Gujarat has emerged as the epicentre of economic activities in the country. The state has consistently recorded higher growth rates than the national average. Factors such as labour harmony, infrastructure development, social sector reforms, an investor friendly climate, transparent policies, entrepreneurial skills and prudent fiscal management have contributed to the growth of the state’s economy. Shares Micky Shah, director, Power Palazzo, a Gujarat based distributor of active and passive components for electronics and semiconductor industry, “Gujarat is mainly a consumer of electronics items and devices and its contribution to manufacturing of electronic items is very low as compared to other states like Delhi and NCR, Pune, Bengaluru and Chennai.”
Advantages offered by the state
Gujarat’s ICT industry is largely driven by small and medium enterprises (SMEs). The state boasts of several factors that make it a conducive place for SMEs to set up business. The state’s IT and electronics parks include Creative Infocity and Electronics Park in Gandhinagar, and GNFC Infotower in Ahmedabad. Some more projects for the development of IT and ITES SEZ parks are also in the pipeline.
Gujarat has a low cost infrastructure compared to other states of India. It has the second lowest real estate rates in India, which has made it an attractive destination for many big companies to set up their units.
Also, the state is ranked fourth from the bottom in terms of labour, transportation and power costs in India. Says Nitin P Desai, CEO, Navatek Systems, another Gujarat based distributor of electronic components and security products, “Gujarat has very good infrastructure and connectivity. There is no reason why Gujarat cannot become a manufacturing hub. But this can only happen once electronics production takes off in the state, which is at a standstill at the moment. On the other hand, sectors like automobile are growing. With the goverment promoting non- conventional energy getting in the state, becoming a power electronics hardware hub is a sure possibility for Gujarat.”
Some of the major players in the IT and telecom sectors, which are operating in Gujarat are Bharti Airtel, Tata
Consultancy Services, IBM, Tata Teleservices, Wipro and Vodafone India Ltd. Besides, associations like the Gujarat Electronics and Software Industries Association (GESIA), which has more than 300 members from across Gujarat, are a recognised platform for those in the industry to discuss and solve common issues, as well as provide its members opportunities to network with government officials.
GESIA has many milestones to its credit, which include the establishment of the Electronics and Quality Development Centre and the Software Testing Training Laboratory, under the Ministry of Information Technology. It has also forged partnerships with various national level industry associations and has worked with the government of Gujarat for state level IT policies.
According to Nitin Desai, as far as demand for components is concerned, Gujarat does not face an encouraging scene since there is no major manufacturing activity taking place in the state. There have been no policy initiatives to boost the electronics sector in Gujarat. Gandhinagar, which is the only dedicated ‘Electronics Industrial Estate’ in the state is in very poor condition. Most of the units have either closed down or are in sick status. “We don’t even see any new manufacturing units coming up. In fact, some of the major consumer electronics players are shutting down their factories in Gujarat” he informs.
Also, Gujarat is suffering from a huge shortage of skilled manpower. A state government document recently revealed the huge gap between the short supply and huge demand for skilled and semi-skilled manpower as the main reason behind initiating several new schemes to increase the employability of the state’s youth. The schemes include Kaushalya Vardhan Kendras and the eMPower project for training youth in basic electronics. The document suggests that employability in Gujarat is poor because the informal sector accounts for 92 per cent of all available jobs, and a large population gets left out of the job market because of the non-availability of affordable training institutes. The document states that just 10 per cent of the workforce is skilled. The document estimates that, given the way industrialisation is shaping up, Gujarat would need to train about 5.4 million people by 2017.
In this regard, a statement issued by GESIA says that Gujarat does not have good IT engineering colleges or institutes. The institutes are still teaching a very old syllabus, and there is a need to upgrade the curriculum of engineering colleges in the state to bridge the gap between the industry’s requirements and those of the growing number of engineering graduates from Gujarat.
Another concern pointed out by GESIA is that in the case of e-governance, the state government is outsourcing jobs to ICT companies outside the state. Therefore, the MNCs are taking away the cream of the business. However, in many states including Karnataka, local companies get 95 per cent of the business from their state government, while in Gujarat, less than 10 per cent is localised. The state government should, therefore, find ways to give business to local SMEs, GESIA points out.
With the ICT industry facing a serious shortage of skilled manpower, Gujarat is in need of government support to save its ICT industry. However, it has been almost a year since the state’s 2006 ICT policy (which had a tenure of five years) expired, yet a new policy hasn’t seen the light of day. The draft policy is ready, and it has emphasised the need to make adequate human resources available to the IT setups, develop infrastructure for the IT industry, as well as the need for some fiscal sops in the form of subsidies or incentives.
By Nitasha Chawla