How TN topped Niti Aayog’s ‘Export Preparedness Index’, became top investment destination

Chennai: Stable governance and politics, sector-specific policy interventions and prompt action. This is what officials and experts claim has helped Tamil Nadu thrive as a major investment destination in India.

July saw the state top the third edition of the Modi government think-tank NITI Aayog’s Export Preparedness Index (EPI) for 2022. The index measures the export performance and potential of the Indian states and Union territories and factors in, among other things, the direct and indirect aspects that support it.
Tamil Nadu’s performance in 2022 was an improvement from the year before, when it was placed fourth on the list. The same year, the state had been ranked third in the implementation of the central government’s Business Reform Action Plan 2020, a list of 301 reform points covering 15 business regulatory areas. This was a significant leap from the 14th position it had secured in 2019.
Tamil Nadu also became the top exporter of electronics in 2022-2023, according to the central government’s National Import-Export Record for Yearly Analysis of Trade (NIRYAT) data — it now accounts for 22.8 per cent of India’s electronic exports, with figures nearly tripling to $5.37 billion from $1.86 billion the year before, according to media reports.

For Tamil Nadu’s Dravida Munnetra Kazhagam (DMK) government, which swept to power in 2021, this comes as a massive shot in the arm — although the state has always been counted among India’s most industrialised, this is the first time it has topped the EPI charts since NITI Aayog began releasing its assessment report in 2020.

Officials and experts ThePrint spoke to said policy interventions have helped the state emerge as a destination for investments — both domestic and foreign.

According to M. Suresh Babu, a professor of economics at the Indian Institute of Technology Madras, Tamil Nadu doesn’t have a single overarching policy to help push its industries. Instead, it tailors sector-specific policies by identifying “sunrise sectors” — businesses or sectors with the potential for rapid growth, Babu said.

“For example, immediately after Covid-19 in 2021, there was an effort to increase the production of medical devices. Similarly the state has, in a big way, focused on the Electric Vehicle (EV) industry. The state already has advantages in this sector as it has a strong automobile industry. Now they are further enabling a transition to EV by a very specific set of policies,” he said.

T.R.B Rajaa, the state’s minister for industries, investment promotion and commerce, attributes the state’s success to “several corrective measures” and the Dravidian Model — a governance model that, according to the DMK, involves inclusive planning and democratic governance for ease in approachability, policymaking, and action.

According to industries minister Rajaa, the state government’s policy interventions have helped bring investments to the state.

“In 2022 alone, this government released the Aerospace and Defence Industrial Policy, Footwear and Leather Products Policy, Life Sciences Promotion Policy, and Research & Development Policy. In 2023, we have released a new EV policy and a logistics policy (for transporting goods and services). These new policies and other smaller policy tweaks, along with streamlining processes in industry-focused departments, has led to good results,” Rajaa told ThePrint.