Southern edge for Andhra auto hub

Chandrababu Naidu is luring companies to SriCity, around 55 km from Chennai, with incentives and ease of doing business

A new automobile hub in southern Andhra Pradesh in the integrated business city, SriCity is posing a challenge for Tamil Nadu.

Andhra Pradesh Chief Minister N Chandrababu Naidu is going all out to sell SriCity, around 55 km from Chennai, as an automobile cluster.

On April 27, Isuzu Motors inaugurated its Rs 3,000-crore plant there. Hero Motocorp will lay the foundation stone for its Rs 3,000-crore plant adjacent to Sri City this month. Crane manufacturer Kobleco and dozens of Japanese components makers have units in SriCity.

Isuzu, Mahindra & Mahindra and Hero had looked at Tamil Nadu and Karnataka but eventually decided on Andhra Pradesh because of the state government's incentives.

Kartikeya Misra, director, industries, Andhra Pradesh, said around Rs 12,000 crore worth of investments would materialise in the next 18 months.

Masanori Katayama, president and representative director, Isuzu Motors Japan, said he was impressed with the motivated bureaucrats of Andhra Pradesh. Hiroyasu Miura, chairman, Isuzu Motors India added, infrastructure, connectivity and the management of SriCity were the key reasons for the choice.

The World Bank had ranked Andhra Pradesh as number two in India in ease of doing business, far higher than Tamil Nadu and Karnataka, Misra said, adding other factors working for the state were land cost, power, water, infrastructure, and the labour environment.

Kumar Kandaswami, senior director, Deloitte Touche Tohmatsu India, said once the goods and services tax came into force automobile companies in Andhra Pradesh would gain from the components ecosystem in Chennai. He added companies tended to look for the second and third plant options as a de-risking strategy.

DRIVING FORCE

Automobile investments announced in the last few years in Tamil Nadu

• Rs 4,000 crore by Mahindra & Mahindra for a test track and automotive plant
   
• Rs 350 crore by TVS Motor to expand its Hosur facility
   
• Rs 57 crore by Royal Enfield to buy 50 acres near Chennai to expand factory
  

 

Rs 250 crore by Mando - Hella for an auto parts unit
 

Rs 110 crore by Sekisi-DLJM fo an auto components unit
 

Rs 100 crore by Jinhap Automotive for an auto parts unit

TN auto industry at a glance

• Aims to reach production of 5 mn units by 2020 from 3.55 mn now
   
• Capacity additions by Yamaha, Mahindra & Mahindra, Royal Enfield
   
• TN's exports share in automobile is 21.20% and domestic sales share is 14.90%
   
• Production share is 15.80%
   
• Chennai accounts for 21% of India's automobile exports
   
• Export hub for passenger vehicles accounting for 70% of India's overall exports
  

 

20% of India's total installed capacity of vehicle production

Advantage Andhra

• Access to the administration including chief minister and bureaucrats is easier
   
• Land is cheaper by 50-75% at SriCity
   
• Connectivity to ports of Krishnapatanam, Vizag, Ennore, Chennai