Kerala Governments's Manufacturing Sector

A robust and diverse manufacturing or industrial sector is essential for the economy. An increase in the manufacturing sector's share of the GDP would accelerate economic growth. However, Kerala is not a state characterized by large industrial plants; the service sector is the dominant force here. Kerala's manufacturing sector is relatively small. The secondary sector includes manufacturing, construction and other sectors. The secondary or industrial sector (including manufacturing and construction) holds a prominent position in Kerala economy, accounting for 28.5 per cent of GSVA (at constant prices) in 2024-25. The manufacturing sector holds a prominent position in Kerala economy, accounting roughly 13% of the state's Gross State Value Added (GSVA), driven by traditional industries, MSMEs, and emerging high-value manufacturing. While the construction sector accounts 14.1% of the state's Gross State Value Added (GSVA). According to the Periodic Labour Force Survey (PLFS) of 2023-24, about 9.9 percent of total workers of the State were active in the manufacturing sector. 

Kerala's Industrialisation

The Department of Industries and Commerce oversees the industrial activity in Kerala. Manufacturing sector contributes a major part in the industrial development in Kerala. As per the assesment of Annual Survey of Industries India (2023-24), the share of Kerala in employment in the factory sector in India is 1.82 percent, while share of Kerala in total output in factory sector is 1.72 percent. Traditional industries, like coir, cashew and handloom contributes a major part of Kerala’s manufacturing workforce. Resource based industries like food products and beverages (which include cashew processing), beedi making, and textiles (including coir processing and handlooms) accounted for major share of workers in factory sector of state. Over the years, employment in traditional industries of Kerala has been decreasing whereas that in modern industries is increasing. Other Sectors providing more employments include food and beverages, chemicals, pharmaceuticals, rubber, plastic products and non-metallic mineral products. The leading industries in terms of employment generation in kerala include food and beverages, pharmaceuticals, refined petroleum products, chemicals, rubber and plastic products. 

The coming of few modern industries in kerala is another positive development in the industrial landscape. Industries such as electronics, medical instruments and supplies are some among them. The number of workers engaged in the manufacture of electronic components in Kerala increased from 2930 in 2012-13 to 7500 in 2019-20 and then to 9465 in 2023-24 fiscal year. The number of workers engaged in the manufacture of medical and dental devices and supplies increased from 1023 in 2012-13 to 5863 in 2019-20 and then to 8019 in 2023-24 fiscal year. The rise of demand in the State for medicines and healthcare products indicates that life sciences, pharmaceuticals, medical equipment manufacturing and biotechnology sectors have high growth potential in the state. The large numbers of hospitals, clinics, doctors and nurses in the state are factors conducive for these industries. The IT and electronics sector in the state increases demands for the production of more softwares and hardwares. The IT sector itself is going through fundamental changes and the state has to be prepared in this direction. Kerala has the potential to build a large electronics hardware manufacturing units.  The State should build on the unique advantages of the IT sector and also make good use of the skills and knowledge sets of its professionally qualified workforce. The presence of large number of State and Central public sector units working with strong support of state government is one of the unique features of Kerala’s industrial landscape.

Manufacturing Sector

Manufacturing is widely considered as the backbone of economic development. It has strong potential to generate employment, raise productivity, strengthen exports, and reduce dependence on imports. Manufacturing includes the organised and unorganised sectors. Kerala’s manufacturing sector is steadly increasing in the recent years. Kerala has also achieved steady progress in modernising and diversifying the industrial sector of the state. As per the estimates by the Department of Economics and Statistics, Government of Kerala, the GSVA of the manufacturing sector at constant prices increased by 15.33 percent to reach Rs.73,656.03 crore in the fiscal year, 2023-24. The sectors providing significant employment in the state includes the chemicals, food and beverages, refined petroleum products, pharmaceuticals, rubber products, plastic products and non-metallic mineral products.

Public Sector Undertakings

Public sector undertakings in Kerala fall into two categories: those where the Union Government holds the majority share (Central Public Sector Undertakings (CPSUs)) and those where the State Government holds the majority share (State Public Sector Undertakings). According to recent reports by the Comptroller and Auditor General of India (CAG), Kerala has 130 state government PSUs, comprising 115 functional and 15 non-functional enterprises. Four of them are statutory corporations. Eleven units in Kerala are joint ventures between the State Government and the Central Government. State public sector units have contributed significantly to industrial sector performance, particularly in recent years. Kerala has several State and Central public sector units operating in manufacturing sectors such as chemicals, engineering, and electronics. Certain public sector undertakings are pioneers in their respective fields at the national level. There are 51 Public Sector Undertakings, including eight cooperative spinning mills under the Department of Industries and Commerce, spread across nine different sectors. The number of profit-making Public Sector Undertakings (Net profit) under the Industries Department in Kerala has increased from 12 in 2023-24 to 14 in 2024-25. Also the number of Public Sector Undertakings making operating profit has increased from 18 in 2023-24 to 22 in 2024-25.

Micro Small and Medium Enterprises (MSMEs)

The Department of Industries and Commerce, Kerala Government, manages the MSME (Micro, Small, and Medium Enterprises) promotion, registration, financing, and advisory services in the state. MSMEs contributes a major role in promoting the entrepreneurship and innovation in the state. They functions across diverse sectors and cater to domestic as well as international markets with a wide range of products and services. The MSMEs contributes a major role in Kerala’s economic growth by promoting the entrepreneurship and creating jobs within a minimal investment. It supports the state's industrial development, especially helping by addressing rural challenges. The major industries under MSMEs in the state includes khadi, handicrafts, handlooms, garment making, food processing, textile industries and industries related to bamboo, coir, wood, plastic, leather, rubber, and clay products. MSMEs in Kerala produces more than 8000 products ranging from traditional to high-tech items.

Food Processing

In Kerala, the Department of Industries & Commerce, Government of Kerala serves as the state's nodal agency overseeing the food processing initiatives, notably implementing the Pradhan Mantri Formalization of Micro Food Processing Enterprises (PMFME) Scheme in Kerala for micro-enterprises. The food processing sector contributes a major role in strengthening the linkages between industry and agriculture. A developed food processing sector having higher levels of processing helps to reduce wastage, promotes crop diversification, provides decent returns to farmers, increase employment and also the export earnings. Kerala is rich in a wide variety of natural food items. Kerala has been successful in developing its ethnic food preparations that caters export markets, mainly to cater to the Malayali diaspora across the world. These products have turned into an important export sector. With many Keralites living abroad, also with the rising demand for processed food in the country, the state has great opportunities for developing its food-processing industry. To fully utilise this opportunity, the government needs to develop a suitable platform for the native farmers, food processors, and food retailers to work together and link farm production with the global market.

Traditional Industries

The Department of Industries and Commerce, Kerala Government oversees the traditional sectors across the state. It works to protect traditional livelihoods and promote sustainable manufacturing. Traditional industries in kerala include coir, handloom, handicrafts, cashew processing and khadi & village industries. These industries generate large scale employment, especially for women from relatively marginalised sections. Traditional industries create value and represent an important part of Kerala’s heritage and culture. They play an important role in promoting inclusive development.

Institutions, Agencies and Boards promoting Industries in Kerala

The Institutions in Kerala promoting Industries are,

■ Kerala Financial Corporation (KFC)

The Kerala Financial Corporation is a public sector financial institution that drives industrial development by providing tailored loan schemes to MSMEs and startups across the state

■ Kerala State Industrial Development Corporation (KSIDC)

The Kerala State Industrial Development Corporation (KSIDC) is an investment promotion agency of the Kerala Government. It was established in 1961 to catalyze large and medium-scale industrialization and infrastructure development in the state.

■ Small Industries Development Corporation of India (SIDBI)

SIDBI was established for promoting, financing, and assisting in development of industries in the small scale sector.

■ Kerala Industrial Infrastructure Development Corporation (KINFRA)

KINFRA is Kerala Infrastructure Development Corporation. It was set up in 1993. Its headquarters is at Thiruvananthapuram. They develops physical infrastructure across the state by establishing specialized parks like defense, apparel, electronic and industrial parks.

■ Small Industries Service Institute (SISI)

SISI is Small Industries Service Institute. It is located at Thrissur.

■ Infrastructure Kerala Limited (INKL)

Established in 2007. It is a PPP initiative promoted by the Kerala Government to accelerate infrastructure development across the state.

■ Directorate of Industries & Commerce (DIC)

Implements industrial activities and supports MSMEs through 14 District Industries Centres.

■ Kerala Small Industries Development Corporation (SIDCO)

SIDCO is Small Industries Development Corporation. It is established in 1975. They assists small-scale enterprises with raw materials and infrastructure.

■ Kerala Industrial and Technical Consultancy Organization (KITCO)

KITCO is Kerala Industrial and Technical Consultancy Organization. It is situated at Ernakulam.

■ Rural Infrastructural Development Fund (RIDF)

RIDF is Rural Infrastructural Development Fund. It was formed by NABARD in 1995-96.

■ Kerala Bureau of Industrial Promotion (K-BIP)

They are the promotional arm of the Industries Department of Kerala Government. They focuses on technology infusion, skill development, and cluster development

■ Kerala Startup Mission (KSUM)

They serves as a nodal agency for promoting the technology startups and implementing the state startup policy.

■ Kerala Khadi & Village Industries Board

They promotes traditional village and cottage industries.

■ Centre for Management Development (CMD)

The Centre for Management Development (CMD) is an autonomous institution of Kerala Government established in 1979 under the Department of Industries and Commerce. It functions as a research-driven management consulting, advisory, and training agency. It serves as professional managerial support to central, state and local governments, development organizations and corporate entities.

■ Kerala Institute for Entrepreneurship Development (KIED)

They conducts training programs and manages the entrepreneurship development clubs in schools and colleges.