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Why Gujarat can be India's biggest automobile hub

Last updated on: July 7, 2011 15:47 IST

Why Gujarat can be India's biggest automobile hub

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Rediff Business Desk

Gujarat Chief Minister Narendra Modi dreams of making Gujarat an automobile hub. His dream does not seem far-fetched as many auto makers are now flocking to Gujarat.

After Tata Motors relocated the Nano plant to Sanand having faced a myriad of problems at Singur in West Bengal, automakers have been making a beeline to set up manufacturing bases in Gujarat.

Gujarat came onto the radar of auto companies after the government went overboard to help the troubled Tata Motors shift its base from Singur.

An investor-friendly government, transparency, good infrastructure, easy connectivity to ports and an efficient rail and road network make it a hotspot for the automobile industry.

So can Gujarat emerge as the Detroit of India? Which auto companies are eyeing Gujarat?

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Image: Narendra Modi with Ratan Tata.

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The entrepreneurial sprit and a strong base of auto ancillary units makes the environment congenial for automakers in Gujarat.

With all the automakers focused on exports, Gujarat becomes attractive with its well developed ports.

The transparency in dealing with officials, ease of setting up a business has also been hailed as big advantages here.

While auto manufacturers face frequent labour strikes in other states, Gujarat has not been confronted with major labour issues, though General Motors's Halol plant saw a labour issue.

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Image: Pillars of the cargo port are checked as trucks wait to load coal at Dahej.
Photographs: Amit Dave/Reuters.
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The auto ancillary hubs in Rajkot, Ahmedabad and Vadodara play a vital role in further developing Gujarat as an automobile hub.

The auto-component industry at Rajkot has registered a 15-20 per cent growth annually.

With more than 500 auto component manufacturers, with a net turnover of around Rs 1,500 crore (Rs 15 billion), auto component makers will see a 20-30 per cent growth in business with more companies coming to Gujarat.

The government also plans to set up an auto ancillary park for Sanand district and a precision engineering park in Dahej. A Special Economic Zone for auto parts is also likely to be set up in Kutch.

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Image: Tata Nano plant at Sanand.
Photographs: Reuters.
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However, Gujarat faces stiff competition from Tamil Nadu and Maharasthra, which have already established automobile industry's hotspots.

One of the most industrialised states in the country, Gujarat has emerged as a manufacturing powerhouse attracting many companies. Gujarat accounts for 17 per cent of India's total fixed capital.

The manufacturing sector forms the backbone of Gujarat's economic growth. With Gujarat poised to grow further as an investment-friendly destination, the auto industry is geared to spin fortunes from the state.

Experts point out that Gujarat needs to expand its vendor base, improve accessibility and offer more sops to attract the big players.

So which are the biggest auto players in Gujarat?

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Image: Manufacturing forms the backbone of Gujarat's economic growth.
Photographs: Reuters.
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Apollo Tyres was the first company to enter Gujarat in 1991 with an investment of Rs 1400 crore (Rs 14 billion).

Apollo's Gujarat plant at Limda is one of the largest units of its kind in the South East Asian region. The Limda plant has the latest technological innovations.

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Image: Apollo Tyres.

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General Motors started its plant at Halol with an investment of Rs 2,000 crore (Rs 20 billion) in 1996.

GM is planning to expand manufacturing unit by investing Rs 500 crore (Rs 5 billion).

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Image: Chevrolet Beat LPG.

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In 2002, heavy commercial vehicle manufacturer Asia Motor Works set up its Rs 1,400 crore (Rs 14 billion) facility in Bhuj.

AMW has ramped up capacity of the Bhuj plant from 10,000 units to 50,000. It also manufactures components for the automotive and general engineering industries.

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Image: Asia Motor Works.

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In 2008, Gujarat welcomed the much troubled Tata Motors to fulfill its dream of making the world's cheapest car.

Despite the presence of established players, Narendra Modi wooed Tata Motors to set up shop in Gujarat. So Tatas decided to relocate to Sanand.

This was a turning point for Gujarat auto industry.

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Image: Tata Nano plant at Sanand.
Photographs: Reuters.
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Ceat Tyres was the next to follow. The company set up a manufacturing plant investing Rs 700 crore (Rs 7 billion).

Ceat manufactures over 10-million tyres per year and has a major market share in the light truck and truck tyre market.

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Image: CEAT office building.

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Ford India will set up its manufacturing unit right next to Tata Motors' Nano factory at Sanand.

Ford had sought 550 acres from the state government to set up a mother plant together with an ancillary park.

This would be Ford's second plant in India. It already has a manufacturing unit in Maraimalai Nagar, Chennai, which has an annual capacity of 200,000 units.

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Why Gujarat can be India's biggest automobile hub

Image: Ford plant.

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Maruti Suzuki India is in talks with the Gujarat government over the possibility of setting up its seventh plant in India.

Maruti along with vendors, could invest up to Rs 18,000 crore (Rs 180 billion) in Gujarat as it looks to produce about 20 lakh (2 million) units in the long run in the state.

While Gujarat is a preferred location, Maruti is also looking at other states for expansion.

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Image: Maruti plant.

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French auto major Peugeot is considering setting up a manufacturing facility in India and is scouting for 150 acres of land in Gujarat.

Top company officials meet chief minister Narendra Modi and expressed their desire to set up a manufacturing plant.

The company is impressed with the fast-paced development of Gujarat and is in talks with the state government regarding a suitable place for the plant.

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Image: Peugeot 107.

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Hyundai plans to build a diesel engine plant in Gujarat with an installed capacity of 150,000 units per annum.

Hyundai plans to invest Rs 400 crore (Rs 4 billion) for the plant which will be operational by 2013-14.

Hyundai officials have visited a site at Dholera.


Image: Hyundai i20.

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