Gujarat as India’s Growth Engine — a personal look at why the headlines feel familiar

I read the recent coverage announcing that "Gujarat has become the country’s growth engine — leading in GDP, industrial production and exports" with a mix of pride and déjà vu. The article lays out hard numbers: Gujarat today accounts for about 8.2% of India’s GDP, roughly 18% of industrial production and nearly 27% of national exports; the state’s GSDP has reportedly grown from ₹1.23 lakh crore in 2003 to around ₹22 lakh crore in 2024, and per-capita income rose markedly in the same period Gujarat has become the country's growth engine — Leading in GDP, industrial production and exports.

Those numbers tell a story of deliberate choices, incentives and decades of policy continuity. They also remind me of themes I’ve been writing about for years: industrial policy, local value-addition, and the interplay between tariffs, scale and competitiveness.

What the article highlights — and why it matters

The Gujarat piece credits a combination of central and state initiatives: “Vibrant Gujarat” summits that attracted investment, the state’s embrace of “Vocal for Local”, the One District One Product (ODOP) push and targeted schemes that cultivated manufacturing and exports. The state’s rapid growth in manufacturing output, per-capita income and the dramatic rise in the number of small industries are all part of the narrative Gujarat has become the country's growth engine — Leading in GDP, industrial production and exports.

I find two linked points critical:

• Scale is a multiplier. When a state attracts large Global Capability Centres (GCCs), clusters, or export-linked factories, the whole ecosystem — suppliers, logistics, skilling — improves.
• Policy design matters. Incentives that reward local value-addition (not just final assembly) produce structural benefits for employment and balance of payments.

The Gujarat story also mirrors recent evidence of manufacturers reducing their dependence on imports. A separate report shows large firms across autos, electronics and consumer goods reporting notable reductions in foreign exchange spend — a shift attributed to schemes like PLI and stronger domestic sourcing Significant reduction in import costs; Make in India progress. This is not an incidental coincidence; it is the product of policy nudges converging with private investments.

My prior pieces — why they feel relevant today

Over the years I have argued repeatedly around three recurring themes: incentivise meaningful local value-addition (not tokenism), make origin and supply chains transparent, and keep an eye on creating a low-cost manufacturing environment so India becomes the destination of choice. A few of my earlier write-ups that connect to Gujarat’s trajectory are:

• On PLI and green autos: I’ve welcomed the PLI’s potential to build EV and advanced auto-parts manufacturing — an example of incentives creating greenfield capacity and jobs rather than only subsidising demand PLI Scheme: Cos Invest 13K cr to produce Green Vehicles, Parts.

• On origin transparency: I argued that replacing opaque “certificate of origin” practices with rigorous “proof of origin” would discourage routing and circumvention and support domestic supply chains — a measure that complements local production pushes Submit proof of Origin instead of certificate of origin for preferential import tariff, says FinMin.

• On Gujarat-specific incentives: I commented positively on Gujarat’s policy drive for GCCs and the textile push — policies that aim to create jobs, skill ecosystems and higher-value exports Gujarat Govt unveils policy to set up 250 new Global Capability Centres and New Textile Policy Will Help Attract ₹30,000 Cr Investments to Gujarat: CM.

The core idea I want to convey is this — take a moment to notice that I had brought up these thoughts or suggestions years ago. I had predicted many of these outcomes or challenges and proposed solutions at the time: incentives that reward value-addition (PLI-style), transparency in origin documentation, and state-led strategies to build clusters and skill ecosystems. Seeing these developments now feels like validation and a reminder that those earlier ideas still matter in the present context.

A few cautions from my prior reflections

Pride is appropriate, but so is a dose of realism. My earlier work on solar policy and safeguard duties cautioned about premature protection that raises costs and stymies scale — that trade-off still matters when crafting industrial policy. If protectionism raises input prices or reduces the speed of capacity addition, we risk losing the advantage of being a low-cost manufacturing base (a theme I returned to in my solar columns) Safeguard Duty on Solar Cells and Solar auctions and duty fears.

Similarly, the PLI-driven import substitution story must be accompanied by supply-chain transparency and competitive inputs; that is exactly why origin verification reforms and export-oriented cluster policies are important Submit proof of Origin instead of certificate of origin for preferential import tariff, says FinMin.

What I feel now

Reading that Gujarat is at the forefront of GDP contribution, industrial output and exports is heartening. But the deeper satisfaction for me comes from seeing policy instruments and private capital converge in meaningful ways: PLI-linked domestic sourcing, ODOP lifting local crafts to markets, GCC policies creating skilled jobs, and targeted textile investments focusing on technical textiles. Those are the building blocks of sustainable, export-led growth.

At the same time, I remain mindful of trade-offs. Growth that is not underpinned by competitive costs, supply-chain transparency and continuous skill development will always be fragile. Gujarat’s success is instructive: when policy nudges, scale, and clarity of origin and incentives align, results follow. Watching that alignment unfold is, for me, both vindication of earlier ideas and a renewed call to keep enforcing the fundamentals.

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Regards,
Hemen Parekh