Text: Bhargav TS
The 6 South Indian states; Andhra Pradesh, Karnataka, Kerala, Puducherry, Tamil Nadu and Telangana differ in language, food and in culture but it shares a commonality by having enormous talent pool, quality engineering and manufacturing. This helped them to have global companies R&D centres and manufacturing facilities in these states. According to experts the quality of the components and the sub-systems are in high standards that are manufactured in these states compared to other hubs. They feel manufacturing alone will not make ‘Make in India’ successful, companies have to manufacture components to global the standards and quality has to be in place.
Apart from the manufacturing facilities, the companies have also established their R&D centres in these states. In Hyderabad, the capital city of Telangana Hyundai has it engineering centre. Chennai, so called Detroit of Asia houses engineering centres of Renault-Nissan, Mahindra & Mahindra, Ashok Leyland, Daimler, Apollo Tyres and many other component manufacturers’ engineering centers. The IT hub, Bangalore also has many R&D centers repeleted with IT talent.
Each state is specialised in different sectors, the manufacturing sector’s activity is highly commendable in Tamil Nadu due to its home grown players like TVS, Rane and Amalgamation Group. Once the US-based Ford Motor Co. stepped into the state in 1996 to manufacture its car, lot of OEMs followed them in the subsequent years. Currently global companies like Hyundai, Renault-Nissan, BMW, Daimler and Yamaha have established their manufacturing facility apart from the home grown companies like TVS Motors, Royal Enfield, Ashok Leyland, Mahindra and Hindustan Motors.
On top of this, while USA’s Caterpillar, Japan’s Komatsu and South Korea’s Doosan have chosen Chennai to establish large earth moving equipment manufacturing plants, the state now accounts for 35% of India’s $18 billion worth auto-components production. Popularly known as the Detroit of Asia, Chennai is the base of 30% of the automotive sector of the country and 40% of the auto components. In addition, Chennai has a vast pool of engineering colleges, polytechnics and a very highly qualified entrepreneurial base.
The manufacturing industry in this region started in 1840 with Simpsons pioneering India’s automobile industry including making rail coaches and diesel engines. Later in 1948, Ashok Leyland started assembling ‘Austin cars’. But today, a flagship of the Hinduja Group, Ashok Leyland with 3 plants in Tamil Nadu itself is one of the largest makers of trucks, buses and off-road vehicles. The TVS Group had burst into a robust phase in the 1960’s by setting up a number of auto-components manufacturing plants. Thus a sound engineering base ably supported by a skilled workforce took shape.
Currently component manufacturers like Saint-Gobain, Visteon, Apollo Tyres, Tenneco, MRF, TVS Group companies, Rane, Amalgamations Group, JBM, Valeo, Lear Corp, Mando, Faurecia, SL Lumax and Bosch have their manufacturing facilities in and around Chennai. In a span of past 20 years, Tamil Nadu has grown in leaps and bounds even though there are some negatives. Manufacturers choose the capital city Chennai due to availability of talent pool, good road connectivity and also has 3 major ports – Chennai Port, Kamarajar Port and Kattupalli Port as these ports act as export gateway to most of the companies.
An industry veteran said, “Tamil Nadu has always been in the forefront of industrialisation with a strong presence in the manufacture of engineering and auto components, textiles, leather and sugar. During the post liberalisation period since 1991, private sector began to take over the lead in the industrial development of the country. In the different scenario, states started taking the initiative in the new and competitive environment and Tamil Nadu was one of the earliest to seize the opportunity and announced its Industrial Policy in 1992 itself. This policy became the cornerstone and laid the foundation for the rapid growth of new industries in the state. This policy became the harbinger of growth that facilitated the electronics and automobile industry revolution in Tamil Nadu by attracting major projects from Industrial giants. These major projects triggered a multiplier effect by attracting a large number of auto and other ancillary industries.”
According to the latest study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) titled ‘Study of States Emergence: A Comparative Analysis of Growth and Development’, Tamil Nadu has ranked among the best performing states in 8 out of 9 key development parameters covering economy, power, roads, health and service sector performance. The study deals with states’ performances especially in terms of the economic performance, income and inequalities parameter and identifying leaders in growth, development and investment. Tamil Nadu bagged leading position in most of these parameters.
The government of Tamil Nadu is also arranging its Global Investors Meet (GIM) on September 9 and 10 in Chennai to attract more investments. According to an official release, investment worth Rs 53,000 crore in sectors other than energy and Rs 23,000 crore in the energy sector, totalling Rs 76,000 crore have been lined up for signing of MoUs for the GIM, which was originally scheduled on May 23 and 24. Citing a reason for the postponement, the government official told, during the foreign road shows, there has been considerable interest shown in investing in Tamil Nadu due to the prevalent industrial investment environment in the state. Many foreign investors have represented that they would be in a position to commit much larger investment with some more time being made available to finalise such investment proposals. Further, a strong feedback has been received from many foreign investors that the event may be held after the summer season.
Andhra Pradesh, the land of plenty with rich natural resources has a vision to become the investment destination of choice for the best companies in the world. The previous and the present governments’ try to present the State better to persuade more investments. Towards this end, the State government has identified the thrust areas for rapid development and growth. The sectors that are identified as growth engines include manufacturing, infrastructure and knowledge-based industry like information technology, biotechnology and pharmaceuticals. However, emphasis has also been laid on tourism, roads, ports and airports, finance and insurance besides food processing.
The government has identified potential investment areas within these sectors and formulated an investment-friendly and progressive industrial policy that aims at seeking investment from all sources. The State is offering a host of liberal concessions and incentives to the entrepreneurs with a view to accelerate industrial investment and growth. It has made the single window systems of clearance mandatory for granting the various approvals.
On the other side Telangana, the newly developed state has unveiled its new industrial policy recently. According to the policy, the state will provide time-bound approvals to the projects planned to set up in the state. “Chasing cell” will be put in place and conferred them prerogative of monitoring the progress with regards to approval and clearance. In order to reduce the delays caused by the government officials, the policy says it can take penal actions against the officials if there is undue delay in processing the applications. Mega projects with an investment of Rs 200 crore and above would be conceded green signal within 15 days. To encourage solar power, the government has assured for single window clearance. So far, the 1 year old government has identified 14 thrust areas in the manufacturing sector and chronicled with sectoral policies and incentives. All statutory clearances will be taken care by Telangana State Industrial Infrastructure Corporation (TSIIC) freeing investors in taking the burden of securing permission individually.
In a bid to promote the manufacturing sector, the state government of Karnataka has also revealed its new industrial policy 2014-19 focusing aerospace, automotive, machine tool, cement and steel sector. The policy aims at achieving an industrial growth rate of 12% per annum by attracting investments of about 5 lakh crore and generate employment to about 15 lakh persons in 5 years. The policy lays emphasis on providing good infrastructure support for promotion of industries. It is proposed to form at least 5 industrial areas every year over an area of 5000 to 8000 acres through KIADB with all infrastructure support such as roads, trains, water, power and connectivity.
Keeping in view the contributions being made by the MSME sector towards GDP, employment and revenue generation, special attention has been given to this sector by reserving 20% of the allotable land in each industrial area. Further to boost exports, the policy envisages several measures such as utilisation of the Mangalore port, improvement of road and train connectivity with the GoI (Government of India) support and expediting the projects like tunnel work at Shiradhi Ghaat.
Kerala, the agricultural state has very less manufacturing units. The state mainly focuses on agriculture has very less small scale ancillary units which supports the component manufacturers in other states. Pondicherry, an Union Territory in Tamil Nadu has a lot of potential to grow as an industrial hub but it lacks due to improper government support. Even though Pondicherry has established players like Manatec, Pondy Die Cast and few other component manufacturers have established their factories in the coastal town.
Despite few issues the South states continue to charm the automotive industry for reasons that are unique to this region. Due to Golden Quadrilateral, these states are connected and get faster link to the ports.As the availablity of Ports are more in these states, it is more attractive for the manufacturers to support the Make in India campaign as they can export to many countries through these ports.The governments of these states are also very aggressive to attract investments in their respective states and a health competition makes a win-win situation for both states and investors. ACI
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