Reliance’s Jamnagar oil refinery showcases Gujarat’s entrepreneurial spirit

It is administration such as this that makes Gujarat the third-most competitive state, according to the study, though Gujarat itself ranks fourth behind Delhi, Assam and Sikkim on the administration parameter.

Such characteristics in administration have helped the state grab Tata Motors’ Nano car project from under the nose of Maharashtra and Andhra Pradesh. Even before other states could decide on where they would offer land to Tata Motors, Gujarat had readied for transfer around 1,000 acres of land as the first tranche to help kickstart the project. Tata Motors chairman Ratan Tata has since gone as far as saying it would be “stupid” for anybody to not look at Gujarat as an investment destination.

Gujarat, however, has a long history of investor friendliness. Decades ago, when India was still in the grip of the Licence Raj and industrial licences took up to 3-4 years to materialise, Gujarat formed the Gujarat Industrial Development Corporation and the Gujarat Industrial Investment Corporation to apply for industrial licences in bulk. When the licences materialised, it would transfer them to entrepreneurs interested in those businesses.

“The state’s entrepreneurial spirit runs through the political establishment and the bureaucracy,” says Vimal Ambani, chairman of CII’s Gujarat Council. The real impact of some of these policies has manifested nearly a decade after the reforms began. Since 2002-03, Gujarat’s gross domestic product (GDP) has been growing at an average of 10.62 per cent every year — faster than the rate of growth in China’s GDP. And way above the all-India average of 7.77 per cent or Gujarat’s own 1997-98 to 2001-02 average of just 2.77 per cent.

Modi has begun to capitalise on the investors’ newfound interest in the state. Gujarat has forever been Maharashtra’s less-favoured cousin in attracting India-bound investments, but now it appears to be outsmarting its neighbour. The high point of which was a biennial event called the Vibrant Gujarat Global Investors’ Summit this year. The summit’s 2003, 2005 and 2007 editions attracted investment agreements of over $186 billion. But the summit this January has been the most successful so far. Blessed by the who’s who of India Inc., including Reliance Industries chairman Mukesh Ambani, Tata group chairman Ratan Tata, ICICI managing director K.V. Kamath, Aditya Birla group chairman Kumar Mangalam Birla and ADAG group chairman Anil Ambani, the event resulted in 8,662 MoUs (over 7,000 of which are in the small and medium enterprises segment) worth $243 billion. Though the numbers are impressive, not all of what has been promised in the past has actually materialised. For instance, of all the commitments between 2003 and 2007, only 76 per cent of investments have either been made or are being implemented.