Tamil Nadu Chief Minister J Jayalalithaa also launched another policy for the biotechnology sector.
Chennai is considered the Detroit of Asia for having a number of manufacturing facilities by many auto firms.
"Recognising the importance of automobile and auto- components sector to State, my government has brought out a separate Tamil Nadu Automobile and Autocomponent Policy 2014," she said at a function to mark the formal launch of the policies and Tamil Nadu Vision 2023 document second phase.
"This automobile policy will focus on future development and consolidation of the automobile and components industry, where Tamil Nadu enjoys a comparative advantage. It aims to generate five lakh jobs and make Chennai as one of the World's top five auto clusters," she said.
On industrial and biotechnology policies, she said the purpose was to further strengthen the state's competitiveness.
"I had recognised the need to focus on sunrise sectors like biotechnology, aerospace and nanotechnology," she said.
"This industrial policy has innovative features with a focus on creating a business friendly environment with world class infrastructure and to boost employment and skill levels obtaining in the State," she said.
Recalling that 17 MoUs were signed attracting investments of Rs 26,000 crore in 2012 when the Vision 2023 document was released, Jayalalithaa said: "Today 16 more MoUs are signed for industries with a total investment of Rs 5,081 crore offering employment to 1.62 lakh persons".
"With this, the total investment envisaged in the 33 MOUs signed so far by my Government in its present tenure is Rs 31,706 crore with an employment potential of 1.62 lakh"..
Referring to Centre for Monitoring Indian Economy report, Jayalalithaa said Tamil Nadu achieved 18.2 per cent growth in investments higher than Gujarat, Maharashtra and Karanataka.
"..investments attracted by Tamil Nadu between June 2011 and January 2014 is Rs 1.46 lakh crore," she said.