CHENNAI • It is quiet as Mr Ruchak Khanter walks across his factory in the southern Indian city of Chennai.
Stacked piles of unsold stainless steel plates, trays and bowls cover the floor, industrial stamping machines lay idle and most of his workers have been sent home.
"There's literally no work," Mr Khanter said, citing the new nationwide goods and services tax (GST) and the decline in his state's competitiveness as other regions draw investment. He is considering moving to Ahmedabad in Gujarat, some 1,850km to the north. "A lot of industries have already moved."
Nicknamed the "Detroit of India" for its car industry, Chennai, the capital of Tamil Nadu, is at risk of taking on another characteristic of the American city - the demise of a manufacturing powerhouse.
For India as a whole though, the ascent of less-developed states could spell a future of more balanced, sustainable growth where regional rivalries fuel productivity gains, much as they have in the other giant economies of the United States and China.
"For a host of reasons, parts of South India developed more rapidly than the northern states post-Independence," said Mr Shailesh Kumar, senior Asia analyst at political risk firm Eurasia Group. "This trend may now be changing on account of the government's push to have states compete for business and investments, with the goal that in the end, all of India will benefit."
There's literally no work. A lot of industries have already moved.
MR RUCHAK KHANTER, citing the new nationwide GST and the decline in his state's competitiveness as other regions draw investment.
Andhra Pradesh and Telangana are among the fiercest competitors for new industry. Chief minister Chandrababu Naidu is tapping into Andhra Pradesh's tech prowess to try and make their built-from-scratch capital Amaravati a Singapore-style "fintech" centre of India.
For Indian Prime Minister Narendra Modi, more balanced growth across the nation of 1.3 billion would help fulfill his 2014 campaign promise to bring economic development to all Indians - a pledge now under pressure from a lack of job creation. He knows competition between states can lead to new investments and job creation, and has tried to level the playing field by implementing national policies like the GST.
That is little comfort to businesses in Tamil Nadu, India's most industrialised state and long a destination for global manufacturers. Political shifts and policies have dented the region's momentum, while a fall in remittances from workers in the Gulf has been most notable here.
Planned investments in Tamil Nadu still totalled US$5.7 billion (S$7.68 billion) since 2015, with a recent uptick "despite ongoing political uncertainties", said global real estate firm Jones Lang LaSalle.
India's southern states - Tamil Nadu, Andhra Pradesh, Telangana, Kerala and Karnataka - have long enjoyed better social indicators than northern states like Bihar or Uttar Pradesh. Numbers tell the story: Andhra Pradesh, with a population of 50 million, has more factories than Uttar Pradesh, home to over 200 million people. The challenge is the same for fading industrial regions - to shift from lower-wage assembly to higher-value manufacturing and research and development.
Even in the south's famed IT outsourcing industry, all is not well. According to the National Association of Software and Services Companies, the sector has been hit by job losses in some of its largest firms.
Some blame US President Donald Trump's attacks on the H-1B visa. Others put it down to the effects of the policy changes. For some, the transition up the value chain means hiring fewer people. Mr Virendra Bhayani, whose family owns Bhupendra International, an exporter of plastic housewares, installed expensive machinery and now employ just 15 workers, down from 30. "We are in a transition. The industry is going through a lot of changes." BLOOMBERG