TN seeks to put industry back on track; ease of doing biz is CM's priority

While ease of doing business is the chief minister's priority, industry wants more interaction with the government

After facing criticism for its supposed lack of initiatives to attract investment, the government of Tamil Nadu has intensified efforts to recover its old reputation of being an industry-friendly state.

Chief Minister Edappadi K Palaniswami, who took office 11 months ago, recently met top industry captains in this matter. He assured them ease of doing business was his administration's priority.

Venu Srinivasan, chairman, TVS Motor, said: “The chief minister highlighted various things the government is doing in terms of road infrastructure and airport connectivity, including the Metro project. The government’s plans are impressive.” Industry stressed the need for frequent interactions with the government and the need to host more roadshows showcasing Tamil Nadu’s industrial potential, he said.

P Ravichandran, chairman of the Tamil Nadu chapter of the Confederation of Indian Industry and president, Danfoss Industries Pvt Ltd, said: “The chief minister wanted feedback about the recently launched Business Facilitation Act. The Business Facilitation Act has taken off very well. There are 18 proposals which have come in for approval and three have been cleared.”

State’s industrial climate

The RBI’s 2016-17 data shows Tamil Nadu comes on top in the country with 16 per cent of the factories in India in FY15. It has also been ranked among the top FDI destinations, especially in the automobile sector.

But in the past two-three years, things have slowed due to a lack of good governance, issues related to ease of doing business, and corruption.

“Political uncertainty, lack of clarity on the government's stand, and the alleged absence of ease of doing business are challenging. Things need to improve,” the CEO of a Chennai-based company said.

A chief executive of a company that has decided to set up a greenfield unit in Andhra Pradesh said, “When we decided to expand, nobody approached us. Even nobody asked us why we were investing in Andhra Pradesh instead of Tamil Nadu”.

On the contrary, in Andhra Pradesh, the chief minister’s office was in regular touch with investors, small or big, tracking the progress of projects and intervening to remove hurdles in the process, said another industrialist. 

Various other states have held roadshows in Tamil Nadu. To some extent they have succeeded. MRF is investing around Rs 40 billion in Gujarat, where Ford too has expanded. Ashok Leyland, Apollo Tyres, Hyundai Group’s Kia Motors, Isuzu, and Hero are a few auto majors, besides FMCG players, who have chosen Andhra Pradesh instead of Tamil Nadu. 

According to the RBI data on FDI inflows, in 2016-17, Tamil Nadu got Rs 148.30 billion as against Rs 297.81 billion in 2015-16. During the same period the FDI inflow into Andhra Pradesh rose to Rs 147.67 billion from Rs 103.15 billion in the previous fiscal year. 

‘All is well’

The state government, however, refutes there is a lack of interest on the part of industry in Tamil Nadu.

State Industries Minister M C Sampath says of the 98 deals for Rs 2,420 billion signed in 2015, 61 projects with an investment of Rs 627.38 billion are being executed. 

CEAT will invest around Rs 50 billion, PSA Group, which manufactures cars with the Peugeot brand and others, is to set up its manufacturing facility at Rs 20 billion, and furniture firm IKEA will set up a store with an investment of Rs 12 billion. 

Palaniswamy has assured industry representatives of easy access to himself and senior officials. Sampath has said the government will arrange regular meetings between industry and the chief minister, and the state is coming up with policies on information and communication technology, industry and aeronautics, and defence.

Defence Expo 2018 (Defexpo) will be held, for the first time in Tamil Nadu, on the outskirts of Chennai between April 11 and 14. 

New political entrants

Political analysts say the announcement by actor Rajinikanth on his political entry on December 31, 2017, and industry sentiment on that were reasons for the chief minister’s enthusiasm. 

Those who speculate that industry may be backing the entry of Rajinikanth into politics, for a strong and stable administration in the state, point to major industrialist Anand Mahindra’s tweet to justify their point.  Mahindra, commenting on the news quoting Rajinikanth that he would resign if he did not deliver in three years, said, “If Tamil Nadu was a Stock, I would be bullish and going long on it right now...”