Published on: October 10, 2022

Kerala’s draft industrial policy

Kerala’s draft industrial policy

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Kerala’s new draft industrial policy promises a host of incentives aimed at attracting investments, promoting employment generation, and fostering entrepreneurship.


  • The new policy, coming after a gap of four years, focuses on the State’s traditional sectors as well as the sunrise sectors including Artificial Intelligence, hi-tech farming, value added rubber products, medical equipment, biotechnology, graphene, electric vehicles, and robotics.

The major incentives proposed include

  • 10% investment subsidy on fixed capital for non-MSMEs, subject to a maximum of ₹10 crore and 100% State GST reimbursement for capital investment for five years for non-MSMEs.
  • Annually, the government will subsidise 50% of the stipend for 1,000 apprentices, subject to a maximum of ₹5,000 per apprentice for six months.
  • Another major incentive will be the 100% electricity duty exemption for MSMEs for five years.
  • As part of efforts to encourage MSMEs to source funds through non-traditional routes, rather than loans, existing and new MSMEs will be reimbursed 50% expenses subject to a maximum of ₹1 crore, incurred on floating Public Issue through the National Stock Exchange or the Bombay Stock Exchange, provided the funds thus raised are utilised for setting up or expanding enterprise in the State.
  • Stamp Duty and registration charges will be waived up to 100% on lease deed or purchase of land or building for setting up manufacturing units in government and notified private industrial parks.
  • Similar waiver will be provided for women and SC/ST entrepreneurs for setting up manufacturing units anywhere in the State.
  • The government will also provide 2% interest subvention on term loan taken for fixed capital investment, by priority sector units, from government financial institutions, for a period of three years from the date of starting commercial operations.
  • Waiver of 50% of land conversion charges as well as full exemption from remitting additional fees for the built-up space to be developed on the converted land will be provided for setting up manufacturing units and logistics parks having a minimum capital investment of ₹100 crore, excluding land cost.
  • MSME exporters will be reimbursed up to 100% of the stall charges incurred, subject to a maximum of ₹5 lakh for participating in one international fair or exhibition per year.
  • As much as 50% of the expenses incurred for compulsory marking like CE, FDA, ISO and BIS will be refunded, to a maximum of ₹25 lakh per unit per year.
  • As part of incentives for following sustainable practices, reimbursement of 25% of expenses incurred for setting up effluent treatment plants, rain water harvesting, zero discharge technologies, recycling of e-waste and recycling of waste water, excluding expenditure incurred for civil works, subject to a maximum of ₹25 lakh.
  • Under incentives for introducing Industrial Revolution (IR) 4.0 initiatives in the manufacturing process, 20% reimbursement of the cost of software including big data analytic tools and machinery will be provided subject to a maximum of ₹25 lakh per unit.

The government estimates generation of direct employment of 10,000 and indirect employment of 30,000 per year for the policy period. The finalised industrial policy, after public consultations and vetting of the Cabinet is expected to be released in February 2023.