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India By State - Kerala - Taxation & Legalities




Taxation & Legalities

Policies & Incentives

IT Policy

The state's IT Policy has laid down the following strategies to tap the business opportunities offered by Information Technology. The main focus is about a creation an appropriate pro-business, pro-enterprise, legal, regulatory and commercial framework to facilitate rapid growth of the IT industry.

They want to establish an internationally competitive business infrastructure and environment for the IT industry, at par with the best facilities and practices worldwide.

A number of labour regulations related to working hours for the IT/ITES sectors have been relaxed, making it the first state to permit flexi-time, a three-shift operation and women working in night shifts. The state has also introduced a system of self-certification for these sectors.

Biotech Policy

The guidelines as laid down under the policy are as follows:

  • To increase the value of the state's export-oriented resources such as Spices and related Plantation crops, Sea foods and Marine resources
  • To improve the level of productivity and create new application in Rubber, Coconut, Tuber crops and develops competitive products meeting international standards.
  • To develop recombinant DNA and other modern technologies to combat the major health hazards of the state such as Cancer, Diabetes and Cardiovascular and other physiological disorders; to develop diagnostics and vaccines for overall health care as well as to protect the state's Agriculture, Spice, Plantation and Forest crops, from biotic and abiotic stresses
  • To promote a sustained build-up of both the knowledge cadre and knowledge base through the strengthening and creation of educational and R&D institutions
  • To establish an infrastructure and put in place an administrative, regulatory, legal and financial framework conducive for investment and growth of biotech enterprises, which in turn will promote economic development and human welfare
  • To provide an ambiance with a package of guidelines for financial support and incentives, legal and labour reforms as well as institutional autonomies needed for the healthy, efficient and competitive growth of biotechnology knowledge base and industry.

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The Government has set up the Kerala Biotechnology Commission and the Kerala Biotechnology Board. The latter headed by the Chief Minister, will create a corpus of US$ 20.65 million to build infrastructure such as biotech parks. The board will liaise with national and international agencies and ensure appropriate and timely implementation of the policy

The Kerala Biotechnology Commission will be responsible for the implementation of the Biotech Policy and related guidelines laid down by the board. The Commission aims at identifying focus areas of investment and prioritising projects for implementation :

The biotech parks in the state are principally designed to have the following components:

Bio-resource centre: A hub to provide infrastructure, equipment, facilities and services to assist the tenants and clients of the park

Technology incubator: Develop and licence technologies with the help of R&D institutions for tenants and clients

Training centres: Impart technology skill packages in biotech streams

Infrastructure Policy

Kerala Industrial Infrastructure Development Corporation (KINFRA) is the nodal agency for all infrastructure development activities in the state. The state policy proposes to set up a fund to undertake preliminary/feasibility studies for infrastructure and project development related activities under various departments.

The State Government has outlined a renewable energy policy, the focus of which is to develop non-conventional energy sources, provision of single window technical assistance, sourcing of finances and project clearances.

Tourism Policy

The main aim is to give a boost to the tourism sector and help the state meet its social and economic growth objectives. This policy aims to increase the annual international tourist traffic from 0.1 million to 0.5 million and annual domestic tourist traffic from 1 million to 5 million in the next five years. The policy provides various concessions and incentives to entrepreneurs in tourism-related activities.

The key features of the policy are:

  • To select tourist destination with proper planning for development so as to retain high quality of aesthetic and environmental beauty
  • To develop the destinations in a sustainable and eco-friendly manner.
  • To develop basic Infrastructure and ensure cleanliness of tourist destinations.
  • To develop specialised tourism - Ecotourism, Health tourism, rural tourism, Adventure tourism, Plantation tourism. Back water tourism as well as domestic tourism, especially Pilgrimage tourism.
  • To build a good infrastructure through participation by the private sector and through private public partnership with the Government
  • To continue extensive and aggressive marketing of Kerala at National and International markets and promote it as a unique tourism destination
  • To strengthen the domestic tourism sector initiated by local Governments
  • To bring about quality in tourism services and facilities
  • To ensure the safety and security of tourists
  • To clearly specify the roe of government as a catalyst and facilitator in infrastructure development
  • To enhance Inter-governmental coordination

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Labour Policy

The initiatives include the improvement working conditions, providing decent wages and basic lifeline Social Security for workers, especially in the unorganised sector.

The second initiative is to minimise adversarial labour relations and providing labour market security, employment security, work security, and income security for the working population

  • Creative measures to attract public and private investment.
  • 15 lakh new jobs in the coming five years.
  • A unified and consolidated legislation for social security schemes.
  • New Social security schemes for workers in the unorganised sector.
  • Social security cards for workers.
  • Unified and beneficial management of funds of Welfare Boards.
  • Reprioritisation of allocation of funds to benefit vulnerable workers.
  • Model employee-employer relationships.
  • Long term settlements based on productivity.
  • Vital industries and establishments declared as `public utilities`.
  • Industrial Relations committees in more sectors.
  • Labour Law reforms in tune with the times.
  • Referenda for recognition of trade unions
  • Statutory amendments for expediting and streamlining the mechanism of Labour Judiciary.
  • Amendments to Industrial Disputes Act in tune with the times.
  • Efficient functioning of Labour Department.
  • More labour sectors under Minimum Wages Act.
  • Child labour act to be aggressively enforced.
  • Modern medical facilities for workers.
  • Rehabilitation packages for displaced workers.
  • Restructuring in functioning of employment exchanges, computerization and updating of data base.
  • Revamping of curriculum and course content in industrial training.
  • Joint cell of labour department and industries department to study changes in laws and rules.
  • Kerala Institute of Labour & Employment have to be upgraded.
  • Policy progress monitoring team to review progress of implementation of policy.

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Doing Business in Kerala

Obtaining approvals

An indicative list of approvals with timeframe for setting up business in Kerala

List of approvals and clearances required

Departments to be consulted

Incorporation of the company Registrar of companies
Registration, IEM, Industrial licences District Industry Centre for small scale industries for large and medium industries
Allotment of land State Department of Industries / State Industrial Development Corporation / Infrastructure corporation
Permission for land use State Department of Industries, Department of Town and Country Planning
Site environmental approval State pollution control board and Ministry of environment and forests
No Objection Certificate and consent under water and pollution control acts State pollution control board
Approval of construction activity and building plan Town and country planning authority
Sanction of power State electricity board
Registration under states sales tax act and central and state excise act Sales tax department, Central and state excise departments

Estimated time taken (in days)

SINGLE WINDOW CLEARANCE The state's single window facility clears investment proposals in 45 days on an average. The single window obtains all approvals necessary for the investment proposal within the specified timeframe*.

*Source: Kerala State Industrial Development Corporation

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Cost of setting up business

An indicative table on cost of setting up business in Kerala

Manufacturing

Land (US$ / hectare) NA
Labour cost (US$ / man year)* 1,327

Services

Occupation cost  

Employee cost (US$ / man year)**

Software developers 6,383
Team leads 14,893
Architects 21,276
Project managers 31,915

Common heads

Cost of capital* (Prime lending rate, per cent) 10.57

Electricity (US cents / kWh)**

Commercial 9.3
Industrial 4.79

*Source: Indiastat.com
**KPMG Analysis on costing for an IT venture in India
*Estimated by computing the average Prime Lending Rates of prominent public sector, private sector and foreign banks in India
**Source: Indiastat.com
Note: Exchange rate used is INR 47 per US$

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More Information on Kerala

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