CHENNAI: Tamil Nadu’s status as one of India’s favoured industrial destinations is being challenged on its own turf as rival states are opening offices in Chennai to reach out to companies for potential investment and to poach professionals trained at Guidance Tamil Nadu, the state’s primary investment promotion agency.
The Andhra Pradesh Economic Development Board, a state investment promotion agency, is considering setting up office in Chennai. Invest UP, Uttar Pradesh’s investment promotion agency, recently established an office in the city. Haryana is also expected to follow suit, said sources at the state industries department. An Invest UP official privately called the contest among states a “blood sport”.
As Guidance prepares for a pay revision, staff have been asked to sign a bond promising not to join offices associated with competing states, according to people familiar with the discussions held this week
‘Bid to lure TN officials a serious concern’
An industries department official told TNIE that other state agencies have attempted to lure investment-promotion professionals who had been trained at Guidance Tamil Nadu. Both AP and UP agencies are carrying out this employee-poaching that the state industries department has called a “serious concern”. States should compete on their own strengths, not try to lure one another’s staff, the source said. “Our approach has never been to compete on incentives alone,” he added, pointing to TN’s industrial ecosystem, infrastructure, talent, speed of execution, and policy continuity.
“There is huge demand for officials from Guidance because they are more skilled,” a former Guidance official said. The exposure is institutional as well as personal. Formed 34 years ago, Guidance was among the first state agencies to bring investment promotion in-house rather than lean on consultancies such as Boston Consulting Group, Ernst and Young, and KPMG, another former Guidance official said. Officials from Kerala, Telangana, and Karnataka have also visited Chennai to study its model.
Guidance has also spent years cultivating a network of target companies that newer agencies lack. Losing experienced staff could mean losing knowledge of investors, projects, and negotiations, not just headcount.
Playing down the rivalry, an Andhra Pradesh industries official said, “We don’t see it as a competition”. AP’s priority is to anchor projects around which suppliers can cluster, and to do that, it will need closer links with Bengaluru, Hyderabad, and Chennai, the official added.
TN has nonetheless lost ground as Andhra Pradesh, under Chief Minister N Chandrababu Naidu, has pursued investors aggressively. Hwaseung Enterprises, the South Korean footwear maker, initially announced setting up a `1,720-crore non-leather footwear plant in TN in August last year.
By November, they moved to Kuppam in AP after being offered more lucrative land-linked incentives.Earlier this year, AP beat TN to a proposed flight-testing and integration complex for the Advanced Medium Combat Aircraft, India’s fifth-generation stealth fighter programme. The neighbouring state also tried unsuccessfully to court a $4 billion HD Hyundai shipbuilding project, now coming up in Thoothukudi.
Uttar Pradesh is taking a more direct approach. Its Chennai office has been operating for about a month under a general manager, according to an Invest UP official. The agency is also setting up satellite offices in Bengaluru, Hyderabad, Delhi, and Mumbai.
The aim is to meet investors “on the ground” rather than wait for them to come to Lucknow, the official said. Chennai’s concentration of automotive, electronics and engineering companies makes it an obvious target. Invest UP is also weighing country-specific enclaves for Taiwanese, South Korean and Japanese companies. TN insists the new arrivals do not change its approach. A TN industries department official said it remains in regular contact with companies in India and abroad, digitally and in person.
