India Markets closed

Can Tamil Nadu get back its industrial mojo?

Political upheavals, lack of firm leadership and a decidedly anti-industrial mood had hit Tamil Nadu’s image as one of the popular destinations for big-ticket industries and companies. The Sterlite imbroglio, the ferment in Yamaha, Royal Enfield factories had also not helped matters. The tough and determined wooing by the Chandrababu Naidu government saw Kia Motors and Hero Group investments flowing to Andhra Pradesh.

It is in this troubled backdrop that the two-day Tamil Nadu Global Investors’ Meet will get underway in Chennai on January 23. This is the second edition of GIM — the first one having been held in September 2015 when J Jayalalithaa was at the helm. That meet, deemed a success (98 MoUs with a total investment promise of around Rs. 62,738 crore) had, however, some controversy attached to it, as critics alleged that most of the investments were on paper only and many of the MoUs had failed to move beyond that stage.

It is a charge that State Industry Minister MC Sampath denies vehemently. “More than 25 per cent of the MoUs have attained fruition and the companies are about to start operations. The rest will follow suit shortly,” he says.

Aside from the numbers, the previous GIM will be certainly remembered as a hurried event with the Jayalalithaa government decking it as a showpiece event with a political eye on the 2016 State elections.

The current Edappadi Palaniswami government finds itself in a similar predicament as it has to shore up its constantly falling image. Already buffeted by prickly political developments due to lack of decisive leadership in the party, the AIADMK government also has to face some crucial bye-elections and elections to seats fallen vacant due to the disqualification of 18 MLAs. If the AIADMK loses them, as is being widely predicted, the government will fall.

Also, the AIADMK would want to do well in the general elections of 2019 — the AIADMK won 37 of the 39 MP seats in TN in 2014. With the BJP looking to travel with the AIADMK in the State for the 2019 polls, it is equally important for the national party that some major investments are seen to flow into the State.

With the TN government recently approving a proposal to unveil an aeroplane components policy at the GIM, Defence Minister Nirmala Sitharaman two days back flagged off projects envisaging a total investment of Rs. 3,100 crore by the Ordnance Factory Board (OFB), Defence Public Sector Undertakings and the private sector in the Tamil Nadu Defence Industrial Corridor. As per this, an exclusive defence park is to come up at Sriperumbudur on a 250 acre site, which will subsequently be increased to 500 acres. At least on paper, this will generate jobs for over one lakh people.

The State government, for its part, has earmarked Rs.75 crore for the event itself, and is said to announce subsidies for around Rs. 2000 crore to attract investments. The news at Fort St George, the seat of government in Tamil Nadu, is that the Chief Minister himself is overseeing much of the plans, and wants to ensure that a good image accrues to the government because of the meet. Many big names are lined up to make a splash at the event.

Among them, Taiwanese contract manufacturer Foxconn is expected to announce Rs.1500 crore new production line to manufacture a few models of Apple iphones at its Sriperumbudur unit. (This unit previously manufactured Nokia handsets and had been mostly lying idle since Nokia stopped production.)

The State, which contributes 8.4% to the National GDP (TN is the second largest economy in the country with the highest number of factories in the country), expects to sign at the GIM event around 140 MoUs that will lead to around Rs.2.4 lakh crore worth of investments.

But that is a tough task, as even if the government agencies are keen, there are certain forces in action in Tamil Nadu which are bent on scuppering big industrial projects coming to the State. “It is a convoluted array of forces at play in Tamil Nadu. They have been baulking at industrial development for quite sometime now. The grounds of protest are mostly environmental and ecological,” says V Vedprakash, an investment banker. “Environmental issues need to be addressed. But mostly they are whipped up as a bogey. That is the worrying part. Many a central government project has been stopped in TN recently because of local opposition.”