The new E-factor: Slowly, the state is beginning to attract IT services firms due to its relatively low real estate prices and supply of graduates

Past July, Narendra Modi bombarded investors in India and elsewhere with emails. Some 6.7 million of them. These were virtual invitations to attend a mega investment jamboree, called Vibrant Gujarat, that the state Chief Minister is putting together between September 28 and 30, 2003. Four teams, comprising members of the state's Industrial Extension Bureau (indextb) and officials from the Federation of Indian Chambers of Commerce and Industry (FICCI), a partner in Vibrant Gujarat, are even criss-crossing the globe, wooing investors in countries like the US, Canada, France, Germany, China, and Australia. Happily for Modi, the response has been overwhelming. On an average, some 30,000 emails are pouring into his inbox every day. "There's a growing feeling that one needs to create an industry-friendly environment instead of doling out incentives to investors," says Modi (See ''I Want To Convert Red Tape To Red Carpet'').

Until recently, Modi could have afforded not to exert himself so. After all, according to the past three BT-Gallup surveys, Gujarat was the second-best state to invest in after Maharashtra. But investors today, it seems, can't be taken for granted. The state has slipped from No. 2 to No. 4 in this year's survey. The gainers: Andhra Pradesh and Karnataka. Another concern that, despite Modi's protestations to the contrary, weighs on the minds of investors is the state's recent communal unrest. Says Cyrus Guzder, CEO, AFL: "Following the riots, employers are wary about a resurgence of the problem because there has been little success in apprehending the (culprits)."

FACT SHEET

AREA: 1,96,024 sq km POPULATION: 50.5 million STATE DOMESTIC PRODUCT: Rs 1,24,906 crore PER CAPITA INCOME: Rs 21,275 ROADS: 72,900 kms COASTLINE: 1,600 km dotted with 41 ports POWER (TOTAL GENERATION): 8,582 MW MAJOR INDUSTRIES: Textiles, dyes, pharma, chemicals, petrochemicals, agro-based and food processing items

Nobody's denying that the mood in Gujarat is restive, but that doesn't mean investors have gone cold turkey. In fact, within three months of the riots, Shell signed a deal with Gujarat Maritime Board to set up a 5-million-tonne per annum LNG terminal and develop the Hazira port. Of the $600 million (Rs 2,760 crore) projected cost, $240 million (Rs 1,104 crore) has already been invested. Explains Nitin Shukla, CEO of Shell Hazira: "One consideration was the port, but the other more important one was Gujarat's potential." The state has received Rs 1,98,096 crore in private investment over the last 12 years-next only to Maharashtra.

Historically, Gujarat has boasted of some of the biggest names in business, including Reliance, Essar, ABB, British Gas, and General Motors. The state produces a quarter of the country's petrochemicals, polishes almost three-fourths of its diamonds, and has three lakh small and medium enterprises catering to global markets. However, as Vishnu Varshney, CEO, Gujarat Venture Finance, says, "The state missed the new economy boat."

That may well change. A recent study by Nasscom cites Ahmedabad as the fifth-best location for call centres. That's unlikely to surprise people like Kaushal Mehta, who set up one (Motif Infotech) in Ahmedabad a little over three years ago, and today employs 300 people. Says Mehta: "Ahmedabad has low real estate costs, negligible power outages, 50,000 graduates passing out every year, and a well-networked communications infrastructure, besides low attrition rates." Global Response Corporation, one of the top 30 call centre companies in the US, has also opened a facility in Gandhinagar's Infocity.

Come September 28, global investors will have a chance to experience Modi's Vibrant Gujarat first hand. On his part, the aggressive Chief Minister will find out if coughing up millions of dollars in investment is as easy as replying to email invitations.

INTERVIEW/NARENDRA MODI "I want to convert red tape to red carpet"

Modi: Vibrancy is the new mantra Chief Minister Narendra Modi spoke to BT's Roshni Jayakar at his Gandhinagar office. What is the objective of the Vibrant Gujarat event? There is a growing feeling that one needs to create an industry-friendly environment, instead of doling out incentives to investors. Since investors often complain about red-tapism, my motto is "Convert red tape to red carpet". I will not restrict it to the state-level, but extend it to the districts. All the district level officers will have to compete to attract enterprises. This will create a machinery that works positively. Are there any specific focus areas for attracting investments? The Planning Commission has conceded that to achieve (an all-India) growth rate of 8 per cent during the 10th Plan, Gujarat must grow at 10.2 per cent. How do we achieve that? First, agriculture will be a thrust area for investment. Second is industrial infrastructure. Gujarat has privatised ports, and now we want to privatise special economic zones (SEZs). I have identified five SEZs for that. Finally, I want to create centres of excellence to build human capital. If Europe requires 10,000 teachers, I will be able to provide them, if the US requires one lakh nurses, we will provide them. How do you plan to attract IT-related investments? The health of a state does not depend on how many drug-making units are located there. Similarly, it does not mean how many software producers are located in your state. To me, e-governance is not simply electronic governance, it's effective governance and easy governance. So I say IT+IT=it. Or information technology plus Indian talent is equal to India tomorrow. IT maybe business for some people, for me it is simply a backbone for business and development. Businessmen are concerned about possible resurgence of riots. How are you going to allay their fears? I have sent a record number of emails-67 lakh emails-in connection with Vibrant Gujarat. I receive on an average 30,000 responses per day. However, no one has asked me this question. This issue is limited to a few journalists, who are not investing but just investigating. When the Financial Times (London) journalist asked me this question, I told him, "After 9/11, did anyone ask President Bush if America's development will be affected?"