A leaf out of TN’s export playbook: Lessons for others
India’s export performance faced a setback in FY 2024, with merchandise exports contracting by 3.1% year-on-year to US$ 437.1 billion impacted by factors such as lackluster global demand, geopolitical disruptions, and declining commodity prices. Exports from four of India’s top five exporting states saw contractions in FY 2024. Gujarat’s exports fell by 10% to US$ 134.4 billion, Maharashtra’s by 7.2% to US$ 67.2 billion, Karnataka’s by 4.7% to US$ 26.6 billion, and Uttar Pradesh’s by 5.1% to US$ 20.6 billion in FY 2024.
On the other hand, Tamil Nadu, India’s third largest exporting state, stood out for its export performance with exports reaching US$ 43.6 billion, marking a growth of 7.1% in FY 2024. The state’s share in India’s merchandise exports rose from 8.3% in FY 2022 to 10% in FY 2024. Unlike many other top performing states, Tamil Nadu’s export basket is dominated by industrial goods including high-tech goods which lead to high value addition and are relatively less impacted by commodity prices.
Over the years, Tamil Nadu has emerged as the leader in exports of several manufactured product categories. The state is the leading exporter of telecom instruments, with a share of about 44% in India’s total exports of the product group during FY 2024. Similarly, it was the leading exporter of, inter alia, cotton garments (40%), garments of other textiles (38%), motor vehicles (37%), auto components (32%), electronic machinery and equipment (32%), and leather footwear (48%) during FY 2024.
Besides the evident locational advantages that Tamil Nadu enjoys, there are several other favourable factors driving the growth of manufacturing and exports from the state. Tamil Nadu had 51 operational Special Economic Zones as on the close of the last financial year, the highest in the country. These clusters benefit from fiscal incentives, smooth movement of goods, efficient processes, and strong logistics. Several clusters in sectors with high export potential, namely, apparels, furniture, medical devices, electric vehicles, electronics, and footwear are at different stages of development in the state.