Strong ports, weak freight infra: NITI Aayog lists TN's areas for improvement

CHENNAI: Tamil Nadu emerged as a top performer in NITI Aayog's Investment Friendliness Index. However, its container freight station (CFS) and inland container depot (ICD) capacity is about 33 per cent lower than the average for large states, despite being home to one of the country's strongest port ecosystems, after accounting for the size of its manufacturing sector.

The CFSs and ICDs are key logistics facilities where export and import containers are stored, handled and cleared by Customs before reaching ports or moving inland. The report says Tamil Nadu has fewer such facilities than would typically be expected for a manufacturing base of its size, indicating a gap in the logistics infrastructure supporting the state's manufacturing and export sectors.

The report also credits Tamil Nadu's dense rail network connecting the ports of Chennai, Ennore and Thoothukudi, along with strong road connectivity between Chennai, Coimbatore and Hosur, for supporting efficient movement of goods. However, industry feedback captured under the report points to poor road infrastructure around Chennai Port, with truck waiting times extending up to 36 hours, affecting freight movement and operational efficiency.

The report attributes Tamil Nadu's top ranking in the infrastructure pillar in part to its efficient port infrastructure. The state ranked third in turnaround time at ports weighted by capacity, while electricity downtime is 4 per cent below the large-state average and transmission and distribution (T&D) losses are about 3 per cent lower than the average. It also notes that exports account for 36 per cent of the state's GSDP, above the average for large states, highlighting the importance of an efficient logistics network to its manufacturing-driven economy.

The observations come as several freight infrastructure projects are under way in and around Chennai, including the Chennai Port-Maduravoyal elevated corridor, the proposed Multi-Modal Logistics Park at Mappedu and truck holding yards planned outside the port to streamline cargo movement and reduce congestion.

The report assesses infrastructure using both official data and investor feedback across logistics, warehousing, energy and digital infrastructure. For logistics, it considers indicators such as port turnaround time and gathers industry feedback on factors including berth availability, cargo handling, road connectivity and other port infrastructure.

Among the logistics indicators, Tamil Nadu ranked third in turnaround time at ports weighted by capacity for major and non-major ports, with Gujarat coming out on top in the category.

Highlights:

Tamil Nadu ranks #3

With an overall 53.3 score, TN achieves a near 100% MoU conversion rate

Efficient ports, dense rail network, reliable power grid and impressive export performance contribute to a friendly climate

TN emerged as the most environmental resilient state, the category where Gujarat trailed at rank #8

However, the state's fiscal position, government policy and resources hold TN back from unleashing its full potential

Chennai Airport needs expansion: The report flags limited direct flights to Europe, despite hosting many European multinational companies

The report also points to limited availability of treated sewage water for industrial reuse, particularly in land locked areas and rain shadow zones