Economic Growth in Chennai

Chennai has been the hub of major economic activities in the country from many decades. The economic activity has been hastened with increase in SEZs in and around the city. These SEZs deal in trading goods and offering employment to a large population. Chennai has been identified as the second largest global trafficker in the country owing to increased volume of IT and BPO services export.  Chennai is a very attractive city on its own and is considered to be the prime base for tourism in South India.

Chennai began flourishing with textile industries in the 16th Century and today it has become the only city to enter the "Forbes Top 10-Fastest  Growing Cities in the World" race.  After Mumbai, Delhi & Kolkata, Chennai has become the next big city to host maximum Fortune 500 companies in the Nation. Not only this, Chennai is also a city which has 24 In-House companies who have a net-worth of 1 Billion US Dollars. 5 million Rupees have come up as the paid capital by more than 5000 companies to Chennai. More than 30% of the automobile industry breathes in Chennai. So, Now you know why is Chennai called the Automobile Hub of the Nation!

Role of Industries in Chennai's Economic Growth:

The economic base of Chennai is spread across wide-ranging industries and manufacturing divisions. The following industries have been anchored to be the key drivers in the economic growth of Chennai:

IT Software and BPO Sectors in Chennai:

Numerous software development sectors and business processing organizations (BPOs) have evolved in Chennai, bringing in more and more growth to the economic sector of the city. Chennai comes second in the list of top exporters of software services in the country after Bangalore, followed by Hyderabad listed as the third one in the list.

India's topmost IT companies like Mahindra, Wipro, TCS, Infosys, IBM, HP etc. and many such leading CMMI-level 5 Corporations have their magnificent offices situated in Chennai.

The large IT tech parks are very spacious and commercialized adding to the standardization and economic developments of the city. Chennai has the distinction of being a tier -1 BPO location and is rapidly growing to compensate for outsourced service.

The key advantages that Chennai offers for the growth of the IT and BPO sector are:

• Low Cost
• Business Connectivity
• Techno Skills
• Exclusive Infrastructure
  
  

Automobile Industry of Chennai

Chennai, commonly acknowledged as the “India’s Automobile Centre”, is the hub for many domestic and international automobile companies.
Many big shot enterprises that deal with the production of four wheelers as well as two wheelers, namely Ashok Leyland, BMW, Nissan, Royal Enfield, Daimler, Ford, Hindustan motors, Hyundai, Yamaha, Renault and many more such manufacturing plants are present in Chennai.

Chennai has been offering high supply of commercial/passenger vehicles and automobile components with a regular increase in its production segments yearly. This directly results in a heavy economic evolution of the city and the country as well. At present, Chennai is regarded as the most profitable manufacturer and the leading automobile export hub in India.

Chennai is rapidly growing as a prominent automobile market in India. The development and upgradation of NH 45 and Chennai's excellent infrastructure for automobile industry and the existence of a good number of manufacturing plants are aiding the development of the Indian Automobile Market in Chennai. 

This has forced developers to resort to freebies and schemes to attract buyers.The Chennai residential market has traditionally shown low volatility in price.

Automobile Manufacturing Units in Chennai:

Ford has a manufacturing plant located in Chennai which contributes around 60,000 vehicles annually to the automobile industry as a whole. Porsche India is looking ahead to control the luxury car market in India and thinking about hiring new dealers in Chennai. BMW India also has a plant in Chennai where it puts together different parts of its car series. Naza is considering establishing a plant in Chennai to produce cars for the automobile market in Chennai as well as in the other automobile markets in India. It is going to spend a lump sum amount of US$ 150 million at the onset.

Chennai also has manufacturing units of companies like Hyundai and Ford. Hyundai Motors' Chennai plant was started with US$ 900 billion and is now capable of producing 250,000 units yearly with its upgraded standards. The plant is facilitated with the scope for research and development. At Oragadam, Chennai a manufacturing plant is going to be established by Mahindra & Mahindra, Renault, and Nissan with an investment of 4,000 crore. Volkswagen has decided to establish a manufacturing plant at Chennai. It has chosen 2 locations for the manufacturing plant and is yet to choose the appropriate one between Sriperumbudur and Oragadam. Ford Motors has also decided to export auto components worth nearly US$ 160 million from India to other countries.

Factors encouraging the growth of the automobile sector in Chennai:

The efficiency and quick service of the administrative sector in Tamil Nadu in assisting the automobile industry in Chennai are helping the growth of the automobile sector in Chennai. BMW considers Chennai to be the most appropriate location for its manufacturing unit because it can afford a pool of investments. It has decided to invest nearly 180 crore in a time span of 5 years. The presence of the other major automobile players in Chennai has attracted the attention of the German company, Volkswagen. Chennai is rapidly becoming the choicest location for the automobile industry due to its skillful and efficient workforce aided with its expertise in the manufacturing sector.

This is precisely the reason for the growth of the luxury car market and the heavy automobile sector in Chennai. The other factors encouraging the growth of the automobile sector in Chennai are its competitive automotive and component sector, high literacy standards, excellent infrastructure, and the availability of ports.

Latest automobile launches in Chennai:

Hyundai Motors has launched its recent car, Getz from its Chennai plant. The new Honda Accord has also been recently launched from Chennai. Hyundai also plans to launch its latest car, Honda CR-V from Chennai. General Motors had also launched Opel Corsa and Astra 2000 from its Chennai plant. BMW is also going to launch its X5 model very soon.

Reasons behind the demand for automobiles in Chennai:

Transportation costs are quite high in Chennai which often leads to the purchase of cars as a better option to reduce transportation costs. The rise in the number of automobiles among the middle class in Chennai is due to the growth of employment avenues in Chennai and the increased disposable incomes among the salaried personnel.

The Indian Automobile Market in Chennai is rapidly becoming the most desired location of major car companies for setting up their manufacturing sites. As a result, the automobile market in Chennai looks poised for a bright future ahead.

Hardware and Electronics Manufacturing Units:

When talking about economic growth in Chennai, one cannot avoid the prominent hardware and electronics manufacturing industry of this region. Currently, Chennai is considered as the chief electronic hardware exporter in India.

With a large number of multinational companies like Dell, Motorola, Cisco, Samsung, Siemens, Texas Instruments, Xerox, Nokia Corporation, Sony-Ericsson etc. that have set up its large engineering plants in Chennai,Chennai has emerged as a popular electronic market amongst the south Asian countries.

The domestic marketplace of electronic hardware goods such as Mobile handsets and computers, color televisions, set-top boxes, DVD players, home theatres, personal audio systems, watches, clocks etc have been estimated to be the fastest developing venture in the world today. With new opportunities of investments and quality interest of consumers, the hardware market of Chennai is witnessing rush in demand and a big turnover in its economic growth.

Medical Tourism in Chennai:

Medical tourism is a budding economic development sector in Chennai. Chennai has the distinction of getting 40% of the medical tourists inflow in the country.According to CII, the estimated number of tourists visiting Chennai every year is more than six lakhs.

The most sought-after and proclaimed medical destinations like the Apollo Hospitals Group, Global Hospitals and Health City, The Madras Institute of Orthopedics and Traumatology (MIOT) etc. in Chennai, vows to serve superior quality healthcare and advanced health facilities to its numerous patients and tourists.World renowned specialists, well-equipped modern amenities, and the extensive infrastructures of the hospitals help in handling critical cases, rehabilitation cases to diagnosis and so on, in the best possible way.

These centers also provides hassle-free scheduling and appointment registrations, estimation of cost and paramedical assistances, post medical reviews, accommodation aids, arrangements of transportations and ticketing benefits and many other guidance, and hence is a hotspot for the tourists. Tamil Nadu produces the largest number of doctors and paramedics in the country.

Travel and Tourism Industry in Chennai:

One of the major drivers in the growth of economy in Chennai is its boosting travel and tourism industry. Chennai, the beautiful capital of Tamil Nadu attracts countless visitors from all over the globe due to its striking archeological landmarks, famous heritage buildings, enriching cultural sites, and its mesmerizing beaches that surround the city.

Many historical places of worship, belonging to different religions exists in this city. These legendary temples, churches offer fascinating locations to tourists from around the world. The long and sandy beaches of Chennai add more beauty to this ancient land of the south. On top of all, Chennai is well-linked to all the major cites of India by several means of travel and transportation, encouraging tourism import to the state.

History, heritage and healthcare are just some of the reasons Chennai is one of the most visited cities in the country. In 2009, Chennai attracted the highest number of foreign tourists, with its temples, beaches and historical and cultural centers. For many foreigners, there is also the draw of learning Tamil and visiting places such as Mammallapuram.

According to tourism secretary foreign tourist arrival increased 40% in 2013 as compared to 2012.It serves as gateway to the rest of South.The foreign tourist brought in about Rs 20,000 crores to the state  last year while domestic tourism contributed around Rs 5,500 crores.

Chennai Entertainment and Arts Industry:

The Tamil Film Industry, more famously referred to as the “Kollywood” is a huge entertainer as well as an economically reinforcing industry. The city is home to the traditional arts comprising of world famous Carnatic music and magnificent dance form of Bharatnatyam.

The classical music and dance concerts by renowned musicians/artists held in the city attract visitors from all age group and all places. The south Indian film industry is dominated by Kollywood, which is considered the second largest entertainer after Bollywood.

In terms of industry size, Kollywood produces about 150 films every year which has an annual turnover of US $ 500 million and is second in race to Bollywood.
 

Real Estate in Chennai:

Real estateChennai’s residential property market was marked by moderate demand during calendar year 2012, but despite the subdued economic conditions, the city witnessed several new project launches.

With absorption staying at around 29,000 units in 2012, an increase of only 6 per cent over the previous year, the surge in new launches increased the proportion of unsold units alarmingly, which now hovers around the 40 per cent mark, up from the previous level of 31 per cent in 2011.

Also Read: Business in Chennai