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Investment commitments decline in Gujarat in last 3 years

September 22, 2014 11:27 IST

AhmedabadAs the state readies for another round of Vibrant Gujarat Global Investors’ Summit, an analysis of investment intentions attracted by Gujarat show that they have steadily declined since 2011.

According to data from the Department of Industrial Policy and Promotion under the Ministry of Commerce & Industry, the number of investment proposals in terms of Industrial Entrepreneurs Memorandum and Letter of Intent or has declined from 544 in 2011 to 354 in 2013, down by around 35 per cent.

The proposed investment through these investment intentions have also commensurately come down, from Rs 1.42 lakh crore (Rs 1.42 trillion) to Rs 94,259 crore (Rs 942.59 billion) in 2013, a dip of 33 per cent.

For that matter, if one compares the investment proposals received by the state during 2014 (upto July) with the same period in 2013, it shows a decline from 223 proposals in 2013 to 205 proposals in 2014, and a 64 per cent dip in investment commitments from Rs 61,842 crore (Rs 618.42 billion) to Rs 21,979 crore (Rs 219.79 billion).

A senior official in the state industries department who has closely worked with big companies who have recently set up shop in Gujarat said, “It is very difficult to pinpoint a single reason behind this dip.

"As such there has been no dip in the investor interest in Gujarat. Perhaps, the macro-economic situation could be a factor.”

He also added that in recent years the state has seen a lot of multinational firms taking interest in setting up their manufacturing bases in Gujarat, including names like Honda Motorcycle & Scooter India, Honda Cars India, Abbott India, Teva Pharma, Inbisco apart from a host of others.

Gujarat had seen a steady growth from the period of 2008 to 2011, from 363 investment proposals (Rs 1.25 lakh crore or Rs 1.25 trillion) to 376 proposals (Rs 1.42 lakh crore or Rs 1.42 trillion) in 2009.

The year 2010 had seen a 35 per cent jump over the previous year in terms of number of investment proposals, to 497 proposals while the promised investment grew marginally to Rs 1.49 lakh crore (Rs 1.49 trillion).

Another senior bureaucrat in the state admitted that while there have been huge investment commitments in the past Vibrant Summits, there would come a saturation point.

“While investment intentions can continue to flow in, what matters more now is that how speedily they are translated on ground.

"One would need to provide land as well for manufacturing set ups to come up,” he said.

Gujarat has seen several IEMs filed by companies even during the current month of September, including ones from Cooper Standard Automotive, Transformers and Rectifiers India, Anchor Electricals, Deepak Nitrite, among others.

Image: Ahmedabad.Photograph: Wikimedia Commons

Sohini Das in Ahmedabad
Source: source image