Interactive Meet on Resurgent Gujarat
January 8, 2002, New Delhi

Speech of Shri Narendra Modi, Hon'ble Chief Minister, Gujarat

My colleague Shri Sureshchandra Mehta, Hon'ble Minister of Industry and Tourism, President, Federation of Indian Chamber of Commerce and Industry, President, Gujarat Chambers of Commerce and Industry, Shri G Subba Rao, Chief Secretary, Shri L Mansingh, Principal Secretary, Industries, Consul Generals and their representatives, Senior Officers, Captains of industries, invitees, ladies and gentlemen.

I am extremely happy to meet the captains of industries in this august gathering here. Last month, I had an opportunity to address captains of industries at Mumbai in a similar programme organized to interact on the major international event "Resurgent Gujarat - Business Partnership Meet 2002" planned at Ahmedabad between 8 to10 February 2002 by the State Government and supported by FICCI, Gujarat Chamber of Commerce and Ministry of External Affairs.

You are all aware that Gujarat has faced devastated earthquake last year in January. Because of the support from international agencies, industry and collective efforts of the leaders of the society, NGOs and the Government, it has been possible to carry out rehabilitation work at an accelerated pace. I am happy to inform you that, as of now, the business is back to normal in most of the quake-affected towns and villages. The construction of houses is taking place at full speed, the Industries are being rebuilt, the shops are being repaired and restarted. The people of Gujarat are thinking in terms of achieving still greater heights of business and industry.

Industries Commissioner made an elaborate presentation before you on investment scenario and opportunities in Gujarat. Shri Sureshchandra Mehta, Hon'ble Minister of Industry and Tourism has further substantiated investment environment in Gujarat and presented various aspects before you. I am therefore, not elaborating on the same aspects.

I would, however, like to emphasize that Kutch, the most affected district by earthquake, is now poised for economic growth. Government of India as well as the State Government have undertaken various measures to boost up economic activities. At a time when there is no Sales Tax exemption permitted in any part of the country except in North-East, this is the only district in the western part of the country, which enjoys both Excise exemption and Sales Tax benefits. This is a special case made in view of the damage caused to the district by the earthquake. It is, therefore, once in a lifetime opportunity for the industry to take benefit of these schemes and invest in this district. The location of Kutch district, otherwise, also offers advantage because of well developed infrastructure in terms of Port, Road, Rail and Air transportation network, communications and social infrastructure as well. The district is endowed with good natural resources especially minerals like Limestone, Lignite and Bauxite, besides marine resources namely salt and aquaculture. I therefore, appeal to the industrialists here to look at your investment decisions and select a project to be located in Kutch.

I am, of-course, aware that, the industry in the country as a whole is passing through a difficult phase. The economic growth has been slowed down. The index of industrial production grew by just 2.3% during first six months of 2001-02, as compared with 5.7% growth recorded during the same period of the previous year. The country's export has also declined. The world wide sluggish economic growth as well as poor world trade is responsible for this performance. There is however, a silver-lining. The country's export performance witnessed turn around and the export during November 2001 registered 3.29% growth resulting into 0.5% growth in export since April - November 2001 over previous year during the same period. I wish there will be further improvement and industrial growth will look upward in coming months.

Well friends, although I am in this job of being the CM, which, according to me, also means a Common Man, I have tried to understand what is ailing the industry in Gujarat. And, I would like to share with you my thoughts on this so that you can tell me whether our path is correct or not.

In the global environment, the most important thing for an industry is to stand in competition, not only against the importer but also against other units in the domestic industry. The competitiveness of an industry is influenced by two different factors. There are factors external to an industrial unit, such as the energy cost, immobility in labour policy, transition cost like Stamp Duty, Sales Tax rates, etc., which increases the cost of production of various commodities. And, there are internal factors, such as lack of modern technology, lack of finance and lack of managerial capability, etc., which can also cause low standards of productivity. Government of Gujarat wants to seriously address these issues and will like to adopt following strategies:I am aware of the fact that the reforms in the energy sector in Gujarat have become overdue. We want to seriously attend to this work and bring about structural reforms in such a way that the losses of the State Electricity Board are not loaded on to the industrial units. We want to create a more efficient, balanced and sustainable system.
As far as tax regime is concerned, here again, our approach would be to reduce the overall rates while improving the tax compliance. We are also going to remove the cascading effect of Sales Tax in the implementation of VAT regime, which we hope to bring about by April 2002.

As far as the Labour legislation is concerned, it is mostly falling in the purview of Government of India. However, we are going to suggest to the Government of India certain simple modifications in the Act and the Rules, which could make life simpler for most industrial units.

In order to upgrade the quality of products and modernize technology in the industry, Government of Gujarat is going to assist the small-scale industry by way of subsidies for upgradation to ISO 9000 standards. In addition, we would be taking up the work of 'cluster development' for small-scale industries in which all common facilities like common processing, testing, training of workers, etc., would be made available.

In order to remove the infrastructural bottlenecks, the State has already done a lot. Gujarat is already known as a pioneer in Port privatization as well as in creating institutional framework for privatization of all other sectors of infrastructure. However, we would still like to address this issue little more seriously. At the same time, if need be, we may think of making investment out of the State budget in some critical infrastructure links so that the industry can flourish in Gujarat.

Simultaneously, we would also like to promote the emerging areas of India's competitiveness in the world. These are IT, which is Information Technology and BT, which is Bio-technology. I tend to refer to IT as "India Tomorrow" and BT as "Bharat Tomorrow". These two are going to form the basis of tomorrow's prosperity in urban and rural areas respectively and that is why, I call them "India Tomorrow" and "Bharat Tomorrow".

Gujarat has already placed in position a futuristic Information Technology Policy. A separate Department of Information Technology is being set up. Gujarat Informatics Ltd. (GIL) is working as a Nodal Agency to promote IT development in the State. Gujarat has embarked upon creating infrastructure facilities needed for setting up and expanding IT projects which include Integrated Data Communication Network to provide services of Internet operation, Electronic Data Interchange Services, value added network services etc. A Software Technology Park in Gandhinagar and GNFC Info Tower in Ahmedabad are already operational. An Info-city for IT projects is likely to be commissioned shortly in Gandhinagar. An Institute for Information Technology (DA-IICT) has also become operational at Gandhinagar. Gujarat offers tremendous potential in IT sector.

Bio-technology is another area, which has been identified as a high potential sector. Gujarat has witnessed tremendous development in pharmaceutical sector, having over 45% share in drugs and formulation products in the country. The State Government has taken initiatives to set up Biotechnology Institution to develop requisite manpower as also provide research facilities to small and medium industrial units to go into biotechnology field. A Biotechnology Park along with Research Institution is being set up in Savli Industrial Estate near Baroda. Besides, an advance study institute for Biotechnology and Information Technology is being set up in collaboration with Nottingham University, UK by a NRI Trust.

Agro and food processing industry is an important sector identified by the State Government as thrust industry having potential for development. This is the sector, which generates large employment potential with less investment. Gujarat has already exploited commercial crops like oil seeds, cotton, tobacco and sugar. There is however, potential for value addition projects and also for processing of fruits and vegetables. The State Government will identify Agri Export Zones and support value addition projects. A separate policy has been put in place to promote agro and food processing industry. We would welcome suggestions for any modifications if required.

One of the "thrust" areas for the Government is going to be the Readymade Garment sector. Gujarat is the major source of cotton and man-made fabric for all the readymade garment units, which are located in the south as well as in the north of India. Very little of Gujarat's fabric is converted into garments in Gujarat itself. We cannot overlook the fact that readymade garment is a highly employment intensive industry in which the investment per job required is as little as Rs.50,000/- on an average. Secondly, this is one industry, which could be multiplied in the decentralized sector, provided common facilities are made available at a central location in Gujarat. My Government is, therefore, working in the direction of creating two large sized Garment Parks - one in Ahmedabad and the other in Surat - which will fulfill this felt-need of the cities. We would like to market these Parks with the help of private sector so that some of the leading brand makers could locate their units in these Parks.
I have outlined some of the steps, which my Government will take urgently. However, you may have many other suggestions to make and I would appreciate if you can give your suggestions during the interaction.

The State Government is committed to continue its efforts in improving investment environment and to attract further investment. The event "Re-surgent Gujarat - Business Partnership Meet 2002" is an attempt in this direction in which industry leaders not only from the country but also from all over the world are expected to participate and will have exchanges and meetings.

In this meet, I find the presence of a large number of Consul Generals and Trade Representatives of various countries. It is my earnest request to them that they may like to organize visit of delegations from their respective countries to Gujarat to participate in this event in February 2002. They may also like to send Project Profiles to the Industries Associations of their respective countries in order to facilitate matchmaking during the event.

Finally, I welcome you all who are present here to join us during the event on 8 to10 February, 2002 at Ahmedabad.

Thank you.