Gujarat: how safe an investment destination?

Where the mind is numbed with fear and the head bowed down, where knowledge is shackled, where the world has been broken up into fragments based on one''s religion - will a rational individual ever choose to invest in a place like this? Can big-ticket investments flow in to regions where insecurity rules? Gujarat chief minister Narendra Modi may believe otherwise, but Gujarat runs the risk of being such a place. Modi may have assured a CII summit thatÂ Rs 8,000 crore of investment is set to flow into Gujarat, but details are not forthcoming since. Not even when Gujarat government officials were asked point-blank. They mentioned General Motors bringing in Rs 1,000 crore and Shell Gas putting in another Rs 3,500 crore. No further information was available. Officials excused themselves off, saying they were overworked. The Union Commerce and Industry Ministry was no better. Officials took more than 48 hours to come back with how much actual investment has flown into Gujarat in the last 11 months. Still, at the end of the day, no information was available. Gujarat government officials were tom-toming on how Gujarat was the favoured FDI destination. What they probably glossed over is: all this was Gujarat''s glorious past. During the first 10 months of 2002, Gujarat managed to collect a paltry $7.5 million against Maharashtra''s share of $30 million. It''s quite possible that even this investment was pre-decided well before the Gujarat riots, and wasn''t cut despite the severe encouragement by Modi. Let''s examine some of the fundamentals of the Gujarat economy. There''s news that Gujarat Electricity Board was the highest loss-maker among all state electricity boards last fiscal. Its losses touched a whopping Rs 2,208 crore last March. This was mainly due to the exorbitant tariff it has been paying to independent power producers. Clearly, Modi will have to set his electricity utility right if he wants the industry to take his boastings seriously. After all, industry cannot survive without power. The stifling bureaucracy is also working overtime. According to media reports, Gujarat Pipavav Port Limited managing director Nikhil Gandhi had to shift his proposed Positra Special Economic Zone project out of the state when he couldn''t get land allotted for over 27 months. Gautam Adani''s (of Adani Exports) proposed SEZ, similarly, hasn''t moved an inch with the state government yet to decide on the project. And, before you get waylaid by Modiâ€™s promises on encouraging private sector investment in biotechnology, understand one thing: the government has no concrete plan of action for this sector at all. Despite all the talk of investment in the state, and the venture capital help that it intends to extend, the government is completely silent on the key issue of forming a policy at the state level. Letâ€™s now look at what potential foreign investors have to say about Gujarat. Since 9/11 and following the US donning war paint, Saudi Arabian investors are increasingly looking at investment opportunities outside the US - particularly in Asia. China, Korea, Malaysia and India are considered attractive destinations. But even as they are gung-ho over the Indian IT and pharmaceutical sectors and express keenness to do business, Saudi businessmen say they are troubled by what happened in Gujarat. As businessmen, we will go where there is profit and stability, said Ziad al-Bassam, who headed a Saudi delegation which toured India recently. And so when we read about Gujarat, this worries us. What would have happened if I had built a factory there and it had been burned down because I am a Muslim? Now, sample what some leading Indian CEOs had to say about the Gujarat riots. Tata Consultancy Services CEO S Ramadorai had said: We don''t have anything against a single politician... but this is no longer an issue for the state government, or the (local) bureaucracy. It affects the risk profile of the country. K Vijayan, CEO, JM Mutual Fund, said: â€œA CEO sitting in New York or Oslo does not distinguish between Ahmedabad, Hyderabad or Mumbai. For him, it''s India that he''s investing in, and riots can shake his business confidence,â€� while the Pantaloon Group''s Kishore Biyani had observed: Companies will start reconsidering their investments in Gujarat. Getting good people to work in Gujarat will also be a problem for the time being. This was last February. A year later, itâ€™s extremely unlikely that the scenario would have changed drastically. There are of course some industrialists who think otherwise. Chennai-based industrialist Venu Srinivasan of TVS group considers post-Godhra Gujarat a good state for industrial investment. â€œGujarat is not a violent state, but after the Godhra and post-Godhra carnage, it has been wrongly branded so. What had happened was one single passing incident on the basis of which no generalisation could be made,â€� Srinivasan said. Â For Modiâ€™s sake, one hopes that Srinivasan is correct in his assessment. Narendra Modi, for the time being, would do well to remember that a display of finger-wagging, sharp words and bad temper in front of industry captains wonâ€™t take him far. No one doubts his impressive electoral win, but that is no guarantor to his administrative abilities and leading Gujarat to a position of economic pre-eminence. If Modi seriously wants investments to come in, he must assuage concerns at home and abroad about the safety of life and property in Gujarat first. Will you invest in Gujarat?

Gujarat: how safe an investment destination?

Gujarat Chief Minister Narendra Modi may have assured a CII summit that Rs 8,000 crore of investment is set to flow into Gujarat, but details are not forthcoming since. Not even when Gujarat government officials were asked point-blank.<br /><img s...

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