Tamil Nadu unveils policy to woo auto sector

The Chennai-Oragadam area is considered the Detroit of Asia but in what appears to be an attempt to take things to the next level, the Tamil Nadu government has announced the Tamil Nadu Automobile and Auto Component Policy, 2014, last week.

The policy aims at providing a framework for future development and consolidation of the automobile and components industry where, at present, the state has some advantages against north and western regions of the country thanks to a large supplier community and top-quality educational and engineering institutions.

As part of the policy, the state intends to generate half-a-million jobs and build the Chennai belt as one of the top five leading auto cluster globally.

The Chennai-Oragadam belt is home to Ford India, Hyundai Motor India, the country’s largest passenger car exporter, Renault-Nissan and Daimler India Commercial Vehicles. Last year, the state saw the inauguration of the second Royal Enfield plant which set up base at Oragadam.

It may be recalled that Tamil Nadu was hopeful of getting Peugeot-Citroen to set up base in TN in 2011 and had laid out a red carpet for the Peugeot delegation. That was not to be and the French company then zeroed in on Gujarat. However, PSA has now put its India plans on the back-burner given its problems back in the home market and some likely restructuring.

As part of the Vision 2013 document, chief minister J Jayalalithaa, after assuming office, had set a  target of 14 percent growth in the manufacturing sector every year and total investment of Rs 15 lakh crore in all the sectors of the state’s economy by 2023.

To accomplish this, two sets of MoUs numbering 17 in all were signed two years ago in 2012, committing an investment of Rs 26,625 crore. Taking this forward, the state has signed 16 new sets of MoUs for industries with total investment of Rs 5,081 crore that can potentially generate over 16,000 jobs.

One of the key problems that Tamil Nadu faces is the power shortage that has made many a component supplier look at the possibility of re-locating to another place.

To it things in perspective, Sri City, located at the border of the states of Andhra Pradesh and Tamil Nadu, is wooing players from all industry segments. So far, among the big names from the auto sector it has got is Isuzu Motors India which is setting up a facility that will go begin operations in 2016. It is also in talks with some auto component suppliers. One of the key advantages that can be used to woo new players is the modern port of Ennore.

Will the newly-formed state of Telengana woo investments from the auto sector? And will Seemandhra, the successor state of the erstwhile Andhra Pradesh which has been promised a five-year special package, also throw its ring into the hat? Only time will tell.