Any entrepreneur will tell you that pitching Tamil Nadu as an attractive investment destination is a no-brainer.
If India has just attained the status of a middle-income country in the World Bank’s reckoning, the state achieved that status many years ago. Tamil Nadu’s per capita income of Rs 1.66 lakh in 2017-18, is 48 per cent higher than the average Indian. With its per capita income vaulting 14 times in the last 20 years, with 16 per cent of India’s industrial workforce and an equal proportion of its factories, the state also offers a remarkable pool of talent for industries. Tamil Nadu has a diverse and broad ecosystem of industry clusters, ranging from automobiles to software services, from textiles to leather and offers a variety of geographical locations to suit different sectors.
TN continues a top FDI destination
But despite the many advantages the state has fallen in its status as a top-of-mind destination for greenfield investments. DIPP data indicates that between 1991 and 2006, Tamil Nadu was an investment magnet that attracted an average of 446 IEMs annually with an investment value of Rs 10,400 crore. Then, the state used to draw about 6 per cent of all investment proposals across India. But that number has diminished with 62 IEMs worth Rs 3130 crore filed in 2017. We continue to be a top FDI destination, attracting 19bn. dollar during 2012-17, but hyper-competitive neighboring States have been pulling out all stops to woo investors.
In competitive federalism, ‘ease of doing business’ matters to investors. On this count, Tamil Nadu has scored well below its potential, standing 15th in the sweepstakes. But the causes for this sluggish performance are not of a structural nature and can be overcome.
Our voice needs to be heard at delhi
First, we must appreciate that in the last two years we have gone through a watershed transition in political leadership. The state has always featured storied leaders who powered over their counterparts. With the passing of these leaders, there is a vacuum, which the state is struggling to fill. Secondly, the state currently lacks political sponsorship at the Centre. Right from independence, Tamil Nadu has had stalwarts representing it at New Delhi. Be it India’s first Finance Minister R K Shanmukham Chettiar or T T Krishnamachari who steered the economy in its formative years, or the affable R Venkataraman who shaped the industrial policy, we had someone who would hear us. In more recent years, that has not been so.
These challenges are not insurmountable. Remember, irrespective of shifting political formations, the state government is home to a roster of exceptionally gifted bureaucrats. The doyens of industry must ally with the steel frame of the state’s bureaucracy to drive reforms. They must shed their traditional reluctance to tom-tom their achievements and showcase the progress being made by the state in various fields.
Two, the State would benefit from a specialist team to identify the specific action points needed to improve its standing in the DIPP’s state-level ease of doing business rankings. Remember, these rankings do serve as a ready reckoner to new investors looking to step into a business destination. Tamil Nadu should take a few leaves out of the playbook of the Centre which has secured India a 23-place jump in the World Bank’s cross-country ease of doing business rankings, in a matter of just two years.
In short, the state needs a can-do spirit to regain its pole position as an investment destination par excellence.
