Gujarat industry seeks easier access to incentives, lower cost of doing business

The industrial ecosystem in Gujarat, one of India’s high-growth states, is supported by a diverse manufacturing base, entrepreneurial culture, and growing adoption of technology. However, rising production costs, geopolitical uncertainty, limited access to markets, and compliance challenges are putting pressure on both large industries and micro, small, and medium enterprises (MSMEs) in the state, industry stakeholders said.

While large industries are facing higher input and logistics costs, MSMEs in the state are particularly at risk because of their limited financial and human resources. According to the government data, as of July 2026, Gujarat has more than 33.16 lakh operational MSMEs, which contribute around 37% to state’s GSDP and employ more than 1 crore people.

Industry stakeholders called for targeted government support, easier access to subsidies and incentives, lower electricity costs, and measures to improve export competitiveness of these enterprises.


“MSMEs are keen to grow but continue to face several challenges, including inadequate institutional support, rising production costs, difficulties in assessing market demand, and limited access to government schemes,” said Jaimin Vasa, President of the Gujarat Chemical Association, adding that geopolitical uncertainties and higher raw material prices have further worsened market conditions, significantly increasing the cost of doing business.

The challenges are not restricted to smaller businesses. Large industries are also facing higher production costs and disruptions in access to important export markets, particularly in Europe, the US, Russia, and Ukraine, said Vasa.

According to him, businesses are facing a dual challenge, as in some cases, geopolitical developments have effectively shut markets, while in others, markets are open, but realisations are too low to make exports viable.

The pharmaceutical and chemical sectors are particularly exposed to these pressures as manufacturers face higher raw material and logistics costs. At the same time, customers are often unwilling to absorb higher prices because they too are dealing with rising costs, Vasa pointed out.

“Geopolitical tensions have pushed up costs across the board, while many markets are also not performing well,” Vasa said, adding that higher prices for imported raw materials are making Indian manufacturers less competitive globally.

Vasa also raised concerns over India’s dependence on the US market, particularly for pharmaceuticals. Frequent uncertainty over possible changes in US trade policy and tariffs makes it difficult for businesses to plan investments and operations, he said.

Similar concerns exist over trade with Russia and Ukraine, where companies face uncertainty not only over future market access but also over timely payments.

He said government support should focus on directly reducing the cost of production. Lower electricity charges and duties, along with incentives for exports and research and development, could help MSMEs improve competitiveness and invest in innovation.

‘Industry undergoing technological transformation’
At the same time, Gujarat’s MSME ecosystem is undergoing significant technological transformation, according to Hansraj Gajera, General Secretary, Gujarat Unit, Laghu Udyog Bharati.

A new generation of young and qualified entrepreneurs is increasingly adopting automation, modern machinery, and technology, he said. This has helped Gujarat’s MSMEs improve their ability to meet global quality standards.

Companies such as Toyota and Mercedes have been sourcing components from Gujarat, reflecting the growing capabilities of the state’s smaller manufacturers, Gajera said.

Gujarat’s industrial strength also lies in its regional specialisation. Rajkot has a presence across more than 40 MSME segments; Jamnagar has emerged as a hub for brass parts and electronic components, while Surat has built strong capabilities in diamonds and textiles.

According to Gajera, the state government has also become more proactive in engaging with entrepreneurs and understanding industry concerns while framing policies. However, access to credit remains a challenge for MSMEs.

He said the delivery of government subsidies and financial assistance had become more transparent, provided businesses maintained proper documentation. In some schemes, financial assistance that was earlier routed through organisers is now being transferred directly to eligible beneficiaries.

Gajera, however, stressed the need for region-specific policies, saying solutions that work for one industrial cluster may not necessarily be suitable for another.

He also sees significant opportunities for Gujarat’s MSMEs in defence and other strategic sectors. The development of a defence corridor, DRDO facilities, and defence PSUs in the state could create new markets for local component manufacturers and help integrate them into India's defence manufacturing ecosystem.

“Bringing defence, railways, shipping and other strategic PSUs to Gujarat could create significant opportunities for MSMEs,” he said.

Gems & jewellery sector faces challenges
The gems and jewellery sector, meanwhile, continues to face a slowdown amid high gold prices, according to Mayur Adesara, Vice President, Gujarat chapter, India Bullion and Jewellers Association (IBJA).

Adesara said the government should simplify export procedures and provide appropriate incentives to boost overseas shipments. The sector currently faces multiple compliance and procedural requirements that make it difficult for businesses to operate smoothly.

India imports around 700-900 tonnes of gold annually, making it one of the world’s largest gold importers. Adesara said greater support for domestic gold refining could help strengthen the industry and reduce import dependence over the long term.

Gujarat, particularly Ahmedabad, plays an important role in India’s gems and jewellery ecosystem, with manufacturing centres such as Rajkot and Kolkata also supplying jewellery to global markets.

Industry representatives also want the government to focus beyond traditional subsidies and address the broader cost of doing business.

MSME-large company integration
Darshana Thakkar, National President, Entrepreneurship Development Council, Women’s Indian Chamber of Commerce and Industry (WICCI), said Gujarat had developed one of India's strongest industrial ecosystems, supported by progressive policies, infrastructure, and an entrepreneurial culture.

However, she said the next phase of growth would depend on integrating MSMEs more deeply into the supply chains of large companies.

“The focus now should shift from vendor development to value-chain development,” Thakkar said, calling for easier access to technology, quality certifications, digital procurement platforms, and mentorship from anchor industries.

According to Thakkar, industry is increasingly looking beyond subsidies and seeking faster execution and a lower cost of doing business. Affordable industrial land, smaller plug-and-play manufacturing spaces, simplified incentive disbursement, and sector-specific infrastructure could encourage more first-generation entrepreneurs and help existing MSMEs scale up.

She said future policies should reward innovation, technology adoption, sustainability, exports, and employment generation rather than focusing only on capital investment.

Thakkar also called for a shift from “Ease of Doing Business” to “Ease of Growing Business”, with entrepreneurs spending less time navigating approvals and more time building their businesses.

A genuinely integrated digital single-window system, supported by time-bound clearances, transparent land allocation, and reduced compliance requirements, could improve investor confidence and accelerate industrial expansion, she said.