Knight Frank India, in association with the Confederation of Real Estate Developers' Associations of India (CREDAI)- Tamil Nadu, has estimated that Tamil Nadu’s Nominal Gross State Domestic Product (GSDP) would expand to approximately US$ 2.6 trillion by FY 2047-48.
Tamil Nadu stands as the second-largest state economy in India, contributing 8.8% to the nation’s GDP. In FY 2023, the state GDP is estimated to have expanded to USD 294 bn. Over the 10-year period before the onset of the COVID-19 pandemic (FY 2009-2019), Tamil Nadu’s economy experienced an average annual growth rate of 11%.
At this pace of growth, FY 2047-48, when India attains its centenary of independence, Tamil Nadu’s Gross State Domestic Product (GSDP) is likely to expand to USD 2.6 tn, resulting in the state being one of the key contributors to India’s overall economy.
Agriculture, services, manufacturing, and others play crucial roles in driving the state’s economic prosperity. Presently, the services sector stands out as the primary catalyst, contributing 53% to the overall economic growth of Tamil Nadu.
The state’s growth ambitions are set to drive the need for expanding economic activities into tier 2 and 3 cities of Tamil Nadu, accentuating the pace of urbanization. This trend is expected to significantly boost the construction sector, encompassing real estate and infrastructure development. As of FY 2022-23, the size of Tamil Nadu’s construction sector is estimated to be USD 32 bn, contributing 11% to the state’s overall economy. Projected at the current growth rate, this sector is poised to expand to USD 208bn by FY 2047-48.
The manufacturing sector, which accounts for 19% of the state’s economy, is expected to expand to US$ 374 billion (bn) by FY 2048.
To cater to the expansion of the manufacturing sector in the state, there would be a requirement of 2,25,728 hectares (557786 acres) of industrial land in Tamil Nadu. As of 2021, Tamil Nadu has 19,520 ha (48235 acres) of industrial land.
Based on the evaluation by Knight Frank the anticipated growth in the key sectors of manufacturing, construction, services, agriculture, etc. assuming the continuation of the current growth trajectory, by FY 2047-48, the sectors are expected to expand at the pace outlined below.
Currently, Tamil Nadu holds the distinction of being the most urbanised state in India with 48% of its population residing in urban areas according to the Census of 2011. By the year 2047, it is anticipated that 68% of Tamil Nadu’s population will be urbanised. This translates to an estimated 35 mn households residing in urban cities, surpassing the projected average for India which is estimated to be 51% according to the India Real Estate Vision 2047, Knight Frank Research.
To cater to the urban households housing requirement, cities in Tamil Nadu would require 20 mn additional houses by 2047.
As of FY 2022-23, Tamil Nadu had 1.4 mn employees registered with the EPFO (Government of India). Considering this as a proxy indicator, to reach the potential state GDP estimate of USD 2.6 tn in FY 2047-48, the formal employment in the state is estimated to rise to 19 mn. This would necessitate a requirement of 1.2 bn sq ft of office space in Tamil Nadu, which includes office requirements for public, private and multinational agencies.
The expansion of economic activities will generate employment opportunities across sectors, which in turn will generate a demand for office real estate. Already, Tamil Nadu is an attractive destination for companies across categories such as Information technology, manufacturing, Global Capability Centres (GCCs) etc to establish their workspaces in the state. Currently, the state has the most operational SEZs in the country i.e. 50 out of 270 SEZs, which include both IT and non-IT SEZs, generating vast employment opportunities.
With the groundwork laid out and projections contemplated for the state, it is pertinent to delve into specific aspects that could accelerate the growth rate or strategically influence key vectors for the state's advancement.
For Tamil Nadu to realise its ambitious target of achieving a USD 1 trn economy by 2030, a strategic imperative lies in the introduction of a targeted retail-focused policy. While the state has successfully implemented sectoral policies that have catalysed growth in specific industries, a dedicated retail development policy is essential to unlock the full economic potential.
Given Tamil Nadu's status as the textile capital of the nation, a well-crafted retail policy can harness this strength, creating a symbiotic relationship that propels both the retail sector and the state's economic landscape forward. Such a policy would not only stimulate economic growth by fostering employment opportunities and encouraging entrepreneurship but also contribute significantly to achieving the broader economic milestones set for Tamil Nadu.
Ideally the Tamil Nadu retail policy should be proposed keeping in mind the following objectives which can help the state harness its true potential: Job Creation and Economic Growth, Entrepreneurship Promotion, Women's Empowerment, MSME Growth and Revenue Contribution with implementation strategies which entails skill development programs, financial incentives, women-centric initiatives to participate and lead retail enterprises, technology integration and lastly, establish a robust monitoring and evaluation framework.
Infrastructure development is a pivotal enabler for economic growth, connectivity, and overall liveability. While the Tamil Nadu government has made substantial investments in ongoing and upcoming projects, there are specific measures that can further enhance the existing infrastructure: Regular Debottlenecking of Ports, Regular Debottlenecking of Airports, Focus on Enhancing Stormwater Infrastructure Implementation across Tamil Nadu and smart urban planning.
Given the geographical diversity of Tamil Nadu, with varying climatic conditions, there is a need to emphasize the enhancement of stormwater infrastructure. This involves the construction and maintenance of systems to manage rainwater, preventing flooding and waterlogging during heavy rainfall. Effective stormwater infrastructure contributes to disaster resilience and overall urban planning.
As part of the Government of India's Smart Cities Mission, twelve cities in Tamil Nadu have been designated for transformation into smart cities. These cities include Chennai, Coimbatore, Dindigul, Erode, Madurai, Salem, Thanjavur, Thoothukudi, Tiruchirapalli, Tirunelveli, Tiruppur, and Vellore. However, it is an ongoing process that necessitates consistent updates and revisions to align with the evolving dynamics of both the city and its region.
