TN Losing Investments? Korean Firm Exit Triggers Political Storm

Tamil Nadu’s investment climate has come under intense political scrutiny following two high-profile setbacks — the controversial Foxconn “fresh investment” claim and the exit of South Korean footwear manufacturer Hwaseung, which shifted its large project from Tirunelveli to Andhra Pradesh. Together, these developments have raised pointed questions about administrative efficiency, regional economic balance, and the state’s ability to retain big-ticket projects ahead of the 2026 Assembly elections.

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Korean Firm Exits Tirunelveli Project

Hwaseung, which had announced a ₹1,720-crore non-leather footwear unit in Tirunelveli, has now moved the project to Andhra Pradesh.
The original plan promised nearly 20,000 jobs, a significant boost for South Tamil Nadu. Instead, the company opted for Andhra despite a lower investment commitment, suggesting that Tamil Nadu’s land and policy terms did not meet expectations.

This move has revived longstanding concerns that Tamil Nadu may be losing its competitive edge in attracting large industrial investments.

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Foxconn Row Adds to the Embarrassment

The investment discourse heated up further after Minister T. R. B. Raja announced that Foxconn agreed to invest ₹15,000 crore and create 14,000 jobs following a meeting with the Chief Minister.

However, Foxconn issued a clarification denying any “fresh investment”, undercutting the government’s claims and offering ammunition to political opponents, who allege misleading communication and poor negotiation strategies.

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Opposition Demands a White Paper

Opposition parties — including the BJP, AIADMK, and PMK — have seized the moment to question the DMK government’s investment track record.

Their demands include:

1. A white paper on all investment MoUs.

2. Transparency on why major projects are being lost to other states.

3. Accountability as Tamil Nadu heads into the 2026 Assembly elections.

Opponents argue that Tamil Nadu is becoming a “land of missed opportunities,” despite its strong industrial reputation.

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Regional Imbalance in Growth

Another recurring theme is Tamil Nadu’s uneven industrial distribution:

1. North TN (Chennai region) and

2. West TN (Coimbatore, Salem belt)

continue to attract most new projects.

But South Tamil Nadu — particularly districts like Tirunelveli and Ramanathapuram — remains largely under-industrialised, except for the Tuticorin port region.
This imbalance has triggered fresh demands for a more decentralised and region-focused industrial policy.

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Land, Policy & Wage Issues Surface

Industry sources and experts point to several structural reasons behind the recent investment exits:

1. Land Policies: Tamil Nadu reportedly did not agree to provide the prime land parcel Hwaseung demanded.

2. FDI Competitiveness: Some say the state’s terms are less aggressive compared to neighbours like Andhra Pradesh.

3. Wages: Tamil Nadu’s higher wage structure increases operating costs.

4. Labor Policies: Andhra allows 12-hour shifts, giving employers more flexibility, while TN’s stricter labor norms limit that option.

These factors collectively may be nudging cost-sensitive industries toward states offering more liberal and cost-efficient ecosystems.

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Experts Offer Balanced Perspective

However, economists caution against oversimplification:

1. Not every lost investment signifies a policy failure.

2. Companies evaluate factors like incentives, logistics, local supply chains, and long-term strategies.

3. States must balance industrial incentives with broader social, environmental, and economic priorities.

Despite the recent controversies, Tamil Nadu retains structural advantages:
a robust industrial base, a skilled workforce, and the highest economic growth rate in India (11.9%), according to recent data.

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The Political & Industrial Impact

The dual controversies — Foxconn and Hwaseung — have intensified the political climate in Tamil Nadu. With elections around the corner, these narratives will likely shape public debate on:

1. Investment governance

2. Regional development equity

3. Administrative efficiency

4. Competitiveness vs. welfare policy priorities

Whether these incidents turn out to be isolated cases or part of a broader investment climate challenge remains a central question as Tamil Nadu prepares for 2026.

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