Kerala’s new draft industrial policy promises huge incentives for MSMEs and non-MSMEs

Major incentives proposed include investment subsidy, 100% electricity and stamp duty waivers, and expenses reimbursement

September 28, 2022 05:58 pm | Updated September 29, 2022 01:41 pm IST - THIRUVANANTHAPURAM

Kerala’s new draft industrial policy

Kerala’s new draft industrial policy | Photo Credit: The Hindu

Kerala's new draft industrial policy, set to be officially unveiled by Industries Minister P. Rajeeve on Thursday, 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.

Also read: Kerala improves ranking in ease of doing business index

Major incentives

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.

Also read: 49,608 MSMEs registered in State: Minister

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.

Draft policy highlights
10% investment subsidy (maximum ₹10 crore) on fixed capital for non-MSMEs
100% State GST reimbursement for capital investment for five years for non-MSMEs
100% electricity duty exemption for MSMEs for five years
50% reimbursement (maximum of ₹1 crore) of new MSMEs’ expenses
100% waiver of stamp duty and registration charges for setting up manufacturing units in industrial parks
20% reimbursement (maximum ₹25 lakh per unit) on cost of software including big data analytic tools and machinery in upgrading manufacturing

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.

Also read: Kerala to set up graphene industrial park: Minister Rajeeve

For exporters and technological upgrade

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.

Also read: Kerala State Information Technology Infrastructure Limited to incentivise setting up of rural BPO/IT operations

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