American Chamber of Commerce in India
Apex Chamber of U.S. Industry in India
Breakfast Meeting on Policy Initiatives by the Tamil Nadu Government to Promote Industrial Development– 23 February 2017
A breakfast meeting on the ease of doing business in Tamil Nadu was held on 23rd February in Chennai. The guest speaker was Mr. Vikram Kapur IAS, Principal Secretary to Government, Industries Department.
Mr. Ramkumar, Chairman -Tamil Nadu Chapter, AMCHAM, welcomed members and set the tone for the meeting by stating that traditionally, Tamil Nadu has always been in the forefront of industrialization with a strong presence in the manufacturing of engineering and auto components, textiles, leather, sugar etc. Tamil Nadu is one state with a strong agricultural base and has transitioned from agriculture to manufacturing and now to IT and services.
Mr. Vikram Kapur began his address by stating that people in the audience are responsible for the India and Tamil Nadu growth story. He went on to say that during the post liberalization period since 1991, the private sector began to take over the lead in the industrial development of the country. States started taking the initiative in the new and competitive environment and Tamil Nadu was one of the earliest to seize the opportunity by playing a supportive role and announced its industrial policy in 1992 itself. This policy became the cornerstone and laid the foundation for the rapid growth of new industries in the state. This policy became the harbinger of growth that facilitated the electronics and automobile industry revolution in Tamil Nadu by attracting major projects from Industrial giants. Major projects triggered a multiplier effect by attracting a large number of auto and other ancillary industries.
Mr. Kapur went on to mention that the policy of the government has been to maximize the welfare of the people of Tamil Nadu by creating gainful employment opportunities by achieving higher and sustainable economic growth with emphasis on balanced regional development through greater private and public investment in manufacturing and infrastructure development. He said that the telecom story is evidence of how the private sector can change the face of the communication industry where over 80% of the population has a mobile connection. This is an example of the government giving space to the private sector and the private sector took the challenge. The government, in its avowed policy to make the ease of doing business, is working towards unshackling the fetters of the private sector.
Mr. Kapur said that Tamil Nadu set standards in many sectors such as a remarkable industrial growth story; public health which boasts of a fascinating story with universal coverage; pioneers in education with the ‘aided schools’ concept and the state has been the first to open up the education sector to private investment; social upliftment reforms and the noon meal scheme for school students which has been adopted by many states; free power to farmers bringing in growth in the agri sector despite the state being perennially drought prone.
On the governance front, Mr. Kapur said that the state is the most urbanized with over 50% of the population living in towns and cities. The state has a well-functioning bureaucracy supporting the political executive and a disciplined citizenry. The state has a growth of 9.0 to 9.25% which is 2% more than the national average, with the state GDP being second only to Maharashtra. On the industrial output the state is the 3rd largest with the largest number of factories, largest number of SME’s and a 20 million workforce. He added that on the export front the state was the 3rd largest and for the period 2011 – 2016 the state received the 3rd highest FDI inflow.
The political and social culture in the state is reflected in the faith that business has reposed in Tamil Nadu which boasts of the finest infrastructure and having an extensive road network; rail network; 4 major ports and many minor ports and 4 international airports. The state has overcome its power shortages and today is self-sufficient in power with no major load shedding across the state.
The advantages of the state is in its urbanization which is a critical engine for growth; large pool of trained manpower with one million graduates yearly; the engineering colleges in the state produce over 2.5 lakh engineers every year and an equal number of engineering diploma holders and tradesmen from the Industrial training Institutes. ‘India Today’ ranked Tamil Nadu as the number 1 state in terms of showing the most improvement in its socio-economic infrastructure.
Mr. Kapur attributed to the poor showing in the EODB rankings from 12th in 2015 to 18th place in 2016 due to the increase in the number of parameters from 240 to 600. He said that the ranking matrix needs a serious re-look.
On the e-governance front, Mr. Kapur stated that the public and businesses interface with 10 or 12 government departments, all of them are in a fairly advanced state of computerization.
To make life easier for businesses, some of the outcomes are the ‘single window clearance’ through the TN state Guidance Bureau which grants an in-principle approval after 30 days of submitting the complete proposal. Some of the challenges are in the CRZ clearance which is extremely strict; TNPCB which has strict norms and an online filing system; land clearances which many times get held up in litigation. The TN government, through its agencies like SIPCOT and TIDCO, have a large readily available land bank to cater to industry.
Mr. Kapur said that the NCAER gives the state a better ranking when compared to the DIPP rating which does not factor in industry feedback.
To improve the infrastructure the state has embarked on a plan to invest in logistics support by developing roads, rail networks, ports, power generation and distribution as outlined in the Vision Document 2023.
Mr. Kapur invited American businesses to invest in Tamil Nadu by stating that there are numerous opportunities for work in ‘smart cities,’ the aeronautical hub and manufacturing. In the recently held Global Investor Meet 2015, a total of 98 MOU’s were signed with an investment of 242 lakh crore rupees over a period of 3 to 7 years. Of this, 62 projects have been implemented and 7 have already started commercial production.
He concluded by thanking the American companies for kick starting the industrial development in the state making a reference to Ford Motor Company which set up a manufacturing plant in Marai Malai Nagar near Chennai.
This presentation was followed by an interactive session, after which, the meeting concluded.
By joining AMCHAM India, you become part of an active and dynamic Apex Chamber of U.S. Industry in India with a membership base of more than 400 American companies in India. AMCHAM is an important voice for policy advocacy, a critical source for business intelligence, a vibrant platform for networking and expanding your business.