Economy

Buzzing with activity

| Updated on: Feb 06, 2011
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Rarely in India one could find a Tier II city such as Coimbatore, the third largest city in Tamil Nadu that could be described as a complete city. While there are cities that are industrially developed or known for their quality health care or for offering top-notch educational facilities or which are coveted for their retail business or real estate potential, it is Coimbatore that has something of everything. Of course, the icing on the cake is its salubrious climate and more importantly the cosmopolitan outlook of the people, giving its residents a quality of life unseen in a city of its size elsewhere that too a city with a moderate population as Coimbatore.

It is this diversity in its profile that has helped Coimbatore to weather many a storm — be it the 1998 serial bomb blast that shook the city's conscience but did not tear asunder the social fabric of the city — or the economic slowdown of the early 2000 or 2008-09, which, while impacting the city, did not destroy the faith of the people in themselves. It is this positive outlook that has helped them reap rich rewards, even as the city looks set to achieve greater glory as the Indian economy integrates with the global economy more firmly.

Initiative

Much of this development has come at the initiative of the people themselves, with investment in industries by the Government being insignificant. Despite being a region that does not produce any significant quantity of cotton to sustain textile mills, Coimbatore has emerged as a major force in the textile sector from yarn and cloth manufacture to garment production. It has one of the largest clusters of SSI units in the country, and is the largest single producer of pumps and motors, apart from emerging as an auto component hub. The huge potential of the city in this segment has attracted foreign companies to establish manufacturing units, either on their own or in alliance with local manufacturers.

But what is likely to define the future growth of the city is the commissioning of the Tidel Park, established at an investment of about Rs 300 crore by the State Government, which is expected to provide employment directly to about 10,000 people when it becomes fully operational soon. But the advantage of Coimbatore is that it is not going to be just IT-dependent to propel its growth. As Coimbatore is largely driven by the basic engineering industry that supports diverse segments such as pumps and motors, automobile and railway components, textile machinery etc., it has helped in wider distribution of wealth which is its strength.

On growth path

Mr K. Ilango, former President of Coimbatore District Small Industries Association (Codissia), said industries were on a capacity expansion mode and even units that were hit by the economic slowdown quickly recovered in line with the Indian economy. In fact “certain sectors of the industry did not feel the slowdown at all” and now all the industries “are firmly on the growth path.”

With the surge in demand and the overall economy doing well, the industrial output has also increased. But the shortage of labour has become more pronounced, pushing up the salary level of the employees. This has helped in increasing their spending power which in turn has helped boost the overall economy, especially the retail sector. The deterrent is the high land prices which increased the cost of investment in new projects.

He said the overall economic boom in sectors such as automotive, infrastructure and capital goods is helping the engineering industry and investments are being made for expansion. Valve manufacturing is growing in a big way. Auto component manufacturers are not able to meet the demand of their customers.

Textile sector

The textile sector (especially the cotton spinning industry) is seeing good margins due to better price realisation. Many textile companies are diversifying into value-added products such as technical textiles and inner-wear etc. Some are working to get into niche areas such as organic cotton and branded clothes. The overall situation is ‘bullish.' He said power and manpower were the two major constraints facing the industries. The sudden surge in growth has caused severe paucity of labour and skilled workforce is not available for the additional capacity. Most of the industries are training them in-house. Attrition rates are high, as companies are poaching labour from others.

Entrepreneurship

Even for the unskilled labour, the wages are skyrocketing with daily wages hovering around Rs 150-200. Mr Ilango felt that the competition for labour would come not from the IT sector, but from the services sector. If the number of techies grows in Coimbatore, the services sector will grow tremendously, taking away a large portion of mid-level workforce from the industries. This will translate into higher wages and industries have to be prepared for it.

He said the uniqueness of Coimbatore is its vibrant entrepreneurial base which has the potential to grow bigger and bigger.

A significant number of micro industries can graduate into small, small into medium and medium into large. The next 5 years will be the period when this will happen significantly. If the challenges of power, manpower and infrastructure can be overcome, Coimbatore has the potential to become a metro. He said the challenge then would be not to allow the ills that plague metros creep in to affect this lovely city.

Mr M. Krishnan, President, Indian Chamber of Commerce and Industry (ICCI), Coimbatore, said though the city witnessed some improvement in infrastructure facilities, “Coimbatore is still not being cared by the policy makers.” The chamber insists that the Government implement the scheme roads, more ring roads, over-bridges etc to de-congest traffic . He said the industrial scenario was upbeat and compared to five years back, it was far better and because of exports, the growth rate ranged from 20 per cent to 30 per cent.

Healthcare

Two other areas where Coimbatore has earned fame are health care and hospitality. With several multi-speciality hospitals offering top quality health care at affordable cost, particularly in cardiac care, oncology, orthopaedics and paediatrics, the city has emerged as a major health care destination.

Luxury hotels

With the opening of the Le Meridien hotel, the first five-star hotel in the city recently, a major gap in the luxury category accommodation has been closed and with the city gearing up to the opening of more 5-star category luxury hotels including the one by the Taj Group in the next two years, the elevation of the city as a favourite convention centre is on the cards. As a young city with all the trappings of a metro in the making, Coimbatore is also emerging as an IT destination. MNCs such as Cognizant Technology Solutions and Bosch have leveraged on the abundant talent pool available here to ramp up their facility. Cognizant, which started its first development centre at the Kumaraguru Techno Park campus with 50 professionals in August 2005, has since expanded by establishing a facility at the KGISL campus before investing in Coimbatore Hitech Infrastructure Ltd SEZ (Special Economic Zone) at Keeranatham. Its total workforce here is now around 2,500.

CHIL SEZ

The CHIL SEZ is a Rs 2,190-crore project, spread over 250 acres, of which, 150 acres is a SEZ notified area, and the remaining 100 acres of non-SEZ area are for support infrastructure including residential housing and other amenities. Investment in the CHIL SEZ brought in by KGISL-Indialand, Bosch, Cognizant and Dell, has on date crossed Rs 990 crore. Mr Ashok Bakthavatsalam, Managing Director of KGISL, said a further investment of Rs 1,100 crore is in the pipeline, and the project is slated for completion by December 2013.

Market research firm Ugam Solutions and BPO player CBay Systems (from Mumbai) have established their office in this SEZ. Currently around 6,500 professionals are employed in the zone (total 11,000, including other workers). He estimated a minimum of 8,000 indirect jobs and 12,000 direct jobs to be generated on completion of this project. He said 80 per cent of Coimbatore's IT exports in 2009-10 (of Rs 710.66 crore) was generated in Saravanampatti, Chinnavedampatti and Keerantham villages. Apart from offering ready to plug in facility, the State Government has also given land to Wipro, TCS and HCL Tech.

Published on February 07, 2011

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