GREAT EXPECTATIONS
GIM 2019 NEEDS TO ENSURE NEW JOBS, NOT INVESTMENT JARGON
Conversion Of 30% After Last Meet In 2016, Puts Pressure On State To Make Better Choices
D.Govardan@timesgroup.com 22.01.2019
For the second time, organizers of the just-concluded Vibrant Gujarat, a global investment summit backed by Prime Minister Narendra Modi, did not talk about the crores of rupees promised at the end of the meet. Instead, they highlighted the 21 lakh jobs that will be created as a result of the 28,360 memorandums of understanding (MoUs) that were signed at the event.
In less than 72 hours, Tamil Nadu will reveal its investment numbers at the end of the second edition of its Global Investors Meet (GIM) on Thursday. A couple of questions arise: In the absence of a leader like J Jayalalithaa, will the Edappadi K Palaniswami-led government be able to sell the idea of the state as an attractive investment destination? Will TN be inclined to take a cue from Gujarat and focus on job creation?
In GIM 2016, Tamil Nadu attracted lot of promise. MoUs for attracting more than ₹2.42 lakh crore in investments were signed to generate more than 4.7 lakh jobs. However, the changing thermal map resulted in fewer investments in the energy space (power companies promised 40% of the total investments), pulling down the conversion rate of investment to commitment to around 30%. In other words, only a third of the promised money flowed in.
Will GIM 2019 be any different? “Forget about Gujarat, Tamil Nadu is far ahead in terms of conversion of promise into action. The state has been selective about the companies they sign MoUs with. If conversion was 30% last time, it will be much higher this time,” says M Ponnuswami, Tamil Nadu chairman of CII, which is partnering with the government for GIM 2019.
“The state focuses on 12 sectors including automobile, textiles, aerospace, agro and food processing, pharmaceutical and chemicals. The first question the government asks an investor is, ‘what is the job creation potential?’ and only then the question on investment is asked. Job creation is a top objective. This year’s GIM has focused attention on new areas like tourism, housing and construction and even schools,” says Ponnuswami.
Industry experts feel the focus of Gujarat on employment numbers and not investment figures is for political reasons. “The BJP is getting hit over its failure on its promise to create two crore jobs every year. To change that perception they are talking about employment numbers. Even if they create so many jobs that will anyway be filled by labour from Bihar and other states,” said an industry person on condition of anonymity.
Tamil Nadu should not be scattered in its efforts and instead concentrate on select sectors where its strengths lie. “To create jobs, the state should focus on automobiles and auto components, gems and jewellery, handicrafts, textiles, leather parks, and agro industries like food processing,” says M Rafeeque Ahmed, former chairman of Council for Leather Exports. “The more you go for hi-tech industries, it restricts employment generation. We should attract more companies like the Taiwanese sports shoe makers, which has set up base near Cheyyar in Kancheepuram and offers jobs to more than 10,000 women from the region,” he adds.
M V Subramanian, director, Native-Lead Foundation, which has been focusing on identifying startups in smaller cities in the state, feels employment has not become fully formal, to put a number for every sector. “It is easy to do so for IT, since only graduates are directly employed, and estimates indicate this sector will offer an incremental annual growth of only about 5% to 6% over the next five years, along with related sectors like construction, mobility, hospitality and healthcare,” says Subramanian.
State industries secretary K Gnandesikan sought to downplay the employment numbers being touted by Gujarat. “At close to 22,000, MSMEs formed bulk of the MoUs signed by them. With each MSME on an average employing 25 people, it would result in generating employment for only five lakh. What they have mentioned is quite a tall order,” he said.
“GIM 2019 will focus on textiles and garments, electronics hardware and sports shoes, besides automobiles, auto components, engineering and service sectors too. Tech-intensive industries, with low employment potential, too are approaching us. We need to have a blend of everything and this GIM will offer that,” says Gnanadesikan said. We will know in the next three days.
Email your feedback with name and address to southpole.toi@timesgroup.com
GIM 2019 NEEDS TO ENSURE NEW JOBS, NOT INVESTMENT JARGON
Conversion Of 30% After Last Meet In 2016, Puts Pressure On State To Make Better Choices
D.Govardan@timesgroup.com 22.01.2019
For the second time, organizers of the just-concluded Vibrant Gujarat, a global investment summit backed by Prime Minister Narendra Modi, did not talk about the crores of rupees promised at the end of the meet. Instead, they highlighted the 21 lakh jobs that will be created as a result of the 28,360 memorandums of understanding (MoUs) that were signed at the event.
In less than 72 hours, Tamil Nadu will reveal its investment numbers at the end of the second edition of its Global Investors Meet (GIM) on Thursday. A couple of questions arise: In the absence of a leader like J Jayalalithaa, will the Edappadi K Palaniswami-led government be able to sell the idea of the state as an attractive investment destination? Will TN be inclined to take a cue from Gujarat and focus on job creation?
In GIM 2016, Tamil Nadu attracted lot of promise. MoUs for attracting more than ₹2.42 lakh crore in investments were signed to generate more than 4.7 lakh jobs. However, the changing thermal map resulted in fewer investments in the energy space (power companies promised 40% of the total investments), pulling down the conversion rate of investment to commitment to around 30%. In other words, only a third of the promised money flowed in.
Will GIM 2019 be any different? “Forget about Gujarat, Tamil Nadu is far ahead in terms of conversion of promise into action. The state has been selective about the companies they sign MoUs with. If conversion was 30% last time, it will be much higher this time,” says M Ponnuswami, Tamil Nadu chairman of CII, which is partnering with the government for GIM 2019.
“The state focuses on 12 sectors including automobile, textiles, aerospace, agro and food processing, pharmaceutical and chemicals. The first question the government asks an investor is, ‘what is the job creation potential?’ and only then the question on investment is asked. Job creation is a top objective. This year’s GIM has focused attention on new areas like tourism, housing and construction and even schools,” says Ponnuswami.
Industry experts feel the focus of Gujarat on employment numbers and not investment figures is for political reasons. “The BJP is getting hit over its failure on its promise to create two crore jobs every year. To change that perception they are talking about employment numbers. Even if they create so many jobs that will anyway be filled by labour from Bihar and other states,” said an industry person on condition of anonymity.
Tamil Nadu should not be scattered in its efforts and instead concentrate on select sectors where its strengths lie. “To create jobs, the state should focus on automobiles and auto components, gems and jewellery, handicrafts, textiles, leather parks, and agro industries like food processing,” says M Rafeeque Ahmed, former chairman of Council for Leather Exports. “The more you go for hi-tech industries, it restricts employment generation. We should attract more companies like the Taiwanese sports shoe makers, which has set up base near Cheyyar in Kancheepuram and offers jobs to more than 10,000 women from the region,” he adds.
M V Subramanian, director, Native-Lead Foundation, which has been focusing on identifying startups in smaller cities in the state, feels employment has not become fully formal, to put a number for every sector. “It is easy to do so for IT, since only graduates are directly employed, and estimates indicate this sector will offer an incremental annual growth of only about 5% to 6% over the next five years, along with related sectors like construction, mobility, hospitality and healthcare,” says Subramanian.
State industries secretary K Gnandesikan sought to downplay the employment numbers being touted by Gujarat. “At close to 22,000, MSMEs formed bulk of the MoUs signed by them. With each MSME on an average employing 25 people, it would result in generating employment for only five lakh. What they have mentioned is quite a tall order,” he said.
“GIM 2019 will focus on textiles and garments, electronics hardware and sports shoes, besides automobiles, auto components, engineering and service sectors too. Tech-intensive industries, with low employment potential, too are approaching us. We need to have a blend of everything and this GIM will offer that,” says Gnanadesikan said. We will know in the next three days.
Email your feedback with name and address to southpole.toi@timesgroup.com
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