Kerala announces measures to build industry-friendly environment

Thiruvananthapuram, Feb 20 (PTI) The Kerala government on Thursday announced a series of measures to make the state more industry-friendly, including eliminating the requirement for panchayat licenses for enterprises classified under the White and Green categories of the Pollution Control Board.

Speaking at a press conference, Minister for Local Self-Governments M B Rajesh said the relaxations are intended to create a business-friendly environment in the wake of the Invest Kerala Global Summit (IKGS), which begins on Friday in Kochi.

"In 2024 alone, the Local Self-Government Department introduced 47 reform measures under the Ease of Doing Business initiative.

These reforms—covering rules, procedures, and online platforms—have been well received by the business community. They have significantly contributed to Kerala’s improved Ease of Doing Business ranking. The state’s recognition as a Top Achiever in service quality in municipalities and corporations is a notable achievement of the department," he said.

The minister stated that the K-Smart project, which aims to provide local self-government services digitally on a unified platform, will be extended to panchayats by April.

This will further strengthen Kerala’s progress in e-governance and enhance the industry-friendly environment, he added.

To further support entrepreneurs, the government plans to amend the Kerala Panchayat Raj (Grant of Licenses for Factories, Trades, Entrepreneurial Activities, and Other Services) Rules, 1996.

The draft rules, submitted by the Principal Director of the Local Self-Government Department (LSGD), are currently under review to make local self-government institutions more entrepreneur-friendly.

At present, many new-age enterprises struggle to obtain licenses due to outdated regulations listing only older business categories.

This will change, allowing any legal enterprise to secure a license from panchayats, the minister said.

According to Rajesh, enterprises are categorized into two groups: Category I and Category II.

Category I enterprises consist of production units.

Those classified under the White and Green categories by the Pollution Control Board will only require registration, eliminating the need for a panchayat license.

However, businesses falling under the Red and Orange categories must obtain a license from the Grama Panchayat.

Category II enterprises include businesses engaged in trade, commerce, and services.

These enterprises must secure a license from the Secretary of the local body.

Currently, there is no mechanism to issue licenses for cottage industries and home-based commercial service activities.

While small enterprises can operate without a license, this has led to challenges, particularly in securing bank loans and GST registration.

To address this, a new provision will be introduced, allowing businesses classified under the White and Green categories of the Pollution Control Board to obtain licenses even if they operate from residential buildings, regardless of their designated occupancy category under building regulations.

Up to 50 per cent of residential properties can be used for such entrepreneurial activities, the minister said.

The license fee will now be determined solely based on capital investment, replacing the previous system that factored in horsepower.

A lower fee slab will be introduced to support entrepreneurs with minimal capital investment, and the exclusion of land and building costs from capital investment calculations is under consideration, the minister said.

Inspections will be limited to areas under the jurisdiction of panchayats or secretaries.

Additionally, the rule requiring licenses to expire at the end of the financial year has been abolished. Instead, a one-year license will now remain valid for a full year from its date of issuance, he added.

The issued license will also clearly outline the responsibilities of the licensee, he said.

Regarding breweries, Rajesh said he could confirm whether they fall under Category I or II only after verification.

"This is in no way linked to the proposed brewery unit at Elappully panchayat in Palakkad district," said Rajesh, who is also the Minister for Excise.

Meanwhile, criticism has emerged from various quarters, alleging that the relaxations are intended to facilitate the establishment of the brewery unit at Elappully.

The Congress-ruled local body has already opposed the project and accused the government of curtailing the powers of grama panchayats.

Revathi Babu K, president of the Elappully panchayat, alleged that the relaxations were introduced to enable the proposed brewery, as permission from the local body is required for constructing buildings and roads for the project. PTI