Vibrant Gujarat: 'Letter of intent replaces' the usual 'Memorandum of Understanding'

Even as it aims to portray itself as a Davos-like global business networking platform, the much-anticipated seventh edition of Vibrant Gujarat Global Summit 2015 (VGS), which will begin on Sunday at Mahatma Mandir in Gandhinagar has moved on from signing of memorandums of understanding (MoUs) to letters of intent (LoIs).

Much has been made about implementation (or the lack of it) of the MoUs and investment commitments made ever since the first summit was held in 2003, and which continued to grow in size every alternate year.

Hence, state government officials say the emphasis will now be on creating global networking platform and signing of executable projects and LoIs instead of MoUs.

“It is no more about investments but about sharing of knowledge and networking at a global level. We are also ensuring that everybody who comes forward with investment proposals have to also submit an executable project proposal. As a result, LoIs or formal agreements will be signed instead of MoUs. This way, we want to attract only those who are serious about investing, not just in Gujarat but with any state they intend to,” said an official, on the condition of anonymity.

From being merely an investors’ summit, VGS has catapulted Gujarat’s global positioning as an ‘industry-friendly’ destination. VGS, essentially, Modi’s brainchild as the chief minister of Gujarat, had taken off in 2003 after the Kutch earthquake in 2001 and communal riots of 2002, in order to re-instill confidence among investors.

Modi’s idea has worked wonders not only for him, but also in creating a brand for the western state, across the country, and even overseas. In the prime minister’s own words, VGS is the “Davos of the East” or “Davos in Action”.

Modi had earlier said that what had started as a business meet, today has “metamorphosed into an international knowledge sharing platform”.

Yet, this is exactly where the twist in the tale starts. Gujarat has been trying to re-position its biennial investment event, as one that is ideal for networking and knowledge sharing, trying to move beyond the scope of just MoUs and investment proposals. Statistics, too, shows that while the investment intentions had steadily grown till 2011, they saw a major dip in the 2013 edition. That year, even the state government refrained from quoting the official investment intention figures, and claimed that the focus was more on forging ties and knowledge sharing among stakeholders.

The event has come under scrutiny from various quarters, many alleging that while there is hype around investment committed during the summit, not much is realised on ground. State government sources peg the execution rates at 60 per cent, claiming that it is still much better than the national average of 30 per cent. Industry sources, however, point out that nearly 20 per cent of all investment proposals are dropped, and actual on-ground execution would be close to 40-45 per cent.

It needs to be mentioned  that from Rs 66,000 crore worth investment commitments in 2003 to just over Rs 20 lakh crore in 2011 and roughly Rs 10-12 lakh crore in 2013, the cumulative investment commitments or intentions amount to over Rs 51 lakh crore, whereas estimates on execution or completion of projects or investments are unavailable.

Vibrant Gujarat Global Summit's Investment over the years |Create infographics

Nevertheless, there will be many firsts at VGS this time. It will be the first time that the event will be inaugurated by a prime minister. Also, for the first time, eight nations, including the United States of America, Great Britain, South Africa, Japan, Canada, Australia, Singapore and Netherlands will be partnering VGS.

For the first time, a United Nations Secretary General (Ban Ki-moon) will be the chief guest at a VGS session this year. US Secretary of State John Kerry will also attend the summit.

In another first, chief executive officers (CEO)s of global organisations, including Fortune 500 firms, will be hosted by the PM at the Global CEO Conclave including Jim Yong Kim, president, the World Bank; Ajaypal Singh Banga, president, MasterCard; David Schoch, group vice-president, Ford Motors; John Davies, global vice-president, Intel; and Hamad Rashid Al-Mohamnadi, CEO, RasGas, among others.
 

The conclave will also see participation by leaders of Indian companies like Cyrus Mistry of Chairman Tata Sons; Mukesh Ambani, Chairman Reliance Industries; Sunil Mittal, Chairman Bharti Enterprises; Adi Godrej, Chairman Godrej Group; Deepak Parekh, Chairman HDFC Bank and many more. 

After ignoring Modi during his stint as the CM of Gujarat, US has for the first time signed on as a partner country for the global investors summit. Secretary of State John Kerry will attend the Summit. 

Over 2,500 international delegates from more than 150 countries are expected for the event, as against 2,100 delegates from 121 countries in 2013. 

Meanwhile, a state minister has recently claimed in one of the VGS roadshows that Gujarat aims to sign agreements involving Rs 12 lakh crore this year. While the seventh edition of the VGS is the first one without Modi as the CM, the state government has left no stones unturned to make the event a successful one.