Historical Development of Industrialisation in Tamil Nadu

Historical Development of Industrialisation in Tamil Nadu

There is lot of evidence for presence of industrial activities such as textiles, ship-building, iron and steel making and pottery in precolonial Tamil Nadu. Given the vast coastline, the region has been involved in trade with both South-East and West Asia for several centuries. Colonial policies also contributed to the decline of the handloom weaving industry due to competition from machine-made imports from England. But some industries also developed during the colonial period.

Industrialisation in the Colonial Period

There are two sets of factors that have contributed to the process. The introduction of cotton cultivation in western and southern Tamil Nadu by the colonial government led to the emergence of a large-scale textile sector in these parts.

Second, increase in trade during this period led to industrial development around two of the most active ports in the region, Chennai and Tuticorin. Match factories too emerged during the colonial period in the Sivakasi region, which later on became a major centre for fireworks production and printing. Port-related activity too contributed to the growth of the region. Leather production was also taking place in Dindigul, Vellore and Ambur areas.

In Western Tamil Nadu, the emergence of textiles industries also led to demand and starting of textile machinery industry in the region. This textile machinery industry in turn led to the rise of a number of small workshops for repair and producers of machinery components. Another major development in the western region is the introduction of electricity from hydro-electric power in 1930s. Availability of electricity allowed for use of oil engines for drawing ground water. This led to both expansion of agriculture as well as increase in demand for oil engines. In turn, it led to emergence of workshops for servicing engines and also for addressing the demand for spare parts. Foundries began to be set up and agricultural machinery began to be produced.

Post-Independence to early 1990s

Soon after independence, several large enterprises were set up by both the central and state governments in different segments such as the Integral Coach Factory in Chennai to make railway coaches and the Bharat Heavy Electricals Limited (BHEL) in Tiruchirapalli manufacture to boilers and turbines. BHEL in turn led to the emergence of an industrial cluster of several small firms catering to its input requirements. Heavy Vehicles Factory was set up to manufacture tanks in Avadi on the outskirts of Chennai. Standard Motors too started manufacturing cars in Chennai. Ashok Motors (later Ashok Leyland) and Standard Motors together helped form an automobile cluster in the Chennai region. The Avadi industrial estate was established in the 1950s to support the small and medium companies supplying to the large firms in the region. More hydro-electric power projects in the state were also initiated to increase the spread of electrification. The government played a major role in all these processes. The Salem Steel Plant was set up in 1973 to produce stainless steel.

The 1970s and 1980s saw the setting up of emergence of powerloom weaving clusters in the Coimbatore region as well as expansion of cotton knitwear cluster in Tiruppur and home furnishings cluster in Karur. This period also saw more encouragement of the small and medium sector with setting up of industrial estates by the state government in different parts. The Hosur industrial cluster is a successful case of how such policy efforts to promote industrial estates helped to develop industries in a backward region.

Industrialisation in Tamil Nadu – Liberalization Phase

The final phase of industrialisation is the post-reforms period since the early 1990s. The reforms made the state governments more responsible for resource mobilisation and they were forced to compete with each other to attract private investments for industrialisation. Incentives such as cheap land, tax concessions and subsidised but quality power were all offered to woo investors. Trade liberalisation and currency devaluation also helped open up export markets. This led to two major developments.

The important industries in the state that evolved over a much longer period include sugar, fertilizers, cement, agricultural implements, iron and steel, chemicals, transformers and paper.

Because of all these factors, Tamil Nadu at present has the largest number of factories among all states in India and also has the largest share of workforce employed in manufacturing. Importantly, it is more labour intensive compared to other industrially advanced states like Maharashtra and Gujarat. The major industries are automobiles, auto-components, light and heavy engineering, machinery, cotton, textiles, rubber, food products, transport equipment, chemicals, and leather and leather goods. Unlike other states, the industries are spread across all regions of the state (there are 27 clusters in 13 districts) with many of them being export oriented as well. The state has a well- developed network of roads, rail, air and major ports.