Tamilian Dollar Answer

When the Make in India initiative was launched in 2014, it set a target of achieving 25% of GDP from manufacturing by 2025. In reality, the share of manufacturing has remained almost constant at about 16%. Amidst this underperformance, one state that stands out for getting 25% of GSDP from manufacturing is Tamil Nadu.TN is home to manufacturing facilities of international giants such as Foxconn, Pegatron, Samsung, Hyundai, Ford, Nissan, TVS Motor Company, and Ashok Leyland. Notably, Apple’s suppliers in the state employ around 50,000 workers who produce millions of iPhones. Similarly Feng Tay, a key supplier for Nike, operates multiple factories in the state employing over 37,000 workers. Overall, the state currently has over 31,000 operational factories, the highest in India.TN has also emerged as a major export powerhouse across garments, automobiles, engineering goods and electronics. While it has less than 6% of India’s population, it now accounts for almost 15% of India’s non-oil exports. Over 41% of India’s electronics, 38% of footwear and 45% of auto and auto components manufacturing come from TN. On the back of its manufacturing success TN now has third highest per capita GDP in India among large states, only marginally behind Telangana and Karnataka which are largely driven by IT exports.States aspiring to be manufacturing powerhouses can learn some lessons from TN. While several factors have contributed to its success, three key factors stand out.Building infra & industrial clusters | This did not happen overnight. The state govt has consistently invested in ports (such as Chennai, Tuticorin), road networks, and industrial estates. SIPCOT (State Industries Promotion Corporation of Tamil Nadu), established in 1971, developed industrial parks across the state and provided plug-and-play infra long before it became a national buzzword.This ensured that before investors arrived land was ready with basic infra in place and clusters developed organically, creating scaled and globally competitive ecosystems. Cities like Coimbatore, Chennai and Tirupur evolved into specialised hubs — for engineering goods, automobiles, and textiles respectively — creating a broad industrial base unlike any other state.More recently the state has taken the lead in helping build worker housing to facilitate manufacturing at scale where thousands of migrant women can live and work safely. To attract Taiwanese investment and technological knowhow the state plans to set up an industrial park focused on Taiwanese suppliers and component makers in electronics, technical textiles and non-leather footwear, creating thousands of jobs.Supporting investors | The state has an investment promotion agency, Guidance Tamil Nadu. Many states have fancy ‘investor summits’ and ‘single-window clearances’ that exist more in rhetoric than in practice. TN, however, institutionalised investor support in a way few others have.Guidance Tamil Nadu is a full-service concierge for investors — helping companies secure land, clear approvals, solve labour issues, even assisting in navigating day-to-day operational hiccups after they set up shop.This professional, proactive approach has meant that companies get real-time handholding, not just ceremonial assurances. Problems are solved before they snowball and investors feel heard and prioritised — critical in a Trumpian world where manufacturers are seeking out reliable global options. Projects are not allowed to drown in slow approvals and unpredictable red tape, making the investor’s experience akin to that of a fast-moving Asian economy.Functional babudom | TN boasts a bureaucracy that acts not as a roadblock but as a launchpad. The bureaucracy doesn’t see itself as a gatekeeper, but rather as a partner. Officials are empowered — and expected — to think like facilitators and act with speed typically associated with the private sector.Recently when Centre announced the electronics components incentives policy, TN state govt took just a week to come up with a matching scheme and set itself a goal of achieving $100bn in electronics exports from the current level of $14bn. In TN, key clearances are digitised, timelines are tracked publicly, and grievance redressal mechanisms are institutionalised.If a project hits a snag, the goal is not to shrug it off but to clear the road quickly. The role of supportive bureaucracy does not end with landing an investment. Recently when workers at the Samsung plant went on strike, the political and bureaucratic leadership worked behind the scenes to find an amicable solution to the dispute, rather than using worker unrest for short-term political gains. This has encouraged Samsung to invest further in the state.Importantly, policy continuity has been its hallmark. Bureaucrats feel reassured to take difficult calls because there is no witch-hunt even when the party in power changes. That sort of predictability is gold for investors looking to make billion-dollar commitments.The southern state has set itself an aggressive timeline for becoming a trillion-dollar economy, but the state does have its share of challenges. With increasing per capita income, TN is largely reliant on migrant labour, but it is not the most preferred destination for migrants due to language barriers. It is also seen as a difficult place to get environment and pollution clearances.A healthy competition has emerged between states like AP, Telangana, UP, MP, Gujarat and Maharashtra for attracting investors. If competing Indian states can absorb even a fraction of the lessons from TN’s success, India will soon have multiple manufacturing flywheels. And the dream of turning India into a manufacturing powerhouse might be realised sooner than we expect.Dhawan is founder-CEO & Doshi is operating partner, The Convergence Foundation. Views are personal