Dr T R B Rajaa, Minister for Industries, Investment Promotions and Commerce, Tamil Nadu intends to make the state a one-stop shop for EV investments.
06 Aug 2023 | 22829 Views | By Ketan Thakkar and Hormazd Sorabjee
Considered the Detroit of India, the South Indian state of Tamil Nadu is vying to be the most preferred investment destination for electric vehicles (EVs) in the world. With marque names like Hyundai, Foxxcon, Ola, Ashok Leyland, and TVS Motor committing significant investments, the proactive Minister of State of Industries, ...
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Considered the Detroit of India, the South Indian state of Tamil Nadu is vying to be the most preferred investment destination for electric vehicles (EVs) in the world. With marque names like Hyundai, Foxxcon, Ola, Ashok Leyland, and TVS Motor committing significant investments, the proactive Minister of State of Industries, Dr T R B Rajaa is going all out to create a comprehensive ecosystem for electric vehicles.
In an interview with Autocar India, the minister laid out the game plan that entails creating a strong enabling environment not only for vehicle manufacturing, but also to invite billions of dollars for battery and cell manufacturing, and semiconductor chip manufacturing in the coming years. Rajaa met up with 30 CEOs of the state in June 2023 to deliberate and discuss how the state government can facilitate existing investors of the state to recommit to the future of electric vehicles. The state is expecting an investment of over US$ 6 billion and a potential of generating about 1.5 lakh jobs in the coming years.
Plug and play approach
Rajaa says he wants to create a “plug and play” approach. “If you decide to come in, you can come and set up shop within a few months, maximum a year, to a year and a half, and at the same time, you will have your own facility also coming up,” he said.
The state is already the largest producer of electric vehicles, accounting for 46 percent of two-wheelers sold in India. Rajaa said that the manufacturing capacities have been built and going forward, “Anyone who’s looking to put up an EV industry will first come into Tamil Nadu, and we’re not going to let go of the opportunity.”
Hyundai Motor India has already committed an investment of over Rs 20,000 crore for EVs in the state, despite being wooed by multiple state governments from western and northern India. The state also boasts the largest electric two-wheeler factory in the world by Ola, which is in the process of setting up a gigafactory to support the manufacturing of electric two-wheelers in the future.
Frank Torres, President, Nissan India Operations says: “We started our journey in India when we set up our manufacturing plant and R&D centre out of Chennai nearly 15 years ago. The strength of the auto manufacturing ecosystem in Tamil Nadu as well as the robust infrastructure and connectivity in the state have helped Nissan to not only cater to the domestic market but also develop Chennai as an export hub during these years. We were the first car manufacturer to start using Kamarajar Port (formerly Ennore port) for exporting cars and so far, we have exported well over one million cars to over 108 global destinations. This is a true testament to our ‘Make in India, Make for the World’ philosophy.
Nissan has a strong roadmap for the future outlined as part of the Alliance’s India vision where we will be manufacturing three new models each for Nissan and Renault for domestic and export markets out of Chennai. The new models will not only cater to Indian customers but also signal a significant increase in exports from India, reinforcing Chennai as an international export hub.”
Ready to capitalise on PLIs
Talking about his ambitious plans for future growth, Raaja said that the next two years will be really crucial in how the state offers PLIs and other incentives. “It’s not just Tamil Nadu, as a nation we will have to take that step in the right direction,” he said, as the pace of electrification gathers momentum amid severe global warming challenges. On its part, the government is building the land base. Already 40,000 acres have been secured and a further 10,000 acres is in the offing. While the cost of land is rising given the strong urbanisation happening in and around Chennai, he is confident that this issue can be resolved. “Everybody accepts that when you come into a developed state like this, then land prices are an issue. I think we can manage by subsidising that via our incentives.”
Skill development at the core
It is not just incentives and a land bank. The government is also working overtime to ensure that ‘skill development’ is at the core of creating a conducive environment.
On why Tamil Nadu is amongst the top choices for electric vehicles, Rajaa explained that the Chief Minister has an initiative called the Naan Mudhalvan Scheme. The objective of this scheme is to identify potential training providers, to impart various skill training based on current industry gaps. As part of this scheme, the government works closely with the industry, to make sure that the syllabus is also tweaked for future demand.
This is critical given the fact that the levels of electronics needed in future electric and connected vehicles are going to be of a different magnitude.
“The Industrial Training Institutes are world class now. They look like shopfloors, much better than many other industries. Our students get trained in cutting edge tech and they are trained to meet the demand of the industry well ahead of the demand being created. Our investors know they will really get a solid workforce within that state," he said.
Tamil Nadu broke into the Top Three ranks in the ease of doing business in 2022, from its previous ranking of fourteenth. The state has been credited for its responsiveness to the pleas of the industry and addressing them at short notice.
It is the second most industrialised state in the country, with a relatively high per capita income, indicating how the development of industries has helped in the development of the socio-economic structure in the state. In terms of wages also, the workers are paid relatively better, as compared to other states.
The increasing number of engineering schools and colleges have ensured a steady flow of workers needed to transition from the ICE driven market to EV manufacturing, which is likely a call for a higher number of research and development (R&D) professionals. The minister says R&D is very close to the Chief Minister’s heart and he has assured that the state is going to have a lot of centres of excellence coming up to churn out a highly skilled force to support not only manufacturing but development as well.
Base for battery and chip manufacturing
Battery space is also an area of interest for the minister, as he explains that the way they take care of international investors when they come to visit the state, ‘is a huge advantage for them.’
Ola Electric has already commenced the construction of the country’s largest gigafactory, by installing the first pillar of its factory in Krishnagiri, Tamil Nadu. The facility which will be expanded in phases, is set to reach 100 GWh at peak capacity, the company claimed in a statement. Once operational, it will be the largest cell factory in India and one of the largest cell-manufacturing facilities in the world.
Apart from Ola, there are numerous other players currently in discussion with the government to evaluate the manufacturing of cells in the state. On a specific question about Tesla, Rajaa said he would ‘play it safe’ by saying, “Our Chief Minister’s office has been in talks with a lot of big players. That’s all that I would want to say."
The state which has an ambition of keeping its competitive edge as the EV capital of India, knows that the quantum of chips in electric vehicles is significantly higher and a local production of chips will go a long way in attracting capital for manufacturing of EVs.
The government of India had come out with a Production Linked Incentive scheme or PLI for semiconductors and display FAB ecosystem in December 2021 with a total outlay of over Rs 76,000 crore. This was tweaked in September 2022 to attract global investors with higher incentives.
Tamil Nadu is close to announcing big-ticket investments in the state, assured the minister. The state has, in fact, set up a dedicated team to attract investors in this space.
“We have a separate team working on looking for big investors who will come in and set up shop very quickly. We are in advanced talks with a few companies, and we should be able to make big announcements in a year or year-and-a-half,” assured Rajaa.
Incentivising consumption
It is a holistic approach to a greener tomorrow. Apart from incentivising vehicle manufacturing, the state is adopting a cluster[1]based approach to develop the charging infrastructure.
The Tamil Nadu government is also willing to share costs with companies in certain zones. “We are looking out for really big players to come into the charging infrastructure space. I think we’ll be able to pull them in very soon with our incentives for the charging infrastructure.” Rajaa says he expects the state to move to all electric vehicle sales by 2035 and the government will also support industries to move to net carbon zero.
“It would be a realistic target to go full EV, including passenger vehicles. We are giving a big push on the commercial side. I do want to see this by 2035,” he concluded.
This feature was first published in Autocar Professional's August 1, 2023 issue.
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