Hosur emerges as investment destination

Hosur has become an urbane cosmopolitan town, showcased as an investment destination alongside Chennai and Coimbatore

April 07, 2022 03:23 pm | Updated April 08, 2022 11:46 am IST

Workers at a supplier unit in Hosur.

Workers at a supplier unit in Hosur. | Photo Credit: N. BASHKARAN

Five decades ago, in 1973, a sparsely-populated hilly terrain of Hosur was chosen to site one of Tamil Nadu’s first two industrial estates to be promoted by the State Industries Promotion Corporation of Tamilnadu (SIPCOT), with the other in Ranipet. Since then, Hosur has evolved into an urbane cosmopolitan town showcased as an investment destination alongside Chennai and Coimbatore. In recent times, it is attracting big-ticket projects, giving competition to the other industrial hubs.

The cluster saw two high-profile investments last year, with Tata Electronics setting up a ₹5,000-crore mobile components plant at Udhanapalli, and Ola, a ₹2,500-crore electric vehicle (EV) plant at nearby Pochampally. These investments are seen as the beginning of a new boom in Hosur. For industry heads here, these investments are the consummation of Hosur’s evolution into a “mature industrial landscape” with a well-oiled supply chain of micro, small and medium enterprises; an “amicable” labour culture, and a pleasant climate supportive of work efficiency.

That is in addition to the network of highways facilitating logistics of movement, proximity to Bengaluru and availability of land.

“The kind of labour unrest in rural Bengaluru is not seen here. In a new location, where society experiences industry for the first time, there is unrest,” says K. Velmurugan, president, Hosur Small and Tiny Industries Association that leads the MSMEs. “In Hosur, labour unrest ended in the 1990s,” he recalled. “Both industry and the labour have matured, and industry has learnt exploitative practices are counter-productive. That, along with MSME supply chain and availability of land, is a huge draw,” says Mr. Velmurugan.

The industrial landscape, at first led by TVS Motors, Ashok Leyland and Titan Industries, now hosts a diverse portfolio, spanning pharma, electronics, food processing, apparels, granites, logistics and warehousing. At a time when the Union government’s policy push for electric vehicles might reduce automotive clusters to industrial ghost towns in the absence of reinvention, Hosur’s automotive industry has already diversified, with companies such as TVS Motors and Simple Energy Private Limited inking deals for electric vehicle manufacture, along with companies for electric vehicle charging components proposed to set shop.

“This is a self-supporting ecosystem of a stable industrial climate, matured industries, including MSMEs, and a network of ancillary units, combined with land availability and an aggressive approach from the government,” says R. Rajagopalan, president, Hosur Industries Association, who terms the current investment climate “Rebirth for Hosur”.

In Hosur’s industrial landscape, with a supply chain densely populated by MSMEs and limited large buyers, new big industries will help MSMEs diversify and bargain for better prices. At best, the relationship between MSMEs and tier 1, tier 2 and tier 3 companies is often strained in varying degrees with pricing disagreements and input credit delays. “This is the typical demand-supply dynamic. With more MSMEs and less demand, MSMEs have no bargaining power as service providers. With investment and new industries, the demand increases, allowing MSMEs to choose between customers,” points out Mr. Velmurugan. But with opportunities, MSMEs will also require hand-holding by the government in terms of security-free credit, given that MSMEs are steeped in GST defaults and outstanding loans due to the slowdown.

The Employment pitch

According to Krishnagiri Collector V. Jayachandra Bhanu Reddy, SIPCOT’s requirement for land was 2,223 acres for Phase III and IV, of which, the administration has acquired 1,400 acres.

In its wake, protests have risen from farmers in Shoolagiri, who fear dispossession of lush farmland and loss of livelihood. The government’s pitch for investments and accelerated land acquisition hinges on local employment generation. However, a preliminary look signals changes in modes of recruitment. The demographics of labour is also changing, with women-only workforces being hired for the new plants.

In a hitherto manpower-supplier supported landscape, the new investments like the recently set up plants of Tata Electronics and Ola Electric have skipped manpower suppliers and recruited their own initial workforce through internal teams. “The company wanted to ensure there were no agents, no coercion and families of women were in the loop,” said a source from Tata Electronics.

The threshold educational qualification of higher secondary/ graduation as eligibility also means only a miniscule percentage of women workers are drawn from the migrant labour pool, given several of those States have low female literacy rates.

However, some of the new investors are also bringing in a new form of labour called the ‘scheme’ employment, with a fixed term of 2 years-5 years. While contract labour was seen as exploitative, it is unclear how the ‘scheme’ employment will work.

“What would happen to the women at the end of the term? Will they be retained or sent away is unclear. At least as a contractor, if one company relieves my worker, I will send the person to another client and I am answerable to my worker for his job,” says a leading manpower supplier with a clientele of tier 1 companies. While labour contractors had their flaws, this moral economy may vanish under the ‘scheme’ employment, with the lone worker against a primary employer.

This increasing feminisation of labour, while seen as an immediate gain for local employment, however, awaits scrutiny in the face of the unpredictable ‘scheme’ employment, says Sridhar, district joint secretary, Centre of Indian Trade Unions (CITU). “Will there be space for unionisation, collective bargaining for women?”

The ‘scheme’ worker is a concept in Singapore and other countries. We do not know if ‘scheme’ or ‘term’ work becomes a reality (norm) and if it can be meaningful or sustainable. It should be a win-win for the government, the industry and the employee. The worker should have a reasonable salary and steady employment,” says Mr. Rajagopalan.

With Hosur’s new boom come new challenges.

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