Tamil Nadu is the home of major automobile companies. The state's auto components sector is thriving; 35 per cent of India 's auto component production comes from units in Chennai. Tamil Nadu's current annual output in the automotive sector is estimated to be $3-3.5 billion with an estimated share of 25 per cent in the Indian automotive Industry and its contribution to the State's Gross State Domestic Product is 7-8 per cent.

The State government intends to transform the state into one of the top three manufacturing hubs for automotive and auto ancillary in Asia by 2015. The State targets to achieve an output of $18 billion in automotive employ a total of 6 lakh people by 2015. To achieve this growth Tamil Nadu needs investments of $5 billion in automotive sector in the coming 10 years to expand the existing capacities; 60-70 per cent of which would have to be from global multinational companies and the balance from Indian companies to make the state a manufacturing hub for automotive sector.

A strong engineering base exists in the state involving products ranging from automobiles, bicycles, castings and forgings, to textile machines, electrical and non-electrical machinery, pumps and transportation equipment, engineering ancillary industries all of which are concentrated in Chennai (Madras), Coimbatore, Salem ,etc. The exports of engineering products from Tamil Nadu is around Rs.14.50 billion (US $ 320 million) of which automobile ancillaries alone contribute around US $ 150 million. It is an established fact that the automobile industry in the state accounts for nearly 50% of the all India export market. The strong engineering base consists of a network of nearly 3,000 units, employing a skilled workforce of more than 2.5 lakh, making high quality inputs such as castings and forgings and a wide variety of ancillary products

Tamil Nadu is now, very strongly emerging as the key hub for Information Technology Enabled Services (ITES) and Business Process Outsourcing (BPO) in the country particularly in the Banking, Financial Services and Insurance (BFSI) sector. Institutions like World Bank, ABN AMRO, Standard Chartered Bank, Citi Bank and other international banking and financial institutions are not only firmly established, but scaling up their operations from Chennai. Simultaneously Public and Private Communication Providers (PCPs) have provided an Optical Fibre Cable (OFC) network for more than 14000 Kms throughout the State, thus placing Tamil Nadu amongst the most connected States of India. Investor-friendly policies, a peaceful climate prevailing in the State and a pro-active and supportive Government makes Tamil Nadu an ideal destination for overseas entrepreneurs.

Tamil Nadu has a dominant presence in the leather and leather based industries. The tanning industry in India has a total installed capacity of 225 million pieces of hide and skins of which Tamil Nadu alone contributes to an inspiring 70%. Leather industry occupies a pride of place in the industrial map of Tamil Nadu. Tamil Nadu enjoys a leading position with 40% share in India 's export. It currently employs about 2.5 million persons Leather exports by the end of the year 2000-2001 were Rs. 9000 crores.

Prospects of India 's textile trade have brightened with the abolition of the international multi-fiber arrangement (MFA) on January 1, 2005 . This removes the quota restrictions on Indian garment exports. The dismantling of trade barriers and quota restrictions has led to a fall in margins for most textile exporters and global prices have also dropped 5-10 per cent. The production of readymade garments increased by 24.4 per cent in October 2004, and that of cotton textiles too grew by nearly 15 per cent. Even the World Trade Organization (WTO) has in a study expected India to increase its share of the global textile trade from the current 4 per cent to 15 per cent by 2010. Out of 1,875 large and medium textile mills in India , 858 are located in Tamil Nadu. Similarly, out of 1,146 small units in India , 904 are located in Tamil Nadu. The state produces over 1,164 million kg of spun yarn per annum, which amounts to over one third of the total production of spun yarn (3081.37 million kg) in the country