Untitled Document

Dun & Bradstreet - Oriental Bank of Commerce SME Cluster Series 2014 : Chennai


Cluster Overview


About Chennai

Chennai, formerly known as Madras, is the capital city of Tamil Nadu. It is the fourth most populous metropolitan area and the fifth most populous city in India. Chennai is famous for its culture and tradition, which emanates from its deep historic heritage. The city has been ruled by various south Indian dynasties, such as Pallava, Chera, Chola, Pandya, and Vijaynagar. It was the chief centre from which the British rule expanded in the sub-continent.

Chennai is one of the leading cities in India in terms of trade and commerce. It is the fourth largest employer in India’s IT & ITES sector. It also ranks fourth in terms of highest number of higher education Institutes in the country. The prominent sectors in the city are automobile, technology, hardware manufacturing, plastics manufacturing, printing and healthcare industries. Chennai is also home to Kollywood (the Tamil film industry), which is the second largest movie industry in India. The service industry of Chennai chiefly includes repair & servicing of motor vehicles, computer servicing, event management, Spa, videography, photography, tailoring/fashion designing, embroidery work, pre-school care centers, among others.

Awards and rankings:


Chennai is situated on the north-east end of Tamil Nadu on the coast of Bay of Bengal, between 12° 09’ and 13° 09’ of the northern latitude and 80° 12’ and 80° 19’ of the southern longitude. The city is bordered on the east by the Bay of Bengal and on the remaining three sides by Kanchipuram and Thiruvallur districts. Along the Bay coast, it stretches about 25.6 kms from Thiruvanmiyur in the south to Thiruvottiyur in the north. Two rivers, Coovam and Adyar intersect the city with the Coovam running through the heart of the city and the Adyar flowing through the southern part of the city. For most of the year, the weather in the city is hot and humid. The geographical area of Chennai district is approximately 178.20 sq kms. The entire area of the district has been classified as urban. The district has more than 664 acres of industrial area.

Demographic Indicators

Chennai is the most densely populated district in the state with a population density per sq km of 26,903 (Census 2011). The district has a population of 4,646,732 as per the 2011 Census, which increased at a Compounded Annual Growth Rate (CAGR) of 0.7% during 2001-2011. It accounts for 6.4% share in the total population of Tamil Nadu. Chennai has the highest urban population representing 12.5% of the state’s urban population. The sex ratio of the district is 989 females for every 1000 males, as against 996 for the state. Its literacy rate is 90.18%, as compared to the state’s literacy rate of 80.09%. In 2011, Chennai recorded the highest human development index of 0.817 in the state, which was also greater than 0.765 of Tamil Nadu.

Economic Scenario

Chennai, the fourth largest city in India, is a major trade centre. Chennai, being the capital of the state, is the centre for various activities of Tamil Nadu thus contributing significantly to the state’s economy. The Chennai zone contributes about 39% of the State’s GDP. The city ranks first in terms of number of employment, productive capital and revenue generation among other districts of the state. Chennai’s net district domestic product at constant (2004-05) prices was ` 245.83 billion during FY10, which was the highest in the state (representing 7.84%). The city reported revenue receipts of ` 12.4 billion during FY12, which is estimated to reach ` 16.6 billion (revised estimate) during FY13.


Chennai is the capital city of Tamil Nadu and is the gateway of south India. Well-known for its culture and tradition, Chennai is an attractive destination for exporters as its two ways of transportation, airways and seaports, help both largescale enterprises and SMEs alike to export to various parts of the world. Its transportation infrastructure comprises an international airport, two seaports and substantial rail and road network connectivity.

Urban Infrastructure: Chennai is one of the most urbanised cities in India. To further enhance the infrastructural development and create a more industry-friendly environment, the State Government has launched the Chennai Mega City Programme for Chennai City and its suburban areas. Under this programme, the Government allocated ` 10 billion during the last two years for taking up roads improvement, water supply schemes, underground sewerage schemes and other projects. The Government has also allocated ` five billion for Chennai Mega City Development in its budget estimates for FY14.

Road: Chennai’s road infrastructure includes major arterial roads that run either in an east-west or north-south direction. The total length of roads in Chennai City is about 2,847 km. The city is chiefly connected by four national highways, namely, Kolkata (NH5), Bengaluru (NH4), Thiruvallur (NH 205) and Trichy (NH 45). Anna Salai is one of the most famous roads in the city. Besides, other prominent arterial roads include Kamaraj Salai, Poonamalee High Road, Radhakrishnan Salai and Sardar Patel Road.

Major Road Sector Investments: The State Government has taken up various projects to improve the road sector to ease the congestion in the main arterial roads leading to major cities. The Chennai High Speed Elevated Transport Corridor spanning a length of 74 km at a cost of ` 30 billion is a major road sector investment. The other two high value projects are the Chennai Port to Maduravoyal (NH-4) four lane elevated road and the Chennai Outer Ring Road Project Phase II for an estimated investment of ` 18.13 billion and ` 10.76 billion respectively. In addition, development of four grade separators in Chennai is expected to be taken up during FY14 at a cost of ` 2.71 billion.

Railways: The Chennai Central railway station is the city’s largest railway station that runs trains to major cities and towns. The other two major railway stations are Chennai Egmore, which connects the cities and towns within Tamil Nadu, and Tambaram. The Chennai rail system uses broad gauges of 698 route km. The Chennai Central railway station is a hub for suburban trains, from which North Line, West Line and West North Line originate. Moreover, the Chennai Park suburban station’s proximity to the central station enables it to facilitate connectivity to Tambaram/Chengalpet/Tirumalpur routes through South Line and South West Line.

Major Rail Sector Investments: The need for a new rapid transport system as the traffic volumes on the roads has been increasing substantially has compelled the Government of Tamil Nadu to implement the Chennai Metro Rail Project. The proposed Phase-1 of the project includes the creation of two initial corridors running from Washermenpet to Airport (23.1 km) and Chennai Central to St. Thomas Mount (45.1 km). The project is slated to be completed by FY15 at an estimated cost of about ` 140 billion.

The Chennai Mono Rail Project includes a network of four monorail corridors that extend to a total length of 57 kms at an investment of ` 85 billion. Initially a network of three elevated corridors across Vandalur to Velachery via Tambaram east (23 km); Poonamallee to Kathipara via Porur (18 km); Poonamallee to Vadapalani via Valasarawakkam (16 km) will be established, and later the development of Vandalur to Puzhal (54 kms) corridor would be carried out. These proposed monorail corridors would integrate with the metro rail network at Vadapalani and the Kathipara junction. Besides, intermodal hubs at Velachery and a link between monorail and the MRTS at Velachery would also be established.

Airport: The Chennai International Airport (CIA) is the city’s airport for both domestic and international flights. The airport consists of the Anna International terminal and the Kamaraj Domestic terminal. The share of CIA in all India’s passenger traffic is 8%. It is the third busiest airport in India as it handled over 12.7 million passengers in FY13. The airport is also India’s third largest airport in terms of freight traffic, as it handled freight traffic of 315,879 tonnes. In FY13, three airlines, namely Air Austral, Indigo Airlines and Maldivian Airlines, commenced services at Chennai airport.

Ports: Chennai has two ports - the Chennai and Ennore Port. The Chennai port is one of the largest artificial ports in India and is the largest in the Bay of Bengal. It recorded an annual cargo tonnage of 53.4 million tonnes (MT) during FY13, as compared to 55.71 MT and 61.46 MT respectively during FY12 and FY11. The Chennai port is also one the busiest container hubs in India. It handles transportation of automobiles, motorcycles and general industrial cargo.

The Ennore port handles various cargos such as coal, ore and other bulk and rock mineral products. It recorded an annual cargo tonnage of 17.88 MT during FY13, as compared to 14.96 MT and 11.01 MT respectively during FY12 and FY11.

Tamil Nadu Vision 2023

Tamil Nadu’s Vision 2023 envisages a few large infrastructure projects across the state in order to further boost its economic and industrial growth. Some of the key projects for Chennai include:

Industrial Scenario

Chennai is one of the leading industrial cities in India. The city has the fourth largest port in the country that provides it trade links to Japan, Singapore, Malaysia, Bangladesh, Burma, Ceylon and other far eastern countries. It is also the first to have developed a full-fledged container terminal to international standards. The city is India’s second largest exporter of software, information technology (IT) and information-technology-enabled services (ITES).

It is referred to as the Detroit of South Asia since a major chunk of India’s automobile manufacturing industry is based in and around the city, which helps it record 60% of the country’s automotive exports. Chennai is a supplier of automobile components to global auto makers such as General Motors, Chrysler, Toyota, Ford and Volkswagen amongst others. Moreover, major automobile manufacturers such as Ford, Hyundai, Ashok Leyland and TAFE, among others have their manufacturing base in the city.

The Tamil film industry known as Kollywood, the second largest movie industry in India, is also based in the city. Chennai is recognised as one of India’s leading audio and video production centres. Several audio and video production and postproduction processing activities such as digital recording, dubbing, mastering and animation are undertaken in Chennai for several films made all over India.

Some of the large scale enterprises/public sector units operating in the city are the Steel Authority of India Ltd, Food Corporation of India, Chennai Petroleum Corporation Ltd, Oil & Natural Gas Corporation Ltd, State Trading Corporation of India Ltd, Shipping Corporation of India Ltd, Bharat Electronics Ltd and Integral Coach Factory. Auto parts, software, leather products, readymade garments, milk products, agriculture implements, food products, electronics items and marine products are the major exportable items from the city.

Prominent Clusters

The fourth largest city in India, Chennai is a major trade centre. Traditionally, it is a hub of economic, geographic and political activities in South India. Chennai has the 4th highest number of higher education institutes in the country and has one of the largest resource pools in the form of graduating students suitable for IT and ITeS sector.

It is also the 4th biggest employer in IT & ITES sector in the country. Since 2000, the Old Mahapalipuram Road (OMR) is also known as the IT corridor of Chennai. Till 2006, IT development in this micro market was mainly driven by government nodal agencies – TIDCO, ELCOT and SIPCOT. However, post 2006, major private players including RMZ, Shapoorji & Pallonji, Tata Realty and others have developed IT parks along this road.

Chennai is the largest auto components cluster as it houses a majority of India’s automobile manufacturing industry and accounts for about 60% and 35% of the country’s automotive exports and automobile components manufacturing capacity. The city comprises about 350 Tier I and II suppliers and more than 3,000 SME Tier III and IV suppliers. Additionally, seven companies in Chennai have won prestigious Deming Awards. In the tyre manufacturing sector, Chennai has manufacturing plants of MRF and Apollo Tyres, Michelin, Dunlop and JK Tyres.

Further, some of the key research and development (R&D), design and testing centers in Chennai include the following:

The following table highlights the details of the some of the major clusters in Chennai: