October 2008 is a time in his life that 63-year-old Ravubha Vaghela will never forget. After all, it is not every day that one willingly makes a Rs 7-crore sacrifice. The banker-turned-teacher-turned-realtor-turned-industrialist parted with 30 acres of prime land off the Sanand-Viramgam highway, 30 km from Ahmedabad, for Rs 1,000 per square metre - half the market price - to enable the Narendra Modi-led Gujarat government to build an approach road for the Tata Nano plant.
But for his decision, Gujarat might not have become the latest and the fastest growing auto hub in the country. "Though the state government had 1,000 acres of land for the Tata Nano project, negotiations were faltering, as there was no access road to the site. When it became clear that this could push the plant out of Gujarat's hands, I came forward to offer my land," he says.
Close ties with Congress leader Shankersinh Vaghela - Modi's bete noire - did not deter Ravubha from selling his land and persuading other farmers in four villages to part with nearly 3,500 acres, so that Gujarat Industrial Development Corporation, or GIDC, could develop the auto hub. "We wanted to show how different the outlook of Gujarati farmers was from those in West Bengal," he adds in English laced with a mix of Hindi and Gujarati.
Three years later, not only is Tata Motors' Nano plant up and running, but two other global auto majors - Ford Motor and PSA Peugeot Citroen - plan to invest Rs 4,000 crore each to set up car factories in the area. The impact is already visible in Sanand and nearby villages: with the Rs 1,600 crore that farmers have got for their land, they have bought luxury cars, built big houses, bought large tracts of land at some distance from their villages, and invested the rest in the 12 new bank branches which have opened in the area in the past year.
And there is more in store: state government officials say Maruti Suzuki , too, will build its plant near Sanand, and that the deal is likely to be sealed in October. Besides car makers, two-wheeler manufacturers are also considering expanding their operations in the area. And GIDC officials say the deluge of offers from farmers who want to sell their land is growing daily.
Gujarat's transformation into an auto hub began in 2008, with the chance marriage of a realisation and an opportunity. Unhappy with the level of value addition in terms of downstream industries and job creation triggered by large chemical, petrochemical and pharmaceuticals investments, Chief Minister Modi sought officials' views on ways to improve the situation.
Gujarat accounts for half the chemicals produced in the country and 62 per cent of petrochemicals. Modi wanted to take the share of manufacturing in the state's gross domestic product from the current 31 per cent - the national average is 18 per cent - to 40 per cent by 2025 (the projected national target is 25 per cent). "We realised that, to achieve this target, the state had to shift its focus from traditional industries which were capital-intensive but with low per capita value addition," says Saurabh Dalal, the state's industries minister. "We identified sectors such as automobiles, where the ratio of direct to indirect employment is very high."
The opportunity came on October 3, 2008, when Ratan Tata decided to pull the Nano project out of Singur in West Bengal. An SMS from Modi, asking Tata to consider Sanand as a possible location, set the ball rolling. But it was no shoo-in: Tata Motors was considering locations in Karnataka and elsewhere.
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