Tamil Nadu’s decentralised industrialisation model
Economy16 Apr 2024| A-AA+
In News
Tamil Nadu, is India’s No.1 state in terms of economic complexity, measured by the diversity of its gross domestic product (GDP) and employment profile.
Cluster-based industrialisation
TN has just a handful of large business houses with annual revenues in excess of Rs 15,000 crore: TVS, Murugappa, MRF, Amalgamations and Apollo Hospitals.
Even they are not in the league of Tata, Reliance, Aditya Birla, Adani, Mahindra, JSW, Vedanta, Bharti, Infosys, HCL or Wipro, as far as turnover goes.
TN’s economic transformation has been brought about not by so-called Big Capital as much as medium-scale businesses with turnover range from Rs 100 crore to Rs 5,000 crore (some, like Hatsun and Suguna, have graduated to the next Rs 5,000-10,000 crore level).
Its industrialisation has also been more spread out and decentralised, via the development of clusters.
Some of the clusters – agglomerations of firms specialising in particular industries – are well known: Tirupur for cotton knitwear (the units there clocked exports of Rs 34,350 crore and Rs 27,000 crore of domestic sales in 2022-23); Coimbatore for spinning mills and engineering goods (from castings, textile machinery and auto components to pumpsets and wet grinders); Sivakasi for safety matches, fire crackers and printing; Salem, Erode, Karur and Somanur for powerlooms and home textiles; and Vaniyambadi, Ambur and Ranipet for leather.
Popular towns
Many cluster towns are hubs for multiple industries. Thus, Karur has powerlooms, bus body builders and even makers of mosquito and fishing nets (one of them, V.K.A. Polymers, is a major exporter of insecticide-treated bed nets).
Dindigul has spinning mills and leather tanneries.
Namakkal is as famous for layer poultry farms as its large lorry fleet/bulk cargo logistics operators and tapioca-based sago (sabudana) factories.
Salem has powerlooms and tapioca starch-cum-sago producers, while Erode is a textile and “turmeric city”.
Chatrapatti, in Virudhunagar district’s Rajapalayam taluka, is “bandage city” not for nothing: It is a manufacturing centre for bandages, gauze pads/rolls/swabs and other surgical cotton products and woven dressings. Tiruchengode is India’s “borewell rigs capital”.
The borewell drilling services contractors of this town near Namakkal take their truck-mounted rigs all over the country to dig up to 1,400 feet.
Dhalavaipuram, hardly 10 km from Rajapalayam, specialises in production of nighties and ladies innerwear, just as Natham, next to Dindigul, does in low-priced men’s formal shirts.
Tirupur’s knitwear industry alone today employs some 800,000 people, including migrants from Uttar Pradesh, Bihar, Jharkhand, Odisha, Assam and other states. Take K.P.R. Mill Ltd.
This company, with Rs 4,740 crore sales in 2022-23, has 21,819 permanent employees – over 84% women – at its garmenting, knitting, spinning and processing facilities in Tirupur and nearby areas of Coimbatore and Erode districts.
Entrepreneuership in TN
A traditional banking-cum-trading community, the Chettiars had extensive operations in Southeast Asia and Sri Lanka.
The disruptions from World War II and the Burmese nationalist movement led many to redirect their investments back home.
Prominent among them were Annamalai Chettiar (the M.A. Chidambaram and Chettinad groups descended from him), A.M.M.
Murugappa Chettiar (Murugappa Group), Karumuttu Thiagaraja Chettiar (textile magnate) and Alagappa Chettiar (textiles, insurance, hotels and education).
The big Tamil Brahmin-owned houses included TVS, TTK, Amalgamations, Seshasayee, Rane, India Cements, Sanmar, Enfield India, Standard Motors and Shriram.
A more recent name is the business software solutions company Zoho Corporation of Sridhar Vembu.
Coimbatore’s spinning mills, foundries, machining and pumps & valves, textile equipment and compressor making units were mostly started by Kammavar Naidus.
The promoters of Suguna Foods, CRI Pumps, Elgi Equipment and Lakshmi Machine Works, too, are from this community.
Sivasaki’s fireworks, match and printing industries have been built largely by Nadars. But this belt in southern TN – also covering Virudhunagar, Srivilliputhur, Watrap and Rajapalayam – has produced entrepreneurs from other communities as well: Raju (Ramco Group and Adyar Ananda Bhavan) and Udayar (Pothys).
Many from here have also gone on to create successful product brands: Hatsun (‘Arun’ ice-cream and ‘Arokya’ milk), V.V.V. & Sons (‘Idhayam’ sesame oil) and Kaleesuwari Refinery (‘Gold Winner’ sunflower oil).
Way forward
The above “entrepreneurship from below” – combined with its high social progress indices from public health and education investments – probably explains TN’s relative success in achieving industrialisation and diversification beyond agriculture.
