With a Pegasus on its logo indicating growth, curtains will go up on Tamil Nadu Chief Minister Jayalalithaa’s most ambitious venture, Tamil Nadu Global Investors Meet (GIM) 2015, which the state claims would attract investments to the tune of Rs. 1 lakh crore (US$ 16 billion). A total of Rs. 100 crore has been earmarked for this event. Some of the State expenditure has been in revamping the Chennai airport and in the re-laying of roads.
This meet is crucial for the state for multiple reasons. In the last few years, Tamil Nadu is vying with other states such as Gujarat, Rajasthan, West Bengal, in the race to attract the bulk of investments in India. Recently, the acute power crisis in Tamil Nadu resulted in the State losing a number of key projects to Gujarat, which could promise investors uninterrupted supply as a contrast. Automobile firms such as Ford are not keen on any new expansions in Tamil Nadu. Even Andhra Pradesh and Telangana have caught up with Tamil Nadu and bagged several investments that were initially supposed to come to the state. The state received only 3.5 per cent of the total number of industrial investment proposals that came into India between 2008 and 2012. Secondly, the state's image as a great place to invest has suffered after the Nokia plant shutdown in November 2014, which left thousands of employees jobless.
The upcoming meet is thus expected to reinforce confidence and brighten up the investment climate. But not everyone is optimistic. Some fear that the Global Investment Meet is a mere posturing attempt before the all-important State elections in 2016.
The Tamil Nadu government in April abruptly postponed this meet from May to September, ostensibly because foreign investors were worried about the city’s hot weather. The postponement was despite the State claiming that they had already lined up investments to the tune of Rs. 76,000 crore. But the real issue, many believe, was that the government wanted to wait for Ms. Jayalalithaa’s acquittal in the disproportionate assets case and her return as Chief Minister.
The presentations made by the State government during the GIM meetings and the road shows said that the State continues to be a leader in foreign direct investment and had attracted Rs. 44,402 crore in FDI in the last three years and seen the signing of 33 memorandums of understanding worth Rs. 31,706 crore. Its ultimate goal is to realise the State’s Vision 2023 target of 14 per cent growth per annum in the manufacturing sector and to attract investment of Rs. 15 lakh crore across all sectors by 2023.
“A look at the macro-economic profile of the state indicates that Tamil Nadu is the second largest state in the country with a Gross State Domestic Product (GSDP) of $80.1 billion in 2013-14. The state’s economy is dominated by the services sector and the industry sector which contribute 65 per cent and 30 per cent respectively to the state GSDP,” is what was said in the presentations. But industrialists feel that the growth has actually skidded in the last few years. “The manufacturing output [of the GSDP] in Tamil Nadu which was 20 per cent in 2004-05 is now 16.6 per cent,” says one industrialist.
An official from an automobile firm blames labour problems. “There are several unrecognised unions that create unnecessary panic. The government has to bring in strong regulations to eliminate such issues.” But statistics indicate that the number of strikes in the state dropped from 110 during 2003 to 28 in 2013. “The old scars still remain; even now firms globally look at TN as a state with labour unrest,” he added.
There are several issues plaguing the state that it needs to overcome to create a good investment climate. Power was also a constraint for industrialists some time ago, but the situation has improved gradually in the last couple of years. “2011 and 2012 were a nightmare with power problems. Spinning mills and textiles which heavily depend on power lost huge amounts of money. The government has to ensure that such things don’t cripple the state again,” said the chief executive officer of a textile firm in Tirupur.
But ministers, secretaries of various departments at all the road shows and meetings claim that all is well with the state. They even clarified that the Nokia shutdown episode had nothing to do with the state government. A few months ago, State Industries Minister P. Thangamani had said, “I would like to point out that Nokia did face some problems in the state but it was not because of the state government. But because of the retrospective taxes, which were imposed on companies by the previous government at the Centre.”
C.V. Sankar, State Industries Secretary, and M. Velmurugan, executive vice chairman, Tamil Nadu Industrial Guidance & Export Promotion Bureau have been at the forefront in seminars seeking to attract investors. They have mentioned that the government has decided to get clearances issued by all the concerned departments and agencies within a period of 30 days from the date of application for Single Window Clearance to the Guidance Bureau.
The state is also pitching itself as the best in terms of sector specific policies and in the availability of a huge land bank (compared to other states) and also in the access to railways and ports.
But there are apprehensions among industrial circles about what would happen if the ruling government changes, in the run up to the electoral campaigns that are soon to begun. Will there be time to look into projects? Though the state government claims that it has reached the Rs. 1 lakh crore target in terms of proposals, there are questions on how much of this would translate into reality. Even in states such as Gujarat the conversion rate was less than 10 per cent.
A senior government official is dismissive of all apprehensions and says that with the identification of twelve focus sectors, the state would surely cross the projected Rs. 1 lakh crore. “In fact we have already surpassed it,” he said. The sectors include — aerospace; agriculture and food processing; automobile and auto-components; electronic hardware; heavy engineering, infrastructure; IT & ITES; renewable energy; skill development; textiles and apparels; pharmaceuticals and biotechnology; chemicals, petrochemicals and minerals.
The stage is now all set at the Chennai Trade Centre, Nandambakkam for the big event on September 9 and 10. Nine partner countries including Korea, Japan, Australia, Canada, France, Italy, Russia, UK and Singapore have been roped in for the organisation of the event. Some 5,000 people from various state government departments are working round the clock to make the event a success.
While the Tamil Nadu State government is gung-ho about realising investment targets, industrial circles are apprehensive about the lack of focus in an election year.
