Tamil Nadu is one of India’s economically advanced states. Not just now; even in the past. Turn to history for proof.
Almost 70 years ago, at the crack of Independence, Tamil Nadu had several industrial units cutting across the state with Madras (now Chennai), Madurai and Coimbatore being the jewels in the crown.
Coimbatore in Western Tamil Nadu had a strong textile and supporting engineering industry. So did Madurai in the south. Chennai had its own rich cluster of industries: Textile (B&C Mills/Binny) and engineering (Best & Co, Crompton Engineering, Parrys, Simpsons), to name a couple.
The start was good. But it needed progressive and visionary administration to take it forward. Luckily we had such an administration which introduced a slew of investment-friendly policies that drew out and encouraged new generations of entrepreneurs.
Look at the innovation: the Madras Industrial Investment Corporation (now TIIC), set up in 1949, pioneered development finance. TIIC not only funded industries through term loans, it also extended equity support. In an investment-shy region this was like manna from heaven. In the entrepreneur’s mindset, equity was cheaper than debt! And most start-ups didn’t have much anyway! The floodgates opened. Hundreds of units were set up in textiles, sugar, cement and other traditional sectors as also in entirely new areas such as aluminium, viscose, staple fibre and paper. So dynamic was TIIC that it later amended its Memorandum and Articles of Association to extend financial and equity assistance to shipping, recognising it as an industry!
The state helped businessmen engaged in trading to seamlessly transition to manufacturing. It was thus the dealers and distributors of popular, imported brands of bicycles, motor cycles and passenger cars, set up manufacturing facilities in collaboration with their principals, mostly in the UK. When the base expanded to the production of commercial vehicles and later tractors, it was a trigger for the mushrooming of a number of auto component manufacturing units. In quick time Chennai emerged strong in the engineering sector and earned the reputation as a strong centre for automobile and auto component manufacture. Along with these grew a flourishing services sector offering, among others, financial services and insurance.
And then the economy opened up in 1991. India shed itself free of Nehruvian socialism and married market economy. Tamil Nadu was ready for the giant leap forward as it had already built a strong base and this came in handy to carry out large volume production.