Recently, data put out by the Annual Survey of Industries for 2023-24 ranked Tamil Nadu as one of the country’s most industrialized states. According to statistics, the state is home to around 15.43 percent of the total number of factories in the country, employing a similar percentage of the total workforce involved in industrial operations. Over the years, the state has consistently performed well across various parameters of ranking, and the latest data reiterates its industrial prowess in the country.
The data comes as a shot in the arm at a time when the tariff-drama being played out at the behest of the USA is threatening quite a few sectors, most visibly the textile segment. Guidance Tamil Nadu, the apex government body for investment promotion in the state, has pegged the potential loss for TN in 2025-26 due to the 50 percent US tariff on imports across sectors at 3.93 billion dollars, with the garment sector alone facing potential losses of 1.62 billion dollars. The fallout is also expected to result in a loss of nearly 30 lakh jobs across industries, including textiles, diamonds, machineries, and auto parts. The government has been quick to hold meetings with exporters to listen to their grievances and assure them of timely intervention and support. A statement made by the state’s industries minister, that the government is also taking this opportunity to identify structural issues in the export policy, indicates that the government is looking at it from a long-term perspective, which is a welcome approach. It has also made appeals to the Union Government drawing attention to the fact that its dependency on the US market implies that the impact of the higher tariffs would be disproportionately higher, urging quick action, including a special financial relief package. Amidst all the gloom, the recent rationalisation of the GST rates which is expected to boost demand across segments comes as a silver lining.
Of late, certain issues plaguing the industrial climate in the state have been consistently cropping up. The anguish against the rising power costs (particularly since the yearly revisions based on a multi-year tariff framework linking them to the Consumer Price Index came into force in 2022) is one such. While the government has absorbed the financial burden for small consumers, MSMEs, cottage and tiny industries, the impact on the larger consumers remain. Following a turbulent phase arising out of subdued demand and higher raw material costs, it is only recently that the textile mills are looking at a gradual improvement and better market performance this year.
That these issues do not seem to have dulled the appetite of foreign investors looking to invest in the state is a matter of cheer. Going by news reports, the recent visit of the Chief Minister to Europe seems to have been a grand success, with 33 MOUs being signed, and the expected investment commitments being valued at 15,516 crore rupees. These MOUs, which span a wide range of sectors, including renewable energy, design, shipbuilding, textiles, and aerospace are also expected to create job opportunities for more than 17,000 people.
While welcoming new investments, it is imperative that the government follows up on the MOUs to their logical conclusion. An accusation (at whichever party is in power) regularly levied is that these are nothing more than elaborately designed PR exercises. The opposition, which faced demands when it was in power to publish a white paper on the status of the MOUs and the employment it had created, has repaid the favour by consistently demanding a similar exercise of the current government. Expectedly, these have been dismissed as nothing more than opportunities to score political brownie points. Given the importance of industrial growth (and its impact on the social sector) in the economic progress of Tamil Nadu, it is essential that there is speedy action in terms of full support (land acquisitions, clearances, infrastructural demands) to ensure that the MOUs do not remain only on paper.