Tamil Nadu Records 11.19% Growth in 2025 as Investments Rise and Tariff Worries Loom

Tamil Nadu recorded 11.19% growth in 2025, driven by strong manufacturing, rising electronics exports and fresh investments, including Ford's return. While aerospace and industrial jobs expanded, new US tariffs hit Tirupur's textile exporters hard.

Known for its strong and diverse industrial base, Tamil Nadu continued to make steady progress in 2025, recording high growth, attracting major investments, and posting record exports. At the same time, the year also brought fresh challenges, especially for the textile sector, as new US tariffs hit exporters in Tirupur.

The state is now entering 2026 with double-digit growth, backed by strong performance in manufacturing, electronics, automobiles, and emerging sectors like aerospace and defence.

State records highest-ever growth rate

Tamil Nadu recorded an all-time high growth rate of 11.19 per cent, according to revised estimates by the Union Ministry of Statistics and Programme Implementation. Chief Minister M K Stalin said the achievement reflected the sustained economic policies followed by the DMK government, which came to power in 2021.

“We are not saying this. As per the Union ministry’s revised estimates, during 2024–25, Tamil Nadu has achieved 11.19 per cent growth,” Stalin said.

Industry department officials noted that the state’s earlier highest growth rate was 9.69 per cent, recorded in 2010–11, when the late DMK leader M Karunanidhi was the Chief Minister.

Ford’s return lifts investor confidence

One of the most positive developments of 2025 was the decision by Ford Motor Company to return to Tamil Nadu. The US-based car maker announced an investment of ₹3,250 crore to produce new-generation engines at its factory in Maraimalai Nagar, near Chennai.

Ford had exited India in 2021, stopping vehicle manufacturing and shutting operations, including its 400-acre plant located about 45 km south of Chennai.

In 2024, the company submitted a Letter of Intent (LoI) to the Tamil Nadu government, confirming plans to use the Chennai facility for engine manufacturing.

The investment is expected to create 600 direct jobs and further strengthen Tamil Nadu’s strong automobile and auto-components ecosystem, the Chief Minister said.

Electronics exports hit historic high

Tamil Nadu also recorded a major milestone in exports during the year. The state achieved a historic high of USD 14.65 billion in electronics exports in the 2024–25 financial year, marking a 53 per cent increase over the previous year.

In 2023–24, electronics exports stood at USD 9.56 billion.

Industry department sources said Tamil Nadu now accounts for 41.23 per cent of India’s total electronics exports, underlining its growing importance in the sector.

State leads in industrial employment

Tamil Nadu continued to lead the country in industrial employment. According to the Annual Survey of Industries 2023-24, released in August 2025, the state ranked first, employing 15.24 per cent of all factory workers in India.

It also has the highest number of factories in the country, with 40,100 units operating across sectors.

Officials said this reflects the state’s long-term focus on manufacturing, infrastructure, and skilled labour.

Investor conclaves drive regional growth

To ensure balanced and inclusive industrial growth, the Tamil Nadu government held region-specific Rising Investor’s Conclaves in August and November.

These were organised in cities such as Coimbatore and Tuticorin to attract investments beyond Chennai. At the Coimbatore conclave in November, the government signed 158 memoranda of understanding (MoUs) worth ₹43,844 crore, expected to create over one lakh jobs.

At the Tuticorin conclave, the state secured investments of over ₹32,000 crore through 41 MoUs, mainly in sectors such as renewable energy and shipbuilding.

Aerospace and defence get fresh push

Tamil Nadu also strengthened its focus on aerospace and defence manufacturing. At the first edition of AeroDefCon 2025, held in October, the state secured Rs 23,000 crore in investments.

The government has set a target of attracting Rs 75,000 crore in aerospace and defence investments by 2032, positioning Tamil Nadu as a key hub in the sector.

US tariffs hit Tirupur exporters hard

Despite the strong overall performance, the year also brought serious concerns, especially for the textile and garment sector. The US government’s decision to impose a 50 per cent tariff on Indian exports badly affected Tirupur, known as the knitwear capital of India.

Exporters in Tirupur reported a loss of Rs 15,000 crore worth of orders. Production cuts of up to 30 per cent were reported across many units, leading to fears of job losses.

Chief Minister Stalin urged Prime Minister Narendra Modi to prioritise resolution of the tariff issue through bilateral talks with the US.

Tamil Nadu's textile and apparel sector contributes 28 per cent of India’s total textile exports and provides employment to around 75 lakh people, making the issue a major concern for the state.

As Tamil Nadu steps into 2026, the state stands at a key moment. Strong growth, rising exports, and new investments have boosted confidence, while challenges like global trade pressures remind policymakers of the need for constant support to traditional industries.

How the state balances opportunity and risk will shape its industrial future in the years ahead.

(With agency inputs)