The digital economy of Tamil Nadu faced significant challenges in 2024 as part of India’s broader internet shutdown landscape, with the country experiencing economic losses of ₹2,660 crore ($322 million) due to internet disruptions. According to a comprehensive report by UK-based review platform Top10VPN, these shutdowns have particularly impacted the state’s burgeoning startup ecosystem.
Tamil Nadu, home to over 4,000 registered startups and a rising technology hub, witnessed the ripple effects of these disruptions despite having fewer direct shutdowns compared to other states. The state’s digital infrastructure, crucial for its startup community, was affected by both regional and nationwide internet governance policies.
According to internet shutdown tracker SFLC.in, India experienced 60 internet shutdowns in 2024, translating to 3,160 hours of internet blockade – equivalent to 131.6 days. While this represents a 37.5% decrease from the 96 shutdowns recorded in 2023, the economic impact remains substantial for digital businesses.
“The recurring internet shutdowns create an unpredictable business environment for startups, particularly affecting those in e-commerce, edtech, and digital services sectors,” says Karthik Rajagopal, President of the Tamil Nadu Startup and Entrepreneurship Development Association. “When you’re running a digital business, every hour of connectivity loss translates to revenue loss and customer trust erosion.”
The data reveals that 53.33% of these shutdowns were preventive measures, while 45% were reactive responses to serious incidents. Mobile internet users bore the brunt of these restrictions, with 49 instances specifically targeting mobile internet services, while eight incidents affected both mobile and broadband connectivity.
For Tamil Nadu’s startup ecosystem, which has seen a 40% year-over-year growth in digital-first businesses, these disruptions pose significant operational challenges. Local startup founders report losing crucial business hours during nationwide payment gateway disruptions and facing difficulties in maintaining service level agreements (SLAs) during regional internet restrictions.
“As a SaaS startup based in Chennai, we serve clients across multiple time zones. Even brief internet disruptions can severely impact our service delivery and customer relationships,” explains Priya Sundaram, founder of CloudTech Solutions, a growing SaaS platform. “The cumulative effect of these shutdowns affects India’s reputation as a reliable digital services hub.”
The impact extends beyond immediate financial losses. The state’s edtech startups reported significant disruptions to online learning services, particularly during the five nationwide internet shutdowns implemented to prevent examination cheating, which accounted for 36.5 hours of internet blockade.
Recently, the Cellular Operators Association of India (COAI) approached the Department of Telecommunications (DoT) to address the increasing frequency of internet shutdown orders. The industry body emphasized how these disruptions not only inconvenience citizens but also cripple critical functions of digital businesses.
Looking ahead
The Tamil Nadu Startup Development Corporation has announced plans to work with central authorities to develop more targeted approaches to security concerns that minimize impact on digital businesses. The corporation is also advocating for clear communication protocols during inevitable shutdowns to help startups better manage their operations and client expectations.
