Policy Update
Divya Natarajan
Background
The Tamil Nadu R&D Policy 2022 is the State Government’s dedicated framework for attracting and supporting research and development investment, issued by the Industries, Investment Promotion and Commerce Department. The Department’s own Policy Note describes its purpose as boosting an R&D ecosystem that can feed innovative technologies and solutions across industrial and service sectors, with a particular aim of attracting scientific R&D and Global Capability Centre (GCC) investments (Government of Tamil Nadu, 2023). The policy takes effect from the date of the Government Order and is valid for ten years or until a new policy is announced, whichever is earlier (Government of Tamil Nadu, 2022).
The policy begins from a position of stated strength. It records that Tamil Nadu has 59 universities, 2,639 colleges, 860 standalone institutes and about 200 central and state research institutes, that it ranks among the top three States on the national innovation index, and that it accounts for a 9 percent share of State R&D expenditure, the second highest in the country (Government of Tamil Nadu, 2022). It also notes that the State hosts around 150 GCCs, many of which sit alongside manufacturing operations, so that R&D centres and GCCs are closely interlinked in Tamil Nadu (Government of Tamil Nadu, 2022).
The policy lists the problems it is meant to address: moving up the manufacturing value chain through product development, increasing the supply of scientists and researchers and retaining high-value jobs in the State, encouraging private-sector R&D, reducing information asymmetry and speeding up intellectual property generation and commercialisation, and monitoring R&D performance and outcomes (Government of Tamil Nadu, 2022). Its vision is to make Tamil Nadu a knowledge-based economy by 2030, and its single quantified goal is to double R&D expenditure from the Government, Higher Education and Private Sector by 2030 (Government of Tamil Nadu, 2022).
The scope is deliberately bounded. The policy covers R&D projects undertaken by private companies and research institutes, independently or in partnership with private companies, in the Focus and Sunrise sectors defined in the Tamil Nadu Industrial Policy 2021, and aligned to five Grand Challenges: Clean Energy, Sustainable and Advanced Manufacturing, Health, Well-being and Life Sciences, Future of Mobility, and Digital and Data Economy (Government of Tamil Nadu, 2022). It also describes as a first of its kind for the State the decision to incentivise GCCs on par with engineering R&D centres, on the reasoning that R&D-intensive processes are carried out in both (Government of Tamil Nadu, 2022).
Functioning
The policy works through six groups of instruments, covering industry-academia-government linkages, incentives for firms, human capital, support for MSMEs and start-ups, funding avenues, and an implementing body.
Table 1: Architecture of the Tamil Nadu R&D Policy 2022
| Pillar | Main instruments | Agencies named |
| Fostering linkages | Innovation Clusters anchored by an academic or research institute; a Hi-Tech Corridor linking the clusters; a Knowledge City; Research Parks; an Industry 4.0 platform; Work Labs; Centres of Excellence; national and international collaboration; conclaves | Guidance (Work Labs), TIDCO, SIPCOT, TNeGA |
| Incentives | A special package for R&D centres and GCCs (see Table 2) | Guidance, with SIPCOT as disbursing agency |
| Human capital | A programme to build at least 10 high-calibre research institutes; research capacity building; a “100 Talent Plan” to bring Tamil-origin scientists from abroad for short-term appointments; Technology Transfer Offices | Higher Education Department |
| MSMEs and start-ups | Regional start-up hubs at Erode, Madurai and Tirunelveli; Industrial Innovation Centres; the iTNT Hub; an MSME Innovation Research Programme based on procurement | TANSIM, SIPCOT, MSME Department |
| Funding | TANSEED grants of Rs 10 lakh to start-ups; the Emerging Sector Seed Fund; Innovation Initiatives grants of 25 percent of project cost; a Research and Technology Fund; a Digital Accelerator for diaspora start-ups; TNSCST research schemes | State Planning Commission, TNIFMC, TNSCST |
| Implementation | A Section 8 company, the Tamil Nadu R&D Mission (“Cognition”), to act as facilitator, procurer and evaluator of R&D | R&D Mission, chaired by the Industries Minister |
Source: Government of Tamil Nadu, Industries, Investment Promotion and Commerce Department, Tamil Nadu R&D Policy 2022 (compiled by researcher).
The incentive package is the part of the policy with the most precise terms. To qualify, an R&D firm must invest at least Rs 50 crore in eligible fixed assets within a four-year investment period and create employment for 50 persons, with R&D facilities clearly demarcated from production and quality control. A GCC must appear in the latest Forbes Global 2000 or Fortune 1000 list, be a new or expanding centre in Tamil Nadu established before December 31, 2027, and create at least 500 jobs within four years (Government of Tamil Nadu, 2022). Projects with investments made from April 1, 2022 are eligible.
Table 2: Special Package of Incentives for R&D Centres and GCCs
| Incentive | What it covers | Limit |
| Land cost | Purchase or lease of land for standalone R&D projects | 50 percent of cost, up to 20 acres, ceiling of Rs 50 lakh per acre |
| R&D training | Core R&D staff who are Tamil Nadu residents with prescribed qualifications | Rs 10,000 per person per month for 12 months |
| Quality certification | ISO, BIS, ISI and similar certifications | 50 percent of cost, up to Rs 1 crore |
| Intellectual property | Patents, copyrights, trademarks and Geographical Indicators | 50 percent of expenditure, up to Rs 1 crore for in-house R&D and up to Rs 5 crore for standalone R&D assets |
| Special capital subsidy | Eligible fixed assets, which may include intangible R&D spending up to 20 percent of the total | 25 percent, paid in equal instalments over 10 years, ceiling of Rs 25 crore |
| Innovation lab | Accredited innovation labs serving clusters | 50 percent of fixed assets, up to Rs 1 crore |
| Software licences | Specialised proprietary software | 50 percent of expenditure, up to Rs 25 lakh |
| Prototyping and testing | Product testing and prototyping facilities | 25 percent of fixed assets, up to Rs 1 crore |
| Other support | Standard incentives under the Industrial Policy 2021, SGST refund on capital goods, exemption from the Factories Act for demarcated in-house R&D units, and Floor Space Index relaxations | As specified |
Source: Government of Tamil Nadu, Tamil Nadu R&D Policy 2022 (compiled by researcher).
Sanctioning follows a two-step route. The Inter-Departmental Committee constituted for the Tamil Nadu Industrial Policy 2021 recommends incentives to the Cabinet, and SIPCOT disburses them (Government of Tamil Nadu, 2022). The high investment and employment thresholds mean the special package is aimed at large R&D investors and GCCs. Smaller firms and start-ups are served by a different set of tools, mainly modest grants such as the Rs 10 lakh TANSEED grant and procurement-based innovation programmes.
The policy also sets out how its own results are to be tracked. It proposes to monitor inputs such as R&D budgets, contract volumes and the number of researchers, and outputs such as publications, patents, industrial designs, trademark applications, citations and ICT exports, with the R&D Mission responsible for creating a monitoring and evaluation framework (Government of Tamil Nadu, 2022). This commitment matters for the assessment that follows.
Performance
Assessing the policy’s performance is difficult for a basic reason: the official sources reviewed publish little outcome data attributable to it. The more useful exercise is to examine three things: what the Government reports as delivered, what the latest official spending data show, and how the policy’s own baseline claims compare with that data.
On delivery, the following table sets each major commitment against what the official documents reviewed report. The status column reflects the portions of the Policy Notes and the searches carried out for this article. A missing confirmation is not proof that something has not been delivered.
Table 3: Policy Commitments and Reported Status in Official Documents
| Policy commitment | What the official documents reviewed report | Status |
| R&D Mission (“Cognition”) as a Section 8 company and implementing agency | No official confirmation that it has been constituted was located | Not verified |
| Industry 4.0 platform | The 2023-24 Policy Note said a portal on advanced manufacturing and Industry 4.0 would be developed and rolled out in 2023. No confirmation of launch was located | Not verified |
| Industrial Innovation Centres at Coimbatore, Sriperumbudur and Hosur | Centres at Hosur and Sriperumbudur were inaugurated on June 24, 2022, at a project cost of Rs 33.46 crore with a Rs 14.20 crore grant from Tamil Nadu Innovation Initiatives; seven start-ups at Hosur and three at Sriperumbudur were using them. Coimbatore is not reported | Partly reported |
| Centres of Excellence | TANCAM (with Dassault Systemes), TANSAM (with Siemens) and TAMCOE (with GE Aviation), together costing over Rs 600 crore, inaugurated in 2022 | Reported |
| Work Labs for industry-academia matching | Outputs reported for 2022 include over 120 industry partners, curriculum revision with more than 40 industry experts, 7 MoUs for sandwich degree programmes, over 1,500 internships with 45 industries and faculty immersion for 65 professors | Reported |
| Knowledge City and Research Parks | The 2023-24 Policy Note records that knowledge parks and cities were announced. No construction or allotment status was located | Announced |
| Research and Technology Fund (Rs 100 crore, with a further Rs 150 crore proposed) | No operational status was located | Not verified |
| Emerging Sector Seed Fund | The policy gives the corpus as Rs 50 crore. The 2023-24 Policy Note reports Rs 500 crore for a SEBI-registered Category I venture capital fund | Reported, but the two figures differ |
Source: Government of Tamil Nadu (2022, 2023); compiled by researcher.
Two features of this table need to be read carefully. First, much of what is reported as delivered pre-dates the policy: the Centres of Excellence and the Innovation Centres were inaugurated in June and November 2022, and the Centres of Excellence were created under an earlier TIDCO scheme that the policy says the State will continue to support (Government of Tamil Nadu, 2022, 2023). They are better read as the base the policy builds on than as its results. Second, the Work Labs outputs are mainly about skilling, internships and curriculum, and are linked to the Naan Mudhalvan skilling programme, so they speak to the talent leg of industry-academia linkage more than to joint research (Government of Tamil Nadu, 2023). By 2026-27, the Work Labs Cell is described as operating across four areas, including a research and innovation ecosystem, and as conducting a State-wide skill gap assessment (Government of Tamil Nadu, 2026).
On spending, the latest state-wise official series located comes from the Department of Science and Technology’s R&D Statistics 2022-23, as tabled in Parliament, and it covers R&D expenditure by State Governments, including State agricultural universities and other State departments, for 2018-19 to 2020-21 (PIB, 2025). It therefore describes the position before the policy was issued, and it does not include Higher Education or private-sector spending at the State level.
Table 4: Tamil Nadu State-Government R&D Expenditure, 2018-19 to 2020-21
| Indicator | 2018-19 | 2019-20 | 2020-21 |
| Tamil Nadu (Rs crore) | 513.86 | 637.75 | 609.72 |
| All reporting States (Rs crore) | 8,029.21 | 8,554.79 | 8,476.35 |
| Tamil Nadu share of the total (percent) | 6.4 | 7.5 | 7.2 |
| Tamil Nadu rank among the 24 reporting States | 5th | 3rd | 5th |
| National R&D spending as a share of GDP (percent) | 0.66 | 0.66 | 0.64 |
Source: PIB (2025), citing Research and Development Statistics 2022-23, NSTMIS, DST. The share and rank are calculated by researcher from the published annexure.
Tamil Nadu’s State-government R&D spending rose by about 19 percent between 2018-19 and 2020-21, against about 6 percent for all reporting States, so the direction is favourable. The level, however, differs from the claim in the policy. The policy cites a 9 percent share and second place, and DST’s R&D Statistics 2019-20 does report Tamil Nadu at 9.5 percent and second among States (DST, n.d.). The 2022-23 series gives 6.4 to 7.5 percent and a rank of third to fifth. The two editions may differ in coverage or revision, so the comparison is indicative. It still shows that the baseline on which the policy rests is not settled.
The policy’s own research base also shows up in central programme data. Since 2022, Tamil Nadu has had more institutions supported under the Fund for Improvement of S&T Infrastructure (FIST) than any other State listed in the same Parliament reply (PIB, 2025).
Table 5: Research Infrastructure Support to Institutions Since 2022, Selected States
| State | FIST | SAIF | PURSE | SUPREME | PGTP | RRSFP |
| Tamil Nadu | 30 | 1 | 1 | 2 | 2 | 1 |
| Maharashtra | 14 | 2 | 1 | 0 | 2 | 3 |
| Kerala | 13 | 1 | 1 | 0 | 1 | 1 |
| Karnataka | 6 | 2 | 0 | 0 | 0 | 5 |
Source: PIB (2025). Numbers are institutions supported under each scheme. FIST, SAIF, PURSE and SUPREME are Department of Science and Technology schemes; PGTP and RRSFP are Department of Biotechnology schemes.
These figures describe the strength of the State’s academic research base and are the result of central schemes. They are not outcomes of the State’s R&D policy.
The Government also reports headline rankings. The 2023-24 Policy Note states that Tamil Nadu is taking third position among States in R&D investment and that Chennai is the most cost-competitive destination for electronics R&D, without giving the underlying source or metric (Government of Tamil Nadu, 2023). The 2026-27 Policy Note records the inauguration of Ford’s Global Capability Centre in Coimbatore during the 2026 investment conclave, and reports that NITI Aayog’s Investment Friendliness Index 2026 ranked the State third, a composite index that includes the innovation ecosystem among many factors (Government of Tamil Nadu, 2026).
Impact
The policy’s clearest contribution lies in design rather than in measured results. It brings GCCs, engineering R&D centres, universities, start-ups and MSMEs under one framework, and it links research capacity, talent and commercialisation in a single document. Placing GCCs on par with R&D centres reflects how R&D is actually organised in the State, where many GCCs operate beside manufacturing plants (Government of Tamil Nadu, 2022).
On the industry-academia leg, the reported impact is real but modest and concentrated on skills. The Work Labs outputs listed in Table 3 show active matching of industry needs with curricula and internships. The research-collaboration aims of the policy, such as sponsored research, technology transfer offices and faculty-industry projects, are reported mostly in small numbers, such as the faculty immersion programme for 65 professors, or not at all (Government of Tamil Nadu, 2023).
The Department has shown that it can evaluate its incentives when it chooses to. A study commissioned from Deloitte found that, for a sample of 30 of 43 beneficiary companies over a decade, each rupee of industrial incentive returned about 4.95 rupees to the State (Government of Tamil Nadu, 2023). That study concerns industrial investment incentives in general, however, and no comparable evaluation of the R&D package was located. The Policy Note for 2023-24 also committed the Department to review the impact of the industrial policies released since 2021, and no published review was located (Government of Tamil Nadu, 2023).
No figures on applications received, sanctioned or disbursed under the special package were found in the sources reviewed. Without them, it is not possible to say how many R&D centres or GCCs have used the package, or in which cities. For this reason, the policy’s impact on R&D spending, patents or researcher numbers cannot be assessed from public data at present.
Emerging Issues
First, the policy cannot currently be measured against its own goal. It aims to double R&D expenditure from the Government, Higher Education and Private Sector by 2030, but it does not state a baseline year or which measure is to be used (Government of Tamil Nadu, 2022). The only state-wise official series available covers State-government spending alone, and it ends in 2020-21, before the policy was issued (PIB, 2025). The monitoring framework the policy assigns to the R&D Mission has not been published in any source reviewed.
Second, the baseline claims in the policy do not match the later official data. The policy’s 9 percent share and second rank are compared with 6.4 to 7.5 percent and a rank of third to fifth in the 2022-23 series (Government of Tamil Nadu, 2022; PIB, 2025). The difference may come from revisions or coverage, but a target that is defined relative to a baseline needs a baseline that can be reproduced.
Third, important parts of the delivery machinery cannot be verified. The R&D Mission that the policy names as its implementing agency, the Industry 4.0 platform promised for 2023, the Research and Technology Fund and the Knowledge City do not have a confirmed status in the official documents reviewed, and the two official figures for the Emerging Sector Seed Fund corpus differ by a factor of ten (Government of Tamil Nadu, 2022, 2023). Much of what is reported as delivered, including the Centres of Excellence and the Innovation Centres, was created before or independently of the policy, which makes attribution difficult.
Fourth, the incentive package rests on a policy framework that is changing. The special package is defined largely by cross-reference to paragraphs of the Tamil Nadu Industrial Policy 2021 (Government of Tamil Nadu, 2022). That policy states that it is valid until March 31, 2025 (Guidance Tamil Nadu, n.d.), while the 2026-27 Policy Note lists it as in force and says a successor is being finalised, with R&D and GCCs among 20 high-potential sectors being considered for it (Government of Tamil Nadu, 2026). The R&D policy has a ten-year term and its GCC window runs to December 2027, so the documents reviewed do not explain how the cross-references will be treated once the successor policy arrives. The 2026-27 Policy Note also lists a separate Special Scheme to promote GCCs in Tamil Nadu (2024), which suggests that GCC support is now spread across more than one instrument (Government of Tamil Nadu, 2026).
Finally, the incentive thresholds favour large investors. A Rs 50 crore investment with 50 jobs for R&D centres, and 500 jobs for GCCs from the largest global firms, leaves out smaller R&D firms from the special package (Government of Tamil Nadu, 2022). The policy’s answer for smaller players is a set of small grants and regional hubs at Erode, Madurai and Tirunelveli, and no progress data on those hubs was located. The regional spread of the policy promises through conclaves in Tier 2 and Tier 3 cities therefore remains unverified.
Way Forward
First, the Government should publish a baseline and a yearly R&D dashboard. This would define the baseline year and the measure for the 2030 doubling target, combine DST’s State-government series with Higher Education and private-sector estimates for Tamil Nadu, and report the input and output indicators that the policy itself lists, namely R&D spending, patents, publications and trademarks.
Second, the status of the institutional machinery should be confirmed in public. The Government should state whether the R&D Mission has been constituted and who sits on its Leadership Board, whether the Industry 4.0 platform is live, and what progress has been made on the Knowledge City, Research Parks and the Research and Technology Fund. The discrepancy in the Emerging Sector Seed Fund corpus should also be corrected in whichever document is wrong.
Third, uptake data for the special package should be published and evaluated. Annual figures on applications, sanctions and disbursements, split between R&D centres and GCCs and by city, together with an R&D-specific evaluation along the lines of the earlier Deloitte study but with a longer sample, would show whether the package is attracting additional R&D or simply rewarding investment that would have happened anyway.
Fourth, the successor Industrial Policy should settle how R&D incentives fit within it. Either the R&D incentives should be restated in the new policy, or the R&D policy’s cross-references should be updated, and the relationship between the R&D policy and the 2024 GCC scheme should be made explicit. A lower tier for smaller R&D firms, linked to the policy’s own MSME research programme, could be considered so that the special package is not reserved for the largest investors.
Finally, the industry-academia leg should be given measurable research targets. Work Labs reporting could add sponsored research contracts, technology transfer offices established, faculty-industry projects and use of central research funds, which the policy encourages industry and academia to draw on. Tamil Nadu’s large base of FIST-supported institutions (PIB, 2025) offers a platform on which such targets could be set.
References
- Government of Tamil Nadu, Industries, Investment Promotion and Commerce Department. (2022). Tamil Nadu R&D Policy 2022. Listed at Guidance Tamil Nadu, Policy and Notifications. https://www.investingintamilnadu.com/business-in-tamil-nadu/policy-notifications
- State Planning Commission, Government of Tamil Nadu. https://spc.tn.gov.in/policy/tamil-nadu-rd-policy-2022/
- Government of Tamil Nadu, Industries, Investment Promotion and Commerce Department. (2023). Policy Note 2023-2024, Demand No. 27. https://tnswp.com/DIGIGOV/StaticAttachment?AttachmentFileName=%2Fpdf%2Fpoli_noti%2FPolicy-Note-2023-24.pdf
- Guidance Tamil Nadu. (n.d.). Tamil Nadu Industrial Policy 2021. https://tnswp.com/DIGIGOV/TN-pages/industrial-policy.jsp?pagedisp=static
- Press Information Bureau (PIB), Ministry of Science and Technology, Government of India. (2025, July 31). Parliament Question: Data on R&D Spending and Research Infrastructure. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2150809
- Department of Science and Technology, Government of India. (n.d.). Research and Development Statistics 2019-20. https://dst.gov.in/sites/default/files/Research%20and%20Deveopment%20Statistics%202019-20_0.pdf
- Government of Tamil Nadu. (2026). Industries, Investment Promotion and Commerce Department: Policy Note 2026–2027. Government of Tamil Nadu. https://cms.tn.gov.in/cms_migrated/document/docfiles/ind_e_pn_2026_27.pdf
About the Contributor
Divya Natarajan is a Research and Editorial Intern at IMPRI and a recent Economics graduate from Stella Maris College, Chennai. She has experience in public policy research, editorial writing, and policy analysis through internships with think tanks and research organisations. Her interests include public policy, governance and development economics.
Acknowledgements
I would like to extend my gratitude to IMPRI for this opportunity, constructive reviews and editorial support.
Reviewers
Aditi Bhuinyan and Angela
Disclaimer
All views expressed in the article belong solely to the author and not necessarily to the organisation.
