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

After a long wait, Tamil Nadu has finally unveiled its much-anticipated AVGC-XR Policy 2026, aimed at accelerating growth in the animation, visual effects, gaming, comics and extended reality sectors. The policy envisions positioning the State as a creative powerhouse where artists, technologists and storytellers can drive a sustainable, inclusive and innovation-led economy — attracting investments, generating employment and strengthening Tamil Nadu’s contribution to India’s global soft power.

The Electronics Corporation of Tamil Nadu Limited (ELCOT), under the Information Technology and Digital Services Department, Government of Tamil Nadu, shall function as the nodal agency for the AVGC-XR sector and for implementing this policy.

Through this policy, the State aims to support the creation of at least 200 AVGC-XR startups by 2030; foster the growth of a minimum of 100 AVGC-XR companies to create a minimum of 20 high-profile companies in terms of revenue and also create a skill-development ecosystem, including Digital Arts Centres in 300-400 colleges, finishing school with world-class trainers, and annual hackathons to mobilise talent.

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

According to the policy, AVGC-XR companies are eligible for 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), TIDEL and managed by Tamil Nadu Infrastructure Fund Management Corporation (TNIFMC).

The report quoted data which showed the global Animation and VFX industry, valued at $160 billion in 2023, is projected to reach $300 billion by 2030 (CAGR ~9%). India’s share, currently $1 billion (2022), is expected to grow sixfold to $6 billion by 2030, creating nearly 20 lakh jobs nationwide. Tamil Nadu, with its strong base of studios and creative talent — particularly in Chennai — can capture up to 20% of the Indian market, translating to 2 lakh jobs.

Chennai is fast becoming one of India’s key AVGC-XR centres, hosting numerous independent game studios, XR startups, and two global-scale VFX companies. Chennai is also among India’s top three markets for AAA console and PC games, contributing around 30% of national sales. It also hosts one of the most vibrant gaming café and board game cultures. The city remains India’s strongest comic book market, with Tamil being the only Indian language in which Franco-Belgian comics are officially distributed. Tamil Nadu is a leading consumer of Japanese anime and manga in India, with Chennai recording the longest theatrical runs for anime films.

Tamil cinema is India’s third-largest, generating over $420 million annually — surpassing the Indonesian and Thai industries and ranking just behind Spain. Tamil Nadu also has the country’s second-highest number of cinema screens and ranks among the top five states for OTT subscriptions across Netflix, Amazon Prime Video, and Disney+.