Ease of Doing Business in Kerala

In India, Department of Industrial Policy and Promotion (DIPP), Government of India has been ranking States based on the World Bank initiated Ease of Doing Business policy. The States have been ranked based on the marks obtained by implementing the various Business Reform Action Points prepared based on the parameters that include ease in setting up a business, registration of property, labour compliances, infrastructure availability, finance and tax issues, inspection reforms and ease in exiting business.

Government of Kerala (GoK) had decided to undertake reforms to help place the State on an equal footing amongst other top ranked States and identified specific areas for improvement in various aspects of doing business in the State. It was also decided to adopt the best practices of other States to improve the ease of doing business environment in the State. State had laid emphasis on simplification of the existing Acts & Rules and introduction of information technology to make governance more efficient, effective, transparent and user-friendly.

The key steps undertaken by the State Government as a part of EoDB initiatives are -

KSIDC, being the nodal agency of the Government of Kerala, had done a study on the modification / amendments to be made in the concerned Rules and Regulations related to the existing clearance procedures in the State. Based on the recommendations of the study report, the Kerala Legislature has passed the Kerala Investment Promotion and Facilitation Act 2018, amending following seven acts of departments 'concerned.

- Acts

  • The Kerala Panchayat Raj Act, 1994
  • The Kerala Municipality Act, 1994
  • The Kerala Lifts and Escalators Act, 2013
  • The Kerala Groundwater (Control and Regulation) Act, 2002
  • The Kerala Head Load Workers Act, 1978
  • The Kerala Shops and Commercial Establishment Act, 1960
  • The Kerala State Single Window Clearance Boards and Industrial Township Area Development Act, 1999

Amendments to following existing 10 Rules were also issued thereon by the concerned departments-

- Rules

  • The Kerala Panchayat Raj (Issue of Licence to Dangerous and Offensive Trades and factories) Rules, 1996
  • The Kerala Panchayat Raj (Profession Tax) Rules, 1996
  • The Kerala Municipality (Registration of Private Hospitals and Private Paramedical Institutions) Rules, 1997
  • The Kerala Panchayat Raj Building Rules, 2011
  • The Kerala Municipality Building Rules, 1999
  • The Kerala Factories Rules, 1957
  • The Kerala Inter-State Migrant Workers (Regulation of Employment and Condition of Service) Rules, 1983
  • The Kerala Contract Labour(Regulation and Abolition) Rules, 1974
  • The Building and Construction Workers(Regulation of Employment and Condition of Service(Kerala)) Rules, 1998
  • The Kerala Motor Workers Rules, 1962
  • Changed the name of "Dangerous & Offensive Trades and Factories" licenses for starting and running enterprises to a more industry friendly "Factories, Trades, Entrepreneurship Activities and Other Services", thereby removing all negative connotations.
  • Eliminated the need for NOC from the DMO for undertaking all activities. Henceforth, Clearance from District Medical Officers to be applicable only for hospitals, clinics, laboratories and paramedical institutions.
  • Specific time limits (30 days) fixed for issue or rejection of licenses beyond which deemed licences will be issued.
  • Employers shall hire the services of only registered headload workers in notified areas. In case if a technical expertise is required they may engage their own manpower or machinery for loading/unloading tasks. An employer may henceforth arrange loading and unloading operations on his own.
  • Approval based on Self-certification and Third party certification for specific levels is implemented in the State for clearances from LSG / PCB / CTP / Fire & Rescue. However, misrepresentations if any detected later, a penalty of maximum of Rs.5 lakhs shall be charged.
  • The power of the Local Body to issue stop memos to industries that have obtained all statutory approvals, on receiving complaints about nuisance created by the venture has been taken away; instead, the local body has to seek an expert opinion from the concerned departments and take action based on that.
  • Stop memos/prohibitory notices to be issued, if any, only if the establishment fails to comply with the corrective norms of the technical departments within the stipulated time frame.
  • Licences to be issued with a validity of 5 years and renewal of the same will also be for 5 years. Renewal will be automatic based on fee payment with no separate application process.
  • Introduction of self-certification for green category industries for Pollution Control Board and self-certification for factory licence from Factories & Boilers, for factories with less than 25 workers.
  • Single Window Board to have the power to issue composite clearances that will be binding to all departments/agencies. Deemed licenses may be issued by the respective Boards in cases where the stipulated time period of 30 days have exceeded.
  • The licence for lifts and escalators may now be issued for 3 years and further renewed for a period of 1 year
  • Only two documents required for obtaining electricity connections – proof of identity and proof of legal occupancy
  • Coverage Area and Floor Area Ratios have been increased in the relevant rules thereby increasing he available land for construction
  • Categorizations of industrial activities in the ‘Hazardous’ category has been linked to the definition in Factories Act. The access road width, set back etc. will henceforth be dependent on this classification.
  • Spot registration introduced under 5 labour laws
  • Delegation in powers of approval from the Department of Town and Country Planning have been ensured, with CTP being the appellate authority
  • Orders issued for inspections to be done on the basis of a risk assessment of units, with the more risky to be inspected more often.
  • Defined registration process for profession tax payers
  • Provisions for joint inspection by departments have been introduced.
As a part of the Ease of Doing Business initiatives, the State Government had laid emphasis on introduction of information technology to make governance more efficient, effective, transparent and user-friendly. The State Government has now introduced an online Single Window Clearance mechanism (KSWIFT) to bring together concerned departments for expediting approvals within the time limits. Kerala Single Window Interface for Fast and Transparent Clearance (KSWIFT) will be the platform for all future transactions with the Government on the issue of granting licences and approvals in a time bound manner. Presently, the services of the following 14 Departments / Agencies are being made available in KSWIFT, wherein all the applications can be submitted through a unified Common Application Form (CAF)-
  • Directorate of Urban Affairs
  • Directorate of Panchayats
  • Department of Town and Country Planning
  • Department of Factories and Boilers
  • Department of Electrical Inspectorate
  • Department of Mining and Geology
  • Department of Forest and Wildlife
  • Department of Labour
  • Department of Fire and Rescue Services
  • Kerala State Pollution Control Board
  • State Environment Impact Assessment Authority
  • Kerala State Electricity Board Ltd.
  • Kerala Water Authority
  • Department of Ground Water
KSWIFT will be the unique integrating platform that supports the entrepreneurs in obtaining their requisite clearances for setting up and running an enterprise in the State. With features like CAF; intelligent information wizard; unified payment mechanism; time bound clearances; digital approvals; online issue of clearances; deemed approvals and composite licences, KSWIFT is one of its kind online clearance mechanism in the Country. KSWIFT will enable entrepreneurs to submit all their applications online along with provisions to upload the requisite supporting documents. Further, dedicated dashboards provided for both project proponents and Department officials, paves way for end to end tracking and processing of the applications. In order to increase the transparency of the whole process, KSWIFT has also enabled the provision for third party verification of the entire clearance process. Thus, KSWIFT will be the next revolutionary change in the clearances / legislative landscape of the State which will provide a thriving environment for enterprises in the State. KSWIFT is expected to reduce the physical touch points in the entire clearance process, thereby making the entire process more efficient and effective.

As a means of improving the entrepreneur – Government interface, the State Government has now constituted Investment Promotion and Facilitation Cells (IPFC) at both the State and District levels. The IPFC consists of officials of the concerned line Departments / Agencies that are involved in the providing clearances for setting up and running enterprises in the State.

IPFC shall act as the single point of contact for investors and accord all the required approvals for setting up and operation of enterprises in the State. The IPFCs are envisaged to track the progress of applications submitted online, obtain regular feedback from the stakeholder Departments / Agencies, remove bottlenecks if any and ensure time-bound disposal of applications. The IPFC will also be providing handholding support to all entrepreneurs who wish to make the State their preferred destination for starting and running an enterprise.

The IPFC at the State level, with Managing Director, Kerala State Industrial Development Corporation Ltd. (KSIDC) as its CEO will be headquartered in KSIDC Thiruvananthapuram office. While at the respective District levels, the District Collectors will be the Chairperson for the IPFC and General Manager, District Industries Centers its Convenors.

These initiatives of the State Government are sure to be milestone achievements in Kerala’s Industrial Scenario, whereby Governance will be simplified and entrepreneurs will find the State to be a true destination for setting up industries and thriving successfully thereon.