Surat’s industrial renaissance is a model for India’s economic growth

Deccan Chronicle, June 16, 2024 

By Pradeep S. Mehta and Mehak Sharma

India is establishing targets to reach its vision of a developed India by 2024 and to become a $30 trillion economy within the next 23 years. The Niti Aayog, the premier public policy think tank for the Government of India, has defined India’s short-term, medium-term and long-term goals. Its initial focus for growth centres is on four cities — Mumbai, Varanasi, Surat and Vishakhapatnamto build a national development strategy. The subsequent stages entail choosing an additional 20 to 25 cities to drive economic development and beyond. The four initial selected cities have demonstrated robust growth trajectories in terms of population and flourishing industrial units over the past 20 years. Here, we have focused on Surat in Gujarat as a case study because of its unique dimensions, which can serve as a good role model for all other cities.

This involves understanding how Surat can evolve into a megacity and significantly contribute to the solid economic growth of India. This city hosts more than 6,000 industrial units and has a population of approximately 7.5 million. Despite occupying just about four per cent of Gujarat’s total land area, it contributes around 20 per cent to the state’s GDP.

However, this transformative journey has been anything but smooth and straightforward. The path to development began around 2004, following a significant setback a decade earlier in September 1994, when a severe plague struck the city. This epidemic, initially pneumonic but later turning bubonic, deeply impacted Surat’s economy and caused widespread disruption, both locally and globally. The aftermath of this epidemic created chaos that reverberated across the region and beyond.

The consequences were no less than the recent Covid-19 pandemic. The UAE’s halt on cargo transhipment from India severely impacted India’s agricultural exports, causing a $420 million loss. The global media coverage of Surat’s lague outbreak led to London’s global depository receipts plunging and local agricultural stocks tumbling. The situation disrupted international relations, postponing a Mauritian minister’s visit, cancellation of several international conferences, and failing to attract the foreign media and tour operators. Global travel restrictions, enhanced surveillance by the Centres for Disease Control and Prevention (CDC), Atlanta, and quarantine measures in Italy and Russia added to the economic toll, estimated at around $600 million.

Despite facing numerous adversities, the city of Surat persevered. The credit for its progress goes to the intrepid business community, particularly the textile, diamond, and the proximal Hazira industrial belts. Credit should also go to the Gujarat Industrial Development Corporation (GIDC), and a good municipal commissioner, Mr S.R. Rao. These sectors
have been key drivers of Surat’s overall development and growth. The city boasts a vibrant textile market and is globally renowned for its diamond polishing and cutting industry, processing nearly 90 per cent of the world’s diamonds.

The nearby Hazira port plays a crucial role in maritime trade, with its strategic location and robust infrastructure, facilitating the import and export of goods. Surat is also home to numerous Special Economic Zones (SEZs), which attract investments in various sectors such as chemicals,

petrochemicals, engineering, and information technology. Known for its entrepreneurial spirit, the city’s local entrepreneurs and businesses continually innovate and adapt to changing market dynamics, fostering economic diversification and resilience.

A major factor in Surat’s growth is its rapid infrastructure development, including advancements in transportation, real estate, and urban planning, all of which support economic activity and enhance the quality of life. Additionally, the agriculturally rich regions surrounding Surat contribute to its economy through the processing of cotton, rice, and other crops, adding value and supporting the agricultural sector.

Through multiple interviews with prominent city industrialists, several key drivers of the city’s economic growth have emerged. These include the unwavering and resilient attitude of the citizens, who persist even in the toughest situations. Additionally, many industrialists have operated with a vision of contributing to society and the nation, and this constructive approach has significantly fostered both industrial and overall economic growth.

Surat’s diverse economic activities and its strategic initiatives in industrial and infrastructural development play a pivotal role in driving not only the city’s growth but also contributing significantly to the economic growth of Gujarat and India as a whole. Other cities in India can also ensure their economic growth by adopting several strategies inspired by the development path of Surat. This includes creating ample employment opportunities by investing in key industries and providing support through subsidies, tax incentives and infrastructure development.

To ascertain its economic progress, India, in line with the growth model adopted in Surat, should ensure an all-round development approach focusing on major labour-intensive industries. This should be coupled with ensuring a considerable expenditure on the existing human capital, such as on health, education and skills. Strategic investment and guided interventions from the government can only ensure a resilient and thriving economy in future. Today, Surat is the second largest city of Gujarat and the fastest growing city in India. The example of Surat certainly shows that nothing is unattainable, and so should be the spirit if India wants to attain its goal of “Viksit Bharat” by 2047.

(The authors work with CUTS International, a global public policy think and action tank)

This article can also be viewed at: