Are biz summits imperative for foreign investment?

Gandhinagar: On December 20, 2021, the World Economic Forum postponed its Davos summit slated to be held between January, 2022 and mid-year owing to the rapid transmission of the Omicron variant across the world.

However, the Vibrant Global Gujarat Summit (VGGS) will be held on schedule from January 10-12, state Health Minister Rushikesh Patel had informed three days ago, despite surge in COVID-19 cases.

Justifying the decision to go ahead with VGGS, the minister argued, “For a state’s economic growth, investment is a must. And to attract it, such summits play a vital role.”

Taking his statement into consideration, First India explored the history of Gujarat’s domestic and international trade as well as foreign investment.

Despite no business summits held in the state earlier, Gujarat has been on the international trade map and the destination of foreign investment.

Centuries before the nation attained independence and the state of Gujarat was formed, art, crafts and skills were appreciated by the world.

During the Indus Valley civilization, it was connected through the Lothal port, Mandvi port in the 16th century Mandvi port and Choryarsi port from Surat.

Kutch crafts (country vessels) attracted international contracts, Surti zari craft was exported to Persian Gulf countries.

Coming to the 19th and 20th centuries, coupled with the artistic skills and aptitude for business of Gujaratis, the state’s coastal belt helped it flourish and establish the textile sector in Ahmedabad as well as the pharmaceutical sector in Central and South Gujarat.

Formed in 1960, Gujarat saw the establishment of the Gujarat Industrial Development Corporation under the Act passed in 1962.

The first Foreign Direct Investment (FDI) in the state came from Switzerland’s ABB company, when it set up a production facility in ManejaVadodara in 1963.

The second major foreign investment came in 1976 in VatvaAhmedabad, when Germany’s Bosch Rexroth set up a hydraulic valves manufacturing unit.

Slowly, the GIDC estates were founded under the state’s second Chief Minister Late Balvantrai Mehta. First one was set up in Vapi in 1967, and the second large industrial estate was established in Ankleshwar (1978).

The state’s pharmaceutical sector grew between 1962 and 1985. In 1967, Ramanbhai Patel installed Cadmach company that manufactured pharmaceutical machinery, which further boosted the industry’s growth

. Commenting on the effectiveness of the Vibrant Gujarat Summit, economist Hemant Shah says, “A myth has been created in the last two decades about Vibrant Gujarat bringing in foreign investment that has boosted economic growth.

However, the fact is that the state’s annual growth rate has maintained an average of 8.5% for the last 20 years.”

He adds, “In 1960-70, the state’s annual growth rate was 4.4%, and 10% from 1970-80. Between 1980 and 2000, the annual rate has been 14% on average.”