Tamil Nadu is rapidly positioning itself as a preferred destination for multinational manufacturers seeking to diversify their supply chains away from China. The state’s strategic location, robust infrastructure, skilled workforce, and supportive government policies have made it an attractive option for companies across various sectors, including electronics, automobiles, auto components, electric vehicles, and consumer goods.
Leveraging Core Competencies
Tamil Nadu has a strong foundation in sectors such as electronics, automobiles, and non-leather footwear, making it a natural fit for companies implementing the China+1 strategy. The state’s commitment to fostering a conducive business environment has led to significant investments from global giants like Tata Electronics, Jabil, Cisco, Vinfast, Tata-JLR, Hong Fu, and Pou Chen.
Electronics Sector Soars
The electronics sector has witnessed remarkable growth, with exports surging from $1.26 billion in 2021 to over $10 billion currently. This exponential growth in just three years, even in a sector dominated by China, underscores Tamil Nadu’s emergence as a global electronics manufacturing hub. Notably, Foxconn, the world’s largest electronics manufacturer, has established its largest base outside China in Tamil Nadu, employing over 40,000 workers.
Automotive and Auto Components Gain Momentum
The automotive industry is another key sector attracting substantial investments. Tata Motors’ Rs 9,000 crore investment and Hyundai’s Rs 20,000 crore commitment are a testament to the state’s growing significance in the automotive landscape. Additionally, companies like Visteon, Eaton, ZF, and Autodesk are investing in auto component manufacturing, further solidifying Tamil Nadu’s position as an automotive hub.
Capitalising on EV Boom
With the increasing demand for electric vehicles (EVs) and the challenges faced by Chinese EV manufacturers in certain markets, Tamil Nadu is well-positioned to emerge as a leading EV hub. The state’s established expertise in the automotive and electronics sectors, coupled with its supportive policies, makes it an ideal destination for EV manufacturers.
Diversifying into Non-Leather Footwear and Technical Textiles
Tamil Nadu is also actively pursuing investments in non-leather footwear and technical textiles. Three Taiwanese companies, Hon Fu, Pou Chen, and Dean Shoes, have collectively committed nearly Rs 5,000 crore to manufacturing facilities in the state. In the technical textiles sector, Ramatex, a supplier to Japanese brand Uniqlo, has invested Rs 1,100 crore, and the state is actively engaging with other global players.
Government Initiatives and Industry Support
The Tamil Nadu government has implemented several initiatives to attract investments and create a favourable business environment. These include developing sector-specific policies, improving skill development programs, streamlining regulatory processes, and establishing specialised industrial clusters.
While Tamil Nadu is well-positioned to capitalise on the China+1 strategy, challenges such as high material costs compared to China remain. However, initiatives like direct shipping from Tuticorin port to the US can help mitigate these challenges.
Industry leaders like Srivats Ram, MD of Wheels India and Chairman of CII TN State Council, express optimism about Tamil Nadu’s future as a global manufacturing hub. With its strategic location, skilled workforce, and supportive government policies, Tamil Nadu is poised to become a key player in the global supply chain.
