Gujarat: Fast becoming The Detroit of India?

We all know that Detroit has been an automobile hub because it is home to GM, Ford and Chrysler. Gujarat, too, the way it is attracting Automobile giants,  is poised to be the next big automobile hub, not only for India even internationally.

Fewer bureaucratic issues, transparency and no apparent labour problems are driving one automobile giant after another to enter Gujarat for production.

Let’s take a look at how it all started and how Gujarat is poised to be the star of the 7^th largest vehicle manufacturing country in the world.

2009: Tata Nano

Originally meant to be set up in West Bengal, the Tata Nano plant came up in Sanand after a long delay and a monetary loss caused by political hurdles in West Bengal. A large part of this switch was attributable to the strong leadership of Narendra Modi who was elemental in convincing Mr. Ratan Tata to bring the Nano plant to Gujarat.

The new Tata Nano plant is located in Sanand, a small city which is about a 30 minute drive from Ahmedabad, Gujarat. For those of you who are interested in numbers, the Tata Nano plant is located on a massive 1,100 acre space and after an on-going investment of more than Rs. 2,000 crore.

2011: Ford

Taking advantage of streamlined and transparent dealing with the Gujarat Government authorities, in July 2011, Ford officially announced that it would be setting up a plant in Gujarat. The facility will be located in Sanand, in the same region as the plant for Tata Nano.

It was announced that the Ford Plant in Gujarat would commence production from 2014 and will have an annual initial capacity of 240,000 vehicles. This facility is also expected to generate about 5000 jobs and total investment is pegged at whooping USD 1 Billion. Again, stunning numbers and a stellar deal for Gujarat to secure the investment of one of the world’s largest automobile giant.

2011: Peugeot Citroen

Not wanting to be left alone, Peugeot and the officials of the Gujarat government signed an agreement in late August 2011 to set up a plant, again in Sanand. Much similar to Ford, Peugeot expects to commence production in the Sanand plant by about 2014.

Peugeot’s facility is set to come up on a 600 acre site with investment pegged at Rs. 4,000 crore. Similar to Tata and Ford, Narendra Modi’s government was instrumental in bringing Peugeot to Gujarat, making Sanand officially an automotive hub.

2011: Maruti Suzuki

Maruti Suzuki had been desperately trying to ward off labour problems and political unrest in its Gurgaon and Manesar plants. After suffering massive financial losses, Maruti Suzuki decided to set up a manufacturing facility in Gujarat. Maruti Suzuki’s facility is planned on a massive 1,400 acre spread and production is expected to commence by 2015.

Existing Automobile players

Before the influx of these automobile giants in Gujarat, there were other companies already flourishing in the state. The likes of General Motors in Halol, Apollo Tyres in Limda, Asia Motor Works in Bhuj and CEAT have already set up base in Gujarat.

What makes Gujarat tick?

Apart from the very obvious efforts put in by the Gujarat Government under the capable hands of Narenda Modi, Gujarat also seems to offer other advantages to car manufacturers. Here are a few highlights.

• Ports of Gujarat (Mundra, Kandla and Pipavav) offer manufacturers a cheaper option to export vehicles to Western countries
• Good connectivity in terms of roads and other utilities like electricity and water
• Easy connectivity by road to various hubs in the country – Gujarat has about 35% of the proposed Delhi Mumbai Industrial Corridor (DMIC).
• Various Special Investment Regions and Special Economic Zones that allow businesses and companies to avail tax benefits and a host of other state concessions including a fast track approval

Here is what Mr. Narendra Modi had to say while Peugeot was signing the paperwork for its plant in Gujarat.

"We wanted to encourage our engineering sector as a result of which a lot of automotive companies have come to the state. Gujarat is moving towards becoming a global automotive manufacturing hub and shall become backbone of Indian automotive sector"

Looking at these developments, one can definitely say that Gujarat is fast becoming the Detroit of not only India but probably the Detroit of the East!

What’s your take?