+ All Categories
Home > Documents > Gujarat Lores

Gujarat Lores

Date post: 02-Jun-2017
Category:
Upload: jeyakrishnan
View: 230 times
Download: 0 times
Share this document with a friend
32
INDIAN STATES Economy and Business Gujarat www.ibef.org
Transcript
Page 1: Gujarat Lores

INDIAN STATESEconomy and Business

Gujarat

www.ibef.org

Page 2: Gujarat Lores

Published by

Page 3: Gujarat Lores

INDIAN STATESEconomy and Business

Gujarat

www.ibef.org

Page 4: Gujarat Lores
Page 5: Gujarat Lores

CONTENTS

Executive Summary 5

Economic Snapshot 7

The State Economy 9

Infrastructure 11Social infrastructure 11Access infrastructure 11Industrial infrastructure 12

State Policy 13Vision & Mission 13Agro policy 13Small industries policy 13Infrastructure policy 13e-Governance 14

Business Opportunities 15Key industries 16Exports 18Investment 18

Key Players 19

Doing Business in Gujarat 26Indicative list of approvals and clearances 26Cost of setting up business 27Contact for information 28

A report by KPMG for IBEF

Page 6: Gujarat Lores
Page 7: Gujarat Lores

GUJARAT PAGE 5

Executive Summary

It is home to the world’s largest grassroots refinery in Jamnagar, set up by India’s leading business house,the Reliance Group. Essar and Indian PetrochemicalsCorporation Ltd are other large chemicalmanufacturers in the state. Gujarat also accounts for 40 per cent of India’s pharmaceutical productionwith major players like Cadila, Sun Pharma, Alembic,Torrent and Sarabhai being present in the state.

Apart from large-scale textile manufacturing units,Gujarat’s gem and jewellery industry processes 80 per cent of the diamonds in the country and itsimmensely successful state cooperative federationshave brought prosperity to rural Gujarat.Amul,a brand owned by the Gujarat Cooperative MilkMarketing Federation, enjoys a significant market share in India’s processed food sector.

The state is keen to leverage its natural resource base and entrepreneurial spirit to sustain itsleadership position.To attract investment Gujarat has set up single window facilities at the district level.Gujarat’s Industrial Promotion Board is also in theprocess of setting up kiosks at all important places to disseminate information regarding regulationsgoverning new investment.

The state has actively sought private participationto improve existing infrastructure facilities.It was the first in the country to develop portfacilities, estates and roads in conjunction with the private sector.

Gujarat, India’s leading industrial state is a manufacturing powerhouse with world-classproduction capabilities in textiles, petrochemicals,pharmaceuticals and agro-based products.

Situated on the western tip of India, Gujarat has the longest coastline in the country.The state has 41 ports that handle most of the cargo in the country,including India’s only chemical handling port located at Dahej, in Bharuch district.The state has extensiveroad, rail and air networks.The recently commissionedLiquefied Natural Gas (LNG) terminals in Dahej standto augment its capabilities in the power sector andbenefit industry.The state also has India’s largest hydro project, the Sardar Sarovar project.

Gujarat is rich in bio-resources and has a forest cover of 1.88 billion hectares. It has 10.7 millionhectares of highly diversified cropping area and is a leading producer of horticultural crops.It is rich in mineral resources like limestone,lignite and bauxite.

Industrial estates in Gujarat have proven to be extremely popular with businesses. Jamnagar in Gujarat is the world’s largest industrial estate whileKandla has Asia’s first and India’s largest multi-productSpecial Economic Zone (SEZ).

The chemical industry in Gujarat accounts for half of the annual investment in the state and contributesto more than 20 per cent of India’s chemical output.

Page 8: Gujarat Lores

Industrial Centres in Gujarat

Page 9: Gujarat Lores

GUJARAT PAGE 7

An Economic Snapshot

Capital Gandhinagar

Area (sq km) 1,96, 000

Population (million) 50.6

Literacy rate (%) 69

Sex ratio (per 1000 males) 921

Length of coastline (km) 1,600 (the longest in India)

GSDP (US$ billion) 22

GSDP over 10 years (%) 12.4

National highway length (km) 1,572

Domestic airports Ahmedabad, Surat,Vadodara, Jamnagar

International airport Ahmedabad

Major ports Kandla, Dahej, Hazira, Mundra

Key industries ChemicalsDrugs & Pharmaceuticals Gems and JewelleryMines & Minerals Textiles Agro-based

Monthly per capita 14expenditure (US$)

Market potential value 7.8 % share in India

Page 10: Gujarat Lores

Advantage Gujarat

n Gujarat has the largest chemical industry in the country

n It is a leading producer of cement and soda ash

n It has the largest diamond processing industry in the country

n The state has vast mineral resources like bauxite, lignite and natural gas

n Gujarat is the leading producer of cotton, castor seeds and psyllium husk

n Gujarat has the world's largest industrial estate and grassroots refinery located at Jamnagar

n Gujarat is home to Kandla,Asia’s first and largest multi-product specialeconomic zone (SEZ). It is also India’s largest port with a capacity of 39 MMTPA (million metric tonnes per annum). Most of India’s bulk cargo is handled through Kandla port

n India’s largest Liquefied Natural Gas (LNG) terminals are in the process of beingset up at Dahej port

n Gujarat was the first state to privatise the setting up of infrastructure projectsand the only state so far in the country where ports are being built on theBuild-Own-Operate-Transfer (BOOT) scheme.

Page 11: Gujarat Lores

A strong manufacturing sector is the bedrock of economic activity in Gujarat. In the last two decades, the state witnessed an accelerated pace of industrialisation.The contribution of themanufacturing sector in the state economy hasdoubled in the past decade because of its strategiclocation, excellent infrastructure support, extensivenatural resource base and a proactive government.As of October 2004, the state has receivedacknowledgements of 6850 Industrial EntrepreneursMemorandums (IEMs) for an estimated investment of US$ 59.24 billion.

According to the Annual Survey of Industries (2002-03), Gujarat ranks second in respect of state-wise percentage share in Net Value Added by manufacturing in the factory sector of the country.

n Gujarat is India’s most industrialised state.It accounts for 20 per cent of India’s manufacturing

GUJARAT PAGE 9

THE STATE ECONOMY

The state of Gujarat accounts for 16 per cent of the country’s total investment and 10 per cent of expenditure.This is primarily due to theentrepreneurial spirit of its people.The state’s GrossState Domestic Product (GSDP) grew at an averagerate of 12.4 per cent per annum in the period 1994-02. Its GSDP was estimated at US$ 22 billion in 2003-04 as against US$ 19 billion in 2002-03,which is a growth of 15.4 per cent during the year.

The growth in industrial activity has brought aboutprosperity in the state.The number of people livingbelow poverty line has registered a decline.Thepurchasing power of people has increased immensely.The monthly per capita consumer expenditure of the state is well above the national average.

Monthly Per Capita Consumer Expenditure

Rural Gujarat Urban Gujarat

Gujarat: US$ 12.2 Gujarat: US$ 25.4

India: US$ 11 India: US$ 21

Gujarat - Sectoral Contribution to GSDP

40.10%

21.80%

38.10%

Tertiary

Primary

Secondary Source: Socio-Economic Review, 2003-04Government of Gujarat website

< 729

729-1458

1458-2187.5

> 2187.5

Source: National Council of Applied Economic Research (NCAER)

Income distribution of households (US$; in per cent)

1989 1999

49.35

34.14

12.34

4.17

24.56

35.41

20.79

19.25

Page 12: Gujarat Lores

n It is the second largest producer of lignite in thecountry producing 6.7 million tonnes (2003-04)

n It is the second largest producer of oil and naturalgas producing 6.13 million tonnes and 3.42 millioncubic metres respectively in 2003-04

n It is the country’s fourth largest producer of bauxite producing 1.97 million tonnes in 2003-04

n The state produced 19.16 million tonnes of limestone in 2003-04 and is one of its largestproducers of soda ash

The recent successes in natural gas explorations in the state have made an immense impact on the industry. Riding on the wave of the recent gas discoveries, India’s first LNG terminal has beencommissioned at Dahej port and a gas pipeline grid is under construction. Both these initiatives wouldprovide inexpensive and clean fuel to industry in Gujarat giving it a distinctive advantage.

output, 21 per cent of its exports and 30 per centof its stock market capitalisation

n Gujarat’s rate of growth of industrial output is 18 per cent (2003-04)

n Gujarat ranks third in number of factories in the country

n It is a leading state in terms of per capita grossoutput and per capita value added in industries

n Projects worth US$ 7.3 billion are underimplementation

A majority of the state’s population continues to rely on agriculture as its principal source of livelihood.Though cash crop cultivation is thepredominant feature of agriculture, the state has the potential to grow a wide variety of agricultural and horticultural crops owing to its varied agro-climatic zones.

n Gujarat is India’s leading producer of castor,cotton, tobacco, groundnut, sesame seeds andfennel seeds

n It is one of India’s largest exporters of oil seedsand value added products, psyllium husk, cummin,dehydrated onion, dehydrated garlic, fruits andvegetables

n As in 2004, 239 projects with an investment of US$ 596 million were commissioned in theagro-marine and food processing sector.Presently, 103 projects with investment worth US$ 452 million are known to be underimplementation

Gujarat is endowed with a rich and diverse mineralbase. Principal minerals found in the state arelimestone, lignite and low-grade bauxite.

Source: Government of Gujarat Website

Index of Agricultural Production(Base:Triennium ending 1981-82=100)

1998-99 1999-00 2000-01 2001-02P 2002-03P 2003-04P0

50

100

150

200

250

120.6

163.3

226.2

88.575.3

121.2

64.373.2

96.3

154.6

96.2

74.3 7390.7

137.6

243.6

216.7

69

Total Foodgrains

Total Oilseeds

Cotton

Page 13: Gujarat Lores

GUJARAT PAGE 11

INFRASTRUCTURE

The state has high life expectancy levels, low birth and death rates and a low infant mortality rate.72.3 per cent of Gujarat’s population is below the age of 45.The state has 1637 government hospitalsand 1070 primary health centres.

Access infrastructure

Gujarat has a 1600 km indented coastline with 11 intermediate, 1 major and 29 minor ports,which handle over 80 per cent of the port traffic in the country.

Gujarat was the first state to announce a separate Port policy, which integrates the development of portswith industrial development, power generation andinfrastructure development. It was also the first stateto privatise the construction of ports in the country.

Gujarat’s ports handle 20 per cent of the total cargo of the country. Kandla, India’s largest port handled 41.5 million tonnes of cargo in 2003-04. Other ports in the state, the Gujarat Pipavav Port at Pipavav(Saurashtra) and the recently commissioned GujaratAdani Port at Mundra (Kutch) were the country’s firstGreenfield ports to be developed on a Build-Own-Operate-Transfer (BOOT) basis. Mundra is a state-of-the-art port that facilitates berthing of large vesselswhile Dahej in Gujarat is the country’s only chemicalhandling port. It is estimated that by 2015, Gujarat’sports will handle 39 per cent of the country’s total cargo.

Gujarat also has a road network spanning across74,000 km. It is also well connected by rail with 5310 km of rail lines.

Though Gujarat is self sufficient in its needs fordomestic and commercial water consumption,it has initiated plans for the maximum developmentand utilisation of water resources in the state.

Gujarat was the first state in the country to enact theGujarat Infrastructure Development Act.The GujaratInfrastructure Development Board set up in 1995under this Act facilitates the flow of funds from theprivate sector into the infrastructure sector andensures coordination amongst various agencies.Gujarat was one of the first states to set up industrialparks in India and is now in the process of upgradingthe infrastructure support for these parks.The stateis now focused on setting up industry specific parkswhich can offer specialised services.

Social infrastructure

The state leads in labour productivity in the countryand the highest proportion of the state’s populace is engaged in running owned businesses.

The State’s literacy rate stands at 69.1 per cent,which is higher than the national average of 65.38 per cent. Gujarat is home to India’s leadingbusiness school, the Indian Institute of Management,Ahmedabad (IIM-A) and other important institutionsuch as National Institute of Design (NID),National Institute of Fashion Technology (NIFT),the Entrepreneurship Development Institute of India(EDI), among others.The state also has 25 engineeringcolleges 26 management institutions and 300 technical institutes.

The State Government plans to establish a Shipbuilding University, a first of its kind in the country in the district of Kutch.

Further, the industrial development in the stateprovides vast potential for setting up of neweducational institutes in areas of marine engineering,port management, gems and jewellery design, fisheryand fish processing, urban planning, disastermanagement and biotechnology.

Page 14: Gujarat Lores

commissioned LNG terminals at Dahej. In fact,by 2010, 20 per cent of the country’s energy needswill be met by natural gas and Gujarat would play a crucial role in fulfilling these requirements.

Industrial infrastructure

The Gujarat Industrial Development Corporation(GIDC) has set up 168 industrial estates and another106 are being developed in different parts of thestate.The state government has special economiczones at Kandla and Surat and a software technologypark at Gandhinagar. GIDC plans to set up andapparel park in Surat. Additionally, GIDC hasdeveloped an industrial park in Dahej, which includesa petrochemical complex with facilities like a privateairstrip, effluent collection and disposal, a liquidchemical port and railway lines.

To encourage investment in the state, Gujarat alsogives autonomy and funds to industrial estates toimplement maintenance and modernisation measures.It is also encouraging organisations to set up units inthese zones by giving them tax holidays and subsidieslike exemption from stamp duty and registration fees.

The Sardar Sarovar project will provide assuredirrigation to 1.8 million hectares in Gujarat withwater for domestic and industrial use in about 8215 villages and 135 townships.

The state has undertaken extensive canalconstruction to supply water to the arid regions of Kutch. Also underway is Kalpasar, a multipurposeproject that aims to build a dam across the Gulf of Khambhat with a tidal reservoir of 872 sq km.

PowerPower is key to industry and Gujarat has a goodrecord of consistent power supply for commercialuse.The state has planned several initiatives to buildadequate capacity in generation, transmission anddistribution of power supply.These includerationalising the power tariff structure, encouragingpower generation from non-conventional sources,focusing on energy conservation and improving thequality of services to consumers.

As the largest producer of natural gas in India,Gujarat intends to set up an extensive state-wide gas grid to augment its existing power capacity.The grid will use gas supplied by the recently

Page 15: Gujarat Lores

GUJARAT PAGE 13

STATE POLICY

The state has taken a number of measures to doubleits agro-processing capability.These include setting up food parks, agro-processing zones of internationalstandards and agro-export zones to provide impetusto the export of perishables.

To develop large-scale cold storages the state usesLNG available at Dahej and Hazira, which is morecost effective.

Small industries policy

Gujarat is encouraging new industrial clusters and offering specialised facilities to business units.The state government offers policy incentives to companies undergoing technology upgradation,modernisation and expansion, and encourageslinkages between industry and R&D centres.It also encourages quality certifications and patent registration by giving financial assistance for these activities.

Infrastructure policy

Gujarat is one of the first states to privatiseinfrastructure development and has built a number of roads and ports through public-private partnership.

The state plans to enhance its ports infrastructure to handle a gross capacity of 100 million tonnes of cargo.To encourage coastal shipping of passengersand cargo, the state intends to introduce a hovercraft/catamaran service joining differentterminals along the Kutch and Saurashtra coast.

The state plans to develop Ahmedabad and Surat as international airports that would be hubs fortransporting high volume cargo. Airports at Vadodaraand Jamnagar are to operate as spokes, attracting anddisseminating local cargo.

Vision & Mission

The discovery of gas reserves in the state and theopening of the Indian economy have presented Gujaratwith a wide array of business opportunities.The state is keen to become a preferred destination for foreigndirect investment (FDI) and is consciously developing a brand synonymous with cost effectiveness andunparalleled quality.The government’s policyframework is geared towards further developing theentrepreneurial spirit in the state, facilitating newindustries, investment and developing an excellentsupport system by upgrading its existing infrastructure.

Gujarat’s Industrial Policy, focuses on the following areas:

n Strengthening the existing manufacturing base by creating new industrial clusters

n Creating and sustaining a global brand imagefor Gujarat and its products

n Ensuring holistic development and removingregional imbalances

n Upgrading existing urban and industrialinfrastructure

n Initiating labour law and power reformsn Effective governance and information dissemination

with a focus on enabling entrepreneursn Undertaking suitable measures for the development

of human resources through capacity building andskill upgradation for enhancing productivity

Agro policy

Gujarat is keen to encourage investment in agroindustries, agro infrastructure and hi-tech agriculture.The state's agro policy aims to create a world-classsupply chain to facilitate transfer between the centresof cultivation and agro-processing zones. It proposesto encourage agro-research through institutes such as Gujarat’s Agriculture University.

Page 16: Gujarat Lores

n Fast-track clearances for infrastructure projects from the Gujarat InfrastructureDevelopment Board

n Implementation of IT in governance to makegovernance transparent and streamlined in the state

n Tax reforms with a particular emphasis on rationalisation, simplification, self-assessment,transparency and harmonisation of the ratestructure.

e-Governance

The state government has outlined a number of policy initiatives to encourage entrepreneurs.These include:n iNDEXTb (Industrial Extension Bureau) and

District Industries Development Centres, whichwill serve as single window facilities at the stateand district levels respectively

Page 17: Gujarat Lores

GUJARAT PAGE 15

BUSINESS OPPORTUNITIES

The recent discoveries of gas reserves haveprovided a fillip to the industries in the state.

n Capability: The gems and jewellery industry in Gujarat relies on the skilled manpower availablein the state.The state is a leader in terms of labourproductivity.This has been a major factor enablingthe success of Gujarat in sectors like engineering,petrochemical and gems and jewellery.

Based on an assessment of the above factors,some of the industries with potential for investmentand growth in the state of Gujarat are depicted in the graph:

Several factors contribute to making a state an attractive investment destination. Major factorsimpacting evolution of industry in Gujarat are:

n Proactive policies: The policy the stategovernment adopts towards a sector directlyaffects investment. For instance the investment in infrastructure can be related to the governmentpolicy seeking private investment.This has giventhe state a head start in the sector.

n Availability of natural resources: Certainindustries like petrochemicals have a highdependence on availability of natural resources.

Natural ResourcesDriven

Capability Driven

Source: KPMG analysis

Sector Attractiveness Drivers

Proactiven Exclusive Policy

n Special Incentives

n Special Infrastructure

(SEZ, STPI,AEZ etc.)

Moderaten Generic policy incentives

n Exemptions given on request

Polic

y Pr

oact

iven

ess

Mine andMineral-based

Textile,Leather and

Knitwear

Infrastructure

Agro-based

Engineering

Drugs andPharma

ChemicalIndustry

Gems andJewellery

This is a qualitative assessment to highlight relative attractiveness of different sectors.A case by case analysis is necessary before investment decisions are made.

Page 18: Gujarat Lores

Symbiotics, Cynamide India,Aventis,Abbott Lab,Atul Ltd, Rallis among others.

Gems and Jewellery Since the early 17th century, Gujarat has been the diamond-processing hub of the country.Today, Gujarat accounts for 80 per cent of thediamonds processed in India. In fact, 55 per cent of the global diamond cutting and polishing takesplace in Surat’s 10,000 diamond units. In 2003-04,the state exported cut and polished diamonds worth US$ 5 billion. Gujarat also houses someprimary gold markets around Rajkot and Ahmedabad.The gems and jewellery industry is also the secondlargest employer in the state, generating over a million jobs.

Mines and Minerals Vast reserves of limestone, bauxite and natural gas have enabled the mineral-based industry in Gujarat to flourish.Today, this sector accounts for 12.4 per cent of the total sales by industries in the state. Processed minerals such as kaolin,chalk, fire clay, bentonite, silica sand are consumed by glass, ceramic, plastic, paint and rubber industries,which are mostly small-scale in nature. Gujarat’s

Key industries

ChemicalsThe chemicals industry is the core of Gujarat’sindustrial activity and the sector accounts for 34.5 per cent of the total sales by industries in the state. Since August 1991, chemicals and allied sector has accounted for investment worth US$ 32.57 billion, 50.3 per cent of the totalinvestment in the state.

Of the 1,497 projects in the sector, investment worth US$ 12.04 billion have been commissioned.Another 398 projects, envisaging an investment of US$ 5 billion are under implementation.

Gujarat boasts of the world’s largest grass-rootsrefinery in Jamnagar, which was set up by the Reliance Group. Essar and L&T are some of the other major industrial units in the chemicalssector in Gujarat.

The state’s small-scale industry in the chemicalindustry’s sub-sectors such as dyestuff,pharmaceuticals, paints and fine chemicals has put in an impressive performance.

Drugs and PharmaceuticalsGujarat has about 3,267 registered pharmaceuticalindustrial units involving a capital investment of about US$ 1.6 billion. Most of these are small and medium companies.

At present 295 large scale projects involving an investment of US$ 533 million have beencommissioned while 114 large scale projectsenvisaging an investment of US$ 225 million are under various stages of implementation.

The state’s pharmaceutical industry contributessubstantially to the production, domestic consumptionand the export basket of the country’s drug sector.Gujarat is home to large pharmaceutical unitsbelonging to Sarabhai Chemicals, Cadilla,Torrent,

Page 19: Gujarat Lores

GUJARAT PAGE 17

40 per cent of the country’s art silk fabric.

A large number of garment and garment processingunits have developed in urban areas. Some of the keytextile manufacturers in the state are Arvind Mills,Mafatlal and Digjam.

Agro-basedGujarat is keen to promote the agro-processingindustry, which currently consists of small andmedium sector units producing a wide variety of products. It has about 16,400 small-scale industrialunits in food processing, beverage and tobaccoprocessing. Gujarat is well known for its success in dairy cooperatives.Amul, a brand owned by theGujarat Cooperative Milk Marketing Federation,enjoys a significant market share in the processedfoods sector.

Another 224 large and medium scale units with an investment of US$ 508 million have beencommissioned.The state is actively encouraging theproduction of derivatives based on castor seeds andpsyllium husk.The agro-processing sector alsoaccounts for a significant proportion of the workingpopulation in the state.

advantage lies not just in the availability of rawmaterial but infrastructure, skilled manpowerand natural gas.

Mining clusters have flourished in Junagadh, Kutch,Bharuch,Vadodara and Mehsana districts and small-scale entrepreneurs have made major inroads into the processing of mineral resources.They export low-grade bauxite, cement clinker, decorative anddimension stones (e.g. marble, granite, sandstone) to South Asian markets.

The state government has been actively promotingthe development of clusters within this sector.Theidea behind is to promote new businesses, which willprocess these raw materials and develop productsthat fetch a better price in the international market.

TextilesThe textiles sector is critical to the state’s economicgrowth as it contributes 23 per cent of the state’sGSDP. Gujarat’s fabric process houses are concentratedin Ahmedabad and Surat.The state accounts for 12 per cent of the total textile exports from thecountry. It produces about 30 per cent of woven fabric in the country and Surat alone produces over

Sector Attractiveness Drivers

All

Indi

a R

ank

- Pr

oduc

tion

• Rice• Brijnal• Tomato

• Papaya• Garlic

• Wheat

• Ginger• Chilly

• Tobacco• Groundnut• Sesame Seeds

• Chikus• Guar Seed

• Rape Seed• Mustard• Mango

• Okra

• Castor• Fennel• Cotton

• Onion• Banana• Isabgul• Cumin

• Guava• Potato

• Turmeric

1st RankHighest

2/3rdHigh

47thMedium

8th and Below Low

8th and Below Low

47thMedium

2/3rdHigh

1st Rank Highest

Page 20: Gujarat Lores

Source: Media reports

The state offers investors a distinct advantage interms of quality manpower and infrastructure facilitiessuch as power and water supply, ports and now a gasgrid.This is encouraging multinationals and leadingIndian companies to turn their manufacturing plants in the state into global sourcing bases. For example,ABB plans to invest a further US$ 500 million in itsVadodara plant and use it as a global sourcing basefor circuit breaker and other electrical equipment.Arvind Mills, the second largest denim manufacturerin the world has doubled its manufacturing capacity.Glaxo SmithKline India, plans to use its manufacturingplant in Ankleshwar as a global sourcing hub for an intermediary used in manufacturing Zantac.Aventis, an international pharma giant, will service its global requirements for glibenclamide from itsplant in Ankleshwar, Gujarat.

Future investment In 2004, investment worth US$ 23.4 billion wereplanned for Gujarat. Of this, infrastructure investmentalone amounted to US$ 17.5 billion and a majority

of this was for developing the ports infrastructure.

A number of multinationals are also investing in gas grids and building LNG terminals in the state.The minerals giant Hindalco intends to invest US$ 544 million for increasing its copper smelting

Exports

In 2003, Gujarat’s exports stood at US$ 1.96 billion.Export earnings from chemicals accounted for 30 per cent of these revenues, buttressing the state’s leadership position in this sector.Earnings from export of metals and metal-basedproducts had the highest CAGR of 17.4 per centbetween 1998-03.

Investment

Gujarat has been at the forefront in attracting FDI.Between 1991 and 2004, Gujarat accounted for 6.44 per cent of India’s FDI approvals.

Major foreign direct investment in the state

Company Country Segment Investment

of origin US$ million

Royal Dutch Shell Netherlands Energy 600

ABB France Petrochemicals 500

EI Dupont UK Chemicals NA

General Motors USA Automobile 185

Bayer Germany Chemicals NA

AT&T USA Automotive NA

GE Plastics USA Plastics NA

British Gas UK Power NA

Siemens AG Germany Infrastructure NA

Estimate of likely invesment in Gujarat (US$ million)

3375

1652

168 132 123

Che

mic

als,

Petr

oche

m a

ndPh

arm

a

Min

ing

and

Min

eral

s

Aut

omot

ive

and

Aut

o A

ncill

iari

es

Engi

neer

ing

and

Har

dwar

e

Source: Projects Today

Text

iles

Estimates of exports from Gujarat in 2002-03 by Public Companies and CAGR

Source: CMIE

5 ye

ar C

AG

R (

per

cent

)

Share of Exports from Gujarat (US$ million)

0

30

60

0 10 20 30 40

Machinery

Mining

Food and Beverages

Transport Equipment

Textile

Non Metals

Metals

Chemical

Page 21: Gujarat Lores

GUJARAT PAGE 19

PROFILES OF KEY PLAYERS IN GUJARAT

solutions in industrial and mobile applications throughhydraulics, electric drives and controls, linear drivesand guides, pneumatics.The company has close to 300 employees and recorded total sales of US$ 23 million in 2003. Its facility at Ahmedabadmanufactures hydraulic valves, pumps, blocks, cylindersand power units. Bosch has sales offices, servicecentres and training centres in Ahmedabad servingcustomers in India, Bangladesh, Nepal and Sri Lanka.

British Gas British Gas is a leading player in the global energymarket. In India, the company has a majorityshareholding (65 per cent) in Gujarat Gas CompanyLtd.The company’s principal lines of business arenatural gas distribution, transmission systems,compressed natural gas (CNG), gas supplies andnatural gas.

E.I. DupontDupont India became a wholly owned subsidiary of E.I. Du Pont de Nemours and Company Inc.,USA, in 1994.The company has invested close

ABBAsea Boveri Brown (ABB) is a global leader in powerand automation technology that enables utility andindustry customers to improve performance whilereducing environmental impact. ABB’s state-of-the-artmanufacturing facility in Vadodara is a global sourcingbase for outdoor and indoor circuit breakers.TheABB Group operates in 100 countries. In India it hasa vast installed base, extensive local manufacturing and a countrywide marketing and service presence.ABB posted revenues of US$ 327 million in 2003.

AT&T IndiaAT&T India, a subsidiary of AT&T, USA, is based in Gujarat since 1984.The company has established a brand name in the telecom services sector.It offers networking and communication equipment to telecom operators. In collaboration with the Aditya V Birla Group, AT&T operates Idea Cellular in Gujarat.AT&T is a three-time winner of theMalcolm Baldrige National Quality Award in the US, and winner of Japan’s Deming Prize and Taiwan’s National Quality Award.

BayerBayer AG, the German chemical giant, is a Fortune500 company with global sales of US$ 33 billion.Represented by 350 companies across five continents, it has a total workforce of 115,400people. Its business operations are the responsibilityof the subgroups - Bayer HealthCare AG, BayerCropScience AG and Bayer MaterialScience AG.In Gujarat, the company operates through BayerCropScience Ltd, Bayer Diagnostics India Ltd andBilag Industries Private Ltd.

Bosch Rexroth (India) LtdBosch Rexroth (India) Ltd, a subsidiary of BoschRexroth AG, Germany was established in 1975.Thecompany provides comprehensive drive and control

Page 22: Gujarat Lores

is one of the world's leading integrated sea logistics companies with an asset capitalisation of US$ 1 billion.The Group reported an annualturnover of US$ 2.08 billion in 2004. Essar hasconsistently set new standards of excellence in the Indian power sector and it supplies around 7 per cent of Gujarat’s power.

GE Plastics India Ltd (GEPIL)GE Plastics India Ltd is a 50:50 joint venture between Indian Petrochemicals Corporation Ltd(IPCL) and General Electric Plastics BV, Netherlands.The company has a world-class plant for advanced

to US$ 80 million in India and manufacturesTynex toothbrush bristles,Teflon non-stick coating,engineering polymers, crop protection products andpioneer seeds.The company’s facility in Savli, Gujarat,manufactures crop protection products andengineering polymers.

Essar GroupThe Essar Group has been in business since the1800s and has a major presence in steel production,shipping, oil and gas, power, telecom and construction.Essar Steel has a state-of-the-art steel complex in Hazira, Gujarat. Essar Shipping Ltd (ESL)

Page 23: Gujarat Lores

GUJARAT PAGE 21

Gujarat Cooperative Milk Marketing Federation (GCMMF)Gujarat Cooperative Milk Marketing Federation is a state level apex body of milk cooperatives in Gujarat and one of India’s largest food productsmarketing organisations.With about 2.28 millionproducer members, its total milk handling capacity is about 6.7 million litres per day.The company has a wide range of products under its flagship brand Amul.These include milk and milk products,ice creams, chocolates, confectionaries and beverages.The company achieved a total turnover of about US$ 575 million during 2002-03, recording a growthof 15 per cent over the previous year.

Gujarat Ambuja Cements Ltd (GACL)Gujarat Ambuja Cements Ltd is India’s leadingmanufacturer and exporter of cement. It is also India’s most profitable cement company and the world’s least cost cement producer.GACL is the only cement company to be awarded the National Quality Award and the first Indiancement company to receive an ISO 9002 qualitycertification.

Gujarat State Fertilisers & Chemicals LtdGujarat State Fertilisers & Chemicals Ltd operatesin three business segments: fertiliser products,caprolactam and nylon products. It also manufactures

engineering plastics, alloys, blends and compounds at Vadodara in Gujarat.With a present capacity of 25,000 tonnes per annum, it manufactures a widerange of GE’s proprietary products. In 1996, GEPILalso became the first global manufacturing site of General Electric Plastics to start manufacturingGELON® (Polyamide-6) compounds.

General Motors India General Motors India is a collaboration betweenGeneral Motors and Hindustan Motors. Itsmanufacturing plant is located at Halol, 40 km north of Vadodara in Gujarat.The state-of-the-artplant manufactures Opel range of models - Astra,Corsa and Swing. Since inception, the company hasinvested about US$ 73 million in the Astra projectand about US$ 22 million in the Corsa project.

Grasim Industries LtdGrasim Industries Ltd, incorporated in 1947 originally a textile manufacturer, successfullydiversified into Viscose Staple Fibre (VSF) cement,sponge iron and chemicals.The first phase of Grasim’s fourth VSF plant was commissioned in Kharach, Gujarat in 1996. It is now a global leaderin VSF, the country’s largest merchant producer of sponge iron and the second-largest caustic soda maker in India and poised to be India’s largest cement manufacturer.

Page 24: Gujarat Lores

Ingersoll-Rand India Ltd (IRIL)Ingersoll-Rand India Ltd was established in 1926.The company has interests in fields of air solutionsand infrastructure. IRIL has a plant in Naroda(near Ahmedabad).The Naroda facility is ISO 9001-certified and caters to major chunk of the global demand for air-cooled reciprocating air compressors (T 30).The Metrology Lab at thisfacility is one of the few sophisticated labs in India with facilities to conduct tests as per ISI / BSI standards.

Lalbhai GroupThe Lalbhai Group, founded in 1908 has grown to become one of India’s most diversified businesshouses, with a significant presence in the textiles,ready-to-wear, agro-chemicals and telecom industries.Arvind Mills Ltd, one of the Group companies,

caprolactam, nylon-6, nylon filament yarn, nylon chipsand melamine and polymer products.

Gujarat Narmada Valley Fertilisers Company Ltd (GNFCL)Gujarat Narmada Valley Fertilizers Company Ltd is a joint venture company between GSFC and theGujarat government. GNFC has the largest fuel-basedammonia plant in the world. It is also the largest single stream urea plant to be commissioned in theworld.This project was set with an investment of about US$ 100 million at Bharuch, Gujarat.

Huber Chemicals India LtdHuber Chemicals India Ltd is a subsidiary of JM Huber Corp of Germany. It is in the chemicalsand engineering business and has a facility at Jhagadia, an industrial estate in Bharuch, Gujarat.

Page 25: Gujarat Lores

GUJARAT PAGE 23

Gujarat’s success stories.The company has multi-locational integrated manufacturing facilities and a broadproduct portfolio under its umbrella brand, Nirma.It manufactures India’s largest selling detergent powderand exports to the Middle East and other countries.The company has planned backward and forwardintegration projects and is focusing on a strong R&Dbase for continuous product development.

Novartis India LtdNovartis India Ltd is a US$ 100 million company thatemploys close to 1,000 people.The company has twomanufacturing facilities at Kandla and Panoliplant,in Gujarat, which manufacture pharmaceuticals andagrochemical intermediates. In India, Novartis hascollaborations with several domestic players, includingDr Reddy’s,Torrent and Biocon.

Reliance Industries Ltd (RIL)Reliance Industries Ltd is the largest and one of thefastest growing private sector companies in India,with business activities encompassing all major sectorssuch as - oil & gas exploration and production,petroleum refining and marketing, petrochemicals and textiles. Reliance’s Jamnagar complex, a fullyintegrated petroleum refinery, is the largest industrialproject ever implemented by an Indian company.Set up with an investment of US$ 6 billion,the complex has a petrochemical unit, a power

is one of the world’s largest producers of denimfabric. Atul Ltd is a leading manufacturer and exporter of over 500 high quality products,including agrochemicals, bulk drugs and bulk drug intermediates, cresols and cresol derivatives,dyes and dye intermediates, epoxy resins and epoxyhardeners, formaldehyde, specialty chemicals andwood adhesives.

Larsen and Toubro Ltd (L&T)Larsen & Toubro Ltd is one of India’s largestengineering and construction companies.The company has its heavy engineering workshops at Hazira, which manufacture reactors, pressurevessels, columns and heat exchangers for various industries. L&T’s workshops are ISO 9001:2000, ISO 14001:1996 and OHSAS18001:1999 certified.

MatsushitaMatsushita of Japan is a leader in battery productsworldwide. In India, Matsushita has a joint venturewith the Lakhanpal Group.The company manufacturesbatteries and battery appliances under the brandNovino and its plant is located at MakarpuraIndustrial Estate,Vadodara in Gujarat.

NirmaNirma, a US$ 351 million company, is another of

Page 26: Gujarat Lores
Page 27: Gujarat Lores

GUJARAT PAGE 25

Torrent Group Torrent Group’s flagship Torrent Pharmaceuticalsestablished its first manufacturing facilities at Vatva in Gujarat in 1980. Its second plant began operations in 1989 in Mehsana district.These facilitiesmanufacture bulk drugs and formulations.Themanufacturing facilities have received ISO 9001,ISO 14001, OHSAS 18000 (Occupational Health and Safety Management System) certifications and the IDMA (Indian Drug Manufacturing Association)Gold Award for the year 2002.

generation complex, a port and terminals and access to a pipeline network. It is the world’s largest grassroots refinery, the world’s largest delayed coking unit,fluidised catalytic cracking unit and TAME (Tertiary Amyl Methyl Ether) unit.

Royal Dutch ShellThe Shell Group is a world leader in the LiquefiedNatural Gas (LNG) business. In Gujarat, Shell’s Haziraproject is the largest of its ventures in India with thecompany having invested over US$ 600 million.Thecompany’s operation at Hazira is said to be thehighest ever FDI in greenfield project in India.The project includes a port and an LNG terminaltogether with infrastructure, that can handle 5 millionmetric tonnes of LNG per annum.

Siemens LtdSiemens Ltd is a 54.6 per cent subsidiary of SiemensAG. Based in Ahmedabad, the subsidiary manufactureselectrical equipment, medical equipment, railwaysignalling equipment, telecom and data communicationequipment and a host of other electrical products.The company has over 4,000 employees and a revenue of over US$ 315 million.

Page 28: Gujarat Lores

DOING BUSINESS IN GUJARATObtaining approvals

An indicative list of approvals with timeframe for setting up business in Gujarat

List of approvals and clearances required

Incorporation of company

Registration, IEM, Industrial licenses

Allotment of land

Permission for land use

Site environmental approval

No Objection Certificate and consentunder Water and Pollution Control Acts

Approval of construction activity andbuilding plan

Sanction of power

Registration under states Sales Tax Actand Central and State Excise Act

Departments to be consulted

Registrar of Companies

District Industry Centre for small,medium and large industries

State Department of Industries / StateIndustrial Development Corporation /Infrastructure Corporation

State Department of Industries,Department of Town and Country Planning

State Pollution Control Board andMinistry of Environment and Forests

State Pollution Control Board

Town and Country Planning Authority

State Electricity Board

Sales Tax Department, Central and state excise departments

Estimated timetaken (in days)

SINGLEWINDOWCLEARANCE*

The state’s singlewindow facility(iNDEXTb) on an average clearsinvestment approvalsin 30 days. However,the time for obtainingapprovals depends on the nature of theindustry and thedocumentationprovided by theinvestor. In caseswhere the investormeets all governmentrequirements,clearances areexpeditedconsiderably.

* Industry sources

Page 29: Gujarat Lores

GUJARAT PAGE 27

Cost of setting up business

An indicative table on cost of setting up business in Gujarat

ManufacturingLand (US$ / hectare)* 95312Labour cost (US$ / man year)** 1592.4

ServicesOccupation Costs NA(US$ / sq ft / year)

Employee Cost (US$ / man year)***

Software developers 6383Team leads 14893 Architects 21276 Project managers 31915

Common HeadsCost of capital**** 10.57 (Prime lending rate, per cent)

Electricity (US cents / kWh)*****

Commercial 9.49 Industrial 9.29

Sales tax exemptions: The Gujarat governmentgives tax concesstions for investment in backwardareas. For instance, the government has announcedexemptions for investment in the Kutch district.Further, the state has offered an excise exemption to all new units for a period of five years from July 31, 2001 to December 31, 2005.

Units with investment exceeding US$ 4.4 million willhave no ceiling on the quantum of excise exemption.These can avail a 100 per cent exemption / defermentfor investment in eligible fixed assets for differenttime periods depending on the investment range.

Investment range Period of Exemption / Deferment

Up to US$ 2.2 million 5 years

US$ 2.2 - 11.1 million 7 years

Above US$ 11.1 million 10 years

Source: Government of Gujarat website

*Land cost has been estimated by computing the average cost of landat various Industrial Parks in Gujarat. Land is alloted on 99 year lease,which can be renewed later**Source: www.indiastat.com***KPMG analysis on costing for an IT venture in India****Estimated by computing the average Prime Lending Rates ofprominent public sector, private sector and foreign bank in India*****Source: www.indiastat.comNote: Exchange rate used is INR 47 per US$

Page 30: Gujarat Lores

Confederation of Indian Industry (CII)Information on the market and opportunities for investment in the state of Gujarat can also be obtained from the Confederation of IndianIndustry which works with the objective of creating a symbiotic interface between industry and government.

Confederation of Indian Industry Western Region

105, Kakad Chambers1st Floor, 132 Dr Annie Besant RoadWorli, Mumbai 400 018Tel +91 22 24931790Fax +91 22 24939463Email [email protected] of Indian Industry State Office

203-204, Sears TowersGulbai TekraNear Panchvati, EllisbridgeAhmedabad 380 006Tel +91-79-26469843/26469346Fax +91+79-26462878Email [email protected] www.ciionline.org

Contact for information

State Government Websiteweb www.gujaratindia.com

Gujarat Industrial Development Corporation (GIDC)Gujarat Industrial Development Corporation aims to accelerate the pace of industrialisation in the state.GIDC identifies locations suitable for industrialdevelopment and arranges for infrastructure facilities.GIDC has set up industry specific estates like theelectronics estate at Gandhinagar, ceramics estatesnear Bhavnagar, chemical estates at Vapi,Ankleshwar,Panoli, Jhagadia, Nandesari,Vatwa, Naroda, Odhav,etc and a host of engineering estates spread all over Gujarat.

Gujarat Industrial Development Corporation

Block No. 4, 2nd FloorUdyog Bhawan, Sector 11Gandhinagar 382 017Tel +91 79 23225811Fax +91 79 23221191Email [email protected] www.gidc.gov.in

Page 31: Gujarat Lores
Page 32: Gujarat Lores

The India Brand Equity Foundation is a public-private partnershipbetween the Ministry of Commerce & Industry, Government of India andthe Confederation of Indian Industry.The Foundation’s primary objective

is to build positive economic perceptions of India globally.

India Brand Equity Foundationc/o Confederation of Indian Industry

249-F Sector 18Udyog Vihar Phase IV

Gurgaon 122015 HaryanaINDIA

Tel +91 124 501 4087, 4060 - 67 Fax +91 124 501 3873Email [email protected]

Web www.ibef.org


Recommended