Gujarat - An Emerging' Hub For ICT (Leadership Summit 2012)

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ACKNOWLEDGEMENT
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.
Rajkumar Dhoot, MP
President, ASSOCHAM
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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 in the global arena. The sector acts as a stimulant for growth in other related sectors such as real eState, automobiles, travel, railway and mortgage banking industries while creating subsequent employment opportunities. These are good times for further boost to the ICT sector with the roll out of more attractive and investor-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 of the front runners in all round development. One of India's most industrialized States with a decade old history of rolling out strategic and citizen centric eGovernance programs it promotes the use of ICT in almost all walks of life. A wide array of incentives and policy measures, provided by the State, make it an attractive and a transparent investment destination for the investors. The report includes a detailed current State assessment of the State of Gujarat against parameters such as talent availability, infrastructure, Government policies, IT/ITeS policy in Gujarat and e-Governance in Gujarat. It also profiles key cities of Gujarat such as Ahmedabad, Rajkot, Surat, Gandhinagar and Vadodara as probable hubs for the IT/BPO sector. A relative analysis of Ahmedabad as an emerging IT BPO destination as compared to other established IT-BPO destination revealed that while business catalysts such as Government incentives, outsourcing maturity of the location etc and the current quality of life are in favor, the city needs to improve its risk profile and reduce the cost of operations1. We have also provided recommendations at the policy and implementation level which would help Government of Gujarat to place its key cities on the map of other pro-ICT investment cities. KPMG in India is glad to acknowledge its association with ASSOCHAM in organizing the conference Leadership Summit 2012 on 12th October 2012.
Pradeep Udhas Partner and Head - IT BPO Sector KPMG in India
Navin Agrawal Partner and Head - Government Sector KPMG in India
KPMG in India Analysis
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Contents
1 2 Executive Summary Gujarat: About the State
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 1 3 3 3 4 5 8 9 12 14 14 15 18 21 24 24 24 25 26 27 28 30 33 33 36 39 42 45 48 50
Key Requirements to be an ICT destination of choice

Gujarat A Potential ICT Destination Talent availability & employable pool of resources Infrastructure - Delhi-Mumbai Industrial Corridor (DMIC) - Gujarat International finance Tec-city (GIFT) Cost Risk Profile Business Catalyst Government Policies - IT/ ITeS Policy in Gujarat (2006- 11) - e-Governance in Gujarat Quality of Life
Conclusion
Appendix: Cities Profiles Ahmedabad Rajkot Surat Gandhinagar Vadodara Glossary of Terms Sources
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Executive Summary
Gujarat has poised to scale a new economic landmark and has been leading the 2 way 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, egovernance and GIFT are also helping the State to be perceived as an attractive ICT hub of choice by global players3. 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 growth of IT-ITES in Gujarat4. 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 delivery 2 centers .
2 3 4
KPMG in India Analysis Dept. of Science and Technology, Government of Gujarat, http://dst.gujarat.gov.in/e-governance.htm Gujarat State Portal, http://www.gujaratindia.com/citizen/citizen.htm
1 | Gujarat An emerging hub for ICT (Leadership Summit 2012)
The report provides a perspective highlighting Gujarat as the next potential ITITES 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.
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
Gujarat: About the State

Introduction to Gujarat
Gujarat which is situated on the western coast of the Indian Peninsula has the longest coastline of 1,600 km in the country 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 Sindh in the west5. 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.
Key Industries in the State

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 in the State's industrial products6. 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, small and medium industries7.
5 6 7
Gujarat Location Map

Key Industries in Gujarat
Agro and Food Processing Dairy Chemicals and Petrochemicals Textiles and Apparels Engineering and Auto Gems and Jewellery Oil and Gas Pharmaceuticals and Biotechnology IT Minerals Ports Power Tourism
Source: KPMG in India Analysis
Maps of India, http://www.mapsofindia.com/gujarat/quick-facts/area.html Centre for Monitoring Indian Economy Gujarat IBEF report
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 Opportunity Centre.'8 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 the Jyotirgram Yojana. The State had installed power Capacity of 17600 MW as on 8 December 31, 2011 .
Special Economic Zones (SEZ)

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 providing services. 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, 1947 9 offering complete flexibility in the employment of labor by units located in SEZs .
Gujarats Infrastructure Checklist :

Good Connectivity Road, Rail, Air, Ports Continuous power supply Multiple telecom service providers Broadband connectivity till grassroots level Office space avaialbility
8 9
Centre for Monitoring Indian Economy Gujarat State Portal, http://www.gujaratindia.com/index.htm
In all, 60 SEZs are approved for Gujarat. These include multi-product SEZs and sector-specific SEZs covering textiles, pharma, engineering, chemicals, ceramics, gems and jewellery and IT/ITES sectors.
Investments in the State

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 to 10 June 2012 were about USD 8.1 billion. In the backdrop of these developments, the Government of Gujarat had declared Industrial Policy 2009 to further attract investments. The State holds the largest share - 11 percent - of the total outstanding project investments in the country.10
Outstanding Project Investments by States (% Share in Total) As of June, 2011

Multi-State Other States 14% Chattisgarh Haryana UP MP 10%
Gujarat 11% 10% 9% 8% AP 7% Orissa Maharashtra
3% 4% 4% 4% 5%
5% 6% Karnataka WB Jharkhand Tamil Nadu
Source: RBI, December 2011
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 a 24.21 percent and 16.18 percent share in investments respectively11.
10 11
RBI's Regional Office Ahmedabad, Department of Industrial Policy and Automation Gujarat State Portal, http://www.gujaratindia.com/index.htm
Investments in various sectors of Gujarat

Investment in Sectors (1991-2010) Investments under implementation (in USD Billion) 27
Distribution of investments sector-wise, as of June 2011

Irrigation 5.25% Services 16.18% Mining 0.88% Electricity 39.22%
Chemicals and Petrochemicals Infrastructure Projects Other Engineering Glass, Ceramic and Cement Others 9
37 9 9
Construction and Real eState 14.26%
Electrical and Electronic
Mfg, 24.2 1%
Source: RBI, December 2011
The investment climate and industry friendly policies in Gujarat have made it an industrially vibrant State. The State Government began organizing the nowfamous, biennial Vibrant Gujarat Global Investment Summit (VGGIS) from 2003 onwards 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 the State12. On the industrial infrastructure front, the State has moved from traditional industrial clusters to industrial eStates and advanced further to establish 60 SEZs13. The State is further moving to set up truly world-class hugesized '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 Freight Corridor 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 Gujarat 14 International Finance Tech-City (GIFT) .
12 13 14
Vibrant Gujarat website KPMG in India Analysis Gujarat State Portal, http://www.gujaratindia.com/index.htm
Foreign Direct Investment (FDI) in Gujarat

With over 11 percent share in the USD 36,504 million FDI proposed in India in 15 2011-12 , Gujarat emerged as the third most favorite investment destination, behind Odisha and Andhra Pradesh, for overseas investors across India, 16 according to apex industry body ASSOCHAM. Gujarat attracted an investment worth USD 1,001 million in 2011- 12.
17
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 to 2012, the figure stands at USD 8,251 million.17 Gujarat got the second highest number of 131 FDI proposals in 2011- 12.16
Investments in various sectors of Gujarat (Source: RBI)

1200 1001
1000
800
724
USD Mn
600
400
200
0 2010 -11 2011-12
Source: Department of Industrial Policy and Promotion
15 16 17
Department of Industrial Policy and Promotion, May 2012 ASSOCHAM, January 2012 Department of Industrial Policy and Promotion, May 2012
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), Special 18 Investment 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 the Government works to improve its business friendly environment with not only Special Economic Zones but large Investment Regions with robust infrastructure
Major policies for growth in 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
18
Gujarat State Portal, http://www.gujaratindia.com/citizen/citizen.htm
Gujarat Industrial Policy 2009

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.
Industrial Policy 2009 VISION
Facilitate investments
Employment generation and employability enhancement
Adherence to high quality standards
Increasing the efficiency of institutions and catalyzing industrial development
Promotion of geographical strengths to ensure balanced development. Promotion of mega projects like SIR, DMIC, GIFT
Improving the existing physical infrastructure. Investments in various sectors to improve performance
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 90.3 19 billion in 2009-10, registering a growth of 24.7 percent during the year.
19
Gujarat State Portal, http://www.gujaratindia.com/index.htm
The share of primary, secondary and tertiary sectors has been reported at 14.6 percent, 39.4 percent and 46.0 percent respectively to the total GSDP in 2010-11 20 at 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 the 20 year. 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 in 20 2009-10, 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 the year21.
Gross State Domestic Product at Current Prices
Per Capita Net State Domestic Product at Current Prices

1800 1600
Per capita NSDP Growth: 14.4%
120 100
Avg. GSDP Growth: 15.7%
112.5 90.3
1647 .3 1341.5
81.8 IN USD Billion 80 62.9 60 40 20 0 2006-2007 2007-2008
80.3 IN USD
1400 1200 1000 800 600 400 200 0 961.6
1242.4
1201.6
2008-09
2009-10
2010-11
2006-2007 2007-2008
2008-09
2009-10
2010-11
Source: Ministry of Statistics and Programme Implementation
Source: Ministry of Statistics and Programme Implementation
20 21
Gujarat State Portal, http://www.gujaratindia.com/index.htm Ministry of Statistics and Program Implementation, Government of India, State-wise SDP
State-wise GSDP comparison

250 200 USD Billion 150 100 50 0
ar at tB en ga Ka l rn at ak a Ra ja st ha n Ke ra la W es ra Pr . sh ad ht de a as hr N uj D el hi u
234.3
132.7 129.2 124.2
112.5
102.5
87 .6
71.0
60.7 58.0
rP ra
ar
Source: Ministry of Statistics and Programme Implementation, Government of India, May 2011
Gujarat: At a glance State Capital Area (square kilometers) Principal Language Population (in mllion 2011 census) Sex Ratio (Number of Females/1000 Male) Density of Population (persons/square kilometer) Urban Population (%) Literacy Rate (%2001 census) Length of Coastline (kilometers) NSDP (INR billion at current price, 2005-06) National Highway Length (kilometers) Domestic Airport International Airport Key Industries Gandhinagar 196,024 Gujarati 60 921 258 37 .35 69.97 1,600 1,866 2,362 11 1 Petroleum Chemicals Drugs and Pharmaceutical Gems and Jewellery Textiles IT-BPO
Source: Ministry of Statistics and Program Implementation, Government of India; IBEF Gujarat report
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Ta m il
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An d
Key Requirements to be an ICT destination of choice

Some of the most common set of parameters which should be seen before selecting a location are:
Requirements for a city to be considered an ICT Hub20
Cost Cost of operations Cost of training Cost of real-eState Cost of other infrastructure Cost of living Risk Profile Commercial risk Political risk Natural risk Social risk Police, crime, etc. Business Catalyst Government Benefits/incentives Competitive landscape Outsourcing maturity Proximity to parent Presence of ancillary industries and multi-vendor connectivity Presence of recruitment agencies
Scale & Quality Labour pool Skills availability Graduate Output Complexity Untapped aborpool Employment profile Migratory population
Requirements for a city to be considered an ICT hub
Connectivity Bandwidth availability
Infrastructure Transportation Telecom, Power, Water, Electricity
Quality of Life Social infrastructure (hospitals, education institutions, etc.) Availability of recreational facilities Non-work culture Pollution level
Talent avaialbility: The talent availability and future scalability are the foremost important parameters for setting up an ICT industry22. 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.
22
KPMG in India Analysis
Cost: While talent availability and scalability are the two main drivers behind opening up of captives, importance of cost of running the operations can still not be undermined. Risk profile: Risk is one of the most important criteria in making location assessment decisions. Considering risk is extremely important for any location assessment as it has a direct implication on business continuity. Risk may include various aspects such as legal/regulatory risk, probability of natural disasters, business/commercial risk (including supplier risk, logistics dependability, etc.), police/crime/corruption, etc. Companies need to have the ability to identify, assess and prioritize various factors which can pose risk to service delivery. Even after doing a thorough evaluation, companies should formulate a comprehensive business continuity and disaster recovery plan to monitor and control the probability or impact of events that can negatively impact the organization. Ease of doing business: To carry out smooth operations in any city, it is very important to understand the ease of doing business in that city. Thus, various business catalysts such as various Government incentives, outsourcing maturity of the location, proximity to parent's location, etc. are also considered important while location selection. Governments in various countries are taking steps to improve the business environment by providing monetary and non-monetary incentives, single-window clearances, etc. Infrastructure: Availability of adequate infrastructure is an important for functioning of any business and thus is an important parameter while selecting new location. Companies look at several factors such as availability of roads, railways, ports, buildings, power, telecommunications, etc. Some cities are now also focusing on developing infrastructure suited to deliver specialized services. Quality of life: While the quality of life may not directly affect the business environment in a city, it does have a significant impact on employees' satisfaction level which has a trickle-down effect on working of the business. Off late, companies have realized the importance of these parameters and consider factors such as availability of recreational facilities, traffic congestion, air pollution, non-work culture, etc. while selecting a location for business operations. Selecting the right location is one of the most critical factors for the success of any business. Every organization needs to do a careful
screening of multiple parameters. The organization has to build the framework 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 A Potential ICT Destination

Talent availability & employable pool of resources
Gujarat has a literacy rate of 79.3 percent Literacy Rates in Gujarat according to the provisional data of Census 2011; Literacy Rates (Percent) the male literacy rate is 87 .2 percent and the Literacy Rate 79.3 female literacy rate is 70.7 percent. In 2009-10, Male Literacy the State had around 42,145 primary schools with 87.2 over 8.6 million students enrolled. Gujarat with a Female Literacy 70.7 population of around 60 million (2011 census) is Source: Census 2011, Government of India 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 age 23 (20- 59 years) providing large pool of talent to support State's economy . The State is home to 36 Universities and University-level institutions across 24 various 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 State Government has many initiatives to encourage innovation in the education sector.
23 24
KPMG in India Analysis Ministry of Human Resource Development, Government of India
Premier educational institutes in the State

Premiere Instititutes in Gujarat (Illustrative)
Dhirubhai Ambani Institute of Information and Communicati on Technology
Indian Instititute of Manageme nt (IIM-A
The Indian Institute of Technology Gandhinagar (IITGN)
Nirma Institute of Management
National Institute of Design
Indian Institute of Rural Management
National Institute of Fashion Technology
Physical Research Laboratory Ahmadabad
Source: Ministry of Human Resource Development, Government of India
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 secondary 25 level, 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.
Infrastructure
Gujarat has excellent infrastructure as compared to other States . State's performance on various parameters under infrastructure are as follows: Transport: 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
26
25 26
India Human Development Report, Institute of Applied Economic Research, December 2011 KPMG in India Analysis
Major district roads, 10,352 km of Other district roads and 21,505 km of Village 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 gauge and 771 km of narrow gauge27. Cities such as Ahmedabad are well planned with ample public transportation. State Government is undertaking steps such as introduction of Intelligent-traffic-managementsystem to make commuting hassle-free28. Telecom Infrastructure: 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 also rolled-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 2,800 Government offices29. Power, Water and Electricty: 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 2,612.48 30 under 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 to shortage civic body is providing only 1107 MLD water31. Availability of office spaces: There are 83 product clusters, 202 industrial eStates, 60 special economic zones (SEZ) and upcoming infrastructure on 29 the 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.
27 28 29 30 31
Centre for Monitoring Indian Economy Large Project Opportunities, Vibrant Gujarat, 2011 Gujarat SWAN website, http://www.gswan.gov.in/SitePages/Default1.aspx Ministry of Power, Government of India DNA India, http://www.dnaindia.com/india/report_ahmedabad-to-face-water-shortage-from-may-25_1545581
As of October 2011, Gujarat had 45 formally approved SEZs, 6 in-principle approvals 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 the highest geographical area of 29,424 hectares under SEZ development32. State of the art commercial complexes such as MindSpace Special Economic Zone Gandhinagar, Infocity Gandhinagar and GIFT city make Gujarat an attractive business destination.
State-wide Uninterrupted Power Supply

20000 18000 Demand Projection (in MW) 16000 14000 12000 10000 8074 8000 6000 4000 2000 0 2000-01 2006-07 2011-12 2016-17 10605 15722 18478
Source: iNDEXTb (Industrial Extension Bureau, a Government of Gujarat organizaton), 2011
32
Centre for Monitoring Indian Economy
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, Haryana, Rajasthan, Gujarat and Maharashtra) in India33. 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
IT-ITeS, Bio-tech, Pharma Auto and Auto components, Machinery
Petrochemicals, Metal products, Textiles
Prioritised 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
33
Dmic.co.in
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 project is 3 million, the bulk of which will be in the manufacturing sector34. 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 of 150 km on either side of the DFC alignment are to be implemented35. Six major regions have been identified, and these will receive a bulk of 35 investments under the DMIC. These regions can be seen in the grahpic below .
Six major investment regions under DMIC

AhmedabadDholera (Gujarat)
Igatpuri-Nashik-Sinnar (Maharashtra)
Manesar-Bawal (Haryana)
Khushkhera-BhiwadiNeemrana (Rajasthan)
Pithampur-Dhar-Mhow (MP)
Dadri-Noida-Ghaziabad (UP)
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, and 35 include the below mentioned projects .
34
DELHI MUMBAI INDUSTRIAL CORRIDOR, Emerging landscape of global investment, Japan Vibrant Gujarat website
Bank for International Cooperation, jbic.go.jp

35
Sector
Important components of DMIC in Gujarat Construction of expressways to connect major locations to ports and among each other e.g. Ahmadabad to Dholera.
Infrastructure
Developing regional MRTS links e.g. Gandhinagar-AhmadabadDholera and additional DFC spurs and regional links Integration of proposed International Airport in vicinity of Dholera Promote development of processing activities (SEZs/ Industrial Parks / Port Based Industries, Integrated Food / Agro Parks)
Industrial
Setting up free trade warehousing zone, container freight stations, cargo hubs and truck terminals 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
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 DMIC initiative a splendid success.
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 are 36 expected 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 to develop, 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 Global Investor Summit The first phase of GIFT project is expected to get completed by the end of 2012 The project is being run in a PPP mode and the joint venture is named as Gujarat International Finance Tec-City Company Limited" (GIFTCL) The city will have State of the art infrastructure and will have a special economic 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
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).
Salient features of the project

Water supply and sewerage system: 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 Recycling and Reuse of Wastewater. Project would ensure through construction of three barrages on river Sabarmati. There is also a proposed landscaped at 37 the river bank along GIFT . Power supply: 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 power 29 substations . Information & Communication technology (ICT): 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, smart 37 public services, etc . Waste management system: City will have Automated Waste Collection System (AWS) through chute system and waste treatment through 37 Plasma Technology . District cooling system: GIFT will have a centralized AC system, called District Cooling which is cheaper to run and uses less electricity. Total Estimated Capacity of cooling system would be ~ 1.0 Lakh TR37. Transportation: 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, 37 and Transportation and Logistic nodes .
37
Giftgujarat.co.in, Gujarat International Finance Tec-City, Corporate Presentation
GIFT Value Proposition

Technology: Residential Housing Projects: Well-planned residential housing projects Walk-to-work layouts
Ho us ing
Broadband FTTP WiFi / Wimax Shared IT Services
Te ch n
Global Connectivity
olo
gy
ucture Infrastr
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 green
High Rise Business District: Benchmark office, high-rise district to be created with landmark buildings
Educational Institutes to be established International schools for primary education Privatised hospitals with infrastructure to be established
Transport
Overall Connectivity/ Transport: External Connectivity includes MRTS / BRTS/ Roads Public-Private Modal Split 90:10 Personalised Rapid Transit (PRT) System
Source: giftgujarat.co.in
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.
Comparison of GIFT with other international financial centres
Paris Tokyo (La Defense) (Shinjuku) Land Area (sq km) Construction Scale (in mn sq m) Greenbelt (in thousand sq m) Height (m)
Source: giftgujarat.co.in
En
R te et rt ai ai l& nm en t
Social Infrastructure:
Bus in Dis ess tric t
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.
In
l re cia tu So truc s fra
London (Dockyards) 1.05 1.1 50 250
Pudong GIFT (Lujiazui) 1.7 4.5 363 490 3.58 8.5 1183 410
1.6 2.5 40 200
1.6 1.6 120 250
Cost
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 destinations like Mumbai, Bangalore and NCR38. 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 are 39 nearly 50-60 percent lesser than rentals for commercial spaces in Pune .
Risk profile
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. Most of 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.
Business catalyst
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 39
KPMG in India Analysis Vibrant Gujarat website
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.
Government policies
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: Simplification of procedures- addressing the roadblocks and devising mechanisms to plug these gaps. Setting up information banks that are centralized repositories for information on districts, sectors, investment regions, SEZ, govt. incentives etc. Creation of Industrial Zones this shall create environmentally sustainable industrial areas based on predefined parameters. Creation of land banks 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. Investor portal for the State monitoring of the status of investments / MoU at different levels of approvals and implementation. Investor facilitator portal this is a tool to facilitate the Industrial Facilitation Act. Doing business in Gujarat a compilation of various incentives offered to the investors and clearances required to start a new venture in the State.
IT/ ITeS policy in Gujarat (2006- 11)40

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 a turnover 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.
In addition, State Government has directed all line departments to earmark up to 3 percent of their plan outlay for implementation of eGovernance initiatives. The State Government has a LAN Policy for purchase of hardware & software and has also framed a website policy.
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
Source: Department of Science & Technology, IT Policy of Science & Technology Department
40
Dept. of Science and Technology, Government of Gujarat, http://dst.gujarat.gov.in/e-governance.htm
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 access 41 to meet the chief minister personally to present their cases" . SWAGAT has been running systematically for over 7 years resulting in 96 percent cases 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 villages 42 from February 1, 2011 . The official portal of the Chief Minister of Gujarat
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)
Source: IBEF , www.ibef.org/states/gujarat.aspx
41 42
Dept. of Science and Technology, Government of Gujarat, http://dst.gujarat.gov.in/e-governance.htm Gujarat IBEF report
(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 an award 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 eGovernance. 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.
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. The State 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 evaluation included demographics, education, health and medical standards, safety, housing options, socio-cultural political environment, economic environment, and natural built/planned environment.
Conclusion
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 becoming 43 increasingly 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 8,00010,000 compared to the INR 15,000-18,000 in a Tier- 1 city in India. In a city like Mumbai, 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 too 44 are 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
43 44
NASSCOM Strategic Review 2012, February 2012 KPMG in India Analysis
because of various initiatives like the National E-Governance Plan (NeGP) and the unique 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 percent of 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 real45 eState 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, the study 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 of
Management Studies, University of Delhi, http://fms-syssoc.net/blog/?p=48
Established IT-BPO Destinations Parameter/ City

Cost RiskProfile Business Catalyst Qualityof Life
Emerging IT-BPO Destinations Ahmedabad Kolkata Chandigarh
Bengaluru
Mumbai
Delhi
Chennai
Infrastructure
Scale & Quality
High
Low
Appendix: Cities Profiles

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 21.5 percent 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-BPO destination. Ahmedabad is also a good base for voice services due to the presence of human resources The labor and real estate costs in Ahmedabad are lower compared to other Tier-1 locations such as Mumbai, NCR, and Bengaluru
Quick facts Geographic Location 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
Climate
Climate
Population Literacy rate Languages
Major industries
Source: IBEF; KPMG in India Analysis
Current IT-BPO scenario in the city Key IT-BPO service provider / Captive companies Mastek Limited Citizen Infoline Limited Alps BPO Services Limited
Avani Cimcon Tech Limited Blue IT Limited Lyons Technologies Limited
Development of the IT-BPO industry

46
Companies like Mastek, Alps BPO and Blue IT have set up centres in Ahmedabad TCS and Infosys plan to expand their presence in the city in the near future
Human Resources
Ahmedabad is the house to some of the best Universities in India, stressing on the presence of strong educational background in all the inhabitants of the city Good availability of English language resources in the city
Infrastructure Office space: Ample office space available for new entrants and expansion of existing players. Power Supply: The city has almost negligible power cuts. Telecom infrastructure: Leading telecom and broadband operators have a presence in Ahmedabad. National and International connectivity: The city has good traffic management system in place. The city traffic department has undertaken several steps to control traffic in the city, including an excellent Bus Rapid Transport System (BRTS). The city is also home to an international airport. Railway lines connect the city to all towns in Gujarat and other major Indian cities Upcoming projects: The Government of Gujarat and Ahmedabad Mahanagar Sevasadan have initiated a feasibility study into the possibility
46
DataQuest, 20th March 2009
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).
Quality of life
Cost of Living: 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 Crime rate: 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: 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 Ease of commuting: The city has witnessed a significant growth in the number of vehicle resulting in traffic congestion and increase in travel time Availability of Hotels: 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
Risk: City specific

Catastrophic risks: Ahmedabad come under seismic zone 3 and is an earthquake prone region with alluvial soil land. City was rocked with massive earthquake in 2001. Political risks: There have been frequent communal clashes between Hindus and Muslims in the city. Areas such as Dariapur, Khamasha, Idgah bridge, Vadaj and Shahpur are of the most communally sensitive areas History of disruptions: Large scale communal clashes in 2002
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 Geographic Location 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) Gujarati, English, Hindi Focus industry sectors in the district include Engineering, Electronics, Textiles & Apparels, Chemicals and Processed foods
Climate
Population Literacy rate Languages Major industries

The labor and real estate costs in Rajkot are lower compared to other Tier-1 locations such as Mumbai, NCR, and Bengaluru
Current IT-BPO scenario in the city Key IT-BPO service provider / Captive companies Ace Software Exports Limited
Human Resources
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.
Infrastructure
Office space: Ample office space available for new entrants and expansion of existing players. Power Supply: The city has a good power supply system, with many nonrenewable wind and solar power projects coming on-stream during the past 12 months. Telecom infrastructure: Leading telecom and broadband operators have a presence in Rajkot. National and International connectivity: 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 Upcoming projects: The Gujarat State Road Development Corporation (GSRDC) has proposed a four lane highway connecting Rajkot Jamnagar Vadinar.
Quality of life
Cost of Living: Low cost of living as compared to the Tier I cities of India. Crime rate: According to the National Crime Records Bureau (NCRB) , Rajkot has one of the a slightly higher than average crime rate amongst cities in Gujarat Pollution levels: 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 Ease of commuting: Rajkot faces the problem of traffic congestion, caused primarily by increasing vehicular traffic.
Availability of Hotels: Rajkot has a good number of 3 and 4 star hotel properties. However, these are primarily directed towards domestic tourists and business travelers.
Risk: City specific

Catastrophic risks: Rajkot comes under seismic zone 3 and is an earthquake prone region. Political risks: Communal clashes in Rajkot have been few and far between, and the city is generally considered stable.
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
Quick facts Geographic Location 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. City receives 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
Climate
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 companies can 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 cities in India Gujarat is planning to develop IT-ITeS cluster in Surat
Current IT-BPO scenario in the city Key IT-BPO service provider / Captive companies (Services offered) Chicago Software Inds. Ltd. Live Wire Software Ltd. Proximus Knowledge & Technology Services Pvt. Ltd.

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.
Human Resources
Surat experiences an inward movement into the city by professionals to compensate for the lack of skilled resource availability
Infrastructure
Office space : 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. Power Supply: 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 one power station is proposed at Aakhakhol. One 132 KV substation is in place at Bhestan. Telecom infrastructure: 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
Upcoming projects: Government of India plans to develop a Dedicated 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.
Quality of life
Cost of Living: Low cost of living as compared to the Tier I cities of India including 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 Pollution levels: 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 than Ahmedabad (35,100 ton)47 Ease of commuting: Traffic situation in Surat is not very good. City faces traffic jams at peak hours and slow movement of traffic. Availability of Hotels: 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
Risk: City specific

Catastrophic risks: 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. Political risks: There has been stability during the last decade with the ruling party completing its term in power History of disruptions: Surat has not seen any communal tensions, rioting or terrorism since the 2002 Hindu-Muslim riots
47
Rajkot breathes easy compared to Ahmedabad and surat , DNA India Website
Gandhinagar
City Introduction
Gandhinagar is the capital and the largest city of Gujarat. The district has four talukas, viz. Gandhinagar, Kalol, Dehgam and Mansa
Quick facts Geographic Location 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) Gujarati, English, Hindi Food processing, Electronics, Textiles
Climate
Source: 2011 Census of India, Gandhinagar Census 2011 Website

The city has State of the art infrastructure in the form of MindSpace Special Economic Zone, Infocity Gandhinagar and GIFT city The city has some premiere 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. There is plenty of talent available in and around Gandhinagar. Gandhinagar has a good traffic management system and is well connected to other major cities in the State.
Current IT-BPO scenario in the city Key IT-BPO service provider / Captive companies (Services offered) Tata Consultancy Services Futures First Cybage
Perfect IT Solutions Arth Infosoft iGate-Patni (BPO)

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
Human Resources
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.
Infrastructure
Office space : Gandhinagar has three major IT parks MindSpace Special Economic Zone, the first SEZ of Gujarat, Info City STPI (currently functional) and GIFT City (under construction) Power Supply: 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 Telecom infrastructure: Presence of a number of telecom service providers within the city. National and International connectivity: 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.
Upcoming projects: Government of India plans to develop a Dedicated 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
Quality of life
Cost of Living: Low cost of living as compared to the Tier I cities of India including lease rentals for residential accommodation. Consumer Price Index (excluding rent) is almost same as that of Ahmedabad which has CPI of 35.29 Ease of commuting: The city has managed its traffic well with installation of Intelligent-traffic-management-system, creation of traffic signals, construction of flyovers, etc. Availability of Hotels: Gandhinagar has one five star hotel - Cambay Spa & Golf Resort and a number of other hotels. Its proximity to Ahmedabad gives it access to several hotels in Ahmedabad city as well.
Risk: City specific

Catastrophic risks: Gandhinagar lies in Zone 3 of seismic activity and is prone to earthquakes. City is witnessed a severe earthquake in 2001 Political risks: There has been stability during the last decade with the ruling party completing its term in power History of disruptions: Gandhinagar has not seen any communal tensions, rioting or terrorism since the 2002 Hindu-Muslim riots
Vadodara
City Introduction
Vadodara, formerly known as Baroda, is the third largest and most populated city in the Indian State of Gujarat, after Ahmedabad and Surat. Historical and archaeological findings date this place back to the 9th century when it was a small town called Ankottaka (present Akota) located on the right bank of the river Vishvamitri.
Quick facts Geographic Location Vadodara is situated on the banks of the Vishvamitri river Vadodara features a tropical savanna climate. There are three main seasons: Summer, Monsoon and Winter. Aside from the monsoon season, the climate is dry. The weather is hot through the months of March to July 4,157 ,568 (2011) 81.21 percent (2011) Gujarati, English, Hindi Focus Industry sectors in the district include chemicals, pharmaceuticals, glass, dairy, biotechnology, petrochemicals and construction
Climate
Current IT-BPO scenario in the city Key IT-BPO service provider / Captive companies (Services offered) TCS L&T Infotech Rishabh Software

Labor and real eState costs in Vadodara are lower compared to other Tier1 locations such as Mumbai, NCR, and Bengaluru Presence of players like TCS in Vadodara in the city can attract other IT players as well
48
Companies like TCS and L&T Infotech already have a substantial presence in the city.
Human Resources
The Maharaja Sayajirao University of Baroda is ranked amongst the top universities in India, and caters to over 30,000 students annually This provides a readymade talent pool for IT-BPO firms
Infrastructure
Office space : Availability of office space Power Supply: The city has a relatively stable power supply. Telecom infrastructure: Leading telecom and broadband operators have a presence in Vadodara. The presence of firms like TCS and L&T Infotech has ensured that internet connectivity is not a challenge for other aspiring firms National and International connectivity: Vadodara Airport is located to the north-east of the city. Vadodara has air connectivity with Mumbai, New Delhi, Bangalore and Hyderabad. The city is on the major rail and road arteries joining Mumbai with Delhi and Mumbai with Ahmedabad. Due to this Vadodara is known as a 'Gateway to the Golden Quadrilateral'. Upcoming projects: There are plans to setup an international airport in Vadodara in the future.
48
DataQuest, 20th March 2009
Quality of life
Cost of Living: Low cost of living as compared to the Tier I cities of India including 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 Crime rate: The crime data released by NCRB for 2011 has ranked Vadodara 23rd among 53 cities in the country considering its crime figures in accordance with its population. The city's ranking in the list of 2010 was 19.49 Ease of commuting: The city faces traffic jams at peak hours and has suboptimal State of road infrastructure. However, the city is trying to improve 50 traffic situation by taking stricter stance against traffic offenders. Availability of Hotels: Vadodara has one five-star hotel and a number of hotels in other categories.
Risk: City specific

Catastrophic risks: Vadodara comes under seismic zone 3 and is an earthquake prone region. Political risks: No major political risks History of disruptions: Vadodara witnessed Hindu-Muslim riots in 2002 and in May 2006 over a demolition drive. Regions such as Panigate, Fatehpura City, Wadi, Navapura and Raopura are communally sensitive areas.
49 50
Vadodara's 'safe city' tag intact , The Times of India, July 2012 Flout traffic rules in Vadodara, get arrested and land in court , DNA India, June 2011
Glossary of Terms
ASSOCHAM The Associated Chambers of Commerce and Industry of India ATVT - Aapano Taluko Vibrant Taluko AWS - Automated Waste Collection System BRTS - Bus Rapid Transport System CNG - Compressed Natural Gas DFC - Dedicated Freight Corridor DMIC - Delhi-Mumbai Industrial Corridor eGovernance - Electronic-Governance FDI - Foreign Direct Investment FTTP - Fibre to the Premises GDP Gross Domestic Product GIFT - Gujarat International Finance Tech City GIFTCL - Gujarat International Finance Tec-City Company Limited GIS - Geographic information system GPS - Global Positioning System GSDP - Gross State Domestic Product GSWAN - Gujarat State Wide Area Network GSWMA - Gujarat State Watershed Management Agency GUDCOL - Gujarat Urban Development Company Limited ICT - Information and Communication Technology (Sector) IFCs International Financial Centres iNDEXTb INDUSTRIAL EXTENSION BUREAU IT-BPO - Information Technology Business Process Outsourcing IT-ITES - Information Technology - Information Technology Enabled Services IWDMS - Integrated Workflow and Document Management System IWMP - Integrated Water-Shed Management Program LAN - Local Area Network MEGA - Metro Link Express for Gandhinagar Ahmedabad MoU - Memorandum of Understanding
MLD - Million Litres per Day MRTS - Mass Rapid Transit System NCR National Capital Region NCRB - National Crime Records Bureau NeGP - National E-Governance Plan NH - National Highways NSDP - Net State Domestic Product PHC - Primary Health Centres PPP - Public-Private Partnership PRT - Personalised Rapid Transit SCOPE - The Society for Creation of Opportunity through Proficiency in English SEZs - Special Economic Zones SH - State Highways SICN - Sachivalaya Integrated Communication Network SIR - Special Investment Region SPV's - Special Purpose Vehicles STPI - Software Technology Parks of India SWAGAT - State Wide Attention on Grievances with Application of Technology UID - Unique Identification UNPSA - United Nations Public Service Award VAT Value Added Tax VGGIS - Vibrant Gujarat Global Investment Summit Sources
Sources
RBI - Reserve Bank of India RBI's Regional Office Ahmedabad Department of Industrial Policy and Automation ASSOCHAM The Associated Chambers of Commerce and Industry of India India Brand Equity Foundation (IBEF), Gujarat State Presentation Gujarat Industries and Mines Department Gujarat Industrial Policy 2009 Ministry of Statistics and Programme Implementation iNDEXTb - Industrial Extension Bureau, a Government of Gujarat organization DMIC - Delhi-Mumbai Industrial Corridor Website Emerging landscape of global investment Japan Bank for International Cooperation, jbic.go.jp GIFT Website Gujarat International Finance Tec-City Department of Science & Technology, IT Policy of Science & Technology Department DataQuest, 20th March 2009 Surat Municipal Website Literacy Rates for State and District, 2011 census of India, Government of India Rajkot breathes easy compared to Ahmedabad and surat , DNA India Website 2011 Census of India, Gandhinagar Census 2011 Website Vadodara's 'safe city' tag intact , The Times of India, July 2012 Flout traffic rules in Vadodara, get arrested and land in court , DNA India, June 2011
Acknowledgement
This document has been released on the occasion of the ASSOCHAM Leadership Forum 2012. The KPMG team which contributed towards the content presented in the document comprises of Saurabh Jha, Sidharth Tewari, Aditya Shangloo, Shashank Shetty and Ajay Nainy. An acknowledgement for the inputs and support by Jiten Ganatra, Uttara Sujit and Priyanka Agarwal from KPMG in India
ASSOCHAM Contacts Mr. D.S.Rawat Secetary General E: assocham@nic.in Mr. Nakul Prakash Lakhe Head, Gujarat Chapter E: nakul.prakash@assocham.com
KPMG in India Contacts Mr. Pradeep Udhas Partner and Head, IT-BPO Sector E: pudhas@kpmg.com Mr. Navin Agrawal Partner and Head, Government Sector E: navinagrawal@kpmg.com Mr. Rajan Vasa Senior Advisor, KPMG Gujarat E: rajanvasa@kpmg.com Mr. Saurabh Jha Associate Director E: saurabhjha@kpmg.com
KNOWLEDGE PARTNER
The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

Gujarat - An Emerging' Hub For ICT (Leadership Summit 2012)

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Pradeep Udhas Partner and Head - IT BPO Sector KPMG in India

Navin Agrawal Partner and Head - Government Sector KPMG in India

KPMG in India Analysis

Key Requirements to be an ICT destination of choice

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

What sets Gujarat apart

World Class Infrastructure

Preferred destination for Investment

Growing employable workforce

Government incentives & policies

Source: IBEF Gujarat report; KPMG in India Analysis

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

Gujarat: About the State

Key Industries in the State

Gujarat Location Map

Source: KPMG in India Analysis

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

Infrastructure in the State

Special Economic Zones (SEZ)

Gujarats Infrastructure Checklist :

Source: KPMG in India Analysis

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

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

Investments in the State

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

Gujarat 11% 10% 9% 8% AP 7% Orissa Maharashtra

5% 6% Karnataka WB Jharkhand Tamil Nadu

Source: RBI, December 2011

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

Investments in various sectors of Gujarat

Distribution of investments sector-wise, as of June 2011

Construction and Real eState 14.26%

Electrical and Electronic

Source: RBI, December 2011

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

Foreign Direct Investment (FDI) in Gujarat

Investments in various sectors of Gujarat (Source: RBI)

0 2010 -11 2011-12

Source: Department of Industrial Policy and Promotion

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

Government policies for the State

Major policies for growth in the State :

Source: KPMG in India Analysis

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

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

Gujarat Industrial Policy 2009

Industrial Policy 2009 VISION

Employment generation and employability enhancement

Adherence to high quality standards

Increasing the efficiency of institutions and catalyzing industrial development

Source: Gujarat Industries and Mines Department, Industrial Policy 2009

Overall Performance of the state

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

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

Gross State Domestic Product at Current Prices

Per Capita Net State Domestic Product at Current Prices

Avg. GSDP Growth: 15.7%

81.8 IN USD Billion 80 62.9 60 40 20 0 2006-2007 2007-2008

1400 1200 1000 800 600 400 200 0 961.6

Source: Ministry of Statistics and Programme Implementation

Source: Ministry of Statistics and Programme Implementation

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