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Industrial Scenario in Gujarat

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Industrial Scenario in Gujarat Industrial Scenario in Gujarat Major Economic Sector in Gujarat- Current Status Gujarat’s economic growth has been faster in recent years while sustaining a double digit growth for a considerable period of time. Gross State Domestic Product (GSDP) of Gujarat at constant (2004-05) prices in 2009-10 has been estimated at Rs. 3.32 Lakh crore as against Rs. 3.0 Lakh crore in 2008-09, registering a growth of 10.2 percent in a year. As per quick estimates, GSDP at current prices in 2009-10 has been estimated at Rs. 4.23 Lakh crore as against Rs. 3.6 Lakh crore in 2008-09, registering a growth of 16.8 percent compared to last year (Socio-Economic Review 2009-10). Industrial sector has been a major contributor to state economy in recent decades. The higher growth in the economy during the year 2009-10 can be mainly attributed to manufacturing, electricity, construction and communication sectors, which have contributed to the tune of 11.0 to 34.6 percent growth during the year 2009-10 at constant (2004-05) prices (Socio- Economic Review 2009-10).The share of primary, secondary and tertiary sectors in GSDP at constant prices was recorded at 14.2 per cent, 38.6 per cent and 47.2 per cent respectively in the year 2009-10 at 2004-05 base year. It is the tertiary sector that has been contributing to Gujarat economy the most followed by secondary and primary sector, which is comparable to Indian economy on overall contributions from these major sectors. One may infer that Gujarat’s strong and sustained economic base has been supported by secondary sector especially by Manufacturing Sector as well as Tertiary Sector. Recent data shows that Manufacturing Sector contributes 27 percent to the overall GSDP. The share of manufacturing sector in the state has remained almost constant following economic crises of 2008-09 in recent years, due to its open industrial policy which also depends on the external economic environment globally, (Kumar and Subramanian, 2012). Brief History of Industrialistion in Gujarat Gujarat has diversified its industrial base substantially over a period of 60 years ever since it has acquired Statehood from the erstwhile Bombay State. Textiles and Auxiliary sectors were the major contributor to industrial economy of the state during 1960s. The industrial spectrum has completely transformed in the span of over 50 years. At present 12 major industry groups together account for 86 percent of factories, 96 percent of fixed capital investment, 94 percent of value of output and 95 percent of value addition in the states industrial economy. Recently, refined petroleum products has emerged as one of the largest industrial groups having 33 percent share, followed by chemicals having 21 percent share of entire industrial sectors (Industries Commissionerate, 2012). Gujarat has also succeeded in spreading its industrial base spatially covering almost every part of the state. During 1960s, the industrial development was confined only to four major cities namely Ahmedabad, Baroda, Surat and Rajkot and some isolated locations such as Mithapur and Valsad. At present almost all the districts of the state have witnessed industrial development in varying degrees. Such a massive scale of industrial development has been possible on account of judicious exploitation of natural resources, such as minerals, oil and gas, marine resources, agriculture and animal wealth. The discovery of oil and gas in Gujarat in the decade of 60s has played an important role in setting up of petroleum refineries, fertilizer plants and petrochemical complexes in the state at suitable locations. The state government has also established a strong institutional network i.e. Gujarat Industrial Development Corporations (GIDC), in 1960s which oversees industrial estates in the state (Sukhadia, 1997). GIDC’s major responsibility is to providing developed plots and built-up sheds to industries. Institutions were also set up to provide term finance, assistance for purchase of raw materials, plant and equipment and marketing of products. Later, District Industries Centres (DICs) were set up in all the districts to provide assistance in the form of support services in setting up industrial units. These early initiatives have determined the present regional distribution of industrial sectors in the state. It has also influenced the basic structure of industries in terms of size and potential to create employment at regional level. Structure of Industrial Sectors in Gujarat This section presents structure and pattern of industrialization in the state in terms of size and type of the various industrial sectors. The purpose is to also see the growth trends of various industrial sectors in terms of number of units, total investment, and employment during the last five years in order to understand the impact of the open industrial policies adopted in Gujarat. Development and trends of MSME Government of India has introduced Micro, Small and Medium Enterprise Development (MSMED) Act, 2006 which has been implemented in Gujarat. As per the recent data Gujarat has 4130 micro, small and medium enterprise registered in 2006-07. This has increased to 55170 by 2010 with a total investment of Rs 28793.7crore and a total employment of 7.72 Lakh. (see Table). Table: Progress of Micro Small Medium Units in Gujarat, 2006 To 2010 No. of Units Investment Growth (Rs. In Growth Growth Period Registered Rate Crore) Rate Employment Rate 2006 to 2007 4130 3044.52 76097 2007 to 2008 13184 68.67 8323.91 63.42 197329 61.44 2008 to 2009 17869 26.20 8236.15 -1.07 251911 21.67 2009 to 2010 19987 10.64 9189.12 10.37 246989 -1.99 Total 55170 28793.7 772326 Source: Industries in Gujarat, Statistical information 2010, Industries Commissioner ate The growth rate shows declining trends in units, investment and employment in MSMEs during 2006-07 and 2009-10. This indicates a decelerated growth rate in the MSME sector in Gujarat during the same period. Looking at the performance of MSME during the last 5 years in terms of investment employment ratio, there is a decline in per unit employment ratio from 18 persons/unit to 12 person/unit during 2006-07 to 2009-10 (see Annexure-I). MSMEs in Gujarat have been dominated by textile, machinery, apparel and dyeing and chemicals and chemical products. Industrial Sectors under MSME Among different industrial sectors MSME has witnessed impressive development in textile which contributes 36 percent of total MSME units, followed by other sectors like machinery and metal products (14 percent), apparel products (11 percent) and chemical & chemical products (10 percent). Rest others are fabrication and basic metals and food processing industries till 2010(see Figure 2.1) Figure : Type Wise Distribution of MSME, Gujarat, 2010 Series1,Series1, textileSeries1, fabricatedrubber metalSeries1, Non furniture, productsand exceptsmetalic mineral manufacturing,machinery and eqipment N.E.C machineryplastic andproducts, 4, 4% N.C.E, 3, 3% products,eqipments, 6, 6% wearing apparel, dressing & dyeing of fur 5, 5% Series1, basic chemical and chemical products metal , 6, 6% Series1, textile , fabricated metal products excepts machinery 36, 36% and eqipments basic metal food products and beverages Series1, Series1, food rubber and plastic productsmachinery and eqipment Series1,products chemical and Series1, wearing Non metalic mineral productsN.E.C, 14, beveragesand chemical , 5, apparel, dressing 5% & dyeing of fur, 14% products, 10, furniture, manufacturing, N.C.E 10% 11, 11% Source: Industries in Gujarat, Statistical information 2010, Industries Commissionerate Large Scale Units All industrial units other than MSME’s are considered as medium and large industries. Since 1991 Gujarat has received 10,457 Industrial Approvals comprising of 9,481 Industrial Entrepreneurs Memorandum (IEM) Acknowledgements, Letter of Permission (LOP) for 100 percent Export Oriented Units (EOUs) and Letter of Intent (LOI) (Industrial commissionerate, 2011). Table : Progress of Large Scale Industries- 2007-2010 Progress as on 30, 2010 No. of Units Investment Employment (in cr) Projects implemented 5384 169512 907535 (169) Projects under implementation 2483 502754 523937 (210) Progress as on 09.2007 Projects implemented 5067 145110 827258 (163) Projects under implementation 1890 191150 318175 (168) Source: Industries in Gujarat, Statistical information 2010, Industries Commissionerate As on 2007, 5067 large projects were being implemented with an overall investment of Rs. 1.45 lakh crores. Out of this 37 percent projects were under implementation contributing Rs. 1.91 lakh crores of investment. The total large scale units being implemented have increased to 5384 with an investment of Rs. 1.70 lakh crores. However the percentage of projects under implementation were increased to 46 percent in 2010 from 37 percent in 2007 with four fold increase in the total investment amounting to Rs. 5.03 lakh crores, during the same period. There has not been any significant changes in the per unit employment during the same period implying that large industries in the state are of capital intensive. The large industrial sector is dominated by chemical & petrochemical and textile industries. Figure Type wise distribution of LOI+ LOP+ IEM projects in Gujarat (up to 2009-10) Source: Industries in Gujarat, Statistical information 2010, Industries Commissionerate The group-wise analysis of large scale projects under implementation indicates that chemical and petrochemicals sector put together accounts for 30 percent of total investment. The other important sectors having investment in Gujarat include textile (20 percent), engineering (7 percent), metallurgical industry (6 percent), food processing (6 percent) and others having (31 percent) till March 2010. Large industrial sector consists of 84 pharmaceutical units, 57 dyes and intermediate, 49 pulp & paper units and 23 cement units, which falls under most polluting category of industries as indentified by CPCB (see Annexure 2). These industries have very high potential for adverse environment implications on air, water and land and will have deleterious impact in the long run if not properly regulated at both local and regional level.
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