Strengthening the Economy: From Commitment to Achievement

One of the key aspects of transforming an economy severely hit by the unpredictable COVID-19 pandemic will be to actively woo and secure investments that will not only bring in revenue but also create jobs.

The Tamil Nadu government is also moving aggressively on this front, as demonstrated by Chief Minister MK Stalin’s recent visit to Dubai. It is said that there is a commitment of around $1 billion (₹6,100 crore) from the UAE side. Totally, $9 billion (over ₹68,000 crore) – investment commitments with the potential to create over 2 lakh jobs have reportedly been attracted by the DMK government in its 10-month rule.

While the DMK government has made a good start in wooing investors, the signing of 130 MoUs so far is the key to turning them into reality.

Industries Minister Thangam Thenrasu said investments would be made in various districts of Tamil Nadu, which would ensure balanced, underdeveloped, regional development.

He also pointed out that investments came to focus on new sectors such as electronics, auto-components, industrial parks, free trade warehouse sector, IT/ITES, general manufacturing, food processing as well as furniture manufacturing and EV charging infrastructure Is. ,

The state has been at the fore in attracting investment in the electric vehicle sector. A report by Colliers India states that India will see a total investment of ₹94,000 crore ($12.6 billion) in the electric vehicle sector over the next five years and Tamil Nadu will have the highest share of 34%.

Mr Thenarasu said that out of 130 MoUs, 21 were signed a fortnight ago and their implementation would take some more time.

As far as 109 projects are concerned, 3 have started production/partial production/trial production. Nine projects have started their construction or are ready for foundation. 96 projects are being implemented. He said that only one project has been abandoned due to financial reasons.

The Minister said that the MoUs signed are followed faithfully by specialized sector-specific teams under guidance and the government is confident that it will ensure the implementation of these projects in the near future.

Former CII Tamil Nadu President M. Ponnuswamy said that Tamil Nadu’s conversion rate will be higher than other states. He also informed that Guidance is professionally run and it is doing a good job of bringing investment.

Convenor of the Federation of Indian Associations KE Raghunathan said the Chief Minister’s foreign visit was a good start to attract investments and place ‘Made in Tamil Nadu’ in the global market. He said that 30% conversion rate of signed investment proposals and 40% conversion rate in number of jobs is considered a healthy sign.

The state government should focus on quick turnaround time to streamline investments. The Ola Electric Vehicle factory to be built in the state within record time has the potential to quickly turn investment promises into reality and is a confidence-building measure, Mr. Raghunathan said.

curriculum improvement

He added that other states were competing aggressively to attract investments and in recent times, Tamil Nadu has lost out on investments in other states to Kitex Garments, Kia Motors and Qualcomm.

Some industry officials, speaking on condition of anonymity, pointed to the absence of major investments in the state in recent years and hoped that the DMK government, which has a strong mandate, would fill that void.

Mr. Raghunathan said that the government should take lessons from the Sterlite Copper affair, the Ford plant closure and the recent labor unrest at the Foxconn plant. “The government should have a clear policy on what kind of industries it will focus on and allow, apart from implementing standard operating procedures for foreign companies to align with the local culture. It should also have a framework for companies that are stepping out to ensure social security to the affected workers.

Shri Raghunathan said that the allocation for micro, small and medium enterprises has been increased in the state budget, but it has not been distributed properly. “The focus should be on helping the firms in the MSME sector which were badly affected by the pandemic or were unable to take advantage of the central government’s stimulus packages,” he said.

Shri Ponnuswamy stressed on the need to improve MSMEs with focus on exports. He said the government should focus on exporting jewelery and registering MSMEs on the central government’s e-market place, which facilitates online purchase of general use goods and services by various government ministries or departments.

Another industry official said there has been a delay in getting environment clearance to MSMEs and there should be a quick mechanism. He wanted the efficiency of the State Industries Promotion Corporation of Tamil Nadu Limited (SIPCOT) to be improved and its operations at par with Mahindra World City and Sri City.

“Most of the people prefer to set up operations in Sri City as all the processes are completed in quick time and taken care of by them. Maybe the state government can do lateral hiring for SIPCOT and run it as a guidance. Maybe,” said the official.

Mr. Thenarasu highlighted the measures taken to improve the investment climate in the state, including Single Window Portal 2.0, which provides 100 digital services to investors across 24 departments. An additional 100 services will be added by the end of this calendar year.

He said that the state government is also working towards new policies like life sciences, manufacturing policy, research and development, an updated electric vehicle policy, as well as setting up region-specific industrial parks and country-specific desks under the guidance of .

The government is also looking at attracting investments in the Defense Corridor.

Strengthening the MSME Sector

“The state government is talking to foreign original equipment manufacturers to increase sourcing from industries in Tamil Nadu or have more offset partners here. Another effort is to enable MSMEs to have tier-three or tier-two suppliers,” B Krishnamurthy, project director, Defense Corridor Project, said. “We are creating a Center of Excellence for this with private partners. Three centers will be operational in six months.

There are also PSU-centric and consortium-centric measures where joint ventures will be facilitated for both land and air systems. There are three such projects planned in Coimbatore, all for aerial systems, he said, besides proposals for thematic defense parks, Mr Krishnamurthy said.

Tamil Nadu Industrial Investment Corporation (TIIC) Chairman and Managing Director Hans Raj Varma said the focus would be on development of existing MSMEs. Sources said that TIIC had signed MoU to finance startups and MSMEs in the defense sector.

“Apart from a defense park, Coimbatore is poised for huge investment from one of the large scale companies. In the long term, these will boost industrial development,” said MV Ramesh Babu, president of Coimbatore District Small Industries Association.

Memorandum of Understanding under the previous regime

Mr Thenarasu said that under the previous AIADMK regime, 165 MoUs were signed with an investment potential of Rs 1,06,164 crore and promise of 2,49,333 jobs during 2019-20 and 2020-21.

Out of 165 MoUs (excluding Global Investors Meet, 2019) only 52 projects have started production. The actual investment realized is ₹ 7,924 crore and the number of jobs created is 20,363. Effectively, only 32 per cent of the signed MoUs have actually been successful. The actual investment in these completed projects is only 7.46%. Talking about employment, it is only about 8.17%.

With regard to GIM 2015, out of the proposed 98 projects, only 65% ​​have been implemented. Of them, only 27.04 per cent of the committed investment is actually made and only 38.48 per cent of the committed employment is created. As per the information shared by the minister, now, after 7 years have passed, there is little chance of implementing the rest of the projects.

As far as GIM 2019 is concerned, out of 304 MoUs signed, only 184 projects are considered as genuine industrial projects. Of these, 33 projects have been abandoned. So far only 49.67% of the projects have been implemented. Again, against the committed investment, only 26.83% has been done and only 25.66% of the promised employment has been created according to Sri Thenarasu.

He said that even assuming that the investment period ranges from 3 to 5 years and investments will be made in these ongoing projects, there is a possibility that only 55.12% will be invested.

The DMK government has also signed deals that will fetch higher investments and jobs from the Chief Minister’s visit to UAE, as compared to Rs 3,750 crore with a potential of 10,800 jobs signed during former Chief Minister Edappadi K Palaniswami’s visit in September 2019.

Of the six companies that have signed agreements with the AIADMK government in the UAE, only two have invested ₹450 crore. Another ₹650 crore could be materialized, according to officials.

positive FDI inflows

Now the focus will be on the DMK government and how it brings into action the MoU signed by it. On a positive note, according to official data, foreign direct investment (FDI) in the state grew by about 41.5% to ₹17,696 crore (about $2.4 billion) in April-December 2021, compared to ₹12,504 crore (about $1.7 billion) in April-December 2021. Was. period in 2020. Of this, 53%, or ₹9,332 crore, came in the period October-December 2021.

“Over the years, Tamil Nadu has emerged as an economic superpower, the second largest contributor to India’s GDP. It is the most industrialized state in the country and a favorable destination for new investments, which is rapidly moving towards becoming a hub for technological change related to electronics. The FY23 state budget focuses on mid to long term priorities to achieve a sustainable socio-economic development,” Satyakam Arya, President, CII Tamil Nadu State Council, said.

, T. Ramakrishnan and Dennis S. in Chennai. With inputs from M. Soundarya Preetha in Jesudasan and Coimbatore)