TN should target 35% of Indian automotive industry in next 10 years : CII's Vision 2015

The Tamil Nadu state council of the Confederation of Indian Industry (CII) has envisaged Tamil Nadu to emerge as one among the top three destinations of choice for the manufacturing of automobiles and automotive components in its Auto Vision 2015. For which, the state will need an incremental investment worth $5 billion in the next 10 years.

CII had mandated Icra management consulting services for assistance in formulating a vision for Tamil Nadu's automotive sector. This report profiles Vision 2015 for Tamil Nadu arising from the potential of the automotive sector to impact the economic growth and development of the state in the context of emerging trends in the global automotive industry.

At present, Tamil Nadu is one of the three main automotive hubs in the country accounting for about 25 per cent of India output. According to Vision 2015, the state should target 35 per cent of the Indian automotive industry in the next 10 years which translates into $18 billion.

Towards realising the Auto Vision 2015, the substantive role of the Tamil Nadu government would be three-fold. The first will be to facilitate the potential growth of the sector by providing an appropriate policy environment that creates the desired investment climate.

The other two key issues will be to create world-class infrastructure that facilitates logistics and enables cost competitiveness and take appropriate steps to improve the operating environment of the industry.

The key policy initiatives recommended to the state government is to declare the automotive industry as a thrust sector for Tamil Nadu and establish 'automotive parks' in different parts of the state where automotive companies can set up operations. The government must also work towards creating four hubs in Chennai, Coimbatore, Hosur and Madurai.

Addressing a conference on 'Tamil Nadu as a Manufacturing Hub', V Krishnamurthy, chairman of National Manufacturing Competitiveness Council, Government of India, said that a lot of hard work will have to be put in by the automotive sector to get the $5-billion investment in the next 10 years for which a detailed plan is necessary to be worked out.

While new centres like those in Gurgaon and Pune have grown at a faster rate than Chennai in the last few years, the city has its own inherent strength in the automotive sector that needs to be leveraged, he added.

In his address, R Seshasayee, managing director of Ashok Leyland Limited, said that there has been a dramatic change in the industry outlook as a result of the change in mindset though the disabilities faced by the industry has not changed in the last four years.

He said that CII must continue to find solutions to the disabilities such as poor infrastructure, rigid labour laws, cascading tax levels faced by the industries. The first focus area for manufacturers will be that there should be continued emphasis on quality and technology.

Secondly, manufacturers must customise products to the Indian market. "India needs to find its own way of manufacturing like the Toyota way of manufacturing," he added.

Lastly, in order to add value, develop the skills in the auto and auto components sectors as they have a symbolic relationship, he added.