Why Tamil Nadu is on the Radar of Global Biotech Investors

Tamil Nadu is gaining international exposure for its biotech sector due to its streamlined business environment, policy clarity, investor facilitation, human capital, and state-of-the-art infrastructure.

---

The government of India’s southern state of Tamil Nadu has been invited to Basel, Switzerland, for a biotech showcase event on April 24 and 25.

Foreign investors should note that Tamil Nadu is the only Indian state to be invited by the Swiss Business Hub in India to participate at the Swiss Biotech Day, a key conference for the industry in Europe. The Swiss Business Hub India is the Mumbai-based representative of the official international trade and investment promotion agency Switzerland Global Enterprise (S-GE).

India is among the top 12 biotechnology destinations worldwide and has the third largest production hub in the Asia-Pacific. Bio innovation and biomanufacturing in the country is categorized into biopharmaceuticals, bio agriculture, bio-IT, and BioServices. The Indian biotechnology industry has been forecasted to reach US$150 billion by 2025, at a compound annual growth rate (CAGR) of 16.4 percent.

We briefly spotlight some of the reasons why the state of Tamil Nadu is gaining international exposure for its biotech sector in this article.

Why Tamil Nadu

Tamil Nadu has emerged as a test bed for companies innovating in the health tech space and investing in medical technology. The state boasts of a streamlined business environment, policy clarity, investor facilitation, human capital, and state-of-the-art infrastructure.

Participation in the biotech event at Basel, which is Europe’s biggest life sciences cluster, will offer “a pertinent opportunity for building synergies among global investors, experts, and the State,” according to Guidance CEO Venugopalan. ‘Guidance’ is the Government of Tamil Nadu’s nodal agency for investment promotion and single window facilitation.

Life sciences promotion policy – promoted industries and incentives

Tamil Nadu has a strong base in industry, manufacturing, and research, and the biotechnology sector is a thrust area for the state’s policymakers.

On July 4, last year, the state launched the Tamil Nadu Life Science’s Promotion Policy 2022 to support and incentivize research and development (R&D) programs, create industry fixed assets, and grow the medical, agricultural, marine, industrial, and environmental biotechnology production and service capabilities in the state.

Another key policy goal is to attract INR 200 billion (approx. US$2.43 billion) in investments for Tamil Nadu’s life sciences sector and create 50,000 jobs.

The Life Sciences Promotion Policy 2022 applies to greenfield or expansion projects in biotechnology and bioservices, pharmaceutical and nutraceutical industries, medical devices, and medical textiles, as listed below.

List of Eligible Industries – Tamil Nadu Life Sciences Promotion Policy 2022
Sector	Sub-sector / segments / focus area
Pharmaceuticals and Bulk Drugs	API/Bulk Drugs and Drugs intermediates Nutraceuticals (Food Supplements only) Biologics and Biosimilars Drug formulations Ethnoveterinary Drugs
Medical Textile Manufacturing Drugs	Products or segments under medical textile manufacturing that adhere to the standards for Technical Textiles for MedTech as published by the Bureau of Indian Standards (BIS) (products, such as clothing for protection against contact with blood and body fluids, bandage, surgical and first-aid dressings, and face masks.)
Biotechnology	Medical biotechnology Agricultural biotech Industrial biotech Environmental biotech Marine biotech Animal biotech
Medical Devices	Consumables and disposables: High-volume items used in health facilities that include syringes, needles, catheters, sutures, perfusion sets, extension lines, cannula, surgical blades and feeding tubes. Implants and patient aids: Devices manufactured to replace or support biological functions, such as cardiac stents, pacemakers, drug eluting stents, dental implants, intraocular lenses, orthopedic implants, prosthetics, and orthotics, hearing aids, and cochlear implants. Diagnostics: In-vitro diagnostic devices, kits and associated reagents for diagnostic purposes and include equipment for Biochemistry, Hematology, Auto-immune disorder diagnosis, Antibody testing kits, Antigen testing kits, New-born Screening Kits and Self-testing kits & reagents. Patient monitoring devices: In-vitro diagnostic devices, kits and associated reagents for diagnostic purposes and include equipment for Biochemistry, Hematology, Auto-immune disorder diagnosis, Antibody testing kits, Antigen testing kits, New-born Screening Kits and Self-testing kits & reagents. Diagnostic imaging: Electro-diagnostic & radiation apparatus, imaging apparatus and associated accessories, such as Linear Accelerators, CT scans, MRI machines, Electro-cardiographs, Ultrasound machines & probes, X-Ray. Other equipment: Medical devices used in various invasive procedures, such as Artificial dialysis apparatus, defibrillator, Lithotripsy equipment, anesthesia equipment, Laparoscope, endoscope, colposcopes, central nursing stations, stress test systems, and oxygenators.

The Government of Tamil Nadu prioritizes policies that safeguard the environment and human life; thus, industries that do not commit to adopting pollution abatement technologies will not be allowed to operate within the state.

Investments made from April 1, 2022, are eligible for incentives, and this policy supersedes the Tamil Nadu Biotechnology Policy 2014. It will be valid for five years from the date of notification and may be periodically revised.

The units have the option to choose one of the following: a) fixed capital subsidy, b) flexible capital subsidy, or c) turnover-based subsidy. These investment promotion options are mutually exclusive, and the investor must choose one at the start of the project.

Other incentives that can be tapped by life sciences projects cover R&D spend, land cost, stamp duty, quality certification, intellectual property creation, and interest subvention besides other standard incentives linked to electricity tax and green industry.

The policy will also provide additional incentives, such as a one-time overseas training subsidy, subsidy for certification renewal, and subsidy for anchor units with an investment greater than INR 3 billion (approx. US$36.59 million).

Under the Life Sciences Policy 2022, several clearances related to manufacturing and business activities will be onboarded onto the state’s Single Window Portal, which will provide a one-stop shop for companies in the life sciences sector.

Incentives under the industrial promotion policy

Tamil Nadu also offers incentives for the life sciences sector under the Tamil Nadu Industrial Policy (TNIP) 2021. Projects with an investment of INR 3 billion or more in “B” and “C” category districts and INR 5 billion (US$60.99 million) or more in “A” category districts are eligible for a “Structured Package of Assistance” under TNIP 2021.

Medical electronics, devices, equipment, biotechnology, pharmaceuticals, bulk drugs, nutraceuticals, and technical textiles, including medical textiles, are considered sunrise sectors under TNIP 2021 and are eligible for “Special Incentives for Sunrise Sector,” which include investment promotion subsidy, land cost subsidy, stamp duty incentive, enhanced incentive for quality certification, enhanced incentive for intellectual property creation, interest subvention, electricity tax exemption, and State GST refund on capital goods.

Considering the technology-intensive nature of life sciences, the eligibility criteria for incentives has been relaxed to include projects that have an investment greater than INR 500 million (US$6.09 million) and a minimum employment of 50 jobs under the life sciences policy.

A company can choose to avail incentives under the “Special Package of Incentives for Life Sciences” under the Tamil Nadu Life Science’s Promotion Policy 2022 or “Special Incentives for Sunrise Sector” under TNIP 2021, subject to satisfying the eligibility criteria of the applicable policy.

For calculation of benefits, eligible fixed assets (EFA) under TNIP 2021 will include R&D expenditure, such as land, building, plant, and machinery.

Pharmaceutical and biotechnology sector in the state

Tamil Nadu is a leading pharma producer in India, accounting for 10 percent of the manufacture of pharma products in the country. The state currently hosts over 400 companies in biotechnology, pharmaceuticals, and medical devices, including AstraZeneca, GSK, Pfizer, ICON, IQVIA, Johnson & Johnson, Roche, LifeCell, Zifo, Kemin, Novartis, Swiss Garnier, Sanofi, Baxter, ZoomRx, etc. Tamil Nadu is also an emerging hub for medical tourism.

Existing and upcoming special economic zones and dedicated bio-pharmaceutical parks provide necessary infrastructure and equipment for lab research, medical biotech, and genetic engineering.

Tamil Nadu Industrial Development Corporation Limited (TIDCO) has partnered with TIDEL Park Limited to establish TICEL Bio Park Limited, which offers exclusive facilities for biotechnology and pharmaceutical research and development activities in the state. Some flagship projects are TICEL Bio-Park-II in capital Chennai and TICEL Bio-Park-III at industry hub Coimbatore.

Further, IIT-Madras has already set up a bio-incubator at the IIT-M Research Park, equipped with state-of-the-art infrastructure and analytical facilities.

Medical device park

The industry facilitation agency SIPCOT has been tasked with developing a greenfield Medical Devices Park at Oragadam, in Kancheepuram district, which will support Tamil Nadu’s ambitions to move up the value chain. The medical device park will have shared facilities, including a radiation sterilization facility, design and prototyping center with 3D designing and printing capabilities for medical-grade products, testing laboratories, incubation centers, technology development centers, and skill development centers to support the creation of new products, either directly or through public-private partnerships as required by stakeholders.