Aug 30, 2010
The southern districts of Tamil Nadu have traditionally been considered an industrially backward area but, no longer.
Significant investments in infrastructure, happening and in the pipeline, for development of roads, port, power and industrial estates and SEZs along with an attractive package of State Government incentives have helped attract large investments here.
THE PACK
Comprising the nine districts: Madurai, Tuticorin, Tirunelveli, Dindigul, Ramanathapuram, Theni, Virudhunagar, Sivagangai and Kanyakumari, South Tamil Nadu is seeing inflow of investments across a range of sectors. Leading the pack are are Madurai, Turicorin, Tirunelveli and Sivagangai.
Added to infrastructure and incentives are low real estate prices – developed industrial land here costs about a fourth of the prices industries pay in North Tamil Nadu and much lower than for land near Chennai.
State Govt push
A prime mover is the State Industries Promotion Corporation of Tamil Nadu (SIPCOT), the State Government body that is the nodal agency for setting up industrial infrastructure and has established industrial estates and SEZs in the region.
These include the industrial estates and SEZs at Tuticorin, Manamadurai, Gangaikondan, and Nilakottai. The region's abundance in graduates is an attractor, with Tirunelveli growing as a major education hub.
Apart from Sipcot, private players have also set up industrial infrastructure such as the Rs 550-crore Pearl City Food Port SEZ at Tuticorin by the Chennai-based integrated infrastructure company CCCL, and the AMRL Multiproduct SEZ at Nanguneri by the Hyderabad-based AMR group.
According to Government officials, a landmark development has been the Rs 1,500 crore investment proposed by Videocon at Manamadurai, which is expected to generate 1,000 jobs directly.
The investment by the electronic appliances maker has helped attract more investments by its vendors for whom over 30 acres havebeen allotted. Land at the Sipcot industrial estate at Manamadurai is now fully allotted, they say.
Private Investments
Over the next five years Videocon's Unity Appliances Ltd will set up a production facility for LCD and Plasma screen production, electronic appliances and components.
Government officials also said that at the Gangaikondan Industrial Estate, Tirunelveli District, ATC Tires Pvt Ltd is to invest Rs 400 crore on a tyre-manufacturing facility that will generate over 1,000 jobs.
The company is promoted by Yogesh Agencies & Investments, a Mahansaria company, and Warburg Pincus, the equity investment company, which acquired the Israel-based Alliance Tire Company in a $150-million deal in 2007. ATC will help expand Alliance's production capacity.
Alliance is a global leader in developing, manufacturing and marketing a range of off-highway tyres and passenger vehicle tyres.
Its products are exported to over 65 countries for use in agriculture, forestry, mining and construction industries. Mr R. Sarabeswar, Chairman, Pearl City, says enquiries for space indicate that at least 100 acres land could be allotted by the year end at the 425-acre industrial space which includes a 294-acre notified SEZ.
POWER PROJECTS
The proposed investments in power projects in the vicinity of Tuticorin and Tirunelveli, the proximity to the Tuticorin Port which is undergoing rapid expansion, and the potential for marine and agriculture food products hold promise of investments.
Also, a handful of power plants by a range of private players are coming up in the district which would address the needs of the industry.
Leading companies in food sector, domestic and international – in the US, Middle East and Australia – have made enquiries for space at the food SEZ, he said.
At the AMRL SEZ, where 2,520 acres are to come up, the first phase of 300 acres is ready for occupation and work on an additional 200 acres is to start next month.
TNEB is to set up a dedicated substation for this industrial estate, say company officials. AMRL has signed an agreement for space with eight companies and has sold about 30 acres.
Policy Support
In 2008, the Tamil Nadu Government announced a policy specifically to attract investments to the Southern Districts, apart from the incentives available under the industrial policy of the State.
These are a slew of tax incentives available at a lower threshold of investments in these districts.
Incentives for investments more than Rs 250 crore in districts elsewhere are available to the nine Southern districts for investments amounting to just Rs 50 crore and more. These are in addition to the incentives allowed under the industrial policy.
The benefits are: For investments between Rs 50 crore and 100 crore the VAT payable for three years would be treated as a loan that can be paid after seven years with an interest of 0.1 per cent; investments between Rs 100 crore and Rs 200 crore are eligible to pay four years' VAT in the seventh year with an interest of 0.1 per cent; and investments between Rs 200 crore and Rs 250 crore can get a five-year VAT benefit which can be paid after seven years with an interest of 0.1 per cent.
Also, the industrial policy provides for similar VAT incentives to be repaid with 0.1 per cent interest for investments between Rs 250 crore and Rs 1,500 crore.
In the case of such investments in southern districts, this amount is treated as grant.
Source: The Hindu Business Line
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