‘Business as usual’? Rival states circle Tamil Nadu as investors test Vijay govt’s stability

Chennai | New Delhi: With a fledgling party in power in Tamil Nadu, South India's investment magnet is under close watch. As competition for investments intensifies, neighbouring states are quietly exploring opportunities to wrest projects from Tamil Nadu, even as chief minister C Joseph Vijay is assuring investors of policy continuity.

Neighbouring states like Karnataka, Telangana, and Andhra Pradesh have sensed an opportunity in the regime change. With Vijay's TVK remaining largely untested on the policy front, these states are actively wooing investors to wean them away. According to sources, Invest India, India's official national investment promotion and facilitation agency, has reviewed all MoUs signed by the Tamil Nadu government over the last six months to ensure that investors have not changed their commitments. The CM has been actively engaging with industry leaders since taking oath. Top executives from companies including BMW, TAFE, Apollo Hospitals, MinebeaMitsumi, Ramco, Renault Nissan, and MRF, along with industry bodies such as CII, FICCI, and MICCI, have met Vijay over the past 10 days. The government has assured continued support and indicated policy continuity, with a sharp focus on strengthening the state's industrial footprint.

Vijay's first policy signal is expected in the state's new industrial policy, which will be unveiled within a month. According to sources, the policy was ready before the elections, but its release was deferred. Officials in the know indicated that the new government will not make any changes.


Even as neighbouring states draw up aggressive strategies to court investors, some state government officials said companies remain invested to the Tamil Nadu growth story. They said that while there was initial concern during the government formation process, much of it has now eased, as investors believe in the innate value proposition that Tamil Nadu provides.

"Tamil Nadu is in an enviable spot, especially when it comes to manufacturing," said an official, who did not wish to be named. "Particularly in electronics and automobile manufacturing, the state is far ahead of its southern counterparts. Companies that were initially in a wait-and-watch mode have now seen that institutions are functioning normally and that it is business as usual. That has helped allay some of their concerns."

Ravichandran Purushothaman, president of Danfoss India and chairman of CII Southern Region, who was among those who met the CM on May 15, said the new leadership has placed strong focus on new-age industries like AI and deep tech. "They have created separate ministries to focus on creating and attracting more investments," he said. "They are keen to double down on the investment roadmap, improve ease and speed of doing business with a high focus on the MSME sector, green energy and ensuring policy continuity."

Purushothaman said a brief period of recalibration is natural after any regime change, especially under a coalition arrangement, but industry has taken it in stride. "Tamil Nadu's investment ecosystem is built on institutions that have served successive governments well: the Guidance Bureau, SIPCOT, TIDCO, the single-window framework. These continue to function, and ongoing project work has not been disrupted in Tamil Nadu given how deeply manufacturing and services are embedded in the state's economy."