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Global auto hub
May 2015 witnessed the global launch of Renault’s new car, the Kwid. Not surprisingly the event was at Chennai, the Detroit of India.

New townships

“Abundant skilled manpower, a long coastline and a bold vision are powerful factors for attracting investments into Tamil Nadu. To accelerate growth, given the unavailability of land up to Kancheepuram and Chengalpattu, one has to develop industrial townships with rich infrastructure around Coimbatore, Madurai and other major cities that could attract multi-nationals.”

- Venu Srinivasan

At the event, Renault’s Chairman and CEO, Carlos Ghosn, spoke of how Kwid was the perfect example of “Make in India” with 98 per cent level of localisation. Some days later, the 500,000th car of Nissan rolled out for export from its Oragadam factory into a waiting ship, at Kamarajar Port, in Ennore, Chennai. Weeks later, Daimler inaugurated its bus plant in Chennai, with local content of 95 per cent. Ford has also announced its plan to invest Rs 5000 crore in an R&D centre in Chennai, billed to be one of the largest R&D bases of Ford in the Asia-Pacific region.

These are examples of the industrial vibrancy in Tamil Nadu, especially in the automotive sector. Mark it, Tamil Nadu is the only state to attract eight global automobile giants, namely, BMW, Daimler, Ford, Hyundai, Mitsubishi, Nissan, Renault and Yamaha, along with the presence of Indian automotive majors like Ashok Leyland, Royal Enfield, TAFE and TVS.

With an installed capacity to produce over 3.8 lakh cars, 3.5 lakh commercial vehicles, 25 lakh two- wheelers, 1.2 lakh auto rickshaws and 150,000 tractors each year, Tamil Nadu is justifiably called the “Automotive Capital of India.” The state has over 25 per cent share in the Indian automobile manufacturing sector and accounts for 21 per cent of India’s automobile exports, with 70 per cent share in passenger vehicle exports.

 

Driving Force

The four main reasons which provide the driving force for Tamil Nadu’s success in automotive and auto components industry are:

ONE: Availability of strong port logistics. The Chennai container terminal is among the most efficient in India and both the Chennai as well as Ennore Ports have dedicated berths for automobile exports.

TWO: Abundant availability of skilled manpower. The state has the potential to generate 430,000 graduates annually. Apart from this the state boasts of a large base for skills training. Besides the presence of Industrial Training Institutes (ITIs) and Industrial Training Centres (ITCs), industrial units have skill development programmes to promote skills among youth, as part of their CSR activities.

THREE: Industrial peace and cooperation. Touchwood, in the last 15 years, the total incidents of strikes and lock-outs have shown a 70 per  cent decrease and the consequent number of man-days lost last year was just a fifth of the days lost in year 2000.

FOUR: Strong base Chennai alone has 350 Tier I to III suppliers, apart from more than 4000 SMEs, all making up a strong base for manufacture of auto components. The industry offers a high multiplier effect on employment. If the mother plant directly employs one worker, the vendors and support industries employ eight workers. Further, for every crore of rupees invested by an OEM, an additional three crore is invested by the component industry.

The state is aggressively pursuing the goals set by Vision 2023, where auto and auto component sectors get their well-deserved attention. The policy places substantial emphasis on the linkages to be established between manufacturing investments, new technology, logistics and infrastructure and the availability of a highly skilled workforce.

Going forward, the ‘Make in India’ initiative of the Govt. of India will provide a further boost to the auto components industry. ACMA, the apex body of the auto component industry in India, foresees great opportunities for outsourcing from India. European and Asian SMEs are keen to invest in green field manufacturing in India, in order to support their customers who have established facilities in Tamil Nadu. Therefore, the Tamil Nadu Vision 2023 rightly intends to create a Centre of Excellence (COE) in automotive technology to help impart the leading-edge skills required for the auto sector to grow and be competitive.

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