Gujarat summit attracts investment of $100 billion

Wednesday, 17 January 2007, 06:00 Hrs
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Ahmedabad: Special Economic Zones (SEZs) have emerged as the single largest investment sector in the just-concluded Vibrant Gujarat Global Investors Summit, accounting for 38.1 percent of a total investment of around 4,480 billion (about $100 billion) in 308 memorandums of understanding (MoUs) signed with the Gujarat government.

In financial terms, the MoUs relating to SEZs have promised an investment of 1,706 billion ($38.5 billion) with a potential to employ about 605,640 people, according to an expert analysis of investment data available here.

But power, oil and gas, ports, civil aviation and rail transport together have accounted for 45 percent of the total investment or 2,022 billion ($45 billion).

The disappointing sectors were agro food processing, which accounted for 2.57 percent, engineering, auto, ceramics (2.84 percent), textiles and apparels (1.82 percent) and tourism (2.37 percent). Education was just a meagre (0.12 percent) and medical tourism (0.37 percent).

The first major disappointment relates to textiles and garments. According to a quick analysis done on MoUs signed in this segment, it is said that most of the MoUs inked are for capital-intensive projects.

V.L. Mote, a former faculty member of the Indian Institute of Management (IIM), Ahmedabad, who specialises in textiles, opined that since no details were available for investments within the SEZs, it was difficult to give a qualitative estimate of the investment pattern.

But in industries comprising textiles and garments, the investment pattern appeared to be skewed towards textiles and less towards apparels. At least an average of 900,000 ($20,330) will be needed to create one job. For a labor intensive industry this was high, Mote said.

He said Gujarat has a tremendous competitive advantage in garments with the availability of raw material and a big domestic market. But the state did not have the manufacturing capacity to meet the demand.

"This is opening the way for import of garments to meet the Indian demand. This means that Gujarat will be passing on its advantage to overseas competitors like China, Hong Kong and possibility South Africa," Mote added.

The summit also turned out to be a big vote of confidence for Chief Minister Narendra Modi. The praises heaped on him by icons of the Indian industry indicated that they might not be averse to doing business in Gujarat.

The MoUs signed in the summit were more with Indian companies than the foreign ones.

It was said that foreign companies had raised issues in the meeting with officials but they could not be sorted out. The two major issues, it is learned, related to land and water.

However, state chief secretary, Sudhir Mankad, while reviewing the progress of projects, for which MoUs were signed in the previous summits, indicated that land was one of them.

He said the land laws, which were enacted long ago to prevent diversion of farmland to other purposes, might have to be looked in to today's context.
Source: IANS
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