A Kerala story: How a communist minister is rolling out the red carpet to shed state’s anti-industry image

State Minister for Industries, Law, and Coir P Rajeev

Kerala, India’s only Left Front-governed state, with red flags planted on roads and government buildings, is now rolling out the red carpet for investors.

State Minister for Industries, Law, and Coir P Rajeeve, for instance, has a countdown clock in his office in Kerala's capital city, Thiruvananthapuram. It displays the days, hours, minutes, and seconds remaining till the 2026 assembly elections, serving as a reminder for the industries minister, who assumed office on May 20, 2021.

“Everyone who visits or meets me in the office can see the countdown for both me and the government. Officers or investors sitting across the table can have a look at the timeline we should be working towards,” Rajeeve told Moneycontrol on the sidelines of a Bengaluru roadshow organised by Kerala's Department of Industries.

"In the recently released Business Reforms Action Plan (BRAP) rankings, Kerala ranked first in 2022, up from 15th in 2020-2021 and 28th in 2019-2020. The LDF (Left Democratic Front, the coalition governing Kerala) in its 2021 assembly election manifesto promised to reach this top position within five years but we achieved it much earlier," Rajeeve said.

The minister said that this achievement is due to reforms and coordination among multiple government departments to create an industry-friendly atmosphere in the state. "When working in government, coordinating with all bureaucrats and officials is a major challenge. I sent all my officers to IIM (Indian Institute of Management), Kozhikode for residential training to help change their suspicious mindset. Earlier, officials viewed investors as people trying to cheat the government. I asked them to change their outlook," Rajeeve said.

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Militant trade unionism

Kerala—a state with a long history of hostile trade unions—posed major challenges for investors. Frequent strikes and protests, red tape, harassment by officials, non-availability of land, and environmental issues have also deterred investors.

For instance, in June 2021, the Kerala-based textiles major Kitex Group announced its withdrawal from a Rs 3,500-crore project, alleging harassment by state government officials, and moved the entire investment to Telangana.

Other challenges include, paradoxically, rising unemployment, leading to another problem, the mass migration of highly qualified youth to other states and countries. Then there is a cash-strapped state government and an ageing population. Consequently, Kerala is largely absent from the investment map and is primarily viewed as a global tourism destination.

Tech-savvy taskmaster

Rajeeve, who holds a diploma in chemical engineering, has been active in politics since his school days, being a member of the Students' Federation of India (SFI), affiliated with the Communist Party of India (Marxist). He launched a website for SFI as early as in 1999. A tech-savvy politician, Rajeeve personally manages his social media pages.

He served as a Rajya Sabha MP from 2009 to 2015 and received the Sansad Ratna award for best parliamentarian. He also served as the chief editor of Kerala CPI(M)'s mouthpiece, Deshabhimani.

During his time in Parliament, he attracted attention. In 2015, the late BJP leader and then Leader of the House in the Rajya Sabha Arun Jaitley suggested to the late Sitaram Yechury, then CPI(M) general secretary, that Rajeeve should be considered for re-election to the Upper House. His performance as a parliamentarian led to some members even offered a brand new laptop in exchange for Rajeeve's iPad, which served as an encyclopaedia of rules and house proceedings.

In 2021, he contested the state election from Kalamassery in Ernakulam district, considered a United Democratic Front (UDF, the other axis in Kerala politics) stronghold, and won. He then became the industries minister in the Pinarayi Vijayan-led Left Front government.

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Apart from the top position in the BRAP rankings, Kerala is on a par with developed countries in terms of human development indices, as well as resources like ports, clean air, water availability and a skilled labour force. These are some of the facets that the state aims to highlight in order to attract investments ahead of the Global Investors Meet at Kochi in February 2025.

"Single-window clearance is provided for investments up to Rs 50 crore in one minute, allowing businesses to operate without a license for three years. For investments more than Rs 50 crore, clearance is granted within seven days. A grievance mechanism ensures that decisions on industry-related issues are resolved within 30 days, failing which the concerned officials will face penalties," Rajeeve said.

Priority sectors

The minister said that Kerala is unsuitable for large, polluting industries due to high land costs and ecological fragility, but state excels in skilled labour and connectivity. “Our focus is on investments in knowledge-based sectors. The new industrial policy prioritises 22 key sectors including aerospace, defence, AI, robotics, biotechnology, electric vehicles, electronics, food processing, IT, logistics, maritime, shipbuilding and renewable energy,” he said. He has met with around 5,000 investors across Kerala to gather input on simplifying rules and regulations.

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According to Rajeeve, BRAP ranking reflects improving investor confidence. “Negative perceptions of Kerala among industrialists are changing,” he said, citing policy changes and planned roundtable conferences and roadshows in India and abroad ahead of the Global Investors Meet in February 2025.

Recent successful events include the Gen AI conclave in Kochi with IBM and a roundtable on robotics. The government is also working on frameworks for global capability centres, export policies, robotics, and AI. “Kerala contributes 20 percent of the medical device industry turnover in India and also serves as a global hub for spice processing,” he pointed out.

Digital state

The minister said that Kerala is India’s first fully e-governed state in the country and also home to the first digitised bank. "Eighty-seven out of every 100 people have internet access. The state has declared the internet a basic right and built a vast optical fiber network to weave affordable connectivity into the lives of its citizens and government offices through Kerala Fibre Optic Network (K-FON)" he said.

“The state has a very high automobile density, with one in four families owning a car. The density of electric vehicles is also the highest in the country. With high purchasing power and moderate living costs, Kerala is trying to leverage these advantages,” he said.

The state is focusing on emerging technologies like AI, machine learning, data analysis and blockchain, having established the first digital university and the first digital science park. “The goal is to transform Kerala into a knowledge-based economy, utilising strengths such as skilled labour and connectivity through major ports,” he said.

“The upcoming ESG (Environmental, Social, and Governance) policy will provide incentives for sustainable investments. Developed countries are prioritising such investments. The state can become a hub for high-tech manufacturing within 10 to 15 years" he said.

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Campus industrial parks

The government has also decided to grant permission for 25 higher education institutions to establish campus industrial parks (CIPs). “This initiative allows institutions to prioritise the industrial production of their research outcomes. We have received 80 Expressions of Interest (EoIs) in just a week. Students interning at these local industries will get remuneration and academic credits. This will also help to retain talent in Kerala,” Rajeeve said.

"Educational institutions with more than 5 acres of excess land will be granted industrial status which allows them to establish industries. Priority will be given to applicants focusing on the industrial production of research outcomes from these institutions. The second priority goes to alumni, followed by industries permitted under existing rules in the area. This is a path-breaking step," he said.

Industrial licences for households

The minister said the state will also grant industrial licences to households. “Kerala's growing middle class will benefit from industry licences for household businesses. For instance, families owning houses with around 3,000 square feet of space can set up two computers to employ educated housewives. Financial assistance will be provided through K-DISC (Kerala Development and Innovation Strategic Council) and KKEM (Kerala Knowledge Economy Mission),” he said.

The objective, said Rajeeve, is to create 2 million jobs by promoting work-from-home and near-home options, as well as developing workstations in metro stations and other locations."Recent surveys show that Kochi and Thiruvananthapuram are among the safest cities for women to work. In Kerala, you have the freedom to eat what you want and wear what you like, without any restrictions."

'No workdays lost due to strikes'

The minister said workdays lost to strikes are minimal, with no factory attacks reported in Kerala. “Unlike other states, there have been no incidents attacking any company managers. Strikes will not affect the IT sector or related industries,” he claimed.

“As part of the ‘year of enterprises’ initiative by the government, within two years and six months, we have established over 2.9 lakh MSMEs (Micro, Small and Medium Enterprises) in Kerala, with an investment of more than Rs 18,000 crore. Out of these, 92,000 are women entrepreneurs and 30 are transgenders,” Rajeeve said.

On the Global Investors Meet, he said that most states have a Memorandum of Understanding (MoU) conversion rate of 10-20 percent, but Kerala aims for over 50 percent. "There's no point in announcing investments worth lakhs of crores if the conversion rate is poor," Rajeeve said.

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