Gaps in Gujarat's Industrial Policy: Nearly 11,000 Small Units Closed in Five Years

Despite the grand scale and crores spent on organising the Vibrant Gujarat Global Summit, and the state’s claims of major industrial breakthroughs, the ground reality tells a different story.

While the Gujarat government highlights rising employment opportunities for educated youth, a recent Union government report presents a contrasting picture: over the past five years, nearly 11,000 (10,948) small and micro industries in Gujarat have shut down.

The findings reveal that closures of small enterprises are accelerating due to inadequate government incentives, resulting in rising unemployment. Even as Vibrant Gujarat continues to showcase large-scale investments – with the red carpet rolled out for big industries slated to begin operations in 2024-25 –smaller units struggle to stay afloat.

Large companies continue to receive access to premium land and subsidies worth crores, while small and micro enterprises report receiving little to no support, making it harder for them to compete and survive.

According to Union government data, 67 small industries shut down in 2020-21. This downward trend has persisted, with closures rising sharply to 3,534 in 2024-25. Over the last five years, a total of 10,948 small industries have closed in Gujarat, leading to job losses for 54,901 people.

Sharp fall in Udyam portal registrations

The crisis is further reflected in registrations on the Udyam portal. In 2023-24, over 13 lakh small industries were registered on the portal, but in 2025-26, this number plummeted to 5,30,160. The dramatic drop reinforces concerns that small enterprises are shutting down at an alarming rate in the state.

The state government may have earned praise for hosting Vibrant Gujarat, but its effort to replicate the same model at the district level through “District Vibrant” initiatives has not yielded promising results.

Observers note that the government’s focus remains fixed on large industries, leaving smaller players increasingly sidelined. The lack of targeted support for the small sector has exposed gaps in the state’s industrial policy, raising questions about its long-term sustainability.

Hemant Shah, a politics and economics analyst, told Vibes of India, “The focus is on big industries when the Vibrant Gujarat Summits are organised. It is shown that small, medium and micro industries are catered to. However, that does not actually happen.”

Shah further noted that since the turnover benchmarks for medium-scale industries keep changing, small-scale industries keep losing out.

Gujarat Congress spokesperson Parthivsinh Kathavadia told Vibes of India that small-scale industries suffer due to policy decisions. He pointed out that when products are imported from abroad and import duties are removed, small and medium-scale industries are the worst hit, while the Goods and Services Tax (GST) is levied on locally produced products.

According to him, during the Congress regime, a large number of Gujarat Industrial Development Corporation or GIDC-developed areas were set up to cater to small and medium-scale industries. In contrast, the number of GIDCs set up during the Bharatiya Janata Party’s tenure should be noted.

He also said it was necessary to examine which sectors within the small-scale industries suffered the most and were forced to close down.

This story was originally published on Vibes of India.

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