Tamil Nadu adapts and accelerates

Located in the extreme south-east of India, Tamil Nadu is the country’s sixth most populous state with a total population of 72.2 million, 68% of whom are in the working age group of 15 to 59 years, according to Invest India, the country’s investment promotion agency.

Chennai, Tamil Nadu’s capital, is known as 'the Detroit of India' because of its significance to the country’s car-making industry but the city is also emerging as one of India’s main software-as-a-service (SaaS) hubs. With a total population of 10.6 million, Chennai – formerly known as Madras – is also the biggest city in the state, and one of India’s four mega-cities along with Delhi, Mumbai and Kolkata. 

The city is home to global and Indian auto majors, including BMW, Ford, Hyundai, Mitsubishi, Nissan, Ashok Leyland and TVS Group. Tamil Nadu state accounts for 21% of India’s total auto exports and 70% of total passenger vehicles exports, according to Invest India. It is the biggest tyre manufacturing state in India and about 80 auto components manufacturers are based there.

Tradition of tech

Tamil Nadu is also one of India’s most industrialised states and its traditional strengths in technology and education have helped it to develop as an IT and software hub. “A great deal of engineering talent has been built up in the state and it has some of the best technology institutes in India,” says Arun Natarajan, chief executive officer at Venture Intelligence, a research service focused on Indian companies. “This has helped to create an IT corridor around Old Mahabalipuram Road, known as OMR, in the south of Chennai. 

“The state government helped to set up a software park, called Tidel Park, in that area in the year 2000 and many IT services companies have been established there. Chennai now has a lot of software engineering talent and the city is also becoming a major international hub for software product development as well as SaaS.”

With a $229bn economy, Tamil Nadu has one of the biggest economies of any state in India and it experienced economic growth of 12.5% in 2018, according to Invest India, which states that total FDI inflows into the state amounted to $30.7bn between 2000 and 2019. 

Amazon has a major R&D centre located in Chennai and a big proportion of the software development of its Kindle e-reader product takes place there. 

Seat of learning

Chennai is also home to the Indian Institute of Technology Madras (IITM), which was founded in 1959 and is regarded by many as the country’s equivalent of the Massachusetts Institute of Technology. The 250-hectare campus has about 8000 students and 550 faculty members. IITM is one of 16 institutes of technology in India that form part of the country’s IIT system. 

Other key institutions of higher education in the state include Anna University, a prestigious technical university located in the Guindy neighbourhood of Chennai, and PSG College of Technology, an engineering college located in Coimbatore, one of the biggest cities in Tamil Nadu state whose metropolitan area has a population of 2.1 million. 

“The state has very strong links to Silicon Valley,” says Shan Sankaran, chief executive officer at FixNix, a governance, risk management and compliance SaaS start-up based in Chennai. “The standard of education is very high here, there is a large talent pool and many engineering graduates, and the state enjoys good highways and infrastructure overall. In terms of cost of living, Chennai is one of the cheapest mega-cities in the country. It is also one of the safest cities in India.”

Diverse offering

Tamil Nadu has the highest number of operational special economic zones of any state in India, at 37, according to Invest India. It is also home to the largest number of factories of any state, with more than 37,000 units, while it has a diversified manufacturing sector and features among the leading states in industries such as pharmaceuticals, textiles, leather products, and chemicals. 

The state’s coastline of 1076 kilometres is one of the longest in India and it has three major ports and 17 minor ports. Tamil Nadu is also the second highest contributor to India's renewable energy capacity with a strong emphasis on wind power. 

“Tamil Nadu is attracting a great deal of foreign investment because it has one of the best performing economies in the country and has highly developed human indicators,” says Dr K P Karthikeyan, executive director at the industrial guidance and export promotion bureau of the Government of Tamil Nadu, the state’s investment promotion agency. “The state enjoys one of the country’s most skilled labour forces. Traditionally, the auto sector has been very important here but a transition has been taking place to defence and aerospace. The state has one of the two key defence industrial corridors in India,” he adds.

Mahindra World City

Since 2002, Tamil Nadu has been home to Mahindra World City (MWC), an integrated business city and special economic zone located in Chengalpattu district, about 60 kilometres from Chennai, and developed by Mahindra Lifespace Developers (MLDL), the real estate and infrastructure development arm of the Mahindra Group conglomerate (MLDL has two world cities in India, with the other located in Jaipur). 

Spread across 630 hectares, MWC Chennai provides 39,500 jobs directly and hosts more than 65 companies, including BASF, BMW, Capgemini, Fujitec, Infosys and Timken. It is India’s first IGBC Gold (Stage 1)-certified green township and was set up under a public-private partnership between Mahindra Group and Tamil Nadu Industrial Development Corporation. 

“[MWC] in Chennai was the catalyst for the economic and social development of that part of Tamil Nadu state,” says Sangeeta Prasad, managing director and chief executive officer at MLDL. “The integrated city model was conceived in the mid-1990s when India had decided to open up its economy. We believed that a welcoming industrial ecosystem would enable people to come to invest in the country. MWC is manufacturing and services focused. It is an important hub for the manufacture of automobiles and auto parts but IT services are also thriving here.”