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PROFILE
Southern Success
Despite infrastructure snags, Tamil Nadu has managed to attract investments
VISHAL KRISHNA
13 Feb 2009
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In The Fast Lane: Tamil Nadu’s strong technical talent pool has been instrumental
in winning over auto majors and ancillaries (Pic by Hemant Mishra) |
What do multinational companies such as Nokia, Hyundai, Ford, Samsung, Caparo and Adidas have in common in India? They are all headquartered in Tamil Nadu. The state, known for its yummy idli, sambhar and filter coffee, is also an industrial powerhouse. Stereotypes apart, the state ranks an impressive second in BW’s State Competitiveness Survey. It has earned that position by spawning a culture of entrepreneurship through a strong foundation in technical education — it has one of the highest number of engineering graduates in the country.
It takes just 41 days to start a company in Tamil Nadu. So, it is no surprise that top companies continue to flock to the state with corporate investments close to $20 billion (Rs 97,600 crore). Caterpillar and the Renault-Nissan JV have recently built new manufacturing plants.
“The investments of Fortune 500 companies is only going to go up here,” says K.S. Sripathi, chief secretary of Tamil Nadu. He attributes their interest in the state to political stability and the role of educational institutions. Low rentals and low cost of living have also played a role. The government, on its part, continues to dangle the carrot. It has allocated an undisclosed sum to ramp up communication technologies in 426 blocks, and has also allotted free land to expand airports in Chennai, Coimbatore, Madurai and Trichy.
Such development measures led Nokia to set up a telecom park at Sriperambudur, a town outside Chennai, with an investment of $285 million (Rs 1,391 crore). The company says it was able to set up a production facility in a town that was closer to the ports and the airport. “The government has a single-window clearance system, making it faster for operations to begin,” says Sachin Saxena, operations director at Nokia India. The company has managed to increase production in India to 200 million units from 125 million last year and employ 8,000 people. “The state should take another step and set up training institutes to impart skills to youth.” He adds that with such a large talent pool, students should be ready to work in global manufacturing units as and when they finish college.
Infrastructure Bottlenecks
“Education, power resources and infrastructure will be our thrust areas of development,” says Sripathi. The state had invested Rs 2,000 crore for development of highways to support rural and industrial connectivity. However, infrastructure is one area where Tamil Nadu’s cup of woes is overflowing. The state planned to upgrade its 2,000-km highway network over the past two years. But it has been slow in catching up with the superior road infrastructure of states such as Punjab and Gujarat. The chief secretary declined to comment on the national highway projects being implemented by the Centre.
Though industry is not yet complaining about the poor roads, the power crisis in the state has already driven some textile companies, located in Coimbatore, Tirupur and Salem, to run on gensets. But a diesel shortage in the state last year made running these gensets difficult. The power crisis has affected the IT industry too. “Power is expensive here. Our operational expenses have tripled over the past six months. Therefore, our bottom lines will be hurt,” says Sridharan Mani, CEO of American Megatrends, a multinational software company in Chennai.
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