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  Tamil Nadu
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Tamil Nadu
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Tamil Nadu

 

Business Opportunities

 

There are several factors responsible for an industry to grow in a particular region, some of which are mentioned below:

Competent Policy: The policy that a state government adopts for any given sector has a direct impact on its prospects of growth and s its attractiveness for further investment. For example, the Government of Tamil Nadu has given several concessions in the IT sector. This has prompted a number of IT majors, both domestic such as Infosys and Wipro as well as multinationals such as Cognizant, to set up software development operations in the state.

Availability of natural resources: Certain industries such as agro-based have a high dependence on availability of natural resources. The western part of the state say for example serves as the hub of agriculture as the climate over there is quite favorable for the growth of crops.

Skilled Manpower: Availability of good quality manpower is a must for all industries to flourish. High rate of literacy and well developed educational infrastructure are two reasons the state has skilled manpower in abundance. These are a few factors that have enabled the state to carve a niche for themselves in sectors such as engineering, automotive, IT and ITES.

Given its strong base of technical workforce, knowledge-intensive industries are gradually taking a lead position in the state.

Based on an assessment of the above factors, some of the industries with potential for investment and growth in the state are illustrated below:

Key industries

In the post liberalisation era, the state has emerged as one of the front-runners in attracting investment proposals. Tamil Nadu is in the top quartile in the total number of enterprises in the country with a consistent growth rate of 19 per cent.

Textile Industry

Chennai is known for woven garments and textile industry having near about 2,400 registered exporters. Tiruppur, known as the knitting city, has about 3,000 exporters and exports about $1.7 billion worth of T-shirts every year, and has about 25 per cent market share in the European Union in the T-shirts segment. Tamil Nadu has a big cluster of cotton textiles contributing almost 39 percent to the country's total production. The state's total volume of exports on a yearly basis is about $3 billion. Tamil Nadu houses over 59 per cent of the total spinning mills of the country. There are 1,734 large, medium and small spinning mills, including 18 cooperative spinning mills, eight National Textile Corporation mills and 26 composite mills. Tamil Nadu is the largest producer of cotton yarn and accounts for 41 per cent of India’s production.

Tirupur Textile Cluster

Tirupur is an important trade centre of the country, which is famous for its knitted garment wears. It is situated near Coimbatore, which is known as 'the Manchester of south India'.Tirupur textiles cluster has units in spinning, knitting, wet processing, printing, garment manufacturing and export. In addition, there are ancillary units supplying buttons, laces, embroidery, cones and yarn processing.

Tirupur has a significant presence at the lower end of the international hosiery and knitwear market. Most entrepreneurs cater to the lower end of the hosiery market on a contract-manufacturing basis. The cluster accounts for 90 per cent of the country's cotton knitwear exports.

Information Technology

Tamil Nadu has emerged as a centre for investments in IT services and ITES as it possesses key resources of skilled and educated manpower, high standard of educational institutions, good infrastructure and an effective cost of operation. The ITES sector holds immense scope as it provides employment to technical and non-technical graduates.

Cement

With 12 well established plants, the state is counted among one of the leading cement manufacturers in the country. During 2005-06, cement production added up to 14.3 million tonnes per annum (mtpa). Its domestic consumption is almost 11.1 mtpa and its exports are around 0.3 mtpa. Key players in the cement industry having their base in Tamil Nadu are ACC, India Cements, Madras Cements, Chettinad Cements and Tamil Nadu Cements Corporation.

Automotive and Auto components

Chennai is been increasingly recognised as a prime export hub for automobiles in South Asia. Some of the well known automobile manufacturers based in Tamil Nadu are Ford, Hyundai, HM-Mitsubishi, Ashok Leyland, TAFE and TVS Motors have their manufacturing base in Tamil Nadu. The rapid progress in the auto industry can be attributed to skilled manpower and of course to the strong engineering sector. In addition to this, the ports at Chennai and Tuticorin further help to facilitate the export and import of materials for the industry. Tamil Nadu has a 30 per cent share each in the Indian automotive and auto components industries, 17 per cent in the trucks segment and 20 per cent each in passenger cars and two wheelers. Its current annual output in the automotive sector is estimated to be $3-3.5 billion and the contribution of the sector to the GSDP is 7-8 per cent. It has been actively involved in the manufacture of high quality electrical, braking / suspension parts and engine parts. The state is aiming to achieve the output of $18 billion in the sector. Chief players in the automobile and auto ancillaries sectors are Ford, Hyundai, Visteon, Mitsubishi, Rane TRW, Ashok Leyland, and PRICOL.

Coimbatore Pumps and Motors Manufacturing Cluster

There has been a sharp rise in the standard of living of people falling in the middle class group which has paved way for the speedy growth in the number of pumps in the state. Coimbatore Pumps and Motors manufacturing cluster with over 1,000 units are meeting almost 40 per cent of the country's requirements of pump sets. The industry has demonstrated tremendous flexibility by incorporating design changes to suit the site conditions. It has maintained quality, reliability and performance.

Leather

The state has 70 per cent of the total installed capacity of hide and skin. Leather and leather-based industries have witnessed phenomenal growth over the past years. The State Government has set up industrial estates and common effluent treatment plants. This has been done in the wake of providing all possible capital subsidies and infrastructure support by setting up.

Chemicals and Petrochemicals

The chemical industry in Tamil Nadu is based on the outskirt of Chennai and in Cuddalore, Panangudi (Nagapattinam) and Tuticorin. If we compare the growth of this sector in the year 2005-06 over its previous year, there has been a growth of almost 20 percent which is remarkable. To increase the availability of bio fertilisers, production of bio fertiliser inoculum pockets is being taken up at production units at Cuddalore, Trichy, Ramanathapuram, Kudumianmalai and Sakkottai, having a combined annual production capacity of 1,400 MT. Key players in the chemicals sector include Orchid Chemicals and Pharmaceuticals and Shasun Chemicals and Drugs.

Tourism

There is lot of potential in the state's tourism sector and there is great scope for creating more jobs. Health tourism has opened up new avenues as the state has ample high-end medical care facilities. Tamil Nadu is being increasingly promoted as a fascinating destination for holidaying in South India. Marketing campaigns are launched and lot of publicity is been done and even the infrastructural facilities are improved like anything. Participation by the private firms is welcomed by the state in the development of tourism sector.

Mineral-based

The state has a good reserve of mineral resources. In the fiscal year 2006, the state witnessed phenomenal growth in the mineral products and its net sales grew by 28 per cent. It is the chief producer of lignite, limestone, magnesite, mica, quartz, salt, felspar, iron ore, bauxite and gypsum. The existence of lignite in the Neyveli area led to the establishment of Neyveli Lignite Corporation, which plays an important role in the power sector.

Engineering

Tamil Nadu has a strong engineering base the products that are manufactured range from automobiles, bicycles, castings and forgings, to textile machinery, electrical and non-electrical machinery, pumps and transportation equipment. The units are concentrated in Chennai, Coimbatore and Salem. Tamil Nadu, which exports $320 million worth of engineering products, has nearly 3,000 units, employing a skilled workforce of more than 250,000. Prominent players in the engineering sector are Amalgamations Group, BHEL, Caterpillar, CPCL, LMW, Murugappa Group, Saint Gobain, Sanmar and the TVS group.

Banking and Financial Services

Chennai serves as the hub of financial activities in South India having a strong presence of major Indian financial institutions and foreign banks. Several banks have their back offices in Chennai. Some of the well known names in the banking and financial services sector are ABN Amro, Scope International and World Bank.

Agro-based Industries

Tamil Nadu is among the three top producers of a variety of fruits and vegetables all across the country. Its climate is very favourable for the cultivation of crops and this has strengthened the agro processing sector in the state. Tamil Nadu is also a leader in agricultural production with a high yield per hectare of sugarcane, rice and groundnut. Its long coastline has opened the gateway for marine products based industry to flourish. Its exports of the marine products has added up to about $50 million. The area around Coimbatore , Dharmapuri and the Nilgiris have been recognised as ideal locations for the cultivation of flowers such as rose and chrysanthemum, the floriculture industry is likely to get a boost.

Exports

Tamil Nadu has performed well in the thrust industries recording a healthy-growth rate in exports. Exports from agro-based industries and software sector have shown a CAGR of 60 per cent approximately.

Investment

Multinationals such as Hyundai and Saint Gobain are investing in capacity enhancement measures in the state. Likewise Honeywell International Inc. has invested US$ 65 million to set up a manufacturing centre.

The emergence of Tamil Nadu as a centre for manufacturing is in part due to the flow of foreign direct investment in the state. The state has successfully attracted a high quantum of investment in the manufacturing, IT and infrastructure sectors. The state has modelled itself as an attractive destination on the basis of sound infrastructure support, a quality workforce and policy initiatives by the State Government.

Potential hubs for investment

Manufacturing and sourcing base

Some of automotive multinationals that have set up operations in the state are leveraging their plants as global sourcing hubs.

Hyundai Motors has made Chennai a global production base for the compact car segment. Banking on its successful Indian operations, Hyundai has invested US$ 220 million approximately, in its Chennai plant in order to increase its production capacity and has launched its C segment car, Getz, and sports utility vehicle, Terracan. Hyundai has a global strategy to gradually shift the export base from South Korea to India to capitalise on lower shipping costs to Europe and Latin America and reduce delivery cycle times.

Ford Motor Company has made its plant in the state as a sourcing base for its mid-size car, the Ikon. Owing to the cost advantage in India, Ford is also sourcing auto components for its US, European and Chinese operations from the state.

R&D, Software development and BPO hub

The emergence of Chennai as an IT hub and the availability of a quality workforce have enabled the city in particular and the state in general to emerge as a centre for R&D in the country. The presence of a large number of engineering institutions, including IIT Chennai and Anna University have further augmented the state's claim as a prominent centre for R&D activity.

Companies such as Temenos (world leader in banking software) have invested to the tune of US$ 15 million in R&D facilities in the state. Kone, the Finnish elevator giant is now sourcing all its software development from Chennai. Airbee Wireless, a US based software company, has invested US$ 1 million to set up an R&D centre in Chennai. Software majors such as Cognizant, TCS and Infosys have set up software development centres in Chennai.

BPO outfits for a number of multinationals such as ABN AMRO, Standard Chartered and World Bank now operate from Chennai. The city also has the largest medical transcription facility in Asia.

Investment overseas by Tamil Nadu based companies

Sundaram Fasteners, the first ISO 9000 certified subsidiary of the TVS Group has invested US$ 5 million approximately, and plans to invest up to US$ 12.5 million. Sundaram Fasteners is the first company in the Indian engineering industry to set up a manufacturing unit in China. The initial capacity of the plant is 6,000 tonnes and the company aims to generate 25 per cent of the export revenues from this plant. The company also plans to buy the UK-based forging company Dana Spicer. Another group company, the two-wheeler manufacturer, TVS Motors , is planning to set up an unit in Indonesia.

The Tamil Nadu government has set up an Industrial Guidance Bureau (IGB) with the aim to boost investments and attract major investment proposals. During the period 1992–November 2006, the bureau attracted 105 major investment proposals with an aggregate investment of $4 billion. The IGB has been designated as the “Documentation and Clearance Centre” to accept common application forms for obtaining all pre-project state-level approvals and infrastructure support.

*TIDCO & ELCOT have promoted TIDEL Park, the state-of-art facility with a built up area of 12.8 million sq ft. This park achieved 100 per cent occupancy within 4 months of its commissioning. MNCs like Computer Associates, Cognizant, EDS etc. have taken space in this. Enthused by the success of TIDEL I, the State Government is embarking on TIDEL II. Apart from this, currently the Government of Tamil Nadu is in the process of setting up Information Technology parks with state-of-the art facilities at Coimbatore, Trichy, Madurai etc. To improve communications, the State Government is part-funding earth stations at Trichy, Madurai and Thirunelveli. Chennai is the landing station for 2 submarine cables from Singapore with bandwidth of 13 tbps.

 

Content Source: www.ibef.org

 
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