Gujarat

GUJRAT

General Profile

Gujarat state came into existence as a separate State on 1st May 1960.The State is situated on the west coast of India between 20-6′ N to 24-42′ N north latitude and 68-10’E to 74-28’E east longitude. Situated on the west coast of India, Gujarat is one of the leading industrial states of India. It has a geographical area of 1,96,024 sq kms and accounts for 6.19% of the total area of India. Led by entrepreneurial spirit and unfaltering State Government support, Gujarat is a manufacturing powerhouse with world-class production capabilities. Gujarat accounts for 16% of the country’s total investment and 10% of the total expenditure. A strong manufacturing sector is the edifice of economic activity in Gujarat. The state contributes 20% to the manufacturing, 14% to the exports and 30% to the stock market capitalization of India.

Advantage Gujarat

• Gujarat has a strategic location, which gives it easy accessibility to the western, Middle East and African markets.
• The population density of Gujarat now stands at 258 persons per sq. km as against the national average of 325 persons per sq. km.
• The state has longest coastline among all states in India – 1600 Kms, dotted with 41 ports — 1 major, 11 intermediate and 29 minor.
• Gujarat has the advantage of entrepreneurial skill.
• High level of industrialization: Investment equivalent to over US$ 30 billion underway.
• The state is blessed with highly productive and peaceful workforce.
• The present power generating capacity 9,007 MW* – and plans are afoot to raise it to 17,477 MW by 2010 AD (*excluding 4,600 MW captive generation).
• Excellent road network – length exceeding 74,000 Kms linking all the regions of the State.
• An efficient rail network connecting all-important centers in the state.
• Highest number of Airports – 11 – among all the states in India with Ahmadabad an international airport.
• Second highest in India in terms of industrial production, lignite, petroleum and molding sand.
• Fourth highest in India in overall mining of minerals.
• Largest deposits of fluorite, agate and chalk.
• Contributing almost 100% of Acrilonitrile, Cyanide Salts, PMMA, PP, Melamine, Sodium Bicarbonate and Phosphorus and as much as over 80% of Soda Ash, Xylene, Elastomer and LDPE in country’s total production.
• Quality network of educational institutions.
• Excellent law and order situation.
• Professional approach of the Government and Civil services.

Economic Profile

Break up of Economic Activities

Estimates of Per Capita Income in Gujarat (1993-94 to 2004-05)-

Source: Directorate of Economics and Statistics, Govt. of Gujarat

Major Industries

Agro and Food Processing

Agriculture in Gujarat forms a vital sector of the state’s economy. It has to provide the required food grains for the state’s population and raw materials for most of the agro-based industries. Gujarat witnessed Impressive Agriculture Performance in last five years (2001-05), with an average growth rate of 24.11%.

Advantage Gujarat – Agriculture sector

• Integrated Water Management and assured irrigation
• Diversified Crops and Cropping systems
• Climatic diversities – 8 agro climatic zones
• Abundant natural resources suitable for a variety of commercial crops
• Strong Agri Marketing system, Agro based Industries & Co-operatives
• Strong agri research capabilities
• Enterprising Farmers having business instincts

The major food crops in the State are Rice, Wheat, Jowar, Bajra, Maize, Tur, Green Gram, and Groundnut while major non-food crops are Cotton and tobacco.

Gujarat is a leading producer of various agricultural crops within India as well as worldwide. The state is the leading producer of, Castor, Tobacco, Isabgul (Psyllium) and the second largest Producer of Sesame seeds, Cotton and Groundnut in the country. The state has highest productivity in, Mustard, Castor and Cotton, Second highest productivity in Groundnut and Bajara and third highest productivity in Gram, Guar, Banana and Isabgul in India. Gujarat assigns high priority to the agriculture sector and has formulated a comprehensive agro industrial policy and a vision 2010 document for development of agriculture and agro based industries.

Biotechnology in Gujarat

Gujarat’s thriving Pharmaceutical and agricultural sectors are driving its biotech industry, which already has a strong foundation in the state and is well supported by academic and research institutes. Further, specialized biotech park, skilled workforce, government support and ethnic diversity provide the investor with the ideal platform for clinical and contract research, application in agriculture, food and marine technology.

The state government of Gujarat, in its resolve and continued efforts for socio-economic upliftment of the society, has identified biotechnology as single most potential tool of development. The state intends to promote biotechnology sector by building appropriate image, encouraging entrepreneurship, strengthening organizational colorations and forecasting business partnerships. For facilitating the development of biotechnology in the State, Government of Gujarat has constituted Gujarat State Biotechnology Mission, under the aegis of Department of Science and Technology.

Agriculture Biotechnology

The agricultural biotechnology industry is gaining importance in Gujarat due to its sizeable agrarian economy, which contributes significantly to the country’s GDP. A higher percentage of the agricultural land is used for cultivation in the Central Gujarat. While, Valsad has become India’s first integrated horticulture district, Kaira, Baroda, Bharuch and Surat districts are the main contributors to the agricultural production of the State.

The State was amongst the first ones to allow field trials of BT cotton in the country. With the growing R&D spend of the global agri-biotech companies and enhanced clarity on the IPR issues, the country at large and Gujarat in particular, can leverage the diverse agro climatic topography to play a significant role in the agri-biotech scene. The agricultural biotechnology industry is gaining importance in Gujarat due to its sizeable.

The major thrust areas of the corporate players in Gujarat agri-biotech industry include tissue culture, bio-fertilizers and bio- pesticides.

Food Biotechnology and Nutraceuticals

The State’s enormous success in the dairy industry is exemplified by the presence of one of the country’s premier food company viz. AMUL. The Company has been a role model for the cooperative sector in India. With its constant zest for innovation, the Company has the widest range of dairy based food products. It has a strong R&D team backed by a competitive marketing and branding team. Vadilal, an established brand in the processed food segment processes and markets a wide variety of fruits, vegetables and ready-to-serve Indian Foods. Over the last decade the Company has acquired a prominent position in India and established itself as one of India’s leading manufacturers / exporters in this sector.

Gujarat also has a large unorganized natural extracts and nutraceuticals segment base, constituting several small-scale manufacturers and trading outfits. These companies are engaged in producing herb-based dyes, cosmetics, spices and other consumables.

The State has about 240 ayurved pharmaceutical companies of which about 29 have GMP certified facilities. Ahmadabad, Vadodara, Valsad, Surat, Rajkot and Mehsana have a significant presence of natural extract based industry. Companies such as Unique Pharmaceuticals, JB Chemical, Cadila Pharmaceuticals, Paras Pharmaceuticals and Vasu Pharmaceuticals, which are based in Gujarat, have international linkages in terms of import and export of natural extract products.

Marine Biotechnology

Gujarat has1600 km long coastline considered the longest in the country, which includes two, gulf areas Gulf of Kachchh and Gulf of Khambat. Given the longest coastline and the rich marine resources it preserves, the Government of Gujarat is focusing on developing marine biotechnology as a fore area of the biotech sector in the State. Gujarat is India’s first State to establish a Marine National Park located 30 kms from Jamnagar in the Gulf of Kachchh region.

Industrial Biotechnology

Gujarat has developed strengths in the industrial enzymes segment over the years. This segment is dominated by entrepreneur led organizations, which initially started as conservative fermentation based outfits and have today evolved as preferred vendors/service providers for multinational companies. The State has been able to leverage its manufacturing strengths in the industrial biotech segment.

Chemicals and petrochemical Industry

Gujarat’s chemicals sector is one of the fastest growing sectors. The state contributes to more than 20 percent of India’s chemicals output. The exports from this sector are globally competitive and the leading destinations for export are USA, Europe and other developed nations. The state houses four petrochemical complexes, two large petroleum refineries and six large chemical- fertilizer complexes.

Gujarat manufactures 100% soda ash in the country and has an impressive share of 85% in salts production. State’s share in other areas are as follows: Ethylene (50%), polymers (56%), LAB (37%), phosphatic fertilizers (38%), nitrogen fertilizers (20%), etc.

Gujarat Industrial Development Corporation (GIDC) has set up mega estates, particularly for chemicals at Ankleshwer, Panoli, Vapi, Vatva, Jhagadia, Vilayat and Dahej to facilitate further development and growth. Private investment in SEZ and the proposed plans to have a PCPIR (Petroleum, Chemicals and Petrochemicals Investment Region) at Dahej are bound to change the industry scenario of the whole country in general and Gujarat in particular.

The factors responsible for the spectacular growth of the chemicals sector in Gujarat are:

• A strong base of petrochemical industry
• Increasing availability of basic feed stock
• Relatively low overhead cost
• Availability of necessary infrastructure
• Trained and technical manpower and
• High degree of entrepreneurship.

Pharmaceutical Industry in Gujarat

Gujarat boasts of high investment levels in the pharmaceutical sector worth over US$ 2.25 billion indicating significant opportunities for investors. Gujarat offers distinct economic advantages to large pharmaceutical companies who are looking to reduce their time-to-market on new products and save costs within the same period. These include:

• Cost-competitive research base
• Large and skilled workforce
• Skills in process chemistry
• Globally harmonized regulations
• compliance of international standards and FDA approved manufacturing facilities
• 100 companies with WHO compliant manufacturing units

The state of Gujarat houses a number of renowned foreign and domestic firms in the pharmaceutical and drug sector. The leading multinational corporations having operations in the state include Wyeth, Sanofi Aventis, Abbott, Sidmak laboratories, Mission Pharma Logistics and Transpek-Silos industry. On the domestic front, several large players such as Zydus Cadila, Cadila Pharma, Alembic Pharma, Torrent Pharma, Sun Pharma and Intas Pharma have made their presence in the state.

Engineering and Automotive Industry in Gujarat

Gujarat’s engineering sector accounts for 33 percent of industrial units, 26 percent of industrial employment and 17 percent of industrial production. Currently, 275 projects with an investment of US$ 3.77 billion are under implementation. Gujarat’s economy and overall development has gathered tremendous momentum over the past few years and specifically, engineering industry has witnessed impressive growth and development. Many multinational companies such as Sandvik Asia, FAG Bearings, Ingersoll Rand/Dresser Rand, ABB, and Hitachi among others have established their manufacturing base in Gujarat.

Various engineering industries are spread all over Gujarat – Castings & Forgings (Ahmadabad, Rajkot, Vadodara), Brass Parts (Jamnagar), Diesel Engine and Parts (Rajkot), Textile Machinery Parts (Surat, Surendranagar), Automobile components (Ahmadabad, Rajkot), Machine Tools (Rajkot), Air & Gas Compressors (Ahmadabad), Industrial valves (Ahmadabad), etc.

In Gujarat, Automobile sector has been growing tremendously in the last few years. General Motors have set up their unit near Vadodara. The automobile components are manufactured mainly at Ahmadabad, Rajkot and Vadodara. The presence of engineering, foundry and casting industries in the State enables the sourcing of local components required for the automobile assembly/passenger cars.

The state of Gujarat has huge potential for new investments in this sector. The projects that offer investment opportunities are Pre-Engineered Steel Building, High Pressure Cylinders, Submerged Arc Welded (SAW) Pipes, Investment Casting, Manufacture of automobile components, and setting up automobile assembly units. There is also possibility of foreign collaboration with local companies to upgrade their technological capabilities, which would enable them to offer world-class products.

Gems and Jewellery

Gujarat is the leading State in India in gems and jewellery sector, as it contributes to about 72% of the total exports of India. Gujarat has a well-established diamond industry. Diamond processing and trading unit are spread across the State in cities such as Surat, Ahmadabad, Palanpur, Bhavnagar, Valsad and Navsari. Gujarat accounts for about 80% of the diamonds processed and 90% of the diamond export from India. Surat has 65% share in India’s diamond trade. Out of ten diamonds in the world, 8 are processed in Gujarat. The state of Gujarat is an ideal location for designing, manufacturing and marketing of gold jewellery. The advantages of investing in diamond processing in Gujarat are:

• Low cost, economic and skilled labour
• Availability of large number of skilled labour
• Upcoming Diamond Park and gems and jewellery special economic zones
• Presence of state of the art institutions such as Indian Diamond Institute (IDI), National Institute of Design (NID), National Institute of Jewellery Design (NIJD) and National Institute of Fashion Technology (NIFT)
• Well developed market
• Easy availability of institutional and Bank finance
• Relaxed government rules and regulations
• Other competitive world centers like Hong Kong, Thailand, Taiwan, Korea, U.S.A., Italy, etc. are becoming costlier with decreasing availability of skilled labour

Information Technology (IT) and Information Technology enabled Services (ITES)

The growth of software exports in Gujarat (CAGR of 47 percent between 1999-2005) indicates the potential available in the IT sector. Gujarat is emerging as a major hub for IT activity through various approved and proposed SEZs. Several IT SEZs, an IT corridor, a knowledge city, and three IT complexes, amongst others are some of the proposed initiatives in the sector signaling the growing focus on the IT sector.

Gujarat is today emerging as a preferred destination particularly for large businesses like ITES/BPO due to its excellent offerings on the following parameters:

• HR Availability and cost advantage
• Conducive Power and Telecom Infrastructure
• Suitable Real Estate Availability & its Cost
• Government Support and Incentives

Investment Profile in the State

Investor’s Profile in the state-

Unique Opportunities Regarding Investments-

• Business friendly state policies,
• responsive local administration,
• extensive network of roads,
• ports, railways and telecom in most parts,
• well developed financial structure

Investments in the state in 2009

Source: Investments, Vibrant Gujarat Website

According to the Industrial Extension Bureau, investment opportunities for the investors does exist in the following sectors-

• Agro based & food processing industries

• Chemical and allied industries
• Information Technology
• Plastic and allied industries
• Textile Industry
• Mineral based and allied Industries
• Post related activities and infrastructure