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