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A mega investment by Tatas in Tamil Nadu

There is interesting news on several mega investments going into Tamil Nadu.

Tata Electronics to invest around Rs 5763 crore on facilities to make mobile phone components. This would be specially welcome for Tamil Nadu where Tatas have not made large investments in manufacturing. The one mega plan they had of setting up the Tata Titanium project did not take off after battling for over a decade. It is gathered the Tatas have acquired around 600 acres from the GMR SEZ in Krishnagiri district.

The Productivity Linked Scheme (PLI) offered for mega projects, combined with special incentives offered by the Tamil Nadu government under its electronic hardware manufacturing policy, seem to be attracting large investments. Remember Josh Foulger of Foxconn making a fervent plea to the government to offer attractive incentives to expand production of electronic products and components? He accompanied Chief Minister E K Palanisamy in his visit to the UK, USA and UAE in 2019 and has been stressing on the potential for the state producing $ 100 billion worth of electronic products by 2025.

After Foxconn and Pegatron, another large Taiwanese company, Delta Electronics, plans to set up a large facility to produce and install battery chargers for electric two-wheelers. The plant is to be located at Hosur.

Ola Electric is to set up the Ola electric vehicles and batteries plant at a cost of around Rs 2400 crore also at Krishnagiri.

Construction companies should scale up

While such mega investments are welcome, some of these units also face issues relating to construction.  Taiwanese companies have been entrusting such work to large Chinese construction companies. It is gathered such companies of giant size have been engaged in executing projects on turnkey basis. With the Chinese aggression at the border, there have been restrictions on the visits of Chinese. Thus construction and erection work have been affected.

The liberalisation era from 1991 witnessed spectacular growth in infrastructure development of roads, ports, airports, railways and buildings. The focus on infrastructure has been a boon to large construction companies like L&T and units of the Shapoorji Palonji (S&P)group. But the slowdown of economic activity in 2019-20 and more so in the Covid year of 2020-21, has impacted order flows. 

The Tatas who have been entrusting large construction jobs to L&T and S&P, seem to be impressed with the rich scope for business in this sector. Tata Projects and Tata Realty are busy scouting for orders. The large Central Vista project for the new Parliament complex has been won by Tata Projects in competition, among others, with L&T. There shouldn’t be any dearth of business: the Mumbai-Ahmedabad bullet train project itself involves an investment of over Rs 100,000 crore. A good portion of this will go for construction of rail lines, signalling and communication, railway stations… There is the prospect for the construction giant L&T scaling up to the size of some of the large Chinese and American construction companies and would aggressively bid for custom.

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