Impact of FDI on Tamil Nadu Economy

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Impact of FDI on Tamil Nadu Economy has been quite strong. Foreign Direct Investment has provided the state with innovative technologies, new markets, and demands in input. Foreign Direct Investments have made Tamil Nadu rank among the first three states in the country.

Advantages of Tamil Nadu in terms of Investments-

  • Industrial output, value addition, strength of factories, work force employed in factories, and Foreign Direct Investments have made Tamil Nadu rank among the first three states in the country.

  • The state government is quite friendly and open to the investors and the climatic condition of the state is also apt for industrial developments.

  • The literacy rate in Tamil Nadu accounts for 73.5 percent which ensures great number of workforce in the state.

  • Private Participation in Infrastructure building is ensured by the government of Tamil Nadu.

  • Single window clearance is availed to the investment that would surpass USD 5.41892 million.

  • The state government has assured about introducing a new Special Economic Zone (SEZ) policy to carry out the execution of industrial activities in a more systematized form.

  • A fresh new IT Policy 2002 and Information Technology Enabled Services (ITES) Policy 2005 have been formulated with the aim to provide an investor-friendly atmosphere to the IT sector in the state.

  • The government of Tamil Nadu has reduced the stamp duty by 50 percent.

Impact of FDI on Domestic Investments in Tamil Nadu-

  • Foreign Direct Investment has provided the state with innovative technologies, new markets, and demands in input
  • The labor force in the state is mobile and it keeps on touring from multi-national corporations to domestic enterprises
  • Investments in new industrial sectors has stimulated the growth of new industry and new products
  • FDI also had a disadvantageous impact on Tamil Nadu economy as it has crowded out the domestic investment and has also raised the interest rates.
  • FDI has also increased the competitive level of the domestic firms with the global ones
  • FDI Inflows gave rise to employment opportunities and labor skills by setting up various industrial sectors
  • It has brought innovative technologies in the industrial sectors in state
  • FDI has also replaced foreign-intensive equipment by introducing fresh new technologies
  • FDI has brought in technological advancements through various foreign companies and has made products more export-oriented