Trillion test: Can Tamil Nadu reach a trillion by 2030?
Investments are pouring into electronics, automobiles — particularly electric vehicles — defence, and non-leather footwear. At the Tamil Nadu Rising Investors’ Conclave 2025, commitments worth Rs 32,554 crore were secured, signalling investor confidence in the State’s industrial future.
Tamil Nadu is on an impressive economic trajectory, raising the critical question: Can it achieve the ambitious goal of becoming a $1 trillion economy by 2030? With its strong industrial foundation, rapid growth in manufacturing, expanding services, and visionary investments, the State is well-positioned. Yet, careful prioritisation and long-term planning will be critical to sustain this momentum. The State recorded 11.19% real GDP growth in 2024-25, its highest in 14 years and nearly double the national average of around 6.5%. This performance outpaced neighbouring states like Karnataka, Telangana, and Andhra Pradesh, underscoring Tamil Nadu’s economic leadership.
Manufacturing at the core
Manufacturing has emerged as the main engine of growth. The sector recorded 12.6% growth in 2023-24 and surged to 14.7% in 2024-25. Investments are pouring into electronics, automobiles — particularly electric vehicles — defence, and non-leather footwear. At the Tamil Nadu Rising Investors’ Conclave 2025, commitments worth Rs 32,554 crore were secured, signalling investor confidence in the State’s industrial future.
Tamil Nadu is already India’s top exporter of electronic goods, achieving $14.65 billion in electronics exports in FY25, a 53% increase from the previous year and 41% of India’s total electronics exports. Global players such as Cisco, Tata Electronics, and Foxconn are expanding operations, aided by policies nurturing semiconductor ecosystems and electronics clusters. The State has set a long-term target of $100 billion in electronics exports, a crucial pillar of its trillion-dollar ambition.
International outreach is further enhancing prospects. During his European tour in 2025, Chief Minister MK Stalin signed 33 MoUs worth Rs 15,516 crore, expected to generate 17,613 jobs — about Rs 88.1 lakh per job. German investments of Rs 3,201 crore created 6,250 jobs, averaging Rs 51.2 lakh per job. Such high per-head investment costs raise questions about efficiency and opportunity costs, especially when these commitments surpass the combined annual allocations for social welfare and MSMEs. Yet, these are long-term bets on productivity, industrial deepening, and skilled employment. The key lesson is that capital deployment — not headline investment figures — will determine whether these projects deliver sustained economic gains.
Urban strength, rural challenges
The service sector, another pillar of growth, has gained notable momentum. After averaging 7.97% growth between FY21 and FY24, it rose to 9.4% in 2023-24 and 11.3% in 2024-25. Real estate, tourism, trade, IT/ITeS, transport, and communications are driving this surge. A broad base of urban centres — Coimbatore, Madurai, Tirupur, Tiruchy, and Salem — supports balanced development, enabling a narrower urban–rural divide than in many other states and strengthening the platform for sustained service-led growth.
However, rising rural inflation, 5.4% compared to 4.5% in urban areas, signals deeper challenges. According to the Economic Survey 2024-25, rural price pressures are now the primary driver of overall inflation, highlighting household vulnerability. This coincides with a 0.09% contraction in agriculture, the first negative growth in eight years, after a strong average of 5.66% during 2021-2024. Climatic volatility, market instability, and policy gaps have weakened earlier progress in agriculture and irrigation. If unaddressed, rural distress could erode purchasing power, hurt inclusivity, and widen rural-urban disparities.
Inclusive human capital
Tamil Nadu’s industrial success rests on its robust workforce and academic ecosystem. The State consistently has the highest number of factories in India, as per the Annual Survey of Industries. In 2023-24, 33.31% of its workforce was in industries, 15.97% in manufacturing and 17.2% in construction. Tamil Nadu also leads in women’s industrial employment: about 43% of all women employed in India’s factories work here, marking a significant contribution to women’s inclusion in the formal economy. Policies supporting women-friendly workplaces and upskilling will be essential to preserve this edge.
The State’s emphasis on education strengthens this foundation. Tamil Nadu consistently produces the highest number of PhDs in India; in 2020-21 alone, it awarded 3,206 doctoral degrees, reinforcing its position as a hub for advanced research. Leveraging this human capital will be decisive.
Balancing growth, strains
Despite strong performance, emerging strains demand attention. Industrial output rose 14.7% in 2024-25, led by electronics and electric vehicles, but MSMEs face rising input and power costs. Tamil Nadu hiked power tariffs by 4.83% in mid-2024 and 3.16% in July 2025, raising fixed charges for small industries from Rs 35 to over Rs 150 per kW. Even with booming exports, competitiveness is vulnerable to steep energy and logistics costs. Agriculture also witnessed stress: rainfall fell 11% below normal, damaging samba paddy across the delta. Yet procurement reached 44.49 lakh tonnes, nearing the all-time record of 44.95 lakh tonnes set in 2020-21. With a month left, officials expect procurement to cross 47 lakh tonnes, supported by Rs 10,734 crore in MSP payments to over 5.3 lakh farmers — evidence of institutional resilience despite climatic disruptions.
The way forward
Tamil Nadu stands on a historic growth path, but reaching a $1 trillion economy by 2030 demands prudent choices. Investments must be evaluated for productivity, employment quality, and long-term fiscal returns. Excessive focus on capital-intensive projects risks diverting resources from welfare and MSMEs, both vital for inclusive growth.
The State must balance immediate industrial expansion with long-term resilience against climate risks, technological disruption, and demographic shifts. Policies promoting renewable energy, frontier technologies, and rural entrepreneurship will strengthen its growth foundations. With momentum, a diversified economic base, and the right policy thrust, Tamil Nadu is well placed to achieve its trillion-dollar vision. Manufacturing excellence, strong services, and an inclusive workforce offer a leading edge. If growth ambitions are matched with social equity and sustainability, Tamil Nadu could not only reach $1 trillion by 2030 but also emerge as a model of balanced and inclusive development for India and beyond.
Dr Maya K is an Assistant Professor in the Department of Economics, CHRIST (Deemed to be University), Bengaluru; Pavithra Rajasekaran is a UG student in the same department
