South Indian States sustain industrial investment sheen

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.