How India’s first integrated business city came up in Chennai after Ford started operations

Mahindra World City in Chennai, India's first integrated business city, attracts transnational companies, generates jobs, and promotes sustainable development.

During the Global Investors Meet 2024, industrialist Anand Mahindra said Tamil Nadu was not the choice when Ford started its operations in India in a joint venture with the Mahindra Group. “We were looking for locations in the north. It was the Ford team that told us, ‘Tamil Nadu is the place to be’. And the Ford experience helped me make a personal decision to set up the Mahindra Research Valley here,” the Mahindra Group chairman recalled. And there the seeds were sown for the 1,550-acre Mahindra World City (MWC) in Chennai, India’s first integrated business city and corporate India’s first operating Special Economic Zone (SEZ). And this place also includes a multi-sector Special Economic Zone and a Domestic Tariff Area (DTA).

“Currently, over 65 transnational companies — including BMW, Infosys, Mahindra Research Valley, Fujitec, Pegatron, TSMT, BASF, NTN Bearing, Lear Automotive, TVS Group of companies, and Force Motors — have opened their facilities in the MWC,” says Rajaram Pai, Chief Business Officer, Industrial, Mahindra Lifespace Developers Limited. As of the third quarter of the financial year 2024, MWC has facilitated cumulative SEZ exports worth ₹132,871 crore and generated jobs for over 61,000 persons.

So, how did the MWC come up? According to Tamil Nadu Industrial Development Corporation (TIDCO), ideation began in 1996. An MoU was signed between Mahindra and TIDCO. The initial aim was to develop a park for auto ancillary parts units that would support the Ford Motors manufacturing unit at Maraimalainagar.

The Mahindra Group joined hands with IL&FS to develop this park. The proposal was then taken to the government and TIDCO for help in procuring land and getting statutory approval. This was how TIDCO got into it. Subsequently, the entire shares of IL&FS were purchased by the Mahindra Group. When the SEZ policy was announced by the Union government, things changed. “Since SEZ was a new concept and provided many tax holidays which would attract many industries, approval was obtained for developing SEZs in the MWC for information technology, auto ancillary parts, and apparels and fashion accessories to effectively market the area. It was also decided to let out non-SEZ areas in the park and to provide a mix of SEZ and non-SEZ areas to industries of various sectors,” according to information given by TIDCO. Arun Nanda of the Mahindra Group and IAS officers Shaktikanta Das, now the RBI Governor, and Gopalan (then in TIDCO) were the key people involved in this project in its initial stage.

Mahindra World City was inaugurated on September 21, 2002, by Chief Minister Jayalalithaa. Infosys Technologies Limited was the anchor client. Infosys was allotted 129 acres and its proposed investment in Phase I was ₹250 crore. Then, the company had said its overall investment would be ₹1,250 crore. Jayalalithaa laid the foundation for the Infosys project in February 2004. During the Global Investors Meet 2024, Mr. Mahindra recalled, “We convinced Narayana Murthy [of InFosys] to come in as one of the first tenants. Thereafter, there was no looking back. All of you know what kind of tenants the MWC has.”

Another unique thing is a railway project which came up here. The Paranur station was a public-private partnership initiative between the MWC and Southern Railway. It was the first station to be redesigned and maintained by the corporate sector. Earlier, Paranur was the halt station, and the frequency of trains was low. As the industries were mushrooming here, a request was made for developing the station and increasing the frequency of trains. “This was to facilitate several thousand employees working in the MWC to commute from the city to the park easily. The station was inaugurated in December 2007,” a TIDCO official says. “The railways has become a preferred mode of transport for over 40% of the workers residing in Chennai and suburbs,” points out Mr. Pai.

The Mahindra Research Valley at the MWC was the first research and development centre in the world that brought auto and tractor product development under one roof, on a scale that mattered. “The common ground between its systems, simulation, power-train, and material testing provided the basis for immense savings in the R&D infrastructure and synergies. Housing several functional expertise under one roof also ensured the exchange of creative ideas, the robustness of the product, and the best value proposition to the customer,” Mr. Pai says. Apple supplier Pegatron is also housed in the MWC. Chief Minister M.K. Stalin inaugurated the project, which entails a total investment of ₹1,100 crore and offers jobs to roughly 14,000 workers.