India’s Kerala plans for 'NRK City', tax cuts to attract over $10 billion from Gulf investors: Minister

Dubai: Kerala has outlined ambitious plans to create a dedicated city for non-resident Keralites (NRKs) – NRK City - coupled with significant tax incentives to attract over $10 billion in investments, particularly from the Gulf region, with a 100 per cent conversion rate.
NRK City, which is currently in the planning and architectural design phase, will be a physical space exclusively for NRK investments, the state’s Minister for Industries, Law and Coir P Rajeeve told Gulf News. “The land is available with us. The design work is ongoing,” the Minister explained.

It aims to channel the substantial remittances sent by Keralites abroad into productive avenues that generate employment and foster economic growth rather than just purchasing large houses or land.

The Minister said, “We have two plans for NRKs, as they contribute significantly to Kerala’s economy. Around 25 to 30 per cent of the state’s GDP comes from remittances sent by NRKs. We want to transform that money into investments that create employment opportunities, rather than just being spent on properties or land, which do not generate jobs.”

The Minister said the state decided to establish the dedicated NRK Park in Kannur district, offering priority allotment and specific schemes. The city will offer special schemes for NRK investors, including reduced premiums and moratoriums on investments, to make it an attractive proposition for those looking to contribute to Kerala's economy. “Kerala Industrial Infrastructure Development Corporation (KINFRA) has also expressed interest in this activity,” he added.

“For big investments, only 10 per cent of the premium is to be paid in the first year, with a two-year moratorium. Thereafter (it can be paid) in instalments over 10 years if the investment is above INR100 crore. If the investment is between INR 50-100 crore, then 20 per cent is required in the first year, with a similar moratorium and a five-year term,” the Minister explained.

“We’re also encouraging women investors through the ‘Year of Enterprises 3.0’ initiative. This is why we’re creating a ‘Pink City’ in Kochi, offering priority for women entrepreneurs. The same incentives available for NRKs will also apply to women entrepreneurs,” he added. The Year of Enterprises 3.0 aims to create 100,000 new Micro, Small and Medium enterprises in the financial year 2024-25.

The Minister, several officials from Kerala State Industrial Development Corporation (KSIDC), and other state departments are in the UAE for an investor meeting – called the Middle East Enclave. The delegation aims to meet with Gulf investors, particularly those in UAE and Saudi Arabia, to sell the state’s various investment initiatives ahead of its ambitious ‘Invest Kerala Global Summit’ in mid-February. The UAE will send a special delegation to the summit where over 200 global business leaders are expected to participate.

The state hopes to use the investments to boost development in 22 priority sectors identified by CM Pinarayi Vijayan-led CPI(M) party.

These include Aerospace and Defence, AI and robotics and other breakthrough technologies, Ayurveda, biotechnology and life sciences, design, and electric vehicles, to name a few.

When asked about tax incentives and return on investments for NRI and foreign investors, the Minister said, “For tax incentives, we have certain limitations, but now goods and services tax (GST) is there. And we are ready to reimburse 100 per cent of state GST component for capital investment and capital incentives of INR 10 crores.” Additionally, the state is ready to reimburse 50 per cent of the wages for newly recruited local trainees in the first year.

He added, “We’ve set up a committee, chaired by the Chief Secretary, to offer additional incentives on a case-by-case basis. The committee can provide more benefits beyond what is outlined in the industry policy.” Rajeev said the committee would evaluate each case and provide maximum benefits to investors, focusing on creating more employment opportunities and boosting state revenue through taxes. “We’re also prepared to give back a percentage of any additional revenues generated,” explained the Minister.

While the Minister did not commit to a target amount that the state hopes to raise following the Invest Kerala Global Summit, he said they hope for investments of over $10 billion from foreign sources. The final details of the investment incentives are expected to be finalized during the upcoming investor summit, with the government hoping to secure substantial commitments from Gulf investors.

The state has already seen domestic investments of around INR 23,000 crores.

Rajeeve said the state is receiving increasingly positive responses from investors, particularly from Gulf nations such as the UAE and Saudi Arabia. Kerala’s push is focused on high-tech manufacturing, ESG (Environmental, Social, Governance) investments, and industries such as biotechnology and life sciences, where the state has strong potential due to its biodiversity and skilled workforce.