Chennai may become India's detroit soon


Chennai is emerging as the country’s largest automotive and auto components manufacturing hub in terms of investment. According to a state government official, over $3 billion (around Rs 13,800 crore) will be invested in Chennai by global car manufacturers by end of 2010-11. The proposed investment is significantly higher than other auto hubs like Gurgaon in Haryana.

Tamil Nadu Industry Secretary Rajeev Ranjan said the total installed capacity in and around Chennai would be 1.28 million cars a year by the end of the financial year. But, that figure is expected to go up significantly thanks to projects by Ford, Hyundai, BMW, Renault- Nissan and Mitsubishi-HM coming up in the area.

“Every third car produced in India is from in and around Chennai,” says Ranjan. Similarly, the region will see the manufacture of around 350,000 commercial vehicles a year by the end of 2010-11. In 2008-09, 560,000 passenger cars were manufactured, accounting for 30.6 per cent of India’s total production.

Haryana has an installed capacity of around 4.8 million vehicles (1.2 million for Maruti and 3.6 million for Hero Honda). Harley Davidson is also setting up an assembly unit at Bawal in Haryana, which will become operational by the first half of 2011. However, the company has not yet furnished details on its investment or production plans.

Maruti will produce 1.2 million cars from its facilities at Gurgaon and Manesar. Besides, it has plans to add two more plants at its Manesar unit to increase capacity by 0.5 million by 2013. The total investment in both plants is Rs 3,625 crore. Hero Honda, which is the largest producer of motorcycles in the world, has two plants in Haryana: at Gurgaon and Rewari. It produces 6,000 units a day at each.

The automotive industry occupies an important place in the industrial map of Tamil Nadu. The state’s innovative policy for the sector offers an attractive package of support to projects investing more than Rs 4,000 crore. As a result, since May 2006, investments attracted by Tamil Nadu in automotive and auto components manufacturing is around Rs 21,900 crore. That’s almost five times the investments attracted during previous 15 years. The employment potential, both direct and indirect, in these new projects is roughly 120,000.

V Sumantran, executive vice-chairman, Hinduja Automotive, and chairman, Defiance Technologies, says India will produce around 2 million passenger car units in 2010. In a couple of years, annual production is expected to increase to around 10 million units a year. “Though the role of the ecosystem in Chennai cannot be underestimated, many measures on integration within the IT sector will be required to turn Chennai into the Detroit of the future,” he says.

Kiminobu Tokuyama, managing director and CEO, Nissan Motor India, which has set up a Rs 4,500-crore manufacturing unit at Oragadam, near Chennai, along with French partner Renault, said the proactive industrial policies of the Tamil Nadu government helps expansion and setting up of technology centres in Chennai. “Nissan is bullish about India’s small-car segment — it is in the process of introducing new small-car models in the years to come,” he adds.

Hyundai India has made Chennai its manufacturing and export hub for small cars. The i10 and i20 models are manufactured only in Chennai and exported to the world. Chennai is Hyundai’s largest base outside Korea.

On the auto components sides, more than 350 auto component suppliers are located in the state, accounting for over 35 per cent of India’s production capacity. Some of the big names include Visteon, Delphi, Robert Bosch, Lear, Hwashin, Motherson, Unipress, Valeo, Mando and many more have large manufacturing facilities in Tamil Nadu. Three Chennai-based industrial groups — TVS, Rane and Amalgamations — constitute more than 25 per cent of India’s components production.

The most critical intervention of the central government thus far in the automotive sector has come in the form of an ambitious project to set up world-class automotive testing and R&D infrastructure. This will deepen manufacturing, encourage localised R&D, boost exports and converge India’s strengths in IT and electronics with automotive engineering to help the country garner a larger share of the $6-trillion global automotive business.

The Centre is currently implementing National Automotive Testing and R&D Infrastructure Project in Oragdam, Chennai, at a cost of around Rs 450 crore. This project aims to facilitate the introduction of world-class automotive safety, emission and performance standards in the country and ensure seamless integration of our automotive industry with the global industry.