Tamil Nadu aims to emerge as electronics manufacturing hub

Popularly known as India’s Detroit as it is home to several top automobile brands in the world, Tamil Nadu is now going all out to emerge as the No. 1 hub for electronics manufacturing in the country. The state aims to contribute 25% of India’s total electronic exports and increase the industry’s output to $100 billion by 2025.

Besides the conducive ecosystem, “excellent work force”, easy access to sea ports and its “industry-friendly policies”, the Tamil Nadu government believes the Covid-19 outbreak has opened up abundant opportunities for it to attract investments in the sector as many firms are expected to move out of China and set up their units in countries like India.

Chief Minister Edappadi K Palaniswami took the initiative himself by writing to top companies, including those from the electronics sector, asking them to choose Tamil Nadu for setting up their units even as the state battles the Covid-19 pandemic. He also set up a task force to garner investments from firms that are planning to shift out of “certain countries” due to the pandemic, of course, without naming China.

Already home to top 16 electronics manufacturers, including Nokia, Samsung, Flex, Dell, Motorola, Salcomp, HP, and Foxconn, the state is now aiming to contribute 25% of India’s total electronic exports to the world by 2025. India’s electronic exports stood at $11.28 billion in 2019-20. At present, Tamil Nadu is the second largest manufacturing hub in the country and accounts for 16% of the national production of electronics and hardware.

Displaying its intent to emerge as the leader in the sector, the state released its Electronics Hardware Manufacturing Policy 2020 in September offering wide range of subsidies for such companies investing in Tamil Nadu and is now aiming at training over 1 lakh people by 2024 to meet human resource requirement projected by NSDC for Tamil Nadu, in the sector.

The government will formulate a special package of incentives for ESDM units in the MSME sector that will include capital subsidy, interest subvention, low tension power tariff subsidy, generator subsidy, assistance for obtaining intellectual property and assistance in obtaining certifications. MSMEs will also be assisted to scale up their business to serve as a vendor base for large and mega investors in this sector, the policy said.

Tamil Nadu was home to Nokia, the first major mobile phone manufacturer to step onto the Indian soil way back in 2005, whose factory was a symbol of India’s economic success story. But after the factory became defunct in 2014 – it has now been revived by another Finnish firm Salcomp – the state suffered a setback.

“The setback has now been reversed with not just the Nokia factory getting a new lease of life but also Tamil Nadu emerging the most favourite destination for several top electronic manufacturers. The state government’s policies, infrastructure and the facilities offered by SIPCOT are irresistible to companies,” N Muruganandam, Principal Secretary, Industries, told DH. Three seaports in and around Chennai and an international airport is also an added advantage, he said.

Muruganandam added that the state government was in talks with several top companies in the sector for setting up their units without mentioning their names. “Many firms that are already in our state are also planning to expand their capacity by investing huge amounts of money. And the Centre’s production-linked incentive (PLI) scheme is also helping us attract more investments,” he said.

The state wants the electronics industry to be on par with automobiles that accounts to 37.6% of the country’s automobile and auto component exports, apparel (30.8%) and footwear (46.4%). The state has two exclusive Special Economic Zones (SEZs) for Electronics and Hardware manufacturing in Sriperumbudur, 50 km from here, and in Oragadam, 70 km from here, spread over 800 acres.

“Time is the essence and cost is the consideration. We have to be flexible and innovative to seize the opportunity over other states. Though we might appear to lose in the short term, it will be a gain in the long terms and we can devise incentives based on production linked output rather than mere input-based investment,” he said.

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