CHENNAI: The first week of December brought with it (other than the floods) the Rs 3,000 crore Isuzu manufacturing plant in Sri City, which is all-set to begin production in April. The news brings back focus on an issue that has long been debated by industrialists in the south — is Sri City in Andhra Pradesh a threat to investments in the Chennai industrial belt? Because before flying to our neighbouring state, the Isuzu investment had been Chennai-bound. So why did it got there?
For one, land is reportedly several times cheaper. Industry sources say that when a two-wheeler manufacturer signed on with the privately managed SEZ, it got several acres of land for a mere Rs 3 crore. The Andhra Pradesh government also gave Hero MotoCorp 100 per cent exemption on value-added tax (VAT) on bikes produced in the state. Another advantage for the fledgling industrial site is the heavily subsidised power they are able to provide their customers with — Rs 75 paise a unit.
“There is no way Tamil Nadu can afford to give a power subsidy like that,” said a manufacturer in Chennai, requesting anonymity. The processing issues and the time taken for goods to go through Chennai port is also a dampener for future investment — Sri City’s relatively uncongested Krishnapatnam port is better at this.
The marketing and incentive packages have worked for the SEZ. In the six-plus years of its existence, around Rs 22,000 crore of investment has come from 106 industrial units from 26 countries. But does this flurry of investments mean that Chennai’s Sriperumbudur-Oragadam belt, where a lot more industries have poured in with several times more in investment, is losing its charm with industries?
“Not necessarily,” says the Confederation of Indian Industry’s TN-Council Chairman S N Eisenhower. “It is natural that a few companies go where land and power are cheaper. But Sri City has its own problems,” he said.
The lack of skilled labour, especially for industries that require hi-tech expertise, is one. Sri City’s human resources from the area does not have the technically qualified labour that Chennai does. For many companies there, skilled labour is available closer to Chennai and in TN. Another problem is power — while TN’s power situation has been constantly improving, companies in Sri City faced some power shortage last year. This problem looked even more pronounced when their counterparts in Chennai did not. “And after the Global Investors’ Meet, Tamil Nadu is not lagging behind in processing time, incentives and the speed of clearances,” added Eisenhower.
Industry experts say that Andhra’s project comes with its set of issues
Though it scores on ports, cheaper power, it loses out on skilled labour
Global Investors’ Meet Shot in Arm
Tamil Nadu’s first ever Global Investors Meet in September 2015 has attracted an unprecedented investment of Rs 2,42,160 crore — more than double the target of Rs 1 lakh crore. These projects across the State were cumulatively expected to lead to the creation of 4.71 lakh jobs in the State. Chief Minister J Jayalalithaa had announced that all proposals would be cleared within a span of 30 days if all supporting documents were submitted and the requirements were met.