Chennai, March 10 (IANS) The Tamil Nadu government should set up a defence park near Madurai to take advantage of the country's offset policy, the state chapter of industry lobby Confederation of Indian Industry (CII) says.

'We have submitted a proposal to set up an defence industrial park near Madurai to union Minister for Chemicals and Fertilisers M.K. Alagiri. This is one more effort to industrialise southern Tamil Nadu,' C.K.Ranganathan, chairman of the Tamil Nadu State Council, told reporters here Wednesday.

Under India's defence offset policy, if the equipment acquisition value exceeds Rs.300 crore, products equivalent to 30 percent of the contract value have to be locally manufactured.

Appreciating the Tamil Nadu government's health insurance scheme for poor people, Ranganathan urged the state to offer attractive incentives for hospitals to be built in rural areas.

'Without incentives, hospitals in rural areas are not viable,' he remarked.

According to Ranganathan, CII-Tamil Nadu's suggestion to formulate an industry-wise policy has been accepted by the state government.

He said CII is now studying cost-effective ways of making cities better places to in live through its City Connect programme.