Introduction:
In a landmark development for Tamil Nadu’s economic trajectory, VinFast Auto, a prominent Vietnamese automaker, has pledged a staggering ₹16,000 crore (approximately $2 billion) investment to establish an electric vehicle (EV) manufacturing unit in Tamil Nadu.
The DMK government, led by Chief Minister MK Stalin, organized its inaugural investors’ meet, signaling a positive beginning. The event aims to exceed the investment outcomes of the two previous meets held during the tenures of the AIADMK regime in 2015 and 2019, led by J Jayalalithaa and Edapaddi K Palaniswami, respectively.
The previous editions garnered investment commitments of ₹242,160 crore and ₹268,296 crore, but subsequent years saw some firms retracting their plans. In the current edition, the southern state aims to attract investment pledges totaling ₹5.5 lakh crore over two days.
This announcement occurred during the third edition of the Global Investors Meet in Chennai. Several companies, including industry giants like Pegatron and Tata Electronics, signed significant Memoranda of Understanding (MoUs) with the state.
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5 Key Highlights from Tamil Nadu Investment Meet:
1. VinFast’s Strategic Investment:
Vietnam’s leading electric vehicle (EV) manufacturer, VinFast, and the Tamil Nadu State Government signed a Memorandum of Understanding (MoU) on Sunday, outlining a joint investment of around $2 billion.
The initial commitment for the first phase of the project, spanning five years, is set at $500 million.
The VinFast Tamil Nadu project, based in Thoothukudi, aims to establish itself as a premier electric vehicle production hub in the region, boasting an annual capacity of up to 150,000 units.
VinFast’s strategic move to expand into India is fueled by the aim to capitalize on growth opportunities in the world’s most populous nation and a rapidly expanding EV market.
This expansion is a crucial element of VinFast’s broader strategy. This aims to establish a robust presence in key markets and strengthen its supply chain for global expansion.
Details of Vinfast investment
VinFast aims to generate approximately 3,000 – 3,500 job opportunities within the local community. In addition to creating jobs, VinFast actively commits to promoting gender equality and facilitating career advancement opportunities for the workforce.
Construction of the plant is scheduled to commence in 2024, laying a solid foundation for economic growth in Tamil Nadu. In addition to the economic advantages, the project aligns with the goal of green transportation development, targeting 30% of newly registered private cars to be electric. This initiative resonates with the state government’s efforts to minimize carbon emissions in the transportation sector.
“The MoU demonstrates VinFast’s strong commitment to sustainable development and vision of a zero-emission transportation future. We believe that investing in Tamil Nadu will not only bring considerable economic benefits to both parties but will also help accelerate the green energy transition in India and the region,”
~Tran Mai Hoa, Deputy Chief Executive Officer of Sales and Marketing, VinFast Global.
VinFast’s green transportation development initiative represents its third manufacturing projec. This also stands as the most significant investment in the history of Tamil Nadu.
Recognizing the tangible economic and social advantages arising from the project’s establishment, the Government of Tamil Nadu pledges to allocate cleared land for the manufacturing facilities. The govt. would also provide uninterrupted power supply, along with other infrastructure support, to the best of its abilities.
Furthermore, both entities will maintain an ongoing collaboration, exploring possibilities for the installation of charging stations. This would contribute to the pursuit of a cleaner and more sustainable future in mobility.
2. Diverse Investment Portfolio:
On Sunday, Tata Electronics closed a deal to invest ₹12,082 crore for the expansion of its enclosure manufacturing unit and mobile assembly plant catering to various brands in Krishnagiri district.
In a separate agreement, Taiwan’s Pegatron, renowned for assembling Apple’s iPhones, committed ₹1,000 crore for manufacturing computing, communications, and consumer electronics devices in Chengalpattu district.
While China has traditionally served as Apple’s primary production hub, India has become integral to its supply chain.
The country’s contribution to smartphone exports surged from 1% in 2020 to 7% in 2023. This happened after Apple commenced iPhone assembly through contract manufacturers in India last year.
For Tamil Nadu, which emerged as the leading electronics export state in 2022-23 with exports valued at $5.37 billion, the investments from Tata and Pegatron represent a significant boost.
In the initial months of 2023-24, the state’s electronics exports amounted to $4.8 billion,. This is twice that of Uttar Pradesh, which ranked second with $2.5 billion.
JSW Energy secured the second-largest Memorandum of Understanding (MoU) at ₹12,000 crore. This is followed by Hyundai at ₹6,180 crore, TVS at ₹5,000 crore, Godrej Consumer with ₹515 crore, Mitsubishi with ₹200 crore, and Qualcomm at ₹177 crore.
Read More: 5 reasons why Tamilnadu is driving India’s EV revolution
3. Government Initiatives and Policy Framework:
Upon taking office in May 2021, DMK outlined an ambitious plan to make the state a $1 trillion economy by 2030.
On the inaugural day of the summit, Chief Minister Stalin unveiled the state’s policy for semiconductors and advanced electronics. A key objective of this policy is to position Tamil Nadu as a contributor to 40% of India’s electronics exports by 2030.
“Tamil Nadu is on the fast track to economic growth and has attracted substantial investments. This Global Investors Meet will pave the way to further accelerate the quantum of investments to the state and consequent industrial growth.”
~MK Stalin
4. Qualcomm to Invest 177 Cr to setup a design Center
Qualcomm India has announced a substantial investment of ₹177.27 crore in establishing a cutting-edge design centre in Chennai. The company underscored its commitment to fostering technological advancements in India by making the announcement at the Tamil Nadu Global Investors Meet. This design centre is poised to play a pivotal role in shaping the global future of connectivity.
5. Economic Growth and Job Creation:
These investments are expected to generate a significant number of jobs, extending beyond their monetary value. These strategic investments actively support the government’s ambitious goal of steering TN toward a $1 trillion economy by 2030.
“There are more people working on chip design in India as compared to the rest of the world. Owing to the intense work force, many multinational firms prefer setting up offices in the country. So, it is not a surprise that Qualcomm has chosen to set up a facility in Tamil Nadu,”
~Chris Miller, author of Chip War, said during a chat on semiconductors with Rahul Sharma, managing director of APCO Worldwide, a consultancy.
Read More: Qualcomm Invests 177 Cr For Design Centre in Chennai; Creating 1600 Jobs
Conclusion:
VinFast Auto’s colossal investment, coupled with commitments from other industry leaders, signifies a paradigm shift in Tamil Nadu’s economic landscape. The diversification into cutting-edge sectors like electric vehicles and semiconductors positions the state as a frontrunner in India’s industrial development.
