Economy of Tamil Nadu

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Tamil Nadu is the second richest[12] and wealthiest state in the Indian union by GDP[13] and is the most industrialised state in the country. More than 60% of the state is urbanized, accounting around 10.6% of the urban population in the country, while only comprising 6% of India's total population. Services contributes to 55% of the economic activity in the state, followed by manufacturing at 34% and agriculture at 11%. Government is the major investor in the state, with 52% of total investments, followed by private Indian investors at 29.9% and foreign private investors at 14.9%. It has been ranked as the most economically free state in India by the Economic Freedom Rankings for the States of India.[14]

Economy of Tamilnadu
Chennai Kathipara bridge.jpg
Statistics
GDP₹19.7 Trillion (US$298 billion) (2020-2021)
GDP rank2nd
GDP by sector
Agriculture: 13%
Industry: 34%
Services: 53% (2017–18)[1]
Population below poverty line
Template:Decreasepositive 4.3% in poverty (2020–21)[2]
Increase 0.709 high (2019) (11th)
UnemploymentPositive decrease 1.1% (Nov 2020)[3]
External
Exports3.63 lakh crore (US$42 billion) (2019–20)
Export goods
Automobiles,[4] Mobile phone,[5] Software, Missile defense, Electronics, Telecommunications equipment,[6] Armaments,[7] Locomotives,[8] Ships, Machinery, Steel, Aluminium, Transportation equipment,[9] tyres, Textiles, Footwear, Leather, Chemicals, Cement, Plastics, Toys, Food processing, Seafood, Vegetables, Fruits, Tea and Coffee
Main export partners
 Australia[10]
FDI stock
28,049 crore (US$3.2 billion) (2017–18)[11]
Public finances
23% of GSDP (2019–20 est.)[1]
454,176 crore (US$52 billion) (2.56% of GSDP) (2019–20 est.)[1]
Revenues2.98 lakh crore (US$34 billion) (2020–21 est.)[1]
Expenses3.01 lakh crore (US$35 billion) (2020–21 est.)[1]
Stats about Tamil Nadu
Tamil Nadu – India's Economic Powerhouse.
Tamil Nadu's Contribution to India's Industrial Output
Strategic Location of Tamil Nadu
Tamil Nadu strong Social and educational Infrastructure.
Tamil Nadu Rankings
Tamil Nadu Statistics
Tamil Nadu – Automobile Hub of India
Textile industry in Tamil Nadu
Tirupur – India's Knitting City
Electronic Hardware Sector in Tamil Nadu
Tamil Nadu – Leather Hub of India.
Sivakasi – Fireworks Hub of India
Tamil Nadu Service Sector

Macroeconomic trend

This is a chart of trend of gross state domestic product of Tamil Nadu at market prices estimated in Indian rupees.

Year Gross state domestic product USD Rate Appreciated
1960 1,112 crore (US$130 million)
1970 2,371 crore (US$270 million)
1980 8,081 crore (US$930 million)
1990 31,339 crore (US$3.6 billion)
2000 146,796 crore (US$17 billion)
2010 584,896 crore (US$67 billion)
2020 ₹20.54 lakh crore (US$290 billion)

Agriculture and livestock

 
Paddy fields in Kanyakumari District

Tamil Nadu has historically been an agricultural state, while its advances in other fields transformed the state into being an industrialized and innovation based economy, leading to competition for land and its resources. Agriculture is heavily dependent on the river water and monsoon rains. The perennial rivers are Palar, Cheyyar, Ponnaiyar, Kaveri, Meyar, Bhavani, Amaravathi, Vaigai, Chittar and Tamaraparani. Non-perennial rivers include the Vellar, Noyyal, Suruli, Siruvani, Gundar, Vaipar, Valparai and Varshali. Tamil Nadu is the highest producer of bananas and coconuts in the whole country. It is also a leading state in production of other crops such as sugarcane, cotton, kambu, corn, rye, groundnut and oil seeds. At present, Tamil Nadu is India's 4th largest producer of rice behind West Bengal, Uttar Pradesh and Punjab[15][16] Tamil Nadu is the home to Dr. M. S. Swaminathan, known as the "father of the Green Revolution" in India.[17] The state is one of the major producers of turmeric in India.

Given below is a table of 2015–16 national output share of select agricultural crops and allied segments in Tamil Nadu based on 2011 prices[18]

Segment National Share %
Drumstick 98.0
Tapioca 44.4
Floriculture 16.5
Gooseberry 18
Coconut 29.1
Tamarind 25.3
Meat 7.5
Turmeric 14.6
Banana 19.4
Ragi 17.8
Horsegram 17.5
Sapota 17.4
Urd 14.7
Groundnut 14.2
Cucumber 12.6
Maize 12.3
Egg 12.2
Carrot 12.1
Marine fish 11.8
Gur 11.6
Water melon 11.4
Jackfruit 10.9
Jowar 10.6
Tea 8.5
Cocoa 8.2
Moong 7.9
Oilseed 7.7
Papaya 7.4
Paddy 6.9
Bean 6.7
Fruit and vegetable 6.3
Sugarcane 6.1
Mango 5.8
Bitter gourd 5.6
Pear 5.3
Sericulture and Apiculture 5.3

Mining

This is a chart of proven reserves of major minerals of Tamil Nadu[19] in 2001 by Department of Geology and Mining with figures in tonnes.

Mineral Reserve National Share %
Lignite 30,275,000 87
Vermiculite 2,000,000 66
Garnet 23,000,000 42
Zircon 8,000,000 38
Graphite 2,000,000 33
Ilmenite 98,000,000 28
Rutile 5,000,000 27
Monazite 2,000,000 25
Magnesite 73,000,000 17

Tamil Nadu has a few mining projects based on Titanium, Lignite, Magnesite, Graphite, Limestone, Granite and Bauxite.[20] The first one is the Neyveli Lignite Corporation that has led development of large industrial complex around Neyveli in Cuddalore district with Thermal power plants, Fertilizer, Brequetting and Carbonisation plants. Tata Iron and Steel Company (TISCO) have entered into MoU with Government of Tamil Nadu in June 2002 for establishing a titanium dioxide (TiO2) plant with a project outlay of $650 million. Magnesite mining is done at Salem apart from which mining of Bauxite ores are carried out at Yercaud and this region is also rich in Iron Ore Kanjamalai. Molybdenum is found in Dharmapuri, and is the only source in the country.

Energy

Tamil Nadu, being an industrialized and urbanized state, is among the top 3 states with respect to generation of electricity. The total installed capacity of Tamil Nadu stands at around 30200 MW as in September 2018, that derives 11500 MW of power from solar and wind energy. Tamil Nadu has the distinction of being the leader in renewable energy in India by adopting clean sources of energy and having established wind farms as early as 1995. Today it produces more wind power than Denmark and the Netherlands.

Wind energy

The Tamil Nadu Energy Development Agency (TEDA) is a Tamil Nadu government promoting renewable energy sources and energy conservation activities. The agency has largely been responsible for instigating the tremendous growth of Tamil Nadu in the development of wind power.[21] The total installed capacity of windmills in Tamil Nadu totals to around 8700MW. Muppandal wind farm is a renewable energy source, supplying the villagers with electricity for work.[22][23] Wind farms were built in Nagercoil and Tuticorin apart from already existing ones around Coimbatore, Pollachi, Dharapuram, Kangeyam and Udumalaipettai.

Solar

In March 2008, Signet Solar Inc.[24] signed a memorandum of understanding with the State government to build a INR 20 billion thin-film silicon photovoltaic module manufacturing plant in the Sriperumbudur Special Economic Zone.[25] In June 2008, Moser Baer inked a MoU with the state government to build INR 20 billion plant for manufacturing of silicon-based photovoltaic thin film modules and allied products in the Oragadam Special Economic Zone which is closer to the Signet Solar's plant in sriperumbudur.[26]

Nuclear

The Kalpakkam Nuclear Power Plant, Ennore Thermal Plant, Neyveli Lignite Power Plant, Virudhachalam Ceramics and the Narimanam Natural Gas Plants are major sources of Tamil Nadu's electricity. It is presently adding the Koodankulam Nuclear Power Plant to its energy grid. Tamil Nadu sources some of its power needs from renewable sources with wind power contributing over 2000 MW or over 20% of the needs. Tamil Nadu is facing largest power shortage since 2013 (34.1% deficit), the highest in the country, due to industrialization over the last decade.[27] India's leading steel producer SAIL has a steel plant in Salem, Tamil Nadu.[28] Tamil Nadu ranks first nationwide in diesel-based thermal electricity generation with national market share of over 34%.

Hydroelectric

The Mettur Dam is one of the largest dams in India. It was completed in 1936. The total length of the dam is 1700 meters. It is also called Stanley Reservoir. The Mettur Hydro Electrical power project is also quite large Mettur Dam. Mettur has a number of industries (50 km from Salem city): SISCOL,[29] MALCO (Madras Aluminium Company owned by Vedanta Resources), Chemplast (former known as Mettur Chemicals),[30] Thermal power plant, Hydel power plant and huge number of chemical industries. There are many other dams that provide irrigation and drinking water, including the Vaigai Dam.

Bio-diesel

Tamil Nadu at this time is the only state to have a formal Bio-Diesel Policy to use jatropha crops as a source of biofuel and to distribute wasteland to the poor farmers for the planting of these crops.[31]

Industry and manufacturing

One of the global electrical equipment public sector company BHEL has manufacturing plants at Tiruchirappalli and Ranipet. The Tamil Nadu state government owns the Tamil Nadu Newsprint and Papers (TNPL),[32] the world's biggest bagasse-based paper mills in Karur . The world's sixth largest manufacturer of watches together with TATA, under the brand name of "Titan" which has manufacturing plant in Hosur.[33] 40 percent of all wind-generated electricity in India is created by windmills in Tamil Nadu. Danish wind power company NEG Micon has established its manufacturing unit in Chennai.[34] Tamil Nadu is a leading producer of cement in India and with manufacturing units located at Ariyalur, Coimbatore, Karur and Tirunelveli. High-density Polyethylene mono filament yarn and associated products are manufactured in Karur for mosquito nets and fishing nets. More than 60% mosquito nets in India are manufactured here. The region around Salem is rich in mineral ores. The country's largest steel public sector undertaking, SAIL, has a steel plant in Salem.

Coimbatore is a major industrial hub in South India and houses more than 30,000 small, medium and large industries. Coimbatore is known as "Manchester of South India" due to its extensive textile industry and also referred to as "the Pump City" as it supplies half or 50% of India's requirements of motors and pumps.[35] The city is one of the largest exporters of textile, jewellery, wet grinders, poultry and auto components and the term "Coimbatore Wet Grinder" has been given a Geographical indication. Larsen & Toubro has 300 acre huge manufacturing campus in Coimbatore which houses various units of company, manufactures aerospace and defence parts for leading players in the market.

Tuticorin is known as "Gateway of Tamilnadu". Thoothukudi is the major chemical producer in the state. It produces the 70 percent of the total salt production in the state and 30 percent in the country.

IT/ITeS-Software

Tamil Nadu is one of the largest contributor of software exports majorly from its cities Chennai, Coimbatore, Trichy, Salem[36] and Madurai . State has 526 engineering colleges, the most for any state in India giving the services industry access to qualified and skilled labour force. The top engineering colleges in Tamil Nadu have been a major recruiting hub for the IT firms. According to estimates, about 50 per cent of the human resources required for the IT and ITES industry was being sourced from the state.[37] The state has a wide network of about 110 industrial parks and estates offering developed plots with supporting infrastructure.[38] Also, the state government is promoting other industrial parks like Rubber Park, Apparel Parks, Floriculture Park, TIDEL Park for IT/ITS, TICEL BioPark for Biotechnology,[39] Siruseri IT Park, Elcot SEZ and Agro Export Zones among others. Tamil Nadu has the largest number of Small and medium enterprises (SMEs) in India.[40]

This is a chart of trend of software exports from Tamil Nadu published by Electronics Corporation of Tamil Nadu with figures in Crores of Indian Rupees.[41]

Year Software exports
1995  370 crore (US$42 million)
2000  31,160 crore (US$3.6 billion)
2005  41,150 crore (US$4.7 billion)
2010  62,100 crore (US$7.1 billion)
2013  82,450 crore (US$9.5 billion)[42]
2017  111,179 crore (US$13 billion)
2018  139,129 crore (US$16 billion)[43]

Automotive

Chennai is nicknamed "The Detroit of Asia".[44][45] It is home to large number of auto component industries. Over 11.2% of the S&P CNX 500 conglomerates have corporate offices in Tamil Nadu. Tamil Nadu has manufacturing facilities from automobiles, railway coaches, battle-tanks, tractors, motorbikes and heavy vehicles to ships.

Alstom has a manufacturing facility in Coimbatore which manufactures rail transportation products.

Vehicle parts manufacturers

Madras Rubber Factory the local tyre manufacturer is located in Chennai and Perambalur. TI cycles of Murugappa group have their units in Chennai. UCAL Carburettors, TRW Rane, TVS Group are established in Hosur.TVS Srichakra Tyre works at Madurai. Coimbatore is home to Pricol, Elgi Equipments, Craftsman, Roots Horn, Rolon Chains and numerous Tier-I part suppliers.

Transportation industry

Custom built trucks operated in Tamil Nadu, Kerala and Karnataka are from Tiruchengode, Sankagiri, and Namakkal. 90 Percent of Private busses operating in South India are built in Karur. Karur is well known for its bus body building industries. More than 150 Bus body building industries are located in and around Karur. Apart from that, mostly all the TNSTC, MTC, SETC and PRTC busses are built in Karur.

Textiles and Apparels

Tamil Nadu is the largest textile hub of India. Tiruppur "Dollar City" due to its cotton production and textile industries. The textile industry plays a significant role in the Indian economy by providing direct employment to an estimated 35 million people, and thereby contributing 4% of GDP and 35% of gross export earnings. The textile sector contributes to 14% of the manufacturing sector. From Spinning to garment manufacturing, entire textile production chain facilities are in Tamil Nadu. About half of India's total spinning mill capacity is in Tamil Nadu. The western part of Tamil Nadu comprising Coimbatore, Tirupur, Erode, Namakkal, Karur and Dindigul has the majority of spinning mills manufacturing cotton/polyester/blended yarn, open end yarn and silk yarn used by garment units in Tamil Nadu, Maharastra etc. Yarn is also exported to China, Bangladesh etc. Tirupur knitted garment units have been exporting garments for about 3 decades with 2015–16 exports in the range of US$3 Billion. Karur is the major home textile (Curtain cloth, bed linens, kitchen linens, toilet linens, table linens, wall hangings etc.) manufacturing and export hub in India. Erode is the main cloth market in south India for both retail and wholesale ready-mades. Madras (Chennai) has a large presence of woven garments (shirts/pants) manufacturing units. Madurai and Kanchipuram are famous for handloom sarees exported / sold all over India. Lakshmi Machine Works [LMW], one of the three major textile machinery manufacturing companies in the world is located in Coimbatore. Savio also has a factory in Coimbatore. Many textile component manufacturers are in Coimbatore and some export to the Europe etc.

Aerospace and defence

 
Tamil Nadu Defence Corridor

The defence industry in Tamil Nadu is one of the fastest growing sector in the states generating a huge amount of export revenue. The states serves as the headquarters for numerous defence manufacturing public undertakings such as Heavy Vehicles Factory, Combat Vehicles Research and Development Establishment, Ordnance Factory Tiruchirappalli, L&T Aerospace & Defence unit Coimbatore, LMW Advanced Technology Centre, Coimbatore, Ashok Leyland Defence Systems, Mahindra Aerospace, Ramco Systems, TANEJA Aerospace and Salem Aerospace Limited.[46][47] The state has the country's first defence corridor and aerospace park.[48][49] The principal cities manufacturing defence and aerospace components are Chennai, Coimbatore, Tiruchirappalli, Salem and the secondary manufacturing cities are Nagercoil and Hosur.[50][51] French aerospace and defence company, Airbus decided to invest 1 billion dollar (7,200 crores) in an aerospace project in Chennai.[52] The company has also planned to built a helicopter assembly factory in Tamil Nadu.[53] Tier - II cities of Coimbatore and Salem also serves as a major export hub for defence manufacturing firms.[54] Defence, paramilitary and police personnel across the nation use guns, ammunitions and bullets manufactured from the city.[55][56] Special grade steel used in making missiles are manufactured in Salem.[57] India's multinational engineering conglomerate L&T joint venture with France-based MBDA, a world leader in missile systems planned a "L&T MBDA Missile Systems" facility at Aspen SEZ in Coimbatore serves as its hub to export fully assembled missile systems to Europe.[58]

 
IAF's Tejas fighter aircraft

Tamil Nadu also is the hub station where the first Indian made Fifth-generation jet fighter plane is to be manufactured. The Aeronautical Development Agency, which conceived and designed the Light Combat Aircraft (LCA) Tejas, set the ball rolling for building the next generation defence aircraft, the Advanced Medium Combat Aircraft (AMCA), by initiating in Coimbatore to build a technology demonstrator. The project – to be implemented in Sulur in Coimbatore district which will house the permanent base of the Tejas squadron – marks one of Tamil Nadu's first major defence aircraft project.[59]

Electronics

Electronics manufacturing is a growing industry in Tamil Nadu. Chennai has emerged as EMS Hub of India. Companies like Flextronics, Motorola, Sony-Ericsson, Foxconn, Samsung, Cisco, and Dell have chosen Chennai as their South Asian manufacturing hub. Products manufactured include circuit boards and cellular phone handsets.[60] Ericsson also has a Research and Development facility in Chennai.[61] Big EPC companies have set up their Engineering centres which include Saipem India Projects Ltd, Technip, Foster Wheeler, Schneider Electric, Mott MacDonald, Petrofac, Austrian company "Austrian Energy and Environment" have also a design office here besides local giant ECC Larsen & Toubro. Sanmina-SCI is the latest company to invest in Tamil Nadu to create a state of the art manufacturing facility.[62] Nokia Siemens Networks has decided to build a manufacturing plant for wireless network equipment in Tamil Nadu.[63]

The state with a projected population of about 66.5 million in year 2009 has a high mobile market share in India. According to statistics released by Telecom Regulatory Authority of India (TRAI), the state had a total subscriber base of 43 million mobile customers at the beginning of August 2009.[64][65]

Leather

Tamil Nadu accounts for 60 per cent of leather tanning capacity in India[66] and 38 per cent of all leather footwear, garments and components. The state also accounts for 50 per cent of leather exports[67][68] from India, valued at around US$3.3 billion of the total US$6.5 billion from India. Hundreds of leather and tannery facilities are located around Vellore and its nearby towns, such as Ranipet, Ambur and Vaniyambadi. The Vellore district is the top exporter of finished leather goods in the country. Vellore leather accounts for more than 37 percent[69] of the country's export of leather and leather-related products (such as finished leathers, shoes, garments and gloves).

Hundreds of leather and tannery industries are located around Vellore, Dindigul and Erode its nearby towns such as Ranipet, Ambur, Perundurai and Vaniyambadi The tanning industry in India has a total capacity of 225 million pieces of hides and skins, of which Tamil Nadu alone contributes 70 per cent, a leading export product share at 40 per cent for India. It currently employs about 2.5 million persons. Leather exports by the end of 2000–2001 were INR90 billion.

Central Leather Research Institute, a CSIR research laboratory, is located in Chennai, the state capital.

Fireworks

The town of Sivakasi is a leader in the areas of printing, fireworks, and safety matches. It was fondly called as "Little Japan" by Jawaharlal Nehru. It contributes to 80% of India's fireworks production. Sivakasi provides over 60% of India's total offset printing solutions.

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