Economy of Chennai

Tidel Park, one of the largest software parks in India

Hyundai's manufacturing plant at Irungattukottai near Sriperumbudur, Kanchipuram district

The Chennai Port, one of the biggest in South Asia

The Infosys Building in Mahindra World City, New Chennai

Chennai Metropolitan Area's economy of US$58.6 billion PPP^[1] (US$17 billion nominal GDP, 2010)^[2] is currently rated the fourth-largest economy in India and the third highest GDP per capita.^[3] The metropolitan area includes the city and the nearby industrial zones of Sholinganallur, Siruseri, Oragadam and Sriperumbudur.

Chennai has an economic base anchored by the automobile, software services, medical tourism, hardware manufacturing and financial services. Other important industries include petrochemicals, textiles and apparels.^[4] The Chennai Port and Ennore Port contribute greatly to its importance. The city has a fully computerised stock exchange called the Madras Stock Exchange. Chennai has the fourth largest Gross Metropolitan Product in India.

Chennai was recently rated as having the highest quality of life among Indian cities ahead of the other three metros and Bangalore, based on the "Location Ranking Survey" conducted by ECA International. Chennai has improved its global ranking to 138 in 2006–07 from 179 in 2002–03. It is now ranked at 26th position in Asia in terms of livability, up from 31st rank in 2002–03.^[5] According to a 2007 worldwide quality of life survey done by Mercer, Chennai received the second highest rating in India,^[6] with New Delhi scoring the highest,^[6] and came in at a relatively low 157th worldwide.^[6] The reason was attributed to poor health and sanitation, and the increasing air pollution.^[7] It has the distinction of being called as The Detroit of Asia.

As of 2012, the city has about 34,260 identified companies in its 15 zones. Of these, 5,196 companies has a paid-up capital of over ₹ 5 million, about 16,459 companies are in the paid up capital range of ₹ 100,000 to ₹ 200,000, and 2,304 companies have a paid-up capital of less than ₹ 100,000.^[8]

Software and Software Services

Since the late 1990s , software development and business process outsourcing and more recently electronics manufacturing have emerged as major drivers of the city's economic growth. Chennai has been rated as the most attractive Indian city for offshoring services according to A T Kearney's Indian City Services Attractiveness Index 2005.^[9] Major software and software services companies like Aricent, Accenture, Cognizant Technology Solutions, Capgemini, CSC, EDS, SAP AG, Oracle Corporation, Cisco Systems, HCL, HP, IBM, Infosys, Satyam, Sun Microsystems, Symantec, TCS, Verizon, Wipro, CSS Corp and US Technology Resources, Dassault Systèmes, eBay, Honeywell, VMware, Intel, Amazon, Tech Mahindra, IGATE Patni, Adobe Systems, AT&T, Mindtree, Ford Sync, Ramco Systems, Bosch, Deloitte, CA Technologies, Microsoft have development centres in the city. The city is now the second largest exporter of IT and IT enabled Services in the country behind Bangalore. The IT Corridor, on Old Mahabalipuram Road in the southeast of the city houses several technology parks, and, when completed, will provide employment to close to 300,000 people. Besides the existing Tidel Park, two more Tidel Parks are on the anvil in the IT corridor. One is under construction at the Siruseri IT Special Economic Zone ("SEZ") and the other one is being planned at the current location of MGR Film City which is just before the existing Tidel Park, in Taramani on the IT Corridor. A number of SEZ have emerged in and around Chennai. The Mahindra World City, New Chennai, a Special Economic Zone (SEZ) with one of the world's largest high technology business zones, is currently under construction in the outskirts of Chennai. It also includes the World's largest IT Park by Infosys.^[10]

Electronics Hardware

In recent years, Chennai has emerged as an electronic manufacturing hub in South Asia with multinational corporations like Dell, Nokia, Motorola, Cisco, Samsung, Siemens, Sony-Ericsson, Flextronics and Foxconn setting up Electronics / Hardware manufacturing plants, particularly in the Sriperumbudur electronics SEZ . Taccounting for he sector alone has created investments worth $3.5bn in Chennai. Chennai is currently the largest electronics hardware exporter in India, accounting for 45% of the total exports in 2010-11.^[11] The Government of India has planned to promote Chennai as the Electronic Manufacturing and R&D Hub of the World in a span of 15 years. Ericsson,^[12] Alcatel, Atmel, Texas Instruments, Xerox, Nokia Corporation, Siemens have research and development facilities in the city . Semiconductor companies like SPEL and Tessolve have announced plans to set up or expand manufacturing and R&D centers in the city. Companies like Nokia, Flextronics, Motorola, Sony-Ericsson, Foxconn, Samsung, Cisco, and Dell have chosen Chennai as their South Asian manufacturing hub. Products manufactured include circuit boards and cellular phone handsets.^[13]Sanmina-SCI is the latest company to invest in Chennai to create a state of the art manufacturing facility.^[14] Nokia Siemens Networks has decided to build a manufacturing plant for wireless network equipment in Chennai.^[15]

Engineering Procurement and Construction

Chennai has emerged as an Offshore Engineering hub due to the presence of Offshore Technology and Renewable Energy research institutions like Indian Institute of Technology Madras (IIT-M), National Institute of Ocean Technology (NIOT), Center of Wind Energy Technology (C-WET), Indian Maritime University (IMU), Tamil Nadu Energy Development Authority (TEDA), Anna University School of Energy, etc. Big EPC and Energy companies have set up their Engineering centres which include McDermott International, Det Norske Veritas (DNV), Saipem Project Services ltd, Technip, Foster Wheeler, Mott Mecdonald, Petrofac and Technimont, Vestas, Suzlon, etc. Austrian company "Austrian Energy and Environment" have also a design office here besides local giant Larsen & Toubro ECC.

Automobiles

Chennai is known as the Detroit of Asia.The city accounts for 60 per cent of India's automotive exports,^[16][17][18] which leads it to be called as 'The Detroit of Asia'.^[19][20] Chennai has a market share of around 30% of India's automobile industry^[21] and 35% of its auto components industry.^[22] A large number of the automotive companies including several global automotive companies such as BMW, Hyundai, Ford, Nissan, Renault, Mitsubishi, TVS Motor Company, Ashok Leyland, Caterpillar, Royal Enfield, TI Cycles, TAFE, Dunlop, MRF, Daimler, Yamaha and Apollo Tyres have manufacturing plants in and around Chennai. Mahindra & Mahindra have a manufacturing plant under construction in Cheyyar, which is about 100 km from Chennai. The city is a major centre for the auto ancillary industry. Hyundai is in the process of setting up engine plant in the city. Ford is planning to invest $500 million in Chennai plant.^[23] Several Petrochemical companies like Chennai Petro Chemicals Limited (Manali Refinery), Manali Petrochemicals, Petro Araldite and Orchid Pharmaceuticals are situated in the outskirts of Chennai. Chennai will turn out close to 1.5 million vehicles a year, more than any one U.S. state made last year A New Detroit Rises in India's South – WSJ.com.The city is also home to some of the world's largest Automotive R&D facilities in the world, which include Nissan, Hyundai, BMW, Caterpillar and Daimler. It houses the world's second largest Research Valley- The Mahindra Research Valley.

The Heavy Vehicles Factory, Avadi produces military vehicles, including India's main battle tank: Arjun MBT. The Railway Coach building factory of the Indian Railways, the Integral Coach Factory^[24] manufactures railway coaches and other rolling stock.

Banking and Finance

The logo of the Indian Overseas Bank, one of the many operating banks in Chennai

Chennai has been tagged as the Banking Capital of India,for its vibrant banking culture and trading.The city has emerged as an important centre for banking and finance in the World Market. Chennai boasts a transaction volume which serves 900 million people across the World through Back office operation. At present, it is home to four large national level commercial banks and many regional and state level co-operative banks. Several large financial companies and insurance companies are headquartered in Chennai.^[25] Prominent financial institutions, including the World Bank, Standard Chartered Bank, ABN AMRO, Bank of America, The Royal Bank of Scotland, Goldman Sachs, Barclays, HSBC, Deutsche Bank, ING Group, Allianz, Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi UFJ, Abu Dhabi Commercial Bank, Asian Development Bank, Credit Suisse, BNP Paribas Fortis, Deutsche Bank and Citibank have back office and Development Center operations in the city. The city serves as a major back-up centre for operations of many banks and financial companies of the world.

Medical tourism

Chennai leads in the health care sector and is considered the Health Capital of India. Home to some of India's best health care institutions such as Apollo Hospitals, the largest health care provider in Asia,^[26] MIOT Hospitals, Sankara Nethralaya, Sri Ramachandra Medical Center, Fortis Healthcare, Dr.Mehtas Hospitals, Sundaram Medical Foundation (SMF), Madras Medical Mission (MMM), Frontier Lifeline & K.M. Cherian Heart Foundation, Chettinad Health City and Adyar Cancer Institute, Chennai is a preferred destination for medical tourists from across the globe.^[27] Some of the treatments sought after by the tourists include heart surgery, neurological problems, cancer, plastic surgery and orthopaedic procedures.^[28] Chennai attracts about 45% of all health tourists arriving in India from abroad in addition to 30% to 40% of domestic tourists.^[29]

Petrochemicals and Textiles

Other major manufacturing facilities range from small scale manufacturing to large scale heavy industrial manufacturing, petrochemicals and auto ancillary plants. Chennai is a textile industry hub with a large number of apparel industries located in the Ambattur-Padi industrial zone in the northern suburbs of the city. The city also has a large leather apparel and accessory industry. SEZ's for apparel manufacture and footwear are under construction in the southern suburbs of the city. Chennai is the cradle for world-renowned Madras shirts.

Traditional Arts

Chennai, hosts the Madras Music Season, during the months of December and January, annually. It is the capital of the Carnatic Music and Bharatanatyam scene in India, and there are many venues in which artists perform throughout the city. There is also a large theatre scene and contemporary visual art scene in the city.

Entertainment Industry

The city is home to the Tamil entertainment (motion pictures, television, and recorded music) industry which is the second largest in India after Bollywood. Because the film industry is largely centered on a local area called Kodambakkam, the Tamil film industry is popularly referred to as Kollywood.

Aerospace Industry

Chennai Aero Park, a proposed Aerospace design, manufacturing and maintenance park is set to become the largest integrated aerospace ecosystem in the world. The project is a pioneering initiative to mark India's entry into the global aerospace industry. The aero park will enable global players to design, manufacture and maintain all types of aircraft for both civilian and defense needs. It is to be established as a Public-Private Partnership (PPP) entity. The city is home to Ashok Leyland Defence Systems, Rane and 56 more aircraft component manufactures.It also has the largest Aerospace R&D facility in India which is controlled by Mahindra Aerospace.

References

1. "Global city GDP 2013-2014". Brookings Institution. Retrieved 8 May 2015.
2. "The Most Dynamic Cities of 2025". Foreign Policy. Retrieved 24 August 2012.
3. Raghavan, T.C.A. Sharad. "Linking urban India to drive growth". livemint. Retrieved 17 June 2015.
4. "Chennai". lifeinchennai.com. Retrieved 27 July 2009.
5. "5 cities improve their rankings: Survey". The Economic Times (India). 15 March 2007. Retrieved 8 March 2007.
6. "Worldwide Quality of Living Survey". PRNewswire. 2 April 2007. Retrieved 16 April 2007.
7. "Mercer - Our Thinking, Insights, and Perspectives".
8. "Company tax upped, capped at Rs. 30,000". The Hindu (Chennai: The Hindu). 30 October 2012. Retrieved 30 Oct 2012.
9. "Chennai most attractive city for offshoring services". The Hindu Business Line. 2 April 2006. Retrieved 8 March 2007.
10. "World's Largest IT Campus". Infosys, Mahindra World City. Archived from the original on 6 April 2005. Retrieved 6 August 2005.
11. http://www.escindia.in/uploads/OVERALL%20ELECTRONICS%20HARDWARE%20EXPORT%202010-11.pdf
12. Ericsson India Private Ltd
13. "Flextronics signs pact for Chennai facility". The Hindu Business Line.
14. "Welcome to the silicon india network".
15. "This domain is no more in use".
16. "CII launches Chennai zone". The Hindu Business Line. 19 October 2007. Retrieved 3 April 2011.
17. N. Madhavan (7 July 2008). "India's Detroit". Businesstoday.digitaltoday.in. Retrieved 3 March 2009.
18. Mallaby, Sebastian (5 December 2005). "Detroit's Next Big Threat". The Washington Post. Retrieved 3 March 2009.
19. Chennai, the Detroit of Asia?, rediff BUSINESS Shobha Warrier, 30 June 2010 13:01 IST
20. A New Detroit Rises in India's South, THE WALL STREET JOURNAL By ERIC BELLMAN, 8 JULY 2010.
21. Sivalingam, T; Bhaskaran, E (2004). "IT applications in Automotive Industry". GCMM 2004 1st international conference on manufacturing and management (Alpha Science International, Limited): 20. ISBN 978-81-7319-677-5. Retrieved 3 September 2007.
22. "Automotive Components". Department of Scientific and Industrial Research, Govt. of India. Retrieved 3 September 2007.
23. "Ford India entering small car segment". The Hindu Business Line.
24. "Welcome to Official Website of ICF". Retrieved 19 November 2005.
25. Chandramouli, Rajesh (1 May 2008). "Chennai emerging as India's Silicon Valley?". The Economic Times. Retrieved 17 May 2008.
26. "Medical Tourism". Retrieved 12 September 2007.
27. "Indian State: Tamil Nadu". Govt of India. Retrieved 12 September 2007.
28. "Hospitals forge tie-ups to woo overseas patients". The Hindu (Chennai, India). 1 August 2004. Retrieved 12 September 2007.
29. Macguire, Suzanne (2007). "India – The Emerging Global Health Destination". EzineArticles. Retrieved 12 September 2007.