Tamil Nadu Sets Up Crack Team to Net Companies Fleeing China, Other Covid-Hit Nations

The panel will formulate a special incentive package and facilitation process to draw investments. (Reuters)

The panel will formulate a special incentive package and facilitation process to draw investments. (Reuters)

A committee headed by the state’s chief secretary that also includes representatives from South Korea and Japan will submit a report within one month.

Poornima Murali
  • CNN-News18
  • Last Updated: April 30, 2020, 4:08 PM IST
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Chennai: Trying to leverage its position as one of the top destinations for foreign investment in the country, Tamil Nadu has set up a crack team of bureaucrats to see if investments flowing out of Covid-impacted countries as a measure of supply chain diversification can be drawn into the southern Indian state.

This committee will be headed by the state’s chief secretary and will submit a report within one month. The panel will also include representatives from top investor companies from nations like Japan and South Korea, which have already indicated preference to shift production from China.

"Reports indicate that countries like the USA, South Korea, Japan, Taiwan and Singapore are likely to diversify by establishing supply chains originating in India. Tamil Nadu, which is already a favoured investment destination, is well placed to attract these investments and needs to take pro-active steps to attract them," a government order stated.

Globally, companies are said to be evaluating their supply chains. Recently, Japan had even allocated a portion of its stimulus package to help manufacturers with bases in China to move their units.

The panel will formulate a special incentive package and facilitation process to draw investments and identify sectors in which the state can develop ecosystems. The panel will also identify measures to fast track clearances to promote the investments.

Tamil Nadu was doling out incentives one after the other just ahead of the advent of the Coronavirus. The state had unveiled a raft of measures to draw investments emerging in the electric vehicle industry. From road tax waivers for consumers to a slew of sops for charger manufacturers, the state put out a comprehensive policy for e-vehicles.

Another interesting feature in Tamil Nadu’s industrial scene is the presence of Taiwanese phonemaker Foxconn, which runs a contract for Apple among other phone brands such as Xiaomi.

Foxconn was significantly ramping up labour forces for its factory in Sunguvarchathiram off Chennai, before its plans were derailed by the spread of the Coronavirus. The Taiwanese company is one of the trusted investors in Tamil Nadu: top executives of Foxconn were present alongside Edappadi K Palaniswami as he met investors during his trip to the US last year.

Auto plants of companies like Hyundai, Renault Nissan and Ford are also located in the state. Not just commercial vehicle makers like Daimler, even luxury brands have arrived in Tamil Nadu for its labour: BMW has its India plant here near Chennai. Tamil Nadu will be leveraging all these points to global investors in their pitch, said an official privy to the development.

While the state has taken a bold step to draw new investments, its existing investors face a quandary over the lack of clarity about the phased exit plan.

Most of Tamil Nadu’s biggest factories are located in the Sripurumbudur-Oragadam belt in Kanchipuram district, ironically the first-ever area to register a Coronavirus victim in the state.

A C-suite executive working for a major electronics manufacturer said he was “not sure about permissions as yet,” meaning the industry still awaits clarity on operating factories after May 4.

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