March 2014

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Sanand, the New Industrial Hub

“Sanand town has seen progress in the past two years of which only a few towns can dream of. There is construction everywhere.”
Sanand, the New Industrial Hub

It made headlines in every newspaper, news channel and news portal in India. Tata had decided to shift the entire Nano project from Singur in West Bengal to Sanand in Gujarat. For Pradha Devi, the horror stories of how farmers and land owners have been evicted and cheated of their lands in West Bengal suddenly became a true story. “Few days after the deal, government officials came to me for my land. I was certain they would force me out from the land and was ready to put up a fight. They, however, offered to buy my land for about Rs.1,200 per square meter and I had absolutely no reason to decline. My land produced very little and it was too good a deal to refuse,” says Devi. She, along with almost everyone from the village of Bol, sold their lands immediately and could not thank their luck enough for the fortunes they got.

Realty check

In the early 1900s, a village by the name of Kalimati saw the birth of a steel ingot plant. This was one of the first planned industrial cities of India, which soon came to be known as Tata Nagar and finally Jamshedpur. It is rare that a single company can unilaterally change the fortunes of a place; doing it twice is even rarer. Tata has managed to do just this with Sanand and no one seems to be complaining.

Winds of change

While Sanand was always meant to be an industrial area and a satellite town of Ahmedabad, nothing much had happened over the years and it was below everyone’s radar.

Today, however, things are very different. Two years after Tata Motors set shop, Sanand is the most promising auto cluster in the country. With major automotive players like Ford and Peugeot setting up plants in the district and even auto ancillaries like Bosch setting up facilities, Sanand has never had it so good.

Sanand is located around 24 km from Ahmedabad on the Ahmedabad-Viramgam highway. The city is included under the Ahmedabad Urban Development Authority (AUDA) jurisdictional area, which is responsible for planning and development in the area. Development, however, was something which was not the highest priority in region. Bhisnu Rana, who has been living in the area for the past 25 years, says the district was always talked about as being an industrial town but nothing much happened. “There were some industries in the area earlier; smaller in size but most of them have closed down and the remaining has done moderately well,” he says.

Change has been ushered in by the Tata Motors plant. State buses to the area sport “Nano, Pride of Gujarat” banners and everyone around thinks highly of the project. In the areas adjoining the factory, a four-lane highway has come up and even the connecting roads have been made four-laned. Street lights and flood lights dot the landscape and locals say the nights now look like day. Sanitation, cleanliness and pollution from local industries have gone down. As trucks line up to load Nano cars and transport them to various places in the country, hawkers and vendors have sprung up to cater to the small crew in each truck. “Business has improved ever since the Nano plant came up. When the plant was being constructed most laborers came to my place to eat and even now I get a lot of truckers. Business has never been this good,” says Ram Desai who runs a food joint just off the main highway near the Tata Motors plant.

Not much local employment

Ravubha Vaghela, owner of Raviraj Foils—a company with an annual turnover of Rs.100 crore—gave 30 out of the 50 acres needed to build the approach road from the Nano factory for free due to his ‘unconditional love for the Tata group.’ He, however, adds that in terms of employment there has been not much change with the Tata Motors plant as the majority of the workers in the plant are from outside. Most villagers can either be seen sitting idle besides the roads, looking at traffic, while others prefer to play a game of cards. The biggest gain that could have come to Sanand has been the identity and image that it has created for itself. Places far and wide within the country now know Sanand as the “Nano land” and the image of industry-friendly people has been on the world community. The small village where the Tata Motors plant has come up is today encircled and defined by pace of industrialization in the area, scattered amongst the modern buildings.

Sanand town

Sanand town has seen progress in the past two years of which only a few towns can dream of. There is construction everywhere. New roads are being laid, apartments are coming up in the outskirts and new shops and showrooms have sprung up in the otherwise small town. The HDFC bank which came into existence around the same time as the Nano plant was the only third bank to be in the town. As of today there are 17 banks in operation.

However, the number of bank branches is not an indication on the buoyancy of a banking system in the place. While the government gave out Rs.900 crore to buy land, the total deposits in all the banks would not be half of that amount. Deposit levels are low with most being for only short-term, loan off takes are low and products like car and bike loans have few takers.

“People here have become very rich after they sold off their lands but most do not know what to do with the money. While many have bought land elsewhere hoping to make a killing in the future, others have spent in buying cars, bikes, renovating their houses and other necessities of life. About 70 percent of the bikes bought in the Sanand area are on cash. Even rents in the area have almost doubled from Rs.27-Rs.28 per square feet two years back to about Rs.45 per square feet today,” says an HDFC bank official.

This has also come at a price. Constant construction everywhere has meant the environment has gone for a toss. There is dust everywhere and much of what is being constructed in the town is happening at a haphazard scale. “At night the stars were always breathtakingly bright, but sometimes it’s difficult to spot them now. There were more cows and dogs than bikes on the streets but that has changed now,” says Padma. There is a sudden increase in road traffic and many smaller roads have not been able to cope with increased volume. With a large influx of people into the town there is also a fear that security may become a problem going forward.

What makes Sanand click?

Sanand has attained importance in recent times as it is in close proximity to the Delhi-Mumbai Freight Corridor and the adjoining Special Economic Zones (SEZ). When land meant for Anand Agriculture University was given to Tata Motors, everyone has woken up to the potential of this strategically located place.

“Gujarat offered us a combined package of land and infrastructural support which matched our requirements. From a geographical point of view, it is strategically located: central with respect to the principle automotive markets of Northern and Western India. In addition, Gujarat, especially Sanand is fast developing into an automotive cluster which gives us an advantage from a supplier engagement perspective,” says Marc Bocqué, World Press and External Relations Manager, Peugeot.

He adds that availability of greenfield land and ready infrastructure prompted the company to choose Sanand for the plant. The proximity of Ford and Tata enables Peugeot to benefit from a growing cluster.

While Peugeot may be the latest in the bandwagon to join the Sanand race, American automotive giant Ford has by now begun work on its manufacturing facility and an engine plant at Sanand. “The northern and western region in the country represents over 60 percent of the passenger car industry and Gujarat is one of the fastest growing states contributing to 16 percent of industrial production for the entire country. It has the best combination of infrastructure and location for the new plants offering favorable manufacturing and investment climate. A pro-business environment and easy access to ports in northwestern India and a strategic location on the west coast of India, makes Gujarat an ideal shipping and receiving venue accompanied by extensive road and rail networks. Gujarat also possesses an enormous multi-lingual and highly educated workforce, with some of India’s top universities and technical colleges located within the state,” says Michael Boneham, President and Managing Director, Ford India.

Ford is looking at creating 5000 new jobs at the facility at Sanand and thousands more through indirect jobs. Peugeot on the other hand plans to create 5000 jobs with priority being accorded to locals.

Population, literacy rate & skill development

As of the 2001 Census of India, Sanand had a population of 33,687. Sanand has an average literacy rate of 81.7 percent, higher than the state average of 81.4percent. Male literacy is 89.6 percent and female literacy is 72.9 percent.

As per the census, the average literacy rate in the town is 81.7 percent, while the male literacy rate is 89.6 percent and female literacy rate is 72.9 percent. This indicates the higher degree of awareness for education in urban areas of Sanand

While the state has always laid emphasis on skilling people, Sanand will see a major push in this field. “Since Gujarat is fast emerging as an automobile industry hub and India, in general, has a promising talent pool, there are existing resources within the state and in India to be tapped. Gradually, as we scale up operations, we will focus on training and developing manpower in line with our specific requirements. Additionally, Peugeot and the Gujarat state intend to create an Automotive Skills Development Institute to be located within the Sanand automotive cluster to further contribute to the manpower growth and development,” says Bocqué.

Land use

The area of Sanand Taluka is 7,84,53 hectare.

According to a report by Center for Environment Planning and Technology, the secondary sector of Sanand Town comprises total 40 small to medium scale rice mills and other approximately seven small chemical manufacturing units. Total investment of all such manufacturing units stood at Rs.200 crore and employs about 800 people. Further the household industries are in nascent stage and employed only 140 people.

Sanand is now expected to see a major reversal in its fortunes. Peugeot’s project qualifies for the mega projects policy of the State of Gujarat, i.e. companies investing more than Rs.1,000 crore. The forecasted investment to reach initial capacity of approximately 1.7 lakh vehicles is estimated at around Rs.4,000 crore. The company is slated to roll out its first car from the Sanand plant in mid-2014. The 584 acre plot will produce 1.7 lakh (TBC) cars.

The manufacturing operation for Ford on the other hand will be built on a 460 acre site (1.8 million square meters) with 150 acres of adjacent land protected by the local government in order to attract and locate automotive suppliers within close proximity of both plants. Ford will invest Rs.4,000 crore and the integrated manufacturing facility will include stamping, body, paint and assembly operations for vehicle manufacturing, as well as machining and assembly operations for engine manufacturing, with the first vehicle and engine scheduled to come off the line in 2014.

Housing

Nothing comes cheap in Sanand now. Gone are the days when land was economical and easily available. Ever since the announcement of Tata Motors Ltd to establish Nano Plant at Charodi village 13 km away from Sanand Town, prices in the village and nearby have seen a constant movement north. Coupled with the fact that a large track of land has been acquired by Ford India and now by Peugeot, anticipation within the entire district is huge.

Center for Environment Planning and Technology says upcoming DMIC, Industrial Investment and SIR may drive demand of housing units in Sanand Town. However, the law and order situation and poor social infrastructure/service delivery may hamper the demand of housing units. Owing to absence of any tourism resources, there is absence of demand for hotel and restaurant, says the report.

(Source: Stakeholder Consultation/ Centre for Environment Planning and Technology).

Bottomline

Sanand represents a certain view of India. It’s a town that is surrounded by small hamlets and villages. Its lifeblood today is the large industries which are up and running and continues to come into existence. The people coexist in an uneasy truce, trying to live their lives in the shadows of big factories that have sprung up.

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