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Tamil Nadu Startup Policy

Tamil Nadu Startup Policy

Tamil Nadu Startup Policy

The prospects for entrepreneurship and employment in the State of Tamil Nadu is now more reassuring, thanks to the Tamil Nadu Startup Policy. The initiative, which is the first of its kind in the State, proposes the creation of one lakh jobs within the year 2023 by promoting innovation through entrepreneurial endeavors. In this article, we look at the various aspects of the Tamil Nadu Startup Policy in detail.


The Tamil Nadu startup policy is aimed at establishing at least 5,000 startups, including ten global high growth ventures in social impact sectors by the year 2023. The initiative will include comprehensive measures for creating, supporting and nurturing a vibrant startup ecosystem in the State. This will be done by roping in NRIs from the Tamil diaspora and allotting land at nominal lease for 99 years to establish ‘Startup Parks’ at appropriate places.

The scheme also intends to lend infrastructure support for strengthening existing mechanism in areas such as the Internet of Things (IoT), Artificial Intelligence (AI), Machine Learning (ML) and Software as a Service (SAAS).

The Government, through these measures, aims to make the state as the nation’s knowledge capital and innovation hub.

Five-point Action Plan

As a part of the scheme, the Tamil Nadu Government has set a five-point action plan for implementing the policies. This includes:

  • The creation of ecosystems for encouraging innovations.
  • Ensuring the availability of resources to the Startup Ecosystem
  • Skill development and job creation.
  • Promotion of social entrepreneurship.
  • The establishment of global accessibility and partnerships.

Means of Support

To aid the initiative, the Government is taking strides towards setting up the Tamil Nadu Startup Fund of Funds (TNSSGF) with a corpus of Rs. 250 crores. TNSSGF will be registered as an Alternative Investment Fund (AIF) and will be managed by organizations like the Small Industries Development Bank of India (SIDBI). On the same note, the Government intends to set up Tamil Nadu Startup Seed Grant Fund (TNSSGF) with an exchequer of Rs. 50 crores, out of which a sum of five crores will be allotted for the first year. This will be executed in collaboration with financial institutions and universities.

The State is planning to encourage the establishment of corporate and private incubators through CSR funding. These incubators will also play the role of an innovation sandbox to address the problems encountered by PSUs and CPSUs.

The Entrepreneurship Development and Innovation Institute of Tamil Nadu (EDII) will act as the nodal agency for the implantation of this policy.

Relaxation Measures

The newly introduced policy renders relaxation for startups in terms of prior existence, turnover criteria, Earnest Money Deposit (EMD), and others. Such measures are aimed at encouraging startups to partake in public procurements, as well as to enable them to bid for smaller-value tenders. Also, government departments and undertakings are allowed to procure smaller value products from innovative startups for at least two times in a financial year.

Grace Marks and Relaxation for Students

The benefits of the policy are also extended to students by way of special grace marks and attendance relaxation if their project works are converted into a startup in the incubator. A deferred placement support system will be in place across all colleges in consultation with the industry to cover the risks of failed student startups.

Qualifying Startups

An entity, to be recognized as a startup in Tamil Nadu, must be registered under the Tamil Nadu Startup and Innovation Mission (TANSIM). Its date of incorporation must be less than seven years (ten years for biotechnology, AI and ML startups) at the time of registration and its turnover must have been less than Rs. 25 crores in all of these financial years.

Review of Policy

The policy will be reviewed on a five-year period. Any amendments to the policy can only be made with the consent of the State cabinet in a way that doesn’t affect the beneficiaries already covered under the policy. Apart from this, the policy will be reviewed twice in a year by Tamil Nadu Startup and Innovation Council (TANSIL) based on Key Performance Indicators (KPIs) determined by the council.