It turns out the magnetic equator is quite important to for research on geophysics and the interaction of the Earth's field with the atmosphere and solar wind. This location seems ideal both for access to the geomagnetic equator, and for being able to launch sounding rockets without scaring the neighbors (nearby nations).
From the maps below you can see that the a phenomenon called the Equatorial Electrojet passes almost directly over the Thumba Equatorial Rocket Launching Station! This is not a coincidence.
The worldwide solar-driven wind results in the so-called Sq (solar quiet) current system in the E region of the Earth's ionosphere (100–130 km altitude). Resulting from this current is an electrostatic field directed east-west (dawn-dusk) in the equatorial day side of the ionosphere. At the magnetic dip equator, where the geomagnetic field is horizontal, this electric field results in an enhanced eastward current flow within ±3 degrees of the magnetic equator, known as the equatorial electrojet (EEJ).
The EEJ is also discussed here:
n the dayside ionosphere, the neutral winds set up a polarization electric field which usually points into the eastward direction. At the magnetic dip equator, where the magnetic field is exactly horizontal, this electric field has an interesting effect: The resulting upward E x B drift of the electrons generates a negative charge at the top and a positive charge at the bottom of the ionospheric E-region (about 90 to 130 km altitude). The resulting electric field prevents the further upward drift of electrons. Instead, they are now propelled westward by the eastward electric field. This westward movement of the electrons constitutes an eastward electric current which is called the Equatorial Electrojet. The motion of the ions is largely inhibited at this altitude, due to their collisions with the neutral gas.
Rather than try to restate the information, in this case it is better to quote the authoritative sources directly. I've highlighted the key points below.
The statement in Wikipedia seems to come from this 2003 reddif.com article:
Why did Dr Sarabhai choose Thumba as the location for the country's first rocket launch? Scientists say it was because the village is near the magnetic equator (located just north of Thumba), making it the ideal location for scientists to conduct atmospheric research. In fact, Thumba's location at 8°32'34" N and 76°51'32" E is ideal for low-altitude, upper atmosphere and ionosphere studies.
This has made Thumba an international launch site for sounding rockets. The normal launch area here covers about two square kilometres. The site has the capability to launch rockets up to 0.56 metres in diameter. The three launch pads at the Thumba Equatorial Rocket Launching Station have facilities for a variety of sounding rockets, including the French Centaure Dragon, the Indian Centaure and Rohini, Britain's Skua and Petrel, America's Nike-Apache, Nike-Tomahawk and Arcas and Russia's M-100.
Since the successful launch of the American Nike-Apache in 1963, scientists from France, Germany, Japan, Russia and Bulgaria have participated in numerous scientific experiments at Thumba.
According to Balagangadharan, VSSC, which is ISRO's largest centre today, provides the technology base for India's indigenous satellite launch vehicle development efforts. Besides, the Thumba station at the VSSC complex has been dedicated to the United Nations which funds many of the atmospheric research programmes here.
Even as the celebrations begin, Thumba is gearing up to launch a series of Rohini-200 rockets in the next five years, as part of the research programme in middle atmospheric dynamics.
From the web page of the Indian Institute of Geomagnetism's site for The Equatorial Geophysical Research Laboratory, Tirunelveli (T.N):
One of the main functions of EGRL is to obtain continuous records of geomagnetic data – variations in three components of the Earth’s total geomagnetic field (the horizontal (H) and vertical (Z) components and the Declination (D)) recorded with sensitive magnetic instruments called variometers. These are supplemented by regular observations of absolute field components carried out with the Declination Inclination Magnetometer (DIM) and the Proton Precession Magnetometer (PPM). After processing, the data are are sent periodically to the Headquarters at Navi Mumbai. A separate digital fluxgate magnetometer is operational at EGRL that yields high resolution data in digital form. With the standard magnetic observatory and a medium frequency radar providing data on upper mesospheric dynamical parameters, the Centre supports one of a very few locations in the world ideally suited to the study of equatorial electrojet, an enhanced east-west current system in the ionosphere flowing at ~110 km in a narrow latitudinal belt of +3° centered around the magnetic equator (emphasis added).
The article goes on to say:
(2) Ionospheric Phenomena
The equatorial ionosphere holds a unique geomagnetic field configuration that is different from other latitudes. At the magnetic equator, a freely suspended magnet will lie in a horizontal plane in the north-south direction, indicating that the Earth’s magnetic field itself is horizontal there. The geomagnetic field configuration at the magnetic equator allows an enhanced electrical conductivity that leads to an enhanced electrical current system circulating at about 110 km which is traditionally called the equatorial electrojet (EEJ). The study of EEJ is complicated by its observed variability, the extreme manifestation being the reversal of current system in the afternoon hours on certain days. This variability is caused by the variable nature of the wind field itself which is responsible for the primary electrostatic field driven by the dynamo action. The difficulties in understanding the causes for this variability are because of the lack of information on the winds in the dynamo region (90-120 km). (emphasis added)