Valsad Talukas in Bharuch District 1. Amod 2. Ankleswar 3. Bharuch 4. Hansot 5. Jambusar 6. Jhagadia 7. Vagra 8. Valia 180

41 Fig 4.8: -Talukas in Bharuch District 4.23 General Characteristics of the Bharuch District Location & Geographical Area: Bharuch district is located in the Southern part of Gujarat, near the Gulf of Khambhat in Arabian Sea. In 1997, Bharuch district is bifurcated into two parts Narmada District and Bharuch District. The newly formed Bharuch District has Sq.km. area and situated between to North Latitude and to East Longitude. Bharuch District comes under Seismic Zone- III. Bharuch District is bounded by Baroda and Anand District on the North, Narmada District on the East; Surat District is on the South and on its west lays the Gulf of Cambay. The Eastern strip of the district is a hilly and forest area Topography 181

42 The district enjoys moderate climate with greater humidity on its coastal side. The average rainfall in the district is 750 mm to 800 mm. Main rivers in Bharuch District are Narmada, Dhadhar and Kaveri.The rivers flow throughout the year. Some of the important factors are: Some of the major tourist destinations in the district are Bhrigu Rishi Temple, The Golden Bridge, Kabirvad and Shuklatirth. The Government of India has planned to develop a Dedicated Freight Corridor (DFC) linking Delhi, Mumbai, Kolkata and Chennai.The proposed DFC passes through six states in India, of which, Gujarat accounts for 38% (564 km.) of total DFC length (1483 km.) The influenced area of 150 km on either sides of DFC is being developed as Delhi Mumbai Industrial Corridor (DMIC). Bharuch- Dahej industrial area lies within 50 km of the Dedicated Freight Corridor in southern Gujarat. The State government identified 82 links in the DMIC (which includes Bharuch also) Influenced area to upgrade them into four lane carriageway offering connectivity between ports, industrial estates, hinterlands, markets and points of agricultural produce. The Dahej Port operated by Gujarat Maritime Board (GMB), has made significant contribution to facilitate industrial growth in the district. The anchorage is at a distance of 5 km from the old port and 6 km from a proposed container terminal site in Jageshwar, Bharuch. M/s. ABG Shipyard is developing Ship Building Yard at Jageshwar site. 182

43 Many port based industries such as Birla Copper, IPCL have developed heir captive jetties at Dahej Port. M/s. GCPTCL has developed dedicated Chemical terminal at Dahej. The first LNG terminal of the country is developed at Dahej by M/s. Petro net LNG Ltd. Spread over 5,000 hectares of land and with excellent access to entire North West Indian hinterland, Dahej is strategically located at a distance of around 400 km north of Mumbai. The port has cargo handling capacity of around 22 MMTPA. More than INR 7,000 million (USD 171 million) has been invested in its development. The presence of existing industrial estates such as Bharuch, Ankleshwar and Panoli has enhanced the location attractiveness of the region. Commodities handled by the port for import include fertilizers, rock phosphate naphtha, ammonia, coal & coke, propylene, ethylene, copper concentrate, methanol, profane and coconut oil, while the commodities for export include phosphoric acid and soya beans Availability of Minerals Around 52 %of the state s lignite is found in Bharuch and 92 %of silica sand is being produced in the district. There are several mineral based industries in Bharuch district. The crushing units are developed in Jhagadia & Valia talukas. The Bricks manufacturing units are in Ankleshwar, Bharuch, Amod & Jambusar Talukas. The Government of Gujarat has envisaged specific policy initiatives to attract investment in mineral exploration and mineral based industries. The policy 183