Since V. Narayanasamy took over as the Chief Minister of Puducherry in June 2016, he has been on a mission to attract investments to this beautiful union territory situated on the southern coast of India. In an exclusive interaction with The Dollar Business, Narayanasamy talks at length about the progress his government has made thus far to make Puducherry an investor’s paradise.

Interview by Niladri S. Nath | October 2017 Issue | The Dollar Business

TDB: You became the Chief Minister of Puducherry in June 2016. What steps have you taken to further industrial development since then?

V. Narayanasamy (VN): As far as industrial development in Puducherry is concerned, we have opened a new chapter of progress. The Union Territory of Puducherry has substantial potential for industrial and tourism development. To realise that potential, within five months of forming the government, we formulated the new Industrial Policy.

In addition, we have launched a single window clearance system in all government departments. In fact, a committee has been constituted under the chairmanship of the Minister of Industries and Commerce M.O.H.F Shahjahan, to facilitate clearance of the proposals for setting up industries in Puducherry. We have also started interacting with industrialists, not only from India but also from Malaysia, Singapore, Dubai, Abu Dhabi and Germany to attract investments at various platforms. They all have shown interest in setting up industries in Puducherry. We are also reviewing some proposals which have been already submitted for setting up industries. Simultaneously, we have started allotting land to 22 companies in the Karaikal region for setting up manufacturing units.

The Export Facilitation Centre under Pondicherry Industrial Promotion Development and Investment Corporation Ltd. (PIPDIC) started functioning in a full-fledged manner just a year ago. The Centre is helping exporters find new markets and is offering export incentives. In October, we are organising an investors’ meet in Chennai.

TDB: What is the Puducherry’s export projection for FY2018?

VN: In FY2017, the 31 export oriented units (EOUs) operational in Puducherry clocked exports worth Rs.864.83 crore, a 43% increase from Rs.489.59 crore in FY2016. The government’s export projection for FY2018 is Rs.1,200 crore from 69 units. These numbers don’t include handloom and gems & jewellery exports. So, the figures will grow even bigger in coming years. We expect exports from the basic drug manufacturing sector to increase to Rs.500 crore in FY2018 from Rs.350 crore in FY2017 – which will fuel growth. Also, exports are likely to grow from manufacturing units of companies like L&T and MRF in Puducherry.

TDB: Puducherry got its first industrial policy in 1997. However, over the last 20 years, industrial activities haven’t reached the desired level. What are the reasons for that?

VN: I think the industrial development in Puducherry slowed down from 2002 onwards due to the withdrawal of Central Sales Tax (CST) and Puducherry General Sales Tax (PGST) exemptions. The income tax holiday had been withdrawn in 2001. As a result, most of the companies that had set up their base here migrated to other states. The previous governments didn’t pay adequate attention to the industrial development. On top of that, after the implementation of Goods and Services Tax (GST), the pace has slowed down again.

TDB: The new industrial policy launched in 2016 identified nine priority sectors and 15 thrust areas to trigger growth. What has been the progress?

VN: There are some encouraging developments taking place on those fronts. Halal Industry Development Corporation, an agency under the Ministry of International Trade and Industry (MITI) of Malaysia, is setting up units for manufacturing and export of halal foods from Puducherry. A Dubai-based company has also shown interest in investing Rs.20,000 crore to set up cluster to manufacture pharmaceutical products.

The government is interested in developing a 25-acre IT SEZ or IT park under public-private partnership (PPP) mode. Land for this is readily available in Mettupalayam in Puducherry. More land is available at Karaikal and Sedarapet-Karasur regions, which are under PIPDIC. Recently, I addressed a southern council meeting of the Confederation of Indian Industry (CII) in Puducherry. A section of the CII members at the meet had showed a lot of interest in setting up IT SEZs in Puducherry.

TDB: How is Industrial Guidance Bureau (IGB) helping attract investments to Puducherry?

VN: Since April 2016, Industrial Guidance Bureau (IGB) of the Government of Puducherry, which acts as a facilitator between the industries and the concerned departments when it comes to obtaining clearances, permissions or licenses, has processed applications of 177 industry enterprises and given them clearances to set up industries in Puducherry.

These projects are in various stages of implementation with an investment outlay of Rs.459.58 crore. The products which will be manufactured in these units are auto components, LED bulbs, PVC wires and cables, leather goods, pharmaceutical formulations, hydraulic motors, compounds of plastics, etc.

In addition, 839.77 acre and 596 acre of land have been allotted in Sedarpet-Karasur Industrial Estate and Polagam (Karaikal) Industrial Estate, respectively, for setting up multi-sector manufacturing units.

"31 EOUs in Puducherry clocked exports worth Rs.864.83 crore in FY2017"

TDB: The potential for tourism in Puducherry is enormous. What is the government’s strategy for further developing this sector?

VN: We will be formulating a five-year tourism policy soon. We want to focus on three types of tourism in Puducherry - heritage, pilgrimage and leisure. We are already leveraging the leisure tourism potential. In addition, we want to promote heritage tourism by preserving and renovating the old French architecture with an aim to attract tourists from abroad. We also have beach nourishment project to restore beaches. Pilgrimage tourism also has potential, thanks to Aurobindo Ashram. We are investing in infrastructural development in all four regions i.e. Puducherry, Karaikal, Yanam and Mahé. We have already submitted a proposal of Rs.192 crore to the Ministry of Tourism for FY2018 to promote tourism in Puducherry. The proposal has been approved and Rs.108 crore has already been sanctioned.

TDB: Could you highlight some of the transportation and logistical developments in Puducherry?

VN: We have worked towards connecting Puducherry to 14 major destinations across India like Delhi, Bengaluru, Mangalore, Mumbai, Kolkata, etc., through rail networks. We are also working towards setting up East Coast Railways that will help link Chennai, Mahabalipuram, Puducherry and Cuddalore.

In addition, the government has sanctioned a national highway connecting Viluppuram, Puducherry, Cuddalore and Karaikal. The 250-km four-lane stretch will add momentum to the industrial developmental activity in the Union Territory. We would like to see Puducherry connected by air with more destinations like Hyderabad, Bengaluru, Coimbatore, Tirupati, Cochin in near future under the new ‘Ude Desh Ka Aam Nagrik’ (UDAN) scheme. We have also written to the Ministry of Road Transport and Highways to connect Puducherry with two proposed industrial corridors i.e. Chennai-Bengaluru and Visakhapatnam-Chennai Industrial Corridor.

Logistics is also set to improve as soon as the Puducherry Port starts functioning as a satellite port of the Chennai Port. Only about 15% work on the Puducherry Port is remaining. In the first year of its operation, we expect the Puducherry Port to handle 4 lakh tonne of cargo. Further, the Port’s cargo handling capacity is expected to go up to 10 lakh tonne from 2018 onwards.