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Vibrant Gujarat Slips As Economic-Employment-Easy Biz Hub

| Updated: June 30, 2022 13:21

Notwithstanding all the boost, GIFT City and several mega-crore projects launched in Gujarat, a recent report indicates that the state is lagging behind in development. The “trouble-shooter report” also lists ways to remedy the ills and effect an upward shift in the next five years. The detailed study, prepared by 12 senior IAS officers and private agencies, has been presented to the Chief Minister to prepare a roadmap for the development of the state.

The report mentions Gujarat’s dismal show where it comes to business, employability and industrial/economic contribution to the national GDP.

Factors pinned behind the lapse are a lack of skilled workforce, poor policies compared to other states and a constant decline in agriculture and industrial sectors. As of June 2022, Gujarat ranks low in the list of top six states that are significant contributors to India’s economy.

In terms of employability, the state ranks 8th and where it comes to Ease of Doing Business (EoDB), it stands at 10th position. The incentives offered by the state government for setting up businesses in various fields are quite low compared to other states, thereby pushing it even lower in the Cost of Doing Business.

In other parameters, too the state has either stagnated or there has been a marked downward trend.


GujaratAndhra PHaryanaKarnatakaKerala

DECLINING TRENDS (last 10 years)

15.1% from 19.5%43.8% from 48.4%Stagnation at 36.7%Impacted cultivation

Despite the state government propagating start-up and innovation policy, it is the last in list of states when it comes to English skills. The state is not in the list of top 10 states when it comes to English proficiency. This has adversely affected Gujarat’s foray into Fintech and IT companies. No Fintech or IT unicorn is headquartered in the state.

Even though the state has GIFT city, which can become International Finance Gateway of the country, no international merchant or investment bank has their offices here. There has been a paradigm shift in the contribution of various sectors in India’s economy and the service sector has emerged as a major contributor. Unfortunately, service sector growth in Gujarat has been stagnant for the last five years.

EoDB and Cost of Doing Business

Other states like Maharashtra, Karnataka, Tamil Nadu and Andhra Pradesh have sector-specific policies like electronics, EV, textiles, apparels, basic metals, pharma, food processing etc while Gujarat has none. A review shows that incentives offered by the state are not competitive/ attractive compared to other states that are targeting investments in focus sectors of Gujarat.

For instance, Gujarat offers 10-25% subsidy up to maximum Rs 35 lakh for any automobile sector project. It is 35% and up to Rs 1.10 crore in Karnataka, 1.5 crore in Tamil Nadu and Rs 50 lakh in Haryana.

Skill deficits and gaps is also one of the areas where Gujarat lags behind many others. Though service sector is an integral part of the country’s economy, Gujarat with 5.2% contribution stands at 7th position in contribution of the sector.

IT and ITES sector is mainly dependent on exports and is growing at a slow pace. There is very low footprint of IT companies in the state. None of the major players have headquarters here. The reasons are lack of skilled persons, with just 6 engineering colleges compared to Karnataka and Maharashtra which have 19 colleges each.





Low air connectivity to key international hubs is also an important reason. There is no direct connectivity to Europe and USA.


Though the GIFT city can become international financial gateway of the country, well-known international merchant banks and investment banks do not have physical presence. Normally, it takes 90-120 days for approval for setting up a business at the GIFT city which includes registration with the SEZ authority, IFSC, GST etc. Single window clearance system is needed to promote businesses. Stringent KYC norms need to be relaxed for foreign investors.

Also Read: Gujarat Roads To Undergo Makeover With ₹3,760 Crore Approved Project

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