Identification of business segments in Kerala for active promotion by the government

Abstract

The project aims at identifying business segments for active promotion by the government of Kerala to attract investments to the state. Despite a remarkable record in terms of adult literacy, infant mortality, life expectancy, stabilizing population growth, and narrowing gender and spatial gaps, the state has experienced stagnant industrial and economic growth. Though usually attributed to the labor problems in the state, various other underlying factors could be responsible for the poor investor perception, the absence of cosmopolitan culture, lack of centers of excellence, and the lack of a comparative advantage with respect to the other southern states. Recently, there have been a few initiatives by the government of Kerala, including the new IT policy and the Tourism Vision 2015 that aims at developing particular sectors for disproportionate growth in the state and the setting up of the Technopark in Thiruvananthapuram. Tourism has also grown and currently contributes to about 3% of the state’s GDP. The success of tourism as an industry has been mainly attributed to the favorable government policies and its active promotional role, lack of labor issues and the presence of effective tourism development agencies. Based on the state’s competencies we have identified IT enabled services (with a focus on Business Sources Process Outsourcing), Biotechnology, food processing and healthcare with Ayurveda as the thrust areas for the government to focus on. In order to implement this, the government should focus on not just favorable policies but also look at the development of infrastructural capacities with private participation, setting up of industrial development zones, proper power, and water schemes and development of centers for higher education. Along with all this, the government should play an active role in Portraying Kerala as attractive propositions for investments.