5m people, an economy growing at 11.5 per cent – Ingredients for a “second tier” city in India

I made two visits recently to the State of Gujarat in Western India, both of which underline the enormous potential for UK companies in India, and the scale of developments here.

At the end of March a team from our trade and investment operation in Mumbai travelled to Surat, the second largest city in Gujarat, with a population nearing 5m. Arriving on the daily express train from Mumbai those of the group who hadn’t visited the city before quickly realized that we were in one of the much-talked about booming “second tier” cities of India, with an array of developments to prove that it is an economic power house for the State. The infrastructure alone from station to hotel was entirely modern, and Indian clothing apart we could have been in any modern European city, with fast food chains, shopping malls, and supermarkets. A city with entrepreneurial spirit, Surat prides itself in having almost zero unemployment, and wealth creation is the mantra that every citizen seems to imbibe.

A meeting with the top team at the South Gujarat Chamber of Commerce in the morning quickly confirmed that our impressions were based on facts, with the city GDP growing at a rate significantly larger than India as a whole, at well over 11.5 per cent for the most part of the last decade. It is attracting migrants to the city from all parts of India. Besides textile and diamond processing, much of the growth is based on the huge industrial and heavy engineering developments surrounding Surat, notably in Hazira. At Larsen and Toubro’s ( L&T) fabrication plant I saw an entirely new shipbuilding complex,  giant cranes lifting heavy nuclear power reactors and process plant equipment, and a state of the art power generator and turbine factory operating as a joint venture with Mitsubishi Heavy Industries,  the leading Japanese manufacturer – to mention just a few of the developments in a site which directly and indirectly provides employment to  over 10,000 staff and is in the Top 5 heavy engineering fabrication facilities not only in Asia but in the world.

Down the road Essar, another of India’s largest corporations, has a colossal steel-producing facility, and Reliance Industries (which I will write about in more detail in a forthcoming blog) one of its main petrochemical operations. These sites are a vivid demonstration of the scale of India’s manufacturing base; indicating developments sometimes overlooked by those who focus too much on India’s IT skills.

Some UK companies are well set up to support these new industries, and benefit from them. In the energy sector, for example, Shell operates in Hazira, an LNG port facility servicing India, and BG has a subsidiary company to distribute gas around Surat, including many textile operators who continue to provide another bedrock operation for the area.

The Chamber of Commerce are keen to develop further links with the UK, and as a direct result of our visit we have put them in touch with The Society of Dyers and Colourers, who will be bringing a delegation to Western India later this year. Other links during our visit included education, and the Sarvajanik Education Society, which run 33 pre-school to post graduation institutes in the city and will be celebrating its centenary year in 2012, described how they are keen to encourage more of their students to study in the UK. We also suggested the college consider trying to get British students to study in Surat.

While British students may miss some of their UK surroundings in Surat, the city illustrates perfectly how the Indian economy is pushing progress to almost all levels of society at a very rapid pace. If Surat is a so-called second tier example, it is difficult to imagine the scale of an Indian first tier city.

Next stop: Jamnagar, and the world’s largest refining complex.