Tamil Nadu aspires to become a $1 trillion economy by 2030-31. The automotive and auto components industry is expected to be one of the key contributors to this vision.
Known as Detroit of India, Tamil Nadu is a favourite automotive manufacturing destination in India and South Asia. Traditional strengths in manufacturing, a vibrant automotive supply chain, strategic location with robust port connectivity, availability of high-quality workforce and peaceful industrial climate have catapulted Tamil Nadu into an enviable position in automotive manufacture.
The state houses manufacturing units of Ford, Hyundai, Renault-Nissan, BMW and Citroen in the passenger vehicle segment. In commercial vehicles, it is also home to the country’s second-largest medium and heavy commercial vehicle maker, Ashok Leyland and the leading global truck and bus maker, Daimler India Commercial Vehicles. In two-wheelers, Tamil Nadu is home to the production units of TVS Motor, Yamaha, Royal Enfield. In tractors, the state has TAFE, the flagship company of the Amalgamation group.
 The Government of Tamil Nadu has been a source of constant support in the various endeavours of Hyundai through the years. All this, combined with a robust industrial set-up, has helped Chennai earn and keep its title as the ‘Detroit of India.’
TYRE PRODUCTION HUB…
What was started as a base to supply to nearby OEMs, the operations of tyre companies have grown manifold in recent years. The state has emerged as the tyre production hub with the presence of most of the leading tyre manufacturers of the country – MRF, Apollo, J K Tyres, Ceat, TVS Tyres, Michelin and Yokohama. These companies have been ramping up their capacities to serve export markets too.
Tamil Nadu accounts for a fourth of passenger vehicle production in India. Though the exit of Ford has dented the overall production levels of passenger vehicles, new investments in the emerging segments are likely to compensate for the losses. In auto components, the state accounts for a little over a third of all India production. Also, the state has a whopping 40 per cent plus share in total auto exports.
The availability of a highly-educated talent pool has also prompted global automotive companies to set up their engineering and R&D centres in the state. Renault-Nissan and Daimler have set up research and deve-
lopment centres in Chennai. Despite its exit from car manufacture in India, Ford operates its massive engineering and software operations in Tamil Nadu. While Mahindra Research Valley near Chennai is Mahindra Group’s prominent and one of the most extensive R&D operations, companies such as Ashok Leyland, Royal Enfield and Yamaha have their global R&D centres in Chennai.
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A momentous shift is happening in the automotive industry- as sustainability concerns have started to drive the transition from the internal combustion engine (ICE) era to electrical vehicles (EVs). This shift to EV is being accelerated by new regulations, advancements in technology and changing consumer preferences. |
EV REVOLUTION
Meanwhile, a momentous shift is happening in the automotive industry as sustainability concerns have started to drive the transition from the internal combustion engine (ICE) era to electrical vehicles (EVs). This shift to EV is being accelerated by new regulations, advancements in technology and changing consumer expectations.
India is actively looking to embrace electrification in the mobility segment. The Indian EV market is currently less than one per cent of the overall automobile market, against the global EV penetration of about six per cent. However, the Indian government has set an ambitious target for EV penetration by 2030. The 2030 EV ambition envisages 70 per cent of all commercial cars, 30 per cent of private vehicles, 40 per cent of buses, and 80 per cent of two-wheeler and three-wheeler sales in 2030 would be electric.
The Central government has been pushing with incentives such as FAME-II to achieve the 2030 target. As a result, the Indian automobile market now abounds with opportunities for EV makers from across the globe.
WESTERN TN – A HOTSPOT
Interestingly, in this EV chapter, the state has seen manufacturing flavour more in the western districts. Several electric vehicle manufacturers have made a beeline to Hosur, Krishnagiri and Dharmapuri. While Hosur is already an auto hub, the last two are emerging as new manufacturing centres in the region.
There are many reasons for this. While Hosur has a robust auto components ecosystem that can support EV manufacturing, proximity to Bengaluru, the IT capital of India, provides more significant advantages as EV manufacturing involves software and IT systems. Thus, EV companies feel that by being in places like Hosur, they will be able to build quickly their supply chains.
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Tamil Nadu accounts for one-fourth of passenger vehicle production in India. In auto components, the state accounts for a little over a third of all India production. Also, the TN has a whopping 40 per cent plus share in total auto exports. |
Bengaluru-headquartered Ather Energy is one of the early investors in EV manufacturing. It had signed an agreement with the Tamil Nadu government early last year. It recently launched its second factory at Hosur, which will boost its production capacity to 4 lakh units from 1.2 lakh units. In November 2021, it committed another Rs 650 crore investment in the next 5 years.
Ola Electric has committed an investment of Rs 2400 crore for its first factory in Krishnagiri District. This project has created a massive buzz in the market. It has claimed that it will employ over 10,000 women at total capacity and the only all-women automotive manufacturing facility globally. It has already started selling its electric scooter S1.
Another Bengaluru-headquartered EV company, Simple Energy, also signed an agreement with the Tamil Nadu Government for a cumulative investment of Rs 2500 crore. While it has already built a factory at Hosur, with an annual capacity of up to 1 million units, its second factory has been set up in Dharmapuri District.
Greaves Electric Mobility, the E-Mobility arm of Greaves Cotton, has set up its largest EV production facility on a 35-acre site at Ranipet on the Chennai-Bengaluru industrial corridor. It will initially have capacity to produce 120,000 units and gradually ramp it up to a million units. About 70 per cent of the workforce in this factory is women drawn from neighbouring locations.
As the western region has become an attractive centre for EV manufacturing, the Tamil Nadu government plans to create an electric vehicle cluster in Coimbatore to give a fillip to the EV supply chain ecosystem. The state government has already identified EV, EV cell and battery and green fuel technology as one of its 12 sunrise sectors.
With a host of companies across the EV supply chain located in Tamil Nadu and in the process of setting up their operations, the state has emerged as the destination of choice for EV manufacturers.   – Seetharan
