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Andhra Pradesh vs Tamil Nadu: How the Chandrababu Naidu-led state is becoming the new investment magnet
Six years ago, the tune was different — Tamil Nadu versus Gujarat, went the song as auto majors hummed back and forth between the two states. Today, another aggressive note is in the mix —neighbouring Andhra Pradesh, a newly carved state hungry for investments, is beckoning businesses as Tamil Nadu is caught napping. And Andhra is not only wooing auto majors but investments in all sectors and of all sizes, with all manners of attractive carrots.
ET Magazine spoke with a number of businessmen and industrialists in Tamil Nadu who spoke candidly only on condition of anonymity. The wish list remains the same across the board, no matter which industry or sector. Businesses say that while their existing infrastructure in Tamil Nadu will remain, any expansions of business will very likely move to Andhra.
Institutionalised Corruption
"The key to being internationally competitive is highly efficient and responsive governance," says Tamil Nadu's Vision 2023 document released by the state chief minister Jayalalithaa amid much fanfare in March 2012.
"We welcomed the Vision 2023 document at that time," said a manufacturer of solar power panels in the state. "We were confident that the new state government would fix the precarious financial position of the state. But the business community is unhappy now," he said.
He explains why disappointment abounds. "I set up a small unit in the state with an investment of Rs 1 crore and was about to begin production," he said. "But then I got a notice from one particular department stating that some more permissions had to be taken and that if they were not submitted within 10 days, my factory would be sealed. I rushed to the concerned department where I was told I must meet the minister. When I met him he demanded Rs 40 lakh as bribe to sign on all permissions. We bargained and brought it down to Rs 20 lakh. Even then it is a huge hit for me as the project cost itself is only Rs 1 crore."
"Tamil Nadu's business climate is good, opportunities are there, it boasts of a stable and industry-friendly government," said S Raghavan, secretary of the Southern India Chamber of Commerce and Industry (SICCI). "But there is a need for a separate investor protection cell in the chief minister's office which should be personally monitored by the chief minister," he said.
AIADMK spokesperson and Rajya Sabha member of Parliament Rabi Bernard reckons that businessmen may be getting lured to Andhra by the prospect of promised tax benefits. "[But] when it comes to implementation, we have to wait and see how much Andhra can really offer to the investors," he say
Lack of Innovation & Enterprise
Tamil Nadu's bureaucracy is widely believed to be one of the best in the country. But businessmen say that archaic laws and enormous amounts of paperwork have taken its toll on the community. Despite a head start in fields such as Information Technology (IT) and IT Enabled Services (ITeS), Tamil Nadu has little to show in terms of futuristic businesses. Next generation businesses such as Facebook, Google, Snapdeal and Flipkart have preferred Hyderabad, Gurgaon and Maharashtra to Tamil Nadu. This, say IT sector experts, is because Tamil Nadu has not made the effort to promote itself aggressively a la Andhra.
"Yes, Tamil Nadu should talk more and promote itself," said the industries department official. "That is why we are holding the Global Investors' Meet in September. We have to tell people that we are number two in terms of economy after Maharashtra, and number three in terms of exports after Maharashtra and Gujarat. The FDI credits from multinational companies like Hyundai go to the NCR [National Capital Region] because their registered offices are there while the work is happening in Tamil Nadu. It is the same case with IT majors," he said.
Tamil Nadu is the third largest exporter of IT and ITeS in India with exports projected to touch Rs 95 crore this year. A tenth of overall IT and ITeS exports in the country come from Tamil Nadu. "This is the land of opportunity for IT and ITeS," said K Purushothaman, senior director (Tamil Nadu, Kerala and Puducherry), National Association of Software and Service Companies (NASSCOM). "We wish the government focuses on new age businesses, places a dynamic IT policy, works on a startup policy, incentivises women tech entrepreneurs, emphasises innovation at the campus level and ensures that at least 25% of students get opportunities to become entrepreneurs. We also request the labour department to work closely with industry to bring in changes which are in sync with the industry at large," he said.
Andhra, on the other hand, aggressively flaunts its chief minister Naidu's transformation of Hyderabad into an IT hub to woo investors.
Its recent Swarnandhra Vision 2029 policy promises companies in the IT, electronics and egovernance businesses singlewindow clearance for new units within four weeks. Naidu is also giving a major thrust to the coastal city of Vizag as the next knowledge hub along with smaller IT hubs at Kakinada, Tirupati, Vijayawada and Anantapur. All of this is being done with the chief minister himself holding the industries portfolio.
"Andhra is a new state, we have a visionary chief minister and as you are aware, he was responsible for Hyderabad being what it is today," said Shamsher Singh Rawat, industries secretary for Andhra. "We have brought in a progressive industrial policy. We have instituted a lot of reforms internally — for instance all clearances will be completed for industry within 21 days. We have made changes to labour regulations — we have allowed industry to work in three shifts and we can also prohibit strikes in major or key industries which work on a just-in-time concept, like the auto industry for instance," he said. IT majors are contrasting this with the seemingly never-ending paperwork in Tamil Nadu.
Owners of medium-sized businesses say that introduction of egovernance would go a long way towards sorting this issue out. "See Karnataka for instance," explained a computer hardware parts maker. "You can register a property within half a day. But in Tamil Nadu the process will not get done even after 10 days. Egovernance will also remove corruption in a big way," he said.
"The town planning department needs to be revisited, norms need to be relaxed and made easier," said M Rafeeque Ahmed, chairman of the Tamil Nadu State Council of the FICCI. "We need to get out of the paperwork and inspection Raj. Egovernance needs to be brought in — automatic, single-window clearance for projects is needed," he said.
"This is a complete fallacy," said the senior industries department official. "More and more people find that we are more conducive for long-term business. There is a systematic campaign in place to say that Tamil Nadu is not in good shape. I do not know who is behind this."
Last-mile Connectivity
Industrialists say that Tamil Nadu is a state with excellent connectivity in the form of four major ports and eight minor ports, three to four international airports and good roads. But last mile connectivity, in terms of rail and road is missing — one instance cited is the crucial Chennai Port-Maduravoyal Expressway which is languishing in the Supreme Court as the state refuses to implement the project. "Just take a look at the amount of investments that are coming into Tamil Nadu," rebutted the industries department official.
"MRF is setting up an additional unit of Rs 4,500 crore in Perambalur, TVS Tyres, Renault-Nissan, Saint Gobain, Murugappa are all expanding. M&M is setting up shop here. Data from the Pollution Control Board [which gives approvals for setting up new factories and establishments] shows that in the last four years, 539 units have started operations. This works out to a cumulative investment of Rs 78,220 crore," he said.
"The other problem is that we are unable to meet the chief minister to put forth industry demands," said a textile manufacturer in Coimbatore. "We meet bureaucrats, yes, but they have limited powers in the state. It is the chief minister who decides everything. But there is no access to her," he said. The Andhra chief minister, on the other hand, is said to be calling businessmen personally on the phone and asking them to set up shop in his state. "People are comfortable if they can speak to the chief minister," said Shamsher Singh Rawat. "They can speak to him at any time. He is accessible and so are all the ministers and secretaries. He has good relations with industry and a progressive outlook, so people take to him naturally," he said.
Many businessmen in Tamil Nadu feel that the political compulsions of the state have meant that the ruling party has turned its attention to wooing what they call the "freebie votebank" in the state. Medium-scale and small-scale entrepreneurs in the Western belt of Tamil Nadu especially feel that their plight has been ignored by the powers that be. "It is all about elections and politics," said one lathe unit owner in Tirupur.
Bernard pooh-poohs the freebie votebank allusion. "These are no freebies at all; we need to give a sense of participation to the common man. We are balancing both: taking care of the poor and also wanting an economicallyactive Tamil Nadu," says the AIADMK spokesperson.
SICCI's Raghavan says, "Tamil Nadu should pre-empt (investments being redirected to Andhra) and bring back investments. We need to do something different and unique, we need to create an enabling environment to attract investments."
"In reality, it is the other way around," said the industries department official. "Bosch is moving its production unit from Karnataka to Tamil Nadu; Daimler has decided to bring its bus production unit from Pune to Tamil Nadu; KEF has chosen Tamil Nadu over Kerala to set up a pre-fabrication unit near Krishnagiri. Companies are preferring Tamil Nadu over other states. Neighouring states want Tamil Nadu to be written off but we are miles ahead of them," he laughed.
It could well be a case of the grass being greener on the other side of the Andhra-Tamil Nadu border. But Tamil Nadu needs to work very fast in order to regain its edge over other states in attracting investments.
Andhra Pradesh vs Tamil Nadu: How the Chandrababu Naidu-led state is becoming the new investment magnet - timesofindia-economictimes
@Rajaraja Chola @cerberus @Chanakya's_Chant @itachiii @jaiind @Hindustani78 @Roybot @anant_s @levina @Srinivas @jbgt90 @Georgeclark
Six years ago, the tune was different — Tamil Nadu versus Gujarat, went the song as auto majors hummed back and forth between the two states. Today, another aggressive note is in the mix —neighbouring Andhra Pradesh, a newly carved state hungry for investments, is beckoning businesses as Tamil Nadu is caught napping. And Andhra is not only wooing auto majors but investments in all sectors and of all sizes, with all manners of attractive carrots.
ET Magazine spoke with a number of businessmen and industrialists in Tamil Nadu who spoke candidly only on condition of anonymity. The wish list remains the same across the board, no matter which industry or sector. Businesses say that while their existing infrastructure in Tamil Nadu will remain, any expansions of business will very likely move to Andhra.
Institutionalised Corruption
"The key to being internationally competitive is highly efficient and responsive governance," says Tamil Nadu's Vision 2023 document released by the state chief minister Jayalalithaa amid much fanfare in March 2012.
"We welcomed the Vision 2023 document at that time," said a manufacturer of solar power panels in the state. "We were confident that the new state government would fix the precarious financial position of the state. But the business community is unhappy now," he said.
He explains why disappointment abounds. "I set up a small unit in the state with an investment of Rs 1 crore and was about to begin production," he said. "But then I got a notice from one particular department stating that some more permissions had to be taken and that if they were not submitted within 10 days, my factory would be sealed. I rushed to the concerned department where I was told I must meet the minister. When I met him he demanded Rs 40 lakh as bribe to sign on all permissions. We bargained and brought it down to Rs 20 lakh. Even then it is a huge hit for me as the project cost itself is only Rs 1 crore."
"Tamil Nadu's business climate is good, opportunities are there, it boasts of a stable and industry-friendly government," said S Raghavan, secretary of the Southern India Chamber of Commerce and Industry (SICCI). "But there is a need for a separate investor protection cell in the chief minister's office which should be personally monitored by the chief minister," he said.
AIADMK spokesperson and Rajya Sabha member of Parliament Rabi Bernard reckons that businessmen may be getting lured to Andhra by the prospect of promised tax benefits. "[But] when it comes to implementation, we have to wait and see how much Andhra can really offer to the investors," he say
Lack of Innovation & Enterprise
Tamil Nadu's bureaucracy is widely believed to be one of the best in the country. But businessmen say that archaic laws and enormous amounts of paperwork have taken its toll on the community. Despite a head start in fields such as Information Technology (IT) and IT Enabled Services (ITeS), Tamil Nadu has little to show in terms of futuristic businesses. Next generation businesses such as Facebook, Google, Snapdeal and Flipkart have preferred Hyderabad, Gurgaon and Maharashtra to Tamil Nadu. This, say IT sector experts, is because Tamil Nadu has not made the effort to promote itself aggressively a la Andhra.
"Yes, Tamil Nadu should talk more and promote itself," said the industries department official. "That is why we are holding the Global Investors' Meet in September. We have to tell people that we are number two in terms of economy after Maharashtra, and number three in terms of exports after Maharashtra and Gujarat. The FDI credits from multinational companies like Hyundai go to the NCR [National Capital Region] because their registered offices are there while the work is happening in Tamil Nadu. It is the same case with IT majors," he said.
Tamil Nadu is the third largest exporter of IT and ITeS in India with exports projected to touch Rs 95 crore this year. A tenth of overall IT and ITeS exports in the country come from Tamil Nadu. "This is the land of opportunity for IT and ITeS," said K Purushothaman, senior director (Tamil Nadu, Kerala and Puducherry), National Association of Software and Service Companies (NASSCOM). "We wish the government focuses on new age businesses, places a dynamic IT policy, works on a startup policy, incentivises women tech entrepreneurs, emphasises innovation at the campus level and ensures that at least 25% of students get opportunities to become entrepreneurs. We also request the labour department to work closely with industry to bring in changes which are in sync with the industry at large," he said.
Andhra, on the other hand, aggressively flaunts its chief minister Naidu's transformation of Hyderabad into an IT hub to woo investors.
Its recent Swarnandhra Vision 2029 policy promises companies in the IT, electronics and egovernance businesses singlewindow clearance for new units within four weeks. Naidu is also giving a major thrust to the coastal city of Vizag as the next knowledge hub along with smaller IT hubs at Kakinada, Tirupati, Vijayawada and Anantapur. All of this is being done with the chief minister himself holding the industries portfolio.
"Andhra is a new state, we have a visionary chief minister and as you are aware, he was responsible for Hyderabad being what it is today," said Shamsher Singh Rawat, industries secretary for Andhra. "We have brought in a progressive industrial policy. We have instituted a lot of reforms internally — for instance all clearances will be completed for industry within 21 days. We have made changes to labour regulations — we have allowed industry to work in three shifts and we can also prohibit strikes in major or key industries which work on a just-in-time concept, like the auto industry for instance," he said. IT majors are contrasting this with the seemingly never-ending paperwork in Tamil Nadu.
Owners of medium-sized businesses say that introduction of egovernance would go a long way towards sorting this issue out. "See Karnataka for instance," explained a computer hardware parts maker. "You can register a property within half a day. But in Tamil Nadu the process will not get done even after 10 days. Egovernance will also remove corruption in a big way," he said.
"The town planning department needs to be revisited, norms need to be relaxed and made easier," said M Rafeeque Ahmed, chairman of the Tamil Nadu State Council of the FICCI. "We need to get out of the paperwork and inspection Raj. Egovernance needs to be brought in — automatic, single-window clearance for projects is needed," he said.
"This is a complete fallacy," said the senior industries department official. "More and more people find that we are more conducive for long-term business. There is a systematic campaign in place to say that Tamil Nadu is not in good shape. I do not know who is behind this."
Last-mile Connectivity
Industrialists say that Tamil Nadu is a state with excellent connectivity in the form of four major ports and eight minor ports, three to four international airports and good roads. But last mile connectivity, in terms of rail and road is missing — one instance cited is the crucial Chennai Port-Maduravoyal Expressway which is languishing in the Supreme Court as the state refuses to implement the project. "Just take a look at the amount of investments that are coming into Tamil Nadu," rebutted the industries department official.
"MRF is setting up an additional unit of Rs 4,500 crore in Perambalur, TVS Tyres, Renault-Nissan, Saint Gobain, Murugappa are all expanding. M&M is setting up shop here. Data from the Pollution Control Board [which gives approvals for setting up new factories and establishments] shows that in the last four years, 539 units have started operations. This works out to a cumulative investment of Rs 78,220 crore," he said.
"The other problem is that we are unable to meet the chief minister to put forth industry demands," said a textile manufacturer in Coimbatore. "We meet bureaucrats, yes, but they have limited powers in the state. It is the chief minister who decides everything. But there is no access to her," he said. The Andhra chief minister, on the other hand, is said to be calling businessmen personally on the phone and asking them to set up shop in his state. "People are comfortable if they can speak to the chief minister," said Shamsher Singh Rawat. "They can speak to him at any time. He is accessible and so are all the ministers and secretaries. He has good relations with industry and a progressive outlook, so people take to him naturally," he said.
Many businessmen in Tamil Nadu feel that the political compulsions of the state have meant that the ruling party has turned its attention to wooing what they call the "freebie votebank" in the state. Medium-scale and small-scale entrepreneurs in the Western belt of Tamil Nadu especially feel that their plight has been ignored by the powers that be. "It is all about elections and politics," said one lathe unit owner in Tirupur.
Bernard pooh-poohs the freebie votebank allusion. "These are no freebies at all; we need to give a sense of participation to the common man. We are balancing both: taking care of the poor and also wanting an economicallyactive Tamil Nadu," says the AIADMK spokesperson.
SICCI's Raghavan says, "Tamil Nadu should pre-empt (investments being redirected to Andhra) and bring back investments. We need to do something different and unique, we need to create an enabling environment to attract investments."
"In reality, it is the other way around," said the industries department official. "Bosch is moving its production unit from Karnataka to Tamil Nadu; Daimler has decided to bring its bus production unit from Pune to Tamil Nadu; KEF has chosen Tamil Nadu over Kerala to set up a pre-fabrication unit near Krishnagiri. Companies are preferring Tamil Nadu over other states. Neighouring states want Tamil Nadu to be written off but we are miles ahead of them," he laughed.
It could well be a case of the grass being greener on the other side of the Andhra-Tamil Nadu border. But Tamil Nadu needs to work very fast in order to regain its edge over other states in attracting investments.
Andhra Pradesh vs Tamil Nadu: How the Chandrababu Naidu-led state is becoming the new investment magnet - timesofindia-economictimes
@Rajaraja Chola @cerberus @Chanakya's_Chant @itachiii @jaiind @Hindustani78 @Roybot @anant_s @levina @Srinivas @jbgt90 @Georgeclark
