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The Detroit of India poised to retain its USP

The automotive industry is going through one of its most exciting period in India despite frequent disruptions coming its way as speed bumps. It was a 15 per cent growth over the previous year. Tamil Nadu’s manufacturing legacy in the engineering sector, supported by a vibrant and globalised component industry and availability of engineering talent made the state an active hub for the manufacture of automobiles.

This fiscal, India produced 30 million vehicles. These included 4 million passenger vehicles, more than 22 million two-wheelers, and 80,000 commercial vehicles. India is now the fourth largest vehicle producer in the world and may become third, after overtaking Japan, perhaps by 2022. This success story at a global level has a strong Tamil Nadu flavour in it.
Tamil Nadu is one of the most advanced, progressive and competitive states of the country, with a diversified industrial base, strong fundamentals and a well-educate skilled population. The capital city Chennai often described as the ‘Detroit of India’, is the home to the top auto cluster in the country.

1.5 MILLION cars a year

Presently, Chennai can produce about 1.5 million cars a year. Its popular Sriperumbudur-Oragadam-Maraimalai Nagar industrial corridor houses factories of Hyundai, Ford, Renault-Nissan, BMW, Daimler India Commercial Vehicles, Yamaha and Royal Enfield. It is also home to Ashok Leyland, TVS Motor Company, TAFE and Same-Deutz. The availability of port connectivity was a key factor for several companies to set shop here when they were scouting for locations in India several years ago.
The state accounts for more than a fourth of the total auto exports and two-thirds of India’s passenger vehicle exports. In the latest, factories in Chennai produced a million passenger vehicles, partly for domestic consumption and partly for exports.
Exports are a crucial part of the production strategy of Hyundai, Nissan, Renault and Ford. German truck and bus makers Daimler India has also made its Oragadam truck manufacturing operations into an export hub to sell its India-built trucks in several overseas markets. Impressed by the talent pool of the state, global majors like Renault-Nissan, Ford and Daimler have set up one of their largest research and deve-lopment centres in Chennai. These are in addition to Mahindra’s R & D complex – Mahindra Research Valley – and the technical centres of Ashok Leyland, Royal Enfield and Yamaha in the city.
Also Global Automotive Research Centre (GARC), under the aegis of NATRiP, a government of India project for automobile infrastructure, is situated in the SIPCOT industrial growth centre at Oragadam near Chennai. GARC is one of the seven centres planned across the country. GARC-Chennai performs testing of a full range of automobile, agriculture tractors, and construction equipment vehicles.


The auto component industry in Tamil Nadu is genuinely global with international recognition for their manufacturing quality.
The state has the highest number of Deming Award winners. The leading auto parts groups in Tamil Nadu include TVS, Amalgamations and Rane who supply parts to top global brands. These top-class auto parts makers have been a critical factor in not only attracting the large vehicle makers to set up shops in the state but also gave them the confidence to make vehicles in India for global markets.
In 2017-18, the auto-component industry reported total revenues of Rs.51.5 billion, a growth of 18 per cent over last year. The sector contributes 2.5 per cent to the national GDP and employs about 1.5 million. It exports to 160 countries and total value stood at $13.5 billion. Europe and North America account for around two-thirds of total exports.
According to estimates, Tamil Nadu is accounting for a fourth of the total turnover of the Indian auto components industry. She is also home to the highest number of SMEs in the auto components sector.


With the presence of several global players, Tamil Nadu has also become a tyre production hub by housing several large manufacturing units. Some of the big brands include French tyre maker Michelin and domestic majors such as MRF, Apollo Tyres, Ceat and JK Tyres (which is in the process of setting up a factory near Chennai at an investment of Rs 4000 crore).
For Apollo Tyres, Chennai is the fourth factory location in India, but it is one of the largest units with an estimated production capacity of 900 tonnes a day and a key growth centre for the company. French tyre major Michelin began commercial production in 2014 and has so far invested more than Rs.3500 crore; its Chennai factory is one of the most advanced manufacturing facilities with a production capacity of 30,000 tonnes a year. Alliance Tire Group (ATG), engaged in the manufacture of off-highway tyres and is owned by Japan’s Yokohama, has been producing and selling tyres out of its factory in southern Tamil Nadu. MRF and TVS Srichakra Tyres have been producing tyres out of their units in the state for decades.


While Tamil Nadu’s advantages for automobile manufacturing are intact, the past few years have been a challenging period for the state as it didn’t get any significant greenfield auto investment. Neighbouring Andhra Pradesh, Telangana and Karnataka have bagged large auto projects. Gujarat too has emerged as a key investment destination for major automotive manufacturers.
The vigorous promotion efforts made in recent months promise a rebound: French auto major peugeot is gearing up to drive into Tamil Nadu.
With Tamil Nadu offering a unique ecosystem – peaceful industrial climate, availability of substantial skilled manpower, vibrant ancillary industry and good port facilities, there is good reason for the state to be ahead of others, particularly in automobile manufacturing.
– R Seetharan

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