In the backdrop of Invest Kerala summit held in Kochi last week, Kerala chief minister Pinarayi Vijayan spoke to Narayanan V on the state’s ambition to transform from a consumption- and service-oriented economy to one where hi-tech manufacturing has a distinct role in income generation. Excerpts:
Q; How do you plan to make Kerala an attractive investment destination for global companies?
Ans. Kerala has the best Ease of Doing Business atmosphere in India. We have been placed in the Top Achiever category under the Business Reforms Action Plan and have topped 9 of the 30 reform parameters. The State Government acts as an enabler and is committed to facilitating and supporting investors through proactive policies and infrastructure development. One of our key initiatives is the expansion of industrial infrastructure with Techno Parks, Food Parks, EV Parks, Industrial Estates, and the Palakkad Corridor, along with sector-specific hubs like the Kerala Life Sciences Park and the Petrochemical Park. We are enhancing logistics connectivity with projects such as Vizhinjam Port – India’s first deep-water container transhipment port, and the integration of national highways, airports, and seaports to strengthen Kerala’s supply chains.
We are integrating our industrial ecosystem through land pooling initiatives, industrial townships, and policies like the Export and Logistics Park Policy and the Industrial Policy, fostering trade infrastructure and attracting investments. We are implementing investor-friendly policies such as K-SWIFT – Kerala’s single window interface for fast and transparent clearances and undertaking digital governance reforms to streamline business approvals and grievance redressal mechanisms.
Q; Kerala has predominantly been a service-oriented economy. What are your plans to improve the contribution of the manufacturing sector and bring more factories?
Kerala is focusing on high-value, technology-driven industries with minimal land requirements, leveraging its skilled workforce and strategic location to boost the manufacturing ecosystem. We are improving our industrial ecosystem to achieve growth in the manufacturing sector. The Palakkad Industrial Corridor is a key industrial hub with strong connectivity to Coimbatore, Bengaluru, and Chennai, fostering high-tech manufacturing and industrial growth. The Vizhinjam – Kollam – Punalur Industrial and Economic Growth Triangle will strengthen industrial expansion by integrating port-led industries with manufacturing zones, enabling seamless logistics and trade.
Through the Outer Area Growth Corridor, we are developing industrial clusters along Kerala’s periphery to accommodate EV manufacturing, electronics, aerospace, and food processing industries. EV Parks, Kerala Life Sciences Park, and Petrochemical Parkwill strengthen, electric vehicle and battery manufacturing, biotech and medical device industries and the development of advanced materials and industrial applications, respectively. We are leveraging Kerala’s highly skilled workforce to attract knowledge intensive industries. We are transforming Kerala into a knowledge economy by developing Centers of Excellence and skill institutions like ASAP, KDISC, and KOSE, strengthening the talent pipeline for advanced industries. We are promoting responsible and ESG-driven businesses under the tagline ‘Changing the Nature of Business’, ensuring sustainable industrial growth.
Q; Do you have plans for bringing hi-tech manufacturing and making more products in Kerala? If so, which sectors?
Yes, electronics and hi-Tech manufacturing and ESDM (Electronics System Design & Manufacturing) are priority sectors. We are setting up dedicated industrial clusters for electronics manufacturing and innovation. We are strengthening R&D in electronics, with Keltron leading advancements in this sector. We already have the presence of leading electronics companies such as SFO Tech, SYSTRA, and Tresna. Efforts are underway to attract investments in semiconductors, PCB manufacturing, and embedded systems. After this Invest Kerala Global Summit, we are sure to get proposals from companies working in these areas for investments in Kerala.
Q; NRI remittance is a big strength of Kerala. How do you plan to use it for promoting domestic entrepreneurship?
Ans. To effectively channel NRI remittances into Kerala’s domestic entrepreneurship, a multi-faceted approach is required. This involves establishing dedicated NRI focused investment platforms, such as venture funds and online portals, to facilitate seamless investment. Ensuring transparent investment channels will build trust and encourage participation. Simultaneously, providing comprehensive entrepreneurial support through incubation programs, mentorship networks, and financial literacy initiatives is crucial. Furthermore, targeted sector-specific initiatives in areas like tourism, IT, healthcare, and agriculture can leverage NRI expertise and networks. Ultimately, fostering collaboration between government, financial institutions, and the private sector is essential to create a thriving entrepreneurial ecosystem that utilises NRI remittances for sustainable economic growth in Kerala.
In a bid to ensure the same, we have formed the Overseas Keralites Investment and Holding Ltd (OKIH)., which proposes to capitalise on the knowledge capital and financial savings of NRks. OKIH has formed two projects, Rest Stop – a wayside amenities project of international standards, and Senior Citizen Home where NRIs can invest for a reasonable and assured return. OKIH has announced a business model during this Invest Kerala Global Summit, whereby they are going to add new nodes in which NRIs also can participate with other private players and benefit.
Q; What are your plans to improve revenue mobilisation through tax and non tax sources ?
To improve our revenue mobilisation, tax arrears are being collected and amnesty schemes are being administered as well. We are also generating additional revenue by improving productivity and services of our public enterprises. We have also been able to generate revenue by promoting enterprises through our YoE scheme. Kerala’s GST Department has been revamped and its Intelligence Wing has been assessed as one of the best in the country by the GST Council Secretariat. Technological solutions including data analytics are being used to assess tax evasions.
Let me illustrate with figures that such measures are making a marked difference. In 2020-21, the state’s Own Revenue was 54,988.15 crore. Our share of Central Taxes and Grants was 42,628.68 crore in that year. That is, in our total revenue of 97,616.83 core, State share was 56% and Central share was 44%. Now let’s look at the figures for 2023-24. State’s own Revenue was 90,674.97 crore and our share in Central Taxes and Grants was merely 33,811.18 crore. That is, in our total revenue of 1,24,486.15 core, State share was 73%, while Central share was a paltry 27%. For FY 2024-25 we have aimed at raising Rs. 1,000 crores by revising the fees related to our various departments. Through an efficient Scrapping Policy, we aim to raise an additional Rs. 200 crores.
Q; You have come concerns about release of capex funds by the Centre…
In 2024-25, the state has so far received Rs. 2,063.51 crore as capital expenditure funds. We are in anticipation of an additional Rs. 2,090.18 crore for the current financial year. We have one more month for the tear this FY to end, and we remain hopeful. In case of non-receipt of the remaining funds, we will manage the gap with the State’s Own Revenue and by utilising the available normal borrowing space.