Southern exposure

I’m just back from southern India, and the business climate is looking hot.

It is often said that the southern region of the United States is “another country”. The same thing is also sometimes said of Southern Italy – particularly by Northerners. The same was said to me in New Delhi as I planned to venture to the southern parts of India on a recent visit.

Indeed, Southern India is different from the north. Whether it be the manufacturing hub of Chennai in Tamil Nadu, or the high tech city of Bangalore in Karnataka, or the famous education state of Kerala (world re-known for its amazing near 100% literacy levels) the south of India does stand out for its economic dynamism and openness.

Chennai is the capital of Tamil Nadu and thought by many to be the commercial capital of Southern India. Chennai is known as the Detroit of Asia due to its automotive facilities, but is also building a strong telecommunications presence thanks to Nokia (there are direct flights between Helsinki and Chennai on Finnair), and it also had a busy port and related transport facilities in road and rail.

Chennai is probably known to most Australians as the place where Australian cricketer Dean Jones made 210 in the famous Madras tied test. At that time, of course, Chennai was called Madras, (and Mumbai was Bombay and Kolkata was Calcutta), but in Tamil – the region’s main language – the city was always called Chennai and it is now its official name.

Dean Jones batted for almost two days in stifling Chennai heat with temperatures in the high 40s in the middle of the ground in an amazing act of endurance. Jones, who had been violently ill several times during his time at the crease, was taken straight to the emergency wing of Chennai hospital after that innings in a critical condition.

Despite the perception that Australian exporters need Dean Jones-like endurance to do business in India, it seems that there are plenty of them in Southern India.

Just strolling through the Chennai city centre – one of India’s new modern shopping malls fuelled by the retail boom and its burgeoning youthful middle class – gives you a flavour of the Australian presence. At the centre, I see plenty of familiar brand names such as Cookie Man, Gloria Jeans and Florsheim shoes.

Legendary Australian basketballer Andrew Gaze is also setting up a franchise, Jus Sportz, to sell basketball clothing and accessories in India (see, I told you there’s more to Australia-India relations than cricket).

To handle the increased demand from Australian businesses in Chennai, Australia has a new Consulate office, which was opened by Trade Minister Warren Truss on his state visit to India in March.

Australia’s Trade Commissioner in Chennai, Aminur Rahman, says this move was in response to the rise of Chennai and its economic importance to the South, and indeed to the rest of India’s growing economy: “Everything’s hot in Southern India – including the temperature! Our patch extends from Chennai to Bangalore and even into Kerala. The diversity of the region is bringing in a wealth of opportunity.

“Chennai’s strength in manufacturing is well known but it is building up its high tech capability. Bangalore is well known as the home of computer icons Infosys and Wipro and aviation, whilst Kerala is strong in education and medical services – including medical tourism.”

And speaking of southern exposure, the southern states of South Australia and Victoria have been particularly active in Southern India. As Chennai is known as the Detroit of Asia, many Adelaide automotive component manufacturers (such as toolmakers like NTS, Trident and Precise) are joining the automotive global supply chain in Chennai.

In addition, 70% of the Ford Fiesta model, which is assembled at the Ford plant in Chennai, was designed by Ford Australia in Victoria. Further manufacturing opportunities are expected to come in food processing – a relatively undeveloped opportunity in India for Australian companies and engineering and logistics.

South Australia has also been active in the areas of renewable energy and climate change. Tamil Nadu government representatives have worked closely with their counterparts in Adelaide on Australia’s export capabilities in solar power, wind power and other forms of environmental technology, with high profile Indian corporation Tata setting up an Energy Research Institute to support South Australia’s Solar City initiative.

This follows on from Australia’s involvement in providing environmentally sustainable architecture and design expertise to the New Delhi Commonwealth Games team after some success bids in Beijing.

India has certainly been on the map for Australian exporters in recent times and the expansion in the south is testament to that. Australian exports to India over the 2000s have been growing at an annual average rate of growth of almost 29% (compared to China at almost 23%) over the 2000s and there are now over 1800 Australian businesses exporting to India compared to just under 1500 a year ago.

In addition, many international companies in India have got the message to “go south” and on current trends, Chennai (along with Bangalore and Kerala) will become more familiar to Australians than just being the scene of that famous tied test and marathon innings of one Dean Jones.

Tim Harcourt is chief economist of the Australian Trade Commission and author of Beyond Our Shores – see: Austrade’s economistscorner.

Thanks to Purnima Ganapathy, P.S. Krishnan, N.S. Ramnath, Aminur Rathman, Gitesh Agarwal, Abhijt Baerjee, Ayub Tareen and colleagues from Austrade Chennai.

Tamil Nadu at a glance

Capital: Chennai (formerly Madras)
Population: 62 million
Literacy rate: 73%
Neighbouring states: Karnataka (which includes Bangalore) and Kerala

• Chennai is home to 250 engineering colleges (and one very good fine arts college).
• One out of four Indian engineers come from Tamil Nadu.
• Is home to six global auto companies and several major IT companies such as Nokia and Dell.
• Nokia will produce 50% of its mobile phones in Chennai by 2008.

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