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Tamil Nadu signs pacts for more than Rs 2 trillion

Livemint:  September, 2015

Chennai: Salvaging its reputation as an investment destination, the Tamil Nadu government signed investment agreements amounting to more than Rs.2 trillion during a two-day Global Investors Meet that ended on Thursday. The state, which makes three cars a minute, has set an ambitious target to become the world’s largest car manufacturing hub.

“I repeat with pride, the total amount of investments that have been finalized during the investors’ meet is an unprecedented Rs.2,42,160 crore,” chief minister J. Jayalalithaa told the valedictory event of the investors’ meet in Chennai.

This was twice the investment targeted for the first edition of the event.

A total of 98 memoranda of understanding were signed. Companies such as SunEdison Inc., HCL Technologies Ltd, Cognizant Technology Solutions, ITC Ltd, Adani group, MRF Ltd and Delta India Electronics were among the signatories.

“This exceeds the cumulative investment attracted by Tamil Nadu over a 20-year period from 1991 to 2011,” Jayalalithaa said.

Hype aside, Tamil Nadu has a troubled legacy of stalled ventures and infrastructure hurdles. Bad roads, congested ports and delayed approvals have dented the image of a state where foreign investors once flocked to set up automobile factories and technology offices.

In 2012, the state government entered into agreements with 12 companies for investments totalling more than Rs.20,000 crore. Of the lot, the major projects never saw the light of day—Indo Rama Synthetics Ltd’s Rs.4,500 crore synthetic fibre and petrochemical manufacturing unit; BGR Energy and Hitachi Ltd’s Rs.2,325 crore venture to make turbines, generators and boilers; US-based paint maker PPG Industries and Harsha Exito Engineering’s Rs.4,100 crore plant to manufacture fibre glass; and a 2,000-acre textile park in Coimbatore involving an investment of Rs.3,100 crore.

“The global investor meet is a political gimmick,’ said Gnani Sankaran, a political commentator.

“Delays in projects are a matter of concern,” said Jun Kuroki, general manager of Mizuho Bank Ltd, Chennai, at a session to improve infrastructure during the investors’ meet.

Basic infrastructure like roads and waterways needed improvement, he added.

Of the agreements signed, investment proposals worth Rs.1.04 trillion are in the manufacturing sector. The energy sector adds up to Rs.1.07 trillion. Investments of Rs.16,533 crore have been proposed in micro and small enterprises, Rs.10,950 crore in information technology, Rs.1,955 crore in handloom and textiles, Rs.800 crore in agriculture and Rs.500 crore in fisheries.

Close to half the investment committed will go to the southern districts—Madurai, Tirunelveli, Tuticorin, Thanjavur and Kanyakumari. A big chunk will go into the development of the Madurai-Tuticorin industrial corridor and another large investment into setting up a liquefied natural gas terminal at Tuticorin.

Tamil Nadu is facing stiff competition from neighbouring states—Andhra Pradesh, Telangana and even Maharashtra—on attracting investment. Sri City in Andhra Pradesh has signed agreements worth Rs.18,000 crore with more than 100 companies in the last two years.

The Tamil Nadu government has promised single-window clearance within 30 days of the date of application for each of the investment proposals finalized on Thursday.

Jayalalithaa said the state will not just be the most favoured destination in India, it will be among the top three destinations in Asia. A global investors’ meet will be held every two years, she added.

With six months to go for assembly elections in the state, the government wants to show that it means business, said Sankaran.

“I wonder how many agreements that get signed during the investors meeting will actually happen at the ground level,” he added.