A New Chapter in Gujarat′s Vibrant Growth

A leading Indian industrialist traces the Gujarat development story and lays out the many opportunities in specific sectors for foreign investors. As we enter the year 2017 and review the global economic outlook, we see a horizon that is quite challenging. Global economic growth is still weak. Strategic and economic relations among major countries are undergoing a change. Global trade architecture is in for a makeover, with priorities being redefined by countries. As businesses prepare to deal with these bouts of uncertainty, they would obviously be looking for destinations that offer good prospects for growth and where policies are being calibrated to unlock potential of the domestic economy as well as reap benefits of aligning with regional value chains. India is one such country, perhaps one of the very few in the world, that fits into this category. Guided by the strong reformist credentials of our Hon'ble Prime Minister Shri Narendra Modi, we are today amongst the fastest growing major economies in the world and have emerged as a key destination for foreign investors. Growing at a rate of over 7 per cent and certain of maintaining this momentum despite the temporary disruption caused by demonetisation, the Indian economy offers a plethora of opportunities to investors. And the confidence level of investors has only been improving with each major policy move of the government, be it the passage of the GST Bill, the Bankruptcy and Insolvency Code, reforms in the power sector or those related to labour legislations. Add to these the procedural reforms underway to improve the business environment and we understand why CEOs of top global corporations have made India an integral part of their global itinerary. While a lot of action is happening at the Centre, one must not forget that the real building blocks of India's growth are the states. As we move around the country we see a very healthy competition developing among states to reform their regulatory policies, processes and practices so that each can pitch itself to prospective investors and make them anchor in their respective regions. As we evaluate states on the basis of the efforts being made to fast track growth, initiate development projects and spur industrial growth for employment generation, we find Gujarat - which also happens to be my home state - to be amongst the front-runners. With a contribution of nearly 7.14 per cent to India's GDP, 19 per cent to industrial output and about 20 per cent to exports, Gujarat is one of the most progressive and industrialised states in the country and a shining example of what can be achieved when you marry favourable economic policies with the entrepreneurial spirit of the people and provide an enabling business environment with requisite infrastructure. Today, Gujarat and industrial development are coterminous and the state has emerged as one of the leaders in India for chemicals and petrochemicals, textiles, pharmaceuticals, gems and jewellery, agro based industries and engineering industries. Let me elaborate on each of these a bit. Chemicals & Petrochemicals This industry is expected to reach $250 billion by 2020 with specialty chemicals accounting for $70 billion and petrochemicals about $100 billion. It is estimated that we would need investments worth $600 billion by 2030 across the hydrocarbon chain. Gujarat already accounts for a third of India's chemicals production and over two thirds of its petrochemicals production. The state has a very well established downstream network of processing units for polymers, rubber chemicals and plastics. The state government provides a very strong support for R&D in this area and with its dedicated Petroleum, Chemical & Petrochemical Investment Region (PCPIR), we have on offer a natural hub for development. Textiles This industry is expected to reach $200 billion by 2020 in India. Rising disposable incomes, growth of online platforms and marketplaces as well as demand for non-clothing varieties called technical textiles will be the drivers of this growth. Gujarat being the largest producer of raw cotton and man-made fiber in the country is well poised to capitalise on this growth opportunity. Through its incentive policy for textiles, the state has attracted investments of nearly US$ 2.5 billion in the last three years and has a special focus on promoting manufacturing of technical textiles. Investors must look at this area and plan their engagement well. Pharmaceuticals I can say from my personal experience that Gujarat is the place in India for catering to global markets. The pharma industry will be $55 billion by 2020 and our exports are likely to touch $40 billion by the same year. With a contribution of nearly 40 per cent to India's total pharmaceuticals production, 28 per cent to its exports and nearly half of the total medical devices manufactured in India, Gujarat is the undisputed leader in this area in the country. The pharma clusters in Ahmedabad, Vadodara, Bharuch and Vapi are growth centers and investors must visit these areas to see for themselves the opportunities on offer. Gems & Jewellery Gujarat also leads the way in the gems and jewellery sector, contributing to over 70 per cent of the total exports from India. With diamond processing and trading units spread across centres like Surat, Ahmedabad, Palanpur, Bhavnagar, Valsad and Navsari, Gujarat is also India's diamond hub, accounting for almost 80 per cent of diamonds processed and 95 per cent of diamonds exports. Traditional expertise, highly skilled workforce and cost-competitiveness, make Gujarat an attractive destination for investment in the gems and jewellery sector. Agro Processing The trends that emerge when you have a young population and a swelling work force are well known. The market for packaged and ready to eat foods is growing at a fast clip in India. Gujarat with its 8 agro-climatic zones, dedicated agri export zones and one of the highest cold chain storage capacity in the country offers the right mix for growth of this industry. With 100 per cent FDI permitted in this sector through the automatic route, investors must fully leverage Gujarat's enabling ecosystem for agro and food processing industry. Engineering Gujarat′s engineering sector has a wide base with industries spread all over Gujarat - Castings & Forgings at Ahmedabad, Rajkot; Vadodara being the hub for Castings and Forgings; Jamnagar as the centre for Brass Parts; Diesel Engine and Parts centred at Rajkot; Textile Machinery Parts located at Surat and Surendranagar; Ahmedabad, Rajkot being a hub for automobile components to support the fast expanding automobile sector; Machine Tools at Rajkot; Air & Gas Compressors and Industrial valves at Ahmedabad; among many others. Heavy engineering is another strength area for Gujarat. Through the establishment of 30 engineering product clusters that provide ready infrastructure for new engineering units as well as for expansion of existing ones, the state has shown its preparedness to bridge the country's export - import gap in heavy engineering. This skill intensive and labour intensive sector presents a a huge potential for new investments with a plethora of opportunities for foreign collaboration. There are opportunities aplenty in the state even beyond manufacturing. With its huge coastline and ports being strategically located, the state also offers excellent avenues, especially in handling of cargo, setting up of maritime clusters and development of port cities. Further, with plans afoot for development of Ahmedabad, Surat, Vadodara, Rajkot, Dahod and Gandhinagar as smart cities, there is plenty in store in the area of urban infrastructure and other related services. While talking of infrastructure, one must also mention the landmark Delhi Mumbai Industrial Corridor, a good part of which passes through Gujarat. This itself will give rise to investment opportunities in setting up logistics hubs, metro rail, hospitals, schools, road and rail connectivity projects. In financial services, the state has taken the lead in establishing India's first operational International Financial Services Centre (IFSC), called Gujarat International Finance Tec-City (GIFT). GIFT offers firms a world-class infrastructure, where they can easily undertake offshore transactions in the field of banking, insurance & capital markets. One can go on and write more in terms of what Gujarat offers to investors. Being from the state and given my own experience, I can relate and share my own experience of being a very satisfied investor. I urge global businesses to look at the new India that is in the making and how states like Gujarat are contributing to this positive change of growth, development, progress and prosperity. Pankaj R. Patel is president of the Federation of Indian Chambers of Commerce and Industry (FICCI) and Chairman & Managing Director, Zydus Cadila - Cadila Healthcare Ltd.