THIRUVANANTHAPURAM, 23 December 2006 — India’s tourism authorities have ranked Kerala as the best performing state. This tiny state with the highest population density has taken firm steps to make it a hub of knowledge-based industries. But it made little headway in attracting investments in other core sectors.
However, both the government and industry experts feel that things are fast changing. Investments worth at least Rs. 300 billion in various areas, including infrastructure, petrochemicals, shipping, food processing and higher education are lined up for the next four years.
The state boasts quality of life comparable only to the advanced countries despite very low per capita income. However, the strong presence of communists and organized labor unions scared away investors in the past.
Now it is a different scenario altogether. The communists have also realized the importance of the market economy and the need for reaping benefits of globalization while resisting its bad effects.
What was once perceived as the state’s weaknesses have now turned out to be its strength. The educated work force that has global experience now realizes the challenges of running a business.
Kerala’s predominantly agrarian economy registered an impressive growth of 9.2 percent last year — much above the national average though still lagging behind its southern neighbors Karnataka and Tamil Nadu.
“With the emerging investment opportunities and ready supply of educated workers, big companies have started plugging in to Kerala. It has re-emphasized the strong relationship between economic growth and the level of education,” says Navas Meeran, chairman of Confederation of Indian Industries (CII), Kerala chapter.
According to him, Kerala accounts for majority of rubber and coir-based exports in the country. The agro-based industries, coir, textiles, seafood, chemicals, information technology and IT-enabled services and tourism form the backbone of the Kerala economy.
“NRIs from Kerala remit significant amounts to their home state. Over the past five years, deposits from non-resident Keralities have grown at 15 percent and accounts for major chunk of country’s total NRI deposits,” Meeran, who also heads one of the leading business conglomerates, said.
His company, which is involved in various businesses, all started by his father M.E. Meeran, is a success story and a fine example of Kerala’s changing industrial scenario.
“We employ a huge work force in our plantations, bottling units and factories. We have no problem with our employees,” the young industrialist says.
His Eastern Condiments that exports curry powders and spices has a strong presence in the Gulf with an annual earning from exports at around Rs. 300 million.
“The growth in tourism and the IT sectors has also triggered a record growth of 10 percent per annum in the services sector. Kerala has emerged as an attractive destination for investment in the services sector. Revenues from the IT totaled $82 million with exports amounting to $65 million,” he says.
The CII has identified IT and ITES, biotechnology, tourism and eco-tourism, textiles and readymade garments, agriculture and food processing, education and health care, media and entertainment, seafood and marine products, spices and spice extracts, petrochemicals, rubber processing, herbal products, electronics, minerals and clay-based products as major areas that offer immense investment potential.
“With the aim to ensure development across Kerala by identifying and promoting main industries of each region and encouraging discerning investors from across the world, Kerala offers investment opportunities in Biotechnology Park, International Apparel Park, International Technology and Electronics Park, Export Promotion Industrial Parks, Food Processing Parks, Rubber Park, Film and Video Parks, Small Industries Parks and Marine Products Infrastructure Facilities across the State,” he says.
More than a dozen special economic zones offering tax-free investments and repatriation of capital are already in operation or on the way in Kerala. They bring in a special economic/commercial/legal dispensation enabling a more liberalized environment within specified industrial parks, estates and notified areas. A separate Special Economic Zone Policy is already in place.
The CII has already presented a 10-point agenda to make Kerala a developed state by 2020. Recently, CII launched a Clean Kerala Initiative to help preserve Kerala’s natural beauty and greenery.
“Along with the attractions of tourism, medical tourism and knowledge industries, Kerala is now emerging as a hot destination for investors from across the globe,” Meeran claims.
The National Association of Software and Services Companies (NASSCOM) has ranked the port city of Kochi, where Dubai Ports World is building an international container transshipment terminal, the second most favored among the “super nine ITES cities” after Hyderabad.
Kochi ranked higher in quality manpower and cost-effective real estate. The city is second in terms of telecom facilities and policy initiatives while it is rated sixth in power. Kochi is the landing point for the SEA-ME-WE-3 and SAFE submarine cable networks and the primary international gateway of the Videsh Sanchar Nigam Limited that controls most of the voice and data traffic.
Two port-based special economic zones spread over 1000 acres offer immense investment potential in the city. Several projects, including free trade warehousing zones, are expected to come up here.
The projects identified by the port include an international bunkering terminal, ship repair yard, golf course, LNG terminal, hotels, bulk cargo terminals, cargo captive power plant and water desalination plant, all enjoying special tax incentives, duty concessions, exemption from sales tax and turnover tax for supply of goods from domestic tariff areas to the SEZ units.
The Petronet LNG is setting up an LNG re-gasification terminal of capacity up to 5 MMTPA in 40 hectares at an investment of Rs. 16 billion to receive vessels 280 m long and 11.5 m draft to be completed in four years.
The international bunkering terminal has the advantage of being just 11 nautical miles away from the maritime highway connecting Gulf to the Far East and Australia. The Cochin Port Trust has decided to set up a cruise terminal with the most modern services comparable to international standard considering the tremendous potential for promoting port-based tourism products.
The multi-product SEZ will promote textiles, gems and jewelry, petroleum products, chemical, engineering goods, agricultural products, marine products, electronic goods.
All port development projects to be brought under the aegis of the SEZ are slated to bring in a total investment of Rs. 75 billion that includes Rs. 11 billion for the SEZ development to be executed on the PPP (public-private-partnership) model in the next four years, offering variety of options to the investors.
The Cochin International Airport Ltd (CIAL), which runs India’s first corporate airport, is awaiting federal clearance for its budget airline, the first airport-based airline in India.
The company that has 10,000 NRI investors from 30 countries has many new projects like Maintenance Repair Overhaul (MRO), IT Park, Aviation Academy and Chartered Flight Tourism.
The six-billion-rupee IT Park will be spread over 33 acres and it is expected to create 15,000 jobs in a phased manner. The CIAL also has other ambitious projects like a full-scale maintenance hangar (MRO), the biggest in the continent proposed to be constructed in 33 acres at a cost of 1.5 billion rupees to repair two wide-bodied aircraft and four narrow-bodied aircraft initially.
National Thermal Power Corp (NTPC) is in talks with Qatar’s Investment Authority for investments in its gas-fired power project at Kayamkulam, Alappuzha. The NTPC 350 MW power plant plans to expand capacity to 1,950 MW by 2010-’11.
Gas Authority of India Limited (GAIL) has announced the Rs. 70-billion petrochemical complex in Kochi as well as the City Gas Distribution project to be completed in 2009. The 500,000-ton gas cracker plant is expected to produce polypropylene, HDPE and LDPE, which can be made into raw materials for plastic-based industries.
The state-owned Kerala Industrial Infrastructure Development Corporation (KINFRA) acquires land at strategic locations for the orderly development of industries by balancing social, cultural, regional and ecological requirements.
The industry-specific parks established by KINFRA provide readymade manufacturing environment to facilitate easy start up of industrial units with minimum time and cost. They also offer single-window clearance for licenses.
So far, KINFRA has successfully developed 14 theme-based parks including the Export Promotion Industrial Parks and Hi-Tech Park, Kochi, International Apparel Park and Film and Video Park, Thiruvananthapuram, Food Processing Park and Neo Space, Malappuram, and Small Industries Parks in Thiruvananthapuram, Kochi, Thrissur, Wayanad, Kannur and Kasargod besides joint-venture projects like Rubber Park, Kottayam, Seafood Park, Aroor, and Western India KINFRA Park, Palakkad.
KINFRA is also setting up an International Animation School in Thiruvananthapuram in collaboration with the National Institute of Design (NID) that would offer a long duration graduate equivalent diploma program of three years and several shorter duration intensive certificate programs ranging from a few days duration to a year.
Another project is a Biotechnology Park in 50 acres of land at Kalamasserry, Kochi, with federal assistance.
A Biotechnology Incubation Center (BTIC) is proposed to be developed in the Biotechnology Park housing common equipment and instrument facilities like greenhouse and hardening facilities, tissue culture facilities, analytical and QC labs, extraction facilities for plant-based value-added materials and bioinformatics and patent facilitation center.