
The country's most providential mass rapid transit system (MRTS)has to be in Chennai. When it was envisioned in 1983, the ChennaiMRTS was just supposed to be something that connected the happeningport area (the station is aptly named Beach) with far-flung suburbsTaramani (then popular for a hospital and a polytechnic) andTiruvanmiyur. In 1997, when it was commissioned, the Chennai MRTS didnot evoke a great response (it still isn't all that hot), largelybecause the city boasted a great bus service. Today, however, it ispoised to become one of the city's infrastructure showpieces andtestimony to the foresight of city planners. Reason? Taramani hasemerged as a mini hub for software services firms; Siruseri, down theline from Taramani, is where every software company worth its name inIndia is headed; and although the MRTS doesn't reach Siruseri yet,and this writer isn't aware of any efforts by the government to makeit do so, fact is, this can be achieved at little incremental cost.Chennai will then have an efficient rail network connecting thecity's popular residential neighbourhoods (such as Adyar, Mylapore,and Tiruvanmiyur, say) to its emerging software city. This, though,isn't a city-planning miracle wrought by design. It is a quirk ofprovidence.
If things are coming together for Tamil Nadu-and, judging from thenumbers presented in this article, they are-it is only partly becauseof the state government's efforts. Providence plays a larger rolethan it has been given credit for. For instance, the decision by thestate government, in 1985, to allow the creation of privateengineering colleges was largely driven by the desire to returnfavours to entrepreneurs and individuals who had done it a good turnin the past. However, many of the colleges thus founded went on tobecome centres of academic excellence. Today, their output fuels thegreat Indian software story.
That said, things are coming together for the state: Nokia'sinvestment of Rs 625 crore in a manufacturing facility (ChiefMinister J. Jayalalithaa claims this will result in an additionalinvestment of Rs 600 crore by the handset maker's suppliers) beingthe most recent example. Sanjeev Sharma, the Managing Director ofNokia India, is all praise for the state's "infrastructure and theway the state's officials handled the negotiations", but Nokia choseChennai (from a short-list that included Goa, Hyderabad, Bangaloreand Chennai) on account of its connectivity (it has a port and aninternational airport) and its pool of skilled labour.
More announcements are expected, says Rameshram Mishra, theIndustries Secretary of the state, adding tantalisingly that "you canexpect more news by the end of the month". The buzz in Chennai isthat Intel could be considering putting down a manufacturing facilitysomewhere in the state, although this remains a matter of conjecture.And the government is doing its bit. It is investing ininfrastructure (see Infrastructure Heavy) and doing what is requiredto protect its turf. In the automotive industry for instance(companies located in the state contribute 25 per cent to the toplineof the industry), where the centre of gravity is threatening to moveNorth, the state government is actively wooing the Central Governmentfor the Rs 1,800-crore state-of-the-art automotive testing facilityit wants to set up. B. Santhanam, the Chairman of the Tamil Nadubranch of the Confederation of Indian Industry (CII), an industrylobby and the Managing Director of St. Gobain (a glass maker, it isnow in the midst of an expansion that will see it invest Rs 800 crorein the state) reckons the testing centre is key to the state'saspiration of increasing this proportion from 25 per cent to 35 percent.
It isn't just auto; Infosys is building its biggest developmentcentre in Tamil Nadu, and every other software major has investmentslined up for similar facilities; and some Rs 5,000 crore is beingpumped in by small and medium enterprises engaged in the business oftextile exports. The government has provided 300 acres for a textile-processing park in Cuddalore where 10-12 companies will invest Rs 40-60 crore each. With Indian textile exporters looking to improve theirshowing in the post-quota world, and with Tamil Nadu boasting thecountry's largest powerloom sector, textiles looks set to be anotherwinner for the state.
IT services (software), auto (the state can attract as much as $5billion, Rs 22,000 crore in foreign direct investment in this sector,claims Suresh Krishna, the Chairman and Managing Director of SundramFasteners), and textiles are three areas where Tamil Nadu is clearlyamong the leading states in the country, if not the leader. Then,there are other areas such as hardware (Pondicherry, a unionterritory adjoining Tamil Nadu has hitherto been India's hardwarecapital; see India's Unsung Hardware Capital, BT, November 25, 2001)where the state is making its presence felt.
The state's most interesting initiative, however, has to be itsefforts to develop seven southern districts. These keenly feel theNorth-South divide, with North Tamil Nadu being the place whereindustrial activity has traditionally been concentrated. Today,courtesy this initiative (see Seven Unusual Suspects), projects worthRs 33,735 crore are underway in the seven districts. If carried totheir logical end, these would play a part in ensuring far moreequitable development across the state. And that wouldn't beprovidential.
BOX
PARADISE OR PURGATORY?
The Positives
+ Well-connected by air, sea and land
+ Geographically close to regional hub, Singapore
+ Tsunami apart, safe from military and other natural risks
+ Well-educated, stable workforce; little unionism
+ Low cost of living; large number of technical educationinstitutions
The Negatives
- The chronic scarcity of water
- The centre of gravity of the auto ancillaries business may moveNorth
- Other states, such as West Bengal, are wooing IT companies
- Laid-back work culture; not enterprising
- Despite things having improved, corruption is rife in the system
BOX 2
Tamil Nadu Is Sixth...
... but this doesn't include several numbers; for instance, theinvestments by software companies in campuses that is making Chennaithe emerging IT services hub of India.
TOTAL OUTSTANDING INVESTMENTS
Maharashtra: Rs 1,78,766 crore
Andhra Pradesh: Rs 1,64,899 crore
Gujarat: Rs 1,63,604 crore
Karnataka: Rs 1,56,755 crore
Orissa: Rs 1,51,154 crore*
Tamil Nadu: Rs 1,40,096 crore
Total (for all states): Rs 19,05,820 crore
* (after deducting Posco)
PROJECTS UNDER IMPLEMENTATION
Maharashtra: Rs 90,710 crore
Gujarat: Rs 71,782 crore
Andhra Pradesh: Rs 58,735 crore
Karnataka: Rs 54,534 crore
Orissa: Rs 45,342 crore
Tamil Nadu: Rs 41,286 crore
Total (for all states): Rs 7,81,050 crore
Source: CMIE; Till March 2005
BOX 3
Infrastructure Heavy
The public sector and the government are big investors in TamilNadu.
Nuclear Power Corporation, Nuclear Power Project Rs 15,971 crore
Chennai Petroleum Corporation, Refinery & Power Project Rs 15,197crore
Neyveli Lignite Corporation, Mining and Power Project Rs 15,193crore
TIDCO, Naphtha Cracker Project Rs 7,500 crore
IOC, Naphtha Cracker Rs 6,000 crore
Jayamkondam Power Project, Power & Lignite Rs 4,000 crore
NTPC, Power Project Rs 4,000 crore
Nuclear Power Corp., Kalpakkam Power Project, Nuclear Power Rs3,492 crore
Telugu Ganga Project, Water Rs 2,190 crore
Sethusamudram Corporation, Seaway Rs 2,000 crore
Chennai Metropolitan Water Supply, Desalination Plant Rs 1,550crore
CMDA, Road Project Rs 1,200 crore
Tamil Nadu Industries Captive Power Co., Power Project Rs 1,200crore
BHEL, Modernisation of Trichy Plant Rs 1,200 crore
Source: CMIE
TABLE
Seven Unusual Suspects
Tamil Nadu's development plan encompasses seven districts nottraditionally seen as business destinations.
At one time, the region south of the Vindhyas was, to most peoplewho lived North of it, Madras. In these enlightened times, things aredifferent. Yet, chances are, most people do not really realise thatthere is more to Tamil Nadu than Chennai (as Madras is called now).Most parts of the state, especially the southern districts, haveremained largely under-developed. The state is doing its bit byfocussing on infrastructure development in these districts directly,partnering with the private sector, or by simply encouraging thelatter to invest in these areas (the Rs 33,735 crore includes allthree categories of investment and spans sectors such as ports, ITparks and software export zones, power, textiles, metals andtourism). The Tamil Nadu branch of the Confederation of IndianIndustry (CII) recently commisioned Scope e-Knowledge Center, aChennai-based consultancy, to study the seven districts of Madurai,Tuticorin, Virudhunagar, Tirunelveli, Kanniyakumari, Sivagangai, andRamanathapuram (the seven are contiguous and linked by a NationalHighway) and come up with suggestions on what businesses couldsucceed there. For instance, points out Chandu Nair, Director andPresident, Scope, a knowledge corridor in the Madurai-Virudhunagar-Tirunelvelli belt is a good idea, especially since the MaduraiKamaraj University was offering a course in biotechnology as far backas the 1970s. The state government is pretty bullish on the reportand has approached Scope for implementing what has now beenchristened SPEED (Southern Prosperity through Enhanced EconomicDevelopment). CII's Santhanam thinks SPEED is a winner. "The southcan change drastically," he says. "Existing industries will grow andnew ones come in."