Tamil Nadu

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It’s called the Detroit of Asia. So, what is it that makes it a favoured destination for trade among investors, explores surbhi chawla ...

Nicknamed as ‘The Detroit of Asia’ Chennai, the capital of Tamil Nadu, has always been a prime manufacturing location in the country. Even during the British era, the region was an important trading centre for raw hides and skins. Although leather still continues to be a significant part of the trade from this region, keeping up pace with the changing time there are many new avenues for trade that are coming up. In fact, today Tamil Nadu is one of the highly industrialised states of the country, has attracted over Rs.190 billion through FDIs, only in the past two years and has generated employment for nearly 140,000 people in the country.

Global companies like Ford, Renault, Nissan, Caterpillar, Hyundai, Komatsu, BMW, Mitsubishi, Ashok Leyland, Royal Enfield, Mahindra & Mahindra, TVS, et al have already set up manufacturing centres in the state. As a result it is also come up as a breeding ground for many auto ancillary companies. Moreover, the latest company to pour money into the state is Renault-Nissan, who has kicked off their operations at Oragadam near Chennai. They are expected to pump in $1.2 billion and are planning to produce about 400,000 cars a year from its facility that spans across 678 acres.

Certainly, the state had always housed many heavy engineering and manufacturing-based companies and seeing this even companies in electronic manufacturing such as Nokia, Flextronics, Motorola, Sony-Ericsson, Foxconn, Samsung, Cisco, and Dell have chosen Tamil Nadu as their South Asian manufacturing hub. “The major reason for Tamil Nadu having presence on the international map is because of the transparent and responsive government. We have got a new industrial policy and one of the objectives of the policy is to spread the impact of industrialisation throughout the state by following suitable strategies,” M. F. Farooqi, Industries Secretary, Tamil Nadu tells 4Ps B&M.

Moreover, availability of trained people also enables Tamil Nadu to contribute its bit in the IT and BPO sectors. Tamil Nadu is the third largest software exporter by value in India. In fact, software exports from Tamil Nadu have zoomed to Rs.207 billion in 2006-07 from a miniscule Rs.76 billion in 2003-04 (NASSCOM).

Coming back to industries, “this year alone 14 MoUs have been signed till now and another 14 MoUs are yet to be cleared. Tamil Nadu government has set a target for industrial investment in 2008 at Rs.300 billion. What’s more, the state accounts for 33 Notified SEZs. Besides, 59 SEZs have got formal approvals and 12 projects have got GoI’s in principle approval,” avers Farooqi enthusiastically. Even, according to CMIE, in May 1996, investment in pipeline for Tamil Nadu was Rs.906.5 billion, in June 2006 it was 1,735.29 billion; and by March 2008 it shot up to 3,487.04 billion. In the last two years alone the investment has grown by over 100%.

Although people would normally not associate tourism with Tamil Nadu, still the state has been taking initiatives to promote it. “The year 2006 registered a remarkable increase of 21% in tourist arrivals in Tamil Nadu. In 2007 the state received 5,235 million tourists, which was an all time high growth of 29.2%. It was due to many new initiatives like ‘Virunthinar Potruthum Virunthinar Potruthum’ (Guest Care) campaign policy blitz-krieg, cultural festivals et al”, V. Irai Anbu, Secretary, Tourism and Culture shares with 4Ps B&M. To boost the tourist inflow in the state, the government is also looking at new and emerging forms of tourism like Eco-Tourism and Rural Tourism. The tourism department is also creating awareness by conducting commercial and advertising campaigns. “To promote local guest care a lot of word of mouth publicity is being done,” M. Rajaram, Commissioner of Tourism tells 4Ps B&M.

Certainly, the state has always remained at the helm when it comes to industries. However, the major bottle neck that is hampering the pace of industrial development in the state is infrastructure. But once taken care of, this Detroit of Asia certainly has no stopping it!

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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