INDUSTRY IN TAMIL NADU

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INDUSTRY IN TAMIL NADU 

 

Introduction:

The industrial sector is a driver of economic growth. Industrial sector is important in terms of its contribution to Gross State Domestic Product (GSDP) and employment. This sector which is vital in stimulating growth of the economy is closely interconnected with primary and tertiary sectors through its forward and backward linkages. Industrial policy initiatives in the State are designed in the backdrop of the increasing multifaceted globalization of production systems, especially, in terms of technology transfers and development of physical infrastructure for higher growth. The Industrial Policy has its focus on optimal use of resources, upgradation of managerial skills and administrative, technical improvement and modernization in the fields of manufacturing and infrastructure sectors for higher growth in Tenth Five Year Plan Period. In the Information Technology sector, the State is a leader. Chennai has become a hub of software industry. Besides Information Technology, the State has made strident progress in automobile sector and is poised to record significant growth in the Textile Sector in view of the abolition of the Textile Quota regime and the Electronics revolution in Tamil Nadu by attracting Ford, Hyundai, Nokia, Foxconn, Flextronics, etc. The Nokia project in Chennai has become the World’s largest mobile handsets manufacturing facility. Chennai has become the Leader in India in both automobiles and Electronic hardware manufacturing. This success bears ample testimony to the efficacy of the Industrial Policies 1992 and 2003 introduced by the State Government.

 

Today, Tamil Nadu has emerged as the Second largest state economy following Maharashtra which has a much larger area and population. According to the Data book of DCH dated 3rd June 2014 published by the Union Planning Commission, in 2012-13. Tamil Nadu’s Gross State Domestic Product (GSDP) at constant (2004) prices was Rs.451, 313 crores and was ranked Second among India states. In 2009-10, Tamil Nadu was ranked Third with a GSDP of Rs.356,632 crores. The global economy is still reeling under recessionary conditions. According to the World Global Economic Prospects published in June 2014, the world economy registered only a modest real GDP growth of 2.40% in 2013. The manufacturing sector in Tamil Nadu is highly export-intensive, as industries like textiles & garments, leather goods, automobiles and parts, other engineering goods, etc depend on export markets. Notwithstanding these global recessionary trends, Tamil Nadu has recorded higher growth during 2013-14. According to Union INDUSTRY IN TAMIL NADU Planning Commission’s provisional estimates, in 2013-14, the economy of Tamil Nadu grew at 6.13%, which is higher than the All India average growth rate of 4.74%. At present, Tamil Nadu is in the vanguard of Industrialization among Indian states and has become one of most favoured investment destinations in India. The State is ranked as one of the Top Three states in terms of a number of parameters. According to the Annual Survey of Industries 2011-12 recently published by the Central Statistical Organisation (CSO) of Government of India,Tamil Nadu is ranked:

 

  • First among the Indian states in terms of the number of Factories
  • First in terms of the number of workers employed in the factories sector
  • Third in terms of Gross Value of Industrial output
  • Third in terms of Net Value-Added in Factories sector

 

According to Foreign Direct Investment (FDI) Statistics published by the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce and Industry, Government of India, Tamil Nadu is ranked Third among Indian States in terms of Foreign investment inflows during the period April 2000 to March 2014. During this period, Tamil Nadu received Rs. 65,406 crores (US$ 13,197 million) foreign investment. Tamil Nadu’s position follows Maharashtra and New Delhi. During the period April 2013 to March 2014, Tamil Nadu is ranked Third with an FDI inflow of Rs.12595.40 crores (US $ 2116.24 million). This FDI data is based on Reserve Bank of India regional offices. However the New Delhi RBI regional office covers parts of UP and Haryana, Hence, FDI received in Noida, Gurgaon, etc are also accounted against New Delhi. Excluding this, Tamil Nadu’s position is next only to Maharashtra which is double the size of Tamil Nadu. According to the Centre for Monitoring Indian Economy (CMIE), at the end of March 2014, “Total cumulative investments in pipeline” in Tamil Nadu was Rs.9,61,522.22 crores; whereas in March 2011, it was Rs.7,38,918.83 crores.  During the last three year period (up to March 2014), according to CMIE, Tamil Nadu attracted an incremental investment of Rs.2, 22,603.39 crores.

 

            Apart from CMIE, the data published by the Department of Industrial Policy & Promotion (DIPP), Govt of India in its publication titled “Secretariat for Industrial Assistance (SIA)/Statistics” also indicates that Tamil Nadu is one of the most preferred states for making investment. According to DIPP, at the end of April 2014, the total cumulative investments committed in Tamil Nadu in the Industrial Entrepreneur Memorandum (IEM) and Letter of Intent (LoI) as well as Industrial Licence (IL) proposals was Rs.4,48,334 crores; whereas the cumulative investments committed in Tamil Nadu at the end of April 2011 was Rs.3,33,010 crores.  The incremental investment attracted by Tamil Nadu during May 2011 to April 2014 was Rs.1,15,324 crores.

 

Data published by CMIE as well as DIPP, Govt of India bear ample testimony to the buoyant investment climate prevailing in the State. During the last 3 years, the State Government had signed 33 MoUs with an aggregate investment of Rs.31,706 crores. Apart from this, Guidance Bureau under Industries department has attracted an additional investment of Rs.14,896.72 crores in 35 projects through Single window facilitation.  In total, in the last 3 years, total investments attracted in 68 projects were Rs.46, 602.72 crores.

 

In March 2012, the State Government had launched the Tamil Nadu Vision, 2023 wherein the State has unveiled the dream of the Hon’ble Chief Minister to make Tamil Nadu India’s most prosperous and progressive State with no poverty, where its people enjoy all the basic services of a modern society and live in harmonious engagement with the environment, and with the rest of the world. In ‘Tamil Nadu Vision, 2023’, the State Government has set an ambitious growth target for the Tamil Nadu Gross State Domestic Product (GSDP) to grow at 11% or more per annum. Tamil Nadu is set to increase its per capita income at current prices by 6 times from Rs.73,278 rupees i.e., US $1628 in 2010-2011, to Rs.4,50,000 rupees i.e. US $10,000 in 2023, in line with the per capita income of Upper Middle Income countries. The Tamil Nadu Vision, 2023 places substantial emphasis on inclusive growth by channelling considerable resources to the lowest income groups and ensuring that Tamil Nadu becomes poverty free.

 

 

Major Industries of Tamil Nadu

  1. Information Technology

As per National Association of Software and Services Companies (NASSCOM), the Southern States continue to account for more than half of the country’s total export of software. During 2004-05 Karnataka, Tamil Nadu and Andhra Pradesh combined together accounted for 59.6 per cent of India’s total software exports of Rs.78230 crores. Tamil Nadu was the second largest software exporter in the country next only to Karnataka sharing 13.72 per cent in 2004-05.

 

  1. Manufacturing & engineering industry

The manufacturing industry is one of the vibrant sectors of the state economy and contributes significantly to the industrial output. The manufacturing industry broadly covers manufacture of machinery and equipment, transport parts, basic metal and alloy industries, metal products and repair of capital goods. Tamil Nadu’s share of the industrial output is around 11 to 12 per cent of the country’s output and 15 per cent of the country’s exports excluding software exports. Tamil Nadu accounts for about 17 per cent of India’s software exports.

 

  1. Automobile industries

The share of Tamil Nadu in all India production of automobiles and heavy vehicles is rather significant. Automobile industry plays a crucial role in the State economy and has been one of the key driving factors, contributing 8 per cent to State GDP and giving direct employment to 2,20,000 people. Tamil Nadu accounts for about 21 per cent of passenger cars, 33 per cent of commercial vehicles and 35 per cent of automobile components produced in India. Major automobile manufacturers like Ford, Hyundai, HM-Mitsubishi, Ashok Leyland, TAFE, etc. have their manufacturing base in Tamil Nadu.

 

  1. Leather industry

The growth of the leather industry in the state of Tamil Nadu is due to the large tannery base established here over the last two centuries. According to the Tamil Nadu New Industrial Policy 2003, the state accounts for 70 per cent of leather tanning capacity in India and 38 per cent of leather footwear and components. The exports from Tamil Nadu are valued at about US $ 762 million, which accounts for 42 per cent of Indian leather exports.

 

  1. Paper industry

Tamil Nadu is an important paper producer in the country. Tamil Nadu News Prints Papers Ltd., a Public Sector Undertaking of Tamil Nadu is manufacturing news prints, printing and writing papers having high sales performance. This paper industry entered into a tie up arrangements with six sugar mills to use bagasse on substantial basis. It has maintains ‘zero stock balance’and earning highest profit among the SPUs over the years.

 

  1. Chemical & Plastic industry

The Chemical industry in India accounts for a turnover in excess of Rs.48,000 crores and is one of the fastest growing sectors of the economy. The sector contributes 13 per cent to the State’s GDP and constitutes 8 per cent of the total exports of the country.

 

  1. Textile industry

The textile industry occupies a prominent place in the economy in terms of its contribution to industrial output, generation of employment and earnings of foreign exchange. The textile industry in the State until recently faced hardships like general recession in the textile sector, fluctuation in the market trend, inadequate quality of cotton supply, paucity of funds and technological existence of obsolescence in many items and WTO induced post quota market changes. Consequently, the textile industry recorded modest growth.

 

  1. Handlooms and power looms

The handloom sector in the State is the single largest cottage industry providing livelihood to a large number of rural people and promoting export earnings. The handloom sector and its related economic activities generate gainful employment for more than 4.29 lakh weaver households and 11.64 lakh weavers in the State. These societies mainly produce the cloth required for the scheme of “Free Supply of Uniforms to School Children and Free Distribution of Sarees and Dhoties Scheme”.

 

  1. Sugar industry

Sugar Industry in Tamil Nadu is an important agro based industry. It plays a vital role in the economic development of the State and particularly in rural areas. The Sugar Industry provides large scale direct employment to several thousands and indirect employment to several lakhs of farmers and agricultural laborers in the rural areas who are involved in cultivation of sugarcane, harvesting, transport and other services. There are 34 Sugar mills in Tamil Nadu, of which 16 are in cooperative sector and 18 in the private sector.

 

  1. Cement industry

The production performance of cement industry in the State is encouraging. The operational efficiencies of cement industries have improved because of concerted efforts taken by major industries through the process of mergers and acquisition of small and medium ones.

 

Thrust on Industrial Infrastructure development in Vision 2023:

The Vision has identified a set of corridors for development that will facilitate the growth of industries in an equitable manner across all regions of the State. The proposed development of industrial parks and corridors dovetail with the proposed development of the road and rail network in order to provide seamless connectivity. Vision 2023 envisages the basic developmental needs of any Industrial infrastructure which are the land and capital.

Tamil Nadu is the fourth largest state of India. It has a diversified manufacturing sector and features among the leading states in several industries like automobiles, components, engineering, pharmaceuticals, garments, textile products, leather products, chemicals, plastics, etc. It ranks first among the states in terms of number of factories and industrial workers.

Tamil Nadu Industrial Development Corporation Ltd (TIDCO), State Industries Promotion Corporation of Tamil Nadu (SIPCOT), Tamil Nadu Industrial Investment Corporation Limited (TIIC), and Tamil Nadu Small Industries Development Corporation Limited (TANSIDCO) are jointly developing industrial infrastructure in the state.

Between 2004-05 and 2015-16, Gross State Domestic Product (GSDP) expanded at a Compound Annual Growth Rate (CAGR) of 12.31 per cent to US$ 175.33 billion whereas the Net State Domestic Product (NSDP) expanded at a CAGR of 12.84 per cent to US$ 163.12 billion.

Tamil Nadu Industrial Guidance & Export Promotion Bureau has been set up with the objective of attracting major investment proposals into Tamil Nadu.

Some of the major initiatives taken by the government to promote Tamil Nadu as an investment destination are:

  • In the 2015-16 budget, the state government announced plans to invest US$ 2.11 billion for the development of power infrastructure in the state.
  • For 2015-16, Chennai and Coimbatore have been chosen under the programme of Smart Cities by Government of India. Further, the state government has allocated US$ 61.10 million for the smart cities programme and US$ 76.38 million for AMRUT, as per the interim budget 2016-17.
  • The Government of Tamil Nadu is planning to increase the automobile manufacturing capacity to 5.8 million units by 2020.
  • The government is continuously working on developing strong IT infrastructure in order to support the development of hardware and software industries. In the 2016-17 budget, US$ 20.66 million was allocated for the Information Technology Department.
  • In 2015, the state government announced plans to set up four mega food parks in the state. The state government of Tamil Nadu has released an amount of US$ 5 million for this project.
  • Tamil Nadu Vision 2023 envisages an investment of US$ 27.7 billion for improving highways. Chennai is slated to get 17 new projects worth US$ 334.8 million.
  • The Government of Tamil Nadu has unveiled an automobile policy which would focus on future development and consolidation of the automobile and components industry, where the state enjoys a comparative advantage.
  • Upgradation of ~145 km road to 4 lanes has been planned to be undertaken under PPP (Public-Private-Partnership) mode.
  • Tamil Nadu Government has signed Memorandums of Understanding (MoUs) with five auto companies – Daimler India Commercial Vehicles, India Yamaha Motor, Ashok Leyland-Nissan, Eicher Motors and Philips Carbon Black – for an investment of up to US$ 1.7 billion in the state.
  • In order to attract more investment in hardware manufacturing, the state has set up an expert committee with representatives from the industry to evaluate the potential and advise the government on the way forward.

 

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