Global summit has a desi twist

State tags existing projects to 'inflate' MoUs; no foreign investors

The Gujarat government seems to be a on a high after signing 70 memorandum of understandings (MoUs) and investment proposals worth Rs 55,418.50 crore in three days of the Vibrant Gujarat Global Investors' Summit. However, a closer look at the deals show how fallacious the government's claims are.

The inaugural day of the summit witnessed the announcement of 34 projects with investments of Rs 32,513.50 crore in the presence of high-profile central and state ministers, and industrialists.

Top in the day's list in terms of investment was not a foreign company but the Reliance group, which announced investment plans worth Rs 9,000-10,000 crore in various projects.

Second in the list was the Ahmedabad-based pharmaceutical major Torrent group, with Rs 5,000 crore investments in two power projects.

While Reliance Industries chairman Mukesh Ambani did not provide any break-up of the investments, Torrent Group had started work on the Rs 3,800 crore power generation project in Surat six months back.

The Rs 1,200 crore investment plan of the Adani Group, which was announced on the opening day, also lacks credibility as the group had declared its plans on similar lines in the current year.

"State government officials are projecting these proposals as proofs for the success of the summit. But the fact is that most of these plans have already been implemented. Take the case of Adani Group's Rs 150 crore investment in edible oil refining. This project was announced by the chairman of the company, Gautam Adani, three months back," said an industry observer, requesting anonymity.

The only new projects and investments signed during the day were from the gas and petroleum sector. The state-controlled Gujarat State Petroleum Corporation Ltd, played the key role in these deals, signing three MoUs with German majors Steag and Encoltech GmbH and ONGC.

Of these the only major proposal was from Steag. The gas distribution project of the Adani Group, which according to government officials is worth Rs 600 crore, is also not new as the group already holds the rights for gas distribution in two cities.

"You don't need a global summit with expenses running into crores of rupees from the state exchequer to finalise the Rs 250 crore railway project for Ahmedabad by the Delhi Metro or the Rs 60 crore hospital project by a small research institute. Dozens of government officials and ministers, including chief minister Narendra Modi, had gone abroad to invite global investors. These trips cost a lots of money for the cash-strapped state and in turn what the state got was peanuts. Also, most of the projects the government received were from local companies such as Torrent, Adanis and Intas Pharma," said the observer. On day two, Rs 16,120 crore worth 24 projects were announced.

Essar group had claimed that it will invest Rs 3,500 crore in Gujarat for the expansion of its infrastructure and network in power sector, but again the government doesn't have any details of the project. Essar officials were not available for comment.

Take the case of the much-hyped projects worth Rs 2,800 crore from the house of Nirma.

Though government officials were excited about these proposals, no company officials were available for comments.

Only a not-much-known Vibgyor Group of Ethiopia, run by a non-resident Gujarati, Vinod Mehta, was the sole foreign company to commit an investment in the state on day two.

Mehtas committed a whopping Rs 1,200 crore of investment for an info-cum-communication-entertainment park in Bet Bavla and Bagodra. On day three, also the concluding day of the summit, government officials had claimed that they have roped in investments worth Rs 6,785 crore.

An official release claims that Apollo Tyres will invest Rs 600 crore in a radial tyre manufacturing unit in Vadodara.

But company sources said the project, which is at present under implementation, was decided at least a year back. Even Intas Pharmaceuticals' plan to invest Rs 150 crore in a plasma pharma unit in Ahmedabad is nothing new as the company had talked about the project a few months back.

"We are not asking how many of these projects are going to be implemented, but we are questioning the tall claims made by the government," the observer added. No officials were available for comments.