Variety

Nano sets auto-makers navigating westward

Murali Gopalan | Updated on March 24, 2011

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There was absolutely no question of corruption, which explains why most industrialists believe Gujarat is the next big thing waiting to happen.The future will see Maharashtra up against stiffer competition from Tamil Nadu as well as from newcomers such as Gujarat. Yet, it will continue to have its own place under the sun.



General Motors was the only high profile auto resident of Gujarat for many years. In contrast, States such as Maharashtra, Tamil Nadu, Karnataka and Haryana had a far more impressive portfolio right from Ford, Hyundai and Toyota to Suzuki, Honda and Renault-Nissan.

Nano experience

The Nano changed all that virtually overnight. As Tata Motors struggled to douse a raging political inferno in West Bengal, the original home of the people's car, the think-tank in Gujarat was preparing to lay out the red carpet for the company.

This was what prompted the company, in addition to a host of other reasons, to boldly announce that it had had enough of the Bengal experience. A couple of days later, it was made known to all that Sanand, not too far from Ahmedabad, would be the new home for the Nano.

What followed left everyone speechless. Compared to Bengal when every day was a nightmare, things were working at a furious pace in Gujarat.

The State Government wasted little time in ensuring that activity within the plant and outside, in terms of supporting infrastructure, was made ready.

While precious time was lost in the Bengal chapter and Nano numbers were limited thanks to an interim arrangement in the Pantnagar plant, the sky is the limit now for the Nano.

“Gujarat has ensured that everything is in place. It is now up to us to ramp up numbers in the coming months,” a Tata Motors executive told Business Line.

From the company's point of view, what was particularly impressive was the rapid pace of work and, more importantly, zilch interference from the bureaucracy.

There was absolutely no question of corruption either which explains why most industrialists believe Gujarat is the next big thing waiting to happen.

High profile names such as Reliance Industries and Essar have been carrying out their hydrocarbons business here for decades.

The breathtaking pace of readying the Nano plant possibly explains why other automakers are now keen on following the Tatas into Gujarat.

Automakers' haven

Over the last few months, speculation has been rife that Ford and Hyundai have been evaluating its potential for their expansion plans.

While neither company confirmed the news, it will not come as a surprise in the event they decide to set up shop in the State. After all, it has everything that an automaker needs in terms of good ports, roads, power and an able workforce.

While Gujarat is quickly emerging the new kid on the block for big ticket auto investments, its neighbour Maharashtra has had a huge headstart in this space.

For decades, it has been the most comfortable home to Indian companies such as Tata Motors, Mahindra & Mahindra, Bajaj Auto, Force Motors and the Kinetic group. In addition, auto component manufacturers have proliferated in the region since they had to be close to their vehicle customers.

It was in the mid-1990s, when the investment gates were thrown open to multinationals, did Maharashtra suddenly realise that it could not take too much for granted anymore.

Advantage Gujarat

Big names such as Hyundai, Ford, Volvo and Toyota decided to set up shop in the South instead. States such as Tamil Nadu and Karnataka were quick to gauge the potential of these investments and offered these companies huge fiscal baits as goodies to draw them over.

In addition, there was no risk of a militant workforce spoiling the party which was precisely the case with Premier Automobiles and PAL-Peugeot at their plants in Mumbai.

Maharashtra was clueless for some years in reacting to the situation even as it helplessly watched investments flow into other States.

By the turn of the century, it began to set its house in order and kicked off the process of creating auto clusters.

The move worked and names such as Chakan, Ranjangaon and Talegaon were buzzing with activity while welcoming new inmates like Volkswagen, General Motors, Tata-Fiat and M&M into their fold.

Bajaj Auto also had set up its Chakan facility which was to be its showcase laboratory in the two-wheeler space.

The tempo was back in Maharashtra after a scary phase when it seemed intent on hara-kiri in letting investments virtually slip through its fingers.

This was particularly evident during the time the Indian School of Business was on the lookout for an appropriate location.

At that point in time, Maharashtra was on top of everyone's minds but Andhra Pradesh was quicker to offer more sops and space. Eventually,

Professionalism

Hyderabad became home to the ISB, a move that reflected the chaotic state of affairs in Maharashtra.

Even today, industrialists swear by the high levels of professionalism here which explains why they set up shop here in the first place.

Yet, there are concerns about the high cost of living in Mumbai and assured supplies of water and power in the near future.

Successive State Governments have also been slow to reacting to hardcore ground realities with the result that essentials and roads and public transport are in a shambles.

With Ranjangaon and Chakan almost choked to capacity, it is likely that the new centres of growth could be further inland into places such as Nagpur.

This may not be the best bet for those companies with big global plans as they will need to have easier access to ports.

The future will see Maharashtra up against stiffer competition from Tamil Nadu as well as from newcomers such as Gujarat. Yet, it will continue to have its own place under the sun.

Published on March 23, 2011

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