Industrial policies in Gujarat

Introduction

Gujarat is one of the most economically and industrially developed states in India, thanks to the major role played by its industrial policies in promoting industrial development. It has the highest share of the industrial sector in the state domestic product (SDP), when compared to the other major states. The share of the industrial sector in the gross state domestic product (GSDP) has risen from 20 per cent in the 1960s to 30 per cent in the 1970s and 40 per cent in the mid-1990s (Hirway, 2002). The share of the industrial sector in SDP was 44 per cent in the year 2016—17. The rank of the state in terms of contribution to national industrial GDP has risen from 8th in the 1960s to 2nd in the last decade, second only to Maharashtra. Liberalisation has reduced the control exercised by the central government in directing investments to desired locations and has thus left a larger scope for state-level initiatives. Gujarat has responded well to these economic reforms and has initiated significant policy reforms to encourage domestic as well as foreign investments. The industrial policies of the state government have focused on strengthening the manufacturing base and developing the service sector around it. Over a period, the state has diversified its manufacturing base from textile mills to a wide range of other products.

This chapter focuses on the industrial policies promoted in the state since 1971 and details the major objectives outlined in them along with the strategies proposed to achieve these objectives. The provisions for micro, small and medium scale enterprises (MSMEs) have been incorporated in the discussion. Environmental degradation is generally the negative externality of industrial development. Therefore, the measures, if any, suggested for environmental protection in the policies have also been included in the discussion. As the policy documents for the period prior to 1995 are not available in the public domain, published literature has been referred to instead. From 1995 onwards, the original policy documents are available and have been used as the main source of reference along with the published literature. The schemes announced by the government to achieve the objectives of the respective policies have also been referenced. A comparative analysis of the three major industrialised states in the country is also part of the discussion in this chapter.