Gujarat was leader in IEM implementation from 2012 to 2014, but is lagging Maha, other states since then
Is Gujarat falling behind in the race to attract investments? A number of indicators suggest that the state is no more the industrial powerhouse that it used to be until a few years ago. The state’s rank in Ease of Doing Business rankings and share of foreign direct investment pie have fallen. Official data shows that Gujarat is also not the leading state any more when it comes to implementation of Industrial Entrepreneurs’ Memorandum (IEM).
All industrial units, including existing units undertaking expansion, are required to file IEM with the Secretariat of Industrial Assistance (SIA), which functions under the Commerce Ministry’s Department of Industrial Policy and Promotion (DIPP).
SIA statistics show that Gujarat was the numero uno state in implementation of IEM between 2012 and 2014, with a share of as high as 60% in one of the years and over 50% in another. However, the tide seems to have turned in 2015 as Gujarat has trailed not only Maharashtra, but also other states like Andhra Pradesh, Karnataka and even Madhya Pradesh in one or more years, in IEM implementation since.
While Gujarat topped in filing IEM in 2015, 2016, 2017 and 2018 (until May), leading Maharashtra and other states by some distance, the statistics reveal that Maharashtra trumped Prime Minister Narendra Modi’s home state hands down in each of the three years when it came to implementation of IEM.
In 2016, 101 IEM with investment of Rs8,267 fructified in Gujarat, as against 415 filed with proposed investment of Rs56,156 crore. Maharashtra saw investment of Rs40,588 crore materialise.
In fact, Gujarat also trailed Andhra Pradesh (IEM investment of Rs11,395 crore) and Karnataka (Rs9,162 crore) in 2016. In 2017, Gujarat saw the implementation of 77 IEM with an investment of Rs9,795 crore, as against Rs18,993 crore in Maharashtra.
The story has been the same in the current year, though the gap between the investment attracted by the two states narrowed as Gujarat saw 92 IEM and actual investment of Rs16,224 crore coming to fruition, and Maharashtra 80 IEM with an investment of Rs18,978 crore.
Industries secretary MK Das declined to comment saying he had not seen the statistics. An industries department official, however, said that IEM is not the only indicator and that Gujarat remains “one of the top states for investors”.
Industry watchers expressed surprise at the low translation rate of IEM in the state saying they are filed “only by serious investors”.
“It is indeed surprising. IEMs are not like MoUs signed at investment summits organised by states, which tend to be exaggerated,” said an industry player, requesting anonymity.
Incidentally, between 2016 and 2018, Karnataka ranked third after Gujarat and Maharashtra in filing of IEMs, led in proposed investment with almost 40% share, which was higher than Gujarat and Maharashtra put together, but barely 5% of the proposed investment materialised, the statistics show.
SLIPPING OFF INVESTORS’ RADAR?
- Neighbouring Maharashtra has seen higher number of IEM implementation than Gujarat in each of the last four years.
- Gujarat slipped from 3rd in 2016 to 5th in 2017 in Ease of Doing Business rankings released by World Bank and DIPP earlier this month.
- Foreign direct investment in the state fell 38% to $2.09 billion for 2017-18, the fifth highest in the country.
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