South In­dian States sus­tain in­dus­trial in­vest­ment sheen

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The in­dus­trial in­vest­ment cli­mate in the South­ern States, es­pe­cially in Andhra Pradesh, Te­lan­gana, Kar­nataka and Tamil Nadu, are glob­ally en­dorsed to be very good. Th­ese states are able to sus­tain that sheen. The re­cent ease of do­ing busi­ness state rank­ings, jointly pre­pared by the World Bank and the Depart­ment of In­dus­trial Pol­icy and Pro­mo­tion (DIPP, have placed Andhra Pradesh, Te­lan­gana and Kar­nataka among the Top Achiev­ers. Tamil Nadu is among the Achiev­ers, while Ker­ala is placed among the Aspir­ers. In the rank­ing, Andhra Pradesh is at the top, fol­lowed by Te­lan­gana in the sec­ond.

In­dia, in the re­cent years has at­tracted wide­spread at­ten­tion for its rapidly grow­ing econ­omy. In ad­di­tion to na­tional clus­ters such as IT and Busi­ness Ser­vices, In­dia boasts of an evolv­ing auto clus­ter. It pro­duces more than 20 mil­lion ve­hi­cles an­nu­ally, plac­ing it among the top 5 ve­hi­cle pro­duc­ing na­tions. Nearly, ev­ery ma­jor OEM has set up op­er­a­tions in In­dia, and thou­sands of lo­cal firms have sprouted to serve them. Tamil Nadu is one of In­dia’s lead­ing man­u­fac­tur­ing states and is home to one of the top auto clus­ters in the coun­try. The state is a home to 6 for­eign and 2 do­mes­tic OEMs, and more than 100 lo­cal sup­pli­ers. The State ben­e­fits from favourable in­vest­ment con­di­tions and has seen rapid ex­pan­sion since eco­nomic lib­er­al­i­sa­tion. Chen­nai, the cap­i­tal city of Tamil Nadu, is de­scribed as the ‘Detroit of In­dia’ due to the num­ber of OEMs and sup­pli­ers present in and around the city. Al­though Tamil Nadu is cur­rently a leader in the In­dian au­to­mo­tive in­dus­try, it risks los­ing its com­pet­i­tive ad­van­tage due to var­i­ous in­ter­nal and ex­ter­nal fac­tors. More con­certed ac­tions are re­quired to sus­tain Tamil Nadu’s com­pet­i­tive­ness, The state gov­ern­ment has to cre­ate poli­cies to en­cour­age R&D and at­tract more tal­ents.

Andhra Pradesh Chief Min­is­ter N Chan­drababu Naidu said that, the fo­cus of the state now is on trans­form­ing Anan­ta­pur and Ray­alaseema re­gion in the state, into a ma­jor au­to­mo­tive hub. Naidu said the state has man­aged to at­tract $3.7 bil­lion (about Rs 25,000 crore) in­vest­ment in the au­to­mo­tive sec­tor. The Ja­panese au­to­mo­tive com­pany Isuzu, the two-wheeler ma­jor Hero Mo­to­corp, Apollo Tyres, Bharat Forge and Brakes In­dia have made AP their man­u­fac­tur­ing hubs. Amara Raja Bat­ter­ies al­ready has a big pres­ence in the state. Ashok Ley­land and Vira Va­hana are among those who are keen to in­vest there.

The lat­est ad­di­tion of Kia Mo­tors will not only make it a ma­jor an­chor in­vestor but also at­tract other man­u­fac­tur­ers to the state. Lo­cated on the Ban­ga­loreHy­der­abad High­way and close to the Chen­nai-Vizag In­dus­trial Cor­ri­dor and the Kr­ish­na­p­at­nam port, its in­fras­truc­ture is ide­ally suited for au­to­mo­tive com­pa­nies.

The drought-prone district of Anan­ta­pur has been trans­formed

into a re­new­able en­ergy hub with more than 3000 MW of wind and so­lar power gen­er­a­tion ca­pac­ity. The in­ter­link­ing of Go­davari and Kr­ishna with the Pat­tiseema project has added to the avail­abil­ity of wa­ter in the re­gion. All th­ese make it an at­trac­tive des­ti­na­tion for au­to­mo­tive com­pa­nies, he said.

About the state be­ing ranked No. 1 on Ease of Do­ing Busi­ness, he said, this has been pos­si­ble by sim­pli­fy­ing pro­ce­dures and stream­lin­ing the work process.

“Kia’s choice of Anan­ta­pur to lo­cate its plant is a vin­di­ca­tion of my ad­min­is­tra­tion’s ef­forts to boost the au­to­mo­tive sec­tor in the state. Soon, Hero Mo­to­Corp, which has signed up for in­vest­ments for a plant in the state, would com­mence works. We are also in talks with other man­u­fac­tur­ers,” Naidu said. Kia’s com­mit­ment of $1.1 bil­lion in­vest­ment would be one of the big­gest such for­eign di­rect in­vest­ments to be com­mit­ted in In­dia by an au­to­mo­tive sec­tor com­pany if you also take the in­vest­ments of its an­cil­lary com­pa­nies, he said.

Re­fer­ring to the in­vest­ments made into the state over the past three and a half years, he said so far 1946 MoUs have been signed with a po­ten­tial to­tal in­vest­ment of over Rs 13 lakh crore and em­ploy­ment of about 32 lakh jobs.

Re­fer­ring to a sur­vey by the All In­dia Coun­cil for Tech­ni­cal Ed­u­ca­tion, Naidu said it had rated AP among the top States for avail­abil­ity of em­ploy­able skills. This should also at­tract com­pa­nies look­ing to set up plants to choose AP. Apart from that Google, Das­sault Sys­tems and now Kia have in­di­cated at im­part­ing spe­cialised skills which will en­hance em­ploy­a­bil­ity, he said. The youngest state in the coun­try, Te­lan­gana, the sec­ond in ease of do­ing busi­ness rank­ings (it was the num­ber one last year) is at­tract­ing sig­nif­i­cant in­vest­ments ow­ing to a se­ries of mea­sures taken by the gov­ern­ment to pro­vide an in­vestor-friendly busi­ness en­vi­ron­ment. Eco­nomic growth and bet­ter in­fras­truc­ture avail­abil­ity have en­cour­aged pri­vate sec­tor in­vest­ments in a big way.

Te­lan­gana at­tracted to­tal out­stand­ing in­vest­ments worth Rs 5.9 lakh crore as of FY 2017. The state ac­counted for 3.3% share of to­tal in­vest­ments worth over Rs 177 lakh crore at­tracted by the top in­dus­trial states. Re­cent re­ports show that about 28% of in­vest­ment pro­pos­als were in the ir­ri­ga­tion sec­tor, fol­lowed by non-fi­nan­cial sec­tor (25%), elec­tric­ity sec­tor (18.5%) and man­u­fac­tur­ing (11%). About 370 projects with in­vest­ments worth about Rs 4 lakh crore are un­der dif­fer­ent stages of im­ple­men­ta­tion in the State.

Kar­nataka is also emerg­ing as a ma­jor au­to­mo­tive man­u­fac­tur­ing hub in In­dia. Elec­tri­fi­ca­tion of mo­bil­ity is tak­ing the cen­tre stage and the fu­ture of the au­to­mo­tive sec­tor lies in elec­tric ve­hi­cles. Kar­nataka has the ad­van­tage of be­ing the first state in the coun­try to in­tro­duce a com­pre­hen­sive and well-de­signed Elec­tric Ve­hi­cle and En­ergy Stor­age Pol­icy in 2017 to pro­vide be­spoke pol­icy ecosys­tem for this sec­tor.

Ac­cord­ing to a se­nior of­fi­cial of the Kar­nataka gov­ern­ment, the State has emerged as a top in­vest­ment des­ti­na­tion in the coun­try. The state has ac­counted for 42.9% of the to­tal in­vest­ment in­ten­tions in the coun­try as per the statis­tics re­leased by the Depart­ment of In­dus­trial Pol­icy and Pro­mo­tion (DIPP), Min­istry of Com­merce and In­dus­try, Gov­ern­ment of In­dia, up to Oc­to­ber 2017.

Ker­ala which is among the low­est in ease of do­ing busi­ness rank­ings of the States is plan­ning to make a big turn­around, The State is said to be lay­ing a solid foun­da­tion for cre­at­ing a very favourable in­vest­ment cli­mate by leg­isla­tive, tech­no­log­i­cal and fis­cal mea­sures. The State is also plan­ning on­line clear­ance of in­dus­trial projects. The clear­ance mech­a­nism, `Ker­ala sin­gle-win­dow in­ter­face for dig­i­tal ap­pli­ca­tion fast dis­posal and trans­parency’ (KSWIFT) is sched­uled to be im­ple­mented from Septem­ber 1, 2018.

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