By Suman Billa
Look at the record of any successful enterprise, and you will find a stage when it made a smart shift to tap emerging market opportunities. When that critical moment comes, making a decision to change track, guided by a clear vision of the future, is crucial.
Kerala has reached such a tipping point, and rather than trying to woo gargantuan industries that involve huge capital and resources, the state is planning to focus on smart, clean and lean sectors that will drive global growth engines in the future.
The new industrial policy rolled out by the Government of Kerala in March essentially means that Kerala is heading to a new model to attract investors who value priorities like Environmental Social Governance (ESG) and technological skills. It gives the state a new direction toward industrialisation, adopting an ideal growth trajectory that suits Kerala better, given its strengths and limitations.
Unlike most other states in India, Kerala cannot afford to pursue large-scale industries, considering its fragile ecology and tremendous pressure on land. Over the decades, Kerala had not differentiated itself in its approach towards industrialisation vis-a-vis other states. Hence, the state did not make a compelling case in terms of competitiveness, given its ecology, higher wages for blue-collar workers and high land prices. But that is changing.
The state is set to focus on its core strengths like educated and skilled human resource, greater compliance with laws and ecological awareness in the society to position itself as a global destination for industries that value an Environmental Social Governance (ESG) based approach. The industrial policy has its emphasis on how to utilise the state’s strengths to scale up its production capabilities, attract investment and promote employment generation with a new speed and scale.
Kerala’s large pool of educated people offers companies a highly skilled workforce that is less expensive as compared to other national industrial hubs. The rapid changes in technology have paved the way for Industrial Revolution 4.0, which is changing the way economic activities incorporate evolving societal patterns, increasing interconnectivity, and smart automation. Kerala now wants to position itself as a gateway for future industries and investors.
Fairly or unfairly, Kerala’s industrial ambitions have always been greeted with refrains that the state is not investor-friendly due to far too many compliance laws, high labour costs, and rigid environmental regulations. Now, the state wants to turn such tags into strengths. The government wants to send out the message clearly that businesses located in Kerala have a better compliance record in areas like pollution control, sustainable consumption, and ethical treatment of workers.
As the global push against unbridled exploitation of natural and human resources gains momentum, Kerala is ideally suited to attract investors who value sustainable and holistic development, especially in areas like deep tech, Ayurveda, green energy, and nano technology.
Kerala’s unmatched rule-compliance record is an attraction for industrialists in areas like medical device manufacturing and allied fields like nutraceuticals, where stringent safety protocols need to be strictly followed to gain market confidence.
These advantages help evolve a branding concept, and secure for the state, a position of reliability in the global market for "Made in Kerala" products. Given the deep-rooted ties that Kerala has with the Gulf countries, where millions of Keralites work, the state can offer itself as a base for companies looking to expand globally. Diaspora engagement through the Department of Non-Resident Keralites Affairs (Norka) can be a strength.
In deep tech areas like aerospace, where Kerala has a distinct advantage due to the presence of premier space research institutions like Vikram Sarabhai Space Centre (VSSC) and Liquid Propulsion System Centre (LPSC) of ISRO and BrahMos Aerospace, are located in the state capital. They prepare the ground for specialised manufacturers and space-tech startups to take root.
The convergence of different technologies is also proving to be a bonus. The new industrial policy aims to take advantage of the research done at the VSSC on battery development and utilise that to fuel research and development to power electric vehicles. An R&D and testing facility is being planned in Thiruvananthapuram. Similarly, research in medical technology at the Sree Chitra Tirunal Institute of Medical Sciences and Technology can incubate the next set of break-through businesses in that space.
The state has identified 21 such sectors where Kerala’s resources like skilled manpower, environmental awareness, and catchment area for new workers give the state an edge over others. They include an array of fields like food technologies, the maritime sector, recycling and waste management, design, and 3D printing.
A few policy tweaks alone cannot usher in the long-awaited shift. The state needs to get ready for the Industrial Revolution 4.0, and the key to that is an update in the education sector. Academic education is now largely theoretical. But the state can no longer neglect the need to equip the youth to be shop floor-ready.
Another key feature of the new industrial policy is the aim to bring universities and the private sector to develop R&D facilities on campuses. A strong academia-industry partnership is essential for research information to flow back and forth. With this aim, the government plans to establish campus industrial parks.
While the policy highlights futuristic sectors like clean energy, deep tech, and technology, the state also plans to upgrade traditional sectors like Ayurveda, rubber-based industries and tourism. The quality of rubber we produce in Kerala is very good. But we are not producing goods that capture the premium value in the market. The State seeks to reorient its strategy to position itself as a production hub for premium rubber-based goods.
The success of a policy, however path-breaking it may be, is in its implementation. The government is working out a detailed plan with a holistic approach. The whole endeavour is to propel Kerala into a new orbit and set an example for others to follow.
(The author is the Principal Secretary, Department of Industries & Commerce, Government of Kerala)
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