Gujarat: Industrial development | Gujarat State PSC (GPSC) Preparation: All subjects - GPSC (Gujarat) PDF Download

Geographical and Administrative Overview

• Location and Borders: Gujarat is situated on India’s western coast with the longest coastline of 1,600 km. It shares borders with Rajasthan, Madhya Pradesh, Maharashtra, and the Union Territories of Daman & Diu and Dadra & Nagar Haveli. The Arabian Sea lies to the west and southwest of the state.

Industrial Development

• Initial Industrialization: At its establishment in 1960, Gujarat’s industrial activity was limited to four major cities—Ahmedabad, Baroda, Surat, and Rajkot—and a few isolated areas like Mithapur and Valsad.
• Expansion: Over time, industrial development has spread across almost all districts of Gujarat, driven by the strategic use of natural resources including minerals, oil and gas, marine resources, agriculture, and animal husbandry.
• Oil and Gas Impact: The discovery of oil and gas in the 1960s significantly contributed to the development of petroleum refineries, fertilizer plants, and petrochemical complexes in the state.
• Institutional Development: The state government established the Gujarat Industrial Development Corporation (GIDC) to create industrial estates with developed plots and ready-built sheds. Additionally, District Industries Centers (DICs) were set up to support industrial unit establishment.

Infrastructure and Support

• Infrastructure Development: Gujarat has built essential infrastructure for industries, including power, roads, ports, water supply, and technical education facilities.
• Incentives: The government introduced various incentive schemes to promote industrial growth, particularly in underdeveloped regions, to address regional disparities.
• Economic and Industrial Status
• Industrialization: Gujarat is a leading industrial state in India, with a Gross State Domestic Product (GSDP) of approximately US$ 158.2 billion in 2015-16. The state achieved an average annual GSDP growth rate of around 11.56% from 2004-05 to 2015-16.
• Power Generation: As of October 2017, Gujarat’s total installed power generation capacity was 30,298.11 megawatts (MW).

Key Industries

• Petroleum: Known as India’s petroleum capital, Gujarat has a significant refining capacity from both private and public sector companies. As of December 2015, it was the second-largest producer of crude oil in India, with 4.61 million tonnes produced in 2016-17.
• Diamonds: The state is the world’s largest producer of processed diamonds, holding 72% of the global share and 80% of India’s diamond exports.
• Denim Production: Gujarat is the largest manufacturer of denim in India, contributing 65-70% to the country’s production and ranking third globally.

Infrastructure and Investment

• Infrastructure: Gujarat boasts 45 ports, 18 domestic airports, and one international airport. It has 106 product clusters and 60 notified Special Economic Zones (SEZs).
• Investment: The state is poised for significant investment, particularly as part of the US$ 90 billion Delhi-Mumbai Industrial Corridor (DMIC).
• Foreign Direct Investment (FDI): Between April 2000 and June 2017, Gujarat attracted US$ 17.01 billion in FDI, accounting for approximately 4.97% of India’s total FDI inflows.
• Events and MoUs: The Vibrant Saurashtra Expo and Summit held in Rajkot in January 2016 resulted in MoUs worth US$ 341.88 million for various sectoral developments in the state.

Key Sectors

• Agriculture Market Infrastructure (2016-17): During 2016-17 (up to December 2016), the state operated 218 Agricultural Produce Market Committees (APMCs), with 218 main yards and 182 sub-market yards in function.
• Textile Industry Initiatives: The state government announced plans to establish brownfield and greenfield projects aimed at promoting environment-friendly processing standards in the state's textile units.
• Energy Department Allocation (2017-18): The Gujarat state budget for 2017-18 proposed an allocation of US$1.26 billion for the Energy department.
• Engineering Output Goal (By 2020): By 2020, Gujarat aimed to increase the engineering sector's output from the auto and auto components industry to 10%, up from the current level of 3.7%.
• Surat Diamond Industry: Surat polishes eight out of every ten diamonds in the world.
• Medical Device Park Initiative: The Central Government plans to establish a medical device park in Gujarat, with a high-level committee already constituted for this purpose.
• Kandla Port Cargo Handling (2016-17): During 2016-17, Kandla port handled the highest cargo volume among major Indian ports, totaling 105.44 million tonnes.
• Industrial Diversity in Gujarat: Gujarat is one of India's most industrialized states, with key industries including engineering, textiles, vegetable oils, chemicals, and cement. New industries in the state focus on fertilizers and petrochemicals. The state produces significant amounts of cotton, peanuts, dates, sugarcane, and petroleum and is rich in minerals like calcite, gypsum, and limestone. Gujarat accounts for 91% of India's soda ash production and 66% of its salt needs. Chemical industries in Gujarat contribute over 35% of India's chemical production.
• Economic Prosperity: Gujarat is one of India’s wealthiest states, with a per-capita GDP well above the national average. It is notable for its oil and natural gas production in areas like Kalol, Khambat, and Ankleshwar. The state also has a thermal power station in Dhuvaran and hosts the Alang Ship Recycling Yard, the largest in the world. General Motors produces the Astra car in Halol, near Vadodara. Surat remains a global hub for diamond trade.
• Industrial Leadership (1960–90): Between 1960 and 1990, Gujarat became a leader in various industries including textiles, engineering, chemicals, petrochemicals, pharmaceuticals, dairy, cement, ceramics, and jewelry. After economic liberalization, the state's domestic product (SDP) grew at an average rate of 14% per year from 1994 to 2002.
• Chemical Industry Hubs: Ahmedabad, Ankleshwar, and Vapi are major centers for chemical industries in Gujarat, with numerous private and state-owned manufacturing units producing dyes, specialty chemicals, agricultural chemicals, pesticides, pigments, and colors. Rajkot is a hub for engineering manufacturing, especially in auto components and machinery.
• Power Generation Capacity Expansion (1995–2001): Gujarat increased its power generation capacity by 35% between 1995–96 and 2000–01, with significant contributions from Independent Power Producers (IPPs). The state was among the first to encourage private sector investment in power. Additionally, the liquid cargo port at Dahej, established as a joint sector project, is operational.
• Vibrant Gujarat Investor Summit (2007): At the Vibrant Gujarat Investor’s Summit held from January 10 to January 13, 2007, in Ahmedabad, the state government signed 104 Memorandums of Understanding (MoUs) for Special Economic Zones, totaling Rs 2.5 lakh crore, with most investment coming from domestic industries.

Exports

• Impressive Export Performance: Gujarat has consistently demonstrated strong performance in the export of industrial products. Under the 100% Export-Oriented Unit (EOU) scheme, the state received 1,570 approvals with an investment of Rs. 6,605 crore. By June 30, 2009, 468 projects with an investment of Rs. 2,953 crore had been commissioned, while another 467 projects involving Rs. 426 crore were in various stages of implementation. Additionally, numerous units export a portion of their production overseas. Gujarat-based units contribute approximately 14% to India's total exports, excluding gems and jewellery. If gems and jewellery exports are included, Gujarat's total contribution could exceed 25% of the country's exports.
• Enhancing International Competitiveness: To boost the global competitiveness of local industries, the State Government has partnered with the Ahmedabad Management Association (AMA) to establish the GOG-AMA Centre.
• Export Award Scheme: To motivate industries to capitalize on the vast opportunities in the international market, the State Government has introduced an export award scheme.

Special Economic Zones (SEZs)

The Government of Gujarat has actively promoted Special Economic Zones (SEZs), viewing them as catalysts for manufacturing growth, export enhancement, and job creation. The Gujarat SEZ Act, 2004, along with the SEZ Rules of 2005, SEZ Regulations, and the SEZ Amendment Act of 2007, provide a framework for assisting both developers and co-developers in infrastructure development and service provision within SEZs. Tax concessions and labor reforms have been introduced, including amendments to the Industrial Disputes Act of 1947, allowing greater flexibility in employment for SEZ-based units. In total, 57 SEZs have been approved in Gujarat, covering a range of sectors including textiles, pharmaceuticals, engineering, chemicals, ceramics, gems and jewellery, and IT/ITES.

Industrial Policy and MSMEs (2015)

• Under the new Industrial Policy of 2015, the Government introduced a "Scheme for Assistance to Micro, Small, and Medium Enterprises (MSMEs)," focusing on supporting SME development, adding value to local resources, and increasing the manufacturing share in the state GDP. 
• The policy includes measures to enhance the technological sophistication of MSMEs through interest subsidies, venture capital assistance, quality certification, technology acquisition funds, and other forms of support aimed at strengthening this sector.

Market Development Initiatives for MSMEs

• The Gujarat government is also taking steps to improve the visibility and market reach of products from large industries and MSMEs. 
• Recognizing that MSMEs often invest more in production than in marketing, the state is facilitating better marketing practices by providing financial assistance for participation in international exhibitions, promoting machinery purchases during local exhibitions, organizing events in Gujarat, and supporting local exhibitions. These efforts align with the national "Make in India" policy.

Factory Registration and Employment Growth (2014-2015)

• The number of registered factories in Gujarat increased from 30,192 at the end of 2014 to 30,743 by the end of 2015. Correspondingly, average daily employment in these factories rose from 15.98 lakh to 16.23 lakh during the same period.

IT and Electronics Startup Policy (2016-21)

• As part of the "Make in India" and "Start-up India" initiatives, the Gujarat government introduced the 'IT and Electronics Start-up Policy' for 2016-21. This policy aims to foster new ventures in IT and electronics by providing various incentives and subsidies. 
• The state plans to develop 50 incubators to mentor and guide 2,000 start-ups over the next five years, boosting entrepreneurship, skill development, research, and employment opportunities in Gujarat.

Vibrant Gujarat Global Summit 2017

• The 8th edition of the Vibrant Gujarat Global Summit was held from January 10-13, 2017, at Mahatma Mandir in Gandhinagar, inaugurated by Prime Minister Narendra Modi. The summit attracted approximately 33,000 delegates from over 100 countries, with 12 partner countries and eight partner organizations participating. 
• The event resulted in the signing of 25,578 Investment Intentions across various sectors. The summit included 21 Theme Seminars, 3 Action Seminars, 16 Country Seminars, and 4 State Seminars, along with over 350 B2B and 260 B2G meetings. A Global CEO Conclave and a Nobel Dialogue were also part of the event, which highlighted Gujarat's leadership in national initiatives like Make in India, Skill India, Digital India, and others. The Vibrant Gujarat Global Trade Show, held in conjunction with the summit, attracted over 1.6 million delegates.