Tamil Nadu retains its attractiveness for investors

The power cuts the state imposed on the industry in Tamil Nadu in the last four years were debilitating. But that has not affected the state's credentials when it came to attracting investments.

If a senior bureaucrat who is responsible for attracting big-ticket investments into the state is to be believed, 68 projects worth Rs 46,700 crore have come to the state, including the likes of Michelin which is setting up its largest tyre manufacturing facility in the world near Chennai.

"We have not lost a single project," he said. "We explained to investors that the power crisis was temporary and will be taken care of. They believed us." As much as 3,300 MW of power capacity has either been added or is in final stage of completion, he added. From June 1, the state government has removed all restrictions on consumption of electricity from the grid that it had placed on heavy industries.

The state has always ranked high among investors as a destination, ever since Ford Motor Company and Hyundai Motors made Chennai their base for car manufacturing way back in 1996.

Today, the state ranks number one in the country in terms of number of factories and number of workers employed in factories. It is among the top three recipients of foreign direct investments among Indian states. Its GDP is second largest (after Maharashtra's) and 35th largest in the world.

Tamil Nadu is home to the largest auto cluster in the country which ranks among the top 10 such clusters in the world. Chennai and the surrounding region produces 13.8 lakh cars, 3.61 lakh trucks, 3,5 lakh 2-wheelers apart from construction equipment, tractors, bi-cycles, ships and even battle tanks. A good amount of it is exported. Three ports - Chennai Port, Ennore Port and L&T's port - service their needs.

These would not have been possible but for the excellent educational system in the state which produces 1.8 lakh engineering graduates, 1.88 lakh polytechnic students and 1.2 lakh ITI students a year, the bureaucrat added. In all, it totals to half a million technical students and another half a million arts students every year. No other state produces so many students.

While investors broadly agree on Tamil Nadu's strengths, they are, however, increasingly worried about availability of land, especially close to urban centres.

The government, it appears, is aware of this issue and has recently come forward with a new support package for investing in southern districts of the state. Response to the package from the industry has been tepid so far.

But many argue that it is too early to reach a conclusion at a time when most industries are sitting on surplus capacity and expansion is the last thing on their minds.