The Aakhya Weekly #79 | Vibrant Gujarat: A Multi-Billion Dollar Extravaganza
In Focus: Mega Bucks, Green Dreams, and Innovation Unleashed at VGGS 2024
By Devyani Wadera
The 10th edition of the Vibrant Gujarat Global Summit (VGGS) commenced on Wednesday, 10th January, in Gandhinagar. Prime Minister Narendra Modi inaugurated the three-day biennial summit, which was conceptualized under his chief ministership back in 2003 to attract investments to the state. The summit serves as a platform to showcase Gujarat's economic opportunities and potential, drawing investments from both domestic and international businesses across different sectors. VGGS, over the last two decades, has played a pivotal role in Gujarat's transformation into a coveted economic center. Witness to the state's humble beginnings, the summit has attracted a substantial cumulative foreign direct investment (FDI) of $55 billion between 2002 and 2022.
Touted as the summit of success, Vibrant Gujarat stands as a crucial driver of the state's economic revitalization. Celebrating its 20th anniversary, the mega event served as a platform for influential business leaders and policymakers to spark crucial conversations and foster investment partnerships with the state. With the theme 'Gateway to the Future' for this year, the summit hopes to allure semiconductor manufacturers and emerging technologies to establish their presence in the state. Beyond this, the summit also set the tone for discussions on key future initiatives on green hydrogen and renewable energy.
Inaugural investments pour in…
In the days leading up to the summit, the Gujarat government's persistent efforts to position the state as an investment hub yielded substantial results. A week before the mega event, the state secured deals totaling an impressive $86 billion with 58 companies, spanning various sectors including energy, electric vehicles, and oil and gas. Among the agreements, the one that stands out pertains to NTPC Renewable Energy, which injected $10.80 billion into 15 GW of renewable energy projects, and an additional $8.40 billion for fuel cell electric vehicles and hydrogen blending.
With the initial flurry of investments announced, the Vibrant Gujarat Summit 2024 was poised for a promising start, with companies unveiling their plans for various sectors such as semiconductors, technology, green energy, automobiles, and logistics. Here are some of the marquee announcements and investments-
Ambani, Adani roll out massive investments
Out of the substantial $150 billion investments made by Reliance to develop top-tier assets and capabilities, more than a third has been exclusively allocated to Gujarat. Mukesh Ambani affirmed that Reliance will pledge even more for Gujarat's growth trajectory, with fresh investments earmarked for the next decade.
Demonstrating a strong commitment to propel Gujarat into a prominent position in green growth, Reliance has set a bold target to meet half of the state's energy requirements through renewable sources by 2030. Aligning with this vision, the construction of the Dhirubhai Ambani Green Energy Giga Complex is already underway, spanning an expansive 5,000 acres in Jamnagar. It is slated for commissioning in the latter part of 2024. This initiative is expected to generate a multitude of green jobs and enable the production of green products, ultimately positioning Gujarat as a leading exporter of sustainable products. Reliance also unveiled ambitious plans for the establishment of India's first carbon fiber facility in Hazira, marking a significant stride towards making India a trailblazer in new materials and the circular economy.
Even the Adani Group committed to inject a massive ₹2 lakh crores into Gujarat over the next five years, with a bold vision of generating 1,00,000 direct and indirect jobs. The primary focus of this investment is said to be the establishment of a massive 30 GW capacity green energy park in Kutch, covering an expansive 25 square kilometers. This move is centered on bolstering sustainable development and renewable energy infrastructure.
Semiconductor ball rolling
N. Chandrasekaran, Chairman of Tata Sons, has announced that the company is in the final stages of planning a semiconductor fabrication unit in Dholera, Gujarat. The unit is set to commence operations in 2024, underscoring Tata's intent towards advancing technological infrastructure in the region. Additionally, Mr. Chandrasekaran outlined the group's plans to commence the construction of a lithium-ion storage battery factory, with a capacity of 20 GW in Sanand city, Gujarat, within the next two months. Having sealed the deal worth $1.5 billion in June 2023, the conglomerate highlighted that the plant would contribute towards establishing an independent electric vehicle supply chain in the country, thereby reducing reliance on imports.
Simmtech from South Korea is set to invest ₹1,250 crores to establish a semiconductor fabrication in the state, providing India with its first domestically manufactured memory chip by December 2024. This investment will complement Micron's semiconductor plant and create 1,000 direct and indirect job opportunities. These endeavors are expected to kick-start a flourishing semiconductor ecosystem in Gujarat.
Complementing these developments, Ministry of Electronics and Information Technology Minister Ashwini Vaishnaw called for the development of a semiconductor research center at IIT Gandhinagar. He urged Micron to set up a center of excellence to facilitate ongoing research in the semiconductor industry. He further stated that the government will provide all the necessary resources for the cultivation of this project, to ensure that it becomes a hub for research and development in the semiconductor domain. Preceding this, Micron Technology committed to an investment of $2.75 billion, having signed a pact with the Gujarat government to establish a semiconductor plant in Sanand. The facility is expected to generate 20,000 jobs and it is set to begin operations by 2025, playing a significant role in advancing India’s semiconductor ambitions.
Maruti Suzuki's 38,200 Crores Boost for Operations
Suzuki Motor Corporation (SMC) made significant announcements during the summit, marking a pivotal moment for their operations in Gujarat. Maruti Suzuki India Ltd is set to establish a new automobile production plant in Gujarat, beginning operations in FY28–29 with an annual capacity of 1 million units. The total investment for this project is ₹35,000 crores.
In a parallel move towards sustainable mobility, SMC is injecting ₹3,200 crore into Suzuki Motor Gujarat Private Ltd (SMG), facilitating the creation of a dedicated fourth production line specifically geared towards electric vehicles. Expected to become operational in FY26-27, this advanced production line will elevate SMG's annual production capacity from 750,000 units to 1 million units.
Mittal’s Mega Project
Steel titan Lakshmi Mittal unveiled plans for a megaproject: building the world's largest single-location steel plant in Gujarat's Hazira by 2029. This behemoth will churn out a staggering 24 million tonnes of crude steel annually, solidifying India's position as a steel powerhouse. Mittal, speaking at the Vibrant Gujarat Global Summit, emphasized the crucial role steel plays in ‘Atmanirbharta’ - self-reliance - across diverse sectors like infrastructure, urbanization, renewables, and even cutting-edge fields like electric vehicles and defense. The project is already in motion, with the first phase kicking off in 2021 and progressing smoothly towards its 2026 inauguration. In addition to this, ArcelorMittal has secured MoUs with the Gujarat government for the second phase, ensuring continued expansion and growth. This ambitious undertaking marks a pivotal moment in India's industrial landscape, promising not just economic growth but also a significant leap towards self-sufficiency in critical sectors.
DP World’s 25,000 crore bet
Logistics giant DP World is doubling down on its operations by betting on Gujarat, with a staggering ₹25,000 crore investment. This mega-deal aims to transform the state into a bustling trade hub, focusing on three key areas: deep-draft ports in South Gujarat and along the western coast towards Kutch, establishment of Special Economic Zones in Jamnagar and Kutch, setting up of Gati Shakti Cargo Terminals (GCT) and Private Freight Stations at Dahej, Vadodara, Rajkot, Bedi, and Morbi.
Before this announcement, DP World already had a foothold in Gujarat with a container terminal in Mundra, rail-linked private freight terminals in Ahmedabad, and state-wide express cargo services. The company cemented its commitment further in August 2023 with a $510 million mega-container terminal project at Kandla.
The Real Anticipation…
The first two days of the Vibrant Gujarat Global Summit witnessed a slew of investments for the state, with more expected on the final day. This year's Vibrant Gujarat is anticipated to break all records for the number of Memoranda of Understanding (MoUs) that will be signed. However, the real developments will unfold only in the coming months. While the MoUs and investment announcements are significant, their impact will be assessed by the tangible outcomes that follow.
Top Stories of the Week
India and UAE Forge Stronger Ties with Key Agreements
On January 9, India and the United Arab Emirates further solidified their partnership by signing four Memorandums of Understanding (MoUs) in the presence of Prime Minister Narendra Modi and UAE President Mohamed bin Zayed Al Nahyan. Three of the agreements focus on investment cooperation in the renewable energy sector, innovative healthcare projects, and the development of a food park. The fourth agreement was signed between the Gujarat Government and the UAE-based logistics company DP World.
This meeting marked the fourth encounter between Prime Minister Narendra Modi and UAE President Mohamed bin Zayed Al Nahyan in less than seven months. The meeting with President Nahyan occurred on the eve of the Vibrant Gujarat Summit, where he is visiting as the chief guest. Subsequently, the UAE-India Business Summit unfolded as a part of the summit proceedings, further strengthening the bilateral ties.
The UAE has consistently reinforced its position as India's fourth-largest investor, with deepening economic ties accelerated by the signing of the Comprehensive Economic Partnership Agreement (CEPA) in February 2022. Furthermore, UAE's engagement in the India-Middle East-Europe Economic Corridor, unveiled during this year's G20, adds another dimension to their strategic collaboration. Economic integration has remained a primary focus, with both nations leveraging their complementary strengths. India's expanding industrial and manufacturing capacity finds a reliable partner in the UAE, renowned for its resilience as an energy exporter. The reliance on the UAE as a dependable energy exporter aligns with India's growing energy needs, providing stability to India's energy security. At the same time, it showcases the UAE's strategic positioning as a reliable supplier in the region.
Centre Announces Oil Discovery in Krishna-Godavari Basin
The Central Government has announced the commencement of the "first oil" production from Krishna Godavari Deep-Water Block 98/2 in the Bay of Bengal, located near the coast of Kakinada. The state-owned Oil and Natural Gas Corporation (ONGC) played a pivotal role in the discovery in the renowned Krishna-Godavari (KG) Basin, known for its abundant hydrocarbon reserves.
The first significant breakthrough came in 1983 with the discovery of gas in Razole Well No. 1. This initial discovery sparked interest from private players as well, including Reliance Industries, which joined the exploration efforts. The site is particularly notable for the D-6 block, where Reliance Industries discovered the largest natural gas reserves in India in 2003. However, the journey of oil and gas exploration in the KG Basin has not been without challenges. The current project, initiated in 2016, faced significant delays due to the COVID-19 pandemic. Despite the government's consistent efforts, challenges such as supply shortages, import dependence, price volatility, and limited oil refining capacity, among others, continue to persist. Furthermore, it is forced to continue with the exploration for new reserves, while addressing several technical problems in parallel.
This development aligns with India’s growing need for energy security and its pursuit of reducing dependency on imported oil. The production is set to reach 45,000 barrels per day by mid-2024, accounting for 7% of India’s total crude oil production. As the world’s third-largest oil importer and consumer, this discovery could potentially reduce India’s reliance on global markets for crude oil.
A Few Good Reads
In this article, Pranay Kotasthane and Abhiram Manchi convey skepticism on the comparison of India's semiconductor aspirations and space exploration success. Drawing on empirical evidence from China and Soviet-era Russia, the authors caution against overestimating the potential for replicating success in semiconductor manufacturing by directly applying strategies proven effective in the space domain.
As the discourse regarding the societal impact of capitalism versus charity continues, Scott Alexander articulates his perspective on which pathway maximizes positive impact.
In the aftermath of the Go First-P&W case, Vijay Kelkar examines the profound global ramifications of breached contractual trust in the aviation industry, emphasizing the impact on employees, and passengers, and the imperative need for stringent enforcement of contractual agreements.
Arkoprabho Hazra provides a captivating perspective, contending that India's UN vote reflects a consistent adherence to the principle of proportionality and continuity.
In the face of the complex U.S. political scenario, C. Raja Mohan offers four key guidelines for Indians, urging impartial observation, discernment of internal dynamics, acknowledgment of continuity and change, and confidence in the robustness of the American democratic system during the Trump vs. Biden elections.