Tamil Nadu turns nearly every investment pledge it signs into a real project. That is the finding in NITI Aayog’s Investment Friendliness Index report for states, which puts the southern state’s memorandum of understanding (MoU) conversion rate at close to 100 per cent. The report is meant as a guide for domestic and global investors.
Tamil Nadu ranked third overall with a score of 53.3. Gujarat led on 56.6 and Maharashtra followed on 53.7.
What lifted the score
The index credits Tamil Nadu’s infrastructure, business environment, port operations, MoU conversion and exports. The state also has the second-highest number of Atal Tinkering Labs in the country. Gujarat won the top spot on efficient ports, a reliable power sector and a favourable business climate. Maharashtra, with the highest number of the labs, drew large private equity and venture capital investment.
Exports were a standout for Tamil Nadu. Its export-to-GSDP ratio runs 36 per cent above the average for large states, which the report links to the strength of its manufacturing base.
Among large states, it came first on infrastructure. Its port turnaround time is the third best once capacity is weighted in. Electricity downtime sits 4 per cent below the large-state average, and transmission and distribution losses are around 3 per cent lower. The report also cited strong marks in the government policy pillar, where stakeholders were satisfied with how policy is made and carried out, and in environment resilience. Air quality is 22 per cent better than the category average, and disaster preparedness drew favourable feedback.
The report listed road links between industrial centres, a dense rail network, a power grid backed by wind and solar, and the SIPCOT and SIDCO industrial parks among the state’s strengths.
Where it falls short
Tamil Nadu’s financial health score came in marginally below average. Interest payments amount to 3.4 per cent of GSDP, and outstanding liabilities to 31 per cent.
Logistics is another weak spot. Container freight station and inland container depot capacity is about 33 per cent below the large-state average relative to manufacturing output. At Chennai Port, trucks can wait up to 36 hours to get in and out.
The report recommended more international flights from Chennai airport. The city has relatively few direct flights to Europe even though several European multinationals operate there. It also flagged water availability for industry in parts of the state, particularly landlocked and rain-shadow regions.
