Tamil Nadu’s business scene in top

Movers and shakers in the state’s business sectors have called the report a wake-up call for the Government, and urged it to take up immediate reforms to drive business growth and investments. VG Ramakrishnan, MD, Avanteum Advisors LLP, sees the state as one of the top industrialised economies in India. However, he has his reservations when it comes to certain parameters considered essential for a healthy business milieu. “Getting ranked 18th on the performance parameter of the 'Ease of Doing Business in India' should come up as a wakeup call for policymakers to improve the state's image as a business-friendly destination,” notes the former MD of Frost and Sullivan.  

Ramakrishnan goes to say that recent incidents such as Nokia’s sudden exit may have dented TN’s image as the front-runner for investments. “While Nokia’s case is certainly a company specific issue, TN should proactively enhance its image and take concrete steps to improve its position in the ranking. However, sometime the ranking may not fully reflect the reality on ground. Delhi is placed one level below TN but continues to be an attractive place for companies to invest in their offices.” While TN continues to remain an attractive manufacturing and IT/ITES destination, it should take steps improve its ranking to reflect its investment standing, he points out. 

In the late Nineties, MNCs such as Ford and Hyundai set up their manufacturing facilities in TN, boosting the confidence of other big ticket investors to follow suit. The growth of auto giants led to an economic upswing across diverse industries, creating employment opportunities for millions. Availability of ready-made talent pool and infrastructure put in place a vibrancy that catapulted TN in the league of ‘best performing states.’ 

The current status of leadership has been a worrying factor but industry heads believe it’s a matter of time before TN picks up its threads. “It is clearly a destination of investments. Lot of initiatives are being taken to smoothen the whole process. Those of us, having a major presence as far as the size of operations is concerned, don’t really face much challenges,” avers Balachandra Datta, VP Corporate Affairs, Hyundai Motor India Ltd. He brushes aside rumours on the Korean MNC looking to move its operations “lock, stock and barrel” to neighbouring location Chittoor. “We are here for good. We are extremely happy with Chennai. We have no such plans. Our Rs 12,000 crore investments in a single location in India is a proof of that,” Datta added.

Irrespective of change in political leadership, it was business as usual. In fact, it would not be wrong to infer that the domestic players too caught on to the growth whiff of the southern tipping point, leading them to swoop in on Chennai to explore business opportunities for expansion and growth plans. Increasingly, TN made its presence felt by figuring as the “ideal place” for doing business. 

“Nothing has changed. We continue to grow steadily. We need the right context. TN is the top state as far as attracting investments are concerned. We have got the highest foreign direct investments. The ongoing exercise is to ensure that our efforts and data gets captured in the metrics of the Central Government. We do not resort to window-dressing. Unlike other states, we have concrete investment proposals, which means those setting up industries or nurturing growth plans, are contractually bound to execute the projects. These are real,” says a retired government official, who was instrumental in spurring investments into the state, on condition of anonymity.

TN is the only state that has a unique partnership with the Railways, which is under the Central Government. “Besides making land available, it has also a cost-sharing arrangement with the Railways in order to encourage the auto cluster development. As far as investments are concerned, TN is at a historical high with 33 signed MoUs in various stages of implementation, in addition to the 98 MoUs announced at the GIM last year. That means, an investment inflow of over Rs 3.25 lakh crore,” the former official added.

Young entrepreneurs, nevertheless, have a different view of TN’s business climate. Vijay Anand, Founder-CEO of the Startup Centre, a city-based support system for new enterprises, says, “With respect to the start-up scene in TN, from a government perspective, there is a severe shortage of state-intervention, which hasn’t been done at all. The kind of effort that was made to invite manufacturing bigwigs to Chennai, or the initiatives taken to keep companies like Cognizant within Chennai, hasn’t been made for young entrepreneurs here.”

He explains, “I think the government is not even seriously thinking what start-ups can do for the economy. And due to this, we are losing our talent to other states. Today, nobody has an incentive to set up and industry in the state and maintain their facilities here. On one hand, you have Telangana, which has come up with its T-Hub programme and is inviting start-ups to go set up their units there as the state has assured them infrastructural help in terms of office space and other amenities. On the other hand, you have Bengaluru wooing entrepreneurs with a young and robust start-up ecosystem. From a start-up point of view, TN is missing out big time.” 

Vijay believes that TN has bright entrepreneurs and many companies that have strong business potentials, come from the state. “A look at the winners of the Qualcomm Awards will tell you that out of the 2,100 applications that would have been received, 10 of them would have come from Chennai, and the winner would usually be from Chennai. From a numbers perspective, Bengaluru beats us hands down. The few companies that are here have solid foundations, and whether there is a recession or not, they do well. “The state hasn’t done much as yet to provide them with an appropriate platform or an ecosystem to excel. I think the companies are doing us a favour by setting up shop here,” Vijay laments.

So, while it is time to take stock and hear the voices of the minority, a report like the one on ease of doing business will not dent the pride and performance of a state whose “key facets of the vision include TN’s enhanced economic dynamism, best in class human development indicators, well-developed infrastructure that provides universal access to basic services, an investment climate that compares with the best in Asia, and the evolution into India’s foremost knowledge and innovation hub.”

“With 217 developmental projects identified, the State will not only emerge as a numero uno state of India, these initiatives will also pave the way for sustainable and inclusive growth, lasting peace, prosperity and above all, improvement in quality of life for all its citizens. A total investment of Rs 15,00,000 crore is envisaged for infrastructure development, as a part of Vision 2023. 75 of the 217 infrastructure projects are at various stages of implementation, and work on balance projects will commence shortly,” is the stance, if not the pitch, of the government.