A recent report by the Reserve Bank of India (RBI) has picked Tamil Nadu as India’s most industrialised state. The study, quoting data from the Ministry of Statistics and Programme Implementation’s Annual Survey of Industries has the state accounting for over 15 percent of all factories in India.
As of FY20, Tamil Nadu’s 38,837 factories were over 10,000 more than Gujarat’s 28,479 — despite Gujarat’s factory count rising by 82 percent in the last decade against Tamil Nadu’s 45 percent.
While the state accounts for 15.7 percent of all factories, Gujarat’s share is about 11.5 percent. Maharashtra is third on the list with 25,610 factories (10.3 percent) while Andhra Pradesh’s 19,924 factories (6.8 percent) come fourth, and Uttar Pradesh’s 19,184 factories (6.5 percent) complete the top five.
Tamil Nadu’s pole position on factory count isn’t surprising — the state has recently begun an investment blitzkrieg as it hopes to achieve a trillion-dollar economy by 2030.
While India has already signalled its intent to become a $5-trillion economy by FY29, the southern state wants to achieve one-fifth of that target on its own. It has begun setting its sights on investments worth Rs 45 lakh crore in the next eight years to cement its position as India’s manufacturing basin.
“The Chief Minister (MK Stalin) has already set out an ambitious target of a trillion-dollar economy by 2030, which means we should gear up to have more investments in these sectors — to the tune of Rs 45 lakh crore,” said Tamil Nadu’s minister of industries, Thangam Thennarasu.
More recently, Tamil Nadu has stopped relying solely on its traditional trump card of automobile manufacturing, as a means of attracting future investments.
The emergence of the electronics manufacturing sector thanks to investments by Pegatron, Foxconn and Tata Electronics — the company recently made a Rs 4,700-crore investment here — has held the state’s electronics manufacturing sector in good stead.
Today, Tamil Nadu’s diversified manufacturing sector comprises automobiles, components, electronics, textiles, chemicals, leather and non-leather manufacturing.
In all, manufacturing accounts for a third of Tamil Nadu’s projected GDP of $320.3 billion by FY23. The sector now hopes to account for 40 percent of its projected trillion-dollar economy by 2030.
“I think manufacturing is going to play a big role — from $100 billion to $400 billion,” said Ganesh Mani, Chief of Operations, Ashok Leyland, “In order for that to happen, there are multiple areas where investments need to happen. The first and foremost is high-growth technology investments.”
To bring in these investments, the state is rolling out the red carpet and offering incentives like the extension of single window clearances to MSMEs, 24/7 power and capital subsidies.
From automation to AI, and machine learning, the scope for Tamil Nadu to invest big in technology that can support its manufacturing economy is immense. However, whether this can happen in the next eight years or not will depend largely on how the policy and geopolitical landscape, and the economy at large pan out.