State Policy

Discovery of gas reserves in the state and opening of the Indian economy have presented Gujarat with a wide array of business opportunities. The state is keen to become a preferred destination for foreign direct investment (FDI) and is consciously developing a brand synonymous with cost effectiveness and unparalleled quality. The Government's policy framework is geared towards further developing the entrepreneurial spirit in the state, facilitating new industries and investment and developing an excellent support system by upgrading its existing infrastructure.

Gujarat is keen to encourage investment in agro industries, agro infrastructure and hi-tech agriculture. The state government has taken up several agro-industrial projects for development and facilitation of infrastructure, marketing and research. The state's Agro Policy aims to create a world-class supply chain to facilitate transfer between the centres of cultivation and agro-processing zones. It proposes to encourage agro-research through institutes like Gujarat's Agriculture University.

The state has taken a number of measures to double its agro-processing capability. These include setting up food parks, agro-processing zones of international standards and agro-export zones to provide impetus to the export of perishables. It provides support to the cooperative industries private sector industries, apex and Agriculture Product Marketing Committees (APMCs) for setting up centres of Excellence. Besides this, it offers 25 per cent air freight subsidy on agro exports. For undertaking research and developmental activities, it provides up to 50 percent financial assistance. To develop large-scale cold storages, the state uses LNG available at Dahej and Hazira, which is more cost effective.

Gujarat formulated its industrial policy in the year 2003. As per the norms of the policy, the state envisages to do the following:

• Strengthen its present manufacturing base by creating new industrial clusters
• Upgrade its existing urban and industrial infrastructure
• Develop in a holistic manner and remove the regional imbalances
• Create and sustain a global brand image for Gujarat and its products
• Initiate labour laws and power reforms
• Develop human capabilities and enhance their skills for achieving greater productivity
• Develop thrust industries
• Promote and develop SEZs and industrial parks
• Effective governance and information dissemination.
• Facilitate access to, speedy and authentic information for entrepreneurs
• Constitute the Gujarat Industrial Promotion Board (GIPB) to provide single window mechanism for large projects
• Develop clusters for promoting SMEs
• Protect the Environment

Gujarat is encouraging new industrial clusters and offering specialised facilities to business units. The State Government offers policy incentives to companies undergoing technology upgradation, modernisation and expansion, and encourages linkages between industry and R&D centres. It also encourages quality certifications and patent registration by giving financial assistance for these activities.

The port policy of Gujarat focuses on the following:

• Increase the share of Gujarat in national EXIM sector
• Reduce congestion at the existing ports on the western coast by ensuring efficient services to support domestic and international trade
• Encourage shipbuilding, ship repairing and manufacturing facilities for cranes, dredgers and floating crafts
• Boost coastal shipping for cargo and passengers between various locations within and outside Gujarat
• Promote investment in minor and intermediate ports as well as in the new ports.
• Support power plants by offering exclusive facilities for import of different power fuels
• Make available port facilities to promote export-oriented industries and port-based industries entailing almost 50 per cent of the total industrial investment

To increase the generation and supply of power, the government of Gujarat has drafted its power policy according to which it envisages to utilize non conventional sources and conserve energy. Other measures to improve the production and supply of power are to improve the quality of services, de-monopolize distribution of power and encourage involvement of private partners, rationalize tariff structure and make the best possible use of the available energy sources.

Gujarat is one of the first states to privatise infrastructure development and build a number of roads and ports through public-private partnership.

The state plans to enhance its ports infrastructure to handle a gross capacity of 100 million tonnes of cargo. To encourage coastal shipping of passengers and cargo, the state intends to introduce a hovercraft/catamaran service joining different terminals along the Kutch and Saurashtra coast.

The state plans to develop Ahmadabad and Surat as international airports that would be hubs for transporting high volume cargo. Airports at Vadodara and Jamnagar will be basically used for attracting and disseminating local cargo.

The state plans to grant a subsidy on total eligible capital investment at the rate of 25 percent for the establishment of eligible new IT units. Special incentives shall be given as capital subsidy to large units on graduated scale. Turnover incentive shall be given at five per cent of eligible annual turnover with a ceiling of US$ 1.2 million. The government has also introduced the concept of connectivity incentive as per which it would subsidize leased line rental up to 500 Km., to an extent of 50 per cent of the lease rentals.

Gujarat is the first state in India to have a law governing Built Own and Transfer (BOT) transaction. The state government has formulated its own road policy according to which it plans to improve connectivity to all the villages and improve quality of life in rural areas by developing all weather roads. It aims to develop an efficient road system ensuring there is smooth flow of traffic. As per the policy guidelines, higher standards shall be set for road safety and travel comforts. The state government has laid down the guidelines for constantly upgradeing technology by inducting superior and quicker construction and maintenance methods.

According to the state's mineral policy, private firms should be allowed to participate in mining and exploration. Some of the provisions contained in the new mineral policy are:

• Promote the use of modern technology in mining.
• Create a data bank where all the information pertaining to geological and technical details of State and Central Government agencies in geological survey and mineral exploration shall be compiled.
• Give priority to exploring the reserves of lignite to meet the power demand of States and energy needs of industries.
• Implement norms for the assessment of environment which would be constantly monitored.

The State Government has outlined a number of policy initiatives to encourage entrepreneurs. These include:

• iNDEXTb (Industrial Extension Bureau) and District Industries Development Centres, will provide single window facilities at the state and district levels respectively.
• Fast-track clearances for infrastructure projects from the Gujarat Infrastructure Development Board
• Implementation of IT in governance to make governance transparent and streamlined in the state
• Implementation of tax reforms with a particular emphasis on rationalisation, simplification, self-assessment, transparency and harmonisation of the rate structure

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