Economy of Tamil Nadu

14. Economy of Tamil Nadu Top 10 Rising Startups in Chennai 2022 Edition 2

Tamil Nadu is India’s fourth-largest state located on the southern coast of India. It ranks first as a state in the total number of factories and industrial workers. Between the years 2015-16 and 2020-21, Gross State Domestic Product (GSDP) grew at a Compound Annual Growth Rate (CAGR) of 10.56% to reach Rs 19.43 trillion (USD 265.49 billion). In 2020-21, the contribution of the tertiary sector to the State’s Gross State Value Added (GSVA) at current prices was 54.26% followed by the secondary sector at 32.39%.

Total commodities exports from the state stood at US$ 30.02 billion in the financial year 2020.  In the financial year 2021, exports stood at US$ 26.16 billion.

The economic structure of Tamil Nadu has transformed from the Primary sector in the 1960s to tertiary activities in the 2000s.

The main contributors to the economy of Tamil Nadu are agriculture, fishing and forestry, resources and power, manufacturing, services and transportation.

Agriculture, fishing and forestry

Since 1960, the state has been self-sufficient in food grain production. The lad crops for domestic consumption are rice, millet and other cereals, peanuts and pulses, sugarcane, cotton, cashews and chilies. Many farmers also grow livestock, main cows for the dairy industry, poultry, goat and sheep.

Tamil Nadu is also the top fish producer in India. The major yield is from marine fishing. State also has an active forestry sector with pulpwood, babul, firewood, bamboo and teak as primary products and Rubber is also an important crop.

Resources and power

Minerals like limestone, bauxite, gypsum, lignite (brown coal), magnesite, and iron ore are major minerals mined in Tamil Nadu. Neyveli, an opencast lignite mine is one of the largest mines in India. Tamil Nadu, as an industrialized and urbanized state, ranks among the top three states in terms of electricity generation. As of September 2018, Tamil Nadu’s total installed capacity was around 30,200 MW, with 11,500 MW coming from solar and wind energy.

Tamil Nadu has the distinction of being India’s renewable energy leader, having adopted clean energy sources and established wind farms as early as 1995. It now generates more wind power than Denmark and the Netherlands combined. Its products use to fuel a thermal-power plant which provides much of the state’s electricity. The majorly of the energy requirement of Tamil Nadu is generated by thermal power plants. Also, hydroelectric plants, particularly along the Kaveri River and its tributaries, provide an important secondary source of energy. The state is also a leader in wind energy generation.


Tamil Nadu is one of India’s most industrialized states, with the manufacturing sector accounting for more than one-third of the state’s GDP. Heavy vehicle production, such as automobiles, agricultural equipment, military vehicles, and railway cars, is one of the state’s major industries; the railway coach factory at Perambur (near Chennai) is one of Asia’s largest. One of the biggest electrical equipment public sector companies BHEL has its manufacturing unit in Tiruchirappalli and Ranipet. The Tamil Nadu state government owns the Tamil Nadu Newsprint and Papers (TNPL), the world’s largest bagasse-based paper mills in Karus, Tamil Nadu. Chennai has an oil refinery and a petrochemical plant.

Textile milling, food processing, and the production of pharmaceuticals, chemicals, and electronic parts and equipment are also important manufacturing activities. Coimbatore is referred to as the “Manchester of South India” due to its extensive textile industry, and it is also known as “the Pump City” because it supplies half of India’s motor and pump requirements.

Handicrafts are also abundant in Tamil Nadu, particularly brass, bronze, and copperware, leatherwork, hand-loomed silk, kalamkari (hand-painted fabric using natural dyes), and articles made of carved wood, palm leaf, and cane.

Tuticorin is known as the ‘Gateway of Tamil Nadu’. It is a larger producer of chemicals. It all produces 70% of total salt production in the state and 30% in the country.


The service sector is developing since the 20th century. And by 21 century it is the largest contributor to the state’s economy. Expansion in the IT industry has been the priority of the economic development policy. The state also encourages tourism, infrastructure development project, restaurants, and cultural & recreational attractions.

The state government is stimulating industrial parks such as Rubber Park, Apparel Parks, Floriculture Park, TIDEL Park for IT/ITS, TICEL BioPark for Biotechnology, Siruseri IT Park, Elcot SEZ and Agro Export Zones among others. Two major seaports are there in Tamil Nadu. The international airport at Meenambakkam is one of the largest airports in India.

– Varada Ukidave

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