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In July 2021 two months after the Dravida Munnetra Kazhagam (DMK) formed the government in Tamil Nadu, chief minister M K Stalin set an ambitious target for the state to become a USD1-trillion economy by 2030 from the $300 billion currently. “We want Tamil Nadu to be one of the best states in South Asia,” Stalin said speaking at the first investors conclave held then.
On January 8, the DMK government signed 631 MoUs with investors promising ₹6.64 lakh crore at the end of the two-day Global Investors Meet (GIM). This was the third edition of GIM in Tamil Nadu but the DMK government’s first. It surpassed investments pledged in the two previous meets by the All India Anna Dravida Munnetra Kazhagam (AIADMK) regime in 2015 and 2019 under late J Jayalalithaa and Edappadi K Palaniswami which was to the tune of ₹242,160 crore and ₹268, 296 crore, respectively.
The GIM was conducted in pursuit of achieving the target of a $1-trillion economy for which investments worth ₹23 lakh crore need to enter Tamil Nadu by 2030. The state has embarked on new initiatives to support the state’s industrial and economic growth by creating a suitable working environment.
Most manufacturing companies, and electric vehicle production units use land from the State Industries Promotion Corporation of Tamil Nadu (SIPCOT- responsible for the development of industrial land and infrastructure). SIPCOT acquires land from private owners to ease the process of identifying land and transferring ownership to investors. By acquiring land ahead, the state can readily hand it over to investors as an incentive. In 2022, the state set out to create banks of such land under SIPCOT spreading more than 45,000 acres across Tamil Nadu.
And this has basic infrastructure such as roads, drains, electricity and water facilities. “Land in the SIPCOT is on a 99-year leave,” said an official of the industries department. “And the government has a huge pool of land which is one of the advantages of investing in Tamil Nadu.”The DMK government has also been decentralising its investment by moving away from industrial belts such as Hosur-Krishnagiri-Dharamapuri and Sriperumbudur to spread factories across the region to generate more jobs in under-developed districts. “We want to keep land in every region ready,” the official added. Tata, Ola, and Simple Energy are some of the major factories working from inside SIPCOT land.
Last year, the government started a project to provide affordable housing to employees close to their factories in a bid to attract investments. It is being built at various locations, including in Sriperumbudur–a major hub for automobile and electronics manufacturing–and in the industrial town of Hosur. “Quality industrial housing is coming up in close proximity to high employment-oriented industries, including in electronic hardware manufacture, mainly as a labour welfare and productivity-enhancing measure,” a second official said. The employer will have to pay for this facility since several workers travel from villages and towns that are every 100 km away from the factories. The 2021 protests by employees at the Foxconn iPhone plant (Apple’s contract manufacturing firm) in Sriperumbudur against the living conditions and facilities gave this project an impetus. For instance, at 875 crore, the government began construction last year to build industrial housing that can accommodate 18,000 employees in Hosur. Tata Electronics Private Limited which has invested more than ₹5,000 crore to build an electronic ecosystem in Hosur, has so far rented marriage halls and hostels to accommodate their workers.
Tamil Nadu has been a major hub of manufacturing automobiles, auto components, textiles, leather goods, machinery and engineering goods, electronics, rubber products, and IT/ITes. In the past two years, the state has rolled out specific policies–such as for electric vehicles (EV) in February 2023 and on January 6 for semiconductors to emerge in these sectors too. Ola Electric, Ather Energy, Simple Energy, and Switch Mobility have a base in the state. Since the DMK formed the government, 221 EV projects have been facilitated with an investment commitment of ₹2.7 lakh crore and with employment opportunities for more than three lakh people. On the first day of this year’s GIM, the government rolled out a policy for semiconductor and advanced electronics with an aim to create a state-of-the-art manufacturing and design ecosystem to generate high-quality job opportunities. The policy would focus on incentivising strategic investments and collaborating across industry, academia and government.
Despite Tamil Nadu being a duopoly state governed successively by the DMK and AIADMK, both parties have ensured that investors have a supportive political environment since deals would take more than a prescribed five-year period to launch when there is usually a change in government. For instance, though Ford clinched a deal with the late J Jayalalithaa, it launched its first independent model in 1999 after DMK won the elections in 1996. The connectivity of international airports, and two seaports aided by logistics while there was plenty of local labour available has ensured that investors continue in the state. Tamil Nadu rose to the 3rd rank in 2022 in the Ease of Doing Business from being number 14, in the ranking released by the Union government last year.
According to the Annual Survey of Industries (2020), Tamil Nadu leads the country with the highest number of factories at 38,837 followed by Gujarat at 28,479. The state which has a higher number of women electorate also has one of the highest numbers of women employed at 43%. International brands such as BMW, Hyundai, and Daimler, to homegrown majors such as TVS, have a wife footprint in the state. Tamil Nadu is also home to key contract manufacturers for Apple products–Foxconn, Pegatron, and Tata Electronics.
Guidance Tamil Nadu is the state nodal agency for investment promotion established in 1992 which also handholds investors operating here. Guidance has identified focus countries for prospective investments which has drawn Vietnam’s EV major VinFast to enter the Indian market through Tamil Nadu pledging up to $2 billion on the first day of GIM.
Divya Chandrababu is an award-winning political and human rights journalist based in Chennai, India. Divya is presently Assistant Editor of the Hindustan Times where she covers Tamil Nadu & Puducherry. She started her career as a broadcast journalist at NDTV-Hindu where she anchored and wrote prime time news bulletins. Later, she covered politics, development, mental health, child and disability rights for The Times of India. Divya has been a journalism fellow for several programs including the Asia Journalism Fellowship at Singapore and the KAS Media Asia- The Caravan for narrative journalism. Divya has a master’s in politics and international studies from the University of Warwick, UK. As an independent journalist Divya has written for Indian and foreign publications on domestic and international affairs.