Kerala draft IT policy offers incentives for tech parks providing 50% of jobs to locals

The draft policy outlines that the government will offer capital subsidies based on investment ranges and locations for new or expanded IT/ITeS/BPO units in Kerala.

Kerala's draft IT policy–2023 aims to provide incentives to private land developers and investors who prioritise hiring candidates from the state.

According to the draft policy, investors offering 50 percent of jobs to Keralites will receive special incentives, based on investments ranging from Rs 100 crore to over Rs 1,000 crore, with minimum direct employment generation from 1,000 to 5,000.

The draft policy outlines that the government will offer capital subsidies based on investment ranges and locations for new or expanded IT/ITeS/BPO units in Kerala. The capital subsidy will be back-ended and based on investments in Eligible Fixed Assets (EFA).

Rathan U Kelkar, secretary, Kerala Electronics and Information Technology department, told Moneycontrol that the draft policy is currently under discussion. “It will be finalised after considering inputs from multiple stakeholders and is expected to be completed within a month,” he said.

Asked about incentives for providing 50% of jobs to locals, Kelkar said, “The policy is currently open for discussion.”

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To support large-scale co-developers in establishing facilities within IT parks, the state government will provide various phased payment options for leasing government-owned land. These options include a 99-year land lease, making land available without encumbrances, and offering payment flexibility, such as paying only 25% of the land lease amount upfront, with the remaining 75% paid in 10 equal yearly instalments with interest.

Other incentives include SGST (State Goods and Services Tax) reimbursement (up to 25% with a maximum limit of Rs 10 crore for 3 years), power tariff extensions, stamp duty exemptions, waiver of registration charges, and incentives for units employing women, differently abled, and the third gender. Additionally, there are reductions in land conversion charges, quality certification incentives, and special subsidies for green campus initiatives and 5G street infrastructure development.

IT/ITES organisations with 25 employees or more operating from a leased built-up space in a government-owned IT park can claim salary reimbursement as a rent discount, equivalent to 5% of the monthly rent, and up to a maximum of ₹15,000/month, for one year if they provide permanent employment to transgender persons on the campus.

Similar financial aid is applicable for neurodivergent individuals and differently-abled people. Organisations employing more than one category of people can compound the financial aid provided for each category, the policy states.

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For eligible organisations, owning or having on their board persons who are transgender, neurodivergent, differently abled, or a combination of these, a 10% discount on the base rent is available, with no ceiling on the cumulative amount claimed.

Organisations with 50% or more women employees working on the campus are eligible for a 10% discount on base rent for 12 months, with no ceiling on the cumulative amount claimed. To qualify, the organisation should have 50% or more women employees for the preceding 12 months. The rent escalation is calculated on the non-discounted base rent, and financial aid can be given consecutively or whenever the preceding 12 months meet the specified criteria, the draft policy states.

The policy states that Kerala should aim to capture 10% of the country's IT market share in the next five years, creating at least 500,000 new jobs in the IT and allied sectors in Kerala. It also proposes to increase the number of startups operating out of Kerala to 20,000.

The state government also plans to set up small-format co-working spaces (Work near Home) in neighbouring towns and support the development of startups and small-scale entrepreneurs through its  Fostering Technologies in Rural Area (FOSTeRA) scheme. All these facilities will have plug-and-play amenities, and units operating from these spaces will enjoy the privileges applicable to units in government IT parks.

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