Practically, you both are cousins from the father's side in a family tree path that indicates that it would mean brother and sister. This needs a detailed discussion with your family elders or elders of your close family friends. In many tamil families, this would be frowned upon and the families often suffer with social issues within the close family circle, especially if both of you have younger siblings yet to be married.
Many south Indian men marry father's sister's daughter or their own elder sister's daughter and mother's brother's daughter. In medical terms, these marriages within the family circle weaken the gene pool and increase the chances of passing on genetically based diseases to the children.
What you both are planning is referred to as 'Consanguinous marriage'. Marriage between first or second cousins have increased risk of heart and lung problems and birth defects. Certain disease and abnormal genes can be genetically inherited by the cousins from the common ancestor gene pool and passed on to their own children.
There is also an increased risk of pregnancy related issues in unsuccessful pregnancies.
Without meaning to be discouraging,the modern day approach would be to have a Genetic pre-martial counselling, where in the doctors will take a detailed history with special attention to genetically transmitted diseases. They may perform certain tests to check for blood disorders. For instance sickle cell anemia (type of low hemoglobin) is common around Wayanad and certain areas in Kerala. After this they would offer you specific advise regarding what are the chances of the children getting certain diseases. I think as adults, you both are legally free and responsible for your marriage but any parent would love to see that their children are healthy and well, they will do anything to safeguard them.
Please have a discussion with elders whom you are comfortable with and then decide. If you want to go ahead, then at least contact the nearest teaching medical college hospital or a corporate mother and child hospital you can guide you. Once you have this, then you can take a sensible decision. If you do go ahead with the marriage, then you need to go for Pre-conception genetic counselling where in the team would provide extra care and advise for the health of the baby and mother.