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Mr Saranyan Krishnan.Source: Tamil Nadu Guidance
A delegation from the Indian government of Tamil Nadu visited Taiwan at the end of October when quarantine requirements for travelers to Taiwan ended. The delegation had meetings with electronics makers Foxconn, Pegatron, Taiwan Electrical and Electronics Manufacturers Association (TEEMA), Taiwan Footwear Manufacturers Association (TFMA) and others during their visit to Taiwan.
The delegation from Tamil Nadu included Mr. Saranyan Krishnan, Deputy Secretary for Industry, Investment Promotion and Commerce, Government of Tamil Nadu, and Guidance and Investment Promotion Agency, Nodal Investment Promotion Agency, Government of Tamil Nadu. It included Pooja Kulkarni, CEO and MD of Tamil Nadu. .
Tamil Nadu will account for 9% of India’s domestic GDP in 2021, or about US$300 billion. This southern state plays a key role in India’s manufacturing sector, with thriving industries around the state capital, Chennai, and throughout other industrial areas in the state. .
Foxconn’s iPhone production is primarily based in Chennai Rim. Hyundai Motor also built a facility near the capital. Pegatron, Delta Electronics, Dell, Flex, Daimler, Yamaha, Salcomp, Tata Electronics, Ola Electric and Feng Tay Enterprise, Taiwan’s largest shoe manufacturer, also have manufacturing in Tamil Nadu.
To help Taiwan achieve industrial diversification and grow into a trillion-dollar economy by 2030, the delegation will move from electronics manufacturing, technical textiles and footwear, and electric vehicle (EV) manufacturing to I visited Taiwan with a mission to attract more investment.
In addition to Taiwan, countries such as Japan, South Korea, Singapore, Germany, France and the United States are focus countries for Tamil Nadu. The mission’s objectives include accelerating the state’s industrial growth and navigating a post-pandemic “China plus one plus one” strategy.
India, and Tamil Nadu in particular, like many other countries in the world, has been caught in the ongoing US-China conflict and is witnessing a large influx of foreign investment. In 2019, relations between India and China deteriorated.
Krishnan said state governments are taking swift action to offer flexible incentives and remove obstacles for foreign investors. “Tamil Nadu offers flexible and customized incentive structures to meet different industrial requirements,” he said.
Since 1992, the state government and the investment promotion agency, Guidance Tamil Nadu, have devised sector-specific policies, fine-tuned and modified for foreign manufacturers. Policy flexibility and political stability have allowed the state government to maintain dynamic communication with businesses and help manufacturers solve their problems.
Krishnan added that state political parties share common goals. It promises to bring in more investment to boost economic growth. Therefore, there is stability and continuity in policy no matter which party is in power.
Diversification of industries from electronics, textiles, footwear to EVs
The global pandemic was a lesson learned the hard way for supply chains. In the post-pandemic era, Tamil Nadu seeks to increase diversity in terms of economic growth and industrial development, recognizing that the economy cannot depend on just a few sectors. This was evident during the first wave of the pandemic when Tamil Nadu was one of the few states in India to record positive growth.
According to Krishnan, one way to diversify the economy is by establishing manufacturing for a wide range of products, from chips, components, cameras, end devices and automotive electronics to EV batteries and non-electronics. , to strengthen the electronics value chain. Other ways to achieve industrial diversification include developing an EV manufacturing ecosystem. Tamil Nadu is also looking to diversify geographically by building more industrial clusters across the state and evenly distributing manufacturing activities.
Electronics assembly typically requires line workers to live in dormitories and work around the clock. Textile factories, by contrast, are mostly located in rural areas, allowing workers to work her usual nine to five shifts. Workers at textile and footwear companies generally have a better quality of life, Krishnan said. Therefore, the Tamil Nadu government wants to attract more textile and footwear manufacturers to India.
Feng Tay established its first facility in Tamil Nadu in 2006 and is already building its third factory. The shoe maker has created nearly 40,000 jobs, and the state government is eager to replicate its business model. The government’s plan is to build about 30 such large-scale factories across the state, with at least one he in each district, said Mr Krishnan.
During a visit to TFMA in Taichung, Mr. Kulkarni said that 50% of India’s footwear exports are made in Tamil Nadu, and the state provides various amounts of subsidies for land acquisition, intellectual property protection, environmental infrastructure building, etc. said it plans to encourage new investment by offering , based on investment size, location and number of job opportunities created.
Tim Pao, PwC Taiwan partner for international tax services, said India does not exempt corporate income tax, but manufacturers that start production in India by March 2024 can opt for a 15% income tax subsidy. added. However, subsidies for small and medium-sized manufacturers seem less attractive than incentives for large manufacturers.
In order for new industrial clusters to form and have strong supply chains, the Indian government needs to increase subsidies to SMEs, Pao said.
Trillion dollar economy goal
Tamil Nadu, India’s second largest GDP contributor, aims to develop a complete ecosystem for EV manufacturing, from motorcycles, automobiles and car electronics to EV batteries. Krishnan said Tamil Nadu already has a strong base for his EV manufacturing, with one-third of his EVs manufactured in India now being manufactured in Tamil Nadu. I was.
“Tamil Nadu has the majority of production of two-wheelers and three-wheelers, and car manufacturing is recovering. For example, Hyundai’s largest factory outside South Korea is in Tamil Nadu,” Krishnan said. rice field.
Over the last three years, the state has seen investment proposals worth around US$50 billion, combined domestic and foreign investment. Even during the coronavirus pandemic, Tamil Nadu received the highest investment offer of any state. This is about US$10-15 billion annually.
Tamil Nadu has a college graduate ratio of over 50% of its college student population aged 17-23, almost double the national average of 27%.
Tamil Nadu is on track to hopefully become a $1 trillion economy by 2030. Its economy is currently around US$300 billion.
PwC’s Pao said India’s Special Economic Zones (SEZs) were primarily export-oriented, but restrictions on domestic sales were eased.
SEZ manufacturers can now find a way to access the domestic consumer market in India. Moreover, India’s new bill, ‘DESH’ (Development of Enterprises and Service Hubs Bill), aims to upgrade SEZs and open them up to the service sector, he said.
DESH is expected to be debated in Congress in the first quarter of 2023.
Mr. Krishnan concluded the interview by pointing out that Tamil Nadu offers a diverse and profitable place to do business and a large consumer base. As India’s income level rises, household appliances and footwear are two commodities that Indians want to produce at affordable prices.
Meeting of Tamil Nadu delegation and TEEMA.Source: Date
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