Electronic appliance makers eye Gujarat as new manufacturing hub

A global appliance maker with a new manufacturing capacity in Noida is now in the process of doing a final review to shift base to Gujarat. An internal analysis by the company showed that the company could save almost Rs 430 crore annually if this shift was made.

“Skilled labour is cheaper and better road infrastructure and port connectivity ensures that manufacturing and logistics costs are lower,” said the India CEO of the company quoted above.

This CEO states that the three 50-acre plots next to his plot were to be initially occupied by a Mumbai-based electronic goods firm. Even the latter had a change of strategy and shifted to Gujarat instead.

Leaving behind areas like Himachal Pradesh and Delhi-NCR (Greater Noida), Gujarat is slowly becoming the preferred destination of electronic appliance makers.

Gujarat recorded $66.8 billion worth of exports in 2017-18, contributing over 22 percent to India’s net exports.

On January 30, Voltbek Home Appliances, a joint venture between AC maker Voltas and Europe’s consumer durables player, Arçelik, commenced its first manufacturing facility in India. Spread over 60 acres in Sanand, an industrial hub near Ahmedabad, Gujarat, the factory will manufacture Home Appliances that include refrigerators and washing machines.

The company said that this unit will create an OEM base for home appliances in the region, along with local employment opportunities.

During this facility launch, Noel Tata, Chairman, Voltas Limited, said that Gujarat will soon become the manufacturing hub for white goods firms. Tata added that their supply chain has already begun to relocate itself around this factory.

This, he said, will lead to development of Gujarat as a consumer durables manufacturing hub just as the Tata Motors factory led to Gujarat’s development as an auto manufacturing hub.

Players like Polycab already have a manufacturing facility in Halol, Gujarat for the wires and cables business. Similarly, Crompton Greaves Consumer also has manufacturing presence in Gujarat for products like lighting.

Policy measures

In the context of National Electronics Policy and associated emphasis on setting up of electronics manufacturing industry in the country, the Government of Gujarat, with a view to providing focused attention on the subject, came out with the Electronics Policy for the State of Gujarat (2014-2019).

The aim of this plan is to establish Gujarat as a globally-recognized hub for the electronic system design and manufacturing with a turnover of USD 16 billion by 2021 and an investment of USD 6 billion to create employment opportunities for 5 lakh people by 2021.

Here, the aim of the government is to facilitate setting up of Greenfield and Brownfield Electronics Manufacturing Clusters (EMCs) with world-class logistics and infrastructure and business-friendly facilities with good sea, air and inland connectivity.

“The state government has enabled companies to develop land on a cost-effective basis to manufacturers. Power is also cheaper and it is uninterrupted,” said the head of the Gujarat manufacturing facility of an Indian electrical goods firms.

He added that depending on the type of industry and capital invested, tax benefits in the form of reimbursements are also offered to the companies.

While sectors like textile have seen a slowdown post-demonetisation, appliance makers said that this has led to the steady supply of skilled talent to the factories.

The manufacturing cluster head of a small appliance maker said that the minimum wages policy has also been robust and hence worker strikes in the state are also minimal. This improves productivity.

The Gujarat Industrial Development Corporation has played a key role in helping companies set up manufacturing units in the special economic zones (SEZ) as well as special investment regions.

Gujarat has five SEZs, two in Gandhinagar (electronics and IT), one each in Vadodara (bio-technology), Surat (apparel) and Ahmedabad (apparel). These SEZ offer tax concessions setting up plants in the area.

Other manufacturing hubs in Gujarat

Sectors like automobiles, diamonds, textile, oil & gas and pharmaceuticals have a large manufacturing presence in the state.

When it comes to automobiles, the sector has already made Gujarat a major manufacturing hub with presence of players like Tata Motors, Ford, Maruti Suzuki, MG Motors and Honda Motorcycles. The auto clusters in Sanand, Halol and Rajkot is expected to cater to almost 350 auto maker units.

Apart from this, oil and gas refining is a major industry.

Gujarat is also the textile hub of the country with around 8 textile clusters of $30 billion. The state also accounts for 27 percent of the total cotton output of India.