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INDIAN STATESEconomy and Business

Gujarat

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GUJARAT PAGE 3

CONTENTS

Socio-Economic Profi le 5

Employment distribution 5

INFRASTRUCTUREPhysical infrastructure 7State Wide connectivity through rail road network 8Water infrastructure 9Social infrastructure 10Education infrastructure 11Telecommunication & IT infrastructure 12Industrial infrastructure 13Special Economic Zones 14Petroleum and Chemicals 15

POLICIES & INITIATIVESAgro policy 17Port policy 17Power plants in Gujarat 18IT policy 18Mineral policy 19

BUSINESS OPPORTUNITIESAgro & Food processing 20Chemicals & petrochemicals 21Textile & apparels 22Engineering & Automobiles 23Gems & Jewellery 24Port led development 25Pharmaceuticals & biotechnology 26Oil & gas 27Information technology 28Export profi le of Gujarat 28

DOING BUSINESSKey apporvals required 33Average cost of doing business in the region 35

OVERALL STATE COMPETITIVENESS 37

A report by Ernst & Young for IBEF

Situated on the west coast of India, spread over a geographi-cal area of 196,024 sq km, Gujarat is recognised as one of the leading industrial states in the country. The state of Gujarat was created out of 17 northern districts of the former state of Bombay in 1960.

The state presently comprises 25 districts, sub-divided into 226 talukas; it has 18,618 villages and 242 towns. The capital city of Gandhinagar is located close to Ahmedabad, which is the key commercial centre of Gujarat. Other major industrial and com-mercial cities include Vadodara, Surat, Bharuch and Rajkot. Gujarat is bound by the Arabian Sea to the west and fl anked by the states of Rajasthan, Madhya Pradesh and Maharashtra to the north, east and south, and by the union territories of Daman and Diu and Dadra and Nagar Haveli to the south and south-east. Gujarat also shares an international boundary with Pakistan on the north-western side.

The state experiences diverse climatic conditions with mild and pleasant winters, hot and dry summers and heavy monsoons.

Rich Natural Reserves

Gujarat has the advantage of rich natural reserves of oil and natural gas. It is also endowed with a rich and diverse mineral base, contributing signifi cantly to the production of minerals such as agate, chalk, perlite, limestone, bauxite and lignite.

Socio-Economic Profi le

Occupying just six per cent of the geographical area of the coun-try, Gujarat accounts for 16 per cent of industrial production.

Demographic Indicators

With a population of over 50 million, Gujarat accounts for

fi ve per cent of the country’s total population. Population den-sity is 258 persons per sq km. As of 2005, the state had a birth rate of 23.7 and a death rate of 7.1, exhibiting a natural growth rate of 16.6.

Gujarat’s sex ratio is 920 females per 1,000 males (2006). The total effective literacy rate, as recorded during Census 2001, was 69.14 per cent. Literacy rate for males was 79.66 per cent, while for females it was 57.80 per cent.

Higher Urbanisation than India

Presently, almost 38 per cent of the state’s population resides in urban areas vis-à-vis the national average of 29 per cent. Ahmedabad is the most urbanised district in the state with 80.2 per cent of the population residing in urban areas.

Per Capita Income Higher than National Average

Increasing industrial activity in Gujarat has led to immense pros-perity for the people, which is refl ected in improved standards of living. The per capita income at current prices (2005-06) is $833, higher than the national average of $627.2.

GUJARAT: AN INTRODUCTION

Demographic Indicators

Population Density 258 per sq. km.

Rural population (%) 62.64

Urban Population (%) 37.36

Decadal Growth Rate (%) 22.66 (1991-2001)

Birth Rate 23.7 (2005)

Death Rate 7.1 (2005)

Growth Rate 16.6 (2005)

Sex Ratio 870 females per 1000 males (2006)

Effective Literacy Rate(%) 69.14 (2001)

GUJARAT PAGE 5

Increase in Per Capita Income of 2005-06 over 2004-05 (Cur-rent Prices)

Employment Distribution

Manufacturing accounts for the largest employment of manpow-er across industries.

Employment in public sector establishments covered under the

employment market information (EMI) scheme was 830,000, whereas in the private sector it was 860,000 (as on March 2005). Out of the total 1.69 million people employed in the organised sector, 234,000 (13.82 per cent) were women. The public sector employed 17.30 per cent of women, while the pri-vate sector employed 10.45 per cent. Gujarat has the distinction of being ranked fi rst in placement among all states in India.

Tertiary Sector – Highest Contributor to GSDP

The agriculture sector has provided a strong base for the growth of Gujarat’s economy. Rapid strides in agro-technology and food production have played a key role in augmenting the manufacturing and services sectors. Gujarat is India’s largest producer of castor, groundnut, cotton, banana and tobacco.

Composition of GSDP as per Economic Activity

Source: Socio-Economic Review, 2006-07

The growth of the services sector has been augmented by increasing industrial activity. The manufacturing sector has been the backbone of Gujarat’s growth and development. The state’s recognition as a manufac-turing hub is supported by the presence of more than 312,000 small and 2,200 medium enterprises. Contributing to more than 30 per cent of total manufacturing and exports of Gujarat, the small and medium enterprise (SME) sector has played a key role in shaping the manufacturing industry.

The number of factories increased from 12,795 in 2003-04 to 13,603 in 2004-05, showing an increase of 6.31 per cent. The Net Value Added by the factory sector increased from $7.22 billion in 2003-04 to $ 9 billion in 2004-05, an increase of 24.77 per cent. The average daily employment in working factories also increased from 978,000 at the end of 2005 to 1.03 million a year later.

Fixed capital employed by the factory sector in Gujarat in-creased from $21.45 billion in 2003-04 to $21.77 billion in 2004-05, an increase of 1.54 per cent.

As per the provisional summary results of the Annual Survey of Industries (ASI: 2004-05), Gujarat ranks second in the country, in terms of the state-wise percentage share in Net Value Added by Manufacture generated by the factory sector. This is the 10th

SOCIO-ECONOMIC PROFILE

From Revenue Deficit to Revenue Surplus (US$ million)

1000

500

0

-1500

420

-1400

2001-02 2006-07

-500

-1000

Source: Socio-Economic Review 2006-07

Increase in Per Capita Income (At Current Prices)

2005-06

2004-05

US$ 833

US$ 719Increase of 15.9%

100 200 300 400 500 600 700 800 900 1000

Source: Socio-Economic Review 2006-07

Employment Distribution across sectors (‘000)

Manufacturing

Community ServicesTransport & Communication

Financial Services & Real Estate

Power, Gas & Water

Construction

Trade & RestaurantsAgriculture, Forestry & Fishing

Mining & Quarrying

636

590

160

115

55

54

42

15

26

0 100 200 400300 500 700 800600

Composition of GSDP as per Economic Activity

n Primary Sector n Secondary Sector n Teritiary Sector

38.3%

20.2%

41.5%

consecutive year in which Gujarat has retained the second rank.

Gujarat’s share in the country’s industrial aggregate is:• 9.97% factories• 9.56% employees• 15.59% of value of output • 13.86 Net Value AddedSource: Gujarat Socio Economic Review 2007-08

Fiscal Management

The state has been witnessing robust fi nancial growth with the revenue defi cit decreasing from $935.37 million in 2004-05 to a revenue surplus of $417.74 million in 2006-07. The total outlay has tripled in the 11th Five Year Plan (2007-11), over the 10th Five Year Plan.

For fi scal 2007-08 as per the budget estimates, the receipts on revenue account are estimated at $8.24 billion, while the total outgoings on revenue account are placed at $7.83 billion, leaving a surplus of $412.75 million under revenue account.

The proposed outlay for the Eleventh Five Year Plan (2007-12) of the state has been fi xed at $26.73 billion by the National Development Council. The state aims to achieve annual GDP growth of 11.02 per cent, agricultural growth of 5.5 per cent and industrial sector growth of 14 per cent during the plan period.

The state had been allotted a target of 10.2 per cent growth rate for the Tenth Five Year Plan (2002-07), which is higher than the eight per cent growth rate at the national level. Gujarat’s economy has recorded an annual average growth rate of 10.4 per cent for the entire plan period (2002-2007).

The state also has the distinction of having set the highest growth target of 11.2 per cent in the 11th Five Year Plan.

Infrastructure Status

Gujarat has been a pioneer in undertaking initiatives for holistic development, and has made major strides in augmenting physical and social infrastructure. Along with establishing a nodal agency for infrastructure development through private participation, Gujarat was the fi rst state to enact the Private Sector Participa-tion (PSP) law. It was implemented as the Gujarat Infrastructure Development (GIDB) Act (1999).

The state’s rapid industrial growth has been ably supported by adequate infrastructure in order to maintain balanced regional development. Further, the increasing number of investments by key foreign and domestic players in the state supports the capability of the existing infrastructure to sustain these large scale projects.

GUJARAT PAGE 7

PHYSICAL INFRASTRUCTURE

Ports Infrastructure

Gujarat’s coasts have always been India’s global gateways for trade and commerce. The ports of Gujarat form a natural gateway for the land-locked north and north-central states of India, whose combined Gross State Domestic Product (GSDP) constitute almost 25 per cent of India’s total GDP.

Gujarat has the longest coastline in India of 1,600 km. In order to avail of this natural advantage, the state has developed 41 ports, including the major port at Kandla. Among the 185 minor and intermediate ports in India, 40 minor ports are based in Gujarat.

Ports of Gujarat

The state is home to six direct berthing commercial ports, 14 direct berthing captive port terminals, 11 lighterage cargo ports and India’s only Liquid Chemical Port Terminal at Dahej, devel-oped by Gujarat Chemical Port Terminal Co Ltd. Further it is home to two of the three Liquefi ed Natural Gas (LNG) termi-nals in the country.

Handling a total cargo of 163 mmtpa (million metric tonnes per annum) in 2006, Gujarat’s ports handle 25 per cent of the coun-try’s total sea cargo.

Gujarat is the fi rst state in India to formulate a Port Policy, which envisaged the development of 10 Greenfi eld sites. Several policies introduced by the state government provide tariff free-dom, long-term commercial arrangements, concessions on port charges and lower land rentals. These policies have augmented

the process of privatisation of ports, as a result of which capac-ity has increased from 45 mmtpa in 1995 to 163 mmtpa in 2006. Modern mechanised cargo handling systems have been installed in all the new ports.

Road, Rail and Air Connectivity

Gujarat has an established road network of 74,111 km, including national highways, state highways and expressways; this is to be increased to 114,866 km over the coming years.Roads provide excellent connectivity within the state with a sig-nifi cant share (38.2 per cent) of total expressways and national highways being multi-lane.

Ports of Gujarat

Source: Gujarat Maritime Board

Category Length (km)Expressways 93National Highways 2781State Highways 18738Major District Roads 20858Other District Roads 10599Village Roads 21042Total 74111

Source: Department of Road Transport & Highways, GoG

• 87.9% of the total roads in the state are asphalt surfaced.• 98.86% village connectivity with all-weather roads, which is

the highest in India;India’s fi rst national expressway (93 km) is in Gujarat, connecting Ahmedabad and Vadodara.

The Pragatipath Yojana was introduced by the Government in 2005, to connect tribal belts, coastal, industrial and rural areas with mainstream areas, with the development of nine high-speed corridors and widening of highways of corridors (having a total length of 3,710 km). Phase 1 of the project was initiated in 2005–06 and around 340 km was developed in 15 districts involving an investment of $40.7 million. The second phase was initiated in 2006–07 and is under progress. Around 153.9 km is estimated to be developed in eight districts involving an invest-ment of $22 million.

State Wide Connectivity through Rail & Road Networks

An extensive railway network of 5,188 km provides Gujarat with excellent intra-state and inter-state connectivity. The break-up of the railway network is shown below:

Gujarat has 13 airports (the highest in the country) and an international airport at Ahmedabad.

Airports in Gujarat Aircraft departures increased from 31,246 in 2005-06 to 38,838 in 2006-07. Similarly, embarking and disembarking passengers also increased from 1.201 million and 1.168 million in 2005-06, to 1.641 million and 1.579 million, respectively.

The following projects have been proposed to augment the available infrastructure in the state:• High-speed passenger corridor from Ahmedabad to Mumbai.• Proposed Mumbai-Delhi Dedicated Freight Corridor (DFC)

in which the state has a 38% share (565 km).

Power & Energy Infrastructure

Gujarat has abundant energy and gas resources. It has an in-stalled capacity of 13,500 MW of power, which includes captive power generation capacity. This is proposed to be ramped up to over 25,000 MW by 2025.

The Jyotirgram Yojana was introduced by the government for socio economic development of rural areas with provision of 24-hour, three-phase electricity supply to villages. As a result, over 18,000 villages have been supplied with electricity. This has, in addition, led to an increase in the level of average employment and reduction in migration from rural areas by 33 per cent. In addition, several other initiatives have been undertaken to enhance availability and quality of power supply to rural areas, such as the unbundling of the Gujarat Electricity Board (GEB). GEB, established in 1948, was a vertically integrated monopoly in charge of generation, transmission, supply and distribution of electricity in Gujarat. For increasing effi ciency in operations, GEB was restructured into independent organisations, as per the Gujarat Electricity Industry (Reorganisation & Regulation) Act, 2003. The unbundling has led to reduction in transmission and distribution (T&D) losses from 30.90 per cent (2003-04) to 21.5 per cent (2006-07)

Gujarat has adequate resources to meet the state’s current energy requirements. However, in order to prepare for energy security in the future, Gujarat is establishing an integrated state-wide gas grid, which would be operated on an Open Access Common Carrier basis. It is the only state in the country to establish a 2,200 km gas-grid, 1,200 km of which has already been commissioned, 800 km is expected to be commissioned by December 2008 and a further expansion of 200 km has been planned.

Integrated Gas Grid for Energy Security

Besides the existing liquefi ed natural gas (LNG) terminals at Da-hej and Hazira, the state proposes to establish two more LNG terminals at Pipavav and Mundra.

To meet the increasing demand for domestic consumption of gas, the state government initiated City Gas Distribution proj-ects. Sabarmati Gas Ltd, a subsidiary of Gujarat State Petroleum Corporation (GSPC), is engaged in the development of the project. Supply of gas has commenced through the distribution networks in Gandhinagar, Vapi, Sarigam GIDC, Hazira, Anand, Chandkheda, Morbi and Thangadh. Construction work has also started in some districts, including Valsad, Navsari, Nadiad and Rajkot.

For the remaining cities, gas commencement is estimated to begin from the second quarter of 2008. If this momentum is maintained, it is estimated that over the next fi ve years, approxi-mately 2 million houses would be connected with the Piped Natural Gas (PNG) network.

Railroad Length (km)

Broad Gauge 2,736

Meter Gauge 1,665

NarrAow Gauge 787

GUJARAT PAGE 9

GSPC, incorporated in 1979, is India’s only state government-owned company in the oil and gas exploration & production (E&P) business. The government of Gujarat holds about 95 per cent equity stake in the company. The discovery of gas at the Krishna Godavari basin, off the coast of Andhra Pradesh, has placed GSPC on the global map. The company currently holds 42 oil and gas fi elds across the country and has acquired oil and gas assets in Australia, Egypt and Yemen. GSPC has played an instru-mental role in the execution of the gas grid project. It already transmits over 13 mmscmd (million metric stand cubic metres per day) of gas to industries in various cities.

Water Infrastructure

Several water supply projects, such as the Rural Region Water Supply Scheme and the Urban Water Supply Programme, which involve installation of hand pumps and simple wells, have been implemented in the state. In tribal areas, water supply facilities are provided to the people with one hand pump per 50 persons.

The government has devised several methods of water conser-vation in order to replenish the ground water table, as well as to prevent soil erosion, increase the soil moisture and lower soil salinity.

The existing methods of water conservation include:• 87,179 check dams• 35,379 bori bandhs (Dams made of sand bags)• 130,262 khet talavadi (farm ponds)• 5,551 deepened ponds

The Gujarat Water Users’ Participatory Irrigation Management Bill, 2007, authorises farmers to constitute Water Users’ Asso-ciations for management of canals handed over to them (post-rehabilitation) by the government.

To overcome the uneven availability of water in the state, the development of a Water Grid was proposed.

The grid is a network of 75,000 km for water distribution for irrigation purposes. The government plans to cover 75 per cent of the population through the grid by 2010.

Urban Infrastructure

Conventional fuels such as diesel and petrol are being gradually replaced by Compressed Natural Gas (CNG), which aims to ensure better reliability, safety and security to consumers. The government, as a part of its commitment to create a cleaner, greener environment, initiated the process of converting all buses and auto rickshaws into CNG vehicles. In addition, the

Integrated Gas Grid for Energy Security

Current transmission 13 mmscmd

Total Length 2,200 km

Completed 1,200 km

Under Construction 800 km

Integrated Gas Grid

Source: Gujarat State Petroleum Corporation

Surface Water 38,100 MCM

Ground Water 12,000 MCM

Total 50,100 MCM

government, through public and private bodies, is creating neces-sary CNG infrastructure for auto gas supply. Currently, 90 CNG stations have been constructed in Gujarat and 535 CNG buses of Gujarat State Road Transport Corporation (GSRTC) are operational. As on February 2007, 31,513 CNG auto rickshaws were plying in the state, out of which 19,866 were new CNG vehicles and 11,647 were converted. Further, in Ahmedabad city, CNG auto rickshaws have been made mandatory.

The Bus Rapid Transit System (BRTS) is a part of the Integrated Public Transit System, which involves the provision of traffi c solutions, to be implemented jointly by Gujarat Infrastructure Development Board, the state government, Ahmedabad Munici-pal Corporation and Ahmedabad Urban Development Authority.

With the completion of this project in 2010, the city will be-come completely accessible with convenient public transporta-tion facilities. The total length of the BRTS network is estimated

to be 380 km, of which 20 per cent was complete as on August 2007.

River front development at Sabarmati (Ahmedabad) and Tapi (Surat), water supply, sewerage and solid waste management projects are some of the key urban infrastructure projects being undertaken in Gujarat.

Key urban reforms being undertaken include:• Municipal accounting • Solid waste management• Energy effi ciency

Several investment regions are being developed in the state in a holistic manner to include social and urban infrastructure along with industrial infrastructure.

Social Infrastructure

Healthcare Facilities

Gujarat has taken several initiatives for providing better health-care infrastructure to its citizens. The state currently has:• 13 Medical colleges• 1,072 Primary health centres• 7,274 Sub centres• 273 Community health centres• 85 Mobile healthcare units

The Chiranjeevi Scheme introduced by the government has proved to be immensely benefi cial for maternal welfare. The scheme involves collaborations between the government and private sector specialists to provide safe child delivery, primarily for the socio-economically weaker sections. These services are provided in remote areas, which record the highest Infant Mor-tality Rate (IMR) and Maternal Mortality Rate (MMR).

Under the scheme, 68,886 successful deliveries have been ac-

Proposed CNG Bus Depot and Operation (2007-2008)

Simulation of BRTS Project

No. of Registered Doctors (2006)

Source: Department of Health, GoG

2006

2005

2004

2003

2002

33,000 34,000 35,000 36,000 37,000 38,000 39,000 40,000 41,00032,000

39,734

39,461

38,013

36,831

35,086

GUJARAT PAGE 11

complished up to May 2007. Other states such as Uttarakhand, Delhi and West Bengal, are implementing their own version of the scheme.

Chiranjeevi Scheme: At a glance

Department of Health, GoG

The state government’s initiatives in healthcare have been na-tionally and internationally recognised:• Chiranjeevi Scheme was awarded the Asian Innovation

Award 2006 at the Global Entrepolis Singapore by the Singa-pore Economic Development Board.

• Dataquest e-Governance initiative National Award presented to Commissionerate of Health and Family Welfare for e-Governance in Integrated Disease Surveillance Project.

Education Infrastructure

With increasing growth of knowledge-based industries and in-crease in the need for technical manpower, the state is focusing on the development of a good academic foundation.

The provisional number of educational institutions imparting pri-

mary education is 39,059 (2005-06). There has been an addition of 4,357 government primary schools in 2006-07 and to meet the requirement of these new schools, an addition of 36,583 primary school teachers has also been made. In 2006-07, the number of new enrolments in primary schools was 94,4432.

Kanya Kelavani, a state-wide girl child education campaign, was undertaken to increase the enrolment ratio and decrease drop out rate of primary school girl students. The success of this initiative can be measured as below:• Increase in net enrolment ratio from 75% to 97%.• Increase in enrolment ratio of girls to boys from 845 (2003-

04) to 866 (2006-07).

Another initiative, the Vidya Laxmi Yojana, was undertaken to achieve 100 per cent enrolment and retention of girls in primary schools. In the last fi ve years, around 699,000 girls have been given the Vidya Laxmi Bond.

No. of Registered Nurses (2006)

Source: Department of Health, GoG

2006

2005

2004

2003

2002

15,000 15,500 16,000 16,500 17,00014,500

16,816

15,801

15,478

16,299

16,755

Maternal Mortality Rate 389 (2005) 172 (Aug. 2007)

Infant Mortality Rate 64 (2005) 54 (Aug. 2007)

No. of Private specialists enrolled

801 (till Aug 2007)

No. of deliveries by private specialists

95,066 (till Aug 2007)

Lives saved under Chiranjeevi Scheme

548 Mothers and 3,443 New Borns

Source: Department of Health, GoG

Source: Department of Education, GoI

Reduction in year-wise drop-out rates (Primary School)

2006-07

2005-06

2004-05

2003-04

n Std. 1-5 n Std. 1-7

17.8%31.5%

11.8%22.8%

5.8%14.0%

3.7%11.6%

0 5 10 15 20 30 3525

Source: Department of Primary Education, GoG

200 140100806040 120 160

Number of Girl Children Benefited under Vidya Laxmi Yojana

2002-03

2003-04

2004-05

2005-06

2006-07

Figure in INR Millions

1,10,829

1,54,457

1,30,000

1,51,034

1,52,409

Year

s

The number of institutes imparting secondary and higher secondary education was 7,654 (2005-06). There has been an addition in the number of seats in some courses such as Degree Engineering (1,150) and Degree Pharmacy (720) in 2006-07.Number of Schools

More than 500,000 students graduate across various disciplines every year in Gujarat. The state is already home to leading insti-tutions viz:• Indian Institute of Management (IIM)• Entrepreneurial Development Institute (EDI)• National Institute of Design (NID)• National Institute of Fashion Technology (NIFT)• Centre for Environment Planning & Technology (CEPT)• Mudra Institute of Communications, Ahmedabad (MICA)• Institute of Rural Management (IRMA)• National Institute of Design (NID).• Indian Institute of Packaging.• Gujarat National Law University.• Apparel Export Promotion Council training centers.

A centre of the Indian Institute of Technology (IIT), Mumbai, the National Institute of Pharmaceutical Education and Research (NIPER) and Institute of Public Health (IPH) are proposed to be established in the state.

Telecommunications & IT infrastructure

Gujarat has a well established communication network.

Telecommunications and IT have played a key role in increas-ing work effi ciency and enhancing public accessibility through e-governance. Cellular connectivity is 41 for every 100 persons.

As a part of the state disaster preparedness, all district head-quarters have been provided with INMARSAT satellite tele-phones with the back-up support of transportable V-SAT termi-nals capable of establishing voice, video and data communication services within a short span of time. This infrastructure has been ably utilised during past natural disasters. Gujarat is the only state with a state-wide area network (Guja-rat State Wide Area Network-GSWAN), connecting over 2,800 government offi ces. GSWAN is the world’s second largest IP-based WAN.

Gujarat State Wide Area Network Gujarat is the second Indian state to have a Secretariat Inte-grated Communication Network (SICN) with over 7,500 voice connections.

The state government has utilised IT for the redressal of citi-zens’ grievances through State Wide Grievance Attention on Public Grievances by Application of Technology (SWAGAT).

Another key e-governance project, Integrated Workfl ow and Document Management System (IWDMS), addresses the need

Source: Department of Higher Education, GoG

Number of Schools

2006-07

2003-04

39,143

34,786

0 5 10 15 20 25 30 35 40

Source: Department of Higher Education, GoG

Number of School Teachers

2006-07

2003-04

216711

180130

Phones per 100 population (including WLL + mobile)

6.77

Phones per sq. km. (including WLL + mobile)

17.48

No. of Internet Subscribers

146,176

No. of Cellphone Subscribers

(November 30, 2006)

74,13,500

(Increase of 52.89% from November 2005)

Telecommunications Snapshot (October 31, 2006)

Source: Socio-Economic Review, 2006-07

GUJARAT PAGE 13

for streamlining documentation in order to enable functioning of a hassle-free knowledge-led government.

The Bhaskaracharya Institute for Space Applications and Geoin-formatics (BISAG) is a state level nodal agency with facilities in satellite communications and a dedicated bandwidth for con-ducting education programmes.

Gujarat Info City, located near Ahmedabad airport, is a well-equipped hub for IT companies. It has a satellite earth station with 120 MBPS connectivity, leased data and voice connectivity, state-of-the-art telecommunication network and a dedicated ISDN digital telephone exchange. Industrial Infrastructure

Gujarat has been the fi rst Indian state to enact the Private Sec-tor Participation (PSP) Law in the form of the Gujarat Infrastruc-ture Development Act, 1999.

Small & Medium Enterprise (SME) Units

Gujarat’s manufacturing industry is supported by 312,000 small and 2,200 medium units. The Micro, Small & Medium Enterprises Act 2006 aims to facilitate promotion and development of SMEs in a sustainable way. It further empowers the state government with several discretionary measures to extend assistance to such enterprises to facilitate their rapid growth.

83 Product Clusters

Clusters have been recognised by the government as groups of industries manufacturing identical and complementary products having a critical mass of 50 units, located within a radius of 10

km. The state has over 30 engineering clusters, 13 textile clus-ters, 10 food processing clusters and seven chemical clusters.

Out of 83 product clusters, many have not only developed their own raw material sources, but also as markets for selling end products.

The Cluster Development Scheme (CDS) is a planned assistance programme for furthering the growth of product clusters. The cluster approach is being used to systematically improve the competitiveness of SMEs by creating common facilities, enhanc-ing market development and strengthening infrastructure facili-ties.

Product Clusters in Gujarat

Gujarat State Wide Area Network

Source: Industries Commissionerate, GoG

Cluster Classification in Gujarat

n Engineering n Textiles n Food Processing n Chemicals

n Minerals n Others

30

1310

7

6

17

Product Clusters

The scheme involves providing assistance for activities such as:• Modernisation, technology development and upgradation,

quality improvement and training.• Marketing of products and brand development.• Networking between units for common facilities, sourcing of

raw materials, testing, quality improvement and spare capac-ity utilisation.

• Overall productivity improvement.• Market competitiveness.• Capacity enhancement.

The scheme has resulted in the successful development of 20 clusters including Ceramics Cluster at Morbi, Brass Parts Clus-ter at Jamnagar, Fish Processing Cluster at Veraval and Power Looms Cluster at Ahmedabad.

Industrial Estates

Gujarat has 202 well-planned industrial estates established by the Gujarat Industrial Development Corporation (GIDC). They are specifi c for sectors such as chemicals, electronics, gems, ap-parels and granite.

After assessing the industrial viability of a location, GIDC sets up industrial estates on non-agricultural land. They are made avail-able to companies with the provision of basic physical, social and commercial infrastructure such as:• Ready-to-use sheds of various designs and sizes for immedi-

ate commencement of operations.• Well-developed internal road network.• Provision for water and electricity.• Common facilities including training centres, banks, offi ces,

restaurants and conference rooms.• Social infrastructure such as schools, post offi ces and dispen-

saries.GIDC makes provisions for sites/ land for solid waste disposal and common effl uent treatment plants (CETPs) at concessional rates.

Special Economic Zones

Gujarat has the distinction of being the fi rst state to enact the Special Economic Zone (SEZ) Act, 2004. An SEZ is a specifi cally delineated duty-free enclave, deemed to be foreign territory for the purpose of trade, operations and duty and tariffs.

SEZs have been created as designated industrial areas for the

purpose of establishing units, which would in turn lead to an increase in manufacturing activities, augment exports and gener-ate employment. SEZs may be set up in public, private or joint sector, or by the state government.

Currently, with 51 approved, Gujarat has among the highest SEZs in the country and the highest geographical area (over 15,000 hectares) under development for establishing SEZs.

Spread across the state, there are 40 sector-specifi c and 11 multi-product SEZs. While there are two SEZs each in Power and Chemicals, Biotech, Gems & Jewellery, Handicraft and Ce-ramic & Glass have one SEZ each.

Gujarat was the fi rst state to create rules and regulations for

Key Sector-wise Break-up of SEZs

n Electronics, IT/ ITeS n Engineering n Pharma n Textiles & Apparels

11

5

5

8

Source: Industries Commissionerate, GoG

Other Sectors

Source: Industries Commissionerate, GoG

Specific SEZ Type Number

Chemicals 2

Power 2

Gems and Jewellery 1

Ceramics and Glass 1

Biotechnology 1

Handicraft 1

Multi Service 3

GUJARAT PAGE 15

SEZs, which covered industrial and labour aspects, including fl ex-ible labour laws and exit options.Some of the key upcoming SEZs include:

The Gujarat SEZ Act, 2004 has made key provisions with respect to the appointment and termination of labour for units estab-lished in SEZs.

The concept of ‘Fixed Term Employment’ introduced by the SEZ Act has helped in accounting for the least mandays lost due to labour strife, among comparable industrial states.

Delhi Mumbai Industrial Corridor

The development of the Delhi-Mumbai Industrial Corridor (DMIC) is a key opportunity for attracting investments into

Gujarat. The total length of the corridor is 1,483 km, of which Gujarat has a major share of 564 km (38 per cent). The DMIC infl uence area in Gujarat comprises 62 per cent of the total area (18 districts out of 25) and 74 per cent of the total population (37 million).

At present, for the development of Phase-1 of DMIC, key indus-trial nodes (Mega Investment Regions and Industrial areas) have been identifi ed across all the states through which the DMIC is expected to pass.

The key industrial regions identifi ed in Gujarat are:• Ahmedabad-Dholera Investment Region.• Vadodara-Ankleshwar Industrial Area.

The corridor is proposed so as to have excellent connectivity to the non-major ports of Mundra, Pipavav, Dholera, Dahej, Hazira and Maroli.

Among all the MoUs signed during the Vibrant Gujarat Global Investors’ Summit 2007, 260 projects, worth an investment of $45.8 billion, are proposed to be established along DMIC.

Petroleum and Chemicals & Petrochemicals Investment Region (PCPIR)

The PCPIR, an agglomeration of petroleum, chemicals and pet-rochemical industries, is proposed to be developed at Dahej. The region is rich in natural resources and there is an abundance of feedstock. Nearby chemical estates include Ankleshwar, Panoli, Jhagadia, Hazira and Nandesari. In addition, there is abundant availability of PCPIR-specifi c infrastructure such as effl uent disposal pipelines, common effl uent treatment plants and solid waste disposal sites. An SEZ is proposed by the GIDC at Dahej and Jhagadia. A private sector SEZ is also proposed at Vilayat (Bharuch) by Jubilant, Wockhardt and Khanna Paper Mills. The development of the PCPIR is supported by the appropriate legal framework.

Gujarat International Finance Tec City (GIFT)

GIFT is an initiative by the state government to capture the fi nancial market potential that would be generated as a result of the rapid industrialisation in the state. With huge investments being committed to Gujarat, several banks and fi nancial institu-tions are keen to set up base.

For this purpose, a part of the region between the commercial

Other Sectors

Man days Lost (Figures in 000’000)Year Gujarat Maharashtra Tamil Nadu2004 1.42 4.86 6.342005 1.19 4.89 4.682006 1.03 2.41 3.33

Source: Labour Commissioner, GoG

capital, Ahmedabad and the administrative capital, Gandhinagar, has been earmarked for the development of a Central Finance and Business District (CFBD) - GIFT, institutional areas, knowl-edge parks and integrated townships.

It will have state-of-the-art IT infrastructure such as a fully-integrated technology backbone, data centre, shared IT services, WiFi and WiMax. The city will have well-planned residential housing projects with walk-to-work layouts and high quality entertainment malls.

The Gujarat Urban Development Co Ltd. (GUDC), in partner-ship with Infrastructure Leasing & Financial Services Ltd (IL&FS), is promoting the project on a Public-Private Partnership (PPP) model through a joint venture company Gujarat International Finance Tec-City Development Company Limited (GIFTCL). The project is expected to be completed by 2010.

At present, MoUs for 11 million sq ft of occupancy in GIFT have already been signed by global fi nancial companies such as Kotak Mahindra (India), Chescor Capital (UK), Orix (Tokyo), Fairwood Associates and Sembawang Engineers and Constructors Pvt Ltd (Singapore).

GUJARAT PAGE 17

Gujarat Industrial Policy – 2003, was introduced with the objec-tive of transforming the state into an Asian leader, as well as a strong contender globally, in the context of industrial growth. It was formulated with the aim of supporting an entrepreneur at every stage of project implementation. The policy proposes to address the industry requirements on a long-term basis.

The GIDC is a public sector undertaking set up primarily to develop industrial infrastructure by acquiring appropriate land. There were 236 industrial estates at the end of December 2006. In 2007, the corporation dropped four estates and approved 10 new proposals for industrial estates and decided to expand eight existing ones. There were 242 industrial estates at the end of 2007. For the development of industrial estates, GIDC has acquired about 26,360 hectares of land.

The new policy guidelines have been designed keeping in mind the requirements of today’s industries.

Key Highlights of the State Industrial Policy include:• Facilitating access to concrete, speedy and authentic informa-

tion for the benefi t of entrepreneurs. • Upgradation of industrial and urban infrastructure.• Development of thrust industries.• Constitution of Gujarat Industrial Promotion Board (GIPB)

to provide single window mechanism for large projects.• Promotion and development of SEZs and Industrial Parks.• Flexibility of labour laws in SEZs.• Power reforms.• Cluster development for small and medium enterprises:• Interest subsidy• Assistance for research & development• Financial assistance for setting up industrial parks• Assistance to critical infrastructure projects• Power tariff incentives• Human resource development and creation of employment

opportunities.• Creating a global brand image for Gujarat and its products.• Strengthening the existing manufacturing base.• Environment protection.

Agro Policy

The state government offers fi nancial support and incentives for agro industrial projects under the ambit of infrastructure, mar-keting, research and development and facilitation of projects.

Development of supply chain infrastructure and support services for the agro industrial sector has been assigned high priority. The government will also offer incentives such as six per cent per

annum back-ended interest subsidy for the fi rst fi ve years from commencement of operations for projects providing common infrastructure facilities in the value chain.

The state has initiated a provision for providing support to pri-vate sector industries, apex cooperative institutions and Agricul-ture Product Marketing Committees (APMCs) for setting up of Centres of Excellence/ Specifi c Crop Development Institutes.

The state is keen to encourage the export of agricultural prod-ucts from Gujarat by taking key initiatives:• Development of Agro Export Zones.• Establishing an Air Cargo Complex.• Provision of 25 per cent Air Freight Subsidy on agro exports.• Financial assistance (up to 50 per cent of the cost) to agro

industries for research and development activities.• Kiosks to be set up at APMCs and Consuming Centres for

connectivity with related departments of agriculture, univer-sities, industries and international markets.

• Setting-up of internationally recognised testing and accredit-ing laboratories to encourage organic farming.

Port Policy

Gujarat has the distinction of having the highest number of ports spread along its 1,600 km-long coastline. With the increasing infl ow of investments expected to infl uence the further growth of the port-led industry, the state government has launched a new Port Policy with the following key highlights:

• Enhancing Gujarat’s share in the national EXIM sector. • De-congesting the burden on existing ports on the western

coast through effi cient facilities and services to support domestic and international trade.

• Providing port facilities to promote export-oriented indus-tries and port-based industries, which entail almost 50 per cent of total industrial investment.

• Encouraging shipbuilding, ship repairing and manufacturing facilities for cranes, dredgers and fl oating crafts.

• Promoting coastal shipping for passengers and cargo traffi c between various locations within the state as well as impor-tant destinations outside.

• Supporting power plants by offering exclusive facilities for import of different power fuels.

• Encouraging private sector investment in minor and interme-diate ports and also at new port locations.

Power Policy

Gujarat presently has a capacity of 13,500 MW, which includes

State Policy and Incentives

captive power generation. This capacity is expected to be ramped up to more than 25,000 MW by 2025. Gujarat achieved a per capita consumption of electricity of 1,354 units for the year 2006-07, which is more than twice the national average of 665 units.

The total installed capacity of the state as on 31st March 2007 was 9,410 MW. It comprised 4,968 MW by Gujarat State Electricity Corporation Ltd (GSECL), 2,166 MW by the private sector and 2,276 MW by the central sector share.

The total generation of electricity in the state including the pri-vate sector (17,403 MUs) and the central sector (16,602 MUs) was 61,543 MUs in 2006-07 as against 58,724 MUs generated in the previous year.

The total consumption of electricity during 2006-07 was 41,513 MUs as against 38,358 MUs in the previous year.

During 2005-06, wind farms with a total capacity of 84.60 MW were installed in the state.

The installed capacity of electricity in Gujarat has increased from a meagre 385 MW in 1966 to 9,561 MW in 2007. Gujarat has achieved 100 per cent electrifi cation in all villages. There are 23 power plants located in the state, which include nine thermal power plants, nine gas power plants, four hydro power plants and an atomic power plant.

Power Plants in Gujarat

Share of different power plants in generation

Giving highest priority to the development of the power sector, the state has developed a Power Policy to:• Carry out planning and building up adequate capacity in gen-

eration, transmission and distribution • Achieve optimum utilisation of existing equipment. • Rationalise the tariff structure. • Improve quality of services thereby achieving cost effective-

ness. • Strive for energy conservation.

• Encourage power generation by utilising non-conventional sources.

• De-monopolise distribution of power and invite involvement of private partners.

The installed capacity of power in Gujarat is expected to in-crease by 100 per cent (from 10,605 MW to 20,725 MW) over the next fi ve years. The demand projected by 2017 is 18,478 MW for the proposed projects as on date. It is estimated that by 2017 Gujarat will have a capacity to generate 42,005 MW (double the projected demand) to meet the requirement of any additional projects due to rapid industrialisation. Source: 16th Electricity Power Survey, Central Electricity Authority, Energy & Petrochemical Department, GoG, Socio Economic Review of Gujarat, 2006-07

IT Policy

In order to accelerate the development of the IT industry in the state, the government has launched an IT Incentive Policy. This policy would be reviewed after a period of two years in view of the expected rapid technological changes in the industry.

Key highlights of this policy include:• Capital subsidy at a rate of 25 per cent for eligible new IT

units on total eligible capital investment.• Special incentives in the form of a capital subsidy to large

units on a graduated scale.• Turnover incentive at a rate of fi ve per cent of the eligible

annual turnover with a ceiling of around $1.2 million.• Incidence of sales tax on computer hardware, peripherals,

etc., would be reduced.• A special connectivity incentive where the government

would subsidise leased line rental up to 500 km, to an extent of 50 per cent of the lease rentals.

Power Number of Installed Share in Plants Plants Capacity (MW) Generation (%)Thermal Power 9 6041 63.18Gas Power 9 2182 22.82Hydro Power 4 779 8.15Atomic Power 1 559 5.85

Source: Labour Commissioner, GoG

GUJARAT PAGE 19

Small and Medium Industries

The state government has recognised the need to support and strengthen existing clusters of small and medium enterprises (SMEs).

Industry clusters with a minimum of 50 units located within a radius of 10 km at a particular location will be recognised by the government as a cluster. The decided norm for the number of units can be relaxed for certain sectors considering the manage-rial and technical competence, size and nature of the industry.

The government proposes to provide assistance for the purpose of assisting the identifi ed clusters in the areas of technology and product design upgradation, quality improvement, R&D activities, common branding and marketing facilities, development of com-mon facilities such as library, testing and certifi cation laborato-ries, capacity building for workers and supervisors in terms of skill upgradation and productivity.

The government further provides electricity duty exemption for the fi rst fi ve years to cluster associations if they set up common power plants, effl uent treatment plants or waste recycling plants.

Mineral Policy

Gujarat is a leading contributor to the national production of several minerals including agate, chalk, bauxite and lignite.

The state government has established a Mineral Policy with the objective of:• Building global competitiveness in all aspects.• Infusing transparency at all levels of operation.• Enhancing effi ciency by adopting e-governance.

The Policy aims to:• Invite participation from private sector for mining and explo-

ration.• Prioritise exploration of lignite in order to meet power

demand of state as well as fuel requirement of industries.• Creation of data banks by compiling geological and technical

details of state and central government agencies in the fi eld of geological survey and mineral exploration.

• Implement environment assessment norms, which would be constantly monitored in leases of major minerals.

• Promote use of modern technology in mining.

The production of Agate, Steatite and Gypsum during 2006-07 was 38, 1,105 and 156 tonnes, respectively. Other minerals included Limestone (22,482 tonnes), Lignite (9,810 tonnes), Bauxite (3,214 tonnes), Laterite (262 tonnes) and Dolomite (325,000 tonnes). Road Policy

Gujarat has a road network of 74,111 km, comprising express-ways, national and state highways, district roads and village roads.

Gujarat has the distinction of being the fi rst state in India to have a law governing Build Own and Transfer (BOT) transactions. The Road Policy proposes to:• Impart connectivity to all villages by all-weather roads

thereby improving quality of life in rural areas.• Develop adequate and effi cient road system encompassing all

transportation needs to ensure smooth and uninterrupted fl ow of goods and passenger traffi c.

• Constantly upgrade technology by inducting superior and quicker construction and maintenance methods.

• Induct scientifi c principles of resource allocation for mainte-nance and new construction programmes.

• Set high standards of road safety and travel comforts.

Business opportunities offered by any state are dependent on the investment environment, which is infl uenced by several fac-tors.

Availability of Natural Resources

Gujarat has a rich mineral base. The state has a strong agricul-tural foundation as well. In addition, it is one of the earliest oil/ gas producing states in the country.Industries such as petrochemicals, which are highly dependent on availability of natural resources, have fl ourished in the state.

Capability

The success of several industries are infl uenced by the avail-ability of skilled manpower. For instance, the continuous growth of the diamond processing industry in Gujarat has been ably supported by the presence of trained manpower.

Further, the labour policy of the state assists in maintaining harmonious industrial relations. Gujarat has amongst the least mandays lost – 0.6 per cent of the country’s total.

Proactive Government Policies

The support of a proactive government is crucial for rapid industrial growth. Implementation of policies is crucial for the development of upcoming sectors such as biotechnology and clinical research.

Key Thrust Sectors:

Agro & Food Processing

The agro & food processing industry in Gujarat is well estab-lished in terms of natural resources, skilled labour, enterprising farmers and a strong marketing network. During the period 2001-05, the sector witnessed an annual average growth rate of

24.11 per cent. The sector has been ably supported by necessary infrastructure. As on 31st March 2006, the state was home to:• 204 Market committees• 193 Main yards • 207 Sub-market yards

There is a reporting area of 18.81 million hectares in the state, of which 9.795 million hectares (52.07 percent) was net area sown.

Cotton, groundnut, bajra, maize, jowar, tur, pulses, castor and vegetables are the major Kharif crops of the state. The area covered under Kharif crops till September 2007 was 8.889 million hectares. The area covered under Rabi crops in January 2008 was 3.426 million hectares, compared to the 3.202 million hectares sown during the previous year.

The major fruit crops in Gujarat are banana, mango, citrus and sapota (chikoo). The major vegetables grown are onion, potato, brinjal, tomato, okra and cucurbit. The state is leading in pro-ductivity of onions and potatoes. It also produces spices like cumin, fennel, and garlic. It also enjoys a monopoly in seed spices. Isabgul is a prominent medicinal plant grown in the state. The area under cultivation of fl owers like rose, lily and marigold is also increasing. Various aromatic plants like pacholi and pamaroza are cultivated in southern Gujarat. There is scattered cultivation of medicinal plants like allovera, sena, and gugal.

The diverse agro climatic conditions have facilitated success-ful introduction of crops like cashew. As per quick estimates, in 2005-06, the agriculture sector, including animal husbandry contributed 15.5 per cent to Gujarat’s GSDP.

Overall Agricultural Crop Distribution in Gujarat

In 2005-06, the state contributed a signifi cant share to the na-tional production of principal crops:• Highest production of groundnut – 3.39 Million Tonnes (MT)• Highest production of cotton – 6.77 MT

Business Opportunities

Yield of Principal Crops (Kg/Hectare) - Comparison

n Gujarat n

Source: Socio-Economic Review 2006-07

Cotton

Total Oil Seeds

Groundnut1081

1273898

252

229

1393

0 200 400 600 800 1000 1200 1400

GUJARAT PAGE 21

• Second highest production of onion – 2.13 MT

Gujarat also has the distinction of having a higher yield of prin-cipal crops (groundnut, total oilseeds and cotton) vis-à-vis the total yield in the country.

The state contributes signifi cantly to the national production of several other crops including mustard, sesame, pigeon pea, banana, mango, gram and sugarcane. Gujarat holds a stronger position vis-à-vis the world average with reference to the pro-ductivity of several crops.

State-owned Gujarat State Seed Certifi cation Agency (GSSCA) is currently under the process of being accredited by the Agricultural & Processed Food Products Exports Development Authority (APEDA) for the purpose of certifying crops culti-vated organically.

With a strong base in agriculture, Gujarat has developed into a chosen location for food processing companies. The state has a signifi cant number of well-established food processing units:• 3,700 small scale industrial units.• 1,875 working factories.• 150 large and medium scale units.

Companies based in Gujarat have operations across the entire value chain of food processing in fruits and vegetables, grains and whole cereals and consumer food.

The dairy industry is one of the key sectors in Gujarat. The state stands fi fth in India, in terms of milk production.

Gujarat’s dairy sector is characterised by the following:

• 13 district milk producers’ unions• Network of 12,991 milk cooperative societies having 2.5 mil-

lion members• Total milk production – 18.97 million litres per day.

The National Dairy Development Board (NDDB), headquar-tered at Anand, is a key national-level body involved in promot-ing, fi nancing and supporting milk distribution organisations in India. The Gujarat Cooperative Milk Marketing Federation (GCMMF) is a cooperative dairy giant, which sells the Amul and Sagar brands of dairy products through 500,000 unorganised retailers and 3,000 distributors.

GCMMF has played an instrumental role in Operation Flood, popularly known as the White Revolution. GCMMF has clocked a turnover of $1.05 billion during fi scal 2006-07, to become the fi rst billion-dollar cooperative in India; it aims to reach the $2.4 billion-mark over the next three years.

Key companies in Gujarat with activities in the agro and food processing sector include Amul, Vadilal, Rasna, Reliance Industries Ltd. and McCain Food.

Chemicals & Petrochemicals

Gujarat’s chemical and petrochemicals industry is one of the fastest growing sectors. It accounts for 60.3 per cent of the state’s total industrial production. In March 2006, there were more than 15,000 small scale industrial (SSI) units registered for the production of chemicals.

Gujarat’s share in World Productivity (MT/Ha)

n Gujarat n

Onion

Castor

Banana38.9

1.980.92

14.7

16.53

23.37

0 5 10 15 20 25 30 35 40

Key Districts in Dairy Sector

Gujarat’s Share in Petrochemical Industry

Source: Ministry of Chemicals and Fertilizers, GoI

Gujarat

Other States

58.11%

17.68%

11.85%

12.36%

Maharashtra

West Bengal

0 10 20 30 40 50 60

Key Players in Gujarat

Contributing 53 per cent (Ministry of Chemicals & Fertilisers, Government of India, Provisional for 2005-06) to the national production, Gujarat is the highest producer of major chemicals, including alkali, organic, inorganic, pesticides, dyes and dyestuff. It is India’s largest producer of soda ash (100 per cent) and salt (85 per cent). It is also the highest producer of petroleum products (58 per cent) and chemicals (53 per cent).

The state has over 1,867 factories involved in the manufacture of chemical products employing more than 800,000 persons (Annual Survey of Industries, 2004-05).These factories comprise 13.8 per cent of the total number of factories in the state and account for around 30 per cent of the total fi xed capital in the industry.

With availability of abundant raw material, Gujarat is the highest contributor to the total national production of petrochemical products.

Source: Ministry of Chemicals & Fertilizers, Government of India

A designated Petroleum and Chemicals & Petrochemicals Invest-ment Region (PCPIR) is proposed to be developed at Dahej.

Its development would be supported by the concentration of chemical and petrochemical industries, availability of rich natural resources and feedstock, existing physical and specialised infra-structure, including nearby chemical estates.

Gujarat has the distinction of being home to the largest grass-root petrochemical refi nery in the world (of Reliance Industries Ltd) with a capacity of 30 million tones per year.

Key Chemicals & Petrochemicals Clusters in Gujarat

Reliance Industries, Nirma, Heubach Colors, Deepak Nitrite, Lanxess ABS Ltd. and GE are some leading companies with wide-spread operations in Gujarat. The state also boasts of prominent public sector units (PSUs) such as: • Gujarat Alkalies & Chemicals Ltd. (GACL) • Gujarat State Fertiliser Company (GSFC) • Gujarat Narmada Valley Fertiliser Company Ltd. (GNFC)

Companies in Gujarat are involved in activities across the value chain of chemical and petrochemical production.

Textiles & Apparels

Gujarat has long been recognised as the country’s textile hub. The shift has begun from cotton production and non-woven fab-rics to technical textile garments. The textile industry has largely contributed to the industrialisation of the state. Development of several industries such as dyestuff and cotton farming is solely dependent on this sector.Producing 8.9 million bales (35 per cent of the total production in India); Gujarat is the largest producer of raw cotton in the country. Contributing 60 per cent of total cotton exports, the state is also the highest exporter of cotton. With 112 cotton/ man-made textile mills, Gujarat ranks third among all states in the country.

The state has the distinction of being the highest contributor of manmade fi bres (31 per cent) and manmade fi lament yarn (38 per cent) in the country. With 1,560 medium and large textile units, Gujarat contributes 12 per cent to national textile exports. Over 40 per cent of art-silk fabric produced in the country is from the Surat district alone.

Gujarat’s Share in Major chemicals

Soda Ash 98%

37%

50%

37%

41%

50%

83%

38%

56%

20%

LAB

Acetic acid

Methanol

Caustic Soda

Ethylene

Salt

Phosphatic Fertilizers

Polymers

Nitrogen Fertilizers

0 10 20 30 40 50 60 70 80 90 100

Textile Industry: Statistical Snapshot

Source: Industrial Extension Bureau, GoG

Textile Production 14.2% of India

Number of medium and large textile units

1,560

Employment generated for organised sector

150,000

GUJARAT PAGE 23

Over 35 per cent of fabrics from the organised sector and 25 per cent from the decentralised power loom sector are from Gujarat.

In 2005-06, textile units in Gujarat witnessed a 14 per cent increase in production of manmade fi lament yarn. With fabric production increasing from 393,111 sq m in 2004-05 to 438,765 sq m in 2005-06, the sector has recorded an increase of 11 per cent.

The state has a widespread network of infrastructure required for the textile and apparel industry. It has the highest number of state-owned looms for cotton/ manmade fi bre - 6,888 as on March 31, 2006. It has six million powerlooms. Gujarat also has the distinction of having the second highest number of privately owned looms (11,963 as on March 31, 2006) and 45,000 rotors. It also has around three million spindles in the cotton/ manmade fi bre mills.

Large fabric process houses are concentrated in the two key cities of Ahmedabad (250) and Surat (350).

Key Textiles Clusters

Technical textile processes begin from raw materials (cotton production), spinning, weaving and knitting, processing the man-made fi bres and ultimately garments manufacturing. Gujarat pro-duces six per cent of the country’s garments that are exported.The state has the distinction of being home to the largest denim producer in Asia, Arvind Mills (capacity of 100 million metres/ year), and the third largest in the world. Other leading compa-nies with a presence in Gujarat include Welspun Group, Ray-mond, Ashima Group and Mafatlal Industries.

Gujarat’s textile industry has operations across the entire value chain including production of cotton and manmade fabrics, textile machinery, ginning, weaving, garment manufacturing and manufacture of technical textiles.

During the year 2006-07, Khadi worth $4.44 million was produced, while sales amounted to $8.01 million. The industry provided employment to 11,962 persons in 2006-07.

Engineering & Automobiles

Gujarat has been actively promoting the development of the engineering and automobiles industry. The sector has been one of the key drivers of industrial development in Gujarat, account-ing for 15 per cent of the total industrial production.

With an average growth rate of 15 per cent, the state contrib-utes more than nine per cent to the national engineering output. It also has the distinction of being the largest contributor of sponge iron (35 per cent).

Gujarat has over 600 units in the medium and large sectors and more than 75,000 SSI units in the engineering and auto sec-tor. The largest plant producing sponge iron (Essar Steel) has a capacity of 4.6 million tonnes per annum, and there are plans to expand this to 6.4 million tonnes.

Out of the 83 clusters spread across 16 districts of Gujarat, the engineering industry has 30 product clusters. The small-scale industry has emerged as a signifi cant contributor to:

• Foundry, forging and machine tools - with clusters in Baroda, Bhavnagar and Anand. Forging is principally done in Ahmeda-bad, Rajkot and Anand, fabrication and machinery production in Rajkot and Ahmedabad.

• Brass parts• Oil engines and electric motors• Submersible pumps• Industrial valves and bearings

For instance, the Brass Parts Cluster at Jamnagar has over 5,000 small units and meets the entire requirement for brass parts in India.

Production of Key Textiles (in tonnes)

Source: Ministry of Textile, Gol

Man-made

Filament Yarn

Total SpunYarn

481267

300650

231111

Man-made Fibre

Metallurgical

0 2 4 6 8 1210

Share of Gujarat in National Engineering Sector Output

Source: Industrial Extension Bureau, GoG

3.7%

6.2%

11.1%

10.8%

8.3%

Fabrication

Machinery

Electricals

Automotive

As per the Annual Survey of Industries (2004-05), around 18,000 persons were employed in the engineering industry across the sub-sectors of:• Fabricated metal products.• Machinery & equipment.• Electrical machinery.• Communication equipment.• Motor vehicles.• Other transport equipment.• Medical instruments.• Furniture.

The engineering and auto industry comprises around 27 per cent of the total factories, with the highest number being in the machinery and equipment sector.

Gujarat has the distinction of having emerged as an important production centre for the manufacture of industrial machinery, including:• Textile machinery• Chemical machinery• Pollution control equipment• Printing machinery• Air & Gas compressors• Ball and Roller BearingsSource: Gujarat Socio economic review, 2007-08

Companies with manufacturing operations in Gujarat have well-established strengths across the entire span of engineering products:• Largest producer and exporter of SAW and ERW pipes• Largest manufacturer of material handling equipment in India

– Elecon Engineering Ltd• Largest producer of earth moving equipment – Gujarat

Apollo Equipment• Largest manufacturer of glass shells for production of TV

tubes – Videocon International

• Largest exporter of clocks from India with the largest manu-facturing facility of clocks – Orpat and Samay

• Largest ship-breaking yard in the country is located at Alang (recycled 4,240 vessels, weighing about 30.40 million metric tonnes in 2005)

Key players with a presence across the engineering value chain in the state include General Motors, Essar Steel, Hindalco (Aditya Birla Group), Shah Alloys, Larsen & Toubro, Matsushita and Asia Motors.

Gems & Jewellery

Gems & Jewellery is one of the fastest growing sectors in the country. This industry is well established in Gujarat and is sup-ported by policy initiatives from the government. In addition to cutting and polishing of diamonds, processing and jewellery design has also gained prominence.

The industry specialises in both hand-made jewellery in tradi-tional as well as modern designs; other strengths include low

0 2 4 6 8 10 1412

Key Engineering Industries

Source: Annual Survey of Industries, 2004-05

Fabricated Metal Products

2.3

6.28

1.81

12.51

n No. of Factories (%) n Fixed Capital Investment (%) n Value of Output

1.03

3.11

1.03

Machinery & Equipments

Electrical Machinery

2.04

2.79

Key Engineering Clusters

GUJARAT PAGE 25

cost of production and easy availability of skilled labour.

Gujarat has the distinction of being the world’s second largest producer of gold jewellery. It contributes the highest share (85 per cent) to the total national jewellery production. A cluster located in Ahmedabad, specialising in the manufacture of gold jewellery has a labour productivity of around 50 gm of production per day per labourer, which is the highest in the country.

Gujarat is renowned for the production of unique hand-made silver ornaments, which constitute 85 per cent of the total silver jewellery production of India.

The state has the distinction of contributing 90 per cent of the total diamonds processed in the country. Of these, 90 per cent are processed in the 10,000 diamond units located in and around Surat. With eight out of 10 diamonds in the world being polished in Surat, it is known as the ‘Diamond Capital of the World’. It has the world’s largest diamond processing hub with a 72 per cent world share and 80 per cent of the Indian market. In 2004-05, Gujarat contributed 80 per cent to diamond exports.

Leading companies in the state include Sanghavi Diamond Exports, Gitanjali Gems, Harikrishna Exports, Venus Jewels and Bhavani Gems.

Port-Led Development

The state has taken several pioneering initiatives in the develop-ment of the port-led sector, such as: • Development of India’s fi rst privatised port in 1992 (Pipavav

Port).• Announcing of the First Port Policy in the country.• Establishment of the fi rst LNG terminal at Dahej by Petronet

LNG Ltd.• Development of the fi rst chemical terminal at Dahej by Guja-

rat Chemical Port Terminal Company Ltd. (GCPTCL).• Development of the deepest draft multi-purpose port at

Mundra by Adani Group.• Development of the fi rst private sector port rail linkages.• Establishment of the largest ship recycling yard with hazard-

ous waste management facilities at Alang.

The strained capacity of the major ports is resulting in increased berthing timings. This is leading to a rapid growth of the non-major ports. Upcoming non-major ports are being developed as captive ports for catering to the needs of specifi c companies.

With non-major ports being under the jurisdiction of the state, the Gujarat government has the freedom to facilitate fast-track clearance and establishment of ports, particularly through pri-vate participation.

Gujarat also has the advantage of a vast hinterland consisting of key northern and central states such as Rajasthan, Mad-hya Pradesh, Uttar Pradesh, Delhi, Haryana, Punjab, Himachal Pradesh and Jammu & Kashmir. These rapidly developing states, contributing 35 per cent to the country’s total exports, are potential customers of Gujarat’s ports. The combined State Domestic Product (SDP) of these states contributes a signifi cant 25 per cent to the country’s GDP. Export of surplus foodgrains from these leading grain producing states and import of fertiliser, offer great potential for growth of cargo in the near future.

It has been observed that a large portion of the current invest-ments and those expected to fl ow into the state in the near future are converging in and around the port sites. For instance, investments of around $3.9 billion are expected at Hazira, $3.7 billion at Vagra and of $4.9 billion near the ports of Pipavav and Jamnagar. Large industrial houses are keen to locate their busi-ness units in proximity with the ports, to have easy access to imported raw materials and to export fi nished products.

The state has now identifi ed more Greenfi eld ports to be executed in various phases. The process of the development of ports at six locations has already commenced. These are expected to attract investments ranging from $700 million to $1.5 billion. Another $5.6 billion has been set aside by the state government for the upgradation of existing ports.

Simar

MithivirdiVansiBorsi

Maroli

Khambat

Mahuva

Sites Identified for Development of Greenfield Ports

Source: Gujarat Maritime Board

Compared to the previous year, imports through intermediate and minor ports have increased by 20 per cent, while exports have increased by 19.47 per cent. The main items of imports through intermediate and minor ports are crude oil, naphtha, coal, iron ore, rock phosphate, fertiliser, ammonia and machinery. The main items of exports through these ports are high speed diesel (HSD), naphtha, petrol, clinker, cement, oil cakes, bauxite, salt, soda ash and food grains.

Another key factor expected to infl uence the creation of busi-ness opportunities along the ports is the upcoming Delhi-Mum-bai Industrial Corridor (DMIC). The DMIC would have excel-lent connectivity with the non-major ports of Mundra, Pipavav, Dholera, Dahej, Hazira and Maroli. This will greatly facilitate the movement of cargo between the ports and the states through which the DMIC passes.

Shipbuilding

Gujarat’s rich maritime history has facilotated the rapid growth of the shipbuilding industry. At present, more than 5,000 ships and 1,000 sailing vessels visit the ports of Gujarat every year.

Gujarat is already home to signifi cant shipyards such as Alcock Ashdown, Vipul Shipyard and ABG Shipyard.

The state offers several favourable parameters for the develop-ment of shipbuilding and ship-recycling industries:

• Well-developed port infrastructure.• Availability of land, water and power, in abundance.• Availability of raw material, such as ship-building plates and

engines.• Stillness of water and deep draft.• Availability of skilled labour.• Proximity to ancillary industries.• Suffi cient anchorage space.

The Kalpasar Project, which involves construction of a 64 km dyke across the Gulf of Khambat, is expected to result in the development as well as enhancement of new and existing ports, including:• Pipavav • Maroli• Dholera• Dahej• Hazira • Umargaon

The state has more than 10 promising shipbuilding sites along its coastline, with new shipyards already being built in Mundra, Pipavav and Hazira.

Currently, leading companies are in the process of develop-ing shipbuilding yards in the state include Larsen & Toubro and Mercator Group.

Pharmaceuticals & BiotechnologyGujarat has the distinction of being the fi rst state in the country to pioneer several new concepts in the pharmaceutical sec-tor. Manufacturing of chemical-based drugs has now given way to drug discovery, clinical research and contract research and manufacturing services (CRAMS).

Gujarat is the fi rst state to:• Manufacture active pharmaceutical ingredients (APIs) and

fi nished dosage forms in India.• Manufacture pharmaceutical machinery in India.• House Clinical Research Organisations (CRO), such as Quin-

tiles.• Conduct pre-clinical safety and toxicology studies in India.

The state accounts for 28 per cent of the national pharmaceuti-cal production (2006-07). Exports increased by 53 per cent in 2006-07 vis-à-vis 22 per cent in 2005-06.

NCEs

NDDS Products

Technology Intensive Drugs (Cytotoxics,

Vaccines)

Manufacturing and Research Services

Commodity Generics

Active Pharmaceutical Ingredients

Shipbuilding Sites in Gujarat

GUJARAT PAGE 27

Gujarat has a widespread presence across the entire value chain with several domestic and international companies in each seg-ment:• Active Pharmaceutical Ingredients (APIs) – Zydus Cadila,

Alembic, Torrent, Dishman, Concord• Commodity Generics – Zydus Cadila, Torrent, Alembic, JB

Pharma• Manufacturing & Research Services – Intas, Lupin, Glenmark,

Cipla, Wockhardt• Technology Intensive Drugs – Zydus Cadila, Intas• Novel Drug Delivery System (NDDS) Products – Sun

Pharma, Zydus Cadila• New Chemical Entities (NCEs) – Zydus Cadila, Torrent

Gujarat is currently home to 902 allopathic manufacturing units and 2,122 contract manufacturing units. The state houses several multinational companies such as Sanofi Aventis, Wyeth and Ab-bott.

The government has taken initiatives for establishing several pharmaceutical clusters, located in the districts of Baroda,

Ankleshwar, Ahmedabad, Bharuch, Vapi and Valsad. Savli Industrial Estate has been established in Vadodara for the development of biotech companies.

Pharmaceutical Clusters in Gujarat

As on December 2006, Gujarat had commissioned 295 large-scale pharma projects with an investment of $533 million. In early 2007, 114 large-scale projects envisaging an investment of $225 million were under various stages of implementation.

Oil & Gas

Gujarat is the second largest gas producing region in India. The state’s proximity to Middle East gas sources and an attractive northern market makes it a potential gas supply hub. Oil and gas reserves in Gujarat are primarily located at Ankleshwar, Mesana, Tapti High, Hazira, Bharuch, Gandhar, Dahej, Jambusar, Palej, Kalol and isolated gas fi elds around Ahmedabad.

The state was the fi rst to develop a state-wide Integrated Gas Grid, which can augment the distribution of gas to all residential areas.

Two LNG terminals exist at Hazira and Dahej and two new terminals are proposed at Mundra and Pipavav.

Key players in Gujarat include Cairn Energy, Shell, British Gas, Reliance Industries Ltd and ONGC.

NCEs

NDDS Products

Technology Intensive Drugs (Cytotoxics,

Vaccines)

Manufacturing and Research Services

Commodity Generics

Active Pharmaceutical Ingredients

Key Players Across the Value Chain

NCEs

NDDS Products

Technology Intensive Drugs (Cytotoxics,

Vaccines)

Manufacturing and Research Services

Commodity Generics

Active Pharmaceutical Ingredients

Location Activity

Jamnagar RIL refinery - 3rd largest in the world, Essar Refinery

Dahej Petronet LNG Ltd’s re-gasification terminal

Hazira Shell and Total’s LNG terminal

Vadodara IOC Refinery

Gandhar ONGC’s Gas Processing Complex

Leading Players in Gujarat

Information Technology (IT)

Regarded as a rapidly growing sector in Gujarat, exports from Software Technology Parks of India (STPI) units registered a growth of 47 per cent during 2000-05. There are 295 approved STPI units in Gujarat, which comprise fi ve per cent of the total number of approved units in the country.

Independent agencies have ranked Gujarat amongst the top fi ve states in terms of e-readiness.

The ranking has been based on the following parameters:• Level 1 in Network Policy and E-governance• Level 2 in Network Learning• Level 4 in Network Access and Network Society

The rankings have been awarded after analysing the relationship between e-readiness and its major components with develop-ment levels of each state.

Gujarat has the distinction of having implemented several IT projects for evolving a successful e-Governance model. Further, it is in the process of establishing requisite infrastructure for the development of the sector.

The government has put into place an IT policy, offering fi scal and non-fi scal incentives, for promoting rapid growth of the sector.

Export Profi le of Gujarat

Gujarat contributes 14.3 per cent of the country’s total exports of merchandise goods and services. The state’s exports during 2005-06 showed an increase of around 20 per cent over 2004-05.

Gujarat exports several products across various sectors in-cluding textiles, petroleum, chemicals, engineering and gems & jewellery. Chemicals, plastics, seafood and textiles are among the highest contributors to Gujarat’s exports.

Investment Profi le of Gujarat

Gujarat currently contributes to 18 per cent of the country’s total industrial investments. For the period August 1991 to May 2007, the state received 8,423 Industrial Entrepreneur’s Memorandums (IEM) with a proposed investment of around $96 billion. Gujarat holds the highest ranking among all states for IEMs received (value-wise). However, volume-wise, it holds the second rank, indicating the large number of mega projects proposed to be established in the state.

Gujarat has further received: • 808 Letters of Intent (LOI) with a proposed investment of

around $15 billion • 1,504 Letters of Permission (LOP) for setting up 100 per

cent Export Oriented Units (EOUs) with a total expected investment of $1.6 billion.

As on October 31st, 2006, 4,857 projects aggregating a total investment of around $30 billion were implemented. Further, 1,743 projects with an investment of around $29 billion are under implementation.

Gujarat has the distinction of initiating Vibrant Gujarat, a bian-

0 2 4 6 8 10 1612 14

Increase in exports from Gujarat (US$ billion)

2004-05 15.7

2005-06 12.6

Source: Industries Commissionerate, GoG

US$ 102 bn 363 MoUs

& Intentions

US$ 20 bn226 MoUs

US$ 14 bn76 MoUs

n Vibrant Gujarat 2007 n Vibrant Gujarat 2005 n Vibrant Gujarat 2003

Sector wise Exports (US$ billion)

Source: Industries Commissionerate, GoG

Seafood

5.7

1.6

0.82

0.73

0.62

0.54

0.2

Iron and Steel

Plastics

Copper

Cotton

Organic Chemicals

Minerals

Sector-wise Exports (US$billion)

GUJARAT PAGE 29

nual, Global Investors’ Summit. It witnesses participation from leading national and international companies. The fi rst edition of the summit, held in 2003, witnessed the signing of 76 Memo-randa of Understanding (MoU) worth $14 billion. In 2005, 226 MoUs, worth $20 billion, were signed.

The third edition of the summit held in January 2007 witnessed participation of over 200 foreign delegates from leading com-panies across the world. It witnessed the signing of 363 MoUs worth $100 billion.

Increasing number of Investments

Among the investments proposed, a total of 23 Mega Projects with an investment of $67 billion is expected to fl ow into the state.The state also hosted an Urban Summit where 320 MoUs with an investment of $46.6 billion were signed.

Total =675 MOUS*Civil Aviation, Textiles & Apparels, Urban Development, Road & Rail Projects, Healthcare, Paper Industries, Biotechnology, Finan-cial Sector, Education, Pharmaceuticals.

Some of these projects are:• Film City • Effl uent Disposal Channel for Textile Processing Unit • Waste Water Management by Hylfux, Singapore• Carbon Credit by World Bank• Indus Valley Education Centre by Global Heritage, Vadodara• New Institute of Public Health • Vehicle Traffi c Monitoring System.

According to Deustche Bank Research, Gujarat ranks fi rst in

Regional Scoring Tool among 27 states. Gujarat offers the most favourable outlook for growth of demand for infrastructure projects with the highest score of 28 out of the maximum pos-sible score of 33.Source: Census of India, RBI, NHAI, Deutsche Bank Research Key Players

Domestic Players

Reliance Industries Ltd (RIL)

RIL is the fl agship company of India’s largest private sector en-terprise, the Reliance Group, with businesses in the energy and materials value chain. The group’s annual revenues are in excess of $22 billion.

RIL is India’s largest private sector company. In FY 2005-06, it became India’s only private sector company to feature in the Fortune Global 500 list of the World’s Largest Corporations, for the second year in a row.

Three out of four of the company’s manufacturing facilities in India are located in Gujarat – at Naroda (150 acres), Jamnagar (7,400 acres) and Hazira (700 acres). RIL’s grassroot petrochemi-cal refi nery at Jamnagar has the distinction of being the largest of its kind in the world.

The company is engaged in the manufacture of synthetic textiles, fabrics, fi bre intermediates, plastic, polyester, chemicals and petrochemicals.

Reliance is in the process of setting up a Petroleum & Petro-chemicals SEZ at Jamnagar with a proposed development cost of $1.1 billion.

Essar Group

The Essar Group is a diversifi ed business group with an enter-prise value of over $20 billion. The company’s portfolio includes steel, energy, power, communication, shipping & logistics, and construction. It employs over 20,000 people worldwide. With a fi rm foothold in India, Essar Group has been focusing on global expansion with projects in Canada, USA, Africa, the Middle East, the Caribbean and South East Asia.

Among its recent global acquisitions are US-based companies, Global Vantedge and Minnesota Steel, and Canada’s Algoma Steel. In India, the company has operations in Mumbai, Gujarat

Vibrant Gujarat 2007: Key Investments

Source: Reserve Bank of India’s Study on Outlook for Corporate Investments

Sector MoUs Investment

(US$ billion)

SEZs 28 38.84

Power 19 30.32

Oil and Gas 26 10.17

Auto and Engineering 36 3.40

IT 21 3.37

Ports 22 3.07

Chemicals and Petrochemicals

31 3.05

Others 180 12.74

(Ahmedabad, Hazira, Vadinar) and Vishakhapatnam.

Aditya Birla Group (AB Group)

A $24 billion conglomerate, the AB Group has a prominent posi-tion in the league of Fortune 500 companies.

The group is the 11th largest cement producer in the world and the seventh largest in Asia. UltraTech Cement is its cement production company. Hindalco, a Fortune 500 company of the AB Group is one of the world’s largest aluminum rolling companies and one of the three biggest producers of primary aluminum in Asia. It is also amongst the fastest growing copper companies in Asia and the third larg-est producer of insulators.

The group has 10 manufacturing facilities located across Gujarat; they are involved in the production of copper, aluminum, cement, chemicals, viscose staple fi bre and insulators. The group has a presence in the state through the following companies:• Hindalco• Shree Digvijay Cement• Grasim• Aditya Birla Nuvo• Essel Mining• Aditya Birla Insulators• UltraTech Cement

Nirma Ltd.

One of India’s major retail giants, Nirma Ltd offers quality products such as cosmetics, soaps, detergents and salt. Head-quartered in Ahmedabad, Nirma is the largest detergent manu-facturer in India.

Torrent Group

Headquartered in Ahmedabad, the Torrent Group is a $950 mil-lion diversifi ed business conglomerate with a strong presence in the power and pharmaceuticals sectors. Group companies include Torrent Pvt Ltd, Torrent Pharmaceuticals Ltd, Torrent Power Ltd and Torrent Cables Ltd.

ABG Group

The fl agship company of the group, ABG Shipyard, was incorpo-rated in 1989 as the Magdalla Shipyard Pvt Ltd, at Surat, with the key business activities of shipbuilding and ship repairing.

The company’s yard at Surat is the largest private sector shipbuilding yard in the country. It also has the distinction of having multiple building berths and ship-lift facility. The shipyard has constructed and delivered 99 specialised and sophisticated vessels, such as interceptor boats, self loading and discharging bulk cement carriers, split barges, bulk & newsprint carriers and offshore supply vessels, for leading national and international companies.

The group is in the process of establishing a shipyard at another key location in Gujarat at Dahej.

Dishman Pharmaceuticals

Dishman Pharmaceuticals is a recognised supplier of cost-effec-tive, high-quality chemical services and products to the global pharmaceutical and chemical industry. The company manufac-tures APIs, API intermediates and fi ne chemicals. Headquartered in Ahmedabad, Dishman exports to a number of countries. The company aims to become India’s leading contract manufacturing organisation.

Arvind Mills

Arvind Mills is a leading multinational textiles manufacturing company. With its presence across the textiles value chain, the company endeavours to be a one-stop shop for leading garment brands. Arvind Mills is one of the top three producers of denim in the world. Its product line includes fabrics (denims, shirtings, khakis and knitwear) and garments. Arvind Mills is Asia’s fi rst fabric manufacturing unit to receive an ISO 14001 certifi cation.

Quintiles India

Quintiles Transnational is a leading Clinical Research Organiza-tion (CRO), which provides three main services and solutions:• Product Development Services.• Commercialisation for sales force and medical communica-

tion services.• Strategic Partnering Solutions.

Incorporated in Gujarat in 1997, Quintiles is the fi rst global CRO to be established in India. It is the only CRO in India to be recognised by the Department of Scientifi c and Industrial Research (DSIR), Government of India as a Commercial R & D company.

Having conducted more than 175 clinical studies involving over 1,300 sites and nearly 35,000 patients, Quintiles India has devel-oped expertise in various therapeutic areas.

GUJARAT PAGE 31

Rasna

Currently holding 93 per cent market share of the soft drink concentrate market in India and about 82 per cent of the in-house consumption of soft drinks, Rasna has become a house-hold name.

It has the distinction of being among the fi rst Indian companies to have a widespread range of products in the processed food sector.

Zydus Cadila

Established in 1952 in Gujarat, Zydus Cadila has grown into one of India’s leading pharmaceutical and healthcare companies with sales of $457 million in FY 2006-07.The company has a wide-ranging presence in formulations, API, diagnostics, health and dietetic foods, skin care and animal healthcare. It exports branded formulations to 43 countries worldwide. With a total of 560 product registrations, the com-pany focuses on the therapeutic areas of cardiovascular, gastroin-testinal and pain management for exports.

Zydus Cadila, which also exports APIs to more than 40 coun-tries, has a formulations production unit located at Ahmedabad, involved in the manufacture of tablets, injectables, capsules and liquids. The company has production facilities at Vadodara and Ankleshwar and a state-of-art research centre in Ahmedabad. It is in the process of establishing a sector-specifi c SEZ for phar-maceuticals in Ahmedabad.

Adani Group

Established in 1988, the Adani Group recorded sales worth $2.3 billion for the year ending March 31, 2006. It is one of the largest trading houses in India, with operations in coal, wheat, castor oil, petroleum, business process outsourcing (BPO), power trading, iron ore and pulses.

It has developed an SEZ at Mundra. Gujarat Adani Port Ltd was the private partner involved in developing the Mundra Port, the second port to be privatised in the state.The Adani group, through its wholly-owned company, Gujarat Adani Energy Ltd, has developed a distribution network for natural gas in two key cities. The group has also set up India’s largest edible oil refi nery in the state.

In a joint venture with Petronet LNG Ltd, Adani Enterprises

proposes to develop a multi-purpose port at Dahej.

Welspun

A $1 billion group, Welspun is one of the fastest growing busi-ness conglomerates in India with a presence spanning 50 coun-tries. The group’s interests are spread across six companies:• Home textiles.• Saw pipes & steel.• Specialty texturised polyester yarn.• Bathrobes.• Retail.

Welspun Gujarat Stahl Rohren Ltd., has two manufacturing facili-ties in Gujarat, and is the the largest SAW pipe manufacturers in Asia. The group is one of the top three terry towel producers in the world and amongst the largest manufacturers of specialty polyester fi lament yarn in India. It is also the largest manufac-turer and exporter of bathrobes, which are produced in the company’s manufacturing unit in Gujarat.

Foreign Players

Matsushita

Founded in 1918, Matsushita has grown into one of the largest Japanese electronics producers. The company also offers services such as home renovation. Matsushita’s range of products include audiovisual and information/ communication equipment, home appliances and components under its brand – Panasonic.

Matsushita was among the fi rst companies to establish a business unit in Gujarat in 1972 through a joint venture with Lakhanpal. Matsushita Lakhanpal Battery India Ltd., now known as Panasonic Battery India Co Ltd. has a manufacturing unit at Vadodara engaged in the manufacture of dry cell batteries.

With an annual income of $500 million (March 2006), it is involved in the manufacture and sales of batteries, battery appli-ances, battery component parts and machinery spare parts.

Bombardier Transportation India (BTI)

The Indian subsidiary of Bombardier Inc. Canada, BTI has had a presence here since the last 35 years. It is active in rail transpor-tation equipment, systems and services and regional and busi-ness aircraft. It is one of the fi rst private companies to have been chosen to build rail vehicles in India.

Bombardier has a state-of-the-art production site at Vadodara,

which has been operational since 1996. It is involved in the manufacture of a range of converters, electronic controls for train control and communications for three-phase propulsion technology, as well as circuit breakers and tap-changers.

Bombardier’s signaling offi ce and software development centre are also located at Vadodara, where it develops software for signaling and traction applications, and caters to the software requirements of Bombardier Transportation worldwide.

McCain Foods

McCain Foods is a privately owned multinational leader in the frozen food industry with revenues of $6 billion (2004). It is the world’s largest producer of French fries and potato specialties. The company’s food products include appetisers, pizzas, vegeta-bles, desserts and other frozen foods. It has over 55 production facilities spread across six continents, supported by over 20,000 employees.

Shell

Shell is a worldwide group of oil, gas and petrochemical com-panies with interests in bio-fuels, wind and solar power and hydrogen. The group is active in more than 130 countries with over 108,000 people worldwide. The company has made the largest foreign direct investment into India among all integrated oil companies (around $1 billion) and is the only global major to have a retail licence in India. Besides being a major private sector supplier of crude products, chemicals and technology to public/ private sector oil companies, Shell also has key interests in lubri-cants, bitumen and LPG. It also operates an LNG receiving and re-gasifi cation terminal, as well as a technology centre.

India has been a focus country for investments for the global Shell Foundation, which has committed resources across seven programmes and has already spent over $5.5 million.

ABB

ABB is a global leader in power and automation technologies that enable utility and industry customers to improve their performance, while lowering environmental impact. The group operates in around 100 countries and employs about 111,000 people. The company has eight manufacturing units, with a global R&D Centre in Bangalore.

GUJARAT PAGE 33

The steps required to be undertaken by an investor after iden-tifi cation of the project and the locations are given below. The details are related to the state-specifi c approvals required for the purpose of establishing a new unit.

Step 1: Approvals/ Registration/ Filing Information for Setting up a Project

Approval from the Government of Gujarat or Government of India needs to be taken for setting up a project depending on the nature of the industry and scale of investment. The details of key approvals required and the authority granting approvals are as below:

In case of FDI, where the automatic route is not applicable, Gov-ernment of India’s permission needs to be taken before making an application for the above approvals. Apart from the above mentioned approvals, there are certain ap-provals which need to be taken for specifi c projects:

Step 2: Registration of Business Organization

After approval for setting up a project is granted, the applicant will have to get registered with the concerned authority.

Step 3: Acquisition of Land

In Gujarat, investors can purchase land in a GIDC estate. Alter-natively, they can apply for state government land or purchase private land.

Doing Business in Gujarat

Key Approvals Required

Procedure Authority

SSI Registration District Industries Centre of the district where the unit is to be located

Letter of Permission For automatic approval: Development CommissionerKandla Special Economic Zone

Specific Approvals Required

Procedure Authority

Food and Drug Manufacturing Sectors

Commissionerate of FDA

Mining of Minerals Commissionerate of Geology and Mining

Project located within 500m of a coastline

Gujarat Maritime Board

Key Approvals Required

Type of Organization Authority

Sole Proprietorship No registration required

Partnership Registrar of partnership firms

Government of Gujarat

Corporation (Pvt. / Public

Ltd.)

Registrar of companies Govt. of India

(office located in Gujarat)

Key Approvals Required

Land Authority

In GIDC Estate Concerned office of GIDC

Government Land Concerned District Collector or Collector/District Development Officer

Private Land (Purchase of agricultural land for non-agricultural use)

Deputy Collector

Non-Agricultural permission

District Collector (urban area), District Development Officer (rural area)

Step 4: Clearance from Pollution Control Board

A No Objection Certifi cate (NOC) needs to be obtained from the Gujarat Pollution Control Board (GPCB) by industries that are not exempt. The consent from GPCB is required before commencing production. GPCB maintains and regularly updates the list of industries which are not required to obtain NOC.

In addition, the following approvals are required for certain projects:

Step 5: Arrangement of Power

Step 6: Arrangement of Water

Step 7: Approval of Building Plans

Step 8: Other Approvals

In order to establish a unit, there are certain other key approvals required to be taken:

Single Window Assistance for setting up new projects

Industrial Extension Bureau (iNDEXTb) provides a single point of contact for all investment-related activities in Gujarat. It is the investment promotion agency of the government of Gujarat. The agency also assists investors in complying with the above formalities required to set up a project.

Investment Climate in Gujarat

Currently, Gujarat accounts for 18 per cent of the total national industrial investments. As per the Socio-Economic Review 2006-07, the state was home to 10 per cent of the total number of factories located in India. The institutional, regulatory and policy environment infl uences the investment climate of any region or state. Gujarat has been a constant feature in the list of top fi ve states chosen as investment destinations.

Key Approvals Required

Applicability Authority

Recommendation of State Govt. for environmental clearance

Forest and Environment Department

Govt. of Gujarat

Central Regulation Zone

Forest and Environment Department

Govt. of Gujarat

Purpose Authority

Sole proprietorship sanction of power

Location specific circle office of electricity company

Captive power Gujarat Electricity Regulatory Commission

Non-conventional sources of energy

Gujarat Energy Development Commission

Location of Unit Authority

In GIDC Estates Executive Engineer (GIDC) of the concerned region

Outside GIDC Estates Local authority incharge of the area where the unit is to be established

Applicability Authority

Factory Registration Director of Industrial Safety and Health, Govt. of Gujarat

Boiler Registration Chief Inspectorate, Steam and Boiler, Govt. of Gujarat

Handling of hazardous items

Director of Industrial Safety and Health, Govt. of Gujarat

Quality Certification Bureau of Indian Standards (office located in Gujarat)

Location of Unit Authority

In GIDC Estates Authority of concerned GIDC estate

Outside GIDC estates (for drawing canal/ underground water)

Commissionerate of Geology and Mining, Government of Gujarat

GUJARAT PAGE 35

Gujarat has a tradition of entrepreneurship, which is refl ected in the initiatives taken by the state such as:• Enacting Special Economic Zone (SEZ) Act.• Enacting the Private Sector Participation Law (Gujarat Infra-

structure Development Act).• Gujarat Port Policy.• Gujarat Industrial Policy 2000.• Gujarat Build-Operate-Transfer Law.

Being among the fi rst states to establish reform-oriented poli-cies has been a critical factor for creating a conducive environ-ment for investors. Gujarat has further launched specifi c policies that cater to the development of sectors such as ports, roads, biotechnology, IT, agriculture and minerals.

Recognising its importance, the state has also taken necessary steps to establish physical infrastructure such as roads, power and water; industrial infrastructure such as SEZs, industrial clusters and investment regions; and social infrastructure such as townships, educational and healthcare institutions.

However, the state will need to accelerate the creation of residential, educational and recreational facilities to meet the growing demands of investors.

It has established a regulatory framework, which provides requi-site assistance to investors for setting up new units.

In its study on Outlook of Corporate Investments, the Reserve Bank of India (RBI) has ranked Gujarat fi rst with 25.8 per cent of total investments. The study included private companies, which have been sanctioned fi nancial assistance in 2006-07 and those which have been sanctioned assistance prior to 2006-07 and have capital expenditure lined up in subsequent years. The cor-porate investments have been estimated for the year 2006-07 by suitably aggregating data. State ranking analysis conducted by the India Today Group de-clared Gujarat as the top state with the requisite infrastructure for attracting and sustaining investments.

Average cost of doing business in Gujarat

An industry estimate provides the following average costs for setting up a business unit in Gujarat:

State Competitiveness

The tradition of entrepreneurship in Gujarat has played a key role in encouraging industrial development of the state. Gujarat has taken several initiatives for creating competitiveness in the areas of manpower development, socio-economic development and infrastructure.

Gujarat has the uniqueness of product specifi c clusters, which have been developed throughout the state. The government has further lent an impetus to this form of industrial development through the Cluster Development Scheme (CDS). This scheme has provided Gujarat’s SME sector with a competitive edge over similar industries in other states.The state’s competitiveness in the industrial sector has been fur-ther augmented by the presence of 42 SEZs and 182 industrial estates, which is among the highest in the country.

Gujarat utilises its available natural resources such as its 1,600 km long coastline and a rich mineral base for augmenting its industrial development.

Component Cost

Urban land

Rural land(US$ / Sq m)

290 – 365

120 – 146

Electricity(US$ / unit)

0.17

Construction for office space(US$ / Sq ft)

61

Lending rate 10 – 12%

Employee cost(US$ / man year)LabourSupervisor levelManagerial level

14632,341

7,317 - 14,634

Gujarat has key unique infrastructure projects:• Country’s only LNG terminals• Country’s only Chemical Port Terminal• Petroleum and Chemical & Petrochemical Investment Region

(PCPIR)• Special Investment Region (SIR)

Gujarat has the clear advantage of a large number of urban ag-glomerations in comparison with several other states. Located at an average distance of 50-60 km, these cities span the entire state. Connectivity from industrial areas to these urban centers assists in providing easy access to urban and recreational infra-structure.

In recognition to its growth potential, Gujarat was set the high-est growth target of 10.2 per cent in the 10th Five Year Plan by the Planning Commission. The state successfully achieved this target and has now been set the growth target of 11.2 per cent in 11th Five Year Plan.

GUJARAT PAGE 37

OVERALL STATE COMPETITIVENESS

Parameter

Opportunities in Type of Industry

Tourism

Information Technology

Food Processing Industry

Crude Oil and Natural Gas

Petrochemicals

Pharmaceuticals & Biotechnology

High Medium Low

Gujarat

Opportunities in Type of Industry

Agriculture Food & Agro Processing Industry

Mineral Based Industry

Engineering Industry

Chemicals Industry

Apparel & Textile

Retail

High Medium Low

Doing Business

Fiscal and Non-Fiscal Incentives

Cost of doing business

Availability of Labour

Ease of Setting up and Carrying out Business

Industrial Infrastructure - Existing and Propose

Power

Connectivity

Industrial Estates/Areas

STP

EPIP

EPZ

High Medium Low

Parameter

Opportunities in Type of Industry

Electronic Hardware

Gems & Jewellery

Gujarat

Industrial Infrastructure - Existing and Propose

IIDC

Industrial Growth Centre

High Medium Low

High Medium Low

High Medium Low

DISCLAIMER

This publication has been prepared for the India Brand Equity Foundation (“IBEF”).

All rights reserved. All copyright in this publication and related works is owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by elec-tronic means and whether or not transiently or incidentally to some other use of this publication), modifi ed or in any manner communicated to any third party except with the written apporval of IBEF.

This publication is for information purposes only. While due care has been taken during the compilation of this publication to ensure that the informa-tion is accurate to the best of IBEF’s knowledge and belief, the content is not to be construed in any manner whatsover as a substitute for profes-sional advice.

IBEF neither recommends nor endorses any specifi c products or services that may have been mentioned in this publication and nor does it assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this publication.

IBEF shall in no way, be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reli-ance placed guidance taken from any portion of this publication.

GUJARAT PAGE 39

‘India Brand Equity Foundation (IBEF) is a public-private partnership between the Ministry of Commerce & Industry, Government of India, and the Confederation of Indian Industry. It aims to effectively present the India business perspective

and leverage business partnerships in a globalising market-place.

INDIA BRAND EQUITY FOUNDATIONc/o Confederation of Indian Industry

249-F Sector 18Udyog Vihar Phase IV

Gurgaon 122015 HaryanaINDIA

Tel: +91 124 401 4087, 4060 - 67Fax: +91 124 401 3873, 401 4057

Email: j.bhuyan@ciionline.orgWeb: www.ibef.org

Website in the Russian language: www.ibef.org/russia

May 2008