tamil nadu - ibef · •many heavy engineering and manufacturing-based companies ... key industries...

TAMIL NADUSeptember 2009

2

Investment climate of a state is determined by a mix of factors

Tamil Nadu September 2009

Investment climate of a state

• Skilled and cost-effective labour

• Labour market flexibility

• Labour relations

• Availability of raw materials and natural

resources

• Tax incentives and exemptions

• Investment subsidies and other incentives

• Availability of finance at cost-effective terms

• Incentives for foreign direct investment

(FDI)

• Profitability of the industry

• Procedures for entry and exit of firms

• Industrial regulation, labour regulation,

other government regulations

• Certainty about rules and regulations

• Security, law and order situation

• Condition of physical infrastructure such as

power, water, roads, etc.

• Information infrastructure such as telecom,

IT, etc.

• Social infrastructure such as educational

and medical facilities

Resources/Inputs

Incentives to industryPhysical and social

infrastructure

Regulatory framework

3

Tamil Nadu‘s performance on key socio-economic indicators

Availability of social and physical infrastructure in the state

Policy framework and investment approval mechanism

Cost of doing business in Tamil Nadu

Key industries and players


The focus of this presentation is to discuss…

4

Tamil Nadu‘s economic performance has been impressive,

driven by all three sectors of the economy … (1/2)

PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORSTamil Nadu September 2009

Source: Ministry of Statistics and Programme Implementation, Economic Review of Tamil Nadu 2008

CAGR

12.18%

Tamil Nadu's GSDP (US$ billion) Percentage distribution of GSDP

*

*

*

5

PERFORMANCE ON KEY SOCIO-ECONOMIC INDICATORS

Tamil Nadu‘s economic performance has been impressive,

driven by all three sectors of the economy … (2/2)

• The state‘s GDP grew by an impressive 12.2 per cent between 1999-2000 and 2007-08 to reach US$

72.2 billion.

• Within the primary sector, agriculture and allied activities registered the highest growth.

• The share of the secondary sector in GSDP was 31.2 per cent in 2007-08, its growth being driven by

registered and un-registered manufacturing, which achieved a growth of 10.1 per cent between 1999-

2000 and 2007-08.

• The share of the tertiary sector in GSDP was 55.3 per cent in 2007-08. Trade and hotels and

restaurants, the largest sub-group of the sector, registered a growth of 11.9 per cent over the previous

year.


6


Number of households in the educated and self-employed

category is in line with the all-India average

• The per capita income of Tamil Nadu was US$

1,271.1 in 2008–09.

• The share of urban households in the educated

and self-employed category in Tamil Nadu is in

line with the all-India average.

Percentage distribution of households in rural areas by SEC*

Percentage distribution of households in urban areas

by SEC*

Source: BW Marketing Whitebook 2009-10* For definitions, please see annexure


UrbanRural

In Percent In Percent

7

Households in the state have higher disposable incomes as

compared to the rest of the country … (1/2)


• In ownership of assets such as two/four-wheelers and consumer electronics, Tamil Nadu is way ahead

of the all-India average.

Source: The Market Skyline of India 2006 by Indicus Analytics


Two-wheelersFour-wheelers

Televisions Electricity

Percentage ownership of household goods, vehicles and electricity consumption

8


Households in the state have higher disposable incomes as

compared to the rest of the country … (2/2)

• In ownership of assets such as clock and ceiling

fans, rural Tamil Nadu is ahead of the all-India

average.

Source: BW Marketing Whitebook 2009-10


Percentage of rural population owning household goods

and basic amenities

9


Small-scale units play a vital role in the state‘s economy

• Tamil Nadu ranks next only to Maharashtra in terms of contribution of the manufacturing sector to

net state domestic product (NSDP).

• The index of industrial production (IIP) in the state during 2007–08 registered a growth of 8.1 per

cent as compared to 7.9 per cent during the previous year. The manufacturing group, with the

highest weight in the index, performed well with a robust growth of 8.2 per cent in 2007–08.

• Many heavy engineering and manufacturing-based companies are located in and around Chennai.

• Micro and small industries account for 95 per cent of industrial units, 40 per cent of the output of

the manufacturing sector and 35 per cent of the state‘s exports.

• Tamil Nadu Small Industries Corporation Ltd. (TANSI), a conglomerate of 64 industrial units, was

formed in 1965.

• Tamil Nadu is an important IT hub.


10


Small-scale units play a vital role in the state‘s economy

• Textiles

• Heavy commercial vehicles

• Automobiles and auto

components

• Railway coaches

• Power pumps

Key industries in Tamil Nadu

• Leather tanning industries

• Cement

• Paper

• Safety matches

• Steel

• Information technology


11

Tamil Nadu has witnessed a strong inflow of investments in the

manufacturing sector

• Outstanding investments* in the state during the

December 2008 quarter were US$ 121.1 billion.

• The electricity sector attracted the bulk of the

total investment at US$ 36.2 billion.

• The manufacturing sector drew the second-

highest investment worth US$ 34.8 billion.

*Outstanding investments include new projects and those under implementation, but not projects shelved


Break up of investments by sector

Source: CMIE

29%

2%

30%

23%

1%

15%

Manufacturing

Mining

Electricity

Services

Irrigation

Construction

12

Key industries – district-wise … (1/2)

District Industries

Coimbatore Textile mills, motor pump sets and engineering goods

Cuddalore Fisheries, khadi and village industries

Dharmapuri Sugar mills

Dindigul Tannery, lock and safe manufacturing, food processing industries

Erode Sugar mills, poultry farms, handloom and powerloom, leather

Kanchipuram Textiles

Kanyakumari Fisheries

Karur Paper, textile, sugar, bus body building

Krishnagiri Granite processing units

Madurai Chemical, agro based, mechanical engineering, glass ceramics, hosiery, leather

Nagapattinam Cottage industries and handicrafts

Namakkal Poultry, textile weaving, truck body building

Perambalur Cement

Pudukkottai Straw-based and agro-based industries, cashew


13

Key industries – district-wise … (2/2)

District Industries

Ramanathapuram Spinning mills

Salem Mineral-based industry (steel), sandalwood, dairy

Sivaganga Textiles

Thanjavur Agro-based industries such as coconut and palm oil

Nilgiris Tea

Theni Handloom, food processing, safety matches

Thoothukudi Power, match industry, chemical and fishing industries, pearls

Tiruchirapalli Textiles, engineering

Tirunelveli Mineral-based industry

Thiruvallur Fertilisers, refineries

Tiruvannamalai Spinning mills, textile mills

Tiruvarur Khadi and village industries

Vellore Leather and leather-based industries

Villupuram Sugar

Virudunagar Textile mills, cement factories, match and fireworks, printing


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Skilled as well as unskilled labour is available in the state

… (1/2)

• Over 85 per cent of the workforce are main workers.*

• Ample workforce availability (both skilled and unskilled) makes Tamil Nadu an attractive

investment destination.

• According to a study conducted by the Confederation of Indian Industry (CII) in 2006, the state

must create additional educational infrastructure to train 80,000 students annually over the

following decade through public-private partnerships.

* Main workers are those workers who work for the major part of the year, i.e., 296 days as against marginal workers who work for less

than six months

Tamil Nadu September 2009AVAILABILITY OF SOCIAL AND PHYSICAL INFRASTRUCTURE IN THE STATE

16

Skilled as well as unskilled labour is available in the state

… (2/2)

Employment exchange offices in Tamil Nadu as of 2007-08

Employment exchange offices 35

Number of people registered on the employment exchange 4,958,231

Registration during the period 1,060,168

Placements during the period 36,363

Employment in public sector (status up to September 30, 2007)

Central government 225,839

State government 587,111

Central quasi-government 178,805

State quasi-government 333,734

Local bodies 174,039

Source: Department of Employment and Training, Chennai


17

Social infrastructure in the form of educational institutes and

medical institutions is strong

Education infrastructure

• Primary education is strong in the state, with about 5,426,610 students joining primary schools in

2007–08.

• Higher education is well developed in the state with 296 engineering colleges, 264 polytechnics, 669

industrial training institutes and 1,150 arts colleges.

• Private participation in technical and vocational education is being encouraged.


18

Social infrastructure in the form of educational institutes and

medical institutions is strong

Medical infrastructure

• Tamil Nadu has about 318 hospitals, 8,706 health sub-centres, 1,421 primary health centres and 215

dispensaries for modern medicine.

• The daily average in-patient and out-patient strength is about 16,000 and 185,000, respectively.

• For the period 2002–06, life expectancy at birth for males was 65 years and for females was 67.4 years,

as against the all-India figures of 63.7 years and 66.9 years, respectively.

• The state exhibits better health ratios as compared to the national average.


19

• Rural bank branches 1,654

• Semi-urban bank branches 15,362

• Urban bank braches 23,152

• Primary agricultural credit societies 4,892

• Indian commercial banks 5,727

• The banking network in Tamil Nadu has a

deposit mobilisation of over US$ 30 billion and

credit disbursement of over US$ 33 billion.

• During 2007-08, with the addition of 5,403

commercial bank branches, deposit mobilisation

and credit disbursement recorded an increase of

21 per cent and 30 per cent, respectively.

• Tamil Nadu has the highest credit-deposit ratio

in the country, amongst all states. The credit-

deposit ratio was 108.9 per cent in 2008–09.

Tamil Nadu has one of the best infrastructure for collection

of savings and disbursal of credit


Source: Reserve Bank of India

Financial institutions in Tamil Nadu

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Transport infrastructure is adequate and is also being ramped

up … (1/4)

• Tamil Nadu is one of the first states in India to achieve 100 per cent metalled connectivity of rural areas.

• Road density is 1,588 km./1,000 sq. km. against the national average of 1,115 km./1,000 sq. km.

• Chennai is one of the four nodes of the Golden Quadrilateral Project that links other cities such as

Delhi, Kolkata and Mumbai with Chennai.

• The total length of roads in the state as of December 2008 was 192,319 km.

• To upgrade road infrastructure, the state government is implementing a World Bank funded project at a

cost of US$ 500 million.


Roads

21


up … (2/4)

• Tamil Nadu has two international airports at Chennai and Trichy, while domestic airports are located

at Chennai, Coimbatore, Tuticorin and Madurai.

• An import cargo complex is coming up in a 27,000 sq. m. area at the Chennai airport, which is

expected to be ready by July 2010.

• The Chennai international airport is the first international airport to be awarded the ISO-9001-2000

certification. Construction work on a new passenger terminal at the airport has begun. The terminal,

with a planned capacity of 10 million passengers, is scheduled to be ready by 2011.

• The Chennai airport has an electronic data interchange (EDI) facility for customs clearance.


Civil Aviation

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up … (3/4)

• Tamil Nadu has a well-established, 5,911-km. long network, with a track density of 32.2 km per 1,000

sq. km.

• The main railway junctions include Chennai, Coimbatore, Madurai and Tiruchirapalli.

• Chennai has a well-established suburban railway network that connects suburban regions and

neighbouring cities. The Mass Rapid Transportation System (MRTS), which is a part of the suburban

railway network, connects various suburban localities.

• The state has 541 railway stations.


Railways

23


up … (4/4)

• Tamil Nadu has three major ports at Chennai, Ennore and Tuticorin, apart from 15 minor ports.

• 0.81 million tonnes of traffic were handled at the 15 minor ports in Tamil Nadu during 2006–07.

• Chennai port handled 19,617,000 tonnes of traffic between April and July 2009, and 57,491,000

tonnes between April 2008 and March 2009.


Ports

24

The state has a robust telecommunications infrastructure

Telecommunications

• The state had 2,030 telephone exchanges as of March 31, 2009. According to estimates by Telecom

Regulatory Authority of India (TRAI), there were 2.26 million wireline connections and 27.7 million

wireless connections in Tamil Nadu as of March 2009.

• In terms of average wireless connections per 100 persons, Tamil Nadu is above the national average

and accounted for 9 per cent of India‘s net wireless user base as of March 31, 2009.

• The Bharti-Sing Tel submarine cable link between Chennai and Singapore has a bandwidth of 8.4

terabits per second; a second submarine cable, of 5.12 terabits per second bandwidth, between

Chennai and Singapore has been commissioned by VSNL.

• The state has 12,115 post offices offering postal services alone and 3,504 post offices offering both

postal and telegraph services.


25

The state‘s IT sector has benefitted from proactive

government policies

InformationTechnology

• More than 1,400 IT companies operate in Tamil Nadu, employing more than 150,000 professionals.

• Chennai is the second leading software exporter in India, after Bangalore.

• The Government of Tamil Nadu promoted information technology park — the TIDEL Park with

1.2 million sq. ft. of space — catalysed the development of the Information Technology Corridor of

Chennai.

• The key projects in Tamil Nadu are the IT Park at Ambattur in Chennai and the IT Park at

Coimbatore.

• Tamil Nadu was one of the first states in the country to announce a separate IT policy.


26

The state‘s IT sector has benefitted from proactive

government policies

InformationTechnology

• Tamil Nadu was one of the first states in the country to enact a comprehensive policy for non-exclusive use

of the public right of way by organisations in the private/public sectors for laying high bandwidth optic fibre

cables throughout the state.

• Software companies (including services and training) in Tamil Nadu are assured of uninterrupted power

supply. These companies do not have to follow pollution control regulations and do not come under the

purview of the Factories Act 1948. The companies are also exempted from certain provisions of the Tamil

Nadu Shops & Establishment Act.


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Steps are being taken to make the state power sufficient by

2011

Power

• The state has an installed generation capacity of 14,300 MW, comprising state, Central and privately-

owned power plants. The state-owned power plants have a generating capacity of 5,614 MW — four

thermal stations with a generating capacity of 2,970 MW, four gas turbine stations with a generating

capacity of 441 MW, 35 hydro stations with a generating capacity of 2,093 MW and renewable energy

sources with a generating capacity of 110 MW.

• The state has a power shortage that ranges from 1,500 MW to 2,000 MW on a daily basis.

• To strengthen the power supply situation, Tamil Nadu has lined up a slew of power projects of more

than 14,000 MW generation capacity in both the public and private sectors. These projects are

expected to make the state power sufficient by 2011 and power surplus after 2012.


28

Special emphasis on building up industrial infrastructure

Infrastructure Details

Madras export processing

zone (MEPZ) — special

economic zone

Established in 1984 to promote FDI. One of the seven EPZs set up by the Government

of India. Multi-product zone housing 110 functional units. Another 24 units are coming

up.

SEZs by SIPCOT Two hi-tech SEZs in Kanchipuram district for electronic/telecom hardware and support

services, leather sector SEZ in Vellore district, footwear SEZ in Kanchipuram district,

engineering products SEZ in Erode district for pump sets, motors, foundry, etc.,

automobile/auto ancillary SEZ in Tiruvanamalai district, transport engineering goods SEZ

in Tirunelveli district.

SEZs by TIDCO TIDCO has received in-principle approval from the Government of India for establishing

multi-purpose SEZs at Nanguneri (Tirunelveli district), Ennore (near Chennai), Hosur

(Krishnagiri district) and Perambalur. Integrated Township IT SEZ promoted by

RAKINDO Developers Pvt. Ltd. and TIDCO jointly at Coimbatore. India-Singapore SEZ

coming up at Tiruvallur district. Two IT and ITeS SEZs coming up at TIDEL Park, Chennai.

Apparel parks Two apparel parks have been set up, one at Tirupur and other at Irungattukottai near

Chennai at a total project cost of US$ 133 million, including a Government of India

assistance of US$ 6.5 million. The Netaji Apparel Park in Tirupur has commenced

production. Efforts being made to establish an apparel park at Anthiyoor.

Hi-tech weaving parks Two hi-tech weaving parks inaugurated at Kumarapalayam and Palladam. Another hi-tech

weaving park is being set up at Andipatti.


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Key nodal agencies in Tamil Nadu … (1/2)

Tamil Nadu Industrial

Development

Corporation Ltd.

(TIDCO)

• Established in 1965 as a Government of Tamil Nadu Enterprise to promote

large-and medium-scale industries in Tamil Nadu.

• Currently focussing on promoting infrastructure projects, industrial parks and

special economic zones.

State Industries

Promotion Corporation

of Tamil Nadu (SIPCOT)

• Focusses on developing, marketing and maintaining industrial complexes/parks

and growth centres, and implementing infrastructure development schemes.


Investment Corporation

Ltd. (TIIC)

• Provides financial assistance by way of term loans for purchase of land, plant and

machinery, and construction of buildings for setting up of new industrial units as

well as for expansion, modernisation and diversification of existing units.

• Also extends term loans to the service sector in the state.

Tamil Nadu Urban

Development Fund

(TNUDF)

• Provides project advisory, financial advisory and consultancy services to various

urban local bodies (ULBs) through its fund manager, Tamil Nadu Urban

Infrastructure Financial Services (TNUIFSL).

Tamil Nadu September 2009POLICY FRAMEWORK AND INVESTMENT APPROVAL MECHANISM

31

Key nodal agencies in Tamil Nadu … (2/2)

Tamil Nadu Urban

Finance Infrastructure

Development

Corporation (TUFIDCO)

• Extends financial assistance to urban infrastructure schemes in Tamil Nadu.

Electronics Corporation

of Tamil Nadu Limited

(ELCOT)

• Nodal agency for information and communication technology projects for the

Government of Tamil Nadu.

• Focusses on three broad areas, namely, IT promotion for the state of Tamil Nadu,

IT procurement for the Government of Tamil Nadu and e-governance

excellence within Tamil Nadu.

Tamil Nadu Small

Industries Development

Corporation

(TANSIDCO)

• TANSIDCO, an undertaking of the Government of Tamil Nadu, plays a catalytic

role in the promotion and development of small-scale industries and in the

speedy setting up of industries throughout Tamil Nadu.


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Key nodal agency for single-window clearance


Guidance and Export

Promotion Bureau

(Guidance Bureau)

State-level nodal agency for single-window clearance

Purpose

• To attract industrial projects and promote investments in Tamil Nadu.

• To function as the Single Window Facilitation and Documentation Centre for

major investment proposals.

• To provide comprehensive information to investors about federal and state

government policies, infrastructure, taxation, investment opportunities, etc.

• To function as the Tamil Nadu non-resident Indian (NRI) consortium cell to

facilitate NRI investments in the state.

• To monitor implementation of foreign investment proposals approved by the

Government of India.

Composition • Funded by a corpus fund created by an equal annual contribution by five

organisations, namely TIDCO, SIPCOT, TIIC, ELCOT and SIDCO.


33

Attractive investment climate being created in the state

through investment friendly policies, including sector

specific policies … (1/8)

New Industrial Policy 2007

Aims to stimulate further industrial development, attract investment, facilitate building-up new manufacturing

capacity and enable global manufacturing competence and competitiveness of local industry

Key initiatives under this policy include the following:

• Creating two million additional jobs by 2011 and positioning Tamil Nadu as the most attractive investment

destination.

• Raising the contribution of the manufacturing sector to GSDP to 27 per cent by 2011.

• Facilitating industry in capturing a larger share of the world trade in goods/services.

• Reforming regulatory processes and removing procedural hurdles in business.

• Enabling integration of existing industrial clusters with global supply chains.

• Building efficient and dependable industrial infrastructure.

• Developing human resources and intellectual capital to world standards.

• Encouraging symbiosis with small and medium enterprises (SMEs) in major industry clusters.


34




Micro, Small and Medium Industries Policy 2008

Aims to develop micro, small and medium enterprises (MSMEs) in the state

• The policy focusses on initiatives to be taken for the development of MSMEs in the state, including

infrastructure development, incentive schemes, technology development, subsidy schemes for units located in

industrially backward areas, skill development, marketing support, deregulation and simplification,

administrative reforms and rehabilitation of sick enterprises.


35




Tamil Nadu IT Policy 2002

Aims to sustain the current momentum in IT and accelerate the twin benefits of economic prosperity and

increased employment

Key focus areas for 2009–10 under this policy include:

• Establishing an e-governance training academy to train officers and staff of all government departments.

• Establishing IT-ITeS SEZs at Sholinganallur and Perumbakkam, near Chennai.

• Establishing IT parks in Coimbatore, Madurai, Trichy, Salem, Hosur, Vellore and Tirunelveli.

• Establishing a national centre of excellence called Indian Institute of Information Technology, Design and

Manufacturing.

• New schemes introduced for the year 2009–10 under this policy include:

• Skill building initiatives for e-governance programmes and repositioning investment strategy in the new

world economic environment.

• Production of e-lectures for subjects offered by the Tamil Virtual University.


36




Tamil Nadu ITES Policy 2005

Aims to facilitate the growth of ITeS sector

Key initiatives include:

• Attracting maximum global ITeS investments to Tamil Nadu.

• Developing human resource specific to the ITeS Sector.

• Creating world-class infrastructure for IT and ITeS and a framework for protection of intellectual property

and data.

• Generating employment and other ITeS opportunities in the major cities of the state.

• Providing a conducive environment for the sector by reducing regulations and increasing opportunities.


37




Tourism Policy 2002

The policy aims at attracting more tourists, making them stay for a longer period and providing them with

world-class infrastructure facilities

Key focus areas for 2009–10:

• Responsible tourism to inculcate the responsibility of the local populace (hosts) towards the ecosystem, best

practices and caring for guests, and also encouraging tourists to be more responsive to culture and customs.

• Beautification of select tourism destinations.

• Development of the eco-tourism circuit and adventure tourism.

• Promotion of rural tourism.

• Marketing of the newly introduced ―hop on-hop off‖ tours in Chennai.

• Participation in international and national travel marts, organisation of fairs and festivals.


38




Bio Technology Policy 2001

Focusses on providing modern processes together with traditional biotechnology products, especially in the

area of industrial and food enzymes

Key initiatives under this policy include:

• Focus on medical/human and animal healthcare, agriculture-food, environment and industrial products.

• Creation of biotechnology enterprise zones (bio-valleys).

• Regulatory facilitation for establishing a biotech entity for commencing research activity.

• Strengthening of human resources pool.

• Establishment of an emerging technologies fund for biotechnology.

• Establishment of the Tamil Nadu Biotechnology Board.


39




Tamil Nadu SEZ policy 2003

Focusses on providing an internationally competitive and hassle-free environment for exports

Key initiatives under this policy include:

• Providing legislative support to SEZs.

• Providing adequate water supply to SEZs.

• Ensuring continuous power supply of required quality to SEZ units.

• Providing single-window clearance to all SEZ units.


40




Textiles Policy 2006–2007

Aims at facilitating and promoting growth of the textile industry, achieving global standards in product quality,

contributing more to exports and encouraging textile clusters

Thrust areas include:

• Production of textiles to cater to the quantity, quality and price requirements of both domestic and

international markets, keeping in view industry's potential for employment.

• Identification of markets, products for each market, inputs required, technology, human and financial

resources.


41

Two-tier single-window mechanism (SWM) exists to facilitate

speedy implementation of industrial projects … (1/3)

SWM structure inTamil Nadu

State-level industrial

promotion board

Under the chairmanship of

Chief Minister

of Tamil Nadu

Chief Secretary

to Government

of Tamil Nadu

Tamil Nadu

Industrial

Guidance &

Export

Promotion

Bureau

(Guidance

Bureau)

Nodal agency

Project approvals

authority


42



• Single-window clearance mechanism established to avoid procedural delays and accord all pre-project

clearances at the state government level:

• Project Approvals Authority (PAA) under the Chief Secretary to government to monitor and

hasten projects with investment less than US$ 0.02 billion.

• State-level Investment Promotion Board (SIPB) under the chairmanship of the Chief Minister of

Tamil Nadu to monitor and expedite all mega projects exceeding US$ 0.02 billion.

• Common application form (CAF): The Government of Tamil Nadu has introduced a common

application form to be filled and filed by investors with the Documentation and Clearance Center

(DCC) in the Guidance Bureau.


43



Tamil Nadu Business Facilitation Bill

• The Tamil Nadu government introduced a new business facilitation bill in July 2009 to facilitate a single-window

clearance system with the statutory powers to hasten project approvals.

• As part of the legislation, the state government will constitute two authorities, one at the state level and the

other at the district level, for the speedy issue of various clearances required for setting up industrial projects.

• The bill also seeks to facilitate entrepreneurs by furnishing self-certification at the time of submitting the

application form to the authority.


44

Time estimates and agencies concerned for starting a business

in Tamil Nadu

List of approvals and clearances

required

Departments to be consulted Estimated time taken (days)

Incorporation of the company Registrar of Companies

Single-Window Clearance

Guidance (state‘s single-

window clearance facility)

clears investment proposals in

30 days on an average. The

single-window obtains all

approvals necessary for the

investment proposal within the

aforementioned time

Registration, Industrial

Entrepreneurs Memorandum (IEM),

Industrial licences

District Industry Centre

Allotment of landTamil Nadu Department of Industries/State

Industrial Development Corporation

Permission for land use

Tamil Nadu Department of Industries/Tamil

Nadu Industrial Development Corporation,

Department of Town and Country Planning

Site environmental approvalsTamil Nadu Pollution Control Board (TNPCB)

and Union Ministry of Environment and Forests

No-objection certificate and

consent under water and pollution

control acts

Tamil Nadu Pollution Control Board

Approval of construction activity

and building plan

Department of Town and Country Planning

(DTCP)

Sanction of power Tamil Nadu Electricity Board (TNEB)

Registration under states sales tax

act and central and state excise acts

Sales tax department, Central and state excise

departments


45








46


Cost parameter Cost estimate Source

Cost of land US$ 10 per sq. mt.Average cost of land at various

industrial parks in Tamil Nadu

Hotel costs (per room

night)US$ 50 to US$ 150 Leading hotels in the state

Office space rent

(per sq. ft./month)US$ 0.8-1.5 Discussions with property dealers

Cost of residential space

US$ 200 to US$ 550 per month for a 2,000 sq. ft.

house

(Rates depend on the type of structure and

location)

Discussions with property dealers

Power cost Commercial and industrial use: 10 cents per kWh TNEB

Cost of water Commercial and industrial: 30 cents per1,000 litresTamil Nadu Water Supply and

Drainage Board

Tamil Nadu September 2009COST OF DOING BUSINESS

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48

Key industries that have developed in the state are a result of the

policy thrust of the government and several factor advantages

Medium HighLow

Medium

High

Automobiles

& ancillaries

Banking and

financial

services

Cement

Mineral-based

Engineering

Chemicals

and

fertilisers

Agro-based

Tourism

Information

Technology

Leather

Electronics

manufacturing

Po

licy t

hru

st

Factor advantage

Textiles

*Factor advantages include benefits due to geographical

location and availability of factors such as talent pool, natural

resources and capital

Tamil Nadu September 2009KEY INDUSTRIES AND PLAYERS

49

Overview of the textile industry in Tamil Nadu

Overview

• Tamil Nadu is known as the ―yarn bowl‖ of the country.

• Tamil Nadu accounts for 47 per cent of the country‘s spinning

capacity and nearly 60 per cent of yarn exports.

• Tirupur is known as ‗knitting city‘ and has about 3,000

exporters.

• Tamil Nadu has a large cotton textile industry cluster that

accounts for about 50 per cent of India‘s production capacity.

The state added 2.3 million spindles between 2001 and 2009.

• Out of 1,875 large and medium textile mills in India, 858 are

located in Tamil Nadu. Similarly, out of 1,146 small units in

India, 904 are located in Tamil Nadu.

• Chennai is known for the export of woven garments with

about 2,400 registered exporters.

• The major textile centres are Coimbatore and Tirupur. Karur,

Madurai and Rajapalayam are the other textile centres in the

state.

Key Players

• Madura Coats Ltd. (MCL)


50

Key players in the textile segment

MCL

• MCL was started in 1974 as a result of the merger of Madura Mills, J & P Coats and A & F Harvey.

• MCL supplies to clients such as Liz Clairborne, Lee, Levis, Gap, Nike, Adidas and Tommy Hilfiger,

among others.

• It operates through two divisions — Coats India and Global Thread Supply India.


51

Overview of the automotive and auto components industries

in Tamil Nadu

Overview

• Chennai is fast emerging as a major export hub for cars to

south-east Asia.

• Share of Tamil Nadu in the Indian automotive industry is 30

per cent.

• Share of sub-sectors in the auto industry: auto components

account for 30 per cent, trucks for 17 per cent, passenger cars

for 20 per cent and two wheelers for 20 per cent.

• Tamil Nadu‘s strong performance in the auto industry is due

to the presence of skilled manpower, coupled with the state‘s

strong engineering industry background.

• A CII study conducted in 2006 on the Tamil Nadu auto

industry concluded that the Tamil Nadu auto industry would

generate as many as 500,000 additional jobs over the following

10 years.

Key Players

• Ford

• Hyundai

• Mitsubishi

• Ashok Leyland

• Sundram Fasteners

• Rane TRW

• Visteon

• PRICOL


52

Key players in automotive industry … (1/2)

Ford Motor Company

• Established in 1995 with an investment of US$ 351.1 million

under the single-window policy, a wholly-owned subsidiary

of Ford Motor Company.

• Ford‘s plant, located in Maraimalai Nagar near Chennai, has

the capacity to produce 100,000 vehicles per annum. The

company plans to increase its car production capacity to

200,000 vehicles per annum by 2010.

Hyundai Motor India Limited (HMIL)

• Established in 1997 with an investment of US$ 614 million,

the company is a subsidiary of Hyundai Motor Company.

• The plant in Chennai stands on a plot of over 500 acres and

has been built with an initial investment of more than US$

0.5 billion. It presently markets over 18 variants of passenger

cars across four models.

• HMIL registered total sales of 489,328 vehicles in 2008, an

increase of 49.6 per cent over 2007. In the domestic market,

it clocked a growth of 22.4 per cent with sales of 245,387

units in 2008.


53

Key players in automotive industry … (2/2)

Mitsubishi Motors

• Present in India through a tie up with Hindustan Motors.

• Has set up a state-of-the-art manufacturing unit at Tiruvallur,

near Chennai, at a cost of US$ 71 million.

• The main functional areas of the facility are the body (weld)

shop, paint shop, assembly shop and quality line.

Ashok Leyland

• Established by the Hinduja group in 1948, the company

manufactures commercial vehicles.

• It had a turnover of US$ 1.5 billion in 2008–09.

• It is India‘s largest exporter of medium and heavy duty

trucks.

• It was the first Indian automobile company to be awarded

the ISO 9002 certification, in 1993.

• It has taken over the truck business unit of Czechoslovakia-

based AVIA, giving it a foothold in the highly competitive

European truck market.

• Its mother plant is located at Ennore, near Chennai.


54

Key players in auto-components industry … (1/2)

Sundram Fasteners

• It is part of the TVS Group, headquartered in Chennai.

• It was the first Indian company to get the ISO 9000

certification.

• It was the first Indian component manufacturing company to

have won the prestigious Total Productive Maintenance

(TPM) Excellence and Consistency Award from the Japan

Institute of Plant Maintenance.

Rane TRW

• Part of the Rane Group, the company has a manufacturing

facility at Alwarpet, Chennai.

• It is involved in the manufacture of steering systems and seat

belts.

• Its two divisions have a joint venture partnership with TRW

Automotive JV LLC, USA.

• The company won the Deming Prize in 2005.


55

Key players in auto-components industry … (2/2)

Visteon

• It started operations with two projects on a 50-acre facility

at Maraimalai Nagar, near Chennai, in 1999 under the single-

window policy of the government.

• Visteon‘s customer base includes the 19 largest vehicle

manufacturers in the world. It has a global ecosystem with

over 170 technical, manufacturing, sales and service facilities

in 26 countries.

Premier Instruments & Controls Ltd.

• Headquartered in Coimbatore, the company was established

in 1974 and has factories in Uttaranchal, Gurgaon and Pune.

• It has seven factories, 50 product offerings and 4,600

employees.

• It has a 53 per cent share in the automotive instruments

market.

• It is certified ISO 9001 since 1993 and QS 9000 since 2001.


56

Overview of the engineering industry in Tamil Nadu

Overview

• Strong engineering base exists in Tamil Nadu (concentrated in

Chennai, Coimbatore and Salem).

• Exports of engineering products from Tamil Nadu were worth

around US$ 320 million in 2007.

• The strong engineering base consists of a network of nearly

3,000 units, employing over 0.25 million skilled workforce,

making high-quality inputs such as castings and forgings, and a

wide variety of ancillary products.

Key Players

• Amalgamations Group

• BHEL

• Caterpillar

• Murugappa Group

• LMW

• Sanmar Group

• TVS Group


57

Key players in the engineering industry … (1/4)

Amalgamations Group

• One of the largest engineering conglomerates, the group

comprises over 43 companies, 27 manufacturing plants and a

workforce of more than 15,000.

• The group‘s primary focus is engineering and it manufactures

products for various sectors such as farm mechanisation,

automotive components, diesel prime movers, light and

general engineering, etc.

Bharat Heavy Electricals Ltd.

• Established in the late 1950s, BHEL is the largest engineering

and manufacturing enterprise in India in the energy-related

infrastructure sector.

• Principal activities are to manufacture and distribute

electrical, electronic, mechanical and nuclear power

equipment.

• It has a wide network of 14 manufacturing divisions, four

power sector regional centres, over 100 project sites, eight

service centres and 18 regional offices.


58


Caterpillar India Pvt. Ltd.

• The Indian company is a wholly-owned subsidiary of

Caterpillar Inc., which is headquartered at Illinois, USA.

• It manufactures a range of world-class earthmoving

equipment comprising dumpers, front-end loaders, backhoe

loaders, crawler tractors and hydraulic excavators.

• The company has its plant at Melnallathur, Thiruvallur

district.

Murugappa Group

• A US$ 3 billion conglomerate, headquartered in Chennai, the

group has interests in engineering, abrasives, sanitary ware,

fertilisers, finance, bio-products and plantations.

• With 29 limited companies spread across 13 states in India,

the Murugappa Group is one of India‘s oldest business

houses.

• Some of the group companies include Carborundum

Universal Ltd, Cholamandalam Investment & Finance Co Ltd,

Coromandel Fertilizers Ltd, EID Parry (India) Ltd, Godavari

Fertilizers & Chemicals Ltd, Parry Agro Industries Ltd and

Tube Investment of India Ltd.


59


Lakshmi Machine Works

• Based at Coimbatore, the company is a leading textile

machinery manufacturer in India and one amongst the three

in the world to produce the entire range of spinning

machinery.

• Caters to around 60 per cent of the domestic market and

has emerged as the leader in the export of textile

machinery.

• Has diversified into computerised numerically controlled

(CNC) machine tools and is a brand leader in manufacturing

customised products.

Sanmar Group

• Headquartered in Chennai, the company has set benchmarks

for global partnerships in engineering, chloro-chemicals,

specialty chemicals and life insurance.

• The group also has a presence in shipping and software.


60


TVS Group

• Established in 1911, TVS is India‘s leading supplier of

automotive components and one of the country‘s leading

business conglomerates.

• The group comprises over 29 companies that operate in

diverse fields such as automotive component manufacturing,

automotive dealerships and electronics.

• The group has a turnover of over US$ 4 billion and is the

largest manufacturer of automotive components in the

country, with a workforce of over 25,000.

• TVS Motors, Brakes India, Lucas TVS Ltd, Sundram Fasteners

and Wheels India are some of the major subsidiaries of the

group.


61

Overview of the IT Industry

Overview

• Tamil Nadu has emerged as a centre for IT investments.

• Software exports from Tamil Nadu amounted to US$ 7.9

billion in 2008–09, registering a 32 per cent year-on-year

growth. The growth rate during 2007–08 was 37 per cent over

the previous year.

• The portfolio consists of application software and system

software, which has the highest share of around 70 per cent;

ITeS and BPO with 13 per cent; communication software, VLSI

design and Web solutions with a share of 8 per cent; IT

consultancy with a contribution of 6 per cent; and product

development with a contribution of 3 per cent.

• In 2008–09, the number of units registered with the Software

Technology Parks of India (STPI), Chennai, was 1,683.

Key Players

• CTS

• Computer Associates

• Xansa


62

Key players in the IT industry … (1/2)

CTS

• Founded in 1994 in Chennai, the company employs over

40,000 people and has global delivery centres in Asia, Europe

and North America.

• The company holds the SEI CMM Level 5, ISO 9001 and the

P-CMM Level 5 certifications.

Computer Associates

• CA set up its Global Technical Support Centre at Chennai in

2000, which is involved in providing technical support to its

global clientele.

• The centre currently operates with an employee strength of

over 200 professionals.


63

Key players in the IT industry … (2/2)

Xansa

• Established with an initial investment of over US$ 47 million,

the company was set up under the single-window policy.

• Its services include business and technology consulting, IT

implementation, IT outsourcing and BPO.

• Xansa‘s Chennai campus is spread over 27 acres and has the

potential to house up to 6,000 employees.

Polaris

• One of India‘s leading solutions and service providers, the

company has a focus on the banking, financial services and

insurance sectors.

• It is headquartered in Chennai.

• Polaris is the world‘s first CMMi (Capability Maturity Model

Integrated) Level 5 certified company.


64

Overview of the cement industry in Tamil Nadu

Overview

• Tamil Nadu is a leading cement manufacturer in the country,

ranking fourth in cement production.

• Tamil Nadu had a cement production capacity of 18.23 million

tonnes per annum (mtpa) during 2007–08, registering a

growth of 5.5 per cent over the previous year.

• In 2007–08, the cement production in the state was 17.92

mtpa against 16.48 mtpa during the previous year.

• The state reported a cement consumption of 14.46 mtpa, and

cement and clinker exports of 0.01 mtpa in 2007-08.

• The production of ready-mix concrete is a large industry in

the state.

Key Players

• ACC

• Madras Cements

• India Cements

• Chettinad Cements

Corporation


65

Key players in the cement industry … (1/2)

ACC

• ACC is the largest cement manufacturer in the country with

12 per cent market share and 22.63 mtpa capacity.

• The company invested around US$ 400 million in 2008–09

and plans to invest US$ 350 million in the current fiscal for

capacity expansion.

Madras Cements

• Flagship of the Ramco Group, the company has an installed

capacity of 10 mtpa.

• It has five cement factories and over 2,400 employees.

• It has two facilities in Tamil Nadu.


66

Key players in the cement industry … (2/2)

India Cements

• The company is the largest producer of cement in south

India.

• In 2007–08, total clinker production was 72.1 lakh tonnes,

while total cement production was 92.3 lakh tonnes.

• It has three plants in Tamil Nadu and four plants in Andhra

Pradesh, which cater to all major markets in south India and

Maharashtra.

Chettinad Cements Corporation

• Established in 1962, the company has plants at Puliyur, Karur

district, and at Karikalli, Dindigul district.

• The Karur plant has an installed capacity of 0.6 mtpa and the

Karikalli plant has an installed capacity of 1.20 mtpa.


67

Overview of the banking and financial services industry

Overview

• Chennai is the financial hub of south India and major Indian

financial institutions and foreign banks have a strong presence

there.

• Several banks have their back offices in Chennai.

Key Players

• ABN Amro

• Scope International

• World Bank


68

Key players in the banking and financial services industry

ABN Amro

• The Dutch-based bank set up its BPO division, the Global

Support Centre, in Chennai in 2002.

• It has achieved growth in cash lockbox (700 clients) and

international netting (10 clients).

• The centre provides both banking and non-banking services.

Scope International

• Wholly-owned subsidiary of Standard Chartered Bank, UK,

the company is based in Chennai and has operations in

shared services centres.

• It has grown to over 7,000 employees servicing 70 countries

in the Standard Chartered Group within a span of one year.

World Bank

• Commenced its BPO operations at Chennai in 2001 with an

initial workforce of 80.

• Many of the high value-added back office activities of the

bank are now based in Chennai instead of Washington.


69

Overview of the chemicals industry in Tamil Nadu

Overview

• The chemicals industry is a prominent industry in the state of

Tamil Nadu and is mainly situated in Manali (situated on the

outskirts of Chennai), Cuddalore, Panangudi (Nagapattinam)

and Tuticorin.

Key Players

• Orchid Chemicals &

Pharmaceuticals

• Shasun Chemicals and

Drugs


70

Key players in the chemicals industry

Orchid Chemicals and Pharmaceuticals

• The company was established in July 1992 as a 100 per cent

export-oriented unit ( EOU).

• It currently employs over 4,200 people, of which over 700

are scientists, technologists and other professionals.

• It has two manufacturing sites at Alathur, Chennai, and

Aurangabad, and three manufacturing sites for dosage forms

(at Irungattukottai and Alathur), besides two R&D centres (at

Sholinganallur and Irungattukottai).

Shasun Chemicals and Drugs

• Incorporated in 1976, it is headquartered in Chennai with a

multi-product production facility at Cuddalore.

• It manufactures active pharmaceutical ingredients (APIs),

their intermediates and enteric coating excipients, and has a

significant presence in some key generics.


71

Annexure

Socio-economic classification (SEC) of urban and rural households

Urban SEC grid

Education/Occupation

Illit

era

te

School up t

o four

year

s/

litera

te, but

no form

al

schoolin

g

School up t

o fiv

e t

o n

ine

year

s

SSC

/HSC

Cert

ific

ate c

ours

e, but

not

grad

uat

e

Gra

duat

e/p

ost

gra

duat

e

genera

l

Gra

duat

e/p

ost

gra

duat

epro

fess

ional

Unskilled workers E2 E2 E1 D D D D

Skilled workers E2 E1 D C C B2 B2

Petty traders E2 D D C C B2 B2

Shop owners D D C B2 B1 A2 A2

Entrepreneurs: employee none D C B2 B1 A2 A2 A1

Entrepreneurs: employee < 10 C B2 B2 B1 A2 A1 A1

Entrepreneurs: employee > 10 B1 B1 A2 A2 A1 A1 A1

Self-employed professionals D D D B2 B1 A2 A1

Clerical/salesman D D D C B2 B1 B1

Supervisory level D D C C B2 B1 A2

Officers/executives: junior C C C B2 B1 A2 A2

Officer/executive: middle/senior B1 B1 B1 B1 A2 A1 A1


72

Annexure

Socio-economic classification (SEC) of urban and rural households

Education

Type of house

Pucca

Semi

pucca Kuccha

Illiterate R4 R4 R4

Literate but no formal

schoolR3 R4 R4

Up to fourth standard R3 R3 R4

Fifth to ninth standard R3 R3 R4

SSC/HSC R2 R3 R3

Some college but not

graduateR1 R2 R3

Graduate/post graduate

(general)R1 R2 R3

Graduate/post graduate

(professional)R1 R2 R3

Rural SEC grid


73

Annexure

Exchange Rate

Year INR equivalent of one US$

200046.6

200148.3

200248.0

200345.6

200443.7

200545.2

200645.0

200742.0

200840.2

200946.0


74


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