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India By State - Kerala - Business Opportunities


Business Opportunities

 

Introduction

Kerala is well known for its traditional industries such as handloom, cashew, coir and handicrafts. These industries are one of the major sectors, which give employment to more than 1 million people in the State. Other important industries are rubber, tea, ceramics, electric and electronic appliances, telephone cables, transformers, bricks and tiles, drugs and chemicals, general engineering, plywood splints and veneers, beedi and cigar, soaps, oils, fertilizers as well as khadi and village industry products. Besides, there are a number of manufacturing units for production of precision instruments, machine tools, petroleum products, paints, pulp paper, newsprint, glass and non-ferrous metals. While, the principal export products in the State are cashew nut, tea, coffee, spices, lemon grass oil, sea foods, rose wood and coir. The predominance of cash crop cultivation has made the state a leading agro processing centre.

The Government of Kerala has given many concessions to the IT sector. This has prompted many IT majors like Infosys and TCS to set up software development operations in the state.

The growth of IT Enabled Services in the state is led by excellent infrastructure facilities (it has the highest tele-density and two submarine cable landings) and availability of skilled manpower (engineering colleges in the state such as National Institute of Technology, Calicut, are among the best in the country).

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Key Industries

Agro-based & Food Processing

A unique feature of the State is the predominance of cash crops. About 50 per cent of the population depends on agriculture. Kerala is a major producer of coconut, rubber, pepper, cardamom, ginger, banana, cocoa, cashew, aracanut, coffee and tea. Spices like nutmeg, cinnamon, cloves, etc. are also cultivated. Rice and Tapioca are the important food crops. On a national scale, 92 % of the rubber, 70 % of coconut, 60 % of tapioca and almost 100 % of lemon grass oil is produced from the State. Kerala's agriculture has the distinction of having the highest gross income per net cropped area. For instance, coconut occupies 41 per cent of net cropped area and provides livelihood to over 3.5 million families. While, the four plantation crops of rubber, coffee, tea and cardamom accounts for 29 per cent of the net cropped area in the State and 42 per cent of the area in the country.

Kerala Industrial Infrastructure Development Corporation (KINFRA) set up a world-class food park at Kakkancherry, Malappuram in 2002. Four units with a total investment of US$ 2.5 million have started functioning at the park. The state is home to small scale units engaged in spice mixtures, oils, oleoresins, cosmetics, aromatics and flavouring food & beverages. Share of food & beverages sector in the agro-based industry accounted for 2.7 per cent of the total sales in 2003.

Coir

The state produces textiles and readymade garments worth US $1 billion annually and almost one-third of this production is exported.

Kerala accounts for 95 per cent of the total coir and coir products manufactured in India. The Alappuzha district of Kerala alone contributes around 90 per cent to total coir produced in the state. The state has two coir parks at Alappuzha and a third park at Perumon, Kollam. Its Coir Co-operative Marketing Federation (COIRFED) is the apex federation of 600 odd coir co-operatives. It exports a wide range of coir products to the markets of the European Union, the United States and so on.

Electronics

There is 30% growth in domestic demand for electronic goods. A self-contained Electronics Technology Park, Technopark, Trivandrum has been established which is fast attracting electronics manufacturers worldwide. The State has a clear advantage in this field in the form of abundant availability of skilled and semi-skilled workers.

Chemicals

The chemicals sector accounts for 63.4 per cent of the total revenue by industry in the state. Kochi Refineries Ltd, a highly profitable enterprise, is the main player in the sector. It has a capacity of 7 million tonnes and provides feedstock to several own-stream projects. In addition, a large chemicals terminal is being set up at Kochi to make imported feedstock available.

IT/ITeS

The state's excellent communications infrastructure coupled with its geographical location has made it ideal for Information Technology (IT) and IT Enabled Services (ITES).The state is known as the 'Information Gateway' of the country. Kochi in Kerala is fast emerging as a unique IT destination. It is directly connected by two submarine cables and satellite gateways, which are used to support cities including Bangalore. Kerala serves as home to Technopark, Trivandrum and Infopark, Kochi. Two infotech parks developed at Thiruvananthapuram and Kochi house several software companies. Revenues from the IT sector stood at US$ 82.6 million in 2003 and exports were to the tune of US$ 65.1 million in the same period. The 2,750 hardware assembling units provide employment to 2,000. About 350 small and micro software enterprises in the IT sector register a turnover of over US $8.3 million

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Sea Food/Marine Products

sardines, shrimps, lobster, cuttlefish, squid, tuna etc. These have a high demand in the overseas markets. Ongoing technology upgradation in the export-oriented marine product sector indicates greater growth in the immediate future.

Textiles & Garments

The textile sector of Kerala is rapidly growing. Among all the traditional industries within the State, the textile industry, ranks second in providing employment, currently employing 0.2 million people within this sector. Its Co-operative sector consisting of factory type and cottage type societies dominates this industry with 94 per cent of looms. 6 per cent of the remaining handloom units are owned by Industrial entrepreneurs. There are 3,800 power looms, out of which 1,381 are in the Co-operative sector. Cotton yarn is the most popular product in the state followed by knitted garments and fabrics such as cotton and wool. The textile-processing complex at Kanjikode, the International Apparel Park thiruvananthapuram and the Industrial Export Park at Kochi offer walk-in-and-manufacture environments.

Tourism

Kerala has emerged as the most acclaimed tourist hotspot in the country. Beaches, warm weather, back waters, hill stations, water falls, wild life, Ayurveda, year-round festivals and diverse flora and fauna make Kerala a unique destination for tourists. Better known as "God's Own Country", Kerala offers a host of exciting holiday options. The factors stimulating a flourishing tourism sector include scenic splendor, moderate climate, clean environment, friendly and peace loving people with high tolerance for cultural diversity as well as the potential for creating unique tourism products.

In terms of statistics, Kerala forms a prime tourist economy of India and accounts for almost 13 percent of the state's total Gross Domestic Product (GDP). Kerala tourism touched about US $2 billion revenue in 2006 registering a growth of 16 per cent over the previous year. From the period between January and June 2007, the state recorded a rise in the number of tourists by 20.05 per cent over the same period last year. The tourism sector has a lot of potential and is predicted to grow by 11.6 per cent per annum over the next decade (This is the highest recorded growth in the world, surpassing Turkey's 10.2 per cent as well as against India's 9.7 per cent)

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Key Players

IBS Software Services

IBS Software is a leading software solutions provider to the global travel, transportation and logistics industry. It has moved many steps ahead and today has a staff of about 1000 Employees today. It began its operations with 60 employees in 1997. Its development centre in Trivandrum operates from Technopark and the facility at Cochin is based at Infopark

Apollo Tyres Ltd

Apollo Tyres Ltd is India's fastest growing tyre company and one of the country's leading tyre manufacturers. The company set up its first manufacturing unit at Perembra in Kerala. In 1995, Apollo took over the Premier Tyres plant in Kalamassery. Today, this plant manufactures most of the tyres that Apollo exports. The company also has plants in Gujarat and Maharashtra. Apollo Tyres was the first tyre company in the country to obtain an ISO 9001 certification for all its operations. The company manufactures tyres and tubes for two wheelers, cars, trucks and tractors and has a network of more than 100 sales and service offices in the country.

Coir Cooperative Marketing Federation (COIRFED)

The Kerala State Coir Co-operative Marketing Federation is the apex organisation in the coir industry comprising 585 member societies producing yarn, mats & mattings and operating de-fibreing units. COIRFED has 108 showrooms in the country, of which 51 are company-owned and the rest run by franchisees. The company also exports its products to Europe, USA and the Middle East.

Hays Plc

The US$ 4.3 billion British group has set up its documentation centre at the IT Park in Thiruvananthapuram, which functions as a support centre for Hays Plc's European business. Hays Plc has three streams of businesses in HR, logistics and commercial services which include imaging, corporate mailing, systems management and document management. The company has been present in the state for five years. It also has operations in Colombo, Sri Lanka and Tamil Nadu.

IVL India Ltd

IVL India Ltd, a wholly owned subsidiary of IVL GmbH, is a business technology consulting company specialising in SAP implementation, optimisation, integration and development of knowledge services. It develops software for its parent company's global clients in Germany, Italy, United States, Japan, Taiwan, Finland, France and Singapore. It is also a major player in the domestic ERP market with 85 mega projects under its belt. The company is based in Thiruvananthapuram.

Kerala Minerals and Metals Ltd (KMML)

Kerala Minerals and Metals Ltd, a wholly owned government enterprise, is one of the pioneers in the mineral sand industry in the country. KMML is the world's first fully integrated titanium dioxide plant and provides employment to 2000. KMML is the country's first and only manufacturer of Rutile Grade Titanium dioxide by Chloride route. KMML is ISO 9002 certified. It currently exports 20 per cent of its production and aims to increase this to 50 per cent by 2005.

Kerala State Bamboo Corporation

Kerala State Bamboo Corporation Ltd, a Government of Kerala undertaking, was established in 1971. Its head office is at Angamally in Ernakulam district. The main activities include manufacturing and marketing of bamboo ply, artefacts and other value added bamboo products. The corporation employs over 100,000 individuals engaged in reed cutting, mat weaving and manufacture of handicrafts.

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Seaview Support Systems Pvt Ltd

Located at Technopark, Trivandrum, and this 10 year old BPO Company providing back-office services such as Medical transcription, Coding, Billing, Medical research transcription, Legal transcription and Consultancy. Seaview is part of UK's ambitious multi-billion pound project to digitise its National Medical Service records. Seaview has a global presence through a joint venture with Speech Machines, the world's largest medical transcription company. Both the companies are based in Thiruvananthapuram.

Softex Computer Consultants

Softex is a global leader in developing games for mobile phones and software solutions. Its product and project portfolio includes wireless applications, Internet, Intranet and client server applications for industries such as healthcare, ITES, business and entertainment. The company's clients include international telecom giants such as Nokia, Ericsson and Siemens.

Steel and Industrial Forgings (SIFL)

Steel and Industrial Forgings Ltd, a subsidiary of Steel Industrials Kerala Ltd, is a wholly owned Government of Kerala undertaking located at Athani, near Trichur. SIFL's diverse product mix includes complex and high precision forgings for defence, specialised forgings for aero and space research, heavy forgings for commercial vehicles and spares for light automobiles. The company is ISO 9002 certified for its quality standards. Main production machinery comprises 10 tonnes and 6 tonnes closed die pneumatic forge hammers with an annual capacity of 7,500 metric tonnes of carbon & alloy steel and non-ferrous & special metals.

SunTec Business Solutions

SunTec, a US $20 million company, provides transaction management solutions for the financial services and telecommunications industries. The company has developed billing systems for domestic clients such as the Department of Telecommunications, HFCL, Escotel's ISP project, iServe and international clients such as KPN (Finnish), Essnet Cabletron and Triton. In 2004, German giant, Schroder Ventures Asia Pacific Fund invested US$ 4 million in SunTec, thus, enabling the company to enhance its global operations. The company currently offers solutions in the wireless, cable & broadband, wire line and Internet space. The company is based in Thiruvananthapuram.

Tata Consultancy Services (TCS)

Tata Consultancy Services, a US$ 2 billion IT services company, was one of the first IT companies to invest in the state. TCS has a state-of-the-art facility at the Technopark in Thiruvananthapuram. Today, this facility operates as a training college for new global recruits. TCS plans to operate another facility at Kochi. This centre will house about 600 software professionals and will serve as a base for software development and IT services to meet the requirements of both domestic and overseas customers.

Toonz Animations India Pvt Ltd

Founded in 1999, it is a major provider of animation to top US and European producers. It has corporate headquarters at the Technopark campus, with divisions in USA, Europe, Japan and Australia. It is a world-class animation studio delivering content for Film, Television, DVD, Internet and other interactive platforms. Based in Trivandrum, Toonz is among the most advanced studios in the country and has emerged as a potential player in the international animation industry. Promoted by the Canada-based Comcraft Group, Toonz Animations is a 100 per cent subsidiary of Multitech Investment, Mauritius. The company has successfully completed commercial films for clients such as Pepsi, Nestle, Bharat Gas, Coca-Cola, among others. In 2000, the company won the first prize at UNICEF's World Animation Celebration at Los Angeles. More recently, the Animation Magazine heralded the company as one of the top ten multimedia studios in the world. The company's turnover stood at US$ 5 million in 2004. The multi award-winning studio is headed by a team of professionals from different parts of the world.

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Traco Cable Company Ltd

The Company began its operations in 1964 in technical collaboration with a Canada based company M/S. Kelesey Engineering Co. Ltd. It is engaged in the task of manufacturing high quality cables and wires. It has its Head office at Kochi with factory works at Kochi and Thiruvalla. It caters to the needs of Public Sector Undertakings in India such as railways and electricity boards of various states.

Transformers and Electricals Kerala Ltd (TELK)

Set up in 1963, under an agreement with the Government of Kerala, State Industrial Development Corporation and M/S Hitachi Ltd., Japan. It is located at Angamally, near Kochi. It came into existence to set up a Unit for designing and manufacturing extra high voltage electrical equipments in India. The company commenced operations with the manufacture of power transformers and extended its products to a whole range of electrical equipments. TELK takes the credit of manufacturing the first 420 KV transformers (1978) and the first 420 KV SF6 breakers (1979) in the country.

Travancore Cements Ltd (TCL)

Travancore Cements Ltd was incorporated in 1946 and began manufacture of grey cement in 1949. It has a licenced capacity of 50,800 tonnes of cement per annum. TCL has diversified its businesses, adding ordinary portland cement, cement paint and dry cement primer besides acrylic emulsion paint for interiors and exteriors. The ISO 9002 certified company is the only manufacturer in the state that makes white cement from raw material other than conventional limestone.

US Software

This California-based company is a wholly owned subsidiary of US Technology Resources, LLC. Located at Technopark, Trivandrum, it is a leading provider of end-to-end global information technology and BPO services to Fortune 500 companies. The company was established in 1999 at the Infotech Park in Thiruvananthapuram. The company's state-of-the-art facilities in the state are highly rated by clients and independent assessors. The facility at Thiruvanathapuram is built on 180 acres and employs over 1,800 developmental resources. The facilities are connected by high bandwidth dedicated leased lines as well as Internet leased lines.

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Export Profile

Historically, Kerala has been a major exporter of commodities such as tea, cashew kernel, sea-food, coir products, spices and coffee. The Cochin SEZ is a multi-product SEZ with companies from the software, computer hardware, engineering, readymade goods, food processing, rubber products and gems and jewellery sectors.

In 2007-08, the major exports from the Cochin SEZ were gems and jewellery, worth US$ 951.4 million, and electronic hardware, worth US$ 65.9 million.

An airport-based SEZ by Cochin International Airport is one of the seven SEZs approved to be developed by the Central Government.

Investment

As of December 2008, the outstanding investments in the state amounted to US$ 29 billion, with the services sector accounting for a major share of the investments.

Between April 2000 and October 2009, the cumulative FDI inflow in the state was US$ 275.4 million.

Recent investments in the state have been the Integrated Infrastructure Development Centre at Kidangoor, Kinfra International Apparel Parks Ltd (KIAP) at Thiruvananthapuram, Kinfra Film and Video Park at Thiruvananthapuram, International Convention Centre Complex (ICCC) at Thiruvananthapuram, Technocity (Phase-IV expansion programme of Techno park in Thiruvananthapuram), Techno park Phase-III and a deep water port at Vizhinjam, near Thiruvananthapuram.

Break up of investments by sector

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More Information on Kerala

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