Seeking to follow Gujarat 'model'? Proposed Tamil Nadu global investors' meet Jan 2024

Tamil Nadu chief minister MK Stalin

By NS Venkataraman* 
The practice of organizing global investor meet was started by the Gujarat government when Narendra Modi was the Chief Minister of the state. He projected it as a novel idea, seeking to catch the imagination of the investors and the general public, with huge claims being made about investment proposals and Memorandums of Understanding (MoUs).
Subsequently, most of the states in the country including Tamil Nadu, started following the Gujarat “model”, been announcing such investor conferences from time to time.
After having organized so many investor conferences by different states all over India, it is now high time to review whatever benefits gained during such conferences and whether they are commensurate with the efforts put forth and claims made and money spent.
It is also necessary to examine dispassionately whether these conferences have become extravaganza, mainly serving only the political interests of the chief minister and his party in the state.

Past conferences in Tamil Nadu

In 2015, a global investor conference was organized in Tamil Nadu with much fanfare and it was reported that around 5000 delegates from India and abroad attended the meet. It was claimed that around 100 MoUs were signed for an investment of around Rs 2.4 lakh crore.
Another investor meet in Tamil Nadu was organized in 2019, which was also said to have been attended by thousands of delegates from India and abroad and it was claimed that several MoUs were signed worth around Rs 3.4 lakh crore.
Now, yet another investor conference has been announced by the Tamil Nadu government that would take place in January 2024. It has been said that investors from around one hundred countries would be invited to participate in the conference.
What is noteworthy about these investor meet?
What is noteworthy is that while huge claims are made about the number of MoUs signed with thousands of crores of rupees of proposed investment, rarely subsequent announcements are made from time to time as to how many MoUs have really been converted into commissioned projects and how much of investment have been really made and how many direct and indirect employment was generated, as against the originally targeted figures by the government.
It is also necessary to consider the ground reality that some new projects have come up in Tamil Nadu which were not discussed during the investor meet and several projects discussed in the conference have not been set up and also a number of projects have been closed due to variety of reasons such as the massive Sterlite Copper in Tamil Nadu.
In the absence of the credible white paper from the government from time to time to enable the people to know the truth about the investment made , people are forced to guess and conjecture. There is a view of the experts is that only around 30% of the announced projects are under various stages of implementation.

Claims of Tamil Nadu government

The present Tamil Nadu Chief Minister announced in the state assembly that after his party came to power in 2021, 207 companies have signed MoUs for setting up projects amounting to investment of Rs 2.23 lakh crore.
A few months back, the Chief Minister visited Dubai to promote investment in state and claimed that MoUs have been signed for setting up projects in the state amounting to Rs 6,100 crore during his visit.
Recently, the Chief Minister has visited Singapore and Japan and said several MoUs have been signed during this visit for around Rs 3,233 crore, that would provide employment to over 5,000 people.

After signing MoUs amounting to thousands of crores, an impression is sought to be created as if the projects have happened

After reading the claims and announcements of the Chief Minister about the MoUs for investment proposals signed even before the global investor meet, the question arises as to where is any need for holding yet another global investor meet with pomp and show in January 2024? The so far signed MOUs are quite a good number ,if they would materialize.
What should be noted is that after signing MoUs on paper amounting to thousands of crore of rupees, an impression is sought to be created as if the projects have happened.
It is well known that the MoU is the preliminary stage of project proposal under consideration and it is not the be all and end all of the project. During the MoU stage, the investor is undecided but only inclined to view the project proposal favourably, if various parameters would meet its expectations.
After signing the MoU, prefeasibility report has to be prepared. If the contents would be favourable in the prefeasibility report then a detailed project report would be prepared, after which land acquisition has to be decided and financial closures of the project have to be ensured.
These stages are known as pre-investment study stage, which generally can take upto twelve months.
A number of proposals may be given up in the course of the prefeasibility study due to one reason or the other. Therefore, hailing the MoUs signed as a big achievement is not appropriate.

Investors' converences

In today’s world with extensive communication facility being available and India being a free country, all the plus and minus points of the state would be known to the potential investor all over the world . They would not choose to invest simply because of the invitation extended. As a matter of fact, all investors are all the time looking for investment opportunities and would seek to invest if they are convinced, even without this investor conference.
Whatever may be the sugar coating that a state government would do, always there are serious issues confronting the investors, and Tamil Nadu is no exception here. Investors look into political and administrative corruption, environmental activism, the law and order scenario. All this is a matter of high concern for the investors. Such concerns cannot be concealed at any investors’ conference.
Organising such investor meets are a costly affair, as chief ministers, several ministers and bureaucrats, even advisors, go around the world and organise expensive meetings to invite the prospective investors. When the delegates do come, they need to be accommodated and hospitality expenses would be considerable, apart from other substantial promotional expenses. Such expenses could be around Rs 100 crore. Is such huge expense justifiable?
Investor conferences end up largely as an event management affair, and turn out to be publicity campaigns.
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*Trustee, Nandini Voice For The Deprived, Chennai