Introduction
Kerala 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 attracted tourists from around the world. BBC Travel survey has rated Kerala as the top favourite tourist destination among foreign travellers in 2018. Kerala has a wide range of fiscal and policy incentives for businesses under the Industrial and Commercial Policy and has well-drafted sector-specific policies.
As of February 2025, the state had a total installed power generation capacity of 7,345.50 MW, of which 2,282.01 MW was accounted by state utilities, 2,500.23 MW by central utilities, and 2,563.26 MW by the private sector. Thermal power contributed 3,254.69 MW to the total installed power generation capacity, followed by hydropower at 1,904.15 MW, renewable energy at 1,824.66 MW, and nuclear energy at 362.00 MW.
According to the Department for Promotion of Industry and Internal Trade (DPIIT), cumulative FDI inflows in Kerala were valued at Rs. Rs. 10,782 crore (US$ 1.36 billion) between October 2019-December 2024.
Exports from the state stood at Rs. 36,683 crore (US$ 4.30 billion) in FY25 (until February 2025). Kerala exported two key items including Engineering Goods and Spices.
Kerala Tourism
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 all over the world. In 2022, the state attracted 18 million domestic tourists and 345,549 international tourists, achieving an impressive YoY growth of 152%.
Kerala Economy
At current prices, Kerala’s total GSDP is estimated at Rs. 14.3 lakh crore (US$ 167.3 billion) in FY26. The state’s GSDP recorded a CAGR of 8.84% between FY16 and FY26E. At current prices, Kerala’s net state domestic product (NSDP) was ~Rs. 9.34 trillion (US$ 118.77 billion) in 2022-23. NSDP increased at a CAGR of 7.97% between 2015-16 and 2022-23. Kerala’s per capita NSDP was Rs. 2,63,945 (US$ 3,358.08) in 2022-23. Per capita NSDP of the state expanded to a CAGR of 7.49% between 2015-16 and 2022-23.
Industries in Kerala
Kerala is one of the leading pepper and rubber producers in the country. Kerala is the leader in rubber production in the country. The state accounted for about 78% share in the total natural rubber production in 2017-18. Natural Rubber production in Kerala stood at 556.6 thousand MT during 2021-22. Kochi has emerged as a unique IT destination and is connected by two submarine cables and satellite gateways that directly support major IT cities, including Bengaluru. The state has a long coastline of over 580 km & innumerable water bodies, generating a huge potential for inland & marine fishing & providing a prominent position in fish cultivation.
Recent Development in Key Sectors
- Under the State Budget FY26
- Government allocated Rs. 2,870 crore (US$ 336.4 million) has been allocated as capital expenditure on roads and bridges. The Kochi Metro Rail system has been allocated Rs. 289 crore (US$ 33.9 million)
- The government proposed Rs. 3,149 crore (US$ 369.1 million) has been allocated towards government primary schools, of which Rs. 3,147 crore (US$ 368.9 million) is for wages and allowances and Rs. 644 crore (US$ 75.5 million) has been allocated towards the PM Poshan Shakti Nirman scheme.
- Government allocated Rs. 2,688 crore (US$ 315.1 million) has been allocated for allopathic health services in urban areas, and Rs. 1,379 crore (US$ 161.6 million) in rural areas.
- Government allocated funds worth Rs. 1,539 crore (US$ 180.4 million) has been allocated for crop husbandry and Rs. 600 crore (US$ 70.3 million) has been allocated towards the rubber production incentive scheme.
- Under the State Budget 2024-25, the government proposed Rs. 24,256 crore (US$ 2.91 billion) for improvements in education, sports, arts, and culture.
- In the State Budget 2024-25, the government allocated funds worth Rs. 1,720 crore (US$ 206.2 million) for urban development projects in Kerala, out of which Rs. 1,087 crore (US$ 130.3 million) has been allocated towards assistance to municipalities and municipal corporations.
- In the 2024-25 State Budget, Rs. 110 crore (US$ 13.2 million) has been allocated for urban water supply.
- In July 2024, the Ministry of Rural Development has approved the construction of 33 roads spanning 159.86 km in Kerala under the Pradhan Mantri Gram Sadak Yojana-III (PMGSY-III), aiming to enhance rural connectivity and boost economic growth. The project involves an estimated investment of Rs. 160.56 crore (US$ 19.3 million).
- Under the State Budget 2024-25, the government allocated Rs. 2,931 crore (US$ 351.4 million) for roads and bridges.
- In March 2024, Kerala is set to make a significant impact in digital entertainment with the launch of CSpace, India’s first government-backed OTT platform.
- In January 2024, ReNew plans to invest Rs. 26,400 crore (US$ 3.17 billion) in a green hydrogen project in Kerala. The project aims to produce 220 kilo-tonnes per annum (KTPA) of green hydrogen, which will be used to generate 1,100 KTPA of green ammonia.
- In January 2024, Prime Minister Mr. Narendra Modi inaugurated the Kochi-Lakshadweep islands submarine optical fiber connection (KLI-SOFC) project in Kavaratti, Lakshadweep, today. This inauguration is part of developmental projects exceeding Rs. 1,150 crore (US$ 138.1 million) across technology, energy, water resources, healthcare, and education sectors.
- Prime Minister Mr. Narendra Modi laid the foundation and dedicated to the state several projects of the Kochi Metro and Indian Railways totalling Rs. 4,500 crore (US$ 552.69 million) in September 2022.
- In May 2023, during the investors' meet, 24 of the 121 investors forwarded their letters of interest for an investment of Rs. 381.75 crore (US$ 46.6 million) in various sectors of the Kattakada constituency of Kerala.
- In FY23, the total marine products exports from Kerala accounted for US$ 1 billion.
- In FY23, the state’s passenger traffic stood at 8,812,531 at Cochin airport and 3,478,067 at Thiruvananthapuram airport.
- Union Railway Minister Mr. Ashwini Vaishnaw, in April 2023, informed that 34 railway stations in Kerala would soon be upgraded to world-class standards.
- Cargo traffic handled by the Cochin port stood at 35,255 thousand tonnes in FY23.
- A training on Smart Farming using e-crop was inaugurated by Mr. P.Prasad, State Minister for Agriculture Development and Farmers Welfare, on 16th June 2022 at ICAR – CTCRI, Thiruvananthapuram by launching the e-crop-based smart fertigation facility.
- As per the State Budget 2023-24, the government has allocated funds worth Rs. 7,853 crore (US$ 958.1 million) for agriculture and allied activities.
- In 2021-22, the total production of horticulture crops in the state was expected to be 6,160.28 thousand metric tonnes and the area under production was 1,483.03 thousand hectares. In 2021-22, the total production of vegetables and fruits was estimated at 544.95 thousand metric tonnes and 1,939.452 thousand metric tonnes, respectively.
- As of July 2022, Kerala has 25 total notified SEZs. The state has a technopark in Thiruvananthapuram which has been instrumental in attracting global electronics manufacturers, an info park in Kochi, and a cyberpark in Kozhikode.
NOTE: * - As per 3rd Advance Estimates
FACTFILE
Capital
ThiruvananthapuramGeographical Area (sq km)
38,863State Language
Malayalam, Hindi, English and TamilLiteracy Rate
94.6 per centKey Industries:
Handlooms and power looms
Rubber
Bamboo
Coir, Khadi and village
Sericulture
Tourism
Cashew
Mining
Food processing
Spice and spice extracts
IT & Electronics
Seafood and other marine products
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