TAMIL NADU – MISSION $1trn ECONOMY

The Tamil Nadu Chief Minister, almost immediately after coming to power in 2021 had set a target of making the state a $1trn economy by 2030. This target, coming alongside the Government of India’s decision to make India a $5trn economy almost on similar timelines, made sense.

Tamil Nadu has all along been a high performing state and been ranked among the top three states and contributing almost 10% to India’s GDP with a robust performance from all the three sectors, Agriculture, Manufacturing and Services.

The State Government rightly decided that scaling up the economy would not be possible without investments flowing in, both from within India and overseas.

The Global Investors Meet-III (GIM-III) held in Chennai in January 2024, was among the first step taken by the State Government towards this end. MOUs worth Rs 6.64L crores were signed with some of the big industrial houses within India as well as overseas.

As a follow up to GIM-III, the Government held the Tamil Nadu Investment Conclave in August 2024. At the conclave the Chief Minister laid the foundation stone for 28 industrial projects with an investment of Rs. 51,157 crores and inaugurated 19 additional projects with an investment of Rs 17,616 crores. These 47 projects totaling Rs 68,773 crores are expected to go on stream in the coming years and generate employment for over one lakh individuals.

Post the Investment Conclave the Chief Minister undertook a two-week trip to the US to sell Tamil Nadu as an investment destination. During this visit MOUs worth Rs 7616 crores were reportedly inked with 18 US based companies.

 One feature in the current investment cycle has been that many of these projects are coming up in the districts which could, in turn, bring about overall improvement in the State’s infrastructure.

Tamil Nadu has also been offering single window clearance for investors setting up units in the State to facilitate ease of doing business.

Amidst all these upsides, the State has had a few disruptions, if one might term it so: -

-        The exit of Nokia in 2013/2014 due to a major tax dispute coupled with labor strife - This resulted in a sharp fall in the export of mobile phones with its impact on forex earnings and more than 10,000 employees, both direct and indirect, losing their jobs.

-        The closure of the Vedanta Copper Smelting unit post 2018 unrest - Without going into the merits and demerits of the case the bottom line was India had to resort to import of copper to meet its domestic demand apart from losing out on export earnings.

-        The ongoing labor unrest at the Samsung unit near Chennai.

While the first two cases are fait accompli and nothing can be done about it at present, it is imperative that State government acts quickly to resolve the Samsung issue before it spirals out of control and its ripple effect is felt in the other big manufacturing units located in the Sriperumbudur belt.

Such an action would also help remove any doubt in the investors’ mind regarding the seriousness of the government in providing a trouble-free working environment and get the investor confidence back.

CONCLUSION

Tamil Nadu has been putting its best foot forward in ensuring that it reaches its target of being a $ 1trn economy. However, it should quickly and proactively remove all the obstacles and roadblocks that it might encounter in this journey. Whether the target is achieved by 2030 or beyond, only time will tell.

A quote from Mr TRB Raja, Industries Minister of Tamil Nadu, reproduced below, sums up Tamil Nadu’s commitment of making the State the manufacturing hub of India:

 “If you think of China Plus, think of India and if you think of India, think of Tamil Nadu”