Tamil Nadu’s AVGC-XR policy aims for creative boom

After a long wait, Tamil Nadu has finally announced the much-awaited AVGC-XR Policy 2026, which aims to accelerate growth in animation, visual effects, gaming, comics and extended reality sectors. The policy envisages positioning the State as a creative powerhouse where artists, technologists and storytellers can drive a sustainable, inclusive and innovation-driven economy, attract investments, create employment and strengthen Tamil Nadu’s contribution to India’s global soft power.

Tamil Nadu Limited Electronics Corporation (ELCOT), under the Department of Information Technology and Digital Services, Government of Tamil Nadu, will act as the central agency for the AVGC-XR sector and implementation of this policy.

Through this policy, the State aims to support the establishment of at least 200 AVGC-XR initiatives by 2030; Stimulate the growth of at least 100 AVGC-XR companies to create at least 20 high-profile companies in terms of revenue and also create a skill development ecosystem, including Digital Art Centers in 300-400 colleges, drop-out with world-class instructors, and annual hackathons to mobilize talent.

A special facilitation cell will be established for the AVGC-XR sector. The desk will undertake investment promotion, MoU implementation, business facilitation, start-up support (with StartUp TN and iTNT), skill development (with Tamil Nadu Skill Development Corporation) and after-care support including single window permits in coordination with Guidance Tamil Nadu. ELCOT will facilitate single window openings through the Tamil Nadu Single Window Portal, operated by Guidance Tamil Nadu, which offers access to over 200 services covering over 40 government departments and agencies.

As per the policy, AVGC-XR companies are eligible to receive funding under the Tamil Nadu Emerging Sector Seed Fund (TNESSF), a SEBI registered CAT-I AIF set up with an anchor investment of ₹50 crore. The fund is sponsored by Tamil Nadu Industrial Development Corporation Limited (TIDCO) and TIDEL and managed by Tamil Nadu Infrastructure Fund Management Corporation (TNIFMC).

The report included data showing that the global Animation and VFX industry, which was worth $160 billion in 2023, is expected to reach $300 billion by 2030 (CAGR ~9%). India’s share, currently at $1 billion (2022), is expected to grow sixfold to $6 billion by 2030, creating around 20 lakh jobs across the country. Tamil Nadu, with its strong studio base and creative talent (especially in Chennai), can capture 20% of the Indian market, accounting for 2 lakh jobs.

Chennai is fast becoming one of India’s major AVGC-XR hubs and is home to numerous independent game studios, XR startups and two global VFX companies. Chennai is also among India’s top three markets for AAA console and PC games, accounting for around 30% of national sales. It is also home to one of the most vibrant gaming cafe and board game cultures. The city remains India’s strongest comic book market; Tamil is the only Indian language in which Franco-Belgian comics are officially distributed. Tamil Nadu is the leading consumer of Japanese anime and manga in India, and Chennai records the longest theatrical runs for anime films.

Tamil cinema is India’s third largest with annual revenues of over $420 million; It ranks just behind Spain, surpassing the industries of Indonesia and Thailand. Tamil Nadu is also the country’s second state with the highest number of cinema screens and is among the top five states in terms of OTT subscriptions on Netflix, Amazon Prime Video and Disney+.