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A blueprint for the future

TN Global Investors Meet - Curtain Raisers

R Seshasayee (RS) is an important architect of the commercial vehicles giant Ashok Leyland (AL) and who helped the Hinduja group to diversify and to forge collaborations with global giants like Nissan, John Deere... The past president of CII and SIAM, is known for his articulation and original thinking on development issues.

Excerpts from an interview on Tamil Nadu emerging a model state embracing technology and management:

We should not be prisoners of the past. Successes in textiles, automobiles, leather and other industries are no guarantees for growth in the future. The future may not necessarily be in a disruptive fashion, but it will be non-linear.

There are four major drivers that would encompass not just industrial development and markets, but also the socio-economic parameters.

 

Driver 1: Future is going to be heavily influenced by digitisation

This is a non-linear and not a disruptive change. To make sure it is not disruptive, there is need to look aggressively at the opportunities that could unfold and to get prepared for it. The Prime Minister talks about digital India. It is not easy to make this happen at the national level; at the same time, it is not so difficult to make it happen at the state level. Tamil Nadu is much more ready and prepared as a state to embrace the digital world than most others.

This change will be driven by the extent of education and skills. From the human development point of view the state is already ahead and is in the top quartile leading in social indicators like literacy, health, etc. This places us at the vanguard to take forward the digital revolution.

The key pre-requisite is broadband penetration and connectivity with all corners of the state. This will require private investment. The enablers for this are the government working for rapid change and reaching digital technology to people. For B2B connectivity government support may not be needed but G2C will require government intervention. Provision of all government information and services to the entire population will be an exciting change that would prepare us for the future.

Tamil Nadu leads the nation with the highest number of internet subscribers of more than 38 lakh. This high number provides a base to offer several services through the Internet. Tamil Nadu also has the highest wireless telephone density among the large states. This is yet another opportunity to offer smart services through mobile phones.

 

Driver 2: March to the future is through urbanisation...

Tamil Nadu with a high degree of urbanisation is indeed ready. We can go back, learn from history on how cities were planned for the future, on how development has brought up ripple effects and how the ripple effect had led to a ribbon effect, connecting nearby places. We need planned urbanisation and direct migrants to nearby urban centres, offering them the right kind of livelihood and basic infrastructure. Providing connectivity between the cities and making them large commercial centres will make urbanisation a great opportunity.


Tamil Nadu tops the list of urbanised states with 48.45 per cent of its population living in urban areas. In the last 20 years, the rate of urbanisation in Tamil Nadu has been rapid. From 34 per cent in 1991 the extent of urbanisation has risen to 48 per cent. By 2030, this is expected to reach 67 per cent.

 

Driver 3: Future is services and not manufacturing

It is widely believed that manufacturing will provide the needed jobs; but this is unlikely to be true in the coming decades, for the simple reason that there is already phenomenal capacity existing and soon it will not be labour-intensive. One will see lot more of automation and robotics. As GDP grows globally, demand for services will grow faster. Tamil Nadu has a clear advantage to be a global service centre. We have to envision ourselves as an efficient state for providing a variety of services across the globe, for accounting, healthcare and information, thereby coveting global companies to come and set up shop in the state. Already a basic level of activity is happening: in accounting we have the World Bank and large MNCs running their accounting services here.


The state’s GSDP has more than doubled from $36 billion in 2004-05 to $80 billion in 2013-14. This is predominantly attributed to the industry and services sectors. The share of primary sector in GSDP declined to 7.76 per cent in 2013-14 from 11.87 per cent in 2004-05; the share of the secondary sector has been hovering in a range between 28 and 31 per cent and the share of the tertiary sector has expanded to 63.70 per cent from 57.23 per cent. Thus, the state economy has decisively become services-led.

 

Driver 4: The ability to innovate and continually push knowledge frontiers...

The state already has a good infrastructure for education, talent and academic excellence. People coming out with new ideas to solve problems will drive the future. This will require an academic environment like Stanford and Silicon Valley. We need an ecosystem to develop these and to focus on innovation. In the current Internet world it is the idea that is being valued. The state should endeavour to become the crucible for ideas. Not just for business but in science, in solving human problems, nurturing an academic infrastructure, in innovation, in attracting the brightest talent to come and innovate. Institutions like the Chennai Mathematical Institute should attract the brightest and make them do the algorithms here to provide new solutions for emerging growth opportunities. 

The IIT-Madras, to foster research and innovation, has developed the IITM Research Park. It is a place where industrial problems are solved by involving the best of brains from IIT-M. The research park’s first building is filled to capacity. With Saint Gobain as the anchor company, the second building is also becoming operational.

In all these four divisions, the state is in the top quartile and has the potential to lead.

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