The massive return to power, after five years in opposition, of J Jayalalithaa’s AIADMK in Tamil Nadu — officially, still to be declared, as 76 of the 234 results are still to be declared, counting not being over — comes against an interesting background.
Historically, Tamil Nadu has been famous for encouraging both, industry and pro-poor measures. This has been so, no matter which party comes to power. Around 3,000 foreign companies have set up facilities in the state so far, 34 being Fortune 500 companies. There are around 26,000 factories in the manufacturing sector. According to the industry department, proposals worth Rs 8,000-10,000 crore are ready to be placed on the new government’s table, while investments worth Rs 76,500 crore are in the pipeline. However, two major challenges which will stall investment will be power and labour issues.
Tamil Nadu attracted cumulative foreign direct investment inflows of $5.7 billion between April 2000 and May 2010. Chennai has emerged as India’s largest automotive and auto components manufacturing hub and exporter in the country. According to the state government, $3 billion (Rs 13,800 crore) will be invested in Chennai by global car manufacturers by the end of the year.
However, in recent days, labour unrest has been a major issue. The other major issue is electricity. Once surplus in power, the state is now buying from the open market, with a daily shortage of 3,000 Mw every day. Tamil Nadu Electricity Board has restricted power consumed by bulk industry users to 70 per cent of their need.