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India's story of becoming the world's 3rd largest economy isn't one single narrative. It's being written by its powerful, fast-moving states as well. Tamil Nadu embodies this ambition, targeting a $1 trillion economy by 2030. This requires a world-class strategy to attract global investment, build future-ready infrastructure, and foster deep innovation.

To understand this playbook, we want to understand it directly from the source. As our authors are from the state's official, UN-award-winning nodal agency, Guidance Tamil Nadu is the architect and driver of this mission.

In this series, Godson George Micheal Rai and Priyadarshini Samikumar will provide their playbook on several sectors from electronics to engineering, and why global giants should be looking closely at India and Tamil Nadu.

The authors of today’s issue of the India Rising Perspective - Inside the $1 Trillion Economy, are Ms Priyadarshini Samikumar, Associate Vice President (Exports) and Mr Godson George Micheal Rai, Manager (Investment Strategy, Business and Trade Intelligence).

Priyadarshini and Godson bring diverse corporate experience to their current roles at Guidance Tamil Nadu. Priyadarshini previously worked with Australia’s leading investment promotion agency, while Godson, with exceptional academics from University College London, has managed a $ 1.6 billion hedge fund portfolio.

Both are now closely involved with Guidance Tamil Nadu, the state’s investment promotion agency that bridges government and industry to help businesses establish a strong presence in Tamil Nadu.

Enjoy the fourth and final issue of our series!

A mature industrial ecosystem built on engineering excellence and strategic partnerships

Part 4 of India Rising Perspective - Inside the $1 Trillion Economy
By Godson George Micheal Rai and Priyadarshini Samikumar

Tamil Nadu has quietly cemented its position as India's most compelling destination for manufacturing investment. The southern state, home to 72 million people, now accounts for nearly a third of India's automotive output and leads the nation in electronics exports. For European manufacturers seeking to diversify supply chains or establish production bases in Asia, Tamil Nadu presents a proposition that few industrial regions can match: a mature ecosystem, skilled workforce, and proven track record with global brands.

What distinguishes Tamil Nadu from competing investment destinations is not a single advantage but the convergence of several. Distinct manufacturing clusters—automotive, heavy engineering, textiles, leather, and aerospace—operate in close proximity, creating supply chain efficiencies that benefit new entrants. European companies have recognised this: Daimler Trucks, Bosch, Renault, Saint-Gobain, and Schneider Electric all maintain substantial manufacturing operations here, their presence serving as both validation and infrastructure for subsequent investors.

Chennai, Tamil Nadu's capital, earned the moniker 'Detroit of Asia' through sustained automotive investment over three decades. The corridor stretching from Sriperumbudur through Oragadam now hosts one of the world's most concentrated automotive manufacturing zones. European presence here is substantial: Daimler Trucks operates its largest commercial vehicle facility outside Europe at Oragadam, producing trucks and buses under the BharatBenz and Mercedes-Benz brands for domestic and export markets. Renault maintains a major production facility at the same location, manufacturing vehicles for the Indian market while leveraging the plant's export capabilities.

The component supply chain reflects similar European integration. Bosch runs multiple facilities across the state, manufacturing automotive electrical systems, power tools, and home appliances. Valeo, the French automotive supplier, operates alongside Schaeffler, whose precision components supply both local assemblers and export markets. Continental's presence in the tyre segment through its partner operations complements the manufacturing activities of Michelin, which operates a major radial tyre plant north of Chennai.

This clustering generates tangible advantages. Component suppliers serve multiple OEMs within short distances, reducing logistics costs and enabling just-in-time delivery. Engineering talent circulates among firms, raising capability levels across the ecosystem. For a European manufacturer considering Indian production, the presence of familiar suppliers and established quality standards significantly reduces operational risk.

The electric vehicle transition adds another dimension to this automotive strength. Vietnamese manufacturer VinFast has committed USD 2 billion to establish EV production in Tamil Nadu, while established players including Hyundai and the Stellantis group (parent of Peugeot and Citroën) expand their electric portfolios from existing facilities. Hosur, in the state's northwest, has emerged as a two-wheeler EV hub, with Ather Energy, Ola Electric, and TVS all operating production facilities there. The state now produces approximately 40 per cent of India's electric vehicles.

The same industrial foundation that enabled automotive growth extends into heavy engineering, where Tamil Nadu draws on an even longer heritage. Coimbatore developed as a machinery manufacturing centre serving the textile industry; that precision engineering capability has since diversified into pumps, motors, and industrial equipment. The Chennai region adds construction and agricultural machinery to the mix.

European firms have integrated into this ecosystem with similar success. Caterpillar operates a major facility near Chennai, manufacturing construction and mining equipment for regional markets. Komatsu and Kobelco, Japanese competitors, maintain parallel operations, creating a construction equipment cluster with shared supplier networks. Schaeffler's precision bearing manufacturing serves both automotive and industrial customers, illustrating how cross-sector synergies strengthen the broader manufacturing base.

The industrial pump and compressor segment features both European presence and European-style competition. Danfoss, the Danish engineering group, operates facilities near Chennai. Johnson Controls, TAFE (tractors), and multiple Indian engineering firms create a competitive environment that has driven quality and capability improvements across the sector.

Wind energy equipment manufacturing represents a growth segment within this heavy engineering ecosystem. Envision and Senvion have established operations in Tamil Nadu, serving the substantial domestic wind power market—the state itself has significant installed wind capacity—while positioning for exports to other markets.

Beyond heavy machinery, Tamil Nadu's manufacturing depth extends into sectors where craftsmanship meets scale. The state commands an unrivalled position in India's textile landscape, contributing one-third of the nation's textile business while producing nearly 45% of its yarn and 70% of cotton fabric knitting capacity. The state's textile clusters—spanning Tiruppur, Coimbatore, Karur, and Madurai—have evolved into sophisticated manufacturing ecosystems where over 6,500 garment operating units serve as production partners for Europe's most discerning fashion houses.

Global retailers including H&M, Marks & Spencer, and Diesel source extensively from these clusters, drawn by vertically integrated supply chains that seamlessly connect spinning, weaving, processing, and garment manufacturing. This concentration of capability, combined with established compliance frameworks aligned with European sustainability standards, positions Tamil Nadu as a natural manufacturing base for brands seeking reliable, scalable production partnerships.

A similar story of craftsmanship and industrial scale unfolds in leather goods. Tamil Nadu has emerged as India's footwear capital, housing 60% of the country's leather processing capacity and 27% of its footwear manufacturing facilities—the highest concentration nationally. The state's leather ecosystem employs 1.5 million skilled workers across Chennai, Ambur, Ranipet, and Vaniyambadi, producing 38% of India's total output while accounting for 45% of footwear exports.

This industrial depth has attracted substantial partnerships, with companies like Tata International, Farida Group, and Feng Tay Group operating facilities that manufacture for premium European brands requiring exacting quality standards. The presence of both leather and non-leather footwear capabilities, complemented by a robust accessories segment, offers European companies a comprehensive sourcing destination where established manufacturers deliver finished products meeting the most stringent compliance and craftsmanship requirements.

The precision manufacturing expertise that underpins these traditional sectors has opened doors to an even more demanding industry. Tamil Nadu's aerospace cluster, though younger than its automotive counterpart, has attracted significant European investment. Rolls-Royce operates aircraft maintenance and precision manufacturing facilities at Hosur, supported by local engineering firms including Aerospace Engineers, Air Works, and TEAL. The activities span aircraft maintenance, aero-engine components, and electro-mechanical systems.

MBDA, the European missiles consortium jointly owned by Airbus, BAE Systems, and Leonardo, has established operations at Coimbatore alongside L&T and Eaton. These facilities focus on precision manufacturing, forging, and electronics for aerospace applications. The Coimbatore region's existing precision engineering capabilities provide a foundation for aerospace-grade component production.

Tiruchirappalli hosts BHEL's heavy engineering and forging operations, including work on satellite and space systems. Honeywell operates facilities there, contributing to the aerospace and defence ecosystem. The presence of established defence contractors creates opportunities for European aerospace suppliers seeking to participate in India's growing defence manufacturing sector.

The space sector has added another dimension. ISRO maintains facilities at Thoothukudi, while private space companies including Agnikul and satellite operator OneWeb have established operations in the state. This nascent space manufacturing ecosystem presents opportunities for specialised component suppliers, including European firms with relevant capabilities.

What ties these diverse clusters together is a common set of underlying advantages that make Tamil Nadu particularly attractive for European manufacturers. The workforce stands out: the state produces approximately 343,000 engineering graduates annually from its network of technical institutions. Labour relations have historically been more stable than in some competing Indian states. English proficiency facilitates integration with European corporate structures and processes.

Infrastructure supports manufacturing operations at scale. Chennai and Ennore ports handle container traffic efficiently; the international airport at Chennai provides cargo capacity; road connectivity to Bangalore and other southern Indian cities enables regional distribution. Industrial parks operated by SIPCOT, the state industrial development agency, offer ready-to-use facilities with reliable power and water supply.

The state government's investment promotion agency, Guidance Tamil Nadu, provides single-window clearance for incoming investments. Policy continuity across successive state governments has created a predictable operating environment—a factor that matters significantly for long-cycle industrial investments.

Perhaps most significantly, the existing presence of European manufacturers reduces risk for new entrants. Supply chains are established, quality norms are understood, and operational challenges have been addressed by predecessors. A German automotive supplier evaluating Indian production can draw on the experience of Bosch, Schaeffler, and Continental. A French industrial company can reference Saint-Gobain and Schneider Electric's operations.

For European manufacturers weighing Asian production options, Tamil Nadu merits serious consideration. The state combines scale sufficient to support major manufacturing operations with sophistication, evidenced by the aerospace and precision engineering capabilities now established. The presence of European peers provides both validation and practical support structures.

The clusters described here—automotive, electronics, heavy engineering, textiles, leather, and aerospace—do not operate in isolation. Their proximity creates opportunities for diversification and risk mitigation. A downturn in one sector may be offset by growth in another; a supplier can serve multiple industries from a single location. This industrial density, built over decades of sustained investment, constitutes Tamil Nadu's fundamental competitive advantage.

As global supply chains continue to reorganise, manufacturing destinations must demonstrate more than cost advantages. They must offer reliability, capability, and ecosystem support. Tamil Nadu's track record with European manufacturers—measured in billions of euros of investment and decades of successful operations—provides precisely that evidence. The state has earned its position as India's preferred manufacturing destination.

This was the final of our series: That’s it! Thank you for joining us for this India Rising Perspective by authors from Guidance Tamil Nadu.

Catch up on the previous articles of this series here:

Issue 1: Tamil Nadu × Europe: A Shared Industrial DNA and the Rise of a Global Electronics Powerhouse

Issue 2: Tamil Nadu’s GCC Ascent: The Silent Champion of India’s Knowledge Economy

Issue 3: Tamil Nadu: The Quiet Rise of India’s Next Life Sciences Powerhouse

Sources: Guidance Tamil Nadu, TN Global

If you want to explore more on this topic or have questions, please reach out to the authors via LinkedIn:

Priyadarshini Samikumar, Godson George Micheal Rai

Disclaimer: Views expressed by authors are personal. Any use of the data or graphics require prior approval from Guidance Tamil Nadu.

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