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Chennai manufacturing location: Quality production in southern India

by Editor

India offers great potential to foreign companies as a production location and growing sales market: the metropolis of Chennai is particularly attractive thanks to well-trained skilled workers, excellent logistical connections and a wide range of funding opportunities. Arne Bockentin, Trade Lane Manager India at Hermes International, a business unit of Hermes Germany, and Krishnan Viswanathan, Chennai Brand Manager at the Indian freight forwarder Jeena – a long-standing local partner of Hermes Germany – introduce the region as an up-and-coming location.

Hermes International and Jeena have been working together for years as part of a strategic partnership. What are the advantages and synergies?

Krishnan Viswanathan: In challenging times, it is particularly important to be able to build on reliable partnerships. We have a long-standing relationship of trust with Hermes. Our partnership is characterized by efficient cooperation and offers the opportunity to effectively develop the business while taking cultural nuances into account – a great advantage for both sides.

Arne Bockentin: Through our strategic partnership with the Indian logistics market leader Jeena, we are able to ideally support European companies in their market entry into India. The close partnership provides us and our customers with excellent access to the Indian market by bundling extensive expertise in international and local goods traffic. Jeena is a true local hero: The local colleagues are familiar with the regional customs, have an extensive network and diverse know-how.

Global supply chains are undergoing a major transformation. Why should companies expand into the Indian market now? For which industries and companies is it worthwhile to enter?

Arne Bockentin: India offers high potential for foreign companies overall – also because the domestic market is showing strong growth with high domestic consumption. With the “Make in India” initiative, the government has simplified administrative processes and created many investment incentives. Global players, but also medium-sized companies, can benefit from the emerging economy. In addition, the unified input tax deduction system – Goods and Services Tax (GST) – introduced in 2021 as well as new government initiatives for simplyfying administrative processes for foreign investments will make it possible to plan the return on investment more reliably.

Krishnan Viswanathan: Thanks to high availability of raw materials, a skilled workforce and highly developed technological expertise, as well as a well-developed transport network, southern India offers the best conditions to continue to position itself as a major player in global trade. With the airports in Chennai, Bangalore, Hyderabad and Cochin as well as its coastal location, the region is a strategically favorable starting point for air and sea transport. In particular, there is great potential for producers of fast-moving consumer goods (FMCG), food and beverages, lifestyle products, pharmaceutical and medical goods, information technology and renewable energies. Some of these sectors are already being supported by local state governments and thus offer special incentives.
Chennai manufacturing company

Krishnan Viswanathan
Chennai Brand Manager at Jeena

www.jeena.com

Arne Bockentin: South India has the highest density of factories, economic zones and industrial parks in the country and is promoting inclusive, sustainable industrialization. The states of Tamil Nadu, Karnataka and Telangana have become major manufacturing hubs for electronics hardware and software. In addition, the Tiruppur/Karur area accounts for one-third of India’s textile manufacturing. Hyderabad, Bangalore and Chennai are home to India’s most important pharmaceutical, medical technology and biotechnology companies with US and European licenses.

Within the country, the southern Indian metropolis of Chennai is considered particularly attractive. What exactly are the advantages of this location?

Krishnan Viswanathan: Chennai, the capital of the state of Tamil Nadu, has established itself as a major location for the leather, textile and chemical industries. With over 1300 large and small factories, Tamil Nadu is also one of the ten most important automobile manufacturing centers in the world. Chennai, often referred to as the “Detroit of India”, contributes to about 45 percent of automotive exports. With the major ports of Chennai Port, Ennore Port and Kattupalli, Chennai offers an excellent starting point for international maritime traffic. To facilitate trade in goods by national and international companies, the city has established Free Trade Warehousing Zones and Special Economic Zones (FTWZ/ SEZ) that promote exports with import duty concessions.

Chennai manufacturing companies

Arne Bockentin
Hermes International

How do you support local businesses? What services do you offer your clients to operate successfully in Chennai?

Arne Bockentin: With offices in all major production locations (in Chennai, Bangalore, Hyderabad, Coimbatore, Cochin and Tuticorin) and highly trained specialists, our partner Jeena offers our joint business customers and partners decisive location advantages. From there, both air and sea transports, including customs matters, can be handled. Near Chennai Port, Jenna operates a consolidation facility and a quality control center for textile products in Tiruppur.

Krishnan Viswanathan: We offer forwarding and customs services from one hand – that alone is a great advantage that ensures time and money savings as well as smooth processing. Our services include, for example, inland transport, quality controls, Garment on Hanger (GoH) or assembly and packing. Jeena is also accredited with the AEO (Authorised Economic Operator) certificate from the Indian Customs, which further facilitates the processing and thus the international movement of goods.

What practical tips do you give to companies considering Chennai as a production location? What should companies generally consider when entering the Indian market?

Arne Bockentin: Companies that want to expand into India in general and into the state of Chennai in particular should inform themselves about the various advantages and investment incentives. Both the central government and the state government offer promising entry opportunities through customized incentive packages, depending on the investment volume, production location, industry and labor market potential. The extensive incentives include, for example, the possibility of a capital grant by the Tamil Nadu state government, income tax exemption/benefit for 15 years or temporary exemptions from the Goods and Services Tax (GST). Further, also support and preferential treatment in land allocation or aid for training and qualification of employees are among the aids.

Krishnan Viswanathan: A special service provided by the state government is the “Tamil Nadu Single Window Portal”, which bundles over 200 services from more than 40 government agencies as an electronic G2B interface and enables potential investors to process all the official procedures for setting up companies and opening locations in a transparent and uncomplicated manner.

Of course, Jeena supports its business partners and customers with extensive know-how, relationships and detailed knowledge of the local conditions. That is how we support companies every step of the way in our country and region.

Mr Bockentin, Mr. Viswanathan, thank you for the interview.

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