Sustainable IR Trends Fueling Growth of Manufacturing Industries: The Tamil Nadu Experience.

Date01 January 2023
AuthorPoorani, S.


Tamil Nadu (India) plays a critical role in the nation's economic development as an industrial powerhouse. The organized manufacturing sector has the potential to become a global business center as a pillar of economic growth. The state contributes around 34% of GDP. Additionally, it attracts approximately $ 4090.50 million in FDI equity investment toward industrial development (Ibef, 2021a). By 2025, it is expected to attract 20 lakh jobs are being created by investments costing Rs 10 lakh crore (US$ 137.8 billion). With at least 37,378 factories, the southern state leads the list of states (Business Today, 2016). However, there were only 14,617 factories in 1990-91. Over 25 years, this number has risen more than 2.5 times.

Tamil Nadu has significantly contributed to India's development and has experienced decades of steady economic progress. It has become a major production center for textiles, leather goods, light, and heavy engineering, pumps and motors, electronic hardware and software, and vehicles and auto components. The state continues to be a national leader in the exports of readymade clothing, software, leather products, and autos and automotive components. (Ibef, 2021b).

Educational institutions play a crucial role in opening endless opportunities. Table 1 provides us with an overview of the number of colleges with students enrolled. The state has 495 engineering colleges with a total student intake of 278428 (Pon Vasant, 2021). GER (Gross enrolment ratio) in Tamil Nadu grew from 42% in 2012-13 to 51.4% in 2019-20, leading by a wide margin almost all other states in terms of enrolment in higher education. It is estimated that there are 486 diploma colleges in Tamil Nadu, with a student intake of 1.9 lakhs (approx). The courses help students match the industry's expectations by providing professional skills and reducing inequality. Students at the colleges are always prepared in such a way that they develop employability skills that result in their master's degrees. A study on technical and vocational education and its impact on employability found that technical graduates possessed proficient technical abilities.

Number of registered Factories in Tamilnadu

* 2017- 42,082

* 2018-42987

* 2019-44,129

* 2020- 45,477

* 2021-46899

Source: Dish (2021)

"Tamil Nadu represented one-fourth of the factories registered in India overall." This makes it easier to understand why the state is one of India's major industrial hubs. By 2017, there was 2.3 lakh (approx.) registered industries in India against 42,000(approx.) in Tamil Nadu. TN's strong performance in the manufacturing and service sectors has been fueled by the increased FDI and industry innovation, which has led to annual growth in the number of factories and, ultimately, a decrease in the unemployment rate in the nation. Hussein, (2019) explains that investing in manufacturing immediately creates more jobs. Employment in the manufacturing industry has increased over the last ten years. Production decreased slightly during the epidemic, but industrial enterprises gradually resumed and added jobs.

Skill Development & Workforce Demand2019

* Total Skilled Workforce Demand 13,34,608

* Total Semi Skilled Workforce Demand-10,14,298

* Total Skilled Workforce supply 6,56,194

* Total Semi-Skilled Workforce supply 9,31,733

* Estimated Skill Gap (Skilled) 6,78,414

* Estimated Skill Gap (Semi Skilled) 9,31733

Source: Tamilnadu Skill Development (2019)

Above source shows that there would be a skilled workforce demand of about 13.35.000 persons and skilled workforce supply of about 6,36,000 persons leading to an estimated skilled workforce shortfall of about 6, 78,000 persons in 2019. The predicted supply of semi-skilled workforce is about 10, 14,000 persons against the expected demand of 19.46.000 persons, with a skill gap of 9, 30.000 persons. According to Josh Foulger, Country Head and MD for Foxconn International Holding, Tamil Nadu is unique because it contributes one of the most significant percentages of manufacturing to India's GDP (21%). Additionally, the state has outstanding expertise in engineering and related fields (Divay, 2020).

The Tamil Nadu Skill Development Corporation (TNSDC), a central organization for setting up skill development programs in the state, was established by the Tamil Nadu Government. Up to 2019, 227,106 youngsters have received training under the program. Due to the global epidemic, fewer people would attend different skill programs in 2020. However, Tamil Nadu's Government has led several additional measures to upskill the workforce and satisfy the aspirations of the fast expanding local young. It has established a standard to be followed. The economy is projected to grow at a 12.73 percent annual rate at current prices, or Rs. 9.73 lakh crore, or US$140 billion in 2020 (Skill India Report, 2021).

Santosh et al. (2013) states that manufacturing accounted for 14% of all jobs in India. "Digital Excellence" will replace current industry standards. The talent needs and supply in India can be used to extend existing skill sets through technology-driven education as a result of the advancement of technology. The Make in India program, which emphasizes skill development and India's world-class manufacturing infrastructure, were introduced by the Indian government to entice investment and create jobs.

MNC's in the state are promoting innovation in the industry. The government and labor unions work together to benefit the welfare of labor and the industry trends. The digital revolution in manufacturing enhances skills, knowledge, attitudes, and employee morale as manufacturing goes digital.

Tamil Nadu is the home of profitable opportunities and tends to invest considerably in multiple sectors to generate employment. With the help of a business-friendly environment and diverse workforce with the right expertise, the state has become a significant electronic manufacturing hub in India. Thus, employment also includes migrant laborers; various changes and new initiatives are needed to ensure that migrants have access to their rights, most of which are not unique (Arjan, 2020).

Tamil Nadu An Overview

Sipcot (State Industrial Promotion Corporation of Tamil Nadu) Provides infrastructure for setting up industries by providing comprehensive infrastructure in one place. Sipcot comprises a land value of 35,043 acres, implemented in 1971. Tamil Nadu has 24 industrial parks and 6 SEZs. Tamil Nadu has 57 approved SEZs of which 46 are operational. A country with higher export volume will grow faster, with increased productivity and national income. Tamil Nadu contributes 9.25% of export with a volume of USD 30.5 billion; Export is boosting productivity and employment generation and maintaining the trade balance in the country.

The state held a second Global Investor Meeting (GIM) on January 23 and 24, 2019. A total of Rs. 3.4 lakh crore (US$ 48.65 billion) was invested in 12 sectors, including automobiles, textiles, renewable energy, etc. It is expected that 10.5 lakh jobs will be created in the state due to 146 memorandums of understanding (MoUs).

The Objectives of the Study

* To examine the significant contribution of Tamil Nadu towards the manufacturing sector

* To find out the manufacturing industry's contribution towards employment generation

* To understand the impact of IR trends on industrial growth

Review of Past Studies

Employee protection and skill development programs are necessary to build a sustainable environment in the manufacturing sector. Many small manufacturing industries rely on a migrant workforce, the ILO's principal objective today is to increase the chances for workers to find respectable, worthwhile jobs that respect their freedom, equity, security, and human dignity. The ILO Constitution from 1919, Preamble, in recital 2, states that workers employed in countries other than their own should have their interests protected. The ILO has developed specific international standards to manage labor migration and protect migrant workers (ILO, 2022).

As per Invest India, (2021) there are several major global manufacturers from various sectors in India, which continues to make a mark on the world map as a manufacturing destination. Tamil Nadu, a manufacturing hub, attracts investment and creates employment opportunities with skilled and qualified people. The manufacturing industry's advanced infrastructure and policy created a sustainable and smooth work environment. India is a regional hub for foreign direct investment in Asia and is a rich source repository and consumption base. It has the right mindset in the political environment with the right policies, which are business-friendly. And the most critical factor for any enterprise of our size is the people who are very skilled and qualified.

The manufacturing industry, including...

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