Economics · Governance · Law · Public Policy

New Industrial Policy of Gujarat Government

According to the latest World Economic Outlook published by the International Monetary Foundation (IMF), India is expected to grow 6.3% in 2015 and 6.5% in 2016, crossing China’s projected growth rate and thus becoming the world’s fastest growing economy. This growth rate could be attributed to the new government’s strong economic mandate, RBI’s inflation focus supported by benign global commodity prices.

Capitalizing on this positive growth the Government of India (GoI) has introduced the “Make in India” initiative to make India a manufacturing hub. The Government of Gujarat keeping in line with this initiative “intends to create a healthy, conducive atmosphere for conducting business and industrial production”. New Industrial Policy of 2015 is aimed at explaining to the stakeholders the government’s approach for achieving the same; it was strategically revealed before the Vibrant Gujarat Submit to give a boost to the investors’ sentiment.

It plans to achieve economic growth and development through a slew of measures. It recognizes that a sound infrastructure is the backbone of robust economy and thus takes measures to accelerate the infrastructure development in the state. The policy puts the onus of development of infrastructure on Government of Gujarat (GoG), Gujarat Industrial Development Board (GIDB), and Gujarat Industrial Development Corporation (GIDC). The policy recognizing the need to upgrade the existing infrastructure lays down provision for the same.  These provisions include-assistance for the up gradation of both GIDC estates as well as private estates; also it seeks to regulate this assistance on basis of performance reviews done by independent third parties. It also has provisions to make the process of diversification and expansion easier by reviewing the Floor Surface Index (FSI). To improve logistics and transport GoG is pursuing policies which ensure that road transport meets the industrial requirement of speed and time. It also incentivizes private investment in setting up of industrial estate by bearing 25% the cost of infrastructure and providing stamp duty reimbursement. To meet the increasing demands for electricity the policy provides for exploring alternative means of electricity production like wind power, biomass and solar power. It aims at increasing productivity in power production by competitive bidding in state and centre owned projects. Apart from that it also provides for steps to be taken to reduce power theft by setting up police stations and special courts to deal with such cases.

Also the government through this policy aims to promote labor intensive industries. It plans to do this by providing incentives to certain previously specified industry which would be earmarked from time to time, the rationale behind this is that it would increase employment opportunities and would leverage the current economic scenario. Also development in this sector is likely to create vast opportunities for ancillary and downstream industries in the small, medium and large sector in the state.

Another measure, by the help of which government seeks to achieve economic growth is by improving the ease of doing business. Simplification of procedure, minimizing of waiting period and improvement of business environment – is what the government aims at to strengthen Gujarat’s image as an investor friendly state. To facilitate the investor, the policy talks about strengthening the single window system so that investors can file all application related to one project at one point. A special cell will be set up at the Industries Commissionerate to act as the nodal office.

The policy to encourage innovation seeks to develop linkages between the Universities and industries. The relationship would be a symbiotic one, Universities posses a large pool of expertise and thus could provide seamless access to most advanced technology whereas industry could provide universities with research grants, donations for instruments and facilities etc. To attract investments and upgrade technology the government has accorded it has a priority to R&D activities. Specific policies interventions adopted by the government include- assistance to research institutes set up by GoI or GoG, assistance to research institutes set up by industry and assistance to contract research outsourced by the SME to recognized research institutes. The assistance will be in the form of new equipments or up-gradation of existing equipments.

The government has also taken steps to promote startup culture; this is done to leverage the demographic divide which exists in the state. The policy initiatives by the government towards the same include pre incubation co- working spaces, establishment of centre for research and development etc.

 Government through this policy has also taken steps to promote equitable development across all regions; this would be achieved by increase in rural development via increase in investment in rural infrastructure and development. The policy aims to increase employment by promoting labor intensive industries; it also seeks to promote the welfare of Women, SCs and STs by providing them with employment opportunities. Clusters are geographic concentration of competing and collaborative firms which speed up the industrial and economical development in an area by increasing innovation and competiveness. Recognizing the importance of clusters for balanced regional growth the government has taken several measures to promote the same; which includes providing them financial assistance under Scheme of critical infrastructure and pecuniary incentives of nodal industries.

The policy also recognizes the importance of sustainable development and thus has taken a number of measures to promote the same. This includes financial incentives to common infrastructures and waste management projects and need based financial assistance for strengthening environmental compliances, development of Green Industrial Estate and shifting chemical manufacturing units from residential area to industrial area.

The New Industrial Policy of the Gujarat Government is a very comprehensive policy covering all aspects of economic and industrial growth and development; it is in touch with the current economic climate and is planned in such a way to take complete advantage of the same. It provides measure and incentives to strengthen its core competencies i.e. MSME, but at the same time keeping the government’s social welfare obligations in mind provides for inclusive growth. Also it recognizes the need of the hour is sustainable development and thus provides for policies for the same. The policy also shows the government’s commitment to make the state a go to destination for businesses to invest by simplifying the procedures and making the process more transparent. The policy makers intended it to be more of a framework than a blueprint; it was meant to be a communiqué to all the businesses, industries and other stake holders about the industrial policy of the state and in that sense has been spot on.

About the Author

Alifya VoraAlifya Vora is a first year student pursuing her B.A. LL.B. (Hons.) from Symbiosis Law School, Pune. In her spare time she enjoys reading. She is associated with an NGO in Pune and Greenpeace. Currently, she is interning with the Model Governance Foundation.

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