This paper presents empirical evidence on the cement industry in Gujarat to support the argument that the state still has an important role to play in determining the development path of India. A detailed case study of the impact of two cement plants on their localities includes the consequences for employment generation, land markets, farmer livelihoods, labour markets, environment and pollution. The author concludes that public action is required in order to achieve sectoral balance, secure adequate environmental protection and correct factor market distortions