Dearborn, Michigan-head quartered Ford Motor Company on Thursday deepened its engagement with Tamil Nadu, announcing that it would set up an engineering and technology centre in Chennai and expand the capacity of its manufacturing plant on the outskirts of the city.
Ford will invest nearly `5,000 crore over a five-year period in multiple facilities in Chennai and Sanand, Gujarat.
Ford first entered India with a manufacturing plant in Chennai and followed that up with a global customer support centre, or back office operations unit in the city. It chose to set up a second manufacturing plant in Sanand, Gujarat, raising eyebrows in industry circles about Tamil Nadu's attractiveness to corporates and its ability to hold on to investors.
Representatives from Ford and the government of Tamil Nadu signed an MoU at Global Investors Meet on Thursday , paving the way for a Ford campus on a 28-acre site.
Besides the establishment of a global engineering and technology centre, the new Ford campus will be a hub for Ford Global Business Services operations in areas such as IT, product engi neering, finance and accounting, data analytics and manufacturing.
“India is at the centre of Ford's innovation and we are delighted to strengthen our presence with a new global engineering and technology centre,“ said Dave Schoch, president of Ford Asia Pacific. “This is the next chapter of our India journey . With these latest investments, we are making rapid progress in our vision of driving innovation from India to the world.“
“Chennai is Ford's first home in India and we are glad to strengthen our commitment to its people through this proposed expansion and job creation,“ Schoch added.
Ford's main manufacturing plant in Maraimalai Nagar, 45km from Chennai, is spread over 300 acres and has an annual capacity to produce two lakh vehicles and 3.4 lakh engines. Ford operations in Tamil Nadu also include Global Business Services, with offices in Chennai, and Coimbatore.
Ford in March expanded its manufacturing presence and inaugurated its latest state-of-the-art integrated vehicle assembly and engine manufacturing plant in Sanand. The $1-billion facility in Gujarat produces Ford's recently introduced Aspire sedan and soon-tobe-launched new Figo hatchback.
The company plans to increase manufacturing capacity at the Chennai plant too. “We are still working out details and will be unable to confirm the quantum of investment right now,“ a Ford official said.
The company recently ploughed an additional $2 billion into its India operations. The new investment will be for capacity expansion at Ford's TN plant and to establish the new global engineering and technology centre.
Upcoming aerospace park to see first entrant in Jan
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An upcoming aero space and defence park on the out skirts of Chennai will see its first entrant in January with VinMn, a start-up to make engines and components, setting up unit.
Tamil Nadu is setting up the aerospace park in Sriperumbudur-Oragadam, about 50km from the city . Nearly 12 aircraft component manufacturers have been given inprinciple clearance by the state government to set up units. They will now be allotted land. VinMn has been allocated 40 acre in the aerospace park.
“Ground clearing work is underway and we hope the government will complete the process by December. We will ground break in January,“ Venkatesh Chandrasekaran, CEO, VinMn Aerospace said.Funded by PE investors, VinMn is venturing into making of aerospace components and unmanned aerial vehicles by acquiring an auto-components precision manufacturing unit. Aerospace appears the next frontier for manufacturing companies in the state as it can supplement the ecosystem that services Bengalurubased Hindustan Aeronautics Ltd (HAL).
“Between Salem, Hosur and Chennai, we could be the biggest in aerospace vertical.We expect the size of business to be in the region of $10 billion in 10 years,“ Chandrasekaran said.
An association The Aerospace and Defence Industry Association of Tamil Nadu has been formed to lobby for the interests of TNbased companies in this sec tor. This body hopes to act as an interface and enabler in efforts to supply component parts for the RTA (Regional Transport Aircraft) project, which is a joint initiative of HAL and National Aer and National Aer ospace Laboratories. The basic version of the aircraft will have 80-90 seats (RTA-70).
“The three states of Tamil Nadu, Karnataka and Andhra Pradesh are the aero hub triangle in India and companies which are expected to come up in the aero park in the Sriperumbudur-Oragadum belt can look to develop components for the RTA,“ N Shekar, president of the association, said.
Drawing similarities between auto manufacturers and vendor units, Shekar said aircraft component manufacturing units located in the region could end up supplying various parts to the RTA.
“An end to end RTA programme would take about eight years to complete. It is a smaller aircraft and could cater to regional connectivity requirements,“ he said.
Govt asks textile firms not to trust subsidy givers
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Is attack the best form of defence? On Thursday, Tamil Nadu government of ficials adopted this strategy to hit out at neighbouring Andhra Pradesh and others who were targeting its textile businesses by offering tax incentives and subsidies.
“Don't look at subsidies alone. There are other parameters you should consider before you invest outside Tamil Nadu. Here we have a track record of fostering textile businesses,“ said Harmander Singh, principal secretary , handlooms & textiles Tamil Nadu government.
Textile business does not thrive in isolation and instead needs the entire ecosystem, he said. “We have the ecosystem in place and we are here to hear you and help you,“ he told a gathering of textile entrepreneurs and delegates at the Global Investors Meet on Thursday .
Updeep Singh, MD of Itema Weaving (India), concurred with the bureaucrat and said as a businessman he went and set up some units in Andhra Pradesh. “I am yet to get the `90 crore that the government promised as subsidies,“ said Singh, who has worked with textile giants like Wardhman. He asked investors to deepen their commitment in the state. “We need to enhance weaving capacities. We need some big manufacturer (like LMW for spinning) for bringing in weaving technology at cheaper rates,“ he said.
Tirupur Exporters' Association president A Sakthivel said the knitwear town was working towards getting man-made fibre products. “Knitwear using cotton is only a three-month-a-year business. We have started work on man-made fibres under Knitwear Technology Mission to ensure we have work round the year,“ he said.
Textile sector is one of Tamil Nadu's strengths, with 60% of India's spinning mills capacities located in the state. The state, which is the third largest cotton producer and fifth largest fibre and yarn producer, was seen to be losing businesses to other states over the past few years due to non-availability of power. “The power problems are over, and so there is no need to look elsewhere for investing,“ government officials said.
25K workers in state to be trained for leather sector
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Concerned at the poor supply of quality work ers, the Leather Sector Skill Council plans to train an estimated 25,000 people in Tamil Nadu this year to acquire various skills related to the industry , its chairman Habib Hussain said on Thursday .
If the target is achieved, it would be a significant increase from last year when 4,600 workers were trained.“We have set a target of training 100,000 workers across India this year. Since 35% of the country's leather manufacturers are in TN, we expect to train at least 25,000 in the state,“ said Habib at the Global Investors Meet.
The council hopes to increase the number of trained workers by partnering with various leather institutes.
“In Tamil Nadu, we are working with both state and private institutions, including Central Footwear Training Institute and Central Leather Research Institute among others, for the same goal,“ he said. The Union ministries of labour and skill development and entrepreneurship have been promoting skill development in the state, he added.
In terms of business prospects for the industry, the numbers were consistently increasing except in the last three months due to global situation, he pointed out.
Tamil Nadu may have more dalit entrepre neurs in the micro, small and medium enterprises (MSMEs) category than any other state, but most of them face problems in getting credit because of their caste, Dalit Indian Chamber of Commerce and Industry chairman Milind Kamble (pic) said on Thursday .
“Many dalit MSME entrepreneurs in the state are not able to secure financing once they disclose their caste,“ Kamble told TOI on the sidelines of the Global Investors Meet. “Most of them are first generation entrepreneurs and don't have any credit worth mentioning to support them.“
“My father was a small businessman in Maharashtra,“ he said. “When I wanted to start a company , the first hurdle I faced to secure funds was my caste. This situation is still the same in TN.“
As access to funding is a major impediment for dalit entrepreneurs, the government should relax credit norms for dalits, Kamble said.
“The government should devise schemes to give loans to dalit entrepreneurs without any collateral,“ he said. “That will help more people from the scheduled castes and tribes start businesses.“ He said the 1991 economic reforms not only opened the economy to foreign investors, they also created business avenues for dalits.
The number of dalit entrepreneurs in the country has been increasing exponentially. According to the 20152016 Union budget, there are 5.77 lakh dalit entrepreneurs, including 77,000 in TN.
“A p a r t f r o m funds, acquisition and retention of talent are also a hurdle for dalit entrepreneurs,“ he said.
Tamil Nadu MSME minister P Mohan said of the `11 lakh crore investments the state received during the summit, around `16,000 crore was for small industries. The state was drawing up a separate industrial policy for MSMEs, he said.
Many MSMEs participating in the meet complained of delayed credit and clearances.
“I set up a unit in the Sipcot complex in Ariyalur. I have been running around for two years to get clearances and still have not got a power connection,“ Dhananjayan of Ariyalur said. “I will be able to get the remaining clearances in 30 days as the chief minister promised.“
Taxi-Hiring Firm Signs MoU With TN Govt At GIM, Promises To Deliver In 5 Yrs
Ride hiring service Uber has inked a Memorandum of Understanding (MoU) with the Tamil Nadu government to create 30,000 job opportunities.Through the MoU, Uber plans to work closely with the state government on framing regulations in the taxi hailing space.
Signing the deal at the Global Investors Meet in Chennai on Thursday, Uber said the MoU will give 30,000 entrepreneurship opportunities to the state over five years. “This is our commitment to contribute to the economic development of the state. We will invest a portion of the billion dollars that we have allocated towards India, in Tamil Nadu,“ said Uber India president Amit Jain. He refrained from dis closing the exact amount.
Uber has been in the news recently for several reasons.Soon after Uber made an announcement to invest $1 billion towards operations in India, news of the taxi aggregator raising $100 million from the Tata group's private equity arm Tata Opportunity Fund did the rounds.
Jain said several such facilities are in the pipeline.Uber recently partnered with Airtel to provide free 4G Wifi in their cars in Mumbai and Delhi as pilot projects. “Many more such attractive offers will be doled out in the upcoming months,“ he said.
On guidelines, Jain said they are working closely with the Union government to finalise them.
Given the nascent stage of the industry , Uber is working with several states on formu lating and finalising their respective state laws which will be built on the foundation of the central guideline, he said.Jain was hopeful that clarity on legislation will pave the way to better business opportunities and hopefully , removal of the ban in Delhi.
Uber and other app-based cab services were banned by the Delhi high court in December 2014, after a Uber driver was accused of rape.
On opportunities in tier-2 and tier-3 cities, Jain said, “More than half of the cities we operate in are tier-2 and tier-3. A thriving market is developing in these cities as we enter them. Our mission is to create urban mobility as ubiquitous as electricity or water.“ Uber claims to be the leader in the taxi hiring space in terms of technology platforms and quality of service, with a 35% market share.
The Union heavy industries ministry is proposing to set up a dedicated centre to facilitate engineering related technical testing and skilling in Coimbatore.
The ministry , under its skill enhancement programme has initiated steps to conduct a detailed project report (DPR).“Work on DPR has begun. The Coimbatore centre will work towards the needs for pumps and light engineering products. We have initiated several such clusters, and we saw the need for one in Coimbatore,“ Ambuj Sharma, additional secretary, department of heavy industry , government of India said. There is large concentration of pump, textile machinery units in the Coimbatore region. While the exact funding requirements will be known only after the DPR was ready , he said that each cluster would need `75 crore to `100 crore.
When chief minister J Jayalalithaa brought the curtains down on the Global Investors Meet on Thursday , there was a huge difference between promise and delivery -and everyone was happy about it.
Against a target of `1 lakh crore, Jayalalithaa announced, deals worth `2.42 lakh crore were signed during the two-day jamboree. “I am extremely happy to inform that in a resounding endorsement of Tamil Nadu and its government's policies, the total amount of investments finalised during the Global Investors Meet in Chennai is an unprecedented `2,42,160 crore,“ said the chief minister.
The massive investment assurance was much more than the accumulated investments in the last 20 years, since 1991, she said. Thrilled with the success of the meet, the government has now proposed to hold GIMs every two years, with the next one scheduled for 2017.
The CM has assured investors approvals within 30 days of the date of submission of application. “For each investment finalised here, I assure the investors that necessary statutory clearances would be accorded within 30 days. Senior IAS officials will be facilitators for each of the projects, and they will be responsible for liaising with the investor to ensure that all clearances are granted within 30 days,“ she said.
She also promised to make all pre-project clearances online to ensure ease in doing business with Tamil Nadu. Of the investments in he pipeline, nearly 45% or `1,07,136 crore is in the manufacturing sector. The products range from footwear, solar cell and float glass to steel, tyres and electronic hardware. Companies that have come forward include Apollo Tyres, Saint Gobain, JSW Steel, ITC, Lotus Footwear. This is followed by the energy sector with a proposed investment of `1,07,136 crore, of which a large chunk is in solar. “As a direct outcome of the solar energy policy in 2012, MoUs have been signed for `35,356 crore to set up 5,345MW of solar power,“ said Jayalalithaa.
The IT sector has received less than 10% of the total investments, with `10,950 crore, followed by handlooms and textiles that got `1,955 crore. Agriculture and fisheries sectors have received investments of `800 crore and `500 crore respectively . The southern districts, which have plenty of arid land, take nearly 50% of the investments in the manufacturing sector, Jayalalithaa said.
Fertilisers and infrastructure also got a look-in. “An LNG terminal at Tuticorin is one of the projects being signed today . This, along with Ennore LNG terminal, will secure long-term energy security of the state,“ she said.
Chennai-B'luru industrial corridor to attract $181bn
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The proposed ChennaiBengaluru Industrial C o r r i d o r p ro j e c t would attract an investment of $181 billion and generate employment for 22 million skilled people over the next two decades. Of this, more than `2 lakh crore investments would come into Ponneri in North Chennai, said Japan International Cooperation Agency (JICA) deputy ch i e f re p re s e n t at ive Ichiguchi Tomohide at a seminar on industrial corridors at the Global Investors Meet in the city on Thursday .
The corridor would at tract investments in automotive, electronics, pharmaceuticals and petrochemical sectors. As Ponneri develops into an industrial city , more than 3.37 lakh people would be employed there, he said. JICA is involved in drawing up plans for the project. Krishnapatnam, a functional port city in Andhra Pradesh, and Tumkur near Bengaluru are the other cities that would develop as the corridor takes shape.
India has already overtaken China and Indonesia in attracting JICA investments, and among the Indian states, Andhra Pradesh, Tamil Nadu and Karnataka topped in JICA investments, said Tomohide. Speaking in a related event on infrastructure development at GIM, Mizuho Bank general manager Jun Kuroki said about 100 Japanese companies were coming into India every year. As regards the development of the proposed Chennai-Bengaluru industrial corridor, 41% of the project cost was being earmarked for land acquisition in Ponneri region, which could affect the project's viability, said Kuroki. About 5075 km distance along the corridor, both before and after Ponneri, would develop once the project took off, said additional chief secretary of industries department C V Sankar.
Delay in project imple mentation was a major concern in India.
It put pressure not only on the developer, but also on shareholders as it resulted in overall project cost going up, said Ascendas India CEO Lee Fu Nyap. Ascendas is promoting an industrial township near Mahabalipuram in about 1,450 acres.
Mahindra Industrial Park, Chennai, a 60:40 joint venture between Mahindra World City Developers and Sumitomo Corporation of Japan, on Thursday signed a MoU with the state government to develop an integrated township in north Chennai.
The Mahindra Industrial Park is the second project by Mahindra Lifespaces in the city after Mahindra World City. The first phase of the project will be spread over 300 acres at an investment of `400 crore. “The focus of this park would be largely industrial and we will have some social and residentia mix that will cater to the industrial eco system of that area,“ Sangeeta Prasad CEO, integrated cities and industrial clusters, Mahin dra Lifespace Developers said.
Asian Development Bank country director M Teresa Kho on Thursday called for transformation of infrastructure corridors into economic corridors in the country for the holistic development of targeted regions.
While speaking at a seminar on infrastructure at the Global Investors Meet in the city , she said the spillover effects of economic corridor development would reach even rural areas.
Noting that the Vision 2023 document rolled out by the state government three years ago was a step forward in achieving the objective of overall economic development of the state, she said India needed to look at taking economic corridors across states.
For instance, an economic corridor could be developed all the way from Visakhapatnam to Chennai and down up to Tuticorin. ADB was already looking at such a proposal, she said. She stressed that ease of doing business was key to attracting investments into the state.
The country was not able to raise enough resources for infrastructure projects be cause commercial banks still remained the primary source of funding for most projects, said India Infrastructure Finance Company CMD S B Nayar. Banks were already getting close to their sectoral caps. Many projects landed in trouble owing to over leveraging by promoters in the form of debts. Inadequate equity was a major source of concern in such projects, he said.
Nayar suggested that governments, which financed most infrastructure projects should exit from projects once they were ready and running. Once such assets were sold, governments could re-invest that money in new infrastructure projects, he said adding that his company had come out with some products to suit such requirements.
SEZs go digital on data sharing with tax authorities
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In an effort to digitize the Special Economic Zones (SEZs) scheme, a pilot project is underway in Chennai for data sharing and accessibility between SEZ and tax authorities, in a step aimed at increasing ease of doing business.
Shanmuga Sundaram, de velopment commissioner, MEPZ, Chennai said an online system has been developed to provide real-time data accessibility between the SEZ online system and IceGate, the ecommerce portal of the Central Board of Excise and Customs (CBEC). “The idea is for the entire system to become paperless and facilitate real-time sharing of data since SEZs and CBEC work so closely ,“ he said.
This project, (which could take two months to stabilise) marks the first collaboration between the SEZ authorities and CBEC at such a level. The government hopes to replicate in other SEZs.
“We are monitoring the extent of data sharing on a day-to-day basis. As of now, we have been able to match data up to 95% for air cargo and about 25-30% for sea car go,“ he said.
A meeting is scheduled for September 17, with members of the commerce ministry , the director general (systems) and others to discuss how the data integration system can be implemented in full without the technical snags.
The state initiated the SEZ policy in 2003, two years before the Centre put a policy in place. Of the 202 operational SEZs in the country, Tamil Nadu is home to 36, the highest in India. Of the 36 operational SEZs in the state, 10 SEZs contribute 81% of the exports.
Oz bizmen vow to share technology for aqua industry
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The promise to share technology and knowledge in the field of aquac ulture, made by business giants from Australia at the Global Investors Meet, is expected to be a huge step for the local industry.
Speaking on building the “blue economy“, Association of International Seafood Professionals executive director Roy Palmer said, “Australia can develop the workforce capacity for Tamil Nadu by teaching fishermen advanced harvest techniques.“ Emphasising that pushing expensive fish feed and Australian products into the Indian market wasn't the idea, he said they were looking to share environmentfriendly technology that uses less water and land.
Others wanted knowledge exchanged between local and Australian universities. “We can help in areas of educational research and technology where faculty can also be trained,“ said Dr Ravi Fotedar, professor and international program director (sustainable aquaculture), Curtin University .
Welcoming this, World Aquaculture Society director (Asia Pacific chapter) Dr S Felix said, “We plan to have an exchange programme where students from Tamil Nadu Fisheries University (TNFU) can do a part of their course in Curtin University.“ Felix said t h e y wo u l d share native techniques like integrated aquaculture and low saline method with Australian universities. The GIM attracted investments worth nearly Rs 500 crore from about six companies in areas of research and development for aquaculture industry , he said. Significant collaborations in dairy development and food processing were also discussed.
44% of new proposals at GIM cornered by energy sector
At the end of the day , it's a job well done, said an investor. “Let's now see how much gets converted into actual investments,“ he said, walking out of the decked-up Chennai Trade Centre in Nandambakkam.
The Global Investors Meet comes at a time when the investment cycle is just picking up across the country and it ties in well with the NDA government's Make In India programme. The bulk of the new announcements are in manufacturing and the line-up too is impressive. “It is not just the investment amount, also the pedigree of the investors,“ said an industry source.
With more than 50% of the MoUs committed to manufacturing projects in the southern districts of the state, the government has done well to disperse investments and economic activity across geographies and not just concentrate them in select clusters.
To add to the euphoria, it has managed to draw up binding agreements. “Unlike Gujarat or other states, we have not signed Expressions of Interest with investors, we have instead signed MoUs,“ an official said. He added that for each agreement signed, a time-bound implementation plan is in place. There are small projects of less than `500 crore and ultra mega projects of more than `5,000 crore. Each of the investor has signed binding agreements which comes with penal provisions for non-performance. That is an indication of the strength of these agreements,“ he said.For most projects, land (which is the trickiest component) has either been identified or procured by the investor directly or through SIPCOT (the state government nodal agency for land banks).
An analysis shows the energy sector has also drawn a large -almost 44% -share of new proposals. But the enthusiasm is tempered by the knowledge that the finances of the state-owned power purchaser are in poor shape. “We all know that the state power utility Tangedco is not in the pink of its health. Besides, energy projects are long gestation and we do not know what the macro scene would be when these projects get ready for commercial use,“ an industry source said. Besides, there are issues on evacuation of the proposed 5,345 MW of solar power. “The existing grid is over exploited and may not be able to take in so much fresh load, we need additional capacity which can be done only with the support of the central government,“ an official with a power generation company said.
Next in line is the `10,950 crore of IT ITES investments which appears realistic and achievable.
All in all, the state has managed to pull off a coup. An overseas delegate who was present at the valedictory , said, “This is an incredible feat. More than $38 billion of investments at one go. I have heard of several challenges that one faces in India. It is therefore important for the state to put credible face in front in executing these contracts,“ he said.
Simply put: the incredible phase is over while the credible phase needs to set in.
