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  • 1. Explore..Envision..Invest Gujarat: The Business State Of India Gujarat: Destination of Choice
  • 2. An Investor traveling to India today…
      • … leaves with the following lasting memories!
    And of course the Taj Mahal! Software/BPO Units Shopping Malls Efficient factories Bollywood
    • One of the fastest growing world economies
    • Reasonably proactive
    • Opening up of sectors for investment
    • Promising consumer markets
    • Significant investment in infrastructure creation for industry
  • 3. India’s Competitive Advantage vis-à-vis Other Nations
    • Tenth most Industrialised country and the fourth largest economy
    • Known strength in software and manufacturing
    • GDP at (PPP) USD 3.61 trillion in 2005-06
    • Exports USD 100 billion in 2005-06
    • Imports USD 113.1 billion in 2005-06
    • FDI of USD 7.5 billion in 2005-06
    • Growth momentum in economy. GDP growth in 2005-06 is estimated at 8.4% compared to 7.5% in 2004-05
    • Strong Capital Market, Sensex crossed 11,000 mark.
    India- Fact File Source: World Competitiveness Yearbook 2005; Britannica Yearbook, CIA, World factbook, May 2006 , BCG ; Literature search; E&Y analysis
  • 4.
    • While growth in the G-6, Brazil, Russia and China is expected to slow down significantly over the next 50 years, India’s growth rate is likely to remain above 5% throughout that period
    • India’s GDP is likely to outstrip Japan’s in 2032
    • India has the potential to raise its per capita income 35 times the current levels by 2050
    Source: GS BRICSs Model Projections The BRICS verdict on the Indian Economy China India Russia Brazil BRICs 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 UK Germany Japan US Italy France Germany Japan Italy France Germany Italy France Germany G6 * dots indicate when BRICs US$GDP exceeds US$GDP in the G6 Overtaking the G6: When BRICs’ USD GDP will exceed G6
  • 5. Backed by strong fundamentals Indian economy in a resilient mode in terms of GDP growth… Positioned as the fourth largest economy in terms of purchasing power parity... … and will have the largest GDP grwoth rate … along with rising per capita GDP Consistently growing GDP (%) 1 Among the top 5 economies (PPP) 2005 2 Source: CMIE and Tata Statistical Outline of India 2000 2005 2010 2015 2020 One of the fastest growing economies 3 Per Capita GDP to improve by 7% through 2020 4 Source: Goldman Sachs; Dreaming with BRIC's: The path to 2050 Source: Industry sources, Economic Survey 5 year GDP growth rates 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 2000-2005 2005-2010 2010-2015 2015-2020 India China Brazil Russia GDP Per Capita (US$) 5 year avg. growth 3.7% 7.4% 7.5% 468 559 804 1149
  • 6. Racing the Dragon… India inches ahead of China India's growth model is termed as more sustainable than China… as it helps develop more efficient corporates, healthier banks, more robust service industries ... … with a strong banking sector and the benefit of high return on assets… … along with low NPL ratios China and India: Bank return on assets 7 India China India China 2000 2001 2002 2003 2004 China and India: NPL Ratios 8 % of total loans 2000 2001 2002 Democracy: India’s Competitive Advantage 5 Source: World Competitiveness Report, WEF (Rank out of 102 countries) Ease of Doing Business 6 Source: World Competitiveness Report, IMD, 2005 Source: China & India, Deutsche Bank Research Source: China & India, Deutsche Bank Research India ranks ahead of China 99 India China Freedom of Press Judicial Independence Property Rights 26 62 25 64 43 (Higher rank depicts poorer laws in the country)
  • 7. India leads the pack Source: AT Kearney's 2004 Offshore Location Attractiveness Index* Source: IMD Yearbook, 2004 9 Racing the Dragon… India inches ahead of China 5.4 5.4 5.4 5.5 5.4 5.5 5.5 5.6 5.6 7.3 India has been rated as the most attractive investment destination with a cumulative score of 7.3 on a scale of 10 based on key parameters such as financial structure, business environment and people skill & availability Denmark India Singapore Philippines USA Germany Malaysia Hong Kong Russia Turkey South Korea Thailand Mexico Brazil China High Availability of Skilled labor 10
  • 8. India’s Performance + - (1) Labour productivity for India highest in IT services vis-a-vis competing nations Note: Russia and China included as they will compete in specific areas despite aggregate shortages; Israel and Ireland not included because they are not expected to be significant competitors due to lack of manpower Source: World Competitiveness Yearbook 2001; Britannica Yearbook; BCG analysis Very Favourable Unfavourable India’s rise as a Strategic power.. Parameter India Indonesia China Mexico Philippines Russia Availability of workforce-quantity Availability of skilled workforce Cost of labour English language skills Cost and quality of telecom infrastructure Labour Productivity (PPP) 1 Perceived stability of government policies Perceived Operational Risk Risk of personal harm Risk of business disruption
  • 9. Advantage India… Rated among the most favourite investment destinations (UNCTAD, JETRO, JBIC, Deutsche Bank, EIU, etc.) Cumulative assessment of decision factors places India as a superior destination for investments One of the lowest cost destination in the world Largest English speaking nation in the world One of the oldest stock exchanges in entire Asia Superb banking systems and well developed financial systems. Largest Democracy in the world 2nd largest pool of scientists and engineers in the World Harmonized Intellectual property rights laws Operates under English common law and based on English style justice system Advantage India Rated as the second best destination for manufacturing projects and the most attractive investment destination-I BM Best technology licensing regime - UNCTAD’s Global Competitiveness Report, 2003 India has been rated as the most attractive investment destination for offshoring
  • 10. # !@ Introducing Gujarat: Land of Opportunities
  • 11. Introducing Gujarat: Fast Facts Economic Snapshot 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%. Source: Socio-Economic Review, Gujarat State 2005-06 Gross State Domestic Product (GSDP) USD 38.4 Billion Manufacturing Sector USD 7.1 Billion Fixed Capital Investment USD 18.4 Billion Industrial Production USD 44.4 Billion Exports 14% of India Average growth rate 9% per annum Industrial growth rate 15% per annum Population Over 50 million (5% of India) Geographical Area 1,96,000 sq. km (6.19% of India) Business language English Per Capita Income (at current prices) USD 630 (National Average USD 516.5) Literacy Rate 69.9 % Inflation rate (WPI) 9.3 % Urbanisation 37.36% Per Capita Power Consumption 1,175 units (National Average: 592) Cellular Connection 41 per 1000 persons (National Average: 26) Motor Vehicles 118 per 1000 persons (National Average: 57)
  • 12. Gujarat: The Growth Engine of India Gujarat: Sectoral Profile Contributing to India’s economy across all major sectors… Source: Socio-Economic Review, Gujarat State 2005-06 Gujarat: Share in Production Sector Share in Production (in %) Gujarat India Petroleum Products 34.0 38.1 Chemicals & Pharma 27.3 29.8 Engineering Industries 9.3 7.0 Food Processing 8.7 9.2 Textiles & Apparel 6.9 14.9 Metallurgical Ind. 6.2 11.1 Mineral Based Industries 2.4 12.0 Rubber & Plastic Prod. 1.9 9.6 Paper Production 1.1 10.5
  • 13. Gujarat: Mosaic of business environments full of possibilities Gujarat: Industry Profile Gujarat offers a unique combination of a strategic geographic location, state-of-the-art infrastructure, multilingual workforce, and concentration of corporate and financial resources, all in a world-class pro-business environment. Source: Socio-Economic Review, Gujarat State 2005-06 Gujarat tops in Economic Freedom Index (Source: Rajiv Gandhi Institute for Contemporary Studies) Investment Environment is the best in Gujarat among big states of India and has recorded the fastest economic growth among all states (Source: India Today’s exclusive report “India’s Best & Worst States”, 15th August, 2005) Manufacturing Sector(GDP) USD 7.4billion Share in NSDP 31 % Small Scale Sector Units Over 3,10,000 Medium & Large Ind. Units Over 2,200 Number of Factories 12795 (9.9% in India) Workers engaged 0.73 million (9.3% of India) Fixed Capital Investment 18.2% of India Industrial Production USD 44.4 billion (16.1% share of India ) Value Addition USD 6.37 billion (13.2% share of India)
  • 14. … Thrust area for the Gujarat Government … Witnessing Abundance of Opportunity Investment promotion is viewed as a major growth engine of the State Economy Booming State Economy, Improved Living conditions, Policy & Taxation reforms, Rise in Gross Capital Formation, Low penetration levels, High export potential Gujarat: Focused & Progressive… Per Capita Income at Constant Prices : Gujarat vs India Per Capita Income at Constant Prices Gujarat’s Development vs Non Development Expenditure … Increasing Development Activities Urban, social and industrial development is being promoted in totality
    • Urban – provision of water & power supply, road networking, waste management, usage of CNG, tele-density
    • Social – Educational institutions (Literacy), public redressal systems through IT
    • Industrial – 21 SEZs and several Industrial estates & clusters are driving the industrial development thus furthering Gujarat’s cause as a manufacturing hub
  • 15. State-wise Comparison of Investment Proposals through Industrial Entrepreneurs Memoranda (1996-2006) (Source: NIC, GoI), *As on 31/07/06) State wise Value of investments (Source: NIC, GoI), *As on 31/10/05) Annual Average in %age Major Statewise Growth Rate Targets For 10 th Five Year Plan Gujarat: Marching ahead of other states in India.. Gujarat has a high implementation ratio of 47.33% of industrial proposals in terms of investment
    • As on 31st July 2006, Gujarat accounts for the highest investment in India. 16.13% - INR 2,29,928 crores among 8126 projects.
    • In last five years (2001-2006), the state has attracted highest investment among all states in India – Rs.1,82,998 crores
    • Implementation of projects (realisation) is as high as 50% in Gujarat.
  • 16.
    • There are 11 airports under the operational jurisdiction of Airports Authority of India (AAI)
      • International airport : Ahmedabad
      • Domestic airports : Vadodara, Surat, Jamnagar, Rajkot, Bhavnagar, Porbandar, Bhuj, Keshod and Deesa, Ahmedabad
    • Apart from AAI airports there are six airstrips in various stages of development under the State Government
    Airport Port
    • Gujarat has 41 ports along a coastline of 1600 Kms ; 11 are intermediate ports and 29 are minor ports
    • Kandla is a major port controlled by the Central Government of India with traffic handle of 45.9 MMTS
    • Wide and fastest access to hinterland which accelerates speed to market.
    Rail and Road
    • Electricity Generation Capacity 9288MW (2005)
    • SEZ led development 21 SEZ
    • Focused product clusters 83
    • Longest Coastline in India 1600 Kms
    • Larger number of ports 41
    • Number of Airports 11
    Gujarat: A preferred destination for investment Gujarat Ports handled a cargo traffic of 103.9 million metric tonnes in 2005-06 Gujarat is well connected to major cities in the USA, EU, Asia and other Indian metropolitan cities
    • State-of-the-art road infrastructure such as India’s first National Expressway from Ahmedabad to Vadodara .
    • Total road length is 73,619 Kms
    • Target road length is 1,14,866 Kms
    • Total length of railways in Gujarat is 5186 Kms (8.20% of India)
  • 17. Status of Power Sector in Gujarat Source: Power Supply Demand Projections (16th EPS Report)
    • High quality of power, both in terms of uninterrupted supplies and also in terms maintaining frequency, without fluctuations
    • Per capita power consumption is 1,175 units whereas India’s average is 592 units
    • Rich availability of natural gas ( 34 MMCD ) and Lignite ( 1,072 MMT )
    • HT gets 24x7 power supply
    • No power cuts in GIDC industrial estates and other industrial estates
    • No power cuts in town and cities
    … Power Infrastructure
    • Ahmedabad has the lowest labour costs amongst the major cities in India, with a labour costs less than 50% of those in Delhi and 40% below those in Pune.
    • Least mandays lost due to industrial unrest – 0.94 % of the country as against 16.2% industrial production
    • Major amendments in labor legislations for SEZs (only state in the country to allow exit options to investors in terms of termination of labours and closure of units in SEZs)
    • Filing of Consolidated Annual Labor Returns
    … Labour Advantage Gujarat: A preferred destination for investment Labour costs in the leading cities in India Source: Jones Lang Salle 49 57 63 69 80 91 100
  • 18.
    • Good educational facilities and R&D Institutions
    • 39 Engineering Colleges offering undergraduate courses having 12,500 seats
    • 49 Polytechnics offering diploma courses in Engineering having 16,500 seats
    • Centers of Excellence such as NID, NIFT, IIM, PERD
    … Availability of Manpower Gujarat: A preferred destination for investment The availability of well-developed infrastructure in terms of quality roads, railway network, air connectivity, effectively lubricates the vibrant economic activities of the State
    • One of the largest gas producing region in the country
    • Two LNG Terminals at Dahej & Hazira
    • Only state to have an integrated gas grid
    • Total gas grid project - 2200 km
    … Gas Infrastructure Gas Grid Development
    • One of the lowest cost of living amongst all the States
    • Relatively less congested and polluted, offering better standards of living to its inhabitants.
    • State offers a greater road length, a lower Consumer Price Index and lower commercial real estate rates in comparison to the other States
    … Social Infrastructure
  • 19. The Government of Gujarat has devised an investor friendly Industrial Policy, which is aimed at achieving global competitiveness. Industrial Policy Development of thrust industries Human resource development Labour law reforms Cluster development – SME sector Provide Information & facilitation Single window clearance State of the art Infrastructure Environment protection Regional development Key Initiatives Eleven different investment schemes have been introduced to promote investment in the State Government’s commitment to Industrial Development
  • 20. Special Economic Zones …Driving Industrial Growth in Gujarat
    • Multi Product SEZs at Kandla, Surat, Mundra, Dahej, Dholera, Jamnagar
    • Sector Specific Engineering SEZs at Hazira, Ahmedabad
    With 21 SEZs, Gujarat has one of the highest number of SEZs in India For SEZ Units
    • Income Tax Incentives
    • 100% tax holiday for a period of any 10 consecutive years out of 15 years beginning from the year in which the SEZ is notified
    • Exempt from dividend distribution tax
    • Tax exempt on Interest of long term finance
    • Long-term capital gains arising on transfer of shares in developer company tax exempt
    • No minimum alternate tax (MAT)
    For Developers of SEZ s
    • Income Tax Incentives
    • 10 year corporate tax holiday on export profit – 100% for initial 5 years and 50% for the next 5 years
    • No MAT
    Common Incentives
    • Indirect Tax Incentives
    • Nil customs duty
    • Nil excise duty
    • Exemption from central sales tax
    • Exemption from service tax
    • Exemption from securities transaction tax
    • Exemption from tax on sale of electricity for self generated and purchased power
    • Other Benefits
    • Exemption electricity duty
    • Duty free procurement of capital goods (including second hand capital goods), raw materials and consumable spares from domestic market
    • Full freedom for sub contracting
    • Facility to realize and repatriate export proceeds within 12 months
    • Facility to retain 100% foreign exchange receipts in the export earners foreign currency account
    • Other Benefits
    • Full freedom in allocation of developed plots to approved SEZ units on purely commercial basis
    • Full authority to provide services like water, electricity, security, restaurants and recreation centres on commercial lines
    • No net foreign exchange earning requirement imposed
    Only state in India to provide exit options to Investors in terms of termination of labour and closure of units in SEZs Source: Ministry of Commerce and Industry, Department of Commerce
  • 21. Global Firms lending credence to the Gujarat Story
    • General Motors (Halol)
    • GE Plastics (Vadodara)
    • EI Du Pont (Vadodara)
    • ABB (Vadodara)
    • Shell (Surat)
    • British Gas (Surat)
    • Cairn Energy (Surat)
    • P&O (Mundra)
    • Maersk (Pipavav)
    • Wyeth (Atul, Valsad)
    • Sanofi Aventis (Ak’lwar)
    • Pharmacia (Ankleshwar)
    • Perstrop (Vapi)
    • Ciba Specialty (Ankleshwar)
    • Uber (Vapi)
    • Huber (Jhagadia)
    • Gujarat Guardian (Valia)
    • BASF (Dahej)
    • Bayer Cropscience (Ankleshwar)
    • Cheminova (Panoli)
    • Lanxess ABS (Vadodara)
    Automobiles Engineering Plastics Engineering Plastics, Agro Chemicals Electricals Gas Gas Gas Container Port Management Container Port Management Pharmaceuticals Pharmaceuticals Pharmaceuticals Pharmaceuticals Dyes Inks Fine Silica Float Glass Polystyrene Agro Chemicals Agro Chemicals Engineering Plastics
  • 22. Thriving Industrial Estates Providing the industry with ready to use and integrated facilities … Identified Plotted land, 24 hour power and water supply, water treatment plants, waste management centers, effluent disposal plants, environment protection facilities and much more… Cluster Details Panoli Vilayat Vaghodia Halol Dahod – II (Kharedi) Land Area Available & Allotment Price 150 hectares INR 300 per m 2 950 hectares INR 250 per m 2 45 hectares INR 100 per m 2 50 hectares INR 120 per m 2 120 hectares INR 170 per m 2 Power Supply Sub – Station 220/66 KVA Available – Yes Unit Price – INR 5 Sub – Station 220/66 KVA Available – Yes Unit Price – INR 5 Sub – Station 66 KVA Available – Yes Unit Price – INR 5 Sub – Station 66/11 KVA Available – Yes Unit Price – INR 5 Sub – Station 66/11 KVA Available – Yes Unit Price – INR 5 Water Supply Capacity 36 MLD Rate INR 11.90 KL Source – Narmada River Capacity 36 MLD Rate – NIL Source – directed to Dahej Capacity 4 MLD Rate INR 6.75 / KL Source – Bore Water Capacity 1.45 MLD Rate INR 8 / KL Source – Bore Water No Water Supply Scheme Availability of Gas Distributor Gujarat Gas Co ltd Estimated Price INR 9/9.50 per SCM Distributor Gujarat Gas Co ltd Estimated Price INR 9/9.50 per SCM Distributor G.A.I.L Estimated Price INR 9/9.50 per SCM Not Available Not Available
  • 23. Promising Future for your investments Government of Gujarat is actively promoting business demand driven economic development which further aims to improve each of the factors relevant to business decision makers Source: E&Y Analysis Value Proposition Gujarat’s Position (2006) Discussion Lower Cost Gujarat has one of the lowest labour costs Talent Pool Gujarat dominates the talent pool needed to support the industries Quality of Talent Gujarat’s talent pool is capable of meeting global standards Delivery Capabilities ITO helped develop delivery model and vendor base to support industry Supply Base Gujarat has a vibrant and expanding supply base to support industry Local Market Gujarat is one of the fastest growing market Time to Market Gujarat’s geographic position offers the possibility of 24-hour cycle Growing Capacity Gujarat offers an economic of scale for capacity Increasing Productivity Gujarat offers highly skilled labour pool Support Customer Corporations are setting operations for offshoring, and local markets Government Incentives Government of Gujarat is working on incentives to attract FDI Financial Structure Matured Financial Institution Legal Framework Neutral and efficient legal systems Government Structure Investor friendly Democratic Government promoting entrepreneurs Weak Position Strong Position Gujarat’s Position (2020)
  • 24. + Time to secure first-mover advantage in India Relaxing FDI norms Resplendent Market Booming Consumerism Vibrant Economy Is this the right time? … It is
  • 25.
    • The Government of Gujarat organizes “ Vibrant Gujarat - Global Investors Summit “, an event which is one of its kind in India. This annual event was conceptualized by the Government to provide impetus to its initiatives to attract investments in the State .
    • The main aim of the event :
    • To Promote Gujarat as the Business State of India
    • To attract investments, especially in the FDI sector
    • The event in the past has been very successful with a large number of participants from around the world, subsequently a considerable amount of investments have been made by various companies in the State of Gujarat.
    • Vibrant Gujarat 2007
    • The event in January 2007 is poised to be much bigger in terms of participation and opportunities for companies looking to invest in Asia
    Date : 12-13 January 2007 Venue : Science City, Ahmedabad, India Vibrant Gujarat – Global investors summit 2007
  • 26. Welcome to Gujarat Explore.. Envision.. Invest