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Industrial Development & Economic Growth in Tamil Nadu

Last updated on May, 17 2021

Economic Snapshot
Per capita Income

Tamil Nadu is the fourth largest state of India. It has a diversified manufacturing sector and features among the leaders in several industries like automobiles and auto components, engineering, pharmaceuticals, garments, textiles, leather, chemicals, plastics, etc. It ranks first among the states in terms of number of factories and industrial workers.

Tamil Nadu Industrial Development Corporation Ltd (TIDCO), State Industries Promotion Corporation of Tamil Nadu (SIPCOT), Tamil Nadu Industrial Investment Corporation Limited (TIIC), and Tamil Nadu Small Industries Development Corporation Limited (TANSIDCO) are jointly developing industrial infrastructure in the state.

Between 2015-16 and 2020-21, Gross State Domestic Product (GSDP) is expected to expand at a Compound Annual Growth Rate (CAGR) of 12.20% to reach Rs. 20.92 trillion (US$ 299.32 billion). Net State Domestic Product (NSDP) expanded at a CAGR of 11.93% to touch Rs. 16.59 trillion (US$ 237.40 billion) between 2015-16 and 2019-20.

In 2019-20, tertiary sector contributed 53.67% to state’s Gross State Value Added (GSVA) at current prices, followed by secondary sector at 33.44%.

As of February 2021, the state had a total installed power generation capacity of 33.44 GW.  

According to Department for Promotion of Industry and Internal Trade (DPIIT), cumulative Foreign Direct Investment (FDI) inflow in Tamil Nadu and Puducherry stood at US$ 2,683.85 million between October 2019 and December 2020.

Total merchandise exports from the state stood at US$ 30.02 billion during 2019-20. From April 2020 to January 2021, exports stood at US$ 20.49 billion.

IT & ITeS export from Tamil Nadu increased to Rs. 1.39 lakh crore (US$ 19.9 billion) in 2018-19, at a growth rate of 10% y-o-y.

Tamil Nadu Industrial Guidance and Export Promotion Bureau has been set up with an objective to attract major investment proposals to Tamil Nadu.

Some of the major initiatives taken by the Government to promote Tamil Nadu as an investment destination are:

  • The state introduced the ‘Industrial Policy 2021’ to achieve an annual growth rate of 15% in the manufacturing sector while attracting investments worth Rs. 10 lakh crore (US$ 137.8 billion) and creating employment opportunities for 20 lakh people by 2025.
  • In February 2021, Flipkart signed a memorandum of understanding with the Tamil Nadu MSME Trade and Investment Promotion Bureau to bring local artisans, weavers, craftsmen and small and midsized enterprises into the e-commerce marketplace.
  • In December 2020, Tamil Nadu announced that France will sign a memorandum of understanding (MoU) with the Tamil Nadu’s industrial Guidance and Export Promotion Bureau and the Indo-French Chamber of Commerce and Industry to facilitate mutual investments and to promote ease of doing business
  • The government has proposed the Tamil Nadu Urban Flagship Investment Programme to support the state in developing urban and environmental infrastructure. The programme will cost of Rs. 8,156 crore (US$ 1.11 billion) and will be financed with assistance from the Asian Development Bank.  Further, 179 projects at a cost of Rs. 8.6 lakh crore (US$ 117.58 billion) relating to Tamil Nadu have been included in the national infrastructure pipeline. These projects will be implemented in the next five years (2020-25).
  • Comprehensive Road Infrastructure Development Programme (CRIDP) is a flagship scheme to upgrade road infrastructure in the State. Under Budget 2020-21, Rs. 5,500 crore (US$ 780.25 million) has been allocated to the scheme.
  • The Asian Development Bank assisted Tourism Development Project is currently under implementation and a sum of Rs. 90.85 crore (US$ 12.89 million) has been provided in the Budget Estimates of 2020-21.
  • In 2019, Chief Minister launched the Tamil Nadu New Integrated Textile Policy, 2019.
  • According to Good Governance Index 2019, Tamil Nadu ranks first in terms of governance.
  • Tamil Nadu organised its second Global Investor Meet (GIM) on January 23 and 24, 2019. The state surpassed the targeted investment and attracted Rs. 3.4 lakh crore (US$ 48.65 billion) investment in 12 sectors including automobile, textiles, renewable energy, etc. Around 146 memorandum of understanding (MoUs) were signed with an expectation to generate 10.5 lakh job opportunities in the state.
  • During September 2017-October 2019, 50,606 formal jobs were created in Tamil Nadu. *
  • Tamil Nadu ranked first in terms of foreign tourist arrival and second in terms of domestic tourist arrival in 2019(P). In 2018, foreign tourist arrival reached 6.07 million, while domestic tourist arrival reached 385.90 million.
  • In July 2020, the Tamil Nadu government signed MoUs worth US$ 1.48 billion; this is expected to create 13,507 jobs in fields such as solar cells, data centres and industrial parks

Note: * - according to Employees' Provident Fund Organisation (EPFO) data, P - Provisional

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