The Technical Efficiency of Chennai Auto Industry Cluster 2011-28-0100

The Chennai is an one of Automotive hub of India due to it's Automotive Industry presence producing over 40% of the India's Vehicle and Components. During 2001-02, the Automotive Component Industries(ACI) in Ambattur Industrial Estate, Chennai has faced problems on infrastructure(Approach Road, Storm water drainage system, Sewerage System, Sewage treatment plant, Solid Waste Management, Landscaping, Street Lighting and Logistics/ Parking), technology, procurement, production and marketing. In the year 2004-05 under the Cluster Development Approach (CDA), they formed Auto Cluster (AC) got grant under Industrial Infrastructure Upgradation Scheme from Government of India under Public Private Partnership Concept and implemented UNIDO-AIEMA Auto Cluster Supplier Development Programme under Consolidated Project for SME development in India. Due to this the infrastructure, technology, procurement, production and marketing interrelationships taken place among ACI. The objective is to find the technical efficiency of auto cluster before (2001-02) and after the CDA (2008-09). The methodology adopted is collection of primary data from ACI and analyzing using Data Envelopment Analysis (DEA) of Charnes-Cooper-Rhodes (CCR) Model. The Correlation Coefficient Analysis reveals that there is significant increase in correlation coefficient and the Regression Analysis informs that for one percent increase in employment and net worth the gross output increases significantly after the CDA. The DEA gives the technical efficiency of ACI by taking employment, net worth as input variable and gross output as output variable. From the technical score and ranking of auto component manufactures, it is found that there is significant increase in technical efficiency of ACI after the CDA when compared to before CDA. The slack variables obtained clearly reveals the excess employment and net worth and no shortage of gross output. Government policy on CDA by intervention in interrelationships not only benefited Chennai Auto Cluster in general but also Chennai Auto Components Industries in particular.