gujarat – an ‘emerging’ hub for ict (leadership summit 2012)

8/12/2019 Gujarat An emerging hub for ICT (Leadership Summit 2012)

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(i)


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Technology has ushered in the information revolution in all aspects of human

transactions. The internet has changed the way business is done, the speed at

which new findings of any kind reach all parts of the world in no time, and most

of all, the prospects of innovation and development it has thrown. In such a

scenario, no domain is likely to remain unaffected by its enormous force. ICT is

the new idiom of change in the way the world operates today. The current

developments in the information and communication technology (ICT) sector in

Gujarat and their implications in transforming the country into knowledge

economy will add newer dimensions towards economic growth and wellbeing.

The ASSOCHAM platform on ICT focuses on ICT-infrastructure, policies, present

status including the Digital advantage, and will dwell upon the challenges which

must be overcome to attain the status of knowledge economy of the country.

I wish to extend my heartfelt thanks to the Department of Science & Technology

as well as IndexTb, Government of Gujarat for their supports. I am also thankful

to other stakeholders and partners who have made the program a success.

ASSOCHAM has been very instrumental to bring out this prestigious conference

in limited time. It is a pleasure to acknowledge the Knowledge Partner of this

initiative KPMG to come out with this vibrant publication.

ACKNOWLEDGEMENT

(ii)

President,ASSOCHAM

Rajkumar Dhoot, MP


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FOREWORD

The fast paced growth which the Information and Communication Technology(ICT) sector has witnessed has led to India becoming a force to reckon with inthe global arena. The sector acts as a stimulant for growth in other relatedsectors such as real eState, automobiles, travel, railway and mortgage bankingindustries while creating subsequent employment opportunities. These are goodtimes for further boost to the ICT sector with the roll out of more attractive andinvestor-friendly policies supported by numerous measures to facilitate licensing,thereby simplifying the investment procedures

Gujarat serves as a benchmark for other States in India and is slated to be one ofthe front runners in all round development. One of India's most industrializedStates with a decade old history of rolling out strategic and citizen centriceGovernance programs it promotes the use of ICT in almost all walks of life. Awide array of incentives and policy measures, provided by the State, make it anattractive and a transparent investment destination for the investors.

The report includes a detailed current State assessment of the State of Gujaratagainst parameters such as talent availability, infrastructure, Governmentpolicies, IT/ITeS policy in Gujarat and e-Governance in Gujarat. It also profiles keycities of Gujarat such as Ahmedabad, Rajkot, Surat, Gandhinagar and Vadodaraas probable hubs for the IT/BPO sector. A relative analysis of Ahmedabad as an

emerging IT BPO destination as compared to other established IT-BPOdestination revealed that while business catalysts such as Governmentincentives, outsourcing maturity of the location etc and the current quality of lifeare in favor, the city needs to improve its risk profile and reduce the cost of

1operations .

We have also provided recommendations at the policy and implementation levelwhich would help Government of Gujarat to place its key cities on the map ofother pro-ICT investment cities.

KPMG in India is glad to acknowledge its association with ASSOCHAM inorganizing the conference Leadership Summit 2012 on 12th October 2012.

(iii)

Pradeep Udhas

Partner and Head - IT BPO Sector

KPMG in India

Navin Agrawal

Partner and Head - Government Sector

KPMG in India

1KPMG in India Analysis


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Contents

1 Executive Summary

2 Gujarat: About the State

3 Key Requirements to be an ICT destination of choice

4 Conclusion

Appendix: Cities Profiles

Glossary of Terms

Sources

1

3

3

3

4

5

8

9

12

14

Talent availability & employable pool of resources 14

Infrastructure 15

- Delhi-Mumbai Industrial Corridor (DMIC) 18

- Gujarat International finance Tec-city (GIFT) 21

Cost 24

Risk Profile 24

Business Catalyst 24

Government Policies 25

- IT/ ITeS Policy in Gujarat (2006- 11) 26

- e-Governance in Gujarat 27

Quality of Life 28

30

33

33

36

39

42

45

48

50

Introduction to Gujarat

Key Industries in the State

Infrastructure in the State

Investments in the State

Government policies for the State

Overall Performance of the State

Gujarat A Potential ICT Destination

Ahmedabad

Rajkot

Surat

Gandhinagar

Vadodara

(iv)


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ExecutiveSummary

Gujarat has poised to scale a new economic landmark and has been leading the2way in India's economic development . Recent flows of investments in the State,

robust growth in its economy and upcoming SEZs vouches for the tremendous

opportunities present in the State. Today, Gujarat is one of the most industrialized

States in the country and is a premier hub to major industries like oil and gas,chemicals, textiles, and gems and jewellery. The credit for this excellent

performance undoubtedly goes to the hard work of Gujarat's people, its

favorable policies and the State's investments in the physical infrastructure. Due

to these steps, it now enjoys a global reputation as an economic hub and an

excellent location for investment.

The Government-industry partnership within the State has helped create a

conducive environment for the technology industry. The Government has

contributed to the growth of the sector by concentrating on developing State of

the art infrastructure, an integrated IT policy and a strong focus towards

development of human resources and talent availability. Ahmedabad,Gandhinagar, Surat, Vadodara and Rajkot have emerged as major ICT hubs in the

State with other smaller towns following suite. Initiatives like GSWAN, e-

governance and GIFT are also helping the State to be perceived as an attractive3ICT hub of choice by global players .

The education department has also undertaken various initiatives to enrich the

State's human resources. Initiatives like SCOPE (The Society for Creation of

Opportunity through Proficiency in English), College to Career Program and the

establishment of Gujarat Informatics to promote the IT-ITES industry shows the

State Government's commitment to providing paramount support to the growth4of IT-ITES in Gujarat .

Development of business centers like Gujarat International Finance Tech City

(GIFT) near Gandhinagar, the DMIC corridor and various other IT-ITES Special

Economic Zones are also helping in projecting the State as a future IT-ITES

destination and will facilitate the companies interested in setting up delivery2centers .

1 | Gujarat An emerging hub for ICT (Leadership Summit 2012)

2 KPMG in India Analysis3

Dept. of Science and Technology, Government of Gujarat, http://dst.gujarat.gov.in/e-governance.htm4Gujarat State Portal, http://www.gujaratindia.com/citizen/citizen.htm


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What sets Gujarat apart

Fastest Growing Economy

Strategic Location

World Class Infrastructure

Preferred destination for Investment

Growing employable workforce

Government incentives & policies

Source:IBEF Gujarat report; KPMG in India Analysis


The report provides a perspective highlighting Gujarat as the next potential IT-ITES destination. This research report provides insight into the current status of

IT-ITES industry, availability of human resources and city level micro information

related to the State of Gujarat and underscores favorable factors making Gujarat

an attractive choice.


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Gujarat:About the State

Introduction to Gujarat

Key Industries in the State

Gujarat which is situated on the western

coast of the Indian Peninsula has the

longest coastline of 1,600 km in thecountry with a population of around 60

million.

The State is bordered by Rajasthan in the

north, Maharashtra in the south, Madhya

Pradesh in the east, and the Arabian Sea

as well as the Pakistan province of Sindh5in the west .

Gandhinagar is the capital city of Gujarat. Along with 26 districts, some key cities

in the State are Ahmedabad, Vadodara, Surat, Rajkot, Bhavnagar and Jamnagar.

The most commonly spoken language in the State is Gujarati, while other

languages like Hindi and English are also used.

Gujarat contributes 15.5 percent to the

industrial output of India. There are 12

major industry groups that together

account for 95 percent of value-addition in6the State's industrial products . Gujarat is

a leader in several industrial sectors such

as chemicals, petrochemicals, dairy, drugs

and pharmaceuticals, cement and

ceramics, gems and jewellery, textiles

and engineering. The industrial sector

comprises of over 800 large industries. It

is also home to over 3, 45,000 micro,7small and medium industries .


Gujarat Location Map

Source: KPMG in India Analysis

Key Industries in Gujarat

Agro and Food Processing

Dairy

Chemicals and Petrochemicals

Textiles and ApparelsEngineering and Auto

Gems and Jewellery

Oil and Gas

Pharmaceuticals and Biotechnology

IT

Minerals

Ports

Power

Tourism

5 Maps of India, http://www.mapsofindia.com/gujarat/quick-facts/area.html6Centre for Monitoring Indian Economy

7Gujarat IBEF report


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Infrastructure in the State

Gujarat has a robust Infrastructure and is pioneer in Public-Private partnership. It

takes to its credit as 'Asia's Biggest' Investment Infrastructure Opportunity8Centre.' Gujarat State have strategically developed very efficient and cost

affective infrastructure which boost States Urban and Industrial growth.

The State has an excellent infrastructure spread across 42 ports, 13 domestic

airports and one international airport. The State also has an extensive road and

rail network. Urban and rural areas have 24-hour power supply. 100 percent of

Gujarat's villages have electricity connections for 24 hour power through theJyotirgram Yojana. The State had installed power Capacity of 17600 MW as on

8December 31, 2011 .

Government of Gujarat has been encouraging promotion of Special Economic

Zones (SEZs). SEZs are considered as growth engines that can boost

manufacturing, augment exports and generate employment. Government of

Gujarat has enacted the Gujarat SEZ Act, 2004. Besides this, the SEZ Rules,

2005 and SEZ Regulations are in place. Under the Act, assistance is provided to

the developer of SEZ for development of infrastructure facilities and providingservices. Tax concessions are provided to the units coming up in the SEZ. The

State Government has also introduced labor reforms and has carried out

amendments in some of the provisions of the Industrial Disputes Act, 19479offering complete flexibility in the employment of labor by units located in SEZs .

Special Economic Zones (SEZ)

Gujarats Infrastructure Checklist :

Good Connectivity Road, Rail, Air, Ports

Continuous power supply

Multiple telecom service providers

Broadband connectivity till grassroots level

Office space avaialbility



8Centre for Monitoring Indian Economy9Gujarat State Portal, http://www.gujaratindia.com/index.htm


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10RBI's Regional Office Ahmedabad, Department of Industrial Policy and Automation11Gujarat State Portal, http://www.gujaratindia.com/index.htm

In all, 60 SEZs are approved for Gujarat. These include multi-product SEZs andsector-specific SEZs covering textiles, pharma, engineering, chemicals, ceramics,

gems and jewellery and IT/ITES sectors.

With its reputation of being a highly investor-friendly State, Gujarat has a proven

track record of attracting high volumes of investment becoming the most favored

investment destination in India. Total FDI equity inflows from January 2000 to10June 2012 were about USD 8.1 billion. In the backdrop of these developments,

the Government of Gujarat had declared Industrial Policy 2009 to further attractinvestments.

The State holds the largest share - 11 percent - of the total outstanding project10investments in the country.

Investments in the State

Outstanding Project Investments by States (% Share in Total) As of June, 2011

Source:RBI, December 2011

Gujarat

Maharashtra

Orissa

AP

Karnataka

Tamil NaduJharkhandWB

MP

UP

Haryana

Chattisgarh

Other States

Multi-State

10%

14%

3%

4%

4%

4%

11%

10%

9%

8%

7%6%5%

5%


The manufacturing and electricity sectors accounted for about 63.43 percent of

State's total outstanding investment. A substantial proportion of investments

were concentrated in the power sector, holding a 39.22 percent share at nearly

USD 141 billion. It was followed by manufacturing and services sector with a1124.21 percent and 16.18 percent share in investments respectively .


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The investment climate and industry friendly policies in Gujarat have made it an

industrially vibrant State. The State Government began organizing the now-

famous, biennial Vibrant Gujarat Global Investment Summit (VGGIS) from 2003onwards to showcase the State as a major investment destination. In the five

such events held so far investments worth nearly USD 88 billion have been

promised and many projects are at various stages of implementation across the12State . On the industrial infrastructure front, the State has moved from

traditional industrial clusters to industrial eStates and advanced further to13establish 60 SEZs . The State is further moving to set up truly world-class huge-

sized 'Special Investment Regions'. They will be supported by world-class

infrastructure, premium civic amenities and a good policy environment.

Setting up of these regions is in line with the upcoming Dedicated FreightCorridor between Delhi and Mumbai (DFC) and the Delhi-Mumbai Industrial

Corridor (DMIC). Similarly, these regions will have a great synergy with our

upcoming International Finance Tech-City popularly known as Gujarat14International Finance Tech-City (GIFT) .


Electricity39.22%

Mfg, 24.21%

Construction

and Real eState14.26%

Services16.18%

Irrigation5.25%

Mining0.88%

Distribution of investments sector-wise,as of June 2011

Investments in various sectors of Gujarat

Investment in Investments

Sectors (1991-2010) under

implementation

(in USD Billion)

Chemicals and 27

Petrochemicals

Infrastructure Projects 37

Other Engineering 9

Glass, Ceramic and 9

Cement

Others 9

Electrical and Electronic 4

12 Vibrant Gujarat website13

KPMG in India Analysis

14Gujarat State Portal, http://www.gujaratindia.com/index.htm

Source:RBI, December 2011


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Foreign Direct Investment (FDI) in Gujarat

With over 11 percent share in the USD 36,504 million FDI proposed in India in152011-12 , Gujarat emerged as the third most favorite investment destination,

behind Odisha and Andhra Pradesh, for overseas investors across India,16according to apex industry body ASSOCHAM.

17Gujarat attracted an investment worth USD 1,001 million in 2011- 12.

The FDI attracted in the State from 2010- 11 to 2011- 12 showed a growth rate of

38.26 percent. In terms of cumulative FDI attracted in the State, from 2000 to172012, the figure stands at USD 8,251 million. Gujarat got the second highest16number of 131 FDI proposals in 2011- 12.


15Department of Industrial Policy and Promotion, May 201216ASSOCHAM, January 201217Department of Industrial Policy and Promotion, May 2012

Source:Department of Industrial Policy and Promotion

Investments in various sectors of Gujarat (Source: RBI)

724

1001

0

200

400

600

800

1000

1200

2010 -11 2011-12

USDMn


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Government policies for the State

The State has a favorable policy and regulatory environment. The industrial policy

(2009) has focused on high socio-economic development for the State. There are

various sector policies for promotion of investment and growth. There are

numerous incentives under the Special Economic Zone (SEZ), Special18Investment Region (SIR) and Industrial Area Development . The State is a leader

in encouraging Private participation under Public Private partnership. Gujarat

boasts of having the least number of Labor Day losses in a year.

Gujarat's attractiveness as an investment destination is ever increasing, as theGovernment works to improve its business friendly environment with not only

Special Economic Zones but large Investment Regions with robust infrastructure

18Gujarat State Portal, http://www.gujaratindia.com/citizen/citizen.htm

Major policies for growthin the State :

IT Policy (2006-11)

Industrial Policy 2009

BT Policy (2007-12)

Power Policy

Port Policy

Mineral Policy (2003)

Disaster Management Policy

Growth Policy

Road Policy

Tourism Policy



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Industrial Policy2009 VISION

Increasing the efficiency

of institutions and

catalyzing industrial

development

Promotion of geographical

strengths to ensure

balanced development.

Promotion of megaprojects like SIR, DMIC,

GIFT

Improving the existingphysical infrastructure.

Investments in varioussectors to improve

performance

Facilitate investments

Employment

generation

and employability

enhancement

Adherence to high

quality standards

With the primary focus of making Gujarat the most

attractive investment destination of not only in India, but

also that of the world, the Government of Gujarat (GoG)

has announced a new Industrial Policy. The new Industrial

Policy - 2009 with its holistic approach would identify

specific interventions across sectors which would

facilitate in fostering significant growth and in the process

attract global investments. The new industrial policy has

been formulated in line with the vision that has been

framed for the State. The primary policy objectives are as

under:

1. Facilitate investments in the State

2. Employment generation and Employability

enhancement

3. Adherence to high quality standards

The State has witnessed major industrial development.

From 83 product clusters, to 257 industrial eStates and 60

SEZs (multi-product, single product and multi-service

(IT/ITeS)) promoted by the government, the State has

witnessed multiple industries setting shop in the region

leading to development. The industrial sector at present

comprises of over 800 large industries and over 3,45,000

micro, small and medium industries. There are various

investment regions that have developed in the State such

as SIR, DMIC, PCPIR, GIFT and the Knowledge Corridor.

Apart from this, 38% alignment of the Dedicated Freight

Corridor (DFC) is passing through the State of Gujarat.

Gujarat has a high growth rate of about 16 per cent. A

robust financial growth and presence of diverse industry

sectors with leading national and international companies

makes it one of the most attractive investment

destinations in the country.

According to the outlook for corporate investments by the

Reserve Bank of India (RBI), Gujarat ranks first in private

corporate investments in the country. As per Deutsche

Bank research, Gujarat offers the most favorable outlook

for infrastructure projects.

Gujarat Industrial Policy 2009

Source: Gujarat Industries and Mines Department, Industrial Policy 2009

Overall Performance of the state

Gujarat recorded one of the highest GSDP (Gross State Domestic Product)

growth (approximately 15%) rates in the last decade, compared to other States.

Gujarat's GSDP was about US$ 112.5 billion in 2010-11 as against USD 90.319billion in 2009-10, registering a growth of 24.7 percent during the year.

19Gujarat State Portal, http://www.gujaratindia.com/index.htm


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The share of primary, secondary and tertiary sectors has been reported at 14.6percent, 39.4 percent and 46.0 percent respectively to the total GSDP in 2010-11

20at constant (2004-05) prices.

The State's Income i.e. Net State Domestic Product (NSDP) at factor cost at

constant (2004-05) prices in 2010-11 is estimated at USD 67.8 billion as against

USD 59.3 billion in 2009-10, showing a growth of 14.4 percent during the year.

At current prices, the NSDP in 2010-11 is estimated at USD 96.7 billion as against

USD 77.7 billion in 2009-10, representing a growth of 24.4 percent during the20year.

The Per Capita Income (i.e. Per Capita NSDP) at factor cost at constant (2004-05)

prices has been estimated at USD 1,155.9 in 2010-11 as against USD 1,024.1 in202009-10, registering a growth of 12.8 percent during the year . The Per Capita

Income at current prices has been estimated at USD 1,647.3 in 2010-11 as

against USD 1,341.5 in 2009-10, showing an increase of 22.7 percent during the21year .

20Gujarat State Portal, http://www.gujaratindia.com/index.htm21Ministry of Statistics and Program Implementation, Government of India, State-wise SDP

62.9

81.8 80.3

90.3

112.5

0

20

40

60

80

100

120

2006-2007 2007-2008 2008-09 2009-10 2010-11

Avg. GSDPGrowth: 15.7%

INUSDBillion

Source: Ministry of Statistics and Programme Implementation Source: Ministry of Statistics and Programme Implementation

Gross State Domestic Product at Current Prices

961.6

1242.4 1201.6

1341.5

1647.3

0

200

400

600

800

1000

1200

1400

1600

1800

2006-2007 2007-2008 2008-09 2009-10 2010-11

Per Capita Net State Domestic Product atCurrent Prices

Per capita NSDPGrowth: 14.4%

INUSD


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Gujarat: At a glance

State Capital Gandhinagar

Area (square kilometers) 196,024

Principal Language Gujarati

Population (in mllion 2011 census) 60

Sex Ratio (Number of Females/1000 Male) 921

Density of Population (persons/square kilometer) 258

Urban Population (%) 37.35

Literacy Rate (%2001 census) 69.97

Length of Coastline (kilometers) 1,600

NSDP (INR billion at current price, 2005-06) 1,866

National Highway Length (kilometers) 2,362

Domestic Airport 11

International Airport 1

Key Industries Petroleum Chemicals

Drugs and

Pharmaceutical Gems and

Jewellery Textiles IT-BPO

Source: Ministry of Statistics and Program Implementation, Government of India;IBEF Gujarat report


AndhraPr.

Gujar

at

WestBe

ngal

Karna

taka

Delhi

Kerala

Rajas

than

234.3

132.7 129.2 124.2112.5

102.587.6

71.060.7 58.0

0

50

100

150

200

250

USDBillion

Maha

rashtr

a

Uttar

Pradesh

TamilN

adu

State-wise GSDP comparison

Source: Ministry of Statistics and Programme Implementation, Government of India, May 2011


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22 KPMG in India Analysis

Key Requirements

to be an ICT

destination ofchoice

Some of the most common set of parameters which should be seen before

selecting a location are:


Talent avaialbility: The talent availability and future scalability are the22foremost important parameters for setting up an ICT industry . The ICT

sector runs on the basis of quality of human resource which is the most

crucial element in the entire ICT value chain. The availability and quality of

talent varies across different cities and hence it forms an important

parameter for location selection.

20Requirements for a city to be considered an ICT Hub


Scale & Quality

Labour pool

Skills availability

Graduate OutputComplexity

Untapped aborpool

Employment profile

Migratory population

Connectivity

Bandwidthavailability

Infrastructure

Transportation

Telecom,Power, Water,Electricity

Quality of Life

Social infrastructure (hospitals,education institutions, etc.)

Availability of recreational facilities

Non-work culture

Pollution level

Business Catalyst

Government Benefits/incentives

Competitive landscape

Outsourcing maturityProximity to parent

Presence of ancillary industries andmulti-vendor connectivity

Presence of recruitment agencies

Risk Profile

Commercial risk

Political risk

Natural risk

Social risk

Police, crime,etc.

Cost

Cost of operations

Cost of training

Cost of real-eState

Cost of other infrastructure

Cost of living

Requirements

for a city to be

considered an

ICT hub


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screening of multiple parameters. The organization has to build theframework driven by its requirements in order to prevent any alteration to

the business case. Therefore, it is important for organizations to carefully

assess each parameter and optimize the benefits within a given set of

constraints.

Gujarat has a literacy rate of 79.3 percentaccording to the provisional data of Census 2011;

the male literacy rate is 87.2 percent and the

female literacy rate is 70.7 percent. In 2009-10,

the State had around 42,145 primary schools with

over 8.6 million students enrolled. Gujarat with a

population of around 60 million (2011 census) is

the country's 10th largest State in terms of

people, accounting for roughly 5 percent of

country's population. The State has almost 25 million people in the working age23

(20- 59 years) providing large pool of talent to support State's economy .

The State is home to 36 Universities and University-level institutions across24various subjects and streams . Whether it is a small town or a large city of

Gujarat, they all have arts & social science, law, engineering, medical, commerce

or journalism and mass communication college to cater to the needs of higher

education.

Premier institutes like IIM-Ahmedabad, National Institute of Fashion Technology

and National Institute of Design make Gujarat as one of the leading centres of

multi-disciplinary education in the nation. It also has significant enrollments in its

school programs, which forms the base for a well educated population. The StateGovernment has many initiatives to encourage innovation in the education

sector.

Gujarat A Potential ICT Destination

Talent availability & employable pool of resources

Literacy Rates (Percent)

Literacy Rate 79.3

Male Literacy 87.2

Female Literacy 70.7

Literacy Rates in Gujarat

Source: Census 2011, Government of India

23

KPMG in India Analysis24Ministry of Human Resource Development, Government of India


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For a talent intensive industry like IT-ITES, current availability of talent pool as

well as future additions to currently available pool plays vital role in establishing

and expanding operations.

Absence of major IT-ITeS companies has resulted in State's talent migrating to

southern parts of the country. The State can attract this pool of talent as well as

available talent from other parts of the country by creating IT-ITeS hubs.

Cities like Ahmedabad have a large pool of qualified human resources, especially

with Finance and Accounts related background. Ahmedabad also produces a

large number of Chartered Accountants.

Gujarati remains the primary medium of instruction at primary and secondary25level, therefore majority of students lack fluency in English . Excluding this

aspect, the quality of talent in the State is at par in all respect with talent from

any other State in the country. The quantity of suitable talent is sufficient to make

Gujarat an attractive ITeS destination in the country, but investment needs to be

made to convert this raw fresh from college talent into an employable labor pool.

26Gujarat has excellent infrastructure as compared to other States . State's

performance on various parameters under infrastructure are as follows:

There are 42 ports, 13 domestic airports and one international

airport. The State also has extensive road and rail network. As of March

2008, the State has around 18,447 km of State Highways, 20,564 km of

Infrastructure

Transport:


Premiere Instititutes in Gujarat (Illustrative)

IndianInstititute ofManageme

nt (IIM-A

The IndianInstitute ofTechnology

Gandhinagar(IITGN)

NirmaInstitute of

Management

NationalInstitute of

Design

IndianInstitute of

RuralManagement

NationalInstitute of

FashionTechnology

DhirubhaiAmbani

Institute ofInformation

andCommunicati

onTechnology

PhysicalResearch

Laboratory -Ahmadabad

Premier educational institutes in the State

Source: Ministry of Human Resource Development, Government of India

25India Human Development Report, Institute of Applied Economic Research, December 201126KPMG in India Analysis


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Major district roads, 10,352 km of Other district roads and 21,505 km ofVillage roads. The State has a railway network of 5,328 km as of March

2009. It comprises 3,193 km of broad gauge, 1,364 km of metre gauge27and 771 km of narrow gauge . Cities such as Ahmedabad are well

planned with ample public transportation. State Government is

undertaking steps such as introduction of Intelligent-traffic-management-28system to make commuting hassle-free .

As of September 2011, the State had 37.5 million

GSM cellular subscribers. BSNL, Idea, Tata and Vodafone are the

incumbent mobile phone operators in the State. These players have alsorolled-out 3G network in the State. As of November 2010, the State had

656,041 broadband subscribers. Gujarat State Wide Area Network

(GSWAN), is one of the largest IP-based WAN connecting over 2,80029Government offices .

State does not face any severe power

shortage. Cities such as Ahmedabad and Gandhinagar have almost zero

power cuts. As of March 2011, Gujarat had a total installed power

generation capacity of 15,722.65 MW, which comprised 7,178.27 MW

under private utilities, 5,931.90 MW under State utilities and 2,612.4830under central utilities . 100 percent of Gujarat's villages have electricity

connection for 24-hour power through the 'Jyotirgram Yojana'. A 2,200

km gas-grid supplies gas to the industrial areas. However, the State is

reeling under water shortage due to maintenance activities in Narmada

Main Canal at Meshwo River and Raska Weir. As an example,

Ahmedabad faces nearly 17 percent water shortage; average water

supplied to city is 1334 million litres per day (MLD), however, due to31shortage civic body is providing only 1107 MLD water .

There are 83 product clusters, 202 industrialeStates, 60 special economic zones (SEZ) and upcoming infrastructure on

29the Delhi-Mumbai Industrial Corridor (DMIC) . Almost one-third of the

DMIC project is taking place in Gujarat alone. A Dedicated Freight

Corridor (DFC) is being set up between Mumbai and Delhi. Of the 20

industrial nodes identified across six States where DFC passes, six have

been proposed for Gujarat alone.

Power, Water and Electricty:

Availability of office spaces:

Telecom Infrastructure:


27Centre for Monitoring Indian Economy28Large Project Opportunities, Vibrant Gujarat, 201129

Gujarat SWAN website, http://www.gswan.gov.in/SitePages/Default1.aspx30Ministry of Power, Government of India31 DNA India, http://www.dnaindia.com/india/report_ahmedabad-to-face-water-shortage-from-may-25_1545581


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As of October 2011, Gujarat had 45 formally approved SEZs, 6 in-principleapprovals and 30 notified SEZs. Gujarat ranks first in terms of total area

covered under SEZs in India. It is also a leading SEZ State with the32highest geographical area of 29,424 hectares under SEZ development .

State of the art commercial complexes such as MindSpace Special

Economic Zone Gandhinagar, Infocity Gandhinagar and GIFT city make

Gujarat an attractive business destination.


8074

10605

15722

18478

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

2000-01 2006-07 2011-12 2016-17

DemandProjection(inMW)

State-wide Uninterrupted Power Supply

Source: iNDEXTb (Industrial Extension Bureau, a Government of Gujarat organizaton), 2011

32

Centre for Monitoring Indian Economy


24/58

Prioritised

Industries

under DMIC

Auto and Auto

components,

Machinery

IT-ITeS, Bio-tech,

Pharma

Petrochemicals,

Metal products,

Textiles

33

Dmic.co.in

Delhi-Mumbai Industrial Corridor (DMIC)

Overview

The Delhi-Mumbai Industrial Corridor Project (DMIC) is a State sponsored

development project of the Government of India. It is an ambitious project aimed

at developing an industrial Zone spanning across six States (U.P, Delhi NCR,33Haryana, Rajasthan, Gujarat and Maharashtra) in India . The project will see

major expansion of infrastructure and industry including industrial clusters and

rail, road, port, air connectivity in the States along the route of the corridor. The

total investments for the project are estimated as USD 90 billion. A list of

prioritized sectors to be developed under DMIC has also been identified.


Prioritized Industries under DMIC

Source:DMIC Website

DMIC: Key Highlights

Total investment of USD 90 billion across six states

To involve infrastructure development along with setting up of industrial projects

Knowledge parks to be set up to boost the spread of IT and Bio-tech sectors

Gujarat to play a pivotal role in DMIC; Dholera identified as hub for DMIC in the

State

Multiple projects, including the Ahmedabad-Dholera expressway, Ahmedabad

MRTS and an Industrial mega-park near Dholera among the first wave of

projects under DMIC


25/58

Conceived as a global manufacturing and trading hub, the project is expected to

double employment potential, triple industrial output and quadruple exports from

the region in five years. The total employment to be generated from the project34is 3 million, the bulk of which will be in the manufacturing sector . The project is

being executed in partnership with the Japanese Government, and a MoU was

signed in this regard in December 2006. The project involves a 1,483 km long

Dedicated Rail Freight Corridor (DFC) Project between Delhi & Mumbai to be

commissioned by 2016-17. Moreover, high impact developments within a band of35150 km on either side of the DFC alignment are to be implemented .

Six major regions have been identified, and these will receive a bulk of35investments under the DMIC. These regions can be seen in the grahpic below .


Ahmedabad-

Dholera

(Gujarat)

Igatpuri-Nashik-Sinnar

(Maharashtra)

Manesar-Bawal

(Haryana)

Khushkhera-Bhiwadi-

Neemrana (Rajasthan)

Pithampur-Dhar-Mhow

(MP)

Dadri-Noida-Ghaziabad

(UP)

Six major investment regions under DMIC

Source:dmic.co.in

Focus on Gujarat

Dholera in Gujarat is to the hub for the DMIC passing through the State. Owing

to the scorching pace of economic development and reforms seen in the State

over the past decade, Gujarat is poised to gain the most from the DMIC. The

important components of the DMIC in Gujarat span across various sectors, and35include the below mentioned projects .

34DELHI MUMBAI INDUSTRIAL CORRIDOR, Emerging landscape of global investment, Japan

Bank for International Cooperation, jbic.go.jp35 Vibrant Gujarat website


26/58

These projects also open up opportunities for a wide spectrum of players,

ranging from consultants to equipment suppliers to financial institutions to come

together and work in a Public-Private Partnership (PPP) model to make the DMICinitiative a splendid success.


Important components of DMIC in GujaratSector

Construction of expressways to connect major locations to ports and

among each other e.g. Ahmadabad to Dholera.

Developing regional MRTS links e.g. Gandhinagar-Ahmadabad-

Dholera and additional DFC spurs and regional links

Integration of proposed International Airport in vicinity of Dholera

Infrastructure

Promote development of processing activities (SEZs/ Industrial Parks /

Port Based Industries, Integrated Food / Agro Parks)

Setting up free trade warehousing zone, container freight stations,

cargo hubs and truck terminals

Industrial

Institutions to cater to the demand of region as well as to serve as

'Centres of Excellence' for imparting education

World class IT Parks

Knowledge Parks

Source:DMIC Website


27/58

Gujarat International finance Tec-city (GIFT)

About the project

Commenced in 2008 and built on 500 acres of land, GIFT city is conceptualized

as global financial and IT services hub which can be benchmarked against global

financial centres such as Shinjuku, Tokyo, Lujiazui, Shanghai, La Defense, Paris,

and London Dockyards. The city aims at providing high quality physical

infrastructure (electricity, water, gas, district cooling, roads, telecoms and

broadband) to the financial services and information technologies industries in

India which are significant contributors to the Indian economy and hold immense

potential for growth.

The project is currently under construction and will be developed in three

phases. Phase-1 which will have two commercial towers of 29 floors each is

expected to be completed by the end of 2012. The second and third phases are36expected to be completed by 2013 and 2017 respectively .

The project is being run in a Public Private Partnership (PPP) mode, under which

Gujarat Urban Development Company Limited (GUDCOL), an undertaking of

Gujarat Government, has formed a joint venture with Infrastructure Leasing &

Financial Services (IL&FS). The joint venture has been named as "Gujarat

International Finance Tec-City Company Limited" (GIFTCL). The company plans todevelop, finance, and implement all infrastructure projects under GIFT on a


GIFT: Key Highlights

The idea of GIFT was conceived in 2007 during the Vibrant Gujarat GlobalInvestor Summit

The first phase of GIFT project is expected to get completed by the endof 2012

The project is being run in a PPP mode and the joint venture is namedas Gujarat International Finance Tec-City Company Limited" (GIFTCL)

The city will have State of the art infrastructure and will have a specialeconomic zone (SEZ), international education zone, integrated townships,

an entertainment zone, hotels, a convention center, an international

techno park, Software Technology Parks of India (STPI) units, shopping

malls, stock exchanges and service units.

36 Giftgujarat.co.in, Gujarat International Finance Tec-City, Corporate Presentation


28/58

turnkey basis to ensure availability and sustainability and has formed Special

Purpose Vehicles (SPV's) to implement the critical utility components through

major private sector participation.

The site is nearly 12 kms away from the Ahmedabad International Airport and 8

kms from the city of Gandhinagar. It is accessible from NH-8 (Delhi to Mumbai).

Railway line passes by the site on the west (to Delhi) and east (to Himmatnagar).

Project would have 24 x 7 water

supply and would be a zero discharge city. The project would take water

supply from Narmada Main canal, Rainwater Harvesting, and Recyclingand Reuse of Wastewater. Project would ensure through construction of

three barrages on river Sabarmati. There is also a proposed landscaped at37the river bank along GIFT .

The project plans to cater to approximately 740 MW of

power demand. The project will have underground cabling for power

distribution, substation and distribution automation, and indoor power29substations .

The project will have

excellent internet connectivity enabled through International Fibre

Landing System. All the sub-projects would be ICT enabled and

integrated with technologies such as building automation systems,

control systems, virtual concierge, home bundling, smart education,

smart healthcare, intelligent advertisement, smart transportation, smart37public services, etc .

City will have Automated Waste Collection

System (AWS) through chute system and waste treatment through37Plasma Technology .

District cooling system: GIFT will have a centralized AC system, called

District Cooling which is cheaper to run and uses less electricity. Total37Estimated Capacity of cooling system would be ~ 1.0 Lakh TR .

GIFT will have Integrated Urban Linkage System which

aims at reducing lad used for transportation significantly. The project will

have surface roads (4+4 lane), Pedestrian path ways, Bridges, Public

Transport System (BRTS/MRTS), Travalletors, Intelligent Transport System,37and Transportation and Logistic nodes .

Salient features of the project

Water supply and sewerage system:

Power supply:

Information & Communication technology (ICT):

Waste management system:

Transportation:


37 Giftgujarat.co.in, Gujarat International Finance Tec-City, Corporate Presentation


29/58

Global benchmarking of the project

GIFT is designed to be above or at par with globally benchmarked International

Financial Centres (IFCs) in terms of scale and physical scope. The table below

provides a comparison of GIFT with other leading financial centres.


Land Area (sq km) 1.6 1.6 1.05 1.7 3.58

Construction Scale (in mn sq m) 2.5 1.6 1.1 4.5 8.5

Greenbelt (in thousand sq m) 40 120 50 363 1183

Height (m) 200 250 250 490 410

Paris Tokyo London Pudong GIFT

(La Defense) (Shinjuku) (Dockyards) (Lujiazui)

Comparison of GIFT with other international financial centres

Source:giftgujarat.co.in

Housi

ng Technology

Infrastructure

Retail&

Entertain

men

t

Transport

Socia

l

Infra

structu

re

Busin

ess

Dis

tric

t

Technology:

Broadband FTTP

WiFi / Wimax

Shared IT Services

Global Connectivity

Basic Infrastructure:

Uninterrupted and highly

reliable power supply

(99.999%)

Next generation water &

waste management, district

cooling

Retail Cum Entertainment Hubs:

High quality entertainment

malls to be set up

Over 60% of the space is

planned to be greenOverall Connectivity/ Transport:

External Connectivity includes MRTS /

BRTS/ Roads

Public-Private Modal Split 90:10

Personalised Rapid Transit (PRT) System

Social Infrastructure:

Educational Institutes to be establishedInternational schools for primary

education

Privatised hospitals with infrastructure

to be established

High Rise Business District:

be created with landmark buildings

Benchmark office, high-rise district to

Residential Housing Projects:

Well-planned residential housing

projects

Walk-to-work layouts

GIFT Value Proposition

Source:giftgujarat.co.in

It is believed that the setting up of GIFT will enable Gujarat, and eventually India

to emerge as a leading centre of the financial services industry in the near

future. This will go a long way in helping the Indian economy achieve its full

potential, and emerge as a strong competitor to other nations.


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Cost

Risk profile

Business catalyst

Gujarat has a reasonable cost structure when compared to other cities. Cities in

Gujarat have low cost of living as compared to the Tier I cities of India including

lease rentals for residential accommodation. Operational costs are also lower by

at least 8-10 percent compared with tier I cities. The State's excellent power

infrastructure leads to a saving of 30-50 percent of power cost in Gujarat as there

is no need to set-up diesel generators. Good road infrastructure also leads to

reduced damages and time for logistics and commuting.Cities such as

Ahmedabad offer a cost advantage in terms of approximately 30 percent lower

compensation levels and rentals compared with the premier IT-BPO destinations38like Mumbai, Bangalore and NCR .

Other emerging cities such as Surat, Vadodara, and Rajkot have good

infrastructure in place and have lower cost of operations in comparison to other

tier-2 Indian cities. For example, rentals for commercial spaces in Vadodara are39nearly 50-60 percent lesser than rentals for commercial spaces in Pune .

Gujarat comes at an optimum risk level. While the business risk is reducing and a

favorable investment climate is underway, city may face geopolitical risks. Mostof the Gujarat comes under seismic zone 3 and is prone to earthquakes with

alluvial soil land. State was rocked with massive earthquake in 2001. Some parts

of Gujarat also sometimes receives heavy rainfall, as much as 10 inches in 12

hours which leads to flooding of the city.Politically State has remained stable.

However, there have been frequent communal clashes between Hindus and

Muslims in the State. Many parts of Gujarat, especially Ahmedabad and

Vadodara, are communally sensitive. Other than communal issues, issues such

as price hike and policy changes may also lead to State-wide 'bandh' in the

region.

Gujarat is the only State in India where the State Government has framed

policies in almost all key sectors such as industry, power, ports, road, IT,

agriculture, minerals and tourism. Gujarat's Industrial Policy, 2009, offers

attractive incentives and concessions for prospective investors. State also

provides financial assistance at 50 percent of fixed capital investment in land,


38 KPMG in India Analysis39

Vibrant Gujarat website


31/58

buildings and infrastructure facilities up to a maximum of USD 560,000 to

companies which are planning to set-up operations in IT parks.According to the

outlook for corporate investments by the Reserve Bank of India (RBI), Gujarat

ranks first in private corporate investments in the country. As per Deutsche Bank

research paper on infrastructure investment scenario in India, 2007, Gujarat offers

the most favourable outlook for infrastructure projects.

Gujarat offers proactive governance to industries wanting to set-up in the State.

The State has made the necessary efforts to make the set-up and expansion

easier and hassle free. Some of the initiatives for ensuring this are as follows:

addressing the roadblocks and devising

mechanisms to plug these gaps.

that are centralized repositories for

information on districts, sectors, investment regions, SEZ, govt.

incentives etc.

this shall create environmentally

sustainable industrial areas based on predefined parameters.this initiative includes identification of land for

industrial purpose in each district, detailed information collation on the

infrastructure availability and identification of suitable locations with the

help of software.

monitoring of the status of investments /

MoU at different levels of approvals and implementation.

this is a tool to facilitate the Industrial

Facilitation Act.

a compilation of various incentives offered tothe investors and clearances required to start a new venture in the State.

Government policies

Setting up information banks

Creation of Industrial Zones

Creation of land banks

Investor portal for the State

Investor facilitator portal

Doing business in Gujarat

Simplification of procedures-



32/58


Source:Department of Science & Technology, IT Policy of Science & Technology Department

Figure 3: Fiscal incentives

Special package of incentives for mega IT projects

Assistance for setting up high-tech parks

50 percent exemption on Stamp Duty in case of first sale

Electricity Duty Exemption

Exemption from Power Cuts

Simplification of Labour Laws

Exemption from Zoning Regulations

Special Venture Fund for IT/ ITES companies

40IT/ ITeS policy in Gujarat (2006- 11)

Recognizing the importance of Information Technology for employment and

services sector growth, Government of Gujarat notified an IT Policy for the State

in November, 2006. This Policy encourages a rapid expansion and growth of the

knowledge based economy in the State.

The Information Technology Policy of the State offers several concessions and

incentives to companies engaged in IT/ ITES activities and focuses upon the

strategy to develop IT related infrastructure.

The main objectives of the policy are:

1. To attract investments in the IT sector in the State so as to achieve aturnover of USD 1 billion in 5 years.

2. To promote and develop employment opportunities in the IT sector and

provide direct employment to 2, 00,000 persons in 5 years.

40

Dept. of Science and Technology, Government of Gujarat, http://dst.gujarat.gov.in/e-governance.htm

In addition, State Government

has directed all line

departments to earmark up to 3

percent of their plan outlay for

implementation of e-

Governance initiatives. The

State Government has a LAN

Policy for purchase of hardware

& software and has also framed

a website policy.


33/58


e-Governance in Gujarat

Gujarat has received the United Nations Public Service Award (UNPSA), 2010, for

its 'State Wide Attention on Grievances with Application of Technology'

(SWAGAT), in the category 'Improving Transparency, Accountability and

Responsiveness in Public Service'. The award was given for "improving

transparency, accountability and responsiveness in the public service".

Appreciating this initiative, the UN Department of Economic and Social Affairs,

which instituted the award, said SWAGAT allows citizens to "air their grievances

regarding Government's provision of public services" after having "direct access41to meet the chief minister personally to present their cases" .

SWAGAT has been running systematically for over 7 years resulting in 96 percentcases being resolved to date. Taluka level SWAGAT was launched 2 years ago

and now over 4,000 cases are being submitted every month. The Chief Minister

extended the SWAGAT programme up to village level in the name of Gram

SWAGAT on 1st February 2011, to extend the access of grievance resolution

sitting at the village level.

The Gujarat Government has also initiated a rural edition of its highly acclaimed

SWAGAT Online Grievance Redressal Program, called 'Gram SWAGAT' in villages42from February 1, 2011 . The official portal of the Chief Minister of Gujarat

Source:IBEF, www.ibef.org/states/gujarat.aspx

41Dept. of Science and Technology, Government of Gujarat, http://dst.gujarat.gov.in/e-governance.htm42

Gujarat IBEF report

Major e-Governance Projects in the State

GSWAN (Gujarat State Wide Area Network)

SWAGAT Online (State Wide Attention on Grievances through Application

of Technology)

E Gram Vishvagram

e-Dhara

Health Management Information System

E-City

IWDMS (Integrated Workflow and Document Management System)

VAT (Value Added Tax)

E Procurement

SICN (Sachivalya Integrated Communication Network)


34/58


(www.narendramodi.in) got the prestigious eGov 2.0 award for the 'Most

innovative use of social Media'. State Portal (www.gujaratindia.com) too won anaward for the 'Most user friendly portal'.

The State Government has made the Gujarat State Wide Area Network (GSWAN)

connectivity stronger by five times at taluka level to facilitate 'Aapano Taluko

Vibrant Taluko' (ATVT) operations. Gujarat's Integrated Water-Shed Management

Program (IWMP) won the Silver Award for innovative technology usage in e-

Governance. Gujarat is the first State to apply Satellite GIS to fully plan,

implement and monitor watershed management. The GIS Satellite imagery is

used to transparently identify watershed boundaries and most needy areas. GPS

and mobile software are used to feed data and create maps to plan and to

monitor progress. Gujarat State Watershed Management Agency (GSWMA) has

used technology to benefit 1,048 villages, 7.08 lakh hectares, and 2.5 Lakh

farmers.

After successfully completing the e-gram project of providing basic IT

connectivity to all the district, taluka and village panchayats, the Gujarat

Government is now all set to launch a comprehensive e-panchayat project in

order to create a complete database and monitor all the activities taken up in the

rural areas. The e-panchayat project will also provide basic services to rural

citizens like electronically generated ration card, birth and death certificate,

certificate of land ownership etc.


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Quality of life

The cost of living across various cities in Gujarat is low as compared to the Tier I

cities of India including lease rentals for residential accommodation. The

Government has worked towards ensuring very low crime rate in the State.

According to the National Crime Records Bureau (NCRB) report, Ahmedabad has

the lowest crime rate of the 35 Indian cities with a population of more than one

million. With the onset of expansion and growth, the pollution levels have

increased over the past few years in cities which have manufacturing and

chemicals plants. However, the city has started undertaking measures such as

massive push towards usage of CNG vehicles to control the pollution level. TheState is also witnessing significant growth in number of hotels on the back of a

vibrant business environment. Ahmedabad and Gandhinagar being premier

business destination are home to a large number of excellent hotels.

Gujarat is well developed in terms of social infrastructure. As of 2009-10, the

State had around 42,145 primary schools with over 8.6 million students enrolled.

In terms of healthcare infrastructure, the State has 1,110 Primary Health Centres

(PHC), 7,274 Sub-centres, 291 Community Health Centres (CHC), 97 Mobile

Healthcare Units, 24 District Hospitals and 26 Sub-district Level Hospitals. State

is widely promoting use of CNG vehicles which are significantly reducing

pollution level.

State has good non-work culture and has rich cultural heritage. It is famous for

various dance forms such as Dandiya Raas, Garba, Garbi, Rasaka, Tippani and

Padhar. A number of festivals and fairs are also celebrated in the State.

Gujarat ranks high on the livability scale with great recreational opportunities, a

reasonable cost of living, cosmopolitan atmosphere and cultural vibrancy. Many

cities in the State were ranked high in Quality of Life Overall Liveability Index

2010 released by CII. Ahmedabad was ranked 7, Surat was ranked 21 and

Vadodara was ranked26 out of total 36 States. The parameters for evaluationincluded demographics, education, health and medical standards, safety, housing

options, socio-cultural political environment, economic environment, and natural

built/planned environment.



36/58

There are a couple of aspects of outsourcing that make India an attractive

destination. The foremost of these is low cost; the second is scalabilitythe

absence of large numbers of qualified people willing to do these jobs. India is

already losing around 70percent of all incremental voice and call centre business

to newer rivals such as the Philippines and also to other places in Eastern

Europe. The need to reduce costs and make operations leaner is becoming43increasingly important .

An effective way for this is to diversify the delivery footprint across India so as to

take advantage of lower cost centres. Movement to Tier-2 and Tier 3 cities is

attractive despite difficulties in getting the right sort of people. IT-BPO companies

could reduce total operating costs by 20-30 percent by moving to a low-cost city

within India. Other estimates put the cost differential at around 10-15 percent for

non-voice processes and upwards of 20 percent for voice processes. For

performing the same level of work, an employee in Tier -2 cities gets INR 8,000-

10,000 compared to the INR 15,000-18,000 in a Tier- 1 city in India. In a city likeMumbai, salary costs could be even higher. Real eState costs in Tier- 2 cities are

almost two-fifths of those in established BPO centers. Then there's the savings

that arise as a result of lower attrition. Attrition rates in IT-BPO companies are

also very high - 30-35 percent in the Tier 1 cities which imposes a huge cost on

as companies have to seek out new employees, train them etc. The lower

attrition rate in the smaller towns is therefore a big positive, because of the

lower recruiting and training costs. Transportation costs for BPO employees too44are lower .

Smaller towns may have the drawback of poor infrastructure and a lower talent

pool and that's where Gujarat stands out. It also churns out a large number of

graduates who can be trained for a career in the ITeS sector. The city also has

maximum large number of chartered accountants passing out every year.

Non-English BPOs in Tier-2 and Tier-3 centres which can provide services to the

telecom and aviation sectors at low costs will play an increasing role in the

growth of domestic outsourcing industry. Moreover, the Government is expected

to become the biggest driver of domestic BPO in the next few years. This will be


Conclusion

43

NASSCOM Strategic Review 2012, February 201244 KPMG in India Analysis


37/58

because of various initiatives like the National E-Governance Plan (NeGP) and theunique identification (UID) project. The point is that these domestic BPO

services can be easily executed in the smaller towns. A good infrastructure and

connectivity with major cities makes a strong case.

Many companies say that they will be using a hub-and-spoke distributed delivery

model for the industry. Work would be broken up into various processes and

distributed among the spokes. Technology and control would lie with the hub

while the spokes would have fewer seats and handle less complex work. For

instance, an official of Aditya Birla Minacs has elaborated in an interview that the

hub, located out of a Tier-2 city, has 800-1,000 seats and handles 20-25 percentof volumes. The rest of the volume is distributed among the six to seven spokes,

the seat capacity in each around 200. According to the official, these spokes are

in rural areas, so it takes care of issues like attrition, wage inflation and real-45eState costs .

We have grown on the back of the outsourcing necessity that existed in the

West, where cost pressures lead to definite push towards outsourcing. It was

cost arbitrage that led to initiatives in outsourcing. So if an American, or an

Australian company did that, it was because they had severe pressures on cost

and Indian outsourcing providers offered to do the same job at one-third of the

price as compared to what they were getting otherwise. Indian companies have

taken a ride on that and that's how the business has grown and it has

leapfrogged in this period of time.

India's business process outsourcing industry has the potential to rise nearly five

times to US$50 billion in revenues by 2012, provided it successfully taps talent in

smaller cities and town, a global consulting firm said. Currently, the BPO

business is mostly centered in the National Capital Region of Delhi, Bengaluru,

Chennai, Hyderabad, Pune and Kolkata. However, cities like Ahmedabad, Nagpur,

Jaipur, Chandigarh and Nashik can help meet about 50-60 percent of the

projected talent requirement of the BPO industry over the next five years, thestudy said.

The decision to set up BPO centres in Tier 2 and 3 cities is a patient long-term

approach. Striking the right balance between all elements is the key. However,

the trend for some years has been towards reducing costs by setting up shop in

the Tier2 and tier 3 cities. Given Gujarat's commitment to grow this industry,

infrastructure and talent availability and its proximity to the financial capital of

India, it is definitely an option companies cannot afford to miss!

45

Cost advantage: Tier 2 and 3 cities become attractive for BPO's', Rima Chakravarty, Faculty ofManagement Studies, University of Delhi, http://fms-syssoc.net/blog/?p=48



38/58

Established IT-BPO Destinations

Parameter/City

BengaluruCity

Cost

RiskProfile

Business

Catalyst

Qualityof

Life

Infrastructure

Scale&Quality

High Low

Mumbai ChandigarhDelhi Chennai Ahmedabad Kolkata

Emerging IT-BPO Destinations

Source:KPMG in India Analysis



39/58

Quick facts

Situated on the banks of the Sabarmati river, Ahmedabad lies almost in

the centre of Gujarat

Ahmedabad has a hot semi-arid climate. Aside from the monsoon

season, the climate is extremely dry. The average annual rainfall is

about 800 millimeters

Ahmedabad has a hot semi-arid climate. Aside from the monsoon

season, the climate is extremely dry. The average annual rainfall is

about 800 millimeters

5,570,585 (2011)

89.6 percent (2011)

Gujarati, English, Hindi

Engineering, Textiles, Chemicals & Petrochemicals, Drugs &

Pharmaceuticals and Pulp and Paper products are the major industry

sectors present in the city

GeographicLocation

Climate

Climate

Population

Literacy rate

Languages

Major industries

Source:IBEF; KPMG in India Analysis

Ahmedabad

City Introduction

Ahmedabad is the largest city and former capital of the Indian State of

Gujarat. The city is an administrative centre of Ahmedabad district, and is

the judicial capital of Gujarat

In 2010, the Forbes magazine rated Ahmedabad as the fastest growing

city in India, and third in the world. Ahmedabad district accounts for 21.5percent of factories and employs 18 percent of workers in the State

Key drivers for the city to emerge as a favorable IT-BPO destination

The Government of Gujarat plans to promote Ahmedabad as an IT-BPOdestination.

Ahmedabad is also a good base for voice services due to the presenceof human resources

The labor and real estate costs in Ahmedabad are lower compared to

other Tier-1 locations such as Mumbai, NCR, and Bengaluru

Appendix: Cities Profiles



40/58


41/58

of a mass-transit metro system for the cities of Ahmedabad and

Gandhinagar. The company is likely to be named the Metro Link Express

for Gandhinagar and Ahmedabad (MEGA).

Low cost of living as compared to the Tier I cities of India

including lease rentals for residential accommodation. Operational costs

are lower by at least 8-10 percent compared with tier I cities

According to the National Crime Records Bureau (NCRB)report, Ahmedabad has the lowest crime rate of the 35 Indian cities with

a population of more than one million

Pollution levels in Ahmedabad have consistently been

ranked as amongst the worst in India. PM10 emissions (pollutants that

emit particulate matter of less than 10 micrometers in size) for the year

2010 for Ahmedabad were 35,100 ton

The city has witnessed a significant growth in the

number of vehicle resulting in traffic congestion and increase in travel

time

Ahmedabad being a premier business destination is

home to a large number of excellent hotels. Some of these include the Taj

Gateway and the Le' Meridien

Ahmedabad come under seismic zone 3 and is an

earthquake prone region with alluvial soil land. City was rocked with

massive earthquake in 2001.

There have been frequent communal clashes between

Hindus and Muslims in the city. Areas such as Dariapur, Khamasha, Idgahbridge, Vadaj and Shahpur are of the most communally sensitive areas

Large scale communal clashes in 2002

Quality of life

Cost of Living:

Crime rate:

Pollution levels:

Ease of commuting:

Availability of Hotels:

Catastrophic risks:

Political risks:

History of disruptions:

Risk: City specific



42/58

Rajkot

City Introduction

Rajkot is the fourth largest city in the State of Gujarat, after Ahmedabad,

Surat and Vadodara.

Rajkot city is considered the economic, industrial and educational hub of

the region


Quick facts

The city is located on the bank of Aji River and Nyari River which

remains dry except the monsoon months of July to September. The

city is spread in the area of 104.86 sq. km

Rajkot has a semi-arid climate, with hot, dry summers from mid-March

to mid-June and the wet monsoon season from mid-June to October,

when the city receives 500 mm of rain on average. The months from

November to February are mild, the average temperature being

around 20C, with low humidity. One of the most important weather

phenomena that are associated with the city of Rajkot is cyclone. The

cyclones generally occur in the Arabian Sea during the months after

the rainy season

3,799,770 (2011)

82.2 percent (2011)


Focus industry sectors in the district include Engineering, Electronics,

Textiles & Apparels, Chemicals and Processed foods

Geographic Location

Climate

Population

Literacy rate

Languages

Major industries

Source:IBEF; KPMG in India Analysis


The labor and real estate costs in Rajkot are lower compared to otherTier-1 locations such as Mumbai, NCR, and Bengaluru

Key IT-BPO service provider / Captive companies

Ace Software Exports Limited

Current IT-BPO scenario in the city



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Human Resources

Infrastructure

The city is home to Saurashtra University, several colleges, and other

institutions of higher education, both public and private.

There are more than 12 engineering colleges in Rajkot, providing a steady

stream of graduates for the IT industry.

Ample office space available for new entrants and

expansion of existing players.

: The city has a good power supply system, with many non-

renewable wind and solar power projects coming on-stream during the

past 12 months.

Leading telecom and broadband operators have a

presence in Rajkot.

Rajkot is well connected to other

cities through National Highways (NH) & State Highways (SH). The district

is connected to Ahmedabad (225 km), Vadodara (294 km), Surat (461 km),

Mehsana (299 km), Bhavnagar (175 km), Jamnagar (92 km), Vapi (549 km)and Ankleshwar (388 km). Rajkot is well connected by rail network to

important cities in Gujarat and India. There is a domestic airport at Rajkot

city, which operates flights to major cities such asVadodara, Bhuj,

Mumbai, Delhi, Ahmedabad, and Jamnagar

The Gujarat State Road Development Corporation

(GSRDC) has proposed a four lane highway connecting Rajkot Jamnagar

Vadinar.

Low cost of living as compared to the Tier I cities of India.

According to the National Crime Records Bureau (NCRB) ,

Rajkot has one of the a slightly higher than average crime rate amongst

cities in Gujarat

PM10 emissions (pollutants that emit particulate matter

of less than 10 micrometers in size) for the year 2010 for Rajkot were

14,000 ton. This makes Rajkot among the cleanest cities in Gujarat

Rajkot faces the problem of traffic congestion,

caused primarily by increasing vehicular traffic.

Office space:

Power Supply

Telecom infrastructure:

National and International connectivity:

Upcoming projects:

Quality of life

Cost of Living:

Crime rate:

Pollution levels:

Ease of commuting:



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Quick facts

The city is located nearly 300 kms south of State capital Gandhinagar

and is on the left bank of the Tapi river

Surat features a tropical savanna climate, influenced by the Arabian

Sea. Average temperature varies between 23 C to 40 C. Cityreceives an average rainfall of about 1,000 millimeters (39 in)

Metropolitan City: 4,461,026 (Census: 2,011); Surat District: 6,079,231

(Census:2,011)

86.65%

Gujarati, English, Hindi, Marathi

Diamond industry, Textile industry, Chemical industry, Oil & Gas

GeographicLocation

Climate

Population

Literacy rate

Languages

Major industries

Source:Surat Municipal Website, Literacy Rates for State and District", 2011 census of India,

Government of India


The city hosts SURSEZ which is a multi-product SEZ. IT- BPO companiescan set-up their operations in this facility and reap tax benefits

The city also has lower cost of living in comparison to other tier-1 citiesin India

Gujarat is planning to develop IT-ITeS cluster in Surat

Surat

City Introduction

Surat is the second largest commercial hub in the State and is mainly

known for its textiles & diamond processing industries

The city processes 10 out of 12 diamonds in the world contributing to

approximately 65 percent of total diamond exports from India

It contributes 18 percent to the total man-made fiber exports and

40% of man-made fabric production in India

Hazira and Magdalla Ports in the district provide logistic support to

industrial operations in the State


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Development of the IT-BPO industry

Human Resources

Infrastructure

Office space :

Power Supply:


No major IT-BPO companies have set-up their operations in Surat

State is planning to develop Surat into an IT-BPO destination; however, no

major developments have taken place as yet.

Surat experiences an inward movement into the city by professionals to

compensate for the lack of skilled resource availability

Surat has plenty of Special Economic Zones, Industrial

Parks and Industrial Estates. However, majority of these parks are for

Gems & Jewellery business, Textiles and Oil & Gas. There is only one SEZ

SURSEZ, which is open to all non-polluting industries.

Surat has good power situation with well developed

network of sub stations and power stations in the district to cater to the

need of electricity for industry and residential use. Surat has five 220 KV

sub stations at different locations in the district at Sachin, Ichhapor, Kim,

Vav and Bardoli. There are eight power stations in the district and onepower station is proposed at Aakhakhol. One 132 KV substation is in

place at Bhestan.

Leading telecom and broadband operators have a

presence in Surat National and International connectivity: Surat is well

connected to various locations through national and State highways. Surat

has a domestic airport which is well connected to other metros and has

daily flights to Delhi, Jaipur, and Ahmedabad. Other nearest airports are at

Vadodara and Mumbai


Key IT-BPO service provider / Captive companies (Services offered)

Chicago Software Inds. Ltd.

Live Wire Software Ltd.

Proximus Knowledge & Technology Services Pvt. Ltd.




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47

Rajkot breathes easy compared to Ahmedabad and surat, DNA India Website

Cost of Living:

Pollution levels:

Ease of commuting:

Availability of Hotels:

Catastrophic risks:

Political risks:

History of disruptions:

Freight Corridor (DFC) linking Delhi, Mumbai, Kolkata, and Chennai. The

proposed DFC passes through six states in India, of which, Gujarat

accounts for 38% (564 Km) of total DFC length (1483 Km). Surat- Navsari

industrial area lies within 50 Km of the Dedicated Freight Corridor in

southern Gujarat. This region is well connected by NH-8 and NH-6. It will

have an IT/ITeS industry cluster as well.

Low cost of living as compared to the Tier I cities of Indiaincluding lease rentals for residential accommodation. However, with the

State of Gujarat, Vadodara's cost of living is relatively higher. Consumer

Price Index (excluding rent) of Vadodara is 35.69, higher than Ahmedabad

which has a CPI of 35.29

PM10 emissions (pollutants that emit particulate matter

of less than 10 micrometers in size) for the year 2010 for Surat were

19,950 ton, which is more than Rajkot (14,000 ton) but lesser than47Ahmedabad (35,100 ton)

Traffic situation in Surat is not very good. City facestraffic jams at peak hours and slow movement of traffic.

Surat has only one five star hotel The Gateway

hotel. However, there are a number of other 3 star and 4 star hotels in the

city

Surat lies in Zone 3 of seismic activity. City is prone to

several natural hazards, including flooding, earthquakes, epidemics, etc.Surat has witnessed severe flood and epidemics like plague in the past.

There has been stability during the last decade with the

ruling party completing its term in power

Surat has not seen any communal tensions, rioting

or terrorism since the 2002 Hindu-Muslim riots

Upcoming projects:Government of India plans to develop a Dedicated

Quality of life

Risk: City specific



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Quick facts

Located approximately 23 km North from Ahmedabad, on the west

central point of the Industrial corridor between Delhi and Mumbai

Summers (from Mar to Jun) record maximum temperature in the

range of 36 to 42 C and minimum temperature in the range of 19 to 27

C. Winters (from Dec to Feb) record maximum temperature of around

29 C and minimum of around 14 C. Average annual rainfall in the city

is around 803.4 mm

1,387,478 (2011)

85.78% (2011)


Food processing, Electronics, Textiles

GeographicLocation

Climate

Population

Literacy rate

Languages

Major industries

Source:2011 Census of India, Gandhinagar Census 2011 Website


The city has State of the art infrastructure in the form of MindSpaceSpecial Economic Zone, Infocity Gandhinagar and GIFT city

The city has some premiere education institutes such as DhirubaiAmbani Institute of Information & Technology, proposed Indian Instituteof Information Technology, Indian Institute for Advanced Researchlocated in Koba, etc. There is plenty of talent available in and around

Gandhinagar.

Gandhinagar has a good traffic management system and is wellconnected to other major cities in the State.

Key IT-BPO service provider / Captive companies (Services offered)

Tata Consultancy Services

Futures First

Cybage



Perfect IT Solutions

Arth Infosoft

iGate-Patni (BPO)

Gandhinagar

City Introduction

Gandhinagar is the capital and the largest city of Gujarat. The district has

four talukas, viz. Gandhinagar, Kalol, Dehgam and Mansa


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Development of the IT-BPO industry

Human Resources

Infrastructure

Mindspace, Gujarat's first SEZ, heralded the dawn of IT-BPO industry in

the city with Kendle, world's leading clinical research organization,

starting its operations in June 2010

Other than Mindspace, the Infocity in Gandhinagar, an IT park project

positions the city as favorable IT-BPO destination. Another project -

Gujarat International Finance Tec-City (GIFT) plans to be a global financial

and IT services hub

There is plenty of talent available in and around Gandhinagar

The city has premier education institutes such as Dhirubai Ambani

Institute of Information & Technology, proposed Indian Institute of

Information Technology, Indian Institute for Advanced Research located in

Koba, etc.

Gandhinagar has three major IT parks MindSpace SpecialEconomic Zone, the first SEZ of Gujarat, Info City STPI (currently

functional) and GIFT City (under construction)

Gandhinagar has excellent power situation with 24 hour

power supply. The city has one 400 KV service station, two 220 KV

service stations and one 132 KV service station which supply power

throughout the district. Also 66kv sub-stations are spread across the

district

Presence of a number of telecom service

providers within the city.Gandhinagar is well connected to

other locations. National Highway (NH) 8 and 8C runs through the district

connecting it with major cities of the State as also with the rest of India.

It is connected with Ahmedabad by the Sarkhej- Gandhinagar highway

and with Vadodara by the Ahmedabad-Vadodara expressway. Western

railways connect Gandhinagar with major cities in India such as Delhi and

Mumbai via Ahmedabad. Nearest airport is Ahmedabad which is almost

22 km away and has both domestic and international terminals.

Office space :

Power Supply:


National and International connectivity:



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Freight Corridor (DFC) linking Delhi, Mumbai, Kolkata, and Chennai. The

proposed DFC passes through six States in India, of which, Gujarat

accounts for 38% (564 Km) of total DFC length (1483 Km).

Gandhinagar is also developing GIFT city which is conceptualized as

global financial and IT services hub. The first phase is expected to get

completed by November 2012

Low cost of living as compared to the Tier I cities of Indiaincluding lease rentals for residential accommodation. Consumer Price

Index (excluding rent) is almost same as that of Ahmedabad which has

CPI of 35.29

The city has managed its traffic well with installation

of Intelligent-traffic-management-system, creation of traffic signals,

construction of flyovers, etc.

Gandhinagar has o

gujarat – an ‘emerging’ hub for ict (leadership summit 2012)

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