Tamil Nadu has attained 6th position amid industrialised states in attracting 7% of the total domestic and foreign committed investments across India worth above Rs. 143 lakh crore as of June 2013, according to the just-concluded study undertaken by ASSOCHAM.
“Clocking a year on year (YoY) growth rate of over 10%, Tamil Nadu has successfully attracted investment proposals worth over Rs. 10 lakh crore as of June 2013,” according to a strategy paper titled, ‘Realising Double Digit Growth in Tamil Nadu,’ prepared by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
“Over half of the total investment projects (53%) are under implementation, while over 40% are in the announcement stage and of the remaining, implementation of nearly 2.5% has been stalled and there is no information of over 4% projects,” highlighted the ASSOCHAM paper which was jointly released by the chamber’s Southern Region Council chairperson, Mr. Ravindra Sannareddy; Mr. Ravi Wig, chairman, India - SAARC Business Promotion Council and Mr. D.S. Rawat, national secretary general, ASSOCHAM at a press conference held here in Chennai recently.
The power sector has acquired lion’s share of about 44.5% with 132 proposals absorbing investments worth over Rs. 4 lakh crore thereby clocking year-on-year (YOY) growth of over 30%.
“A lot of new investments are going into power sector. But, considering their long gestation period, it will take some time before fruits of these investments are felt, besides commissioning of Kudankulam nuclear power plant would also address this issue to a certain extent,” said the paper prepared by ASSOCHAM Research Bureau.
The services sector accounted for the second highest share of over 29% followed by manufacturing (16%) and real estate (over 9%) which have emerged key investment luring sectors in Tamil Nadu.
Tamil Nadu has acquired a share of over 9% and over 5% in the total investments made by government and private sources respectively across India.
In its paper, ASSOCHAM has also highlighted that Tamil Nadu’s economy grew at a compounded annual growth rate (CAGR) of nine per cent during 2004-05 and 2012-13.
Clocking a CAGR of about 10%, the services sector accounted for highest contribution of over 61% to state domestic product (SDP).
“Good communication facilities together with spruced up rural road network and rural electrification, the services sector has emerged as the state’s economy.”
The industrial sector in Tamil Nadu grew at about 9% CAGR thereby contributing over 30% to the SDP.
“Infrastructure related bottlenecks coupled with lack of credit availability, use of primitive technologies, labour pangs, environmental issues and other such challenges have been hampering the industrial growth in the state.”
Growing at about 5%, the primary sector comprising of agriculture, fishing, forestry & logging contributed about 8.5% of the state domestic product. “This portrays that agriculture is increasingly transforming into a failing economic activity in Tamil Nadu.
With a view to achieve and sustain a double digit growth rate in Tamil Nadu, ASSOCHAM has carried out a detailed SWOT (strengths, weakness, opportunities and threats) analysis and has made the following key suggestions to the state government in this behalf:
Minor Ports Development..!
Tamil Nadu should adopt a full-fledged development of minor ports & connect these ports to industrial corridors of the state. Besides, the state maritime board should form joint ventures with private investors to develop ports and special economic zones (SEZs) in port areas. Special purpose vehicles (SPVs) also need to be formed to create road and rail connectivity with hinterland.
Investment Strategy..!
The state should adopt a policy to utilize public resources to fund the development of primary and priority sectors. While the private sources should be used to develop industry and services sectors, thereby the state confining itself to the role of a regulator and a facilitator.
Agriculture Development..!
Agriculture and allied activities are the main source of rural employment, food security and a key source of demand for secondary and tertiary sectors. Besides, the state is known for its poor endowment of surface water resources. As such it is suggested that Tamil Nadu should focus on water shed management, water conservation, dry land farming and other such techniques.
Apart from this, the state should also strengthen research, development and extension of agriculture and allied services together with providing key inputs using information and communication technology (ICT) as it would go a long way in reviving the agri sector.
Industry Development..!
There is a need to revive traditional labour-intesive industries of textiles, garments, leather, matches, fireworks and others comprising large number of small scale industries (SSIs). Besides, significant industries in sectors like automobile, chemical and transport equipment are facing infrastructure, environment and labour related issues in Tamil Nadu. The state needs to address these issues on an urgent basis. ASSOCHAM has also suggested that further development of water intensive industries like chemicals needs to be discouraged in Tamil Nadu.
Amid other industry related suggestions, it has been suggested that industrial training centres need to reorient their training to cater to the market oriented needs of services and other sectors.
Another significant aspect is that long-term finance requirements of the small and medium enterprises (SMEs) in the state are not met by risk-averse banks and even Small Industries Development Bank of India (SIDBI) and state finance corporations too only lend to small firms with projects worth up to Rs 10 crore outlay on plant and machinery. ASSOCHAM has thus suggested that state-level development finance institutes like erstwhile state industrial development corporations must be revved up to help SMEs.
Services sector development..!
There is ample of scope for the state to develop its tourism industry. With a 992 kilometers long coastline and Tamil Nadu being home to some world renowned temples and other tourist destinations, the state has various opportunities in beach tourism and pilgrimage development.
The state needs to focus more on hydrocarbons’ exploration, conversion of sea water into potable water and environmental preservation. ASSOCHAM has also offered to prepare a detailed roadmap to propel the Tamil Nadu’s economy into higher growth sphere.
Photos
Mr Ravindra Sannareddy (2nd from right), chairman of the ASSOCHAM Southern Region Council also MD & CEO, Sri City Pvt. Ltd. being greeted by Mr D.S. Rawat (extreme left), national secretary general of ASSOCHAM at an ASSOCHAM press conference for release of study titled, ‘Realising Double Digit Growth in Tamil Nadu,’ held here in Chennai today. Also seen in the picture are: Mr Ravi Wig (2nd from left), chairman, India-SAARC Business Promotion Council, ASSOCHAM and Mr N. Raghunathan, Tamil Nadu state-secretary, Builders’ Association of India.
Mr Ravindra Sannareddy (extreme right), chairman of the ASSOCHAM Southern Region Council also MD & CEO, Sri City Pvt. Ltd. seen here interacting with members of the media at an ASSOCHAM press conference for release of study titled, ‘Realising Double Digit Growth in Tamil Nadu,’ held here in Chennai today. Also seen in the picture are: Mr D.S. Rawat (extreme left), national secretary general of ASSOCHAM and Mr Ravi Wig, chairman, India-SAARC Business Promotion Council, ASSOCHAM.
For Media Contact
Avdhesh Sharma Assistant Director-Corporate Communications, ASSOCHAM
Email: avdheshsharma999@gmail.com,pressroom@assocham.com
M: 08130431999
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