Two ports, different paths: How to attract FDI
Ahmedabad, 13 May 2012
Thanks to overwhelming response and extremely intelligent insight, i was compelled to ponder further to look India”s growth centers from investor’s viewpoint. Its sequence to past ARTICLE (LINK HERE) and prelude to further deeper analysis. I am leaving floor open for further debate and idea exchanges. Hope you like it.
I like to read Sydney Morning Herald for their cricket stories, so was pleasantly this February to read a story on Gujarat with word Credible associated. Aptly titled, Role model for a nation on the march, it stresses Gujarat CM’s commonsense policies and why India would need him in spite of the media implanted image. (Read: http://www.smh.com.au/world/role-model-for-a-nation-on-the-march-20120203-1qxei.html)
The author Hamish Mcdonald is well-known India hand, whose one of the book (The Polyester Prince) on Great Dhirubahi Ambani was an excellent piece of investigative writing that in some part inspired even the movie GURU.
Hamish has following things to say for Modi as an outstanding performance card for an Indian leader.
With economic growth averaging about 10.5 per cent over Modi’s decade, the state is increasingly looked upon as the model for a ”credible India” – a play on the ”Incredible India” slogan of the national tourism agency – where bureaucratic and political obstacles are cleared for sustained high growth.
He also notes that, in infrastructure, Modi has taken the Indian lead in private-public sector partnerships. As well as transport, power and water, he has pushed new types of infrastructure. There is a 2200-kilometre gas grid. Gujarat has the world’s second-largest optical fibre network, with broadband connectivity in all its 18,000 villages.
The article ponders over his able leadership and infrastructure created during Modi’s decade for overall growth.
If pervious vibrant summits are of any yardstick it did invite many industries which were fed up with delays at other states. But still Discreet Industry from East Asia is one area where his administration is trying hard to woo. Not only he is passionate about solar energy, his administration is also fond of the land of rising Sun. In 2007, just after the resounding success of vibrant Gujarat, first country Modi visited was Japan. Gujarat is banking very heavily on Japanese investment and rightly so. The Delhi Mumbai Industrial Corridor (DMIC) being planned in partnership with Japan will be major pivot for the investment.
Of all the countries, Japan has shown way to rest of Asia on how to create a growth based economy and society. Their model is studied across and replicated in many success stories of Asian economies. No doubt then both center and state governments are keen to have them partner with. Gujarat’s administration also understands and looks to attract friends from east to invest. The consistent efforts are bearing some fruits.
Maruti-Suzuki’s proposed plant, along with unique and first of the kind infrastructure investment by Japanese/Singapore consortium in Dahej Desalination plant is a landmark event for Gujarat. To add more weight, Japan’s External Trade Research Organization (popularly known as JETRO) also signed MoU with Gujarat Govt. for developing second of its kind Japanese companies specific Industrial park, after Neemrana in Rajasthan. These are just few of the coming events that are casting their shadow which may augur well for Gujarat.
The hope notwithstanding, it is prudent to check statistically how does Gujarat fare?
As per the official list of Japan Chamber of Commerce and Industry in India (JCCII) so far Compared to north and south, only 29 companies are counted as present in Gujarat, compared to whooping 286 in Chennai. Modi knew the limitations and tried to assure investors that Atithi Devo Bhava is State’s mantra in January interactions and that his administration will go out of their way, to make sure investors are comfortable, Because if they are happy and contend then only state will benefit. While that did look a hopeful statement, it is prudent to check current status.I just gave example of Chennai above with clear winner by all counts having 10 times more companies invested than Gujarat, what attracts them could actually unlock some answers.
Post Monsoon, one towering seven star luxurious Hotel is slated to dot ever crowded Anna Salai Road. The construction is racing with parallel site of Chennai Metro across the road. La Grande ITC Chola Grand will be the latest Jewel in the crown of otherwise conservative Chennai. Not only has it added to prestige, it gives added assurance to global investors on faith by hospitality sector. This is in continuation of many international hotel chains crowding Anna Salai Road (the main road of Central Business Distrcit, like Ashram Road of Ahmedabad). The number of flights leaving Chennai for global destination is constantly on rise and more and more companies line up every day to invest in Chennai. Seeing increased interest from Japanese investors, JETRO opened their office in Chennai in October-2010. In short span of less than two years, they have seen on an average 50 companies sending them serious inquiries for trade and investment related queries on weekly basis, boasted local JETRO Chief in one of the media interactions.
The compelling rush was evident when Japanese cabinet METI minister made quiet visit to Chennai and announced interest in Peninsular Region Integrated Development Economy (PRIDE) at the cost of much hyped DMIC. It was a bit rare undiplomatic gesture by Japan that the METI minister did not stop by Delhi to meet his counterpart Mr. Anand Sharma and rather made Chennai his only destination before moving to South East Asia. He was seen inaugurating JETRO’s business support centre, an incubation hub for new companies.
The Japanese team moved in swiftly and started taking direct charge of driving three state Governments. The PRIDE is to develop NH4, connecting with Karnataka, Some parts of Andhra Pradesh and Northern Chennai. All regions would be linked with Port of Ennore in north of Chennai. The port of Ennore seems to be their choice and are keen to almost adopt it. Even recent meetings between PMs of two countries, development of southern region with Ennore port as pivot was discussed and included as an agenda from Japan side.
Minister also observed signing of MoU for one state of the art integrated Industrial Township mainly catering to the needs to Japanese SME sector and to be promoted by Japanese and Singaporean consortium. The new park in spite of apathy by local Govt may provide iconic status to Chennai as a manufacturing hub.
The Chennai Craze baffles many considering the crippling infrastructure of State and collapse of policies with every regime change. Land Acquisition is as difficult as anywhere if not as bad as West Bengal. Least said the better for Water and Electricity. The stampede by investors is an enigma considering all the negative signals from infra and policy front. So what is it that makes Chennai Tick?
Gujarat has strong leader supported by efficient administration as well as robust infrastructure. Is it enough to compete globally? What are the lessons for Credible Gujarat when we see in the mirror called TamilNadu? I shall ponder over them in next analysis. Kindly watch for this space.
Entire series:
Part 1:India’s port of calling: Credible Gujarat and Diligent TamilNadu
Part 2:Two ports, different paths: How to attract FDI
Part 3:India’s port of Calling: Importance of prolific ecosystem and lessons for Gujarat
Part 4:Tale of Two Industries: Lessons for Processed Gujarat from Discrete TamilNadu
Part 5:India’s Port of calling: Role of Palate, Place and People: A potent recipe to cook FDI
Previous articles by Somindu.S.
Narendra Modi’s Gujarat re-writes story of Indian Auto Industry
Narendra Modi’s Blitzkrieg: A savior for Brand India
Why Narendra Modi’s sweet offer is good for Nano Milk
| << Previous Post |
as we all are going gaga over gujarat & deservedly so let me make this one thing clear that all of this is just one man show, one man army that is Narendra Modi, some might argue that it’s not just him whole state machinery is working well but NaMo is the man who inspired them & make them work harder by hook or crook that’s where his dictatorial & managerial skills comes in handy by getting everyone on a same plate & working as a team, my point is gujarat growth story is very much centered around one man Narendra Modi whereas in states like Tamil Nadu, kerela, andhra pradesh, karnataka despite not having pro-active leadership they are progressing & that according to me that type of growth is very long lasting, stable & inclusive. basically it’s the people who makes the nation or a state, I am curious to know that what will the gujarat be like after modi bcoz we all know what gujarat was before 2001 despite having same 6 crore gujaratis.
I don’t think Gujarat picture was too bad before 2001. Narendra Modi’s contribution is as you say great managerial and dictatorial skills to get rid of corruption, great marketing and present better image of state to lure investment from outside, develop tourism, streamline and speed up Govt. processes and implement some innovative schemes and projects. There is no doubt that he has contributed immensely and his absence will be felt when he goes out of Gujarat. But each state will develop or not develop on the basis of its strength and weaknesses. Gujarat’s strength is entrepreneurship, peace, lack of caste based adversity, NRI base. Weakness are lack of high end education (IT, Science), no great tourist sites (though Dwarka, Gir etc. will attract domestic tourists, foreigners will still prefer Kerala, Rajasthan, Goa, Kashmir etc.). Somehow Gujarat is land where anyway few individuals take birth who are brilliant and as a result state prospers. But what is really needed is to give more importance to skills, knowledge, physical and metal fitness rather than money. We had produced Ambanis, Adanis but we also need to produce Bill Gates, Roger Federer, more people enrolling to army and healthy society. No point to have millionaires who look like poor or having too much fat, or chemical industries who just product hazardous chemicals banned in western countries and disposing waste into rivers or inviting corrupt industrialists to setup industry by giving them land at cheap rates. Rather we should invest lot on R & D, setup top educational resources, excellent infrastructures like roads, speedy broadband, build lots of sports facilities for people to do some healthy activities and keep lots of open spaces for greenery and playgrounds, providing best and clean nutritious food and water to everybody.
Dear Rohit,
Fully endorse and agree with most of the observation. No one has any doubt what has been accomplished in a decade. But what about next decade and after that? What is succession plan? How can we build a blue-print for sustainable growth for Gujarat irrespective of any eventuality. There are few more elements than just strong leadership, honest administration or robust infrastructure. We will try to examine what is it that attracts FDI (which is not only precious capital, but also brings in technology and wider growth opportunity).
you have rightly mentioned role of enterprenures and this is one of my favorite topic too, as they are one of the most important stakeholders in forming eco-systems of the state. Watch out for the third part soon. I am sure there will be lot to reflect on.
Thanks again for insightful comments, writing and sharing.
@SominduS
Well said
Excellent comment ROx.
I have the same concern. Some of the people who are trying to remove Modi also believe this and that is ONE of the reason to try and get rid of Modi.
However I think that Modi himself realizes this and hence he has stressed drip irrigation, gunotsav/opening lots of engg colleges etc, tourism industry, power sector – sectors in which Gujarat was traditionally weak. whether he will succeed is an open question. Fundamentally I think Modi is strengthening the foundation quite a bit.
I think that as mentioned by other posters earlier Modi has not done very well in attracting Knowledge industry (not sure where the fault lies). The problem is that about 20 years ago people who were in business/trade (even small shop) were the ones who had a good life, not the people doing government jobs (very few private jobs were there). Because of the knowledge revolution the world has changed drastically in the last 20 years. Cultures which were more focused on education have the upper hand in this kind of world – for an average person (especially with high salaries because of dollar-rupee rate and lots of private companies). This is fundamentally nothing to do with Modi. I think that Modi focussed on education about 3-4 years after he got in so he did waste 2-3 years I think, and a lot of this has to do with _culture_. The thought leaders of Gujarat including people like Ambani/Adani/Sadhus/Sants/Caste leaders/other influential people have to bring about a revolution in education in Gujarat – otherwise Gujarat will be in trouble because knowledge revolution is intensifying even more.
This last time this type of fundamental SHIFT happened was when industrial revolution occurred and Europeans went far ahead of everyone else
The traditional strength of Gujarat has been traders (who are middlemen). The internet eliminates a lot of middlemen (think about buying from Amazon/ebay) and more and more industries are going to get hit, so manufacturing/services/agriculture/KNOWLEDGE will be more important in future.
Dear babloo,
Bang on. cant agree more. Its not only knowledge industry, Gujarat has missed on something even more basic and important. We will explore this as we move forward in this series.
Thanks again for reading, commenting and sharing.
@SominduS
Dear Rox,
You are grabbing the point right. We may end up in a situation in spite of Modi…… I have seen this happening in Andhra. Chandrababu Naidu was so strong, at some point people of the state felt he has some magic wand. Every debate on Gujarat unfortunately gets focussed on 1 man either positive or negative. As if rest 5,99,99,999 do not exist.
My next article will dwell on Ecosystems to drive my point that its not enough only to have strong CM, the subjects have to play their role too. Thanks for reading, commenting and sharing.
@SominduS on Twitter.
When you’re deciding on the acctepable place for a cellar lavatory you’ll have to consider the place the present plumbing for the relaxation of the gaff currently is. Easy exhaust proponents may be the solution to addressing this issue. Nevertheless if there’s additional than enough room in the cellar may supply the magnificent of a spa like room, and that may be a real cope with indeed.
Now International agencies eying on Gujarat cities.
SURAT: The Diamond City’s glitter is set to get flashier. Last year, The City Mayors Foundation, an international think tank on urban affairs, ranked Surat as the fourth fastest developing cities of the world. Now, if all goes as per plan, the city may well emerge as Singapore of India. UK-based charity, The Ecological Sequestration Trust (TEST), has selected Surat as one of the three cities in the world, to be developed as “global cities.” The other two include an island in north China and Kigali in Rwanda. TEST delegation led by its CEO Dr Mike Cherrett had two of meetings with chief minister Narendra Modi and the state government has asked the organization to prepare an integrated development model for Surat. Selecting Surat makes sense given the big-ticket investment projects that are planned near Suvali, a nod for skyscrapers on the Ring Road surrounding the city, several green energy projects and twin-cities development of Surat- Navsari envisaged. Along with its local partner, TARU, a development consultancy firm, TEST will demonstrate practical ways to develop food, water and energy security for Surat, which it aims to develop as eco-city. TEST has organized a workshop of experts and stakeholders from public, private and knowledge sectors to on May 19 to take forward its plan to make Surat a global city. “The aim is to develop an integrated model which will define and help planning of a model city that is sustainable,” said GS Bhat of TARU. Peter Head, executive chairman of TEST, has set the wheels in motion for Surat with clearly defined industrial zone and region of rapid urban development close to the existing city. Head was described by Times Magazine as one of the 30 men who can influence future course of action with regards to sustainable development in the world. Nirav Kothary, regional head of Jones Lang and LaSalle (JLL) said, “This concept of global city will spur the realty market leading to affordability and if the mega city development plan is based on unified model it will help Surat achieve this status even earlier as it is cash-rich and majority of the earnings is invested in realty markets here.”
Great news. Thanks for commenting and sharing.
Hi,
On your previous article – you had replied to my comment (since you replied after several days I did not see your reply earlier -sorry.)
“No point of time they had 10-15 cabinet ministers,”
I never said cabinet ministers – I said ministers. Here is the data
http://en.wikipedia.org/wiki/Third_Vajpayee_Ministry (6 ministers) – most critical Industry minister Maran
http://en.wikipedia.org/wiki/First_Manmohan_Singh_Ministry (at least 8-10)
http://en.wikipedia.org/wiki/Second_Manmohan_Singh_Ministry (at least 7 after removal of Minister of Communications and Information Technology A Raja and Union Minister of Shipping, Road Transport & Highways TR Baalu, dayanidhi Maran, kanimozhi)
I am not even counting the ones from Pondicherry, people like Chidambaram etc.
In any case these did not matter as much – the two key guys were
http://en.wikipedia.org/wiki/Murasoli_Maran
“he was made a Union Minister in three separate central governments, in charge of Urban Development in the V.P. Singh government, Industry in the Gowda and Gujral governments, and finally Commerce and Industry under Vajpayee.”
http://en.wikipedia.org/wiki/Dayanidhi_Maran
He was appointed as Union Minister for Communications and Information Technology on 26 May 2004. For a quite brief time he was away from ministry. Later he was appointed as Minister for Textiles during the year 2009.
Murasoli and Dayanidhi Maran made absolutely sure that any foreign investor was pushed into opening their factories in TN. Since you have so many contacts please try and pull up how many factories were there before/after the Marans.
“And remember Gujarat’s best ambassador at Center is PS to Congress chief. TN does not have any one even distantly close to that.”
Are you serious? Do you think that Ahmed Patel will push anything towards Gujarat where Modi will steal all the credit?
If you are comparing two states, then you have to see the data OVER TIME. Please show some graphs sowing literacy, HDI, child mortality etc from 1961 onwards for TN/Gujarat. Taking a snapshot at one point in time will give a very incorrect picture.
Each state in India has positive and negative traits and each can become developed like France/Germany/UK/Kora/Taiwan etc. Each is developed but they all have their own strengths and weaknesses. No need to badmouth any state (unless they spout garbage about us then expect a reply).
Awesome. Ignore my PS to Congress chief comments. I should have left it for time to reveal. Unfortunately I don’t read or trust wiki so cant even comment back. For that matter anyone who works on BRICs market will intuitively know not to trust any public data. The idea of this series is to see how a global investor sees India from qualitative lenses and not statistical. You may see it as things unfold.
Thanks again for your deep insight and for sharing.
@SominduS
Very nice manifestation. But why would you use Wikipedia to drive your point. It loses credibility of the article. No offence but Wiki is good for Kids homework. Would be interesting to learn how do they do things different in Chennai as Infrastructure is worst there.
Dear Sir,
Thanks for the suggestion and the mail. Have tried to cover them in next article. Hope you will find it relevant. Thanks again for drawing my attention.
@SominduS
Dear Sir,
I am very keen to know the progress of PRIDE you mentioned in article. I live in Bangalore and want to know how it may help this side growth.
Thanks a lot. I have been reading your articles with great interest.
Prithvesh.
Dear Prithvesh,
Its still an early stage but looks like would pick up if all the three state cooperate and center also allow it. It does augur well immensely for the growth of southern corridor and has the potential to transform that part by integrating with S E Asia.
I am glad DG is reaching to other states too. Thanks for your comment and do come back for the third article here.
@SominduS
This week I read two different news. One says Gujarat losing its sheen as detroit of India and another says, Tamilnadu signed 10,000 crores of Auto investment in single day. Including Yamaha. I am wondering if there is something that is special about TN now? And today was surprised to read that in short period of 1 year they have achieved so much.
Dear Kinjal,
Good observation. We will try to diagnose the differentiaters in coming articles. Do come back and share.
@SominduS
I was waiting for this one and was checking often. Hopefully the story will unfold in next ones. Look forward to.
Thanks a lot.
“India’s port of Calling: Importance of Prolific Ecosystem and lessons for Gujarat” is the title of next article. Thanks to your encouragement and comments/mail I am able to move on. Every time a new point is mentioned, it makes me pause slow down and revisit the idea. I am not a trained writer and dont claim to know all. The series here will be only half if not participated by well informed and intelligent readers of DG.
When DeshGujarat claims to be providing true news about Gujarat, I guess it augurs well, it also provides platform for people to think not just about present and past but also for future. The journey is all the more pleasant if participated by more people.
Next few articles might sound a bit shock but its an humble attempt to see it from a global investor’s perspective. Hope you will continue to follow, share and comment to make it even richer.
@SominduS
Ok. Lemme begin by congratulating u on a decent blogsite.. It takes a lot of effort and is not easy..
1. I notice people here talking about crippling infrastructure in Tamilnadu and Tamilnadu is just Chennai and chennai only.. Ur all right and wrong at the same time. The infrastructure in Tamilnadu is on par mostly or a little better than the average Indian Infrastructure. Gujarat is no exception. Gujarat is no Europe inside India..Gujarat does not have more than one decent Airport. A maximum but sizeable contribution to infrastructure development in Gujarat can be attributed to it being closer to New Delhi and being strategically placed. Most of Indias infrastructure development is centrally governed and states only participate as actors. So if states have to do something extraordinary then they gotta allocate budget from their own treasury which needs investor and stakeholder backing not to forget vote bank politics and regime changes. These factors are uniform and present more acutely in a state like Tamilnadu which has no central political party in reckoning nor does it lie in the strategic vicinity of Newdelhi. Tamilnadu is not chennai and chennai only..!!!!?? Duh.. If that be the case Tamilnadu would not have the most urbanised population in India..( Please connect dots together).. Tamilnadu has industrial capital in Coimbatore , Hosur( just outside Blore), Madurai, Tiruppur, Tuticorin to mention a few with each of these cities having gained expertise in different industries and sectors naturally over a period of time.. I do not know much about Gujarat other than Surat and Ahmedabad so it does not allow me to say other parts of gujarat are underdeveloped..
2.Tamilnadu has investor friendly climate and Chennai has been a huge region for investment in automotives with huge success historically. Much of the success can be attributed to decent universities and skilled labour. The social culture permits women to participate freely in economically productive spheres ( Note: I aint saying Tamilnadu is far better.. But it is real that with education and urbanisation comes relaxed gender roles)..