Megapolis Chennai: Time To Take Off

CHENNAI: The fabric of Chennai’s economy has always been woven with quiet resilience — a mix of tradition, enterprise and reinvention. Long before buzzwords like “ecosystem” and “startups” dominated business conversations, the city’s industrial houses had already scripted their own playbooks for survival and growth.

The foundation stones of Chennai’s economic might were already in place, even two decades ago, with empires like Amalgamations, Chettinad, Murugappa and TVS. Having weathered the Licence Raj and broken free from regulatory shackles, these legacy groups rode the wave of post-liberalisation India.

The boom years from 2002 to 2007 transformed Chennai’s corporate landscape. Family-run manufacturing units turned into professionally-managed enterprises, while a new class of entrepreneurs emerged. The city’s rise as a technology hub followed soon after TCS, Cognizant and other IT giants cemented Chennai’s reputation as India’s “software south”.

Then came the 2008 global financial crisis. The downturn forced many Chennai-based companies to diversify beyond city limits. “Companies had to look at alternative locations not only to expand operations but also to hedge their bets,” notes S Narayan, former union finance secretary and member of the Tamil Nadu Economic Advisory Council, which is driving Chief Minister Stalin’s $1-trillion economic vision.

Manufacturers such as Wheels India and TAFE moved parts of their operations to other states, creating new industrial ecosystems that mirrored Chennai’s. The ripple effect was unmistakable as suppliers, logistics providers and ancillary firms followed suit, expanding their footprints and expertise.

Yet, even as traditional manufacturing branched out, Chennai’s economic identity evolved. The IT corridor that once symbolised digital progress is now giving way to a “high-tech manufacturing” ecosystem with semiconductors, data centres, and precision engineering units are adding heft to the city’s industrial mix.

“Technology-led growth over the last 15–20 years has spurred all-round development,” says Narayan. “The explosion in infrastructure and logistics has erased city’s old reputation of being a tough transit point.”

Indeed, the transformation is visible. From seamless transshipments to countries like Singapore and Malaysia, to perishable exports like flowers and vegetables flying out with ease. The city’s airport, strategically located in the hinterland, has turned into a crucial logistics node.

Industry watchers see multiple growth levers powering Chennai’s next economic leap from electric

vehicles to green energy, data centres, R&D hubs, design studios, global capability centres (GCCs), electronics and drone manufacturing. These, they say, are changing not just the city’s skyline but also its mindset. Prosperity born of IT wealth is trickling into Tier-II

cities, where startups are sprouting rapidly. But, not everyone is optimistic. KE Raghunathan, National Chairman, Association of Indian Entrepreneurs, strikes a cautionary note. “Chennai has slowly turned into a living city for the lower-middle and affordable sections, but not a making city like earlier.

“The city’s character has tilted. It is more elite consumption, more IT and services and fewer factories. Ambattur, Guindy, Gummidipoondi and Thiruvanmiyur were once productive manufacturing hubs. That DNA must return.”

The counterpoint, however, lies in Chennai’s shifting growth model: one that is knowledge and technology-driven rather than labour-intensive. The balance sheets of top industrial houses will bear testimony to this. They are glowing even as many are flush with orders they can’t fulfil fast enough.

Narayan points to Hindustan Aeronautics Ltd, now brimming with defence contracts, which has spawned a cluster of R&D activity around the city. The IIT-M Research Park too has become a crucible for innovation, nurturing deep-tech startups that are pushing Chennai up the manufacturing value chain.

The city’s economic canvas today is as diverse as it is dynamic. The film industry remains a multi-billion-rupee business despite fierce competition from Hyderabad and Bengaluru. Realty sector is booming, buoyed by both industrial expansion and rising urban affluence. Global players like Saint-Gobain, Blue Star, Mitsubishi, Kone and Johnson have ramped up their presence, betting on Chennai’s strategic location and skilled workforce.

Beyond boardrooms, a new lifestyle economy has taken root, from luxury coastal resorts and booming restaurant clusters to temple tourism and leisure infrastructure. Chennai’s growth story is no longer confined to factories and tech parks; it’s now woven into everyday life.

The city’s future, say experts, hinges on its ability to align technology with inclusivity. From export-driven auto clusters to homegrown innovation hubs, Chennai’s economic engine is revving at a new pace, one that could make it the economic capital of south India. With its deep industrial roots, technology prowess and reform-driven leadership, Chennai is poised to evolve from a resilient regional player into a full-fledged economic powerhouse. A city that not only lives, but makes, innovates and leads.

HIGH FIVES

Auto to EV

Transition: Turning the Chennai–Sriperumbudur–Oragadam belt into comprehensive EV supply chain

Electronics & Data Corridor: Develop along ORR/OMR-2, powered by green energy purchase agreements and heat-reuse systems for district cooling

Logistics 2.0: Modernise ports and rail links, enable coastal Ro-Ro operations, digitise berthing and customs, and target a 2–3 day door-to-port cycle for MSMEs

Skills & Inclusion: Prioritise safe commutes for women, mandate crèches in IT parks and industrial estates

Startup Flywheel: City Seed Fund, introduce civic innovation challenges; open data access