The Hindu Business Line : Auto, textile sectors in TN set to grow by 10 pc: CII study

A SURVEY by the Confederation of Indian Industry - Southern Region (CII-SR) shows that automotive, auto components and textile industries in Tamil Nadu are set to grow by 10 per cent in the second half of 2005-06 over the first half of the year.

The Business Outlook Survey attempts to predict trends in various sectors based on their performance in the first half of the financial year.

Between April and September 2005, information technology and the chemical and fertiliser industry showed a robust growth.

The survey of industries in Andhra Pradesh, Karnataka, Kerala, Pondicherry and Tamil Nadu aims to predict the trend in top five performing sectors and identify the issues and concerns.

The sectors are selected based on their contribution to the State Gross Domestic Product and the views are those of senior executives in leading companies in these sectors.

In Tamil Nadu, the sectors surveyed are: Automotive and auto components, information technology, textile, cement and chemicals and fertilisers.

The State produces 21 per cent of passenger cars in the country, 33 per cent of commercial vehicles, 35 per cent of the automobile components and 10 per cent of the cement. It is the second largest exporter of information technology products.

There are over 11.64 lakh handloom weavers and 25 per cent of the 16.66 lakh power looms in India are located here. Tirupur, a major centre, produces 56 per cent of India's knitwear.

Information technology grew by 40 per cent in April-September compared to the corresponding period last year, and is expected to sustain this revenue growth in the second half of 2005-06.

With demand buoyant, the headcount is expected to grow 30 per cent.

Employee attrition rate, slow communication network, road infrastructure and visa restriction for onsite work in the US are some concerns.

The chemicals and fertiliser industry posted a 15 per cent growth in sales and production during April-September 2005.

Profit margins could range around 16 - 20 per cent in October 2005-March 2006.

But high Customs and excise duty and non-implementation of VAT have hit this sector.

The survey shows that competitiveness of a range of industries has been affected due to non-implementation of value-added tax (VAT) in Tamil Nadu.

The production, sales and export in automotive and auto components industry in Tamil Nadu grew by 10 per cent in April-September 2005 due to strong domestic growth and exports.

The industry hopes that this growth would continue in the second half. This sector too has been affected because the State has not shifted over to VAT.

The textile industry also grew by 10 per cent and hopes to report similar growth during the rest of the year in sales and exports.

Its concerns are a shortage of trained workforce and poor waste disposal facilities.

The cement industry expects significant growth in the second half of the year with major infrastructure projects and large-scale reconstruction work taking off. In the first half its growth was marginal, according to the survey.

Increase in coal costs, shipping costs, diesel prices and excise duty are some of the factors limiting growth.