Chennai sees much potential for closer investment and trade links with Thailand

The business community in the Indian city of Chennai has urged Thailand to identify areas of cooperation in trade and investment in a bid to connect the two economies across the Bay of Bengal.

Trade missions should be exchanged to explore business opportunities in Thailand and India, said Tamil Nadu state's additional chief secretary of |the Planning and Development Department, R Vijaykumar.

The idea was raised during a recent meeting with a Thai delegation led by the Foreign Ministry's director-general of the South Asia Affairs Department, Narong Sasitorn.

Thailand and Tamil Nadu state have had business links for a long time. On a wider scale, some 45 companies from across India currently operate in Thailand, said Commodre S Shekhar, director of JMPS Sanjivini Consultants.

Meanwhile, many Thai companies, including CP Group, SCG Trading and Rockworth, operate in Chennai, as well as in nearby cities and other states.

"India's strength is software - technique and know-how - while Thailand has hardware, that is, infrastructure and materials," said Shekhar.

Tamil Nadu is a maritime state that can offer facilities for shipyards and shipbuilding, he said.

P Murari, adviser to the Federation of Indian Chamber of Commerce and Industry, said Tamil Nadu and Thailand could forge cooperation in the rubber industry, food processing, fisheries and tourism.

Thai rubber products could be provide a good supply chain for the automobile industry in Chennai, he said, adding that India could seek cooperation in the food-processing industry from Thailand, where investors are keen to explore Indian opportunities.

Fisheries is another potential industry for development in Tamil Nadu, which has a long coastline in the Indian Ocean, while the Thai fisheries industry is more advanced than many others in the region, said Murari.

Tourism as well as media and entertainment are new sectors that the business community in Tamil Nadu wants to develop in collaboration with Thailand, he added.

The state government of Tamil Nadu has a 10-year goal to develop the tourism sector, said Shekhar. Maritime tourism along the Eastern coast combined with a maritime heritage offer great potential for the industry.

Chennai port is developing a cruise-liner terminal and the city will become a major destination for cruise tourism in the near future, he said.

ADVANTAGE

The comparative advantage for doing business in India is economy of scale and a huge market, as the country has a population of about 1.2 billion.

By size, Tamil Nadu is just one-fourth that of Thailand, but the state has a population of 72 million, which is 7 million more than that of the Kingdom.

Charoen Pokphand Food (CPF) set foot into India in 1992 with the establishment of shrimp-breeding and animal-feed factories. The company now has businesses in six states around the country.

India still has plenty of room for more business growth, said Charoonpan Janesasta, senior vice president of CPF.

CPF's parent, CP Group, now has shrimp-breeding facilities, animal-|feed factories, chicken farms and maize plantations around the vast country. |It will invest Bt2 billion annually |over the next five years for agriculture and food businesses in India, he said.

Office furniture is another sector in which Thai investors are keen to explore Indian opportunities.

Rockworth, a major Thai maker, invested US$20 million (Bt630 million) in establishing a factory in Sri City industrial estate in Andha Pradesh state in 2010.

India has strong demand for office furniture as its economy is growing rapidly, said Chakrit Vorachacreyanan, president and executive director of Rockworth Systems Furniture (India).

Only 15 manufacturers are operating in the Indian market, he said, adding that the domestic market is big enough for this segment of furniture production. His company is, however, also considering using India as a production base for markets in Africa, the Middle East and Europe.

Shipments from Cochin port in Kerala state would take only five days to reach the Middle East, and as little as three days from ports in Gujarat state, he said.

However, the path to business success in the huge Indian market is not always a smooth one. In the case of CP Group, the company is struggling to meet the demands of Indian consumer behaviour, as some 70 per cent of the population are vegetarians. Even those people who eat chicken, do not consume it every day.

Besides the serious problem of power blackouts, the latest of which recently made the headlines, there are also issues with the workforce. India has a huge reserve of labour but is beset by low productivity, many Thai investors said.

For a straightforward task like packaging, in Malaysia one man can do the job, while Thailand needs two. In India, as many as eight people are often required to get the same result, they said.

While labour costs in India are 40 per cent lower than in Thailand, productivity is 50 per cent lower, according to investors.

Many Thai investors said they could, however, overcome the problem through intensive training, which would lead to increased productivity.

If such problems can be solved, India will continue to offer great potential for investment, they added.

Note: This is the last in a three-part series exploring visions and possibilities arising from Chennai-Dawei connectivity linking India with Thailand via Myanmar and other Southeast Asian countries.