Gujarat has attracted more foreign direct investment (FDI) than what its GDP size alone would suggest. But relative to its peer states (especially Tamilnadu, Delhi, Maharashtra and Karnataka, and possibly Andhra Pradesh) it has fallen short significantly. The above findings which we made in an earlier study are further confirmed through a survey of opinions and views of CEOs and others intimately concerned with the foreign investment decision process. The survey also brought out the crucial importance of infrastructure, and the quality of governance. Interestingly most of the problems are capable of being corrected through appropriate government action. The intrinsic exploitable advantages of the state remain large. Electricity supply – its poor quality, inadequacy and high price; the adverse law and order situation including the impact of the communal strife and riots and the perception of biases in the implementation of law have been important in adversely affecting FDI. The large comparative advantage of the state in industry and manufacturing implies that the states’ future is intimately dependent upon the growth of manufacturing in India. Success therefore involves coordination with the central government, because many of the difficulties in moving forward and in evolving into modern industries faced by Gujarat’s existing manufacturing involve policy infirmities at the central /macroeconomic level. Important among these are the `inverted tariff structures’ that many of Gujarat’s manufacturing, especially those in the small and medium scale industries, face and the tame pricing of the Indian rupee, in contrast to East Asian countries’ strategy of undervaluing their currencies. There is much that Gujarat can do to attract the new manufacturing and service industries (offshore industries of a wide variety, IT and biotechnology industries). Besides the improvement of Governance especially with regard to control over communal strife, it would need to improve the quality of life in cities and overcome the infrastructural constraints especially with regard to education and availability of technical skills. If Ahmedabad its principal city, can improve its ranking in the hierarchy of central places, Gujarat could successfully attract a lot more FDI, and other non-equity forms of collaboration in the new manufacturing and service industries.

Foreign Direct Investment on Gujarat from January 2000 to October 2006 was estimated to be around Rs. 4,112.73 crores which comes to around USD 898.8 million. Gujarat ranks six in terms of FDI Inflows in India.

Impact of FDI on Gujarat Economy

Abstract:
Impact of FDI on Gujarat Economy has been positive for it has led to the all round development of the state. Impact of FDI on Gujarat Economy has proved to be beneficial for the various industries in the state have grown, developed and also expanded.

Factors attracting foreign direct investment in Gujarat:

• The state provides extensive network of railways.
• Gujarat has the highest number of airports in the country.
• The state provides excellent network of roads.
• Professional services to the investors are provided in Gujarat.
• The state is highly industrialized.
• Location wise, Gujarat has a strategic location providing easy access to the African, western, and Middle East markets.
• Skilled manpower is abundantly available in Gujarat.

Industries attracting foreign direct investment in Gujarat are:

• Oil and gas
• Infrastructure
• Food processing industries
• Information technology
• Gems and jewelry
• Biotechnology
• Chemicals
• Textiles

Amount of foreign direct investment in Gujarat:

The regional office of Reserve Bank of India in Ahmedabad received US$ 970.3 million as foreign direct investment for the state during January 2000 to December 2006. The total percentage of foreign direct investment that the regional office of Reserve Bank of India in Ahmedabad received came to 3.7% out of the total foreign direct investment in India during this period.

BUSINESS

Doing Business in Gujarat India, leading industrialized State. Business opportunities: Agribusiness, Information Technology, Biotechnology, Automotive, …

Gujarat is the leading industrialized State of India. Gujarat is one of the most preferred investment destinations of India, providing opportunities in almost all the sectors of the economy, particularly information technology (IT), tourism, textiles and agricultural sector.

Gujarat houses a number of multinational corporations, private sector companies, public sector enterprises and a large number of medium and small scale units. It is a manufacturing powerhouse with world-class production capabilities in textiles, petrochemicals, pharmaceuticals and agro-based products.

The State is also known for its entrepreneurial spirit as well as robust social and physical infrastructure.

Gujarat boasts of a rich and varied cultural heritage, that is reflected in its art, music, cuisine, literature, religious traditions, etc. It is rich in bio-resources and has a forest cover of 1.88 billion hectares. It has 10.7 million hectares of highly diversified cropping area and is a leading producer of horticultural crops.

Moreover, the State is rich in mineral resources like limestone, lignite and bauxite. It is also a leading producer of cement and soda ash and has the largest diamond processing industry in the country. Thus, the geographic diversity and strategic location has made Gujarat home to an incredible diversity of people.

With 5% of India’s population, Gujarat has 16% of industrial production. Gujarat had an annual average growth of 9% in the last 3 years and an average industrial growth of 15%.

The Gujarat Government gives tax concessions for investment in backward areas. For instance, the Government has announced exemptions 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.

The state offers investors a distinct advantage in terms of quality manpower and infrastructure facilities such as power and water supply, ports and now a gas grid. This is encouraging multinationals and leading Indian companies to turn their manufacturing plants in the state into global sourcing bases.

Summary:

Doing Business in Gujarat India, leading industrialized State. Business opportunities: Agribusiness, Information Technology, Biotechnology, Automotive, …

Gujarat is the leading industrialized State of India. Gujarat is one of the most preferred investment destinations of India, providing opportunities in almost all the sectors of the economy, particularly information technology (IT), tourism, textiles and agricultural sector.

Gujarat houses a number of multinational corporations, private sector companies, public sector enterprises and a large number of medium and small scale units. It is a manufacturing powerhouse with world-class production capabilities in textiles, petrochemicals, pharmaceuticals and agro-based products.

The State is also known for its entrepreneurial spirit as well as robust social and physical infrastructure.

Gujarat boasts of a rich and varied cultural heritage, that is reflected in its art, music, cuisine, literature, religious traditions, etc. It is rich in bio-resources and has a forest cover of 1.88 billion hectares. It has 10.7 million hectares of highly diversified cropping area and is a leading producer of horticultural crops.

Moreover, the State is rich in mineral resources like limestone, lignite and bauxite. It is also a leading producer of cement and soda ash and has the largest diamond processing industry in the country. Thus, the geographic diversity and strategic location has made Gujarat home to an incredible diversity of people.

With 5% of India’s population, Gujarat has 16% of industrial production. Gujarat had an annual average growth of 9% in the last 3 years and an average industrial growth of 15%.

The Gujarat Government gives tax concessions for investment in backward areas. For instance, the Government has announced exemptions 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.

The state offers investors a distinct advantage in terms of quality manpower and infrastructure facilities such as power and water supply, ports and now a gas grid. This is encouraging multinationals and leading Indian companies to turn their manufacturing plants in the state into global sourcing bases.

Sample

Invest Opportunities in Gujarat

ABB plans to invest a further US$ 500 million in its Vadodara plant and use it as a global sourcing base for circuit breakers and other electrical equipment. Arvind Mills, the second largest denim manufacturer in the world has doubled its manufacturing capacity. Glaxo SmithKline India, plans to use its manufacturing plant 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 its plant in Ankleshwar, Gujarat.

Invest Opportunities in Information Technology. Gujarat is a good destination for IT industries. There are several big IT software companies located in the State. Accordingly, the Government of Gujarat has undertaken several initiatives in the IT sector. It has formulated an IT policy, which aims to promote overall IT growth in the State, create enormous employment opportunities as well as develop skilled manpower in IT.

Main Gujarati companies:

Essar Global Limited (EGL) is a diversified business corporation with a balanced portfolio of assets straddling the manufacturing and services sectors: Steel, Energy, Power, Communication, Shipping & logistics, and Construction. EGL, through its six sectoral holding companies, has an enterprise value of over USD 20 billion (INR 80,000 crores) and employs 20,000 people worldwide.

A US $24 billion corporation with a market cap of US $31.5 billion and in the league of Fortune 500, the Aditya Birla Group is anchored by an extraordinary force of 100,000 employees, belonging to 25 different nationalities. In India, the Group has been adjudged “The Best Employer in India and among the top 20 in Asia” by the Hewitt-Economic Times and Wall Street Journal Study 2007. Over 50 per cent of its revenues flow from its overseas operations.

Larsen & Toubro Limited (L&T) is a technology, engineering, construction and manufacturing company. It is one of the largest and most respected companies in India’s private sector.

Tata Consultancy Services (TCS) is one of the world’s leading information technology companies. Through its Global Network Delivery Model™, Innovation Network, and Solution Accelerators, TCS focuses on helping global organizations address their business challenges effectively.

Gujarat Cooperative Milk Marketing Federation (GCMMF) is India’s largest food products marketing organization. It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money.