The state of Tamil Nadu is seeing a sudden surge in investments. In a single day — May 14 — the state government signed MoUs for investments worth Rs 7,850 crore, a major chunk of which will come from the automobile industry. State government representatives said these MoUs indicate that investors, especially the automobile industry, are reiterating their faith in the state.
Twenty-eight leading industrial institutions have come forward to invest about Rs 36,000 crore in Tamil Nadu, according to the state industries department. These proposals are now at different stages of consideration.
The companies that signed MoUs on Monday include Ashok Leyland- Nissan, Yamaha, Daimler and Eicher Motors. The investments come at a time when the J Jayalalithaa-led government is celebrating the occasion of completing one year in power on Wednesday.
From the MoU it signed, Ashok Leyland-Nissan Motor Company will invest Rs 4,150 crore in facilities at Hosur, Pillaipakkam, Ennore, Vellivavayssavadi and Oragadam.
Daimler India Commercial Vehicle Pvt Ltd also signed an agreement with the state government — to increase the investment in its plant at Oragadam (near Chennai) to Rs 4,000 crore. On April 18, the chief minister had inaugurated Daimler’s commercial vehicle plant at Oragadam. The company has so far invested about Rs 2,500 crore in Tamil Nadu, according to the state industries department.
The other major investment committed was Rs 1,500 crore, by India Yamaha Motor Pvt Ltd, the Indian arm of Japanese two-wheeler major Yamaha Motor Co Ltd, for a green-field facility to manufacture two-wheelers. The investment will be spread over five years and the facility will come up at Vallam Vadagal on the outskirts of Chennai.
“This facility will be the company’s largest factory in Asia,” said Roy Kurian, national business head- sales, India Yamaha Motor. The first product to be rolled out from the factory will be Yamaha’s Scooter Ray.
Hiroyuki Suzuki, CEO and managing director, India Yamaha Motor, said, “Two main reasons why we chose Tamil Nadu over other states in the south are the supplier base and the ease of catering to export markets from Tamil Nadu.”
The other two investments for which MoUs were signed on Monday are Rs 350 crore by Eicher Motors to set up a two-wheeler factory at Oragadam for Royal Enfield and another Rs 350 crore by Philips Carbon Black Ltd for setting up a facility at Tiruvallur.
“The state received investment proposals worth Rs 59,907 crore between May 2011 and January 2012. This includes Fortune 500 companies who are ready to invest over the next six months,” says P Thangamani, minister for industries.
This shows the investment environment is improving, the minister said, adding that according to the secretariat for industrial assistance of the Union commerce ministry, between May 2011 and January 2012, the Tamil Nadu government received investment proposals totalling Rs 59,907 crore. The Jayalalithaa-led government took charge on May 16, 2011.
Some of the major investments that were committed after the new government took over include:
Tamil Nadu is one of the largest automobile hubs in the country, with a capacity to manufacture 1.3 million cars and 360,000 commercial vehicles every year. This translates into three cars every minute and one commercial vehicle every 75 seconds.
Tamil Nadu is currently ranked the fourth largest state in India in terms of the size of its economy. While the share of the agricultural sector in TN’s economy is 12.6 per cent, the secondary sector is 25.8 per cent and the services sector 61.6 per cent. The share of the secondary sector comprises the manufacturing, electricity, gas and construction industries. Within the secondary sector, the share of manufacturing industries is 19.5 per cent.
The state government has for the first time embarked on the preparation of a ‘Tamil Nadu Vision 2023’ — a plan to guide overall development. This envisages that GSDP at constant prices will grow at 11 per cent or more per annum over the next 10 years — faster than the national growth rate. This will require the state’s manufacturing sector to grow at 14 per cent a year between 2012 and 2023.
To make this possible, the government has taken steps to address two major issues — land and power. The government proposes to create a land bank of 16,400 acres from which allotments will be made to industry. The State Industries Promotion Corporation of Tamil Nadu will acquire land across six districts. On the power crisis, the government says it will be resolved by the end of this year.
