Kerala's investment puzzle: Strikes, summits, and stalled growth

As with every investment summit Kerala has hosted in recent years, there was a lot of anticipation, noise, and talk from the latest one about hundreds of millions of rupees flowing into the state. Funds leading to new ventures that would create jobs and, hopefully, help the Indian state shed its image of being less than business-friendly.

The Adani Group, notably, confirmed at last week’s summit that it would commit Rs300 billion over the next 5 years. This would be on top of the Rs50 billion already put into the new Vizhinjam port in Thiruvananthapuram. But commitments, firm or otherwise, from other corporate groups, have not been as prominent. At least so far.

Even if the Kerala government manages to actually sign deals for even 20-30% of the promised funds to show up, the latest summit would have served its purpose. But recent history has not been kind in terms of promises being kept and businesses turning their attention to launching new projects in the state.

There are hardly any in government who track the promises made at one summit and issue updates on how many were actually received before the next investment summit shows up on the calendar.

This time, there is also the next Kerala Assembly election to deal with, which must be held before May 2026. How many CEOs will actually go through the process of confirming new projects or releasing fresh investments into Kerala until a new government is formed?

The fact is Kerala and its economy needs something better than these annual investment extravaganzas. The state government, whether by LDF or UDF, should, ideally, have a rethink on what sort of industries should actually be promoted. Do they seriously think Kerala can stand up to Tamil Nadu, Maharashtra or Gujarat in attracting big-scale manufacturers, such as a carmaker? Kerala’s track record with heavy manufacturing in the public sector has been woefully inadequate over the decades, and it would take private enterprises' deep pockets and extremely good fortune to create a successful industrial venture.  

Yet, the obsession with heavy industry and manufacturing continues, and with paltry returns in committed investments. Instead, why can’t the Kerala government and its bureaucrats give serious thought to refocusing attention on select new-age industries? Why not go all out on being the base for the next generation of IT businesses and allied services?

Sure, Kerala already has its IT parks, but some of which are nothing more than real estate plays. How about bringing global or Indian businesses to create tech hubs or campuses to house their future workforces? It needn’t be that those tech hubs can only happen in Bengaluru, Chennai, Pune or Hyderabad.

If done well, even partially, those tech businesses setting up in Kochi or Thiruvananthapuram will be able to draw on sufficient talent from within the state. There are colleges and centres of academic excellence within Kerala already that could provide these tech businesses with the required manpower skills. (Kerala’s youth - and their parents – have already shed their single-minded focus on only looking at engineering or medicine as their career choices.)

Kerala can also play to its strengths – of being an out-and-out consumerist society. Why can’t the government shift its focus to businesses that can feed into those consumer habits? Why not be the go-to destination for mid to big-sized food processing ventures? Or even take the lead in agri-tech, another growth area that if handled well can draw significant investments into the state. Here too, Kerala can utilize its strengths in having a fairly top-notch transportation infrastructure and network. 

But can Kerala’s politicians and bureaucrats ditch the obsession with heavy industry and think smaller? Because there can be serious money available to support projects that would tie in neatly with what the Kerala economy can actually take up.

Of course, always provided that another Kerala ‘curse’ doesn’t show up to scare off those businesses and investors – strikes and worker militancy.