Mumbai : Ahmedabad has been rated as the most favourable destination for small businesses in India followed by Bangalore and Mumbai, according to a joint report by consultancy firm Ernst & Young (E&Y) and retail solutions provider, Franchise India. The report gave Gujarat's diamond and textile hub - Surat - the seventh rank, bringing double pleasure to Gujarati businessmen.

The report titled 'Top 100 cities for small business in India' identifies cities, big and small, that have the potential to start and galvanise the growth of small businesses. According to the report, states such as Gujarat, Maharashtra and Andhra Pradesh have been relatively more proactive towards providing the fitting stratosphere for the prolific growth of small business.

The previous edition of state government's Vibrant Gujarat Global Investment Summit in 2009 had focused on small and medium enterprises. Over 8,000 MoUs were signed by SMEs then. The upcoming summit in 2011, promoted as Davos in Action, too will have a focus on small enterprises. Besides Ahmedabad, Surat has been riding the high wave of optimism, given the spurt in demand for diamonds and textiles, both nationally and the exports markets. "SMEs contribute about 9 per cent of India's GDP. The report highlights some essential pre-requisites while starting a business like demography, infrastructure, retail activity, entrepreneurship and ease of doing business," Franchise India's president, Gaurav Marya, said while launching the report on Thursday.