State Of The Economy 2016

Not-so-nano challenge

Even as SMEs in Sanand take on the bureaucracy, auto ancillaries are battling the dual challenge of unskilled labour and low volume

photographs: Soumik Kar

It takes us barely 45 minutes to reach the Sanand industrial estate from the Ellis Bridge area of Ahmedabad, hardly surprising considering the quality of Gujarat’s roads. When we eventually reach the 2,000-hectare industrial estate — perhaps the country’s youngest automotive cluster — the whole place seems neatly sectioned, well-marked, sparse, and quite spaced out. For an emerging industrial cluster, at first glance, Sanand seems awfully quiet. Very soon, we find out just why. As per the local industries association’s reckoning, close to 1,000 MSMEs that had been assigned plots at the Sanand estate have been slapped with penalties to the tune of Rs.1,000 crore over alleged non-utilisation of land.

Stop work
“This estate was intended not only for automotive companies and ancillaries but for engineering units, packaging companies, pharma and other allied businesses. While bigger companies such as Tata and Ford can afford to set up their own support infrastructure, MSMEs can’t — the state needs to supply that,” says Ajit N Shah, secretary of the Sanand Industries Association — GIDC Bol. This is where the local industry body, the GIDC, has failed small business owners, he says. “GIDC began plotting, assigning and distributing land as early as 2011, when the Tata Nano plant moved from Singur in West Bengal to its current location here. But while Nano got a red-carpet welcome, smaller units had to wait until March 2015 for basic infrastructure. As per RTI records accessed in 2013, GIDC accepted that construction for amenities like water supply, electricity and roads was still underway.”

GIDC rules say that all units have to commence production within two years of allotment or face penalties. “Many small business owners were allotted land in 2011 but got a water connection only towards end 2014,” explains Shah. As per his estimates, nearly 1,000 small industries were left in the lurch in the process. “Now that the civic infrastructure is in place and units are submitting plans for plants, we are being slapped with penalties. If you own a 5,000 sq m plot, today, you will have to cough up nearly Rs.2,542,000 in penalties. With interest, this adds up to nearly Rs.1 crore.” 

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