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Industrial Development & Economic Growth in Kerala

March, 2018

Kerala is known as God’s own country. It is one of the few states to have marketed its natural beauty successfully to the leisure tourism sector. The state’s unique heritage and cultural diversity have helped attract tourists from the world over. Its strategic location on the trans-national trade corridor, rich natural resources, and simple and transparent procedures make the state favourably suited for investments in major sectors such as tourism, IT/ITeS, manufacturing and mining.

Kerala holds second rank in the Investment Climate Index followed by Karnataka, as per a policy research working paper by the World Bank. The state stands second due to its world-class infrastructure and well-trained human resource pool. Kerala's traditional industries include handloom, cashew, coir and handicrafts.

Kerala is a leading agricultural state in the country and the largest producer of rubber, pepper, coconut and coir. As per budget 2018-19, Government of Kerala proposed an outlay of US$ 1,131.75 million for the Agriculture, Animal Husbandry and Co-operation sector.

It has the first international transhipment terminal in India, having a design capacity of around 4 million TEUs and providing better connectivity between Kerala and other ports in India.

Between 2004-05 and 2015-16, Gross State Domestic Product (GSDP) expanded at a Compound Annual Growth Rate (CAGR) of 11.18 per cent to US$ 89.44 billion whereas the Net State Domestic Product (NSDP) expanded at a CAGR of 11.34 per cent to US$ 68.5 billion.

As of December 2017, Kerala had 29 SEZs with formal approval and 25 notified SEZs. A cyber-park, spread over a 68-acre campus, is being developed in Kozhikode. Kerala has been promoting knowledge-based industries such as IT/ITeS, computer hardware and biotechnology. It is the first state having a technology park with CMMI level 4 quality certification and a world-class IT campus in Thiruvananthapuram.

The following are some of the major initiatives taken by the government to promote Kerala as an investment destination:

  • The Kerala government has decided to propose the tax reduction from 14.5 per cent to 5 per cent for attracting investments across Automated Robotic Car Parking System, during 2016-17.
  • Under the National Mission on Food Processing (NMFP) scheme, 23 projects were sanctioned during 2015-16, by the state government. Moreover, a total of 2 projects each were sanctioned under the Mega Food Parks scheme, Food Testing Laboratory Scheme as well as Research & Development Scheme, during 2015-16.
  • The National Coir Research & Management Institute (NCRMI), a state government organisation, is following up on a potential deal with Saudi Aramco for a new technology that can help cultivate crops in saline and arid conditions.
  • The State Tourism Department is developing eco-friendly, rural tourism packages in Kumarakom, Wayanad, Kovalam and Muziris heritage circuit.

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