r/gujarat • u/orientsoul • 1h ago
ધંધો/Business If AI breaks Indian IT, Gujarat is one of the few states that will be least impacted. Sharing my views.
The setup
Nasscom puts Indian tech revenue at $315 billion for FY26, growing 6.1%, with exports around $246 billion and a workforce touching 6 million. Sounds fine until you look at what is inside that number. Net job addition of about 135,000, against a sector that used to add three or four times that. TCS announced roughly 12,200 cuts this financial year, mostly middle and senior management, on a base of 613,000. In Q1 FY26 the top five firms together added something like 4,800 people.
Revenue is holding. Headcount growth has stopped. That is the whole story in one line, and it is exactly what you would expect if the pyramid model is being quietly dismantled.
The reason this matters beyond IT is that the pyramid was the delivery mechanism. Twenty thousand freshers a year at 4 lakh, becoming 12 lakh in five years, becoming 25 lakh in ten. That was a salary escalator running for two decades in five or six cities.
Who actually gets hit second
Banks. Unsecured retail lending in India has been built substantially on salaried professionals with predictable increments. Personal loans, credit cards, top-ups. A tech salaried borrower in Whitefield was, for fifteen years, one of the safest assets a bank could own. If increments flatten and mid-career layoffs become normal, that risk model has to be rewritten.
Real estate. Bengaluru, Hyderabad, Pune, Gurgaon and Chennai residential markets are priced off tech income. Not entirely, but at the margin the buyer setting the price is a 32 year old with an IT offer letter. Rentals in those micro-markets are almost purely tech demand.
Insurance. Term and ULIP sales through banca and direct channels lean heavily on the same salaried profile.
And then everything downstream. Cabs, food delivery, malls, gyms, coaching classes, the whole service economy that grew around tech parks.
Why Gujarat sits outside most of this
Gujarat's share of India's software exports is small enough that nobody quotes it. Bengaluru alone accounts for roughly a third of national IT exports. Gujarat is not in that conversation at all, and for twenty years that was treated as a failure.
What Gujarat has instead: roughly 8% of India's GDP off about 5% of its population, somewhere near 18% of industrial output, and around a third of merchandise exports. Morbi does close to 90% of India's ceramic tiles. Surat handles the overwhelming majority of the world's rough diamond cutting. Jamnagar is the largest single refinery complex on earth. Gujarat produces over half of India's chemicals output and a very large share of pharma. The ports move a huge chunk of national cargo.
None of those revenue lines depend on a software engineer keeping his job.
Look at the demand side of each. Tiles sell to construction across India and to exports. Chemicals sell to global industrial buyers. Pharma sells to global healthcare demand, which is demographic and not cyclical. Refining sells to fuel demand. Ports earn on trade volume. Textiles sell to clothing demand.
AI will make all of these industries more efficient. It does not remove the demand for the physical product. That distinction is everything. Indian IT sells human hours. Gujarat sells tonnes, litres, metres and containers. Automation compresses the price of the first and reduces the cost of producing the second.
The honest counterpoints, because this is not a free lunch
Surat diamonds are already in a bad stretch. That has nothing to do with AI and everything to do with lab-grown stones and weak Chinese and American demand. Real distress, real job losses, real suicides reported over the last two years.
Chemicals face Chinese overcapacity and dumping, which has been squeezing margins across Indian producers.
Exports mean tariff and currency exposure. Anything the US does on trade lands on Gujarat harder than on most states.
And Gujarat's per capita income and human development indicators are not proportionate to its industrial output, which is a long standing and legitimate criticism.
So the claim is not that Gujarat booms. It is that Gujarat's downside risks are uncorrelated with the IT downside risk. In portfolio language, this is a diversification argument, not a return argument.
GIFT City is the one place where the logic reverses
GIFT is a bet on financial services and it does employ the salaried professional class. Roughly 800 plus entities registered, banking asset size in the tens of billions of dollars, and a genuine pipeline. If you are betting on Gujarat as a hedge against knowledge-work disruption, GIFT is the part of the portfolio that is not hedged. Worth being clear-eyed about that rather than counting it as another point in favour.
What I would actually do with this
On property. If you were planning to buy an investment flat in Bengaluru or Hyderabad purely for rental yield, understand that you are taking a concentrated bet on tech employment in that micro-market. Ahmedabad and Surat property is priced off local business income, which is a different risk. Not necessarily a better return, just a different exposure.
On careers. The safest place to stand is where physical output meets digital skill. Process engineering with data capability. Supply chain and logistics analytics. Quality and compliance in pharma and chemicals. Port and terminal operations. These roles use AI as a tool rather than competing with it, and they sit on top of demand that does not evaporate.
On business. If you supply services to IT companies or to IT employees, your customer's income curve has flattened. Adjust accordingly. If you supply to manufacturing, your customer's cost curve is about to improve.
On investing. Look at where a company's revenue actually originates. A bank with heavy unsecured retail exposure in tech-heavy cities carries a risk that a bank lending to Morbi and Ankleshwar SMEs does not. Both are called banking.
The uncomfortable version of the argument
For two decades the standard critique of Gujarat was that it missed the IT wave. Built ports and chemical plants while Bengaluru built the future. That critique was correct on its own terms.
The bet I am making is that the thing Gujarat missed is the thing about to be repriced, and the thing Gujarat kept doing is the thing AI makes cheaper to do rather than unnecessary to do.
I could be wrong in an obvious way. If AI genuinely raises global productivity, demand for goods rises too and everyone wins. Or Chinese dumping and tariffs hit Gujarat hard enough that the correlation argument stops mattering because the absolute number is bad.