Foreign investors eye Tamil Nadu as TVK moves to form govt; labour, policy key concerns

Chennai: Japanese, South Korean and more recently Taiwanese firms which have invested in Tamil Nadu for decades are ‘closely monitoring’ the situation as the TVK moves to form its government, multiple industry bodies and companies told ET. Labour and policy continuity were ‘top of mind’ concerns among these firms who were also hoping that the new party would bring in policies that could sweeten the deal for expansion and further investment in sectors like electronics manufacturing.These three countries have among the largest share of their companies in the country set up in Tamil Nadu. As per estimates, there are around 112 South Korean firms, 182 Japanese firms and 26 Taiwanese companies in the state. These companies, especially in the manufacturing sector, have large operations in the state and are big employers as well.

“We were caught off guard,” a senior executive at a Japanese industry body told ET. “This was extremely unexpected but we are not jumping to any conclusions. There is nothing much mentioned in the TVK manifesto about his (party leader Vijay’s) stance on industry and we are interpreting that the government will not rock the boat.”
This person added that the crucial aspect that is being watched currently is what the TVK’s policies will be on labour and promoting industry.

“Labour in particular is something that we will keep a keen eye on,” he said. “This is especially true because we have recently seen worker protests in Tamil Nadu which the DMK government handled well. The concern is whether the TVK will address those issues without sacrificing business interests to appease workers.”

Korean firms too are keeping a hawk eye on what’s transpiring in the state.
“Korean firms are keeping track of the developments in Tamil Nadu closely,” Kyunghoon Kim, head of the India and South Asia team at the Korea Institute for International Economic Policy (KIEP), said. “They are in ‘wait and watch’ mode but the belief is that there will be policy continuity. Korean companies who are entering TN may be slightly more concerned but for established companies, this is not a worry as of now.”