With VinFast EV Factory Announcement, Thoothukudi Can Now Look Beyond The Sterlite Disaster

VinFast, a Vietnamese electric vehicle (EV) manufacturer, signed a memorandum of understanding (MoU) on Saturday (7 January) during the Tamil Nadu Global Investors Meet to set up battery and vehicle production facilities in Thoothukudi district with an investment of $2 billion.

It is expected to generate around 3,500 jobs and produce 150,000 units annually. Construction is scheduled to begin later this year and the company intends to commit $500 million in the first five years.

The VinFast investment could also create a large EV manufacturing ecosystem in the region, as ancillary units are likely to come up in the surrounding areas.

The incentives are in place to attract more investment — there's the central government's production linked incentive (PLI) scheme for automobiles and auto components, and nothing stops the state government from coming up with its own set of sops for those who want to set up shop.

The location is significant as Thoothukudi is where the protests against the Sterlite copper factory occurred in 2018 and 13 people died in police firing.

The protests are said to have negatively impacted the state's investment climate. While certain sections of people in Thoothukudi are now wanting the Sterlite plant to restart, a decision on that is likely to take time, as the case against its closure is still being heard by the Supreme Court.

The VinFast announcement is thus a step towards a new beginning and the district can now look beyond Sterlite.

It is also a welcome relief for the state's southern districts, which have been lagging behind the more prosperous Chennai and Kongu (western Tamil Nadu) regions.

A look at a picture from a report by the State Planning Commission on Regional Growth Pattern that was brought out in 2022, would show that none of the southern districts have a high gross district domestic product (GDDP). They are in the low, middle or at best upper middle category.

Ramanathapuram and Virudhunagar, the two districts classified as 'aspirational districts' by the NITI Aayog due to their relative backwardness in socio-economic indicators are also in the southern region.

The authors of the report also state that the relative shares of each of the districts have little change over the last three decades, which means that the southern districts have been left behind for far too long.

While districts like in the north and west like Tiruvallur and Erode, respectively had a GDDP of 14,926,564 and 7,344,526, districts in the south like Thoothukudi and Kanyakumari had a GDDP of 3,968,238 and 4,407,338. (Figures in Rs lakh for the period 2017-20 from the aforementioned report)

While the announcement and the potential benefits look good, politicians must also ensure that this investment comes through on time by not indulging in pressure tactics like seeking bribes, favours in contracts, procurements, etc — problems which allegedly plagued the Sterlite plant along with environmental concerns, and allow Thoothukudi to enjoy economic prosperity.

The state cannot afford another Sterlite-like disaster.