Year 2020: Despite lockdown, TN manages to attract Rs 66k crore investments

Stung by the COVID-19 induced lockdown in 2020 that severely impacted many businesses, Tamil Nadu however, sought to bounce back with mega ticket deals in various sectors later, seeking to live up to its image of a favourable investment destination.

The labour-intensive real estate, besides the MSME sector seemed to bear the brunt of the lockdown, with many housing projects coming to a grinding halt and industrial units downing shutters.

With the construction industry in particular employing a large number of guest workers, the sudden halt prompted an exodus of these people to their native states, such as Bihar and Odisha, as many could not make ends meet.

However, relaxations in lockdown rules have brought relief to the megabucks sector, with construction activity commencing in the wake of the guest workers returning.

There may however, be a delay in commissioning of those projects, a city-based realtor said. With the government stepping up its efforts to attract investments by forming committees under state Chief Secretary K Shanmugham and former RBI Governor C Rangarajan, Tamil Nadu managed to bag huge investments in 2020.

The state Industries Department said the government signed 80 memoranda of understanding with various companies entailing investments of over Rs 66,000 crore which would see job creation of over 1.21 lakh. Guidance Tamil Nadu is the nodal agency operating under the industries department and its Chairman Neeraj Mittal said the government has signed 80 MoUS worth over Rs 66,000 crore.

''All these have been signed till date. Now in the coming year this will fructify...Tamil Nadu will march ahead with these investments...Tamil Nadu is number one ranked in the country (in attracting investments),'' he told PTI. ''Our team keeps track of the investments committed and we have increased the employee base from the earlier five to around 80 now who would be constantly monitoring the status of those projects that had been signed or that are yet to be signed,'' he said.

''...so, basically, the entire culture in Tamil Nadu is investor-friendly. The government is very proactive,'' he said. On the impact of pandemic on the industry, he said the government appointed two committees, each led by Shanmugham and Rangarajan, which have been giving their guidance whenever necessary, including on targeting specific countries and firms who want to relocate from a particular country.

Such initiatives helped the state clinch deals worth Rs 66,000 crore during the pandemic, he said, adding ''the drum beat of Tamil Nadu has increased this year''. Citing a study, he said TN was ranked top in the entire country during the current financial year.

The state attracted investments in areas like electric mobility, renewable energy and automotive from Ola Electric, Stuttgart-based Daimler and Adani Group among others. ''Most companies which were hit by the COVID-19 lockdown have gone back to pre-pandemic levels. It may be in auto companies, fuel companies...there is enough demand and with all these investments the industrial climate will only go up and the new projects will generate new jobs,'' Mittal added.

Sector-wise, MSME and housing suffered most, with an industry body of the latter saying 2020 has been a 'shock' to owner-driven companies in the segment. ''These companies have suffered a severe beating in 2020. Though some sectors have recovered some have not recovered at all. Even those who have recorded growth they were fully washed out during Quarters one and two,'' said KE Raghunathan, Convenor, Consortium of Indian Associations.

''Nearly 30-35 per cent of MSMEs have been washed out. They were not able to survive due to the pandemic. This is the biggest calamity of the year 2020,'' Raghunathan, representing 37 trade bodies of micro, small and medium enterprises said.

While businesses have restarted, cost overrun is seen as there has been 20-30 per cent rise in raw material prices. ''Since there is a cost increase in raw materials, I am unable to make profits. I am only making losses,'' he said.

The government should come out with an Emergency Credit Line Guarantee Scheme for those MSMEs affected in the state, he demanded. The housing sector saw a lot of guest workers leaving for their home states as many projects were stalled due to the lockdown.

Preliminary assessment reveals a drastic decline in its workforce by about 70 per cent in the middle of financial year. However, following relaxations in lockdown rules, activities have resumed.

Casa Grande founder Arun M N said there would be huge demand from consumers who seek additional space in their home to take up multi-functional purposes. ''Project launches will also witness a multi-fold increase focusing majorly on the budget home category. 2021 stays promising and stable for the industry,'' he said.

The apparel and cotton industry, largely confined in Tiruppur district, turned dynamic to focus on production of Personal Protection Equipment (PPE) to cater to the COVID market. The initiative to manufacture masks and PPEs was to tide over the crisis caused by lockdown which saw job losses while employers could not pay their staff.

''This migration to make masks and other medical related stuff was only to manage the crisis as the industry was hit hard by the impact,'' an industry official said. Trade body Apparel Export Promotion Council said it saw double-digit growth during the current financial year which indicated a 'V' shaped recovery.

AEPC Chairman A Sakthivel said apparel exports rose for the first time this fiscal and the steep recovery from 90 per cent fall in April to 10 per cent rise in December showed the sector was on the path of a 'V' shaped recovery. The famed lock industry in Dindigul also suffered badly due to the pandemic-triggered lockdown.