The Left Democratic Front government in Kerala is set to unleash another set of reforms in industrial and export policies, with an aim to ease logistics, and further liberalise high-tech and knowledge-based manufacturing, the state’s minister for industries and law, P Rajeeve said. The State government would also announce a slew of steps soon, that would help the land-starved, human-capital-rich state harness its potential to become a global artificial intelligence (AI) hub, he told Financial Express.
The government is holding an international Gen AI conclave – the country’s first– in Kochi on July 1-12, in collaboration with the American tech giant IBM.
Kerala has set a target to take the number of approved industrial parks in the state from over two dozen now to 100, with a liberal land pooling/leasing policy. It is also bolstering industry-academia partnerships to identify new growth/profit centres, spur skilling and job creation, and diversify commercial ventures.
While the state’s information technology (IT) parks are “already full,” the new IT policy to be unveiled would encourage the setting up of more private-sector parks, Rajeeve said.
While being unapologetic about the “alternative development paradigm” being followed by the state, which “puts people at the centre,” the state is eyeing a jump-start in frontier areas like AI, robotics, data analytics, space science, block-chain technology and graphene. Its policies are leaning towards pragmatism, seeking “the next level of development.”
“Despite the several constraints we face, including a slowing of the pace of central funds being transferred to the state via discretionary and other (mandated) means, the state’s economy is making headway,” the minister said. Kerala’s industrial growth was as high as 18% in 2023-24, and the manufacturing sector expanded at close to 19%.
Investors’ perception about Kerala, the minister claimed, has improved a lot in recent years, and cited the “sudden jump” in the state’s ease-of-doing-business ranking, from a lowly 28 to 15. “Leading companies, including the tech giants, from across the world, have already made Kerala one of their key business (investment) centres,” Rajeeve said.
The coastal state’s industrial policy recognises its inherent strengths and shortcomings. “Our strengths include the abundant, skilled human capital, its ability to agilely adapt to the vicissitudes of industries and businesses, strong connectivity (via air, land and sea), and relatively better quality of life. A key constraint, however, is (paucity of) land,” Rajeeve said.
The state’s exchequer is not full of riches either, despite its own tax revenue (OTR) growing above national average, and own revenue share in total revenue being one of the highest.
“Under the industrial policy, we have listed 22 industries, where the state would be able to accord a definite competitive advantage to investors. The MSME sector (consisting of units attracting investments up to Rs 50 crore) is also burgeoning, with proliferation of start-ups thanks to a robust ecosystem, which secured us the “best performer” tag nationally in 2022,” Rajeeve said.
Giving details of the various industry-friendly steps taken by the LDF government in recent years, Rajeeve said: “An unique campaign to create 100,000 enterprises in a year has been a roaring success, and it is continuing for the second year in a row. Over 2.4 lakh enterprises have already been registered thanks to the drive, with investments to the tune of nearly Rs 15,650 crore, and job generation of well over 5 lakh. In every local self government, the service of an intern (MBA, B Tech students) was made available to these units. While the average drop-out rate of new companies registered is around 30% nationally, barely 15% of the new MSMEs in Kerala saw closure.”
He said these MSMEs are also being scaled up with a target to take 1,000 of them to over Rs 100 crore turnover level. “Some 124 of them have already been selected for this upgrade, and these will be given subsidy of Rs 2 crore for modernisation, and interest subvention for working capital loans.” Another focus area is food processing, where the Kerala brand is already well-known and highly regarded. The state has a share of 20% in the national medical equipment production.
Rajeeve said the Gen AI conclave is designed to be facilitator for greater business opportunities in the state, in areas like robotics. He cited the quick rise of Genrobotics, a start-up launched seven years ago, and the clutch of new entities being formed in recent years, in the frontier medical research, including genomics.
Land pooling is being initiated with a view developing private industrial parks to piggyback on the Vizhinjam International Seaport, which would a give a geo-strategic edge to the country. “If more than ten acres of land is available, industrial park licence will be given in a week’s time, and the government will allocate Rs 3 crore for infrastructure development in each park,” the minister said.
While higher education is being accorded top policy priority, the concept of Campus Industrial Parks and paid apprenticeship (for students) are being promoted with assorted policy incentives for the mutual benefits of industry and job seekers.
Rajeeve also sought to dispel the notion that Kerala is witnessing relentless out-migration, noting that the state doesn’t figure among the top 10 states in the mobility report. “Actually, it’s a two-way street. While Kerala students travel to various parts of the world for higher education, large number of students from Africa and other regions, enroll in the state’s universities, and people from many regions including the West Asia travel to Kerala for healthcare. Out-migration from the state is increasingly for white-collar jobs, while the state receives migrant labour.”
Kerala is the first state in the country to unveil an environmental social governance (ESG) policy, and the only state where internet is made a “basic right.”
“Unlike (land-rich and more industralised) states like Gujarat, Maharashtra and Tamil Nadu, Kerala’s land is hugely distributed. Even for acquiring 100 acres of land, for instance, as many as 2,000-3,000 land owners would have to be negotiated with, while land parcels many multiples of that could be available even with a single person in many other states,” the minister said.
“We are hamstrung by multiple (land-related) regulations – the Coastal Regulation Zone (on the 590-km western coastal line), the Western Ghats (on the east), and the wet land (in the middle). To put this in perspective, only 1.6% of the country’s land area belongs to Kerala, but the state accounts for 2.8% of its population, and roughly 4% of the national Goods and Service Tax revenues,” the minister said.
Elaborating on the special regime for MSMEs, he said: “For the first three years since their formation, MSME units can function without licence, and bigger units can get composite licence within 7 working days after application. It is a software-led centralised inspection system sans much human interface or discretion, and the reports of any such inspection will have to be furnmished to the firm in 48 hours. A centralised grievance redressal system has also been put in place, where unless a compliant is resolved in 30 days, the officers concerned will have to pay a penalty. A process is afoot to reform old and outdated laws related to the industrial sector.”
From: financialexpress
Financial News