12 Jan, 2011, 11.20AM IST,
News via Economics Times by Shramana Ganguly Mehta & Himanshu Darji, ET Bureau
AHMEDABAD: Over the next two days, India will see its industry pledge investments in one state that may add up to $450 billion, or one-third of the country’s GDP . Top names from Corporate India will announce projects they plan to start in Gujarat at the two-day Vibrant Gujarat Global Summit beginning Wednesday.
When the CEOs rise, one after the other, to commit investments at the fifth edition of the summit, a few hundred crores will look like small change and only those in multiples of thousands of crores will generate an applause.
“Seldom have incoming dollars been so shocking,” remarked a B-school faculty when Indian companies committed 12.44 lakh crore in January 2009, the peak of global recession. The economics professor with Indian Institute of Management-Ahmedabad was not surprised at doubts over the actual number of projects getting off the ground, but said, “Even if 10% of these investments materialise, it is still a big number”.
Since the first summit in 2003, the state has bagged investments worth $370 billion. Critics have been dismissive of these figures and term the agreements or memoranda of understanding a hype created by one man who aspires for the nation’s top post.
100% rise in investments expected
Chief Minister Narendra Modi came up with the idea of an investment summit to divert attention from the 2002 communal carnage that claimed 2,000 lives in Gujarat. The first summit attracted proposals worth Rs 66,068 crore. The figures kept multiplying since then: Rs 1 lakh crore in 2005, Rs 4.6 lakh crore in 2007 and Rs 12.44 lakh crore in 2009. This time, there may be a 100% rise and the host, the chief minister, has once again tried to take the focus away — this time from investments to knowledge-sharing.
“We want to highlight investment opportunities in the country as a whole, not just Gujarat. If you don’t want to invest in Gujarat, you can think of Orissa, or may be Karnataka, but stay in India,” says Modi, who was described as prime minister material by industrialists such as Bharti Group Chairman Sunil Mittal and ADAG Chairman Anil Ambani .
The public statements coming from the industry captains further endeared Modi to businesses who agree with the state’s USPs such as investment climate, proactive government machinery, good roads, uninterrupted power supply and a 1,600-km coastline, the longest in the country.
The Vibrant Gujarat model, now being replicated by states such as Karnataka and Madhya Pradesh, thus helped in Modi’s image makeover — from a Hindutva hardliner to a state CEO. This year, the industry chieftains will return — the Ambani brothers, Tata Group Chairman Ratan Rata, Godrej Group Chairman Adi Godrej, Mahindra & Mahindra Ltd Vice-Chairman & Managing Director Anand Mahindra , Larsen & Toubro Chairman & Managing Director AM Naik, Aditya Birla Group Chairman Kumar Mangalam Birla, ICICI Bank Managing Director & CEO Chanda Kochhar, Britannia Industries Managing Director Vinita Bali, former ICICI Bank MD & CEO KV Kamath, and Bharti Group Chairman Sunil Mittal. Adding glam quotient would be Bollywood actors Preity Zinta, Anupam Kher, Paresh Rawal and Manoj Joshi.
The big-ticket investments during the current summit would be by Reliance Industries , Adani Group and Essar.
It was the same platform from where Ratan Tata famously said, “You are stupid if you are not in Gujarat” , and subsequently, in 2008, relocated the Nano project to Sanand near Ahmedabad from trouble-torn Singur in West Bengal.
The Rs 2,000-crore project has acted more as an image booster for the state among business houses than bringing any real economic gains. If Tata’s gesture was not enough, Modi quickly roped in Bollywood icon Amitabh Bachchan as the state’s brand ambassador to hardsell Gir lions and Kutch’s salt desert.
Modi’s attempt to breathe life into Gujarat’s non-existent tourism is working and tourists are gradually coming in, but his claims on investments continue to be questioned. Opposition leader Shaktisinh Gohil of the Congress has claimed that a mere 5% of investments proposed in 2009 summit have materialsed so far. Lavasa developer Hindustan Construction Company signed a Rs 40,000-crore MoU for a water city near Dholera in 2009.
“The company is yet to visit the site. Similarly, Hotmail founder Sabeer Bhatia promised to set up a Rs 30,000-crore Nano City , but has not proceeded anywhere,” he claims. Gohil has even demanded a joint legislative committee to probe into the alleged irregularities behind the gala event and alleges the state’s energy sector in the state has become an epicentre of corruption. “There is no progress on any of the 31 MoUs signed in the 2009 summit that promised to invest Rs 2,11,895 crore,” he says.
The state government routinely defends the allegations on inflated investments saying these are long-term projects and may take between three and six years to come up. To further silence the critics, the state has set up a website with updates on the status of each project. Of the Rs 12 lakh crore committed in 2009, 43.27% investment has already come to the state, while of the Rs 4 lakh crore promised in 2007, 68.7% has been invested, officials tell ET.
Independent observers, who refused to be drawn into the inflated investment charges, say the event has facilitated land-grabbing by corporate houses. An academician specialising in infrastructure says, “The state needs to be transparent in such transactions considering land-grabbing by industrialists is a major area of concern.” He believes that ongoing agitations by locals against large projects such as Nirma (in Bhavnagar) and Adani (in Mundra) could play spoilsport.
But the state government says investment plans coming through Vibrant Gujarat are streamlined. The projects are monitored at every juncture and help is provided to the promoter, a claim that was accepted by a plastic pipe maker who recalls receiving phone calls from the state government every month and says government agencies are prompt in clearing hurdles. “A transparent policy along with good infrastructure has drawn investors to the state,” adds Minister of State for Industry Saurabh Patel.
Karnataka Principal Secretary VP Baligar oversees a similar event in his state and asserts that the southern state was the first to devise such a model in 2000. “When you sign an MoU at such a forum, you make a public commitment. Owing to the format, the state keeps such proposed projects on fasttrack,” he says.
The 2010 summit in Karnataka drew close to Rs 4 lakh crore in investments. A marketing expert too says the summit has evolved into a ‘special channel’ to enable industries enter Gujarat. The projects signed during the event are viewed as having the blessing of the leader of the state, a special privilege that few industrialists would want to miss, he says requesting anonymity.
Indeed there are few who would like to miss the corporate congregation. “All flights to Ahmedabad from the evening of January 11 to January 12 and the night of January 13 to January 14 are packed,” says Sanjeev Chhajer of Cox and Kings, a travel operator.
With all roads leading to Mahatma Mandir, the event venue in the capital Gandhinagar, the state machinery has ensured that Gujarat looks very a much part of the globe. The hullabaloo of vendors is missing as the entire state police force gets on road.
With participants from close to 100 countries expected to be present at the inauguration on January 12, those in the hospitality industry are working round-the-clock to accommodate them.
And for those who may not make it, information is available on BlackBerrys and iPhones.
