Kerala: Opportunities driven by the traditional and the modern

The ASCEND 2020 Kerala Global Investors Summit, held in Kochi over January 9-10, received more than 160 direct investment proposals with a cumulative valuation of as much as US$14 billion. A chunk of this commitment came from the Abu Dhabi Investment Authority with the rest coming from various Indian and foreign enterprises.

India’s foremost state in terms of human development, Kerala, has struck the right balance of the traditional and the modern to churn out economic opportunities for the future. This was evident in the more than 100 different projects that were showcased at the summit. These included industrial parks and MSMEs, infrastructure and connectivity projects, as well as projects related to petrochemicals, defence and maritime, fisheries and logistics, modern and traditional healthcare R&D and services, conventional and electric mobility, tourism and hospitality, agro and food processing, among others.

Kerala ranks #2 on the World Bank’s Investment Climate Index for its rich human capital and modern infrastructure, which lead to FDI of US$260 million in 2018-19

The culturally-vibrant and economically-diverse state, with a GDP of over US$108.4 billion, has steadily evolved to attract business interests spanning tourism to maritime. Renowned globally for its backwaters, the state has also emerged as a destination for IT and automotive innovation. The summit sought to encourage opportunities in these spaces. 

Some of the leading metrics that have driven opportunities in the state include: 

• Rich human capital, backed by India’s highest literacy rate for a state and foremost posting in human development
• Kerala has seen a surge in knowledge-based industries like IT/ITeS, computing, biotechnology, electric mobility 
• About 66% of Kerala’s export income comes from spices, fishery, cashews, coffee, and pickles, driving a strong agri sector
• Kerala has a vast ecosystem of MSMEs with capabilities spanning agro and food processing to IT precision technology
• Kerala owns and runs three technoparks, apart from privately-run technoparks and diverse manufacturing clusters
• Strong connectivity with four international airports, 18 major and minor ports, and growing road and rail network
• India’s 1st international transshipment terminal at Kochi (capacity of 4 million TEUs) connecting the rest of the world
• Kerala has achieved 100 per cent electrification and as of mid-2018 had an overall teledensity of 124.17 per cent
• The state (with a 35 million population) had over 43 million wireless subscribers by March 2018 and 19.80 million internet subscribers
• Known for its lush green landscapes, Kerala has focussed on environmental protection in regards to business activities
• High per capita consumption expenditure: Rural Kerala is 2X of rural India while urban Kerala is 1.3X urban India
• People from Kerala represent in heavy numbers in expat workforces around the world, especially in West Asia 

Driven by strong performances in the core industries, Kerala’s economy recorded a CAGR of 11.2 per cent between 2011-12 and 2017-18. Rich human capital and modern infrastructure have also helped the state attain the No.2 rank on the World Bank’s Investment Climate Index. Improving business confidence led to foreign investment inflow worth around US$260 million during 2018-19.

Intending to attract global businesses, Kerala has offered a wide range of fiscal and policy incentives under the Industrial and Commercial Policy. The state has drawn up sector-specific policies and launched e-governance initiatives that have strengthened transparency and bridged the digital divide. Herein, leading Kerala’s pro-industry efforts is the Directorate of Industries and Commerce (DIC) under the aegis of the State Government of Kerala. Apart from the DIC, the other agencies aiding trade and investment in the state include the Kerala State Industrial Development Corp Ltd (KSIDC), Kerala Industrial Infrastructure Development Corp (KINFRA), Kerala Bureau of Industrial Promotion (K-BIP), among others. The State Government has also set up a single-window online clearance mechanism, K-SWIFT, to facilitate incoming businesses with information and services pertaining to 14 different state departments and agencies. 

With several key strengths, Kerala is now open for business.