PTI
Chennai: Chennai that is fast emerging as “Detroit of South Asia” with several auto majors making a beeline to the city, is poised to see investments in the sector jump four-fold from the present $4.5 billion by 2015.
With top auto makers such as Hyundai, Ford, Renault-Nissan, BMW and Ashok Leyland expanding their units, Chennai may be overtaking other auto hubs in India like Pune and Gurgaon where DaimlerChrysler AG and Volkswagen AG and Maruti Suzuki India have their units.
The investment in auto sector in Chennai and its suburbs was expected to touch $15-20 billion, a report of the 11th Five Year Plan (2008-2012) prepared by the Tamil Nadu government said citing a study of the Confederation of the Indian Industry.
The companies are flocking to the city with investment to fund their expansion plans for meeting the growing demand, the report said.
According to it, Tamil Nadu contributes to 21% of all passenger cars, 33% of commercial vehicles and 35% of auto components produced in the country.
More than 100 companies are involved in the business, providing 2.2 lakh direct employment opportunities, playing a ‘crucial role’ in the state’s economy, contributing 8% of its GDP.
The state has two automotive clusters, one at Sriperumbudur and Maraimalainagar each and together these have attracted investment of $4.5 billion.
According to a CII study, Tamil Nadu’s automotive and auto components industry registered a better performance during April-September 2007.
The production went up by 5-10%, sales by 10-12% and exports by 12.5-15%.
The capacity usage rose 5% as a result of increased production, while the value of production also went up 30%.
South Korean auto firm Hyundai Motor was the first to start a manufacturing facility at Sriperumbudur. It was later joined by Ford (US) and domestic major Mahindra and Mahindra.
The state also host to a slew of other majors like Renault-Nissan, who recently inaugurated a car manufacturing facility at Oragadam, with an investment of Rs4,500 crore. BMW has an assembly plant in Chennai.
Tax sops, proximity to the sea port (for exports) and a good work culture are some of the factors that encourage manufactures to set up shop in the state.