Here is All You Should Know about MSMEs in Tamil Nadu

May 23, 2024
Updated on

Tamil Nadu is undoubtedly a land of opportunities, especially for the Micro, Small and Medium Enterprises (MSMEs), which produce over 8,000 products in the state. Tamil Nadu accounts for nearly 15.24% of India’s micro-enterprises and has the highest number of non-farm units. According to a report from the Ministry of Statistics and Programme Implementation, Tamil Nadu ranks first among the states in terms of the number of factories and industrial workers and its gross state domestic product (GSDP) is estimated to be $320.27 billion in 2022-23, growing a CAGR of 11.27 per cent between 2015-16 and 2022-23. Tamil Nadu also has the highest number of women entrepreneurs in India, with more than 10 lakh units.

MSMEs in Tamil Nadu mainly concentrate on coir, automobile, food processing, textiles, footwear and leather industries. The manufacturing sector is the major contributor to the state’s GDP, accounting for over 40% of the total. Other important industries wherein MSMEs are prevalent are healthcare, IT & ITES, leather and textile manufacturing, auto components, electronics, and biotechnology. The state’s total exports currently stand in the third position of the total exports in the country, with around USD 46.46 billion. Tamil Nadu is a state where businesses have an excellent opportunity to establish themselves. Other than this, the customer base is inclined towards domestic goods, including fruits, dairy, vegetables, spices, and poultry. Tamil Nadu is also an important hub of smartphones and electronics manufacturing and has excellent infrastructure with decent road connectivity and amenities. 

Moreover, the state has also garnered attention for being a central location for the production of auto components with the presence of reputed engineering firms. Therefore, MSMEs in Tamil Nadu have great market potential to grow their business. MSMEs in Tamil Nadu offer more than 8,000 products ranging from pharmaceuticals to dairy products. Another impressive achievement of the state’s MSME sector is that it is leading in the number of factories, and the sector is growing tremendously with incredible prospects. Some of the major industries in Tamil Nadu are listed below.

10 Major Industries in Tamil Nadu

Textile and Silk Industry 

Tamil Nadu plays a significant role when it comes to the Indian Textile Industry by producing and exporting yarn, fabrics, knitwear and garments. The state contributes around 25% of India’s share in the export of yarns, cotton, and fabric. Coimbatore, an important region in Tamil Nadu, is also known as ‘the Manchester of South India’ due to its vast Textile Industry, fed by the surrounding cotton fields. Another region in the state, Karur, is known as the ‘Textile Capital of Tamil Nadu’ as the place is famous for its home textiles. As a major source of revenue for the state government, Textile Industry helps MSMEs to promote economic growth in the state.

Tamil Nadu holds fourth place in silk textile production in India. Kancheepuram silk is unique in quality and is known for its traditional value worldwide. Rasipuram, Arani, and Thirubuvanam are other silk centres in Tamil Nadu. Sericulture Training Institute located in Hosur provides proper training for farmers to adopt sericulture farming work to accelerate rural industrialisation.

Food and Beverage Industry

Food and beverage is another industry that is flourishing well in Tamil Nadu. Mango pulp is processed and exported from various MSME units. Food varieties and ingredients for quick cooking are manufactured and marketed locally and exported to foreign markets. Snack items and biscuits are marketed on a large scale from here. Tamil Nadu, with its long coastline, offers plenty of opportunities for industries based on marine life.

Sugar Industry 

Tamil Nadu produces about 10% of the total sugar in India. A majority of sugar units in the state are functioning under the cooperative sector. Currently, Tamil Nadu has 42 sugar mills, out of which 16 are under the cooperative sector, 3 are owned by the public sector and 23 as private mills. Sugar factories in Tamil Nadu are concentrated in Cuddalore, Villupuram, Vellore, Erode, Coimbatore, Thiruvannamalai, Tiruchirappalli, Thanjavur and Madurai districts.

Leather Industry 

Tamil Nadu has around 70% of national tanning factories and 60% of the export of India. Thiruvallur, Chennai, Vellore, Kancheepuram, Thiruchirapalli, Dindigul and Madurai districts have widespread centres for the leather industry. Similarly, Chennai, Vellore, Ambur, Ranipet, Vaniyambadi, Dindigul and Thiruchirappalli are the main centres of the leather industry.

Automobile Industry

The automobile industry is a significant sector from which Tamil Nadu earns 8% of its GDP. This industry contributes to about 21% of passenger cars and 33% of commercial vehicles produced in India. Chennai is the base for 30% of India’s automobiles and 35% of its auto components. MSMEs are the backbone of the automobile supply chain and a key element in the growth of the automotive industry in Tamil Nadu.

Electronics and Electrical Industry

Electronics is a growing industry in the state of Tamil Nadu. Many industry giants in global telecommunications, like Nokia, Flextronics, Motorola, Sony-Ericsson, Foxconn, Samsung, Cisco, Moser Baer, and Dell, have opted for Chennai as their South Asian manufacturing hub. Products manufactured here include circuit boards and cellular phone handsets.

Bharat Heavy Electricals Limited (BHEL), located at Thiruchirappalli, is one of the six large units in India. It produces generators, boilers, and turbines used in the production of hydroelectricity.

Chemical Industries 

Tamil Nadu is home to a large number of chemical industries, mostly small and medium-sized enterprises (MSMEs). The state’s chemical industry is renowned for its quality and diversity, and many of the products are exported to other states in India and even around the world. Most of the chemical industries of Tamil Nadu are clustered around Chennai (Manali), Panangudi (Nagapattinam), Cuddalore, and Thoothukudi.  

Plastic and Rubber industries

Tamil Nadu is one of India’s leading producers of plastics and rubber products. The state comprises about 6,000 rubber and plastic manufacturing industries. Most of the production of plastic and rubber in Tamil Nadu is concentrated around Chennai, which is the largest industrial hub in the state.

Gold and Diamond Jewellery Industry

Tamil Nadu is one of the major centres for gold and diamond jewellery production, with numerous MSMEs operating in the sector. A large number of MSMEs are engaged in the production of gold and diamond jewellery, ranging from small-scale, family-run production units to larger factories. It also provides an important source of income for the local economy, as the jewellery produced is purchased by customers from around the country.

Solar Energy Equipment 

Tamil Nadu has seen a huge growth in the number of solar energy equipment MSMEs in recent years. This growth has been driven by the state’s strong commitment to promoting renewable energy sources and by the numerous incentives for MSMEs in the state. Solar energy equipment MSMEs in Tamil Nadu are mainly engaged in the manufacturing of solar photovoltaic (PV) systems and components, including solar cells, modules, inverters, charge controllers, and batteries. They also produce solar water heaters, solar pumps, and other solar energy accessories. 

The growth of the Tamil Nadu MSME sector can be accredited to the freedom and support offered by the State Government to the different sectors. Let’s read further to learn a few initiatives and schemes from the State Government of Tamil Nadu.

Grow your MSME with collateral-free business loans

Schemes and Initiatives from the State Government of Tamil Nadu

The state Government has taken several steps to improve the ease of doing business and develop an investor-friendly climate in the state to promote investments in the MSME sector. The state has delivered several incentives to assist businesses through financial aid or infrastructural development. The top influential Government Schemes and Programs are listed below.

1. New Entrepreneur cum Enterprise Development Scheme (NEEDS)

The supervisory body of this scheme is the Directorate of Industries and Commerce, Government of Tamil Nadu. By providing subsidies, this initiative aims to prepare the next generation to take up the various business opportunities in MSMEs.

The scheme partners with various financial institutions in India to provide funds to train youth in entrepreneurship. Under the scheme, there are subsidies, including 25% of the total project cost (up to 75 lakhs). MSMEs can also opt for training from numerous Institutions in different industries and specialisations such as sericulture, cement, agriculture, etc. The age limit for applying for this scheme is between 21 to 35. However, people belonging to special categories get relaxation. Their age should be between 21 to 45. Other than this, the applicant should hold a degree, diploma, ITI, or vocational training from a recognised institute.

2. Unemployed Youth Employment Generation Programme (UYEGP)

This scheme is set to provide employment opportunities for unemployed youth from socially and economically backward regions of the state. The scheme also offers subsidies for the project costs and covers 90% of the total project cost by providing loans (for the general category). This percentage increases to 95% for applicants from special categories.

The age limit of the applicants for this scheme should be 18 to 35 years of age with an educational qualification of 8th pass. The subsidies are provided to businesses at the rate of 25% of the project cost up to 2.5 Lakhs.

3. Pacts with TANSIDCO and TAICO Bank

The Government of Tamil Nadu took an excellent initiative to boost the industrial infrastructure in the state. It signed two agreements or Memorandum of Understandings (MoUs) to execute the lending system to empower the MSMEs in the state.

Firstly, it joined hands with TANSIDCO (Tamil Nadu Small Industries Development Corporation) to execute the TIIC-powered Industrial Infrastructure Initiative Scheme. The second MoU was signed with the TAICO Bank to provide loans and credit to different MSMEs for smooth and uninterrupted business conduct. The government has utilised both MoUs to give various firms a liquidity cushion for their daily operations.

4. Capital Subsidy

 Under this initiative, a subsidy of 25% on the total value of the plant and machinery is provided. The amount of subsidy can be up to Rs. 150 Lakh.

These subsidies are provided to MSMEs at 5% on the value of plant and machinery (up to 5 lakhs) to scheduled categories like women, differently abled, scheduled caste, scheduled tribe, and transgender communities. 

There are 24 sectors identified as eligible for capital subsidies and other benefits. These eligible industries or 24 sectors are listed below.

  • Electrical and electronic industry
  • Aero Space, Defense Applications and Components
  • Leather and related goods
  • Readymade garments
  • Auto parts and components
  • Gold/diamond jewellery for exports
  • Pollution control equipment
  • Sports goods and accessories
  • Biotechnology
  • Medical Devices, tools, equipment, and components
  • Electric vehicle components, charging infrastructure, and components
  • Drugs and pharmaceuticals
  • Technical and medical textiles
  • Rubber
  • Electronic system design and manufacturing
  • Food processing
  • Electronic Waste Processing
  • Industry 4.0
  • Plastic (excluding ‘one-time use and throw away plastics’)
  • Petrochemicals and speciality chemicals
  • Alternate products that can be used instead of single-use plastics
  • Cost-effective building material
  • Traditional industries
  • Solar energy equipment

5. Prime Minister’s Employment Generation Programme (PMEGP)

To reduce the unemployment problems in the country, the Central Government formed PMEGP, a national-level initiative. Tamil Nadu has made excellent use of this scheme by providing loans to MSMEs for setting up their businesses.

People who are 18 years of age and above can apply under this program. The maximum limit for financial aid is 10 lakhs for the service sector and 25 lakhs for the manufacturing sector. Subsidies of 35% of the total project cost are also given to MSMEs under this scheme.

6. Tamil Nadu Small Industries Development Corporation (SIDCO) Initiative

SIDCO plays a significant role in implementing infrastructural development in Tamil Nadu. Under this scheme, 118 industrial estates have developed to power MSME growth.

There are different clusters established in various states for specialisation. For example, Cuddalore is the region where ceramic clusters are developed, and auto component clusters are developed in Chennai, Tiruvallur, Krishnagiri, etc. It helps supply raw materials and extends support for marketing activities.

7. Implementation Of Single Window Portal

The State Government of Tamil Nadu has introduced a portal called Single Window Portal to help MSMEs to set up their business fast. Any small business can easily get approvals, clearances, and No Objection Certificates (NoCs) from responsible government departments through this online portal. This clears out any legal obstacles in their way of setting up a micro, small or medium enterprise.

Vision Of the State Government of Tamil Nadu Towards The Growth Of MSME

The Tamil Nadu Government has set various goals for the MSME sector. The mission and vision of the State Government have been summed up in the following points.

  • The first and foremost aim is to attract investments from different sectors. By 2031, there is a target to rope in investments worth Rs. 5 lakh crore.
  • Apart from investments, employment generation is also a key focus area.
  • Tamil Nadu Government also aims to advance the credit system in the state and provide easy access to formal credit.
  • Regarding industries, it objectifies developing 15 mega clusters and 100 common facility centres, which in turn will assist in overall industrial growth.
  • There are special units prepared to help entrepreneurs solve problems, create valuable projects, maintain a smooth credit system, etc.


Tamil Nadu is blessed with abundant resources and skilled manpower. It is one of the most sought-after investment destinations for starting new ventures and is leading in several sectors such as Automobile, Leather, Textiles & Apparel, Engineering components, Pharmaceuticals etc. Tamil Nadu has the third-largest number of MSMEs in the country with a share of 8% and around five million enterprises. The MSMEs of Tamil Nadu play a pivotal role in propelling the industrial growth of the state. 

Tamil Nadu has elevated its credit and infrastructural system to become the fastest-growing state in India, with more MSMEs growing and flourishing. All Businesses, especially MSMEs, enjoy a high degree of comfort and ease of doing business in the state. The availability of subsidies such as power, generator, interest, payroll, and many other schemes and initiatives are aligned towards assisting entrepreneurs to start their enterprises in the state. 

The state also has an eco-system that provides access to formal credit. Some of the leading NBFCs, like Kinara Capital, have a presence across the length and breadth of the state. They provide MSMEs with collateral-free Business Loans. Business Loans provide MSMEs with access to capital that can be used for business purposes such as purchasing equipment, expanding operations, hiring new staff, and developing new products or services. A business loan can help businesses increase their cash flow, which supports the long-term sustainability of the business. Access to capital often presents a challenge for MSMEs. 

Business Loans from Kinara Capital, one of the top-notch fintech companies in India, allow MSMEs to access capital quickly and easily, helping them to invest in their business and grow beyond their comfort zone. Kinara Capital provides unsecured loans to MSMEs up to INR 30 lakhs! Registered MSMEs can take the 1-minute eligibility check on Kinara Capital’s official website or by downloading myKinara App. Qualified MSME owners can continue with the loan application process and upload the necessary documents, and the loan amount will be disbursed digitally to their mentioned bank account within 24-hours

Also, we have a dedicated customer support team available between Monday – Friday (9.30 AM – 6.00 PM) at our toll free number 1800-103-2683 for any questions or assistance. This ensures that entrepreneurs can get the help they need throughout the loan process.


  1. What are the eligibility criteria for myKinara Business Loan in Tamil Nadu? 

To be eligible for myKinara Business Loan, you must be registered as an MSME, and the minimum monthly turnover should be greater than Rs. 50,000 and less than Rs. 2 crores. Other than this, your business should complete 1+ years if you are into manufacturing and 2+ years if you are into trading or services sectors. 

  1. What are the documents that are required to apply for a Business Loan in Tamil Nadu? 

Documents required to apply for myKinara Business Loan include proof of identity, proof of address, business registration documents, financial statements, bank statements, and other documents. 

  1. How long does it take to get a myKinara Business Loans? 

First, you need to take the 1-minute eligibility check. If you are qualified for a business loan, you can upload the necessary documents, and the amount will get disbursed to your mentioned bank account within 24-hours.

  1. Are there any collateral requirements for myKinara Business Loans in Tamil Nadu? 

No, you aren’t required to submit any property collateral documents for getting Business Loans from Kinara Capital. Kinara Capital provides collateral-free Business Loans to  qualifying MSMEs from the manufacturing, trading, and services sectors to help MSMEs to accelerate their business growth

  1. Is there any government scheme available for Business Loans in Tamil Nadu? 

Yes, there are several Government Schemes available for Business Loans in Tamil Nadu. These include the New Entrepreneur cum Enterprise Development Scheme (NEEDS). Unemployed Youth Employment Generation Programme (UYEGP), Prime Minister’s Employment Generation Programme (PMEGP), and Tamil Nadu Small Industries Development Corporation (SIDCO) Initiative.

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