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Gujarat tops as investment destination

Ashraf Sayed in Gandhinagar

Earthquake-battered Gujarat claims to have beaten all other Indian states by attracting investments of Rs 1.74 trillion between April 2000 and July 2001.

Quoting the latest report of the Centre for Monitoring of Indian Economy, Industries Minister Suresh Mehta said Gujarat attracted 11.54 per cent of India's total investment during the 16-month period.

Maharashtra slipped to the second position with investments of Rs 1.686 trillion and Tamil Nadu was a close third with Rs 1.586 trillion.

Mehta said the flow of investments had increased substantially in the last two to three months. This was reflected in 419 letters of intent with investment proposals for more than Rs 200 billion and 458 LoI for export-oriented units.

Members of the Congress Party, the main opposition in the legislative assembly, however, accused Mehta of 'misleading the House' by quoting outdated figures.

Mehta said the service sector had attracted the highest investment of Rs 683.88 billion, followed by power sector (Rs 501.52 billion) and manufacturing sector (Rs 360.58 billion).

While the manufacturing units recorded the highest growth of 11.4 per cent in terms of investments, the total growth rate was estimated at 9.6 per cent, which bettered investments attracted by countries like China, Japan, Malaysia, South Korea and Singapore, Mehta claimed.

On July 1, the minister had told the Assembly that 3,070 projects worth Rs 795.75 billion were nearing completion and another 1,738 projects involving Rs 808.21 billion were in various stages of implementation.

Mehta said investors had belied fears that they would ignore Gujarat after the January 26 earthquake killed nearly 25,000 people and damaged public and private properties worth Rs 200 billion.

He attributed the slowdown in foreign direct investment in the state to global recession. It stood a poor fifth in the country with an FDI of just $462 million.

He sought to take solace from the fact that the growth in US gross domestic product had come down from 5 per cent in 2000 to a mere one percent in 2001, in Europe from 3.4 per cent to 2.4 per cent, from 8.5 per cent to 4.5 per cent in South Korea and 1.7 per cent to 0.06 per cent in Japan.

Mehta blamed the closure of certain non-performing units in the small-scale sector on stiff competition from China and Taiwan.

He said the state's latest industrial policy document stressed on the cluster approach to development.

"We have identified 67 clusters and given approval for development of 10 and they are being provided capital and interest subsidy," said Mehta.

He said the government was planning to grant sales tax exemptions to new industrial units in the quake-ravaged Kutch district for a period of five years.

Mehta said he was confident the tax waiver would attract investments of around Rs 250 billion in the desert district in coming two to three years.

Indo-Asian News Service

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