With the Congress-led United Democratic Front (UDF) set to form the government in Kerala, industries and businesses want the new government to increase pace of infrastructure growth and reforms that may further boost industries. Kerala, under the Left Democratic Front, had done well in building infrastructure over the past 10 years, with outgoing Chief Minister Pinarayi Vijayan claiming that his government undertook sanctioned projects worth Rs 1 lakh crore in the state.
But beyond infrastructure, the state needs enabling policies which give boost to industries, especially service sector and tourism, a key revenue earner for the state. Kerala was the first state to set up an IT park in Thiruvananthapuram in 1990, much before it became a poll pith in other states. Public sector enterprise Keltron was also among the first companies to manufacture electronic products in India in 1973. However, Kerala could not fully capitalise on these initiatives undertaken by previous governments.
The services sector account for 64.2% share of Kerala’s Gross State Value Addition (GSVA) compared to states’ average of 51%. The Industrial sector accounts for 24.9% share of Kerala’s GSVA, whereas the share of an average state stands higher at 29.3%. Industrial sector is driven primarily by construction (13.6% of total GSA) and manufacturing (9.3% of total GSVA) with minor contributions from Electricity (1.7% of total GSVA) and mining (0.3% percent of total GSVA).
Infrastructure push
Over the past 10 years, the state government’s nodal agency, Kerala Infrastructure Investment Fund Board (KIIFB), has played a major role in developing infrastructure. Currently, KIIFB has funds worth Rs 50,000 crore, raised through off-market borrowings against a target of Rs 75,000 crore.
Jeevan Varghese, partner at Lexfins 360 Corporate Services, said: “The new government will have to find different sources to raise funds and look for ways to fast-track the completion of pending infrastructure projects.”
SN Raghuchandran Nair, president of the Trivandrum Chamber of Commerce and Industry (TCCI), said the state has significant scope to improve its road and inland water networks, which would help Kerala develop one of the best transport systems in the country.
“We need to improve inland water transport facilities. The government should explore setting up IT parks or tourism projects along the waterways. This will boost tourism in the state. Tourism is one of Kerala’s major revenue sources. We should promote all forms of tourism, including health tourism,” he said.
Among infrastructure projects, corporates are seeking special focus on last-mile road connectivity to attract industrial investors. Mithun Chittilappilly, managing director of V-Guard Industries Ltd, told TNIE that the state needs better last-mile connectivity and a robust road network.
Industrial promotion
Over the past 10 years, Kerala has made progress in promoting startups and creating an ecosystem conducive to entrepreneurship. Several startups are operating from KIIFB properties in Kochi and Thiruvananthapuram.
PM Mathew, senior fellow and director at the Institute of Small Enterprises & Development, said: “We need an Entrepreneur Security Bill similar to the Food Security Act.” He believes this would encourage entrepreneurs to establish enterprises in the state and protect them from unnecessary bureaucratic harassment. He added that he had helped the Punjab government design the Right to Business Act in 2020.
He also stressed the need for longer tenures for top officials at the Kerala State Industrial Development Corporation (KSIDC). “The average tenure of the chairman and managing director at KSIDC is only 1.1 years. You cannot bring about an industrial revolution with such a short tenure. This post is often treated as a punishment transfer or an assignment for incompetent officers. This mindset needs to change,” he said.
Considering Kerala’s fragile ecology and the need to protect its flora and fauna, corporates and industry leaders also believe the state should focus on attracting GCCs and R&D-focused companies that can generate thousands of jobs.
“EY India’s office in Kochi employs nearly 10,000 people in the city. The next government should focus on building more office infrastructure and attracting international companies in the services, R&D and advisory sectors. This will generate thousands of jobs in the state, as Kerala has a highly educated talent pool,” an industry executive said.
To address the issue of land shortage, industry veteran Dr Viju Jacob suggested changes to land laws enacted in 1961.
“Several land laws were enacted in 1961. The next government should update these laws in line with the aspirations of the current generation. Paddy land that is no longer being cultivated should be acquired by the government and allocated for industrial use. This will open up several acres of land for industries,” he said.
Corporates are also seeking labour reforms, saying hartals and shutdowns disrupt operations and adversely affect business sentiment in the state.
