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Kerala, often criticised for being unfriendly to entrepreneurs, now boasts of 2.9 lakh Micro, Small and Medium Enterprises (MSMEs), established within the three years from 2022, signalling a significant turnaround in its industrial climate. In 2024, the state had been in the top spot in the country’s Business Reforms Action Plan (BRAP) rankings for 2024—a leap from the 28th position of 2021.
According to the Industries Department, the state has created one lakh new enterprises within seven months, engaged directly with over 5,000 investors, and identified 23 priority sectors, including IT, medical devices, and logistics, aligning industrial growth with ecological sensitivity.
Kerala Industries Minister P Rajeev, in an interview with TNM, says the state has repositioned itself as an industry-friendly destination by focusing on sustainable, innovation-led development, while ensuring fair worker rights and environmental protection.
In 2021, Kerala was in the 28th position for ease of doing business across the country. From there, the state moved up to rank 15, and in 2024 secured first place. How was it done?
The ranking is 100% based on investor feedback. In the initial years, our feedback was not that good. Then we started visiting all districts and conducted programmes like ‘Meet the Minister’. We held meetings with all business organisations, sector-wise groups, and industrial estate representatives, directly interacting with around 5,000 investors in the state.
Based on this feedback, we took legislative and executive steps. Through K-SWIFT, we enabled MSMEs to function with approvals valid for up to three-and-a-half years. We launched the Kerala Central Inspection System (K-CIS) to carry out all inspections on a single platform, replacing manual scheduling. We also established a statutory grievance redressal mechanism to resolve complaints within 30 days.
Following this, we launched the ‘Year of Enterprises’ campaign, aiming to create one lakh enterprises in a single economic year. As part of this, we provided training for all officers at IIM Calicut and the central institute in Ahmedabad. We then met with Local Self-Dovernment Department (LSGD) chairpersons, mayors, and secretaries, and provided each LSGD with an intern holding an MBA or BTech, to offer technical support. We also held loan melas. Within seven months, we achieved the target of creating one lakh enterprises.
The suicides of entrepreneurs P Sugathan (2018) and Saji Parayil (2019) had raised concerns about Kerala being unfriendly to entrepreneurs. Does this achievement reflect a correction of past mistakes?
Now, we are able to showcase the existing reality and industrial potential of Kerala, which is far removed from deep-rooted presumptions. Big industries were already here. The world’s largest bag manufacturing company, Asia’s biggest artificial teeth manufacturing company, and one of Asia’s best steel companies are all in Kerala. We also have significant medical device manufacturing units here.
However, these realities were not showcased earlier, with only negativity and minor issues being projected. Many states have bigger issues; for instance, a sarpanch was killed in Maharashtra recently, and over 900 Kia car engines were stolen in Andhra Pradesh over the years. Such incidents do not happen here, yet people remember deaths and not the positives.
These companies were already in Kerala, not because of us, but [the LDF government] strengthened them. When we started showcasing and projecting these achievements, the entire environment turned positive.
The Invest Kerala Global Summit 2025, held in February this year, was a historic success. In just four months, our conversion rate from investment intentions to implementation reached 23%, which is a very good indication.
Given Kerala’s severe land constraints and environmental concerns, how realistic is it to pursue industrial growth without compromising the state’s fragile ecosystems?
We have limitations, particularly in land availability. On one side, there are hills, marshy lands, and rivers; on the other, the sea. Environmental concerns are significant when discussing development here.
Our strength lies in highly skilled human resources, while our limitations are land scarcity and high land and labour costs. We follow the Smile Curve theory, which suggests the highest value is created at the two ends, that is, research and development and marketing or branding. For these two, we need ideas and innovation. The middle part – manufacturing – makes less value addition. For that, we can use migrant labourers.
We have identified what industries are suitable for Kerala and have shortlisted 23 sectors such as IT, medical devices, tourism, maritime, and logistics. We cannot afford large, polluting industries due to our ecologically sensitive land.
Kerala has only 1.16% of India’s land, with 30% being forest, large areas under coastal regulatory zone, and wetlands in between. The concept of green economic growth through innovative, nature-centric solutions (GGGC) is apt for Kerala.
The medical device and life sciences industries are particularly suitable here. We plan to develop something similar to Hyderabad’s Genome Valley on 60 acres.
With Vizhinjam port, ships can come closer due to natural depth, saving almost 10 days per ship, which translates to $250,000 in savings per ship. This will reflect in lower raw material and product costs, enabling manufacturing here and global distribution.
As part of our growth corridor from Thiruvananthapuram to Kollam, a manufacturing zone is being planned. All major international IT firms have also come to Kochi. Kerala is effectively a big city, as it is difficult to demarcate villages from cities here.
How does the Left ideology align with industrial growth in Kerala?
Our industrial policy follows the motto: “Nature, People, and Industry.” Industry comes after nature and people, not before. We focus more on innovation than on infrastructure.
Many think the Left is against industries. That is not true. Communism is not about sharing poverty; it is about increasing production and ensuring fair distribution of income. We are working within the framework of the country.
In 1957, EMS Namboothiripad had a meeting with the Birla Group and brought the Gwalior Rayons factory to Kozhikode. Despite slogans like “Tata, Birla, Goenka thulayatte” (destruction for Tata, Birla, and Goenka), the first Finance Minister, Achutha Menon, spoke about encouraging industries and government equity in private firms, even before the public-private partnership model existed. We support responsible industries.
Trade unions in Kerala are often seen as a hurdle for industries. What is your response?
We believe in providing fair remuneration to workers. We involve trade unions in investment meets.
Has any industry in Kerala closed down in the last 20 years due to trade unions? Yet, nobody looks at the facts.
Kerala, with 1.16% of India’s land and 2.4% of its population, contributes 4% to the national GDP, which is commendable. Kerala has the highest number of five-star hotels in India—91 in total. These hotels were built despite claims of trade union issues. If trade unions were a problem, how were all these hotels constructed?
All these are negative propaganda. Rare incidents happen in every field. If we look at data on work strikes in India over the last 30 years, the highest numbers are in Tamil Nadu, Gujarat, and Maharashtra, not Kerala. So, the narrative that Kerala is synonymous with strikes is merely propaganda.