Tamil Nadu Budget: State Proposes INR 10 Cr Spacetech Fund

Tamil Nadu Finance Minister Thangam Thennarasu has proposed the establishment of a spacetech fund with a corpus of INR 10 Cr.

While presenting the Budget for the fiscal 2025-26 today, Thennarasu said that the fund will encourage and foster the development of spacetech startups in the state. He also announced that a “foundation and prototype development lab” will be set up in Chennai for incubating spacetech ventures and satellite testing.

“To encourage such spacetech startups, a ‘Space Tech Fund’ with an allocation of INR 10 Cr will be set up. Additionally, Foundation & Prototype development lab for satellite testing, space-grade qualification test facilities, incubation and skill development facilities will be set up in Chennai,” Thennarasu said. 

While noting that the number of startups in the state had grown 5X in the past four years to surpass the 10,000 mark, the state finance minister, in his budget speech, also earmarked INR 20 Cr for the “Tamil Nadu Startup Seed Fund” initiative. 

In his speech, Thennarasu also announced the setting up of centres of excellence (COEs) in emerging areas such as artificial intelligence (AI), cyber security, advanced manufacturing, robotics, electric vehicles (EVs) and environmental engineering. 

Setting aside a budget outlay of INR 50 Cr for the initiative, the state FM said that these CoEs will be established at government engineering colleges in collaboration with leading industry players. In addition, the state government also plans to introduce new degree courses in these emerging areas.

Meanwhile, Tamil Nadu Skill Development Corporation will also provide free online training to upskill state government employees in domains such as AI and data analysis. 

Not stopping there, Thennarasu in his speech, also proposed the setting up of a centre of excellence in the area of animation, visual effects, gaming & comics and extended reality (AVGC-XR) for an estimated cost of INR 50 Cr. The project will be executed through the Electronics Corporation of Tamil Nadu Limited (ELCOT).

“To leverage the growing business opportunities in this emerging sector and to create high-end employment for Tamil Nadu’s youth, the Government through ELCOT will set up an AVGC-XR Centre of Excellence in Chennai named ‘Viyan AVGC-XR Hub’ at an estimated cost of INR 50 Cr,” said the state FM. 

Subsequently, the state authorities will also set up AVGC-XR zonal sub-centres in Coimbatore, Trichy, Madurai, Salem and Tirunelveli in collaboration with educational institutions and startups over the course of next three years in a phased manner.

Meanwhile, the budget also saw the government propose a new scheme, under which 2,000 gig workers (registered with the state’s gig employees welfare board) will receive a subsidy of INR 20,000 each for purchasing new electric two-wheelers. 

“To strengthen the social security of internetbased service workers in Tamil Nadu, a group insurance scheme will be introduced to provide compensation for accidental death and disability, benefiting approximately 1.5 Lakh workers. Additionally, lounges equipped with essential facilities will be established in metropolitan cities, including Chennai and Coimbatore, for the convenience of these (gig) workers,”Thennarasu added.

This comes a week after the Maharashtra government also released its Budget for FY26, and announced plans to levy a “vehicle tax” of 6% on EVs priced above INR 30 Lakh. Last week, the Karnataka government also announced an INR 300 Cr fund of funds and INR 100 Cr corpus to support deeptech startups in the state.

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