However, the incentive package will not involve sales tax exemption, according to Kerala industry minister P K Kunjhalikutty. No southern state is offering sales tax exemption to new entrepreneurs, he pointed out.
The priority sectors identified by the state are rubber-based industries, information technology, agro-based business, including food processing, readymade garments, ayurvedic medicines, mining, marine products, light engineering, bio-technology.
Tourism has also been brought within the definition of industry, so that investors in this sector can also avail the incentives.
All new units in these sectors and 100-per cent export-oriented units will be eligible for the states investment subsidy. This will also include expansion, diversification or modernisation of existing units.
The priority sector investors are offered investment subsidy of 15 per cent of fixed capital investment (FCI) or Rs 15 lakh and those in backward districts of Idukky and Wayanad are to get 25 per cent of FCI or Rs 25 lakh.
The state government has also promised five-year breather from power tariff hike for new industrial units, starting commercial production between January 1, 2002 and December 31, 2006.
Kerala has been boasting of one of the lowest industrial consumer power tariffs in the country.
All new units in Kinfra parks, corridors and zones declared by state and Central governments, will be exempted from payment of stamp duty and registration fee for the first registration, according to the new industrial policy.
Mr Kunjhalikutty said that venture capital funding has been set up for financing of new high-risk projects with participation in their equity and management. Kerala Venture Capital Fund (KVCF), financed by Small Industrial Development Bank of India (SIDBI), had been set up for this. Investment could go up to 40 per cent of the paid-up capital in a single project, with a limit of Rs 2 crore and a timeframe, not beyond five years.
Keralas draft industrial policy had been tabled on the state assembly last year and after prolonged discussions with Opposition parties and trade unions, it was the cabinet meeting on Tuesday had cleared it.