Kerala's industrial sector is demonstrating dynamic growth and strategic evolution,
underpinned by robust policy initiatives, substantial infrastructure development, and a
vibrant entrepreneurial ecosystem. The state is actively leveraging its inherent strengths,
including its strategic location and skilled human resources, to foster a conducive
environment for industrial advancement. Kerala's industrial sector is a mix of traditional
and modern industries, with growing opportunities in IT, tourism, and agro-processing.
While challenges like labor unrest and land scarcity persist, government initiatives and
private investments are paving the way for sustainable industrial growth. Recent facts and
figures highlight significant advancements, particularly in the Micro, Small, and Medium
Enterprises (MSME) segment, alongside strategic infrastructure development and a
renewed focus on attracting diverse investments.
Industrial and commercial activities in Kerala remain predominantly concentrated in its
coastal zone. Ernakulam and Thiruvananthapuram lead with a high density of industries,
followed by Alappuzha, Kollam, Kozhikode, Kannur, Kasaragod, and Malappuram.
- Coir Industry: The coir industry is a cornerstone of Kerala's traditional industrial
sector, deeply woven into the state's socio-economic fabric, particularly in its
coastal regions. Known as the "golden fiber," coir, extracted from coconut husks, is
used to produce a wide array of products including mats, matting, rugs, ropes, and
geo-textiles. Kerala is a major player in India's coir production, particularly for
white fiber, and accounts for a significant portion of the country's coir products. The
coir industry is one of the largest cottage industries in Kerala, providing livelihoods
to a significant population, estimated to be around 3.7 to 5 lakh people. A striking
feature is the high participation of women, who constitute approximately 80% of
the workforce, especially in the yarn spinning sector. Historically, Alappuzha has
been the undisputed nerve center of Kerala's coir industry. It was here that the
organized factory-based production of coir mats and matting began. Kollam district
is another major hub for coir production, particularly coir yarn. Its backwaters
facilitate the retting process, and a substantial number of coir workers are
concentrated here.
- Handloom Industry: Among traditional industries of Kerala, handloom sector
stands second only to the coir sector in providing employment. Kerala’s textile
industry comprises traditional handloom sector, power loom and the spinning
sector. The handloom industry in the State is mainly concentrated in
Thiruvananthapuram and Kannur District and in some parts of Kozhikode,
Palakkad, Thrissur, Ernakulam, Kollam and Kasaragod Districts. The industry is
dominated by the co-operative sector, covering 96 per cent of total looms. The
remaining 4 percent of handloom units are owned by industrial entrepreneurs.
- Handicraft industry: Handicraft industry is one of the traditional industries of
Kerala. Kerala has the tradition of making beautiful handicrafts with ivory, bamboo,
palm leaves, seashells, wood, coconut shells, clay, cloth, coir, metals, stone, lacquer
ware, and so on. Many old handicraft classics can be seen in palaces, old heritage
homes and museums in the State. A vast majority of the traditional artisans belong
to socially and economically backward classes.
- Cashew Processing Industries: This traditional sector is largely concentrated in
the coastal region of Kollam district.
- Seafood Industry: These traditional sectors are deeply rooted in the coastal belt,
with Alappuzha district being a prominent center.
- Beedi Industry: The Beedi industry in Kerala has historically been concentrated in
the northern districts of Kozhikode, Kannur, and Kasaragod. A significant entity in
this sector has been The Kerala Dinesh Beedi Workers Central Co-operative Society
Ltd. This cooperative has played a crucial role in organizing the industry and, more
recently, has focused on diversifying its products to support the rehabilitation of
beedi workers
- Fertilizer and Chemicals, Petroleum Refining, and Shipbuilding: Ernakulam
continues to be a major hub with Eloor-Edayar-Ambalamugal region in Kochi
standing out as a major industrial powerhouse, benefiting from its proximity to port
facilities hub for large enterprises such as Fertilizer and Chemicals Travancore Ltd.
(FACT), Kochi Refineries Ltd. (KRL), Hindustan Organic Chemicals (HOC), Cominco
Binani, and Cochin Shipyard, capitalizing on robust port infrastructure
- Mineral-based Industries:The renowned Chavara placer deposits in Kollam
district are central to major mineral industries, including Indian Rare Earths Ltd.
(IRE) and Kerala Minerals and Metals Ltd. (KMML). The Travancore Titanium
Products (TTP) operates in Veli, Thiruvananthapuram.
- Glass Manufacturing: The Excel Glass factory near Cherthala thrives on silica sands
sourced from the coastal areas of Alappuzha district.
- Rubber Based Industry: Kerala, holding its position as India's foremost producer
of natural rubber, naturally fosters a significant and vibrant cluster of rubber-based
industries. These manufacturing endeavors are deeply rooted and predominantly
concentrated in the state's central and southern districts, including Kottayam, Ernakulam, Pathanamthitta, and Kollam, regions where rubber plantations are
abundant. Within these areas, a diverse array of units, ranging from large-scale
factories to numerous small and medium-sized enterprises, are actively engaged in
transforming raw latex into a vast spectrum of products. Rubber Based industry’s
contribution to employment is substantial, providing livelihoods to a considerable
number of people directly and indirectly involved in cultivation, processing, and
manufacturing. This strong foundation in raw material availability, coupled with a
historically skilled workforce, has firmly established rubber-based industries as a
vital and enduring component of Kerala's industrial landscape
Kerala's Information Technology (IT) industry is a dynamic and rapidly expanding sector,
playing a pivotal role in the state's transition towards a knowledge economy. The state has
strategically developed world-class IT infrastructure, attracting both multinational
corporations and a thriving startup ecosystem.
Prime Locations: The IT industry in Kerala is primarily concentrated in three major hubs:
- Technopark, Thiruvananthapuram: India's first IT park, established in 1990, it
remains the largest and a significant source of direct employment in the state. It
houses over 490 companies, employing more than 75,000 professionals.
- Infopark, Kochi: A rapidly growing IT hub in Central Kerala, Infopark Kochi
reported an impressive 24.28% growth in IT exports, reaching ₹11,417 crore in
2023-24. It accommodates over 550 companies and employs more than 70,000
professionals.
- Cyberpark, Kozhikode: This park targets IT growth in the Malabar region, focusing
on niche services and innovation.
Beyond these main parks, Kerala is also planning to establish 20 smaller IT parks based on
5G technology along the national highway, further decentralizing IT infrastructure.
Contribution to Economy and Employment: The IT sector is a major contributor to
Kerala's Gross State Value Added (GSVA) within the services sector, which collectively
accounts for nearly two-thirds (64.2%) of the state's total GSVA. In terms of employment,
the IT sector has seen remarkable growth. The number of IT professionals in Kerala has
increased significantly, reaching 2.5 lakh in 2023, marking a 31% growth in six years
(between 2016 and 2023). Notably, IT parks in Kerala boast a higher representation of
women in the workforce compared to the national average, with women comprising 45% in Technopark and 40% each in Infopark and Cyberpark, reflecting Kerala's strong
emphasis on education and women's empowerment.
Overall, Kerala's IT sector is a testament to its focus on leveraging its skilled talent pool and
robust infrastructure to drive innovation, generate employment, and boost the state's
economic growth through substantial contributions to IT exports.
Kerala's tourism industry, often celebrated as "God's Own Country," is a vibrant and
essential pillar of the state's economy, renowned for its diverse natural beauty and cultural
richness. The state's prime locations attracting tourists range from the serene backwaters
of Alappuzha and Kollam to the pristine beaches of Kovalam and the tranquil hill stations of
Munnar and Thekkady in the Western Ghats. Kochi City and Thiruvananthapuram City also
serve as major entry points and tourist centers, while destinations like Wayanad, Varkala,
and Kumarakom continue to grow in popularity, offering unique experiences.
Tourism makes a substantial contribution to Kerala's Gross State Value Added (GSVA).
According to the latest statistics from Kerala Tourism, the total revenue (including direct
and indirect earnings) from tourism in Kerala for the year FY 2023-24 was ₹43,621.22
crore. This represents a 24.03% increase over the 2022-23 figures, demonstrating
continued strong growth in the sector. This growth highlights its crucial role in the state's
economic prosperity.
Beyond its economic value, the tourism sector is a major employment generator in Kerala.
It is estimated to provide livelihoods to approximately 1.5 million people, encompassing a
wide range of direct and indirect jobs across hospitality, transportation, local crafts, and
various support services. The state's focus on initiatives like "Women Friendly Tourism"
also aims to create significant job opportunities for women, fostering inclusive growth
within the sector. In 2024, Kerala recorded a remarkable 22.25 million tourist arrivals,
showcasing its enduring appeal and the industry's sustained growth as a key driver of
employment and income generation across the state.
Kerala's industrial sector is currently on a progressive path, actively contributing to the
state's economic vitality and employment generation through a blend of traditional
strengths and forward-looking initiatives. The industry sector significantly contributes to
the state's economy, accounting for a notable 24.9 percent of Kerala's Gross State Value
Added (GSVA). Recent data indicates a positive trajectory, with the secondary sector, which
encapsulates manufacturing, growing at 4.1 percent in 2023-24, signifying an upward
trend in industrial output.
A cornerstone of this resurgence is the remarkable performance of the Micro, Small, and
Medium Enterprises (MSME) sector, which has seen unprecedented growth, largely
spurred by the proactive policies of the Government of Kerala. During the fiscal year 2023-
24 alone as per the Government Reports a staggering 103,596 new MSME units were
established, attracting substantial investments amounting to ₹7,048.65 crores and creating
employment opportunities for 218,179 individuals. This impressive achievement is further
reinforced by robust financial inclusion, with total outstanding loans to the MSME sector
reaching ₹95,118.07 crore by March 31, 2025, reflecting a significant 34 percent increase
from March 2023. This figure is projected to exceed ₹1 trillion during the current fiscal
year, underscoring the success of initiatives undertaken by Government and Banks in
making credit more accessible. A particularly noteworthy outcome of these initiatives is the
substantial participation of women, who now own one-third of the state's MSME units,
emphasizing an inclusive growth model. While the immediate impact has seen a higher
concentration of new MSMEs in retail and services, the government maintains a strategic
focus on bolstering the manufacturing segment within this sector.
In parallel, Kerala continues to nurture its significant Information Technology (IT)
industry, positioning itself as a knowledge economy hub. The state's prime IT locations,
including Technopark in Thiruvananthapuram, Infopark in Kochi, and Cyberpark in
Kozhikode, serve as the epicenters of this growth. These parks collectively employ a
substantial workforce, with Technopark alone employing over 75,000 professionals and
Infopark contributing to the livelihoods of more than 70,000 individuals. The IT sector is a
key driver of exports, with Infopark alone reporting an impressive ₹11,417 crore in IT
exports for 2023-24, showcasing its strong and growing international presence. The
Government of Kerala is further expanding this ecosystem by planning 20 smaller IT parks
based on 5G technology along national highways, a decentralization effort aimed at
spreading IT-driven opportunities across the state. This strategic vision aligns with the
state's broader objective of transforming into an Industry 4.0-ready economy by leveraging
its highly skilled workforce and fostering innovation.
Traditional industries, while facing their unique challenges, also remain an integral part of
Kerala's industrial fabric, with concerted government efforts aimed at their modernization
and worker welfare. The coir industry, for instance, deeply rooted in coastal districts like
Alappuzha and Kollam, remains a vital cottage industry providing livelihoods to an
estimated 3.7 to 5 lakh people, with women constituting a significant 80 percent of its
workforce. Government initiatives focus on technology upgradation, skill development, and
market promotion for coir products. Similarly, the Beedi industry, historically concentrated
in Kozhikode, Kannur, and Kasaragod, has seen significant welfare measures. The rubber-
based industries, intrinsically linked to Kerala's status as a major natural rubber producer,
thrive in districts like Kottayam, Ernakulam, Pathanamthitta, and Kollam. Here, numerous
units produce everything from tires and industrial components to consumer goods,
benefiting from local raw material availability and a skilled labor force.
Overall, the Government of Kerala's strategic focus, articulated through the comprehensive
Kerala Industrial Policy 2023, aims to create a highly supportive business environment.
This policy, built on pillars like fostering entrepreneurship, enabling infrastructure, and
transitioning to high-tech industries, includes critical reforms such as allowing non-Red
category industries with up to ₹50 crore investments to operate for three years without
certain approvals. Agencies like the Kerala State Industrial Development Corporation Ltd.
(KSIDC), with its ₹1882.26 crore Assets Under Management (provisional by March 31,
2025) and a provisional profit of ₹58.26 crore in FY2025, and the Kerala Industrial
Infrastructure Development Corporation (KINFRA), which reported a ₹7.19 crore profit in 2024-25 while developing key industrial parks and projects, play instrumental roles in
facilitating investment and building world-class infrastructure. The Kerala Small Industries
Development Corporation (SIDCO) further supports MSMEs by managing a vast network of
industrial estates. These multi-pronged initiatives, encompassing policy reforms,
infrastructure development, and targeted sectoral support, underscore Kerala's
determined pursuit of sustainable and inclusive industrial growth.
The Micro Small and Medium Enterprises (MSME) sector has emerged as a highly vibrant
and dynamic sector of the Indian economy. It contributes significantly in the economy and
social development of the country by fostering entrepreneurship and generating large
employment opportunities at comparatively lower capital investment. MSME is the second
largest employer sector in the country after agriculture. MSMEs are expanding their
domain across sectors of the economy, producing a diverse range of products and services
to meet the demands of domestic as well as global markets. As per the latest Economic
Survey of Government of India, MSMEs contributes approximately 30 per cent of the
country’s GDP, 45 per cent of the manufacturing output, and provide employment to 11
crore population. As per the latest data as on June 2025, a total number of 6,49,95,326
MSMEs are registered in Udyam Registration online portal and for the state of Kerala it is
15,64,708.The sector is diverse in terms of size, levels of technology employed, and
products.
In the Union Budget 2025, the Government of India announced a significant revision to the
MSME classification criteria. Specifically, investment limits have been increased by 2.5
times, and turnover limits have been doubled. This expansion aims to empower MSMEs to
scale up without losing out on crucial benefits and incentives, thus driving broader
economic growth and employment.
Within the MSME sector, micro enterprises are expanding, both in terms of working
enterprises and employment mainly because of ‘Year of Enterprises’ campaign. The
industries under MSMES include handicrafts, handloom, khadi, food processing industries,
garment making and textile industries and industries related to coir, wood, bamboo,
plastic, rubber, leather, and clay products. MSMEs produce over 8000 various products
ranging from traditional to high-tech items. One third of the MSME units in Kerala are
owned by women.
The Government and banks in Kerala facilitate and support MSMEs. To promote the growth
of the MSME and traditional industrial sectors, the District Industries Centres (DIC) acts as
a facilitator. DIC implements various schemes to develop an entrepreneurial culture in the
State. The Industries Department provides financial assistance to start Entrepreneurship
Development clubs at school and college levels to foster entrepreneurship among the
youth. The Department also gives high priority in providing services to Start-ups and
establishing business incubation centres in District Industries Centres. The agencies under
the Directorate of Industries & Commerce are the Directorate of Handloom and Textiles
(which aims at evolving policies for the promotion and development of handloom and
textile sector in the State); Directorate of Coir Development (the implementing agency for
all policy decisions of the Government of Kerala related to coir industry); Khadi and Village
Industries Board (vested with the responsibility of organising and promoting Khadi and Village Industries in the State); and the Directorate of Plantations, set up in 2022-23 for the
development of the plantation sector in the State .
The State achieved remarkable surge in the number of new MSME units established in
2023-24. A total of 1, 03,596 new MSME units were set up in 2023-24 with investment of
Rs.7, 048.65 crore. These units have created employment opportunities for 2, 18,179
individuals, marking a sustainable expansion in the MSME sector. The details of new MSME
units for the last five years are given in Table
Sickness in Micro, Small, and Medium Enterprises (MSME) units in India remains a
significant challenge, impacting both entrepreneurs and the broader national economy. The
Reserve Bank of India (RBI) has consistently evolved its approach to defining and
addressing this issue through various committees and guidelines.
While the Kohli Committee historically provided an early definition for sickness in the
Small Scale Industries (SSI) sector, recognizing a unit as sick if any borrowal account
remained substandard for over six months or if net worth eroded by 50 percent, the
landscape of defining and rehabilitating sick units has evolved significantly. This early
definition, focused on financial distress, was crucial in its time. However, recognizing the
need for more timely intervention and effective rehabilitation of potentially viable sick
units, the RBI constituted a Working Group under the Chairmanship of Dr. K. C.
Chakrabarty, then Chairman & Managing Director of Punjab National Bank. This group
was specifically tasked with recommending changes to the definition of sickness and streamlining the procedure for assessing viability. Following the recommendations of the
Dr. Chakrabarty Working Group and subsequent deliberations, including those by a
committee set up by the Ministry of MSME, a significant shift in the guidelines for
identifying sick MSEs was proposed in Paragraph 83 of the Second Quarter Review of
Monetary Policy 2012-13. The new guidelines marked a crucial evolution. Firstly, the
definition of sickness for an MSE became more stringent, aiming for earlier identification.
Under the new framework, an MSE is now considered 'sick' if any of its borrowal accounts
remains a Non-Performing Asset (NPA) for three months or more, or if there is erosion in
the net worth due to accumulated losses to the extent of 50% of its net worth. Notably, the
previous stipulation that the unit must have been in commercial production for at least two
years has been removed, broadening the scope for early identification of distress. Secondly,
the new guidelines introduced a stipulated time frame for deciding the viability of a unit.
While previously there was no such defined period, the decision on the viability of a sick
unit must now be taken at the earliest, and not later than three months of the unit
becoming sick under any circumstances. This aims to accelerate the rehabilitation process
and prevent further deterioration of the unit's financial health. Thirdly, a significant
procedural improvement has been made regarding unviable units. The procedure for
declaring a unit as unviable was clearly laid down, which was not specified in the earlier
guidelines. This provides clarity and a structured approach for banks and financial
institutions in dealing with units that cannot be revived. Finally, the new guidelines also
addressed the concept of incipient sickness, previously lacking a formal definition.
Incipient sickness, or the 'handholding stage,' was explicitly defined. This crucial addition
allows for proactive measures and support to be provided to MSEs showing early signs of
financial distress, potentially preventing them from spiraling into full-blown sickness.
The reasons for such sickness are multi-faceted, encompassing both internal and external
factors. Internally, poor financial management, including inefficient resource allocation,
excessive borrowing, and inadequate working capital planning, often leads to liquidity
crises. Inefficient management and leadership, lack of adaptation to market changes,
technological obsolescence due to failure to upgrade machinery, and poor marketing
strategies are also significant contributors. Labour issues and industrial disputes can
further exacerbate the problem. Externally, an unfavorable policy environment
characterized by complex regulatory frameworks, bureaucratic hurdles, and inconsistent
policies can hinder growth. Inadequate infrastructure, including poor transportation and
irregular power supply, poses substantial operational challenges. Limited access to timely
and adequate credit from financial institutions, often due to stringent collateral
requirements, is a recurring issue for MSMEs. Furthermore, external shocks such as
changes in global demand, economic recessions, price fluctuations in raw materials, and
disruptions in supply chains contribute to the vulnerability of these units. Lack of demand for products and shortage of working capital have consistently been identified as leading
causes of sickness.
The direct impact of widespread MSME sickness on the Indian economy is substantial and
detrimental. Given that MSMEs are vital drivers of economic growth, contributing
significantly to manufacturing output, employment generation, and exports, their sickness
results in a considerable wastage of physical, financial, and human resources. When MSME
units become sick or close down, it directly leads to job losses, thereby affecting livelihoods
and increasing unemployment. Banks and financial institutions that have extended loans to
these units face the burden of non-performing assets (NPAs), which impacts their liquidity
and overall financial health. The erosion of bank profitability and the tightening of credit
further restricts the flow of funds to other viable businesses, hindering overall economic
expansion. Moreover, the failure of MSMEs can have a ripple effect on ancillary units and
larger industries that depend on them for inputs or services, creating a chain reaction of
distress across the supply chain. This collective downturn in the MSME sector can slow
down economic growth, impede industrial output, and undermine efforts towards inclusive
development, ultimately impacting the nation's GDP and overall economic stability.
The Reserve Bank of India (RBI) has established a comprehensive "Framework for Revival
and Rehabilitation of Micro, Small and Medium Enterprises" to provide a structured and
transparent mechanism for addressing financial stress in these vital economic units. These
frameworks initially notified by the Ministry of MSME in May 2015 and subsequently
aligned with RBI’s prudential norms, aim to preserve viable MSMEs, minimize losses for
creditors, and facilitate their continued development.
The framework is applicable to MSMEs with aggregate loan limits up to ₹25 crore,
encompassing accounts under consortium or multiple banking arrangements. A key aspect
is the early identification of incipient stress in MSME accounts, even before they become
Non-Performing Assets (NPAs). This is achieved through the classification of accounts into
Special Mention Accounts (SMA) categories (SMA-0, SMA-1, SMA-2) based on overdue
periods. Additionally, an MSME borrower can voluntarily initiate proceedings if they
reasonably apprehend business failure, inability to pay debts, or a significant erosion
(50%) of their net worth due to accumulated losses.
Upon identification of stress, either by the bank or the borrower, cases with aggregate loan
limits above ₹10 lakh are referred to a Committee for Stressed Micro, Small & Medium
Enterprises (CSMSME). These committees, which banks are mandated to form at their
Circle/Regional/District levels, play a crucial role in deciding on a Corrective Action Plan
(CAP). The Committee is expected to convene promptly, ideally within five working days of
receiving an application or identifying an SMA-2 account, and take a decision on the CAP
within 30 days of its first meeting.
The CAP can involve one of two primary options:
- Rectification: This involves obtaining a commitment from the borrower to regularize the
account, ensuring it does not slip into NPA status without any loss or sacrifice from
existing lenders. This plan is to be implemented within 30 days.
- Restructuring: If the business shows signs of long-term viability, the Committee can
propose a restructuring plan. For exposures up to ₹10 crore, the terms are finalized within
20 working days, while for exposures between ₹10 crore and ₹25 crore, a Techno-
Economic Viability (TEV) study is undertaken, and terms are finalized within 30
working days. The implementation of a restructuring plan is to be completed within 90
days.
The framework also outlines processes for inter-lender coordination in consortium or
multiple banking arrangements, ensuring a collective approach to revival. While the
framework emphasizes early recognition and time-bound resolution, initial
implementation challenges included issues like the slowing down of Committee meetings
by some banks. However, the RBI has consistently stressed the mandatory nature of these
guidelines, even if the MSME does not explicitly apply for rehabilitation. This
comprehensive framework underscores RBI's commitment to supporting the resilience and
continued growth of the MSME sector, recognizing its pivotal role in the Indian economy.
RBI Notification on Framework for Revival and Rehabilitation of Micro, Small and Medium
Enterprises (MSMEs)
Traditionally, Kerala's export basket has been dominated by primary products such as
spices, marine products, cashew, coir, tea, and coffee. Spices, with a rich historical legacy,
and marine products, capitalizing on Kerala's extensive coastline, have consistently been
significant contributors. The Cochin Port serves as a primary hub for these exports,
reaching diverse destinations including the USA, European Union, and Middle Eastern
countries. However, the state is increasingly recognizing the crucial role of export
performance in reaching global markets and driving sustainable economic growth. The
operationalization of the Vizhinjam International Seaport is set to be a transformative force
in this context.
In the fiscal year 2023-24, Kerala's total exports in terms of quantity stood at 1,781,602
tonnes, valued at approximately ₹60,523.89 Crores (US$7,381.89 million). This represents
a quantity increase of 2.67% over the previous year, though a slight decline in value.
Traditional exports, primarily through sea, include marine products, with frozen shrimp
exports reaching 716,004 tonnes worth US$4,881.27 million in 2023-24. Other key maritime exports include frozen fish, at the second largest position by quantity (21.42%
share) and value (9.09% of US$ earnings), and frozen cuttlefish, which contributed 54,919
tonnes. Cochin Port, a primary hub, handled approximately 83.09 lakh tonnes of export
cargo in 2023-24, with containerized export cargo contributing about 37.75 lakh tonnes.
While freight handles the bulk of exports, air cargo plays a critical role for time-
sensitive, high-value, and perishable goods. Kerala is home to three major international
airports – Cochin (CIAL), Thiruvananthapuram (Trivandrum International Airport), and
Kannur International Airport – all of which handle air cargo. Cochin International Airport is
one of the leading international air cargo centers in South India, with a new Air Cargo
Centre commissioned in 2000 that operates on a single service provider concept.
Trivandrum's Air Cargo Complex (TACT) is vital for exporting perishables, handling around
75-90 metric tonnes per day of vegetables, fruits, meat, fish, and flowers. Additionally,
spices, handicrafts, and textiles are also uplifted through air. In 2022-23, Trivandrum Air
Cargo Complex handled 14,686 metric tonnes of export cargo, with a projected increase to
15,200 metric tonnes in 2023-24, generating an estimated revenue of ₹7.82 crore from air
cargo in that fiscal year. Kannur International Airport, operational since 2018, has also
emerged as a significant hub, especially for the Malabar region, facilitating direct cargo
flights to Middle Eastern destinations like Dubai, Abu Dhabi, Doha, and Muscat, enabling
local producers to efficiently reach global clients.
This reduction in time and cost, both through enhanced sea and air connectivity, will make
Kerala's traditional exports, particularly perishable goods like spices, seafood, and fruits,
more competitive in international markets. For instance, textile consignments which
currently take around 40 days to reach Europe via transshipment could see their transit
time reduced to 25-26 days through Vizhinjam. Furthermore, the development of these
multi-modal logistics hubs is expected to open up new global markets by enabling direct
shipments to major ports and airports in Europe, North America, and East Asia, potentially
boosting export volumes of diversified higher value-added segments such as processed
food, technical textiles, bulk drugs, electronics, machinery, and IT and IT-enabled services.
Kerala's IT exports were approximately US$4 billion in 2024, a sector that can greatly
benefit from improved connectivity, both physical and digital.
To enhance its global market presence, Kerala is focusing on strengthening its export
infrastructure and logistics, including improving transportation networks, port and airport
facilities, and establishing export-oriented industrial zones linked to these hubs. Policy
initiatives also emphasize fostering innovation through collaboration between industry,
government, and academia, aiming to develop cutting-edge products and services. By
strategically expanding its product and market base and bolstering its export ecosystem
with Vizhinjam as a central hub and its international airports playing a crucial complementary role, Kerala aims to significantly increase the share of exports in its Gross
State Domestic Product and become a more prominent player in the global trade arena,
reducing India's overall reliance on foreign transshipment hubs and saving significant
foreign exchange.
Special Economic Zones (SEZs) in Kerala are designated areas designed to provide a
business-friendly environment with simplified regulations, attractive incentives, and
world-class infrastructure to promote exports and attract investment. The state currently
has 20 operational SEZs as of March 18, 2025, with a total of 25 formally approved,
including one central government SEZ (Cochin Special Economic Zone, CSEZ) that pre-dates
the 2005 SEZ Act.
The Cochin Special Economic Zone (CSEZ) in Kakkanad, Kochi, is a prominent example,
being a multi-product zone housing units in diverse sectors such as electronic hardware,
engineering, gem & jewellery, IT & ITES, agro & food processing, textiles & garments, and
plastics & rubber. It currently has around 160 operating units employing over 15,000
people. In recent years, exports from CSEZ have shown significant growth, with a reported
turnover of ₹17,124 crore in 2009-10. While specific detailed figures for Kerala's SEZs for
the most recent fiscal year (2024-25) are still emerging, overall exports from India's
operational SEZs reached ₹14,56,871 crore (US$172.27 billion) in 2024-25, indicating a
robust performance from these zones nationally.
Beyond CSEZ, Kerala has developed various sector-specific SEZs, particularly in the
Information Technology (IT) sector, leveraging its highly skilled workforce. Infopark in
Kochi, Technopark in Thiruvananthapuram, and Cyberpark in Kozhikode host numerous IT
and IT-enabled services (ITES) companies operating as SEZ units. For example, KINFRA has
developed an IT, Animation & Gaming SEZ in Thiruvananthapuram, spread over 10.121
hectares, housing 12 units. These IT SEZs have been instrumental in attracting foreign
direct investment and generating significant employment, contributing to Kerala's growing
reputation as an IT/ITES hub.
The state government continues to prioritize the development and expansion of SEZs as a
key strategy for industrial growth. These zones offer significant benefits to businesses,
including 100% income tax exemption on export income for the initial five years, followed
by 50% for the next five years, exemption from customs and excise duties, and simplified
customs procedures. Such incentives are crucial for attracting both domestic and foreign
investment. The proximity of SEZs to well-developed infrastructure like international
airports and, notably, the upcoming Vizhinjam International Seaport, will further enhance their attractiveness and export capabilities. The Adani Group's commitment to invest
₹30,000 crore in Kerala over the next five years, including significant investments in the
Vizhinjam port, is expected to create further opportunities for SEZ units, particularly those
involved in logistics, manufacturing, and export-oriented industries, by providing world-
class connectivity and reduced logistics costs. This strategic approach aims to boost
manufacturing, diversify the state's export basket, and create substantial employment
opportunities, contributing significantly to Kerala's economic transformation.
The Kerala Industrial Policy 2023 is a forward-looking framework designed to transform
the state into a vibrant industrial hub, focusing on sustainable and inclusive growth while
leveraging its unique strengths. The policy is built upon seven key pillars: Fostering
Entrepreneurship, Enabling Infrastructure, Transition to Hi-Tech, Skill Development,
Supportive Business Environment, Enhancing 'Kerala' Brand Equity, and Priority Sector-
based Industrialization.
A primary objective is to significantly improve the ease of doing business in the state. This
includes measures such as a single-window clearance system (K-SWIFT) for various
licenses and approvals, aiming for expedited processing, with a target of approvals within
seven days for non-MSME non-red category industries. The policy also encourages a self-
certification mechanism for non-Red category industries with investments up to ₹50 crore,
allowing them to operate for up to three years without certain state-level approvals.
Furthermore, the decriminalization of several laws and the establishment of an Investment
Facilitation Cell are aimed at reducing compliance burdens and accelerating the investment
process. These efforts have already shown positive results, with Kerala having significantly
improved its ranking in the ease of doing business index, moving from 28th position in
2021 to a "Top Achiever" status in nine reform areas by 2024.
The policy strongly emphasizes the transition to a high-tech industrial landscape, aligning
with Industry 4.0 principles. It identifies over 20 priority sectors for focused development,
including emerging areas like Artificial Intelligence, Robotics, Graphene, Biotechnology,
Electric Vehicles, Electronic System Design & Manufacturing, Medical Equipment, and
Space Technology. Alongside these, traditional sectors like Ayurveda, high-value-added
rubber products, and food processing also receive renewed focus, with an emphasis on
technology adoption and value addition.
To attract investment, the policy offers a range of incentives. For Micro, Small, and Medium
Enterprises (MSMEs), these include capital subsidies of up to 45% (with maximums
ranging from ₹40 lakh for micro to ₹200 lakh for medium enterprises), 100% electricity duty exemption for five years, and interest subvention on loans. For large and mega
enterprises, there's a 10% investment subsidy on fixed capital (up to ₹10 crore) and 100%
State GST reimbursement on capital investment for five years. Special consideration is
given to women, SC/ST, differently-abled, and transgender entrepreneurs, including 100%
waiver of stamp duty and registration charges for setting up manufacturing units anywhere
in the state. Incentives are also provided for adopting Industry 4.0 technologies, quality
certifications, and participation in trade fairs, reflecting a commitment to global
competitiveness and sustainable industrialization.
Overall, the Kerala Industrial Policy 2023 aims to create a robust entrepreneurial
ecosystem, enhance infrastructure, foster skill development, and promote the "Made in
Kerala" brand on a global scale, thereby generating employment opportunities and driving
the state's economic prosperity.