The first sight of India’s newest “Motor City” is a collection of giant blue-and-gray structures, windowless boxes in corporate colors that are the hallmark of modern manufacturing.
The warehouses and machining plants, walled in on an enormous site of more than 400 hectares, are owned by Tata Motors which moved to the western state of Gujarat in 2008 to start producing its Nano small car.
A short distance up the road in Sanand, an hour’s drive from the state’s biggest city, Ahmedabad, teams of laborers, drilling rigs and trucks are preparing the foundations for a new US$1 billion Ford facility.
Rising from the dust opposite the fields of swaying wheat is a new global car-manufacturing hub, the sort of industrial project which politicians in India often talk about creating but have seldom delivered.
Michael Boneham, an Australian who heads Ford in India, lists the reasons for investing in Gujarat and in the process highlights some of the failings of other Indian states.
The easy availability of land was “critical” — Ford did not want to risk the sort of protests that have blighted industrial projects elsewhere — and he has nothing but praise for the local government.
“I’d call them business-like. We’ve set up a two-weekly and now monthly meeting with key project leaders,” Boneham said during a recent visit to the site.
“There are assignments, timing, and there are commitments that are met, which is what impresses me. The government also has transparency which is important for us, and accessibility,” he added.
Reliable power supplies, decent infrastructure and ports (by Indian standards), and the availability of educated labor were the other factors that tipped the decision on where to locate the Ford’s second Indian plant, which will open in 2014.
Accompanying the Detroit-based group will be 19 automotive suppliers who are set to build factories and train workers, in the process creating the sort of corporate ecosystem that looks set to attract other manufacturers.
Further up the road, French car manufacturer Peugeot has chosen a plot of land for its first factory in India — a proposed US$850 million investment — but its plans are on hold due to the debt crisis in the eurozone.
Maruti Suzuki, India’s biggest car manufacturer, is pressing ahead with a factory elsewhere in Gujarat — in Mehsana, close to the Mundra port — while motorcycle group Hero has also picked the state for its fourth factory.
“Power was a big consideration [in choosing Gujarat],” Shinzo Nakanishi, Maruti Suzuki chief executive, said in an interview at the India auto show earlier this year.
“Other than Gujarat, states have a problem of power supply,” he added. “Also the quality of the manpower is good ... and it was close to the port, our own port.”
Maruti’s operations have traditionally been focused in northern Haryana state, while the other main Indian car-making hub is in southern Tamil Nadu where Ford, Hyundai, Renault-Nissan and Michelin already have factories. The arrival of global car manufacturers has been a boon for Gujarat’s ambitious Chief Minister Narendra Modi, a right-wing Hindu nationalist who holds a much-hyped annual “Vibrant Gujarat” summit to attract investors.
His record as a no-nonsense, business-friendly leader is expected to be part of his eventual pitch to become prime minister — a task made difficult by his association with religious riots in 2002 that left more than 2,000 dead.