The Tamil Nadu Government is committed to providing necessary facilitation and support to the global investors, declared Chief Minister M K Stalin.
In his inaugural speech at the two-day Tamil Nadu Global Investors Meet (TNGIM) 2024, which got off to a grand start at Chennai Trade Centre in Chennai on January 7, the Chief Minister outlined his vision for transforming Tamil Nadu into a $1 trillion economy by 2030.
The inaugural session saw packed attendance. Industry leaders from within the country and several global investors were in attendance at the inaugural meeting.
The Global Investors' Meet would act as a catalyst for economic and industrial growth, he said.
The inaugural day saw several MoUs (memorandum of associations) worth several crore signed. Top-notch companies such as Hyundai, Qualcomm, First Solar, Godrej Consumer, Tata Electronics, Pegatron, JSW, TVS group, Mitsubishi, Vin Fast, Moller Maersk have all exchanged MoUs with the State Government for setting up new facilities or expanding their presence in the state. Stalin also inaugurated Qualcomm's new design centre, set up with an investment of Rs 177.27 crore that will provide jobs to 1,600 people.
These MoUs are expected to bring in substantial FDI (foreign direct investment) flows into Tamil Nadu and open job opportunities for thousands. A complete picture of the FDI flow is expected to be revealed at the concluding session on the TNGIM.
“With the aim that Tamil Nadu should play an important role in shaping India's economic
growth, I have set an ambitious target of transforming Tamil Nadu into a 1 trillionU.S. dollar economy by 2030. To achieve this, we are pursuing a twin-pronged approach ofattracting both capital and employment-intensive investments,” the Chief Minister said.“We offer what we promise,” he said. “We have been inviting investors with a red-carpet welcome. We want to be the trend-setter amidst other states. TNGIM has witnessed encouraging response and is expected to bring pride and investment to Tamil Nadu. Multiple policies have been announced by the state. Our focus is to ensure development for all,” he said.
At the inaugural function, the Chief Minister also unveiled a report on ‘Tamil Nadu Vision $ 1 trillion’. Also, he released the Semiconductor and Advanced Electronics Policy, 2024.
Financial Support
Under the Tamil Nadu Semiconductor and Advanced Electronics Policy 2024, the state government will offer up to 50 per cent of additional financial incentives to semiconductor projects selected under the Centre's $10 billion chip subsidy plan. If a semiconductor project selected by the Centre sets up its manufacturing in Tamil Nadu, it will also be eligible for further incentives to train personnel, stamp duty, land and electricity concessions. Global marquee research or design entities in chips and electronics will also be eligible for up to 30 per cent payroll reimbursement for 3 years if they employ residents from the state. The payroll subsidy shall be capped at Rs 20,000 an employee per month.
The state government will reimburse 50 per cent of the expenditure incurred, up to a maximum of Rs 1 crore for the investment period, for in-house R&D-related to patents, copyright, trademarks and geographical indications registration. An interest subvention of 5 per cent as a rebate in the rate of interest shall be provided for actual term loans taken to finance the project.
Furthermore, the 'Structured Package of Incentives for Advanced Electronics Manufacturing' would be applicable for ‘new/ expansion projects’ in the State with investments made from January 1, 2024. The companies should meet a minimum investment threshold of Rs. 200 crore and minimum employment threshold of 150 jobs for the initial Rs. 200 crore investment.
Growth Framework
The chief minister also released a comprehensive ‘Growth Framework’ that has been designed to act as a blueprint to achieve its ambitious goal of becoming a $1 trillion economy. The vision document was prepared by its knowledge partner Boston Consulting Group.At the heart of the growth framework are the ‘Growth Vectors’, which are key sectors segmented across primary, secondary and tertiary, representing pillars of the State's multi-dimensional economy. To ensure the success of these growth drivers, a robust foundation is required, which is provided by the ‘Enablers’ such as infrastructure, human capital, innovation and governance.The vision document has suggested that Tamil Nadu should focus on enhancing installed energy capacity, improving green energy mix and energy efficiency, while enhancing road & rail connectivity across corridors, and further improving the airport and seaport infrastructure in the State. It is also imperative to focus on housing, urban planning, urban regeneration, and mobility solutions.
Upskilling People
On the human capital front, the document has stressed the need for Tamil Nadu to upskill people towards higher value jobs and increase women participation in the workforce, while ensuring best-in-class infrastructure and services for the current and future disease burden impacting the workforce.
Indicating innovation to be a crucial enabler for growth, the vision document has stressed the need for the State to drive Research & Development (R&D) across emerging topics by facilitating collaboration between academia and the industry.
Logistics is the backbone
'Orchestrating ecosystems is another key area for Tamil Nadu, and the State should focus on enhancing its MSME ecosystem by undertaking interventions to increase formalization, improve financial inclusion, enhance value chain linkages, drive capability development, and offer skilled manpower, in addition to providing institutional support,' the vision document said. Logistics is the backbone of trade, it said. The State should ensure the availability of logistics skill capability and capacity, and institute robust governance mechanisms to ensure logistics efficiency.
'While focusing on economic growth, Tamil Nadu must also continue to spearhead regionally holistic and climate conscious growth,' it said.
'In manufacturing, Tamil Nadu has a strong starting point with its significant industrial footprint spanning multiple sectors. The State is India's leading player in textiles, and can bolster its position further by aiming to become the export epicenter of value-added textiles, as well as pioneer in the specialised field of technical textiles,' the report said.
In automotive and electric vehicles (EV), the vision document sees potential to spearhead cell component and electric vehicle supply equipment (EVSE) component manufacturing to create a virtuous cycle of investments in the larger EV ecosystem. The document, at the same time, suggests that Tamil Nadu can grow stronger in the traditional Internal Combustion Engine (ICE) segment by evolving as an auto component export hub for the world.
The document laid emphasis on building its prowess in the electronics and semiconductors sector by attracting leading players in Fabrication (FABs), Assembly, Testing, Marking, and Packaging (ATMP), and the Outsourced Semiconductor Assembly and Test (OSAT) sectors, while driving value addition & localization in Electronics Manufacturing Services (EMS).
Central assurance
Addressing the TNGIM, Piyush Goyal, Union Minister of Commerce & Industry,
said, “India's growth is backed by the success of its states and Tamil Nadu stands as a pivotal cog in the wheel. Tamil Nadu is one of the most ambitious states with the vision of a $1 trillion economy by 2030 and the government of India is working closely with the state government towards taking the state's inclusive and sustainable growth forward.”
Inclusive focus
Dr. T.R.B. Rajaa, Tamil Nadu Minister for Industries, Investment Promotion and Commerce, said
“At the Tamil Nadu Global Investors Meet 2024, we aspire for a bigger and better future with afocus on inclusivity and sustainability. This summit is a pedestal for the state to showcasethe sectoral expertise, enhance and strengthen skilling diversity and expand the investmentopportunities both nationally and internationally.”
Divergent views
Two ionic thought leaders - Raghuram Rajan, former governor of the Reserve Bank of India, and Arvind Subramanian, former Chief Economic Advisor (CEA) - have differing views on how Tamil Nadu should go about in achieving its ambition of becoming a one trillion dollar economy.
At a panel discussion on 'The big bets for Tamil Nadu trillion dollar economy' held at the GIM (Global Investor Summit 2024 here on Sunday, both said that one trillion dollars 'is doable' for Tamil Nadu. The two, however, sharply divided on the approach to achieving that.
While Arvind Subramanian saw huge opportunity in labour-intensive manufacturing in the wake of decline in China's share, Raghuram Rajan felt that 'services should not be treated as a step-child'.
Time was when India's ability to operate at scale was a question mark, the former CEA said. Today, factories in India were offering scale. Stating that the happenings of the past six months in Tamil Nadu had impressed him, the ex-CEA 'Tamil Nadu can indeed aspire to become a $ one trillion economy'.
Warning against over-subsidising manufacturing, Raghuram Rajan felt that China still was very competitive in manufacturing. He said that Tamil Nadu would be better served by focussing on high-end skill-related activities. 'We (Tamil Nadu) have the capacity to move into the higher-end,' he said. In his view, the ambitious target was achievable but 'you must focus on the higher-end'. Nevertheless, Raghuram Rajan clarified that 'I am not saying that you ignore low-skill manufacturing'. According to him, manufacturing and service 'are coming together'. In this context, he pointed to the EVs (electric vehicles) where design and skill played a significant role. The skill availability in Tamil Nadu opened up lots of options and the rising number of GCCs (global competency centres) bore testimony to that , he said. However, Arvind Subramanian felt that 'doing too many services makes manufacturing difficult'. He said that China would not vacate manufacturing. But China was becoming uncompetitive, he added. In this context, he pointed to the decline in Chinese clothing exports.
Raghuram Rajan said besides cross-border competition from countries such as China, Tamil Nadu had to reckon with competition from states within the country. That precisely was the reason why the state had to focus on higher value-added products that were easier to make in Tamil Nadu given its skill base, he said.
On the debt situation in Tamil Nadu, both said the situation wasn't serious. Raghuram Raja said that the debt situation wasn't unusual when compared to other states. In this context, he pointed to the higher social spending in Tamil Nadu. He hoped that the investment in people would pay off for Tamil Nadu. The power sector 'is the Achilles heel' for Tamil Nadu, Arvind Subramanian said. Pointing out that 1/3rd of the State debt was due to the power sector, he felt that the challenge before the state government was how to get the rates up to reasonable levels.In this context, the former CEA stressed the need for institutional reforms especially in the State power sector.
'Devolution of finances to the states has a big amount of redistribution in terms of national building,' said Arvind Subramanian. However, he wasn't quite sure what would happen once delimitation came into being. 'When it (delimitation) comes, dissatisfaction will grow,' he said. The southern states - which contributed more, could feel why they should get less. He clearly wanted a ``recrorrection'' in the fiscal devolution process. Raghuram Rajan, on the other hand, felt that there should be transparent devolution within the state. 'India does very little in terms of devolution of finances to local bodies,' he said. Arvind Subramanian, interjected and said 'the closer we go the people, we hesitate to tax'. He was of the view that there was overdoing on decentralisation.
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