Now, Cyber Vihar(s)

Spanking clean glass IT complexes on this road house many corporate majors  like Polaris, TCS, MTS, India Bulls, and several others. They tell the story of a new Udyog Vihar, humming with well-dressed English-speaking techies and corporate executives. It is a far cry from the days when industrial workers thronged these roads. Some of them can still be seen at Kapashera, while going to work – but this tribe is slowly dying.

The majority of industrial units in Udyog Vihar have stopped manufacturing, as it has become uneconomical for them, says Ramesh Kumar, an industrialist. “A large number of small and medium enterprises have suffered losses because of the dumping of goods by our neighbour (China). Many units in Udyog Vihar suffered due to this, as the Indian government failed to protect the local industry,” asserts Kumar.

Unable to compete with Chinese, as well as producers in other Indian states that support industry, manufacturers in Udyog Vihar were forced to shut production.  Experts add that the changing business environment, increasing complexity due to globalisation, evolving consumer demands, and growing insistence on high quality products, has also affected the performance of medium and small enterprises here.

The boom in realty, and demand for IT space, hastened the process – and some of the industrialists took the easier way out, says one of the unit owners. It is easier and more profitable to earn a fixed rent by leasing out the property to the IT and BPO companies that struggle, with no support, in industry.

The failure of manufacturing has not only happened in Udyog Vihar, but across Gurgaon District – and that includes the futuristic destination of Manesar. Singla accuses the short-sighted policies of the State government, as well as the HSIIDC, for ruining the industry.  HSIIDC is destroying the industry, instead of supporting it, as the government thinks that Haryana is not a state meant for small scale industry. Their clandestine objective is to wipe out the small manufacturer from this State,” alleges a bitter Singla. He has had many run-in with the authorities. Singla has also challenged the new State Industrial Policy, as well as the Estate Management Policy, on the ground that it impinges on the rights of the industrialists, and will lead to de-growth.

Most of the industrialists argue that the government must understand the value of small units, as they provide larger employment. Udyog Vihar was not meant for IT and BPO firms, as they have been allocated dedicated software parks, they point out.

Singla says that failure of the government to support manufacturing will hurt the State and the country in the long run. Manufacturing has also always been associated with higher employment potential. “The government wrongly thinks that the service and support industry will become the backbone of the economy. These are cyclical businesses, and suffer massive slowdowns, as witnessed during the recent recession,” he asserts. It is a different matter that IT/BPO companies now find Gurgaon too expensive to operate in.

While manufacturers accuse the HSIIDC of supporting the IT and BPO sectors, HSIIDC Estate Officer of Udyog Vihar, Dilbagh Singh Dahiya, says that they do not favour any industry or unit. “For us IT, BPO, manufacturing is the same, and we treat every one as equal,” he asserts. Dahiya however admits that the cost of real estate in Udyog Vihar has gone so high that most of the industrial units find it profitable to either sell or lease out their units. “People come to us seeking permission to lease out and sell their plots. We have to give permission, if they are applying as per rules,” he adds.

Industry observers warn that what happened in Udyog Vihar could be repeated across Gurgaon, if the mistakes committed here are not avoided. Manoj Tyagi, President of the IMT Manesar Industrial Association, also accuses the government of indifference towards  industry. “The government claims that Manesar is a futuristic industrial township, but the reality is far from this. The infrastructure is in poor shape, the power and water supply are inadequate, and there is no fire station in Manesar,” he exclaims.

In his opinion, the corruption pervading in the corridors of power, particularly the pollution control and labour departments, is killing the industry across Gurgaon. “Every official in Haryana wants a posting in Gurgaon, as they want to make money. The government red tape is such that it gives too much discretion to the babus,” says Tyagi. He adds that neighbouring Neemrana and Alwar in Rajasthan have grown at the cost of Gurgaon.

“Five years ago no one was going to Rajasthan, but just visit there now and you will find massive investments by Japanese, and even Gurgaon based industries.  If Udyog Vihar has already lost its way, Manesar too is not providing the answer, he says.

It is also being felt that the government has a hand in discouraging the industry in the Millennium City, as it wants some other parts of the State to flourish, alleges  a business leader. He is referring to Rohtak ,where six big ticket projects were inaugurated by the Chief Minister himself recently. H.R Vaish, President of Gurgaon Chamber of Commerce, alleges that there is no encouragement to small industry from the Haryana government, particularly in Gurgaon.  We want marketing support, easy loans, and help from HSIIDC – but this is not available,” says Vaish. Marketing support is what the small and medium enterprises need to survive, and compete with others, says Suresh Kumar Gupta, a unit owner in Udyog Vihar.

“Earlier there was a system to help the small scale industry, by way of preferred procurement – but it has ceased,” he sighs. 

P.K Jain, a seasoned industrialist, and President of Gurgaon Chambers of Commerce and Industries, has a different view.

Jain says that Gurgaon has reached a stage of saturation as far as industry is concerned; and it is important that industrialisation spreads out in all parts of Haryana. “New industry should be taken to other districts of Haryana, as the pressure on Gurgaon’s infrastructure is already too much. The government should try to meet the demands of existing industry, and help it grow,” he opines.

He instead wants the government to work on procedural reforms, and rationalising of the sales tax and other forms that are time consuming. “The labour shortage in Gurgaon is also hitting the industry hard, and it needs to be resolved, he adds.

It is evident that large industries are more comfortable in Gurgaon, compared to small and medium enterprises that are short on oxygen.  J.N Mangala, President of the Laghu Udyog Bharti, too supports Jain’s contention, and says that large units are not shifting their base from here, but are merely expanding outside. He also says that they are spreading out geographically, to lessen the risks associated with one particular state. 

Pravin Yadav, President of Gurgaon Udyog Association, describes the preference of Udyog Vihar to a huge difference in the rentals that are prevailing in other areas such as DLF. “Here you can get a building on rent at Rs. 50 PSF, whereas just across the road the rentals are not less than Rs. 70 PSF,” says Yadav. He further says that a number of manufacturers have shifted from Udyog Vihar to Bawal and Manesar, in view of the shortage of water, poor power supply, and increased price of real estate.

On the issue of shifting to other states, Yadav says that governments there are giving excise and sales tax benefits, and income tax exemptions. Haryana government has also significantly increased the minimum wages, and this is affecting the competitiveness of industry, he adds.

That the government of Haryana is not seeing the writing on the wall is clear. A large number of companies, particularly those related to Auto, Garment and Pharma, have shifted to other states such as Rajasthan, Himachal, Uttarakhand – and even Gujarat in some cases.

Tyagi says that if the government does not change its stance, the time is not away that manufacturing will shift to Neemrana, Tappukhera, Alwar, Baddi, Haridwar, and other industrial towns. These governments are going all out to support the new arrivals, and this will help them grow at the cost of Gurgaon. The inertia in the State is such that recently a group of industrialists, led by Nirmal Kumar Minda, of the multi-million dollar Minda group, had to call a press conference and plead for construction of a road in Manesar. 

Udyog Vihar: HSIIDC promises better conditions