Tamil Nadu wants investment. It has finally realised that it needs to project its achievements to attract new business consistently. Not that it has done badly. But, to go out and proactively stake its claim among the top-ranking states in the country is not something it has done successfully in the past. The state does suffer from an image problem. There are many who still see it as a super-conservative, inward-looking and politically-driven place. Only those in the industry know that things have changed dramatically in the last two or three years. The state is now going all out to woo investors, both domestic and foreign.
One of its recent attempts to showcase itself is a coffee table book brought out by Ficci (Tamil Nadu State Council) titled Advantage Tamil Nadu. ?We wanted to call it Brand Tamil Nadu. But the chief minister (Karunanidhi) suggested the title himself and felt it presents the state in a better light,? says P Murari, adviser to Ficci president and a former secretary to the President of India. It took two years to bring out the book with total co-operation from the state government and various departments.
Murari, a senior retired IAS official, served in Tamil Nadu before he moved to Delhi, and has worked in the state before the pre-reform days when it was not exactly growth-oriented. Being far away from Delhi, the centre of power, and being a regional party-governed state before the coalition days did not help. Murari, who held many senior positions both in the state and the Centre, recalls his days in the Industrial Licensing Committee and his battles with the then industry minister, ND Tiwari. ?I never understood why he wanted a Chennai-based company like Ashok Leyland to go in for expansion in far away backward areas. But the minister insisted. He felt giving the companies subsidies was enough,? he says.
With reforms, all this has changed. Today the industries have a choice. They know where to go. The states are also more attuned to the needs of domestic and foreign companies, particularly states like Tamil Nadu. Advantage Tamil Nadu gives facts, figures and data (all based on government statistics) that might come as a surprise to many. For instance, the state is ranked first in the country in the number of factories, first in the number of workers employed in factories, third in gross industrial output and third in net value addition.
More than 3,000 foreign joint ventures and 100 per cent foreign subsidiaries have manufacturing bases in Tamil Nadu, with an FDI of over $10 billion. According to this book, Chennai serves as the most cost-effective production base for export markets for many international companies like Nokia, Flextronics, Hyundai, Nissan, Ford and so on. Nokia found Chennai to be cheaper than China by 11 per cent. Today, about three years after it set up shop, Nokia?s Chennai plant has become its largest for hand-set manufacturing. Chennai is also the preferred destination for many BPOs and offshore operations. The city has more than 1,600 IT companies, over 3,00,000 professionals and accounts for annual IT exports of $8.2 billion.
More than 30 Fortune 500 companies have chosen to invest in Tamil Nadu. As Murari points out, it is not just foreign investors who are rushing to Chennai. The Aditya Birla group is investing in a huge carbon black project. Apollo Tyres is setting up a huge radial tyre factory. Asian Paints is another big name that has entered the state, only one of many examples.
It is well known that Chennai, when it was Madras, was called the Detroit of India. Subsequently, the city lost its sheen. The irony is that Chennai today has truly become a major automobile hub, while Detroit is waning. ?Who knows, Detroit might be called the Chennai of US!,? says Murari. Ford came first and then came Hyundai. After a lull of several years there has been non-stop action on the automobile side. The state has managed to attract five other automobile majors, Mitsubishi, Daimler, Nissan, Renault and BMW, and is the only state to have seven auto giants. By the end of this year, Chennai will have an installed capacity to produce 12,80,000 cars and 3,50,000 commercial vehicles. The government takes pride in the fact that from bicycles to battle tanks, everything that moves is manufactured here. There are also 350 large auto component manufacturers, which account for more than 35 per cent of the country?s auto component production.
The state is highly literate, providing sufficient human capital and a productive work force. According to the last census, the literacy rate in Tamil Nadu was 73.45 per cent. It has 73.5 per cent children completing high school. The World Bank has rated Tamil Nadu number one in imparting education through a network of government schools. The state has 420 engineering colleges, one of the major reasons for attracting the IT industry.
There was a time when the state and its politicians did not quite catch on to the merits of investment and job creation. Good projects moved to neighbouring states since the then chief ministers were not open to outsiders. The former CM of Andhra, YSR, is supposed to have swooped down in a helicopter and taken a team from Taiwan away, while they were waiting in Tamil Nadu to meet a former CM. But attitudes have undergone a sea change now. Murari, a veteran bureaucrat, is pleasantly surprised about the speed with which clearances are now given to investors. No one can accuse the Tamil Nadu government of dragging its feet, he says. The government has become very proactive. For example, it has recently set up a manufacturing competitive commission on the lines of the centre with deputy CM, Stalin, as the chairman.
There are glitches in the path of progress. There is power shortage, inadequate rural roads and a perennial water crisis. Murari says that serious efforts are being taken to get past these hurdles. ?Tamil Nadu will overtake Maharashtra and Gujarat,? he predicts optimistically.
sushila.ravindranath@expressindia.com