Tamil Nadu Emerges as a Top Performer in NITI Aayog's Investment Friendliness Index, Despite Logistics Challenges

Tamil Nadu has emerged as one of the top-performing states in NITI Aayog`s Investment Friendliness Index. However, the report highlights that the state`s Container Freight Station (CFS) and Inland Container Depot (ICD) capacity is approximately 33% lower than the average for large states, despite having one of India`s strongest port ecosystems and a robust manufacturing base.

CFSs and ICDs are critical logistics facilities where export and import containers are stored, handled, and cleared by Customs before being transported to ports or inland destinations. According to the report, Tamil Nadu has fewer such facilities than would typically be expected for a manufacturing-driven economy of its size, indicating a significant gap in the logistics infrastructure supporting its industrial and export sectors.

The report commends Tamil Nadu`s extensive rail network, which connects the ports of Chennai, Ennore, and Thoothukudi, as well as its strong road connectivity between Chennai, Coimbatore, and Hosur, enabling the efficient movement of goods. However, feedback from industry stakeholders points to inadequate road infrastructure around Chennai Port, where truck waiting times can extend up to 36 hours, adversely affecting freight movement and operational efficiency.

Tamil Nadu secured the top rank in the infrastructure pillar of the index, largely due to its efficient port infrastructure. The state ranked third nationally in port turnaround time, weighted by capacity. It also performs better than the average for large states, recording 4% lower electricity downtime and around 3% lower transmission and distribution (T&D) losses.

The report further notes that exports contribute 36% of Tamil Nadu`s Gross State Domestic Product (GSDP), exceeding the average for large states. This underscores the importance of strengthening logistics infrastructure to sustain the state`s manufacturing-led economic growth.

Several major freight infrastructure projects are currently underway in and around Chennai to address these challenges. These include the Chennai Port–Maduravoyal Elevated Corridor, the proposed Multi-Modal Logistics Park at Mappedu, and new truck holding yards outside Chennai Port, all aimed at improving cargo movement and reducing congestion.

The NITI Aayog report evaluates infrastructure using both official data and investor feedback across logistics, warehousing, energy, and digital infrastructure. For the logistics assessment, it considers indicators such as port turnaround time while also gathering industry feedback on berth availability, cargo handling efficiency, road connectivity, and other port-related infrastructure.

Among the logistics indicators, Tamil Nadu ranked third in port turnaround time, weighted by capacity across both major and non-major ports, with Gujarat securing the top position.

Key Highlights

- Tamil Nadu ranked among the top-performing states in the NITI Aayog Investment Friendliness Index.

- The state achieved an overall score of 53.3 and recorded a near-100% MoU conversion rate.

- Efficient ports, a dense rail network, a reliable power grid, and strong export performance contributed to its high ranking.

- Tamil Nadu was recognized as the most environmentally resilient state, while Gujarat ranked eighth in this category.

- The report notes that the state`s fiscal position, government policies, and resource availability continue to limit its full investment potential.

- Chennai Airport requires expansion, particularly to increase direct flight connectivity to Europe, despite the presence of numerous European multinational companies in the state.

- The report also highlights the limited availability of treated sewage water for industrial reuse, especially in landlocked and rain-shadow regions, as an area requiring further attention.