Tidco to set up SEZ for auto parts

Chennai, Nov 28 | Updated: Nov 29 2006, 07:05am hrs
Tamil Nadu Industrial Development Corporation Ltd (Tidco) will soon join hands with a well-known entrepreneur to set up an auto component special economic zone (SEZ). The sector specific SEZ will come up in about 2,000 acres of land with an investment of Rs 400 crore.

According to a government official, Auto companies in the US and Europe, to keep their prices at reasonable levels, have started outsourcing auto component manufacturing to India. They will only do the assembling at their country. An auto entrepreneur, to give leverage to this outsourcing wave in the automobile industry, has come up with the idea of setting up a project exclusively for the auto industry. The auto entrepreneur is scouting for 2,000 acres of land to house the project. Application has been filed with board of approvals, ministry of commerce for obtaining SEZ status for the project.

The entrepreneur has approached Tidco to be the local partner. The government agency will take part in the project with minimum investment. Tidco will pick up anywhere between 2% and 11% stake in the equity of the project. The project will call for an investment of about Rs 20 lakh per acre. The debt-equity ratio of the project could be 3:1 or 2.5:1.5, which is yet to be finalised.

The idea behind Tidcopicking up stake in the huge project, they said, is basically to focus on large projects. The state agency has decided to invest in big projects instead of investing in many small projects. The agency has about 10 SEZs at various stages of implementation including Hosur, Perambalur, Reliance ADAG, Ascendas, Nanguneri and Ennore SEZ. It is also planning for two more SEZs in the state, one in Coimbatore and another in the outskirts of Chennai.