Building future: Pathway to TN's urban, industrial growth

“As a well filled to the brim benefits the village, so does the wealth of a wise ruler enrich the world”

(Thirukkural, 731)

Few states in India embody the spirit of this couplet better than Tamil Nadu, whose progressive strides in urban infrastructure and industrial diversification are shaping the State's developmental narrative. As the fourth-largest contributor to India’s GDP, Tamil Nadu’s efforts toward sustainable urban and industrial development have been both ambitious and structured. At the centre of this transformation lies the strategic vision of the Tamil Nadu State Planning Commission (TNSPC) – instrumental in shaping integrated, future-ready policy agendas.

The State is already 48.5% urbanised (Census 2011), with cities like Chennai, Coimbatore, Madurai and Tirupur acting as economic engines. Recognising the need for urban transformation, Tamil Nadu launched the ‘Vision Tamil Nadu 2023’, emphasising inclusive, sustainable cities as key growth anchors. The Tamil Nadu Sustainable Urban Development Project (TNSUDP) exemplifies this vision by empowering select municipalities with results-based grants and infrastructure upgrades. Projects include 407 km of stormwater drain rehabilitation in Chennai, drone-based GIS mapping and mobile governance tools like Urban Tree, enhancing transparency and citizen service delivery. Meanwhile, the ‘Model Cities Initiative’ targeting cities such as Hosur, Erode and Vellore focuses on spatial planning, fiscal sustainability and e-governance. These cities have not only improved their revenue generation but also institutionalised better disclosure mechanisms, reinforcing public trust.

On the industrial front, Tamil Nadu stands out for its diversified base in automobiles, electronics, textiles, leather, and renewables. Backed by entities like SIPCOT, TIDCO and TANSIDCO, it has actively promoted manufacturing ecosystems. The ‘Industrial Policy 2021’ targets Rs 10 lakh crore in investments and 20 lakh jobs by this year. The Global Investors Meet (2019) secured over Rs 3.4 lakh crore across 12 sectors. Investment inflows are strong with FDI touching $3.3 billion between 2019 and 2021, reflecting policy clarity and investor confidence.

However, the pursuit of sustainable urban-industrial growth is not without challenges.

First, there is the pressing issue of aligning industrial land-use planning with urban development. As seen in similar regional economies like Vietnam and Maharashtra, industrial decentralisation and functional zoning, integrated with transport, housing, and water systems, are critical. Here, rapid peri-urban expansion around Chennai and Coimbatore risks straining existing infrastructure and fragmenting land use. Drawing lessons from China’s experience (1978-2018), Tamil Nadu must ensure that industrial upgrades correlate positively with urban land efficiency, particularly beyond Tier-I cities.

Second, the financial health of Urban Local Bodies (ULBs) needs systemic strengthening. Many municipalities depend heavily on state transfers, with limited capacity for own-source revenue. While some Model Cities have made progress, broader fiscal reforms like enabling municipal bonds, property tax reforms and ring-fencing user charges are needed. The Pune and Ahmedabad bond models offer templates that Tamil Nadu can adapt, supported by credit ratings and transparent budgeting practices.

Third, regional inequality in industrial development persists. Investment tends to concentrate in well-served corridors, leaving hinterland regions underserved. A pivot to urban-rural economic convergence is essential. Schemes like “One District, One Product” (as seen in Uttar Pradesh and Madhya Pradesh) can empower backward districts. At the same time, upgrading local infrastructure under the Comprehensive Road Infrastructure Development Programme (CRIDP) can boost mobility and attract new investments to secondary cities.

Fourth, climate resilience must be embedded into all planning. The 2015 Chennai floods highlighted the consequences of unregulated expansion. Tamil Nadu has since acted in establishing a Flood Warning and Control Centre, enhancing drainage networks and using drone mapping to manage urban flooding. Yet, cities like Thoothukudi, Nagercoil and Tirunelveli need similar systems.

Integrating nature-based solutions (e.g., restored wetlands) with conventional infrastructure is no longer optional – it’s urgent.

Fifth, coordination gaps between departments – housing, industry, transport and environment-hinder synergy. Tamil Nadu could emulate Singapore’s Urban Redevelopment Authority (URA), which adopts a single-window planning approach or Karnataka’s Unified Metropolitan Transport Authority (UMTA), to bridge silos and implement convergent solutions.

At the policy level, Tamil Nadu’s efforts like the Urban Flagship Investment Programme (Rs 8,156 crore), co-financed by ADB, and the inclusion of 179 urban projects in the National Infrastructure Pipeline are commendable. The Planning Commission’s push for data-informed governance, regional planning, and capacity building further ensures that sustainability is institutionalised, not just aspirational. Internationally, Colombo’s Megapolis Plan offers a comparable case where strategic zoning, economic clustering, and heritage-sensitive planning are being integrated to build a 21st-century South Asian city. Tamil Nadu’s historic urban centres – Madurai, Thanjavur – could adopt similar heritage-driven industrial models that leverage culture for sustainable tourism and local

enterprise.

Moreover, Tamil Nadu’s inclusive growth model is gaining traction. From onboarding artisans into e-commerce via the MSME Trade Bureau-Flipkart MoU, to skill development missions in backward districts, the State is sending a clear message: economic growth must uplift, not exclude. This is critical for both short-term employment and long-term demographic dividends. Looking ahead, Tamil Nadu’s continued leadership in governance, planning, and investment climate will determine its role as a model for other Indian states. If its policies are backed by strong institutions, resilient infrastructure, and empowered cities, Tamil Nadu can emerge as a global reference point for sustainable development in federal democracies.

In a time of climate transitions, economic volatility, and urban challenges, Tamil Nadu offers a grounded yet ambitious example of how to plan, grow, and govern – not at the cost of inclusion or ecology, but through them.

Thakur is Professor and Dean at Vinayaka Mission’s School of Economics and Public Policy, Chennai