Gujarat Leads Manufacturing Sector Investments In 2023: Colliers

The country's manufacturing market could reach $1 trillion by 2025-26 and Gujarat is expected to play a significant role in achieving this milestone, predicted Colliers India’s study on India's manufacturing sector growth.

According to its study, Colliers has said that Gujarat achieved the highest investment in the manufacturing sector in the year 2023. Gujarat took the lead as the most preferred destination for manufacturing with Maharashtra in second place and Tamil Nadu securing the third position.

Discussing Gujarat's role in becoming India's manufacturing hub, Shri Swapnil Anil, Executive Director and Head of Advisory Services at Colliers India, mentioned, "With the new industrial policy, Gujarat allocates approximately 34.7 per cent of incentives and benefits specifically for the manufacturing sector. This percentage is exclusively designated for manufacturing, which boasts the lowest average setup cost among all states. As a result, Gujarat has attracted investments exceeding Rs 30 thousand crores in 2023 from domestic and foreign manufacturers. These investments will strengthen the state's industrial footprints." 

He additionally stated, "Gujarat has the lowest unemployment rate among the workforce, standing at 4 per cent, making it an attractive destination for numerous new industries to establish their operations. The state's appeal is further enhanced by its well-developed ports, robust connectivity, stable governance, affordable land availability, prompt decision-making, labour supply, business-friendly environment, and supportive policies, all of which contribute to keeping Gujarat at the forefront in this competitive landscape."

As of now, Gujarat continues to stand as the primary manufacturing centre in the country. The study highlights numerous factors contributing to Gujarat's success, demonstrating a strategic alignment of policies, resources, and a conducive environment for investment. According to this study, the reasons below will ensure Gujarat's maximum contribution to making India a manufacturing hub.

Vibrant Gujarat Summit: A Global Economic Alliance
In the last twenty years, the Vibrant Gujarat Summit has solidified its position as the foremost investment event in the country. With significant investments and the highest success rates in converting Memorandum of Understanding (MoUs) into actual projects, the Gujarat Government Summit stands as a key emblem of international economic collaboration. Through this summit, the state government has discerned global industrial requirements, leading to the development of services and infrastructure. For instance, the study says that Gujarat facilitates Common Environmental Infrastructure Facilities covering 40% of the project cost with a maximum limit of Rs 50 crore. Moreover, it offers preferential rates for land use conversion, thereby drawing investors to choose Gujarat for their investments.

Strategic MoUs Strong Manufacturing Partnership
Demonstrating its proactive stance, Gujarat has entered into numerous Memorandum of Understanding (MoUs) in the past six months, leading up to the 10th Vibrant Gujarat Global Summit. Among the various MoUs inked in October 2023, three agreements alone have a cumulative value exceeding Rs 3,000 crore. Illustrating the forward-thinking administrative approach of Gujarat, these agreements span diverse sectors, encompassing textiles, industrial parks, engineering, and the automotive industry, highlighting the state's dedication to fostering regional progress. Gujarat's cost-effective labour facilities and supportive governmental policies result in advantages for industrial development. Land prices in the state are competitively low compared to other regions, accompanied by excellent last-mile connectivity and robust infrastructure, including well-developed ports, roadways, and railways. Furthermore, Gujarat provides water, power, and renewable energy resources at more favourable rates than its counterparts.

Manufacturing Dominance and Incentive Allocation
According to Colliers' study, Gujarat highlights its expertise in industrial production, with manufacturing constituting a substantial 12.5% share of the state's export portfolio. The state allocates a noteworthy 34.7% of overall incentives and benefits from industrial common policies to the manufacturing sector, underscoring Gujarat's dedicated efforts to propel manufacturing growth. Additionally, Gujarat boasts competitive average rents (approximately Rs 18.5 per sq ft per month) and attractive capital rates (around Rs 16.50 million per acre), surpassing comparable states like Rajasthan and Madhya Pradesh. With a 1600 km-long coastline and major ports such as Kandla, Mundra, Pipavav, and Hazira, Gujarat solidifies its position as a logistics powerhouse, handling a total container throughput of 505 million tonnes.

FDI, Stellar Labor Relations, and Government Stability
Gujarat's appeal extends worldwide, with renowned industries in automobile, semiconductor, FMCG, and IT showing a preference for the state. Similarly, there is better coordination between the state's labour force, corporate houses, and the government due to which Gujarat has the lowest number of strikes in the country. Furthermore, the governance stability in Gujarat over the past six terms creates a favourable and secure environment for both investors and developers.

Key growth areas in India's manufacturing sector encompass the latest technologies, sustainable practices, Industry 4.0, a heightened emphasis on local manufacturing, the integration of artificial intelligence (AI), the adoption of 3D printing, and processes driven by the Internet of Things (IoT). Additionally, emerging sectors comprise semiconductors, agricultural technology, and waste management, particularly e-waste, for which the government has formulated various policy documents. It is noteworthy that Gujarat has already asserted its leadership in most of the aforementioned sectors within India. With these strengths, Gujarat is poised to maintain its position as a leading contender for becoming the primary contributor to India's manufacturing market in the future.