Tamil Nadu (TN) is attracting International Investments

When numerous international organizations are looking to diversify their production facilities, supply chain, and sourcing destinations, the Indian province of Tamil Nadu (TN) offers a viable destination. The province, which already possesses a vast industrial base & a prolific start-up ecosystem has recently signed 14 MOUs worth nearly USD 1.5 billion in the last few months. As per the data revealed by the government in the 1st half of the Financial Year (FY) 21, a total of USD 4.5 billion worth of MOUs have been signed.


Major Industries in TN

  1. TN is home to the largest automobile and auto-parts industry in India. The state constitutes 27.5% of the overall automobile, trailer, and semi-trailer market in the country. It contributes to 35% of the overall auto-part industry in India.
  2. After the province of UP, TN is the second largest electronic durable industry in India. It constitutes around 16% of the electronic market in the country that constitutes. telecommunication equipment, electronic appliances, electronic component, laptops, etc. In FY 20, electronic exports from TN amounted to USD 1.5 billion.
  3. India's 50% of textile mills are situated in TN. With an annual readymade garment export worth USD 7 billion, exports from TN comprises one-fifth of India's overall readymade garment exports. The state is also steadily moving up the textile industry value chain and foraying into industrial textiles and textile machinery.
  4. In the chemical industry (alongside pharma and fertilizer products), it comes 3rd after Maharashtra and Gujarat. Chemical exports have amounted to USD 1.27 billion in FY 20.
  5. TN constitutes 15.9% of the general machinery industry in India. The state is one of the most industrialized regions in the country with over 37,000 manufacturing units. 60+ Fortune 500 companies have a base in TN. The total machinery export from TN is around USD 7 billion, growing at a CAGR of 14%.
  6. In recent years, TN alongside other destinations such as Spain, Texas, Ireland, Uruguay, has made a mark on the global renewable energy map. TN has an installed capacity of around 14.2 GW of renewable energy, mostly consisting of windmills and solar panels.


TN's success as one of the most industrialized provinces in India backed by a thriving automobile, textile, pharma, and the ICT industry is rooted in numerous factors.


Physical & Social Infrastructure of TN

  1. Located in the eastern parts of the country, TN has an extensive coastline, which has 5 major ports alongside 25+ minor ports.
  2. TN has 6 airports including 4 international airports resulting in seamless connectivity with 50+ countries.
  3. TN is the most urbanized states of India. At 50% urbanization (Indian average is around 41%), TN has an urban population base of 35 million, thereby offering a vast consumer market for local manufacturers and service providers.
  4. It has 8 million Sq. Ft of plug & Play factory Infrastructure. TN has over 120+ business & industrial parks spread all around.
  5. To systematically manage water shortages, it has built RO (Reverse Osmosis) based desalination plants. The current capacity of desalination is around 400 MLD, which ensures a constant supply of water.
  6. TN has an extensive network of quality B-schools, engineering, medical, and science institutions. Annually it produces a million college graduates.



Favourable MSME Policy

The government of TN has also taken a host of initiatives in recent time to encourage and develop a vibrant MSME & start-up ecosystem.

  1. In 2018, it developed a single-window clearance system for MSMEs, under which more than 15 required government permits are integrated under one platform. Forms can be submitted online and e-payments can be made seamlessly. Further to online submission, the permits are provided within 7-30 days.
  2. Through the online platform industrial lands can be identified and allotted in a completely transparent fashion.
  3. Numerous start-up incubation and accelerator programs are run in TN to support upcoming entrepreneurial ventures.
  4. The state offers a host of lucrative subsidies & concessions to budding businesses. This includes stamp duty waiver, concession in land prices alongside a host of subsidies in electricity tariff, loan interest repayment, etc.
  5. The state has also been a beneficiary of India's lucrative tax regime, as the country currently offers one of the lowest corporate tax rates in South Asia and South-East Asia.


Eyeing the Lucrative Defence Production


TN is set to play a vital role in India's drive towards the indianigestion of its defence manufacturing industry. The country is set to reduce its reliance on imports and develop domestic manufacturing capacities for its USD 25 billion defence imports. It has already put over 100 items on a negative list to promote domestic manufacturing.

After UP, TN is the only state in India that has a dedicated defence corridor to support defence production. Numerous international defence companies have shown their interest to set up their production facilities in the state. Already L&T in partnership with MBDA has started production for assembling, inert integration, and testing for missile systems and weapon launch platforms.

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