GUJARAT. September 2009

GUJARAT September 2009

Investment climate of a state is determined by a mix of factors Skilled and cost-effective labour Labour market flexibility Labour relations Availability of raw materials and natural resources Procedures for entry and exit of firms Industrial regulation, labour regulation, other government regulations Certainty about rules and regulations Security, law and order situation Resources/Inputs Incentives to industry Tax incentives and exemptions Investment subsidies and other incentives Availability of finance at cost-effective terms Incentives for foreign direct investment (FDI) Profitability of the industry Investment climate of a state Regulatory framework Physical and social infrastructure Condition of physical infrastructure such as power, water, roads, etc. Information infrastructure such as telecom, IT, etc. Social infrastructure such as educational and medical facilities 2

The focus of this presentation is to discuss Gujarat s economy and socio-economic profile Infrastructure status State policies and incentives Business opportunities Doing business in Gujarat Overall state competitiveness 3

Gujarat ECONOMY AND SOCIO-ECONOMIC PROFILE September 2009 A snapshot of Gujarat On May 1, 1960, Gujarat was created out of the 17 northern districts of the former state of Bombay. Located on the western coast of India, it has the longest coastline in the country at 1,600 km. The state has a population of approximately 50.7 million (5 per cent of India) and an area of 1,96,024 sq km (6 per cent of India). It is bounded by the Arabian Sea to the west and south west, and by Pakistan in the north. The state is flanked by the states of Rajasthan and Madhya Pradesh towards the north east and east, and by Maharashtra and the Union Territories of Daman, Diu and Nagar Haveli towards the south. 4

ECONOMY AND SOCIO-ECONOMIC PROFILE A snapshot of Gujarat Gandhinagar, the capital city of Gujarat, is located close to Ahmedabad, the commercial capital. It has diverse climatic conditions with mild and pleasant winters, and hot and dry summers and heavy monsoon. The state currently has 26 districts, with the latest district, Tapi, being constituted in 2007, from Surat. 5

ECONOMY AND SOCIO-ECONOMIC PROFILE Socio-economic snapshot Demographic indicators Population density (2001) 258 per sq. km. Rural population (%) 62.64 Urban population (%) 37.36 Decadal growth rate (%) 22.66 (1991 2001) Birth rate 23.5 (2006) Death rate 7.3 (2006) Natural growth rate 16.2 (2006) Sex ratio 920 females per 1,000 males (2001) Effective literacy rate 69.14% (2001) Source: Socio-Economic Review Gujarat State 2007 2008, Directorate of Economics & Statistics, Pages 3, 48 6

ECONOMY AND SOCIO-ECONOMIC PROFILE Tertiary sector highest contributor to Gujarat s economic basket Economic indicators Composition of GSDP as per economic activity Growth trends in Gross State Domestic Product (GSDP) GSDP was US$ 61 billion (E) at current prices in 2007 08 GSDP growth for 2006 07 was 15.81 per cent Gujarat has set the highest growth target of 11.2 per cent for the Eleventh Five Year Plan Source: Socio-Economic Review Gujarat State 2007 2008, Directorate of Economics & Statistics, Pages 5,7 7

ECONOMY AND SOCIO-ECONOMIC PROFILE Tertiary sector highest contributor to Gujarat s economic basket Sectoral contribution to GSDP Tertiary sector highest contributor to GSDP Manufacturing sector a key driver of Gujarat s economy From revenue deficit to revenue surplus (US$ mn) Source: Socio-Economic Review Gujarat State 2007 2008, Directorate of Economics & Statistics, Pages 5,7 8

ECONOMY AND SOCIO-ECONOMIC PROFILE Tertiary sector highest contributor to Gujarat s economic basket Per capita Income Per capita income of Gujarat in 2006 07 was US$ 829.6, higher than the national average of US$ 655.2 Source: Socio-Economic Review Gujarat State 2007 2008, Directorate of Economics & Statistics, Pages 5,7 Increase in per capita income (at current prices) (1US$ = INR 45.24 for 2006-07 and 44.27 for 2005 06) 9

ECONOMY AND SOCIO-ECONOMIC PROFILE Socio-economic profile of Gujarat Employment distribution Employment distribution across sectors Manufacturing accounts for largest share of employment across industries in Gujarat. Employment in public sector establishments was at 1.75 million in June 2007. Employment in the private sector was at 1.8 million in June 2007. The public sector employed 18.66 per cent and the private sector employed 10.21 per cent of women in June 2007. Source: Socio-Economic Review Gujarat State 2007 2008, Directorate of Economics & Statistics, Page 60 10

The focus of this presentation is to discuss Gujarat s economy and socio-economic profile Infrastructure status State policies and incentives Business opportunities Doing business in Gujarat Overall state competitiveness 11

INFRASTRUCTURE STATUS The state has one of the strongest port infrastructures in India Gujarat has 42 ports along a 1,600 km coastline, including one major port at Kandla and 41 minor ports. The state has five direct berthing commercial ports, seven direct berthing captive port terminals and four lighterage cargo ports. It handled the largest (79.84 per cent) share of cargo traffic in India s minor and intermediate ports, and 11.5 per cent in India s major ports in 2008 09. The state has two LNG terminals that offer costefficient transportation of natural gas, crude oil and petroleum products from the Middle East and Europe. Source: Ports of Gujarat, sector profile 2008 2009, Gujarat Maritime Board (GMB), Pages 10, 11 Jakhau Kandla Mundra Okha Positra Major ports Private sector ports GMB ports Navlakhi Jamnagar Sikka Khambhat Dholera Bhavnagar Mithivirdi Porbandar Mahuva Sutrapada Pipava Simar v Jafrabad Maroli Dahej Magdalla Hazira Vansi Borsi 12

INFRASTRUCTURE STATUS The state has one of the strongest port infrastructures in India It is the first state in India to take up port privatisation. The state plans to have modern mechanised cargo handling systems in all new ports. The state s port policy envisages the development of 10 greenfield sites. Source: Ports of Gujarat, sector profile 2008 2009, Gujarat Maritime Board, Pages 10, 11 13

INFRASTRUCTURE STATUS Well developed physical infrastructure rail, road and air The state has a road network of 74,111 km, including national highways (2,781 km), state highways (18,738 km) and expressways (93 km). 38.2 per cent of total expressways and national highways in the state are multi-lane; 87.9 percent of total roads are asphalt-surfaced. There is 98.86 per cent rural connectivity through all-weather roads, the highest in India. Sources: Gujarat State Road Development Corporation, Socio-Economic Review, 2007-08 National highways State highways Railways 14

INFRASTRUCTURE STATUS Well developed physical infrastructure rail, road and air Pragatipath Yojana, a government initiative introduced in 2005, envisages the development of nine high-speed corridors and widening of highways to connect tribal, coastal, industrial and rural areas with mainstream areas. Transportation network across Gujarat To Delhi The state has 13 domestic airports (the highest in the country) and one international airport at Ahmedabad. It also has an extensive railway network of 5,188 km. To Mumbai Rail Link Existing Rail Lines Airports Ports 15 Sources: Compiled from industry sources, EY research

INFRASTRUCTURE STATUS Integrated gas grid a feather in Gujarat s cap The installed capacity of electricity in Gujarat has increased from 385 MW in 1966 to 9,628 MW in 2008. Current transmission Integrated gas grid 25 mmscmd* (including 10 mmscmd of regassified LNG) Over 18,000 villages are supplied with 24-hour, three-phase electricity under Jyotirgram Yojana. Total length Completed Under construction 2,200 km 1,420 km 450 km Transmission losses for 2007 08 were 3.85 percent, which is amongst the lowest in the country. Gujarat is the only state in India with a 2,200 km integrated gas grid that is operated on an open access, common carrier principle. Planned expansion 330 km Sources: Beyond State Boundaries, Government of Gujarat 2008 2009, page 72 * million metric standard cubic metres per day Source: Power, sector profile 2008 2009, Government of Gujarat, Page 6; Piped Natural Gas, GSPC Gas website, http://www.gspcgas.com/, accessed on September 15, 2009 16

INFRASTRUCTURE STATUS Integrated gas grid a feather in Gujarat s cap Gujarat State Petroleum Corporation s GSPC Gas Company is currently supplying piped natural gas (PNG) to nearly 59,709 domestic households, 370 commercial establishments and 551 industrial customers. Integrated gas grid for energy security Mehsana Gujarat State Petroleum Corporation holds over 42 oil and gas fields across India, in addition to exploration blocks in Australia, Egypt and Yemen. GSPC is known for its discovery of the largest gas reserve in India at the Krishna-Godavari Basin. Mundra Kalol Ahmedabad Gandhar Dholera Dahej Hazira Pipavav Palej Ankleshwar Bharuch Commissioned Under construction Tendering Existing LNG terminal Proposed LNG terminal Oil & gas reserves 17

INFRASTRUCTURE STATUS Adequate telecom and IT infrastructure Key initiatives introduced as part of the state government s e-governance drive include the following: Telecommunications snapshot (March 31, 2008) Number of Direct Exchange Lines (DELs) (2008) 2,276,756 Gujarat State Wide Area Network (GSWAN), world s second-largest IP-based WAN connecting over 2,800 government offices Number of GSM cellular subscribers (August 2008) Source: Annual Report 2007 2008, Telecom Regulatory Authority of India, Page 60 20,343,734 Availability of the Secretariat Integrated Communication Network (SICN) with over 7,500 voice connections Gujarat State Wide Area Network (GSWAN) Online redressal of citizen grievances through State Wide Grievance Attention on public grievances by application of Technology (SWAGAT) Integrated Workflow and Document Management System (IWDMS) streamlines documentation in government offices 18

INFRASTRUCTURE STATUS Adequate telecom and IT infrastructure All district headquarters provided with back-up support of transportable V-SAT terminals. Availability of State Disaster Resource Network (SDRN), a database of disaster management related inventory. The Bhaskaracharya Institute for Space Applications and Geoinformatics (BISAG) has satellite communication facilities with dedicated bandwidth. 19

INFRASTRUCTURE STATUS Building infrastructure for water The development of a water grid was proposed to overcome the uneven availability of water in the state. State-wide water grid Until now, 1,874 km bulk pipelines and approximately 100,000 km of distribution pipelines have been laid across the state. Out of 18,594 villages, the water grid has connected almost 9,600 villages. Over 14,000 Pani Samitis (water committees) by the end of 2008. 20 Sources: Beyond State Boundaries, Government of Gujarat 2008 2009, pages 68-71

INFRASTRUCTURE STATUS Building infrastructure for water Water conservation schemes: 118,000 check dams** 55,900 bori bandhs (dams made of sand bags) Surface water Ground water Total * million cubic metres 38,100 mcm* 12,000 mcm 50,100 mcm Interlinking of 21 rivers in central and north Gujarat through Sujalam Sufalam Yojana 18,000 deepened ponds The Gujarat Water Users Participatory Irrigation Management Bill, 2007, authorises farmers to constitute Water Users Associations (WUA) for the management of canals handed over, after rehabilitation by the government. ** Check dam Small weir constructed across a rivulet having minimum discharge of 1 cusec after the monsoons 21

INFRASTRUCTURE STATUS Thrust on clean transport infrastructure CNG initiatives Ahmedabad BRTS map Replacement of conventional fuels by Compressed Natural Gas (CNG) in all buses and auto rickshaws. 141 CNG stations already established. 1,181 CNG buses of Gujarat State Road Transport Corporation (GSRTC), 3,750 CNG private buses, 114,446 CNG auto rickshaws and 50,708 CNG cars are currently operational. In Ahmedabad, CNG auto rickshaws are mandatory. Sources: Beyond State Boundaries, Government of Gujarat 2008 2009, page 74, 87 22

INFRASTRUCTURE STATUS Thrust on clean transport infrastructure Bus Rapid Transit System (BRTS) Simulation of BRTS Project Implemented jointly by the state government, Gujarat Infrastructure Development Board (GIDB), Ahmedabad Municipal Corporation (AMC) and Ahmedabad Urban Development Authority (AUDA). Approved length 88.5 km (Phase 1 58 km + Phase 2 30.5 km). Phase 1 to be operational by December 2009. Entire project to be completed by December 2010. Sources: Beyond State Boundaries, Government of Gujarat 2008 2009, page 74, 87 23

INFRASTRUCTURE STATUS Other initiatives in urban infrastructure River-front development Development around Sabarmati and Tapi rivers undertaken to revitalise city and improve existing infrastructure. Proposed night view along Sabarmati river Envisages development of commercial, residential and recreational facilities. Sabarmati River Front Development Corporation honoured with Prime Minister s Award for Excellence in Urban Planning and Design for development along Sabarmati river. Other reforms Municipal accounting Solid waste management Energy efficiency 24

INFRASTRUCTURE STATUS The state has strong social infrastructure for health Healthcare facilities No. of registered doctors (2006) The state currently has 13 medical colleges, 1,080 primary health centres (PHC), 7,274 sub centres, 273 community health centres (CHC) and 85 mobile healthcare units. Maternal Mortality Rate (MMR) 172 (Aug 2007) 136 (2008) Infant Mortality Rate (IMR) 53 (2006) 52 (2007) No. of private specialists enrolled 865 (until 2009) Source: Department of Health, Government of Gujarat No. of deliveries under Chiranjeevi Scheme 321,302 (until April 2009) Lives saved under Chiranjeevi Scheme (until April 2009) 452 mothers and 6,144 newborns Source: Healthcare, sector profile 2008 2009, Government of Gujarat, Page 13; Beyond State Boundaries, Government of Gujarat 2008 2009, page 5 25

INFRASTRUCTURE STATUS The state has strong social infrastructure for health Healthcare facilities No. of registered nurses (2006) It also has a mechanism for Public-private partnership in healthcare delivery: Chiranjeevi Scheme introduced to reduce maternal and infant mortality, involves collaborations between government and private sector specialists to facilitate safe deliveries for economically weaker sections. Source: Department of Health, Government of Gujarat The Palanpur Hospital s management has been transferred to Wockhardt. 26

INFRASTRUCTURE STATUS Special emphasis on the girl child in education The total number of primary schools in 2006 07 was 39,064, with 221,049 teachers. Reduction in year-wise drop-out rates (primary school) Out of the total number of primary schools, 2,539 schools are only for girls. Kanya Kelavani is a state-wide girl child education campaign to increase enrolment ratio and decrease drop-out rates: Covered 28,346 primary schools Increase in net enrolment ratio from 75 per cent to 98.98 per cent Total number of students enrolled in 2008 was 7.7 million, of which 3.5 million were girls Source: Socio-Economic Review Gujarat State 2007 2008, Directorate of Economics & Statistics, Page 46,47 33,410 girls have benefited from this fund 27

INFRASTRUCTURE STATUS Special emphasis on the girl child in education Vidya Laxmi Yojana has been implemented to achieve 100 per cent enrolment and retention Number of girls who have benefitted from the Vidya Laxmi Yojana (mn) of girls in primary schools: Around 699,000 girls have been given the Vidya Laxmi Bond in the last five years Source: Socio-Economic Review Gujarat State 2007 2008, Directorate of Economics & Statistics, Page 46,47 28

INFRASTRUCTURE STATUS One of the leading states in India for higher education The number of schools imparting secondary and higher secondary education in 2006 07 was 7,967, with 76,054 teachers. The number of students enrolled in these schools was 2.6 million in 2006 07. The number of institutions imparting higher education is 903, with 0.4 million students and 82,63 teachers. Over 0.5 million students graduate every year across disciplines. Source: Socio-Economic Review Gujarat State 2007 2008, Directorate of Economics & Statistics, Page 46,47 29

INFRASTRUCTURE STATUS One of the leading states in India for higher education Existing internationally acclaimed institutions: Number of technical institutes Indian Institute of Management (IIM), Ahmedabad National Institute of Design (NID), Ahmedabad National Institute of Fashion Technology (NIFT), Gandhinagar Centre for Environment Planning and Technology (CEPT), Ahmedabad National Institute of Pharmaceutical Education and Research (NIPER) A campus of Indian Institute of Technology, Mumbai, is located in Ahmedabad Source: Socio-Economic Review Gujarat State 2007 2008, Directorate of Economics & Statistics, Page 46,47 30

INFRASTRUCTURE STATUS One of the leading states in India for higher education Sakshardeep is a litreacy campaign for adult education, under which 1.27 million adults had been educated until 2006. Seats offered by technical institutes Society for Creating of Opportunity through Proficiency in English (SCOPE) is an initiative of the government to make Gujarat s youth proficient in business English. Source: Socio-Economic Review Gujarat State 2007 2008, Directorate of Economics & Statistics, Page 46,47 31

INFRASTRUCTURE STATUS Manufacturing infrastructure bolsters MSMEs MSMEs*, product clusters and industrial estates Number of clusters as per industry type The state s manufacturing industry is supported by 37, 312 MSMEs. Gujarat has 83 product clusters. The Cluster Development Scheme** has been launched for furthering the growth of product clusters. Source: Industries Commissionerate, GoG Successful clusters include ceramics cluster at Morbi, brass parts cluster at Jamnagar, fish processing cluster at Veraval and powerlooms cluster at Ahmedabad. *Micro, small and medium enterprises ** Clusters are groups of industries manufacturing identical and complementary products having critical mass of 50 units, located within a radius of 10 km 32

INFRASTRUCTURE STATUS Manufacturing infrastructure bolsters MSMEs MSMEs*, product clusters and industrial estates Gujarat has 202 industrial estates established by Gujarat Industrial Development Corporation (GIDC) for specific sectors chemicals, electronics, gems, apparels and granite. Industrial estates are set up on non-agricultural land after assessment of industrial viability. *Micro, small and medium enterprises Product clusters Soda ash and salt-based industries, cement and steel pipes Kachch Agro Processing Mehsana KANDLA Engineering and Gandhinagar ceramics Ahmedabad Morbi MUNDRA Chemicals, Okha Surendranagar Petrochemicals, Anand Pharma, Textiles Rajkot Petroleum and brass Vadodara parts Jamnagar DAHEJ Ankleshwar Amreli Bhavnagar Soda ash and saltbased industries Surat Sutrapada HAZIRA Navsari Kodinar PIPAVAV Valsad Source: Industries Commissionerate, GoG 33

INFRASTRUCTURE STATUS Industrial infrastructure for SEZs Special Economic Zones (SEZs) Key sector-wise break up of SEZs Gujarat had 55 approved SEZs (45 sectorspecific and 10 multi-product) as on September 2008. Gujarat s three operational SEZs are: Kandla SEZ SUR SEZ Surat Apparel Park It is the leading SEZ state with the highest geographical area (27,125 hectares) under SEZ development. It is the first state to formulate an SEZ policy, which includes flexible labour laws and exit options for investors. 34

INFRASTRUCTURE STATUS Industrial infrastructure for SEZs A V B S Am G K J Functional 2 1 Notified and operational District-wise distribution of SEZs 2 1 1 1 1 1 Notified 4 1 2 1 1 3 3 Formal 7 4 3 3 4 1 In-principle 2 1 1 4 SEZ Status Approval type Number Area (hectares) Functional 3 506 Notified & operational 7 9810 Notified 15 6114 Formal approval 22 7702 In-principle approval 8 2993 A V B S Am G K J Ahmedabad Vadodara Bharuch Surat Amreli Gandhinagar Kutch Jamnagar Source: Special Economic Zones (SEZs), Sector profile 2008 2009, Government of Gujarat 35

INFRASTRUCTURE STATUS Industrial infrastructure in Gujarat includes dedicated freight corridor Key investment regions Delhi-Mumbai Industrial Corridor (DMIC) Gujarat s share of the Delhi-Mumbai dedicated freight corridor (DFC) of 1,500 km is 38 per cent (564 km). DMIC passing through Gujarat Rajasthan Haryana Uttaranchal Dadri Uttar Pradesh The two investment regions identified for Phase-1 development are: The Ahmedabad-Dholera investment region The Vadodara-Ankleshwar industrial area Gujarat Madhya Pradesh The area under DMIC influence in Gujarat includes: 62 per cent of total area (18 districts out of 26) 74 per cent of population (37 million) Arabian Sea J.N.Port End Terminals DFC Alignment Maharashtra Sources: Industries Commissionerate, GoG 36

INFRASTRUCTURE STATUS Industrial infrastructure in Gujarat includes dedicated freight corridor Key investment regions Delhi-Mumbai Industrial Corridor (DMIC) There is excellent connectivity to ports such as Mundra, Pipavav, Dholera, Dahej, Hazira and Maroli. Other key projects include the Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) at Dahej and the Special Investment Region (SIR) at Dholera. The Gujarat International Finance-Tec City (GIFT), a collaboration between GUDC* and IL&FS**, is being developed as a central finance and business district. *Gujarat Urban Development Company Ltd ** Infrastructure Leasing and Financial Services Co. Ltd Sources: Industries Commissionerate, GoG 37

The focus of this presentation is to discuss Gujarat s Economy and Socio - Economic Profile Infrastructure Status State Policies and Incentives Business Opportunities Doing Business in Gujarat Overall State Competitiveness 38

STATE POLICIES AND INCENTIVES The state has a proactive industrial policy State industrial policy key highlights The state government introduced the Gujarat Industrial Policy in 2003, with amendments in 2009. The policy proposes to address industry requirements on a long-term basis. The key highlights of the policy include the following: Promotion of Brand Gujarat in the global arena. Strengthening the investor facilitation mechanism. Facilitating access to concrete, speedy and authentic information for entrepreneurs. Encouraging innovative projects in the manufacturing sector. 39

STATE POLICIES AND INCENTIVES The state has a proactive industrial policy State industrial policy key highlights Promotion of Green Business to address environment concerns. Development of special investment regions (SIRs) for attracting global business. Increasing opportunities for public-private partnership (PPP) projects, especially in infrastructure. Development of incubation centres to encourage innovation by the youth. Upgradation of industrial and urban infrastructure. Development of thrust industries. Promotion and development of SEZs and industrial parks. Cluster development for SMEs. Human resource development and creation of employment opportunities. 40

STATE POLICIES AND INCENTIVES State agro and port policies and incentives Agricultural policy Key highlights The policy provides financial support and incentives for agro-industrial projects for the development and facilitation of infrastructure, marketing and research. There is a 6 per cent per annum back-ended interest subsidy for the first five years from commencement of operations. The policy provides support to private sector industries, apex cooperative industries and agriculture product marketing committees (APMCs) for setting up centres of excellence. Initiatives undertaken for the export of agri products include: Development of agri-export zones and air cargo complex 25 per cent air freight subsidy on agri exports Financial assistance (up to 50 per cent of cost) for R&D activities Kiosks at APMCs for connectivity with the related departments of agriculture, universities, industries and international markets 41

STATE POLICIES AND INCENTIVES State agro and port policies and incentives Port policy Key highlights The port policy seeks to enhance Gujarat s share in the national export-import sector. It also seeks to decongest existing ports on the western coast through efficient services to support domestic and international trade. Providing port facilities to promote export-oriented industries and port-based industries. Encouraging shipbuilding, ship repairing and manufacturing facilities for cranes, dredgers and floating crafts. Promoting coastal shipping for passengers and cargo traffic between various locations within and outside Gujarat. Supporting power plants by offering exclusive facilities for import of fuels. Encouraging private sector investment in minor and intermediate ports as well as new port locations. 42

STATE POLICIES AND INCENTIVES State power and IT policies and incentives Power generation policy key highlights Carry out planning and building up adequate capacity in generation, transmission and distribution. Achieve optimum utilisation of existing equipment. Rationalise tariff structures. Improve quality of services to achieve cost effectiveness. IT policy key highlights Special incentives for mega-it projects creating employment for more than 1,000 persons in case of an IT unit and 1,500 persons in case of an ITeS unit. Financial assistance at the rate of 50 per cent of fixed capital investment in land, buildings and infrastructure facilities to IT park developers up to a maximum of US$ 509 billion. Strive for energy conservation. Encourage power generation by utilising nonconventional energy sources. De-monopolise distribution of power and invite involvement of private partners. Stamp duty exemption on purchase of land for IT park developers. State shall facilitate a grant of SEZ status to IT industry/it parks subject to the provision of the SEZ Act/rules. 43

STATE POLICIES AND INCENTIVES State mineral and road policies and incentives Mineral policy key highlights Invite participation from the private sector for mining and exploration. Prioritise exploration of lignite to meet the state s power demand and the fuel requirement of industries. Creation of a databank by compiling geological and technical details of state and Central government agencies in geological survey and mineral exploration. Implement environment assessment norms that would be constantly monitored in the case of leases of major minerals. Promote use of modern technology in mining. 44 Road policy key highlights First state in India to have a law governing build-own-transfer (BOT) transactions. Provide connectivity to all villages by building all-weather roads to improve quality of life in rural areas. Develop an efficient road system to ensure smooth and uninterrupted flow of goods and passenger traffic. Constantly upgrade technology by deploying superior and quicker construction and maintenance methods. Induct scientific principles of resource allocation for maintenance and new construction programmes. Set high standards for road safety and the travel comfort of passengers.

STATE POLICIES AND INCENTIVES State solar and tourism policies and incentives Solar Power policy - key highlights Promoting generation of green and clean power. The policy will remain in operation from 2009 to 2014. Solar power generators (SPGs) installed during this period are eligible for incentives for 20 years. Electricity generated from SPGs and used for self-consumption or sale to third party, or sale to licensees, shall be exempted from payment of electricity duty. Exemption from demand cut to the extent of 50 per cent of the installed capacity. Tourism policy - key highlights Identifying and developing tourist destinations. Creating adequate facilities for budget tourists. Strengthening present tourism-related infrastructure with opening of new centres. Promoting accommodation projects, foodoriented projects, entertainment projects, service oriented projects, etc. Promoting tourism in the areas of religious and archaeology, heritage, wild life, coastal and beach, traditional art and craft, and adventure tourism. 45

The focus of this presentation is to discuss Gujarat s Economy and Socio - Economic Profile Infrastructure Status State Policies and Incentives Business Opportunities Doing Business in Gujarat Overall State Competitiveness 46

BUSINESS OPPORTUNITIES Attractive sectors agro and food processing Agro and food processing Agro sector, including animal husbandry, contributed 14.8 per cent (at current prices) to Gujarat s GSDP in 2006 07. Gujarat has a significant share in the national production of principal crops such as: Highest production of cotton 11.22 million bales in 2007 08 Second-highest production of onion 2.23 million tonnes in 2006 07 Major crops of Gujarat Wheat Cotton Paddy Pulses Grains Tobacco Major ports Banana Onion Second-highest production of groundnut 1.44 million tonnes in 2006 07 Sources: Area, Production & Productivity of Cotton, Cotton Corporation of India website, http://www.cotcorp.gov.in/, accessed on September 15, 2009 47

BUSINESS OPPORTUNITIES Attractive sectors agro and food processing Agro and food processing Yield of principal crops (kg./hectare) In 2007, the state s marketing network consisted of: 209 market committees 198 main yards 203 sub-market yards Sources: Area, Production & Productivity of Cotton, Cotton Corporation of India website, http://www.cotcorp.gov.in/, accessed on September 15, 2009 48

BUSINESS OPPORTUNITIES Attractive sectors dairy Dairy sector Key districts in the dairy sector Gujarat s dairy sector consists of: 13 district milk producers unions Network of 12,991 milk cooperative societies having 2.5 million members AHMEDABAD GANDHINAGAR ANAND Total milk production 7.9 million tonnes The National Dairy Development Board in Anand is involved in promoting, financing and supporting milk distribution organisations across India. Sources: Estimates of milk production, National Dairy Development Board website, http://www.nddb.org/, accessed on September 15, 2009 49

BUSINESS OPPORTUNITIES Attractive sectors dairy Dairy sector Key players in Gujarat Gujarat Cooperative Milk Marketing Federation (GCMMF), a cooperative dairy giant, sells Amul and Sagar brands of dairy products through 500,000 unorganised retailers and 3,000 distributors. GCMMF clocked a turnover of US$ 1.05 billion during fiscal 2006 07 to become the first billion-dollar cooperative in India. Sources: Estimates of milk production, National Dairy Development Board website, http://www.nddb.org/, accessed on September 15, 2009 50

BUSINESS OPPORTUNITIES Attractive sectors chemicals and petrochemicals Chemicals and petrochemicals Gujarat contributed about 51 per cent to the national production of chemicals in 2006 07. State-wise share in production of selected major chemicals (2006 07) It is the highest contributor to the total national production of petrochemical products. Gujarat s contribution in the national production of the following is: Soda ash 100 per cent Salt 85 per cent *Other states include Andhra Pradesh, Assam, Chhattisgarh, Dadar & Nagar Haveli, Haryana, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh and Uttaranchal Polymers 56 per cent Ethylene 50 per cent Source: Chemicals & Petrochemicals, sector profile 2008 2009, Government of Gujarat 51

BUSINESS OPPORTUNITIES Attractive sectors chemicals and petrochemicals Chemicals and petrochemicals State-wise production of petrochemicals (2006 07) In 2006, the state had 3,720 factories manufacturing chemical products and employing more than 0.16 million people. Major companies present: Reliance Industries, Nirma, Lanxess ABS Ltd, Gujarat Alkalies and Chemicals Ltd (GACL), Gujarat State Fertilizer Company (GSFC), etc. Proposed development of a petroleum, chemicals and petrochemicals integrated region (PCPIR) at Dahej. *Other states include Andhra Pradesh, Assam, Chhattisgarh, Dadar & Nagar Haveli, Haryana, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh and Uttaranchal Source: Chemicals & Petrochemicals, sector profile 2008 2009, Government of Gujarat 52

BUSINESS OPPORTUNITIES Attractive sectors textiles and apparels Textiles and apparels In 2008 09, Gujarat was the highest exporter of cotton in India at 60 per cent. It was also the highest contributor of man-made fibre (31 per cent) and man-made filament yarn (38 per cent) in the country. The state contributed 12 per cent to national textile exports in that year. Over 40 per cent of the country s art-silk fabric is produced in Surat. Over 30 per cent of fabric manufactured by the organised sector is from Gujarat. Gujarat is the largest producer of denim in India (65 to 70 per cent) and the third-largest in the world. It has the highest number of state-owned looms for cotton and man-made fibre (6,888 as on March 31, 2006); second-highest number of privately-owned looms (11,963 as on March 31, 2006). Operations across the entire value chain. Source: Textiles & Apparel, sector profile 2008 2009, Government of Gujarat 53

BUSINESS OPPORTUNITIES Attractive sectors textiles and apparels Snapshot of textile-specific special economic zones (SEZs) and industrial parks in Gujarat Anjar Mundra Mehsana Gandhinagar Ahmedabad Legend Textile and apparel parks Textile and apparel SEZs Support R&D institutes and centres of excellence Jamnagar Vadodara Bharuch Surat Navsari Raymond Valsad 54

BUSINESS OPPORTUNITIES Attractive sectors engineering and auto (1/4) Engineering and auto The states engineering and auto sector contributes 8 per cent to India s total industrial production and over 9 per cent to the national engineering output. Share of Gujarat in national engineering sector output The state s engineering and auto sector has an average annual growth rate of 15 per cent. The sector comprises more than 600 medium and large sector units, and over 75,000 smallscale units. The state has 30 engineering product clusters. 55

BUSINESS OPPORTUNITIES Attractive sectors engineering and auto (2/4) Small-scale industry is a significant contributor to the national production of brass parts, foundry, forging and machine tools, oil engines and electric motors, submersible pumps and industrial valves and bearings. The brass parts cluster at Jamnagar has over 5,000 small units and meets the entire requirement for brass parts in India. The Kutch region in Gujarat is the third-largest steel hub in the world. General Motors has set up its automotive manufacturing facilities in Gujarat, providing a boost to the auto-ancillary industry. Share (%) of engineering sector in Gujarat s industry Factory (nos.) 29.03 Employment 23.58 Fixed capital investment 7.15 Value of output 10.1 Value added 12.72 Source: Engineering & Auto, sector profile 2008 2009, Government of Gujarat 56

BUSINESS OPPORTUNITIES Attractive sectors engineering and auto (3/4) Key engineering clusters Foundry and forgings Steel pipes and tubes Steel re-rolled products Brass parts Fabricated metal products Steel and aluminium furniture Electric motors Power driven pumps Textile machinery parts Chemical machinery parts Food processing machinery Machine tools Diesel engine and parts Ball and roller bearings Automobile and auto parts 57

BUSINESS OPPORTUNITIES Attractive sectors engineering and auto (4/4) Engineering and auto key strengths Leading players in Gujarat Largest producer of sponge iron Largest copper rod manufacturing facility Largest manufacturer of material handling equipment Largest producer of earth moving equipment Largest power transmission capacity plant Largest manufacturer of glass shells for TV tubes Essar Steel Hindalco Elecon Engineering Gujarat Apollo Kalpataru Power Transmissions Videocon International 58

BUSINESS OPPORTUNITIES Attractive sectors gems and jewellery Gems and jewellery Gujarat s presence in the gems and jewellery value chain Gujarat accounts for 72 per cent of the world s share of processed diamonds and 80 per cent of total diamonds processed in India. Contributes 90 per cent of total diamonds processed in India in 10,000 units in Surat. Eight out of 10 diamonds in the world are polished in Surat. Diamond Gold Platinum Silver and others Mining Processing Fabrication Consumption The state has the highest labour productivity in the jewellery sector in India. Established presence Not applicable in Gujarat Emerging centre/market 59

BUSINESS OPPORTUNITIES Attractive sectors gems and jewellery Gems and jewellery Leading players in Gujarat It is internationally renowned for the production of unique hand-made silver ornaments (85 per cent of total silver jewellery production of India). Renowned institutions such as the Indian Diamond Institute, Gujarat Hira Bourse, and the Gems and Jewellery Export Promotion Council provide skilled manpower for the industry. 60

BUSINESS OPPORTUNITIES Attractive sectors oil and gas Oil and gas Gujarat ranks first in the production of crude oil (onshore 55.10 per cent) and natural gas (onshore 32.3 per cent) in India. The state has the highest number of oil and gas fields, both onshore and offshore, in India (31.3 per cent). Location Jamnagar Dahej Hazira Vadodara Gandhar Activity RIL refinery third-largest in the world, Essar Refinery Petronet LNG s re-gasification terminal Shell and Total s LNG terminal IOC Refinery ONGC s Gas Processing Complex Nearly 36.6 per cent of India s installed refining capacity is in the state of Gujarat, which is the highest in India. Proximity to Middle East gas sources and an attractive northern market makes Gujarat a potential gas supply hub. 61

BUSINESS OPPORTUNITIES Attractive sectors oil and gas Oil and gas Leading players in Gujarat Oil and gas reserves are located at Ankleshwar, Mehsana, Tapti High, Hazira, Bharuch, Gandhar, Dahej, Jambusar, Palej, Kalol and isolated gas fields around Ahmedabad. Gujarat has a 2,200 km state-wide integrated gas grid. The state has two LNG terminals at Hazira and Dahej, and two more terminals are proposed to be set up at Pipavav and Mundra. Source: Oil & Gas, sector profile 2008 2009, Government of Gujarat 62

BUSINESS OPPORTUNITIES Attractive sectors pharma and biotech Pharmaceuticals and biotechnology Gujarat accounted for 45 per cent of the national pharmaceutical production in 2006 07. It is the first state in India to manufacture active pharmaceutical ingredients (APIs) and finished dosage forms. The state accounts for 90 per cent of intravenous sets manufactured in the country. It is home to more than 902 allopathic manufacturing units and 2,122 contract manufacturing units. Gujarat accounted for 22 per cent of India s pharmaceutical exports in 2006 07. It is home to the largest number of clinical research organisations in India and over 100 companies with WHO-compliant manufacturing units. Gujarat has a considerable presence in homoeopathic medicine with 7,500 practitioners, 216 government dispensaries and 15 colleges. 63

BUSINESS OPPORTUNITIES Attractive sectors pharma and biotech Key players across the value chain NCEs NDDS products Technology intensive drugs (cytotoxics, vaccines) Manufacturing and research services Commodity generics Active pharmaceutical ingredients Surendranagar Rajkot Junagadh Ahmedabad cluster Bharuch and Vapi/Valsad cluster Gandhinagar Ahmedabad Surat Baroda cluster Ankleshwar cluster Manufacturing organisation Academic institution R&D organisation 64

BUSINESS OPPORTUNITIES Gujarat offers business opportunities in the ports sector Port-led development The state has a vast hinterland comprising key northern states. It also has a large external trade potential given its vast coastline. In 2007 08, minor ports of Gujarat handled 20 per cent of the total cargo handled by Indian ports. The total port capacity of Gujarat grew at 46.6 per cent, from 135 MMT* in 2001 to 198 MMT in 2007 08. Source: Ports of Gujarat, sector profile 2008 2009, Government of Gujarat Gujarat: Strategic Location Main ports of Gujarat Mundra Okha Porbandar Kandla Navlakhi Jamnagar Sikka Pipavav Gujarat Dahej Hazira Magdalla * MMT = million metric tonnes 65

BUSINESS OPPORTUNITIES Gujarat offers business opportunities in the ports sector Port-led development Many upcoming ports being developed as captive ports for catering to specific companies. The state is undertaking fast-track clearance and establishment of ports through private participation. Increase in connectivity to non-major ports owing to the development of the Delhi-Mumbai Dedicated Freight Corridor. More than 4,800 ships and 1,000 sailing vessels visit the ports of Gujarat every year. Source: Ports of Gujarat, sector profile 2008 2009, Government of Gujarat 66

BUSINESS OPPORTUNITIES Large-scale infrastructure building for shipbuilding industry Shipbuilding Shipping Industry: Opportunities There are several shipyards present in Gujarat ABG Shipyard, Alcock Ashdown, Vipul Shipyard, etc. Infrastructure available for the development of the shipbuilding industry includes: Okha Mundra Availability of raw materials ship building plates and engines Bhavnagar Dahej Stillness of water and deep draft Proximity to ancillary industries Sufficient anchorage space Jafrabad Pipavav Ship building Marine ship building parks (probable stretches) Ship recycling Bunkering facility Sources: Gujarat Maritime Board data and industry sources 67

BUSINESS OPPORTUNITIES Large-scale infrastructure building for shipbuilding industry Shipbuilding New shipyards are being established in Pipavav and Hazira. New projects will be accommodated in a cluster of shipyards called Marine Shipbuilding Parks that will have common infrastructure and all ancillary facilities. A mega marine shipyard is proposed to be built at Dahej and at the Gulf of Kutch. 68

BUSINESS OPPORTUNITIES A rich heritage offers opportunities in tourism Tourism The state has a rich architectural and cultural heritage owing to the presence of Indus Valley civilisation sites such as Lothal, Harappa, etc. Purpose of tourist flow (2006 07) Several pilgrimage and historical places, wildlife sanctuaries, and beach and hill resorts are present. 2006 was celebrated as Tourism Year in Gujarat to promote it as a key tourist destination of India. Some of the initiatives undertaken by the government to promote tourism include the following: Development plan for six tourist destinations by the Pilgrimage Development Board of Gujarat Constitution of the Tourism Promotion Council Reduction in entertainment tax from 50 to 25 per cent from 2006 onwards 69

Number of Tourists (millions) BUSINESS OPPORTUNITIES A rich heritage offers opportunities in tourism Tourism Increase in tourism budget from US$ 21 million during 2008 09 to US$ 35 million during 2009 10 Gross tourist flow (2006 07) Policies on medical tourism, eco tourism and heritage tourism Introduction of courses in tourism and hospitality management Heritage conservation at Adalaj, Vadnagar and Champaner Source: www.customsgujarat.nic.in 70

BUSINESS OPPORTUNITIES The state has a varied export profile Gujarat contributes 19.2 per cent to India s total exports of merchandised goods and services. Increase in exports from Gujarat (US$ bn) During 2006 07, exports and imports were recorded at US$ 126,362 million and US$ 185,749 million, respectively. Exports include items from sectors such as textiles, petroleum, chemicals, pharmaceuticals, engineering, and gems and jewellery. Exports from Kandla port amounted to 39.9 lakh tonnes in 2006 07. Source: Industries Commissionerate, GoG Sector-wise exports (US$ bn) Export items from intermediate and minor ports include naphtha, petrol, clinker, cement, oil cakes, bauxite, para-xylene, salt, soda ash, food grain, cement clinker, ethylene, etc. 71 Source: Industries Commissionerate, GoG

BUSINESS OPPORTUNITIES Gujarat in the forefront in terms of attracting investments The Government of India ranks Gujarat first amongst all states in the country in terms of the total value of Industrial Entrepreneurs Memorandum (IEMs) 1,424 implemented in the last 17 years between 1991 and 2008. VGGIS Investments As per the Reserve Bank of India s (RBI) 2008 report, Gujarat continues to hold the first rank with the proposed investment of Rs 62, 442 crore from 100 projects, accounting for 22 per cent of total investment intentions. Source: Investments, Vibrant Gujarat website, www.vibrantgujarat.com, accessed on September 15, 2009 72 Vibrant Gujarat 2009: Key Investments Sector MoUs Investment (US$ bn) Manufacturing 566 50.84 Infrastructure 194 105.51 Investment regions 101 42.61 Urban development 261 21.97 Social services 145 6.53 Tourism 97 9 Financial services + environment 47 15.67 MSME 7252 1.48

BUSINESS OPPORTUNITIES Gujarat in the forefront in terms of attracting investments With a share of 12.4 per cent ( US$ 4,045.25 million), Gujarat ranks second in the country in terms of FDI inflow, the first being Maharashtra. Vibrant Gujarat Global Investors Summit (VGGIS) is a biennial networking event organised with the aim of showcasing Gujarat s strengths at a global forum. Source: Investments, Vibrant Gujarat website, www.vibrantgujarat.com, accessed on September 15, 2009 73

BUSINESS OPPORTUNITIES Key players doing business in Gujarat (1/9) Company Reliance Industries Ltd Adani Group Business description India s largest and only private sector company to feature in the Fortune Global 500 list of World s Largest Corporations Annual revenues of over US$ 34 billion (as of March 31, 2008) Three manufacturing facilities in Gujarat at Naroda, Jamnagar and Hazira Largest grassroot refinery in the world at Jamnagar Product lines include synthetic textiles, fabrics, fibre intermediates, plastics, polyester, chemicals and petrochemicals Established in 1988 Largest trading house in India leading trader in coal, wheat, castor oil, petroleum, business process outsourcing (BPO), power trading, iron-ore and pulses Involved in development of Mundra port second port to be privatised in Gujarat Developed natural gas distribution network Established India s largest edible oil refinery in the state 74

BUSINESS OPPORTUNITIES Key players doing business in Gujarat (2/9) Company Essar Group Aditya Birla (AB) Group Business description Diversified business group with enterprise value over US$ 14 billion in 2008 09 Business portfolio includes steel, energy, power, communication, ports, shipping and logistics, and construction Operations in Mumbai, Gujarat (Ahmedabad, Hazira, Vadinar), Vishakhapatnam Has operations in over 20 countries across five continents Essar Group has the world's largest gas-based sponge iron plant India s largest exporter of flat steel products with a capacity of 14 MTPA (million tonnes per annum) steel plants in Gujarat, Andhra Pradesh and Chattisgarh and one proposed in Orissa Essar Steel is the largest steel producer in western India, with a capacity of 10 MTPA at Hazira, Gujarat A US$ 29.2 billion corporation, operating in 25 countries and focussing on key sectors such as aluminium, copper, cement, carbon black, textiles, fertilisers, chemicals, mining, software, BPO, financial services, telecom and retail Hindalco, a Fortune 500 company of the AB Group, is one of the world s largest aluminium rolling companies Fourth-largest producer of insulators in the world World leader in viscose staple fibre 10 manufacturing facilities located across Gujarat 75

BUSINESS OPPORTUNITIES Key players doing business in Gujarat (3/9) Company ABG Shipyard Torrent Group Business description Key business activities include ship building and ship repairing India s largest private sector shipyard (Magdalla-Surat), proposed shipyard at Dahej Constructed and delivered 104 specialised vessels interceptor boats, self-loading and discharging bulk cement carriers, split barges, newsprint carriers and offshore supply vessels First Indian company to export vessels to Norway First to produce diesel electric dynamic ships and pollution control vessels Received Highest Exporter awards from the Engineering Export Promotion Council (EEPC) since 2005 US$ 714 million diversified conglomerate with a strong presence in power and pharmaceuticals Group companies include Torrent Pharmaceuticals Ltd, Torrent Power Ltd and Torrent Cable Ltd Torrent Power distributes over seven billion units of power annually to Ahmedabad, Gandhinagar and Surat Torrent Pharma has a manufacturing plant at Indrad (Gujarat), which manufactures formulations and bulk drugs 76

BUSINESS OPPORTUNITIES Key players doing business in Gujarat (4/9) Company Zydus Cadila Quintiles India Business description India s leading pharma companies with sales of US$ 629 million in 2008 09 Product line includes formulations, APIs, diagnostics, health and diet foods, skin care and animal healthcare products Exports formulations and APIs to over 43 countries Focus areas for exports include cardiovascular, gastrointestinal and pain management Production units at Ahmedabad, Vadodara and Ankleshwar for manufacturing tablets, injectables, capsules, liquids and APIs Leading global clinical research organisation (CRO), first global CRO to be established in India Only CRO in India to be identified as commercial R&D company by Department of Scientific and Industrial Research Conducted over 175 clinical studies involving over 1,300 sites and 35,000 patients 77

BUSINESS OPPORTUNITIES Key players doing business in Gujarat (5/9) Company Nirma Welspun Business description Over 350,400 distributors, over 1 million retailers and 300 million consumers Product line includes cosmetics, soaps, detergents and salt Largest detergent manufacturer in India Presence across 50 countries Business activities include home textiles, saw pipes and steel, specialty texturised polyester yarn, bathrobes, retail Welspun-Rohren among the largest saw pipe manufacturers in Asia In 2009, Welspun India Ltd demerged into two companies Welspun Global Brands Ltd (marketing, sales, distribution) and Welspun Investments Ltd 78

BUSINESS OPPORTUNITIES Key players doing business in Gujarat (6/9) Company Business description Amul Anand Milk Union Limited (AMUL) was established in 1956 Market leader in butter, whole milk, cheese, ice cream, dairy whitener, condensed milk, saturated fats and long-life milk Daily average collection of 8.4 million litres of milk from 13,328 village societies Arvind Mills One of the top three producers of denim in the world and largest producer in Asia Product line includes production of fabrics (denims, shirtings, khakis and knitwear) and garments Asia s first fabric manufacturing unit to receive an ISO 14001 certification Ashima Group One of India s leading 100 per cent cotton fabric manufacturers Over two-thirds of its production of 60 million metres of woven and 2,800 tonnes of circular knitted cotton fabric is exported to over 45 countries Products include denims, shirtings, knitted fabrics and garments First textile company to get certified for Integrated Quality and Environmental Management System ISO 9001:2000 and ISO 14001:2004 79

BUSINESS OPPORTUNITIES Key players doing business in Gujarat (7/9) Company Rasna Business description Holds 93 per cent market share in Indian soft drink concentrate market 82 per cent of in-house consumption of soft drink market Wide range of products in processed foods category Bombardier Transportation India Presence in India since 35 years, headquartered in Canada Business activities include rail transportation equipment, systems and services, regional and business aircraft; leading supplier of motor vehicles worldwide Among the first private companies to build rail vehicles in India Production facility at Vadodara Matsushita Largest Japanese electronics producer Products include audiovisual and information/communication equipment, home appliances Among the first companies to establish a business unit in Gujarat in 1972 through a joint venture with Indian company Lakhanpal Manufacturing unit at Vadodara where it manufactures dry cell batteries 80

BUSINESS OPPORTUNITIES Key players doing business in Gujarat (8/9) Company McCain Foods Alstom Business description Privately-owned, multinational leader in the frozen food industry with a revenue of US$ 6 billion in 2004 World's largest producer of french fries and potato specialties food products include appetizers, pizzas, vegetables, desserts and other frozen foods Over 55 production facilities spread across six continents, supported by over 20,000 employees Aims to promote contract farming and buy potatoes from over 100 farmers spread over Anand, Borsad, Palanpur and Deesa in Gujarat 2,000 acres of drip irrigation, introduced by McCain, present in Gujarat for potato farming Manufacturing facility at Mehsana The company's activities in India include power generation, power service and rail transport Headquartered in France and with a presence in 70 countries, employing 80,000 people worldwide Alstom Projects India Ltd is headquartered in New Delhi and has facilities in Durgapur (utility boilers manufacturing facility), Coimbatore (transport manufacturing facility), Bangalore (transport sector software development centre), Kolkata (power service and environmental control system), Shahabad (boiler and foundry products manufacturing facility) and Vadodara (hydro business manufacturing facility) Contract with Gujarat State Electricity Corporation Ltd (GSECL) for construction of the first Alstom GT26-based combined cycle power plant in India, as an extension of the existing power plant at Utran (Surat) 81