Kerala 2005 - of Planning Commission

CHAPTER 8
LOOKING AHEAD: POSSIBILITIES AND STRATEGIES
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locally produced, the multiplier effect of expenditure is
high. In all probability, the strategy can benefit a whole
range of people, beginning from cultivators and collectors
of medicinal plants, manufacturers of medicines and related
products, traditional and modern professionals, skilled
para-health care workers, educational institutions and so
on. Hence, a strategy based on differentiated and quality
product in tourism can create a whole range of linkage
effects in the Kerala economy.
The above brings out the linkages provided by the
economic activities based on ayurveda system of health
care. The existence of a traditional knowledge-base
sustained by Government policy in maintaining a number
of indigenous health/educational institutions has quickly
taken care of the supply of manpower in this growing area
of activity. The continuing growth has also opened up
new training and research institutions. Here again, public
policy has to focus on the quality of training and the
promotion of research and development activities to cater
to the demand for quality services. Similarly, a traditionoriented
and small-scale ayurveda pharmaceutical industry
has also begun to take roots and grow over the last decade
or so, creating additional employment opportunities with
its own linkages.
Manufacturing activities are mostly in the traded sector and
as such we have seen that Kerala’s performance here has
not been impressive, to say the least. This includes those
manufacturing activities for which raw materials are available
within Kerala. What this suggests is the comparative high
cost of manufacturing despite some advantages in the
Box 8.5: ICT and ITES Industry: Need for a Long Run Strategy
Kerala is a region with relative abundance of educated and technically qualified personnel, highest telephone density,
100 per cent digital connectivity, high PC penetration, making the State a fine place for the growth of ICT and ITES
industries But unfortunately the performance of the State is not up to expectations. The available data show that
the level of IT activity in the State is extremely low, the region contributes only less than 1 per cent of the overall
software exports from the country. There are not more than 100 professionally managed software companies in Kerala
concentrated in Thiruvananthapuram and Kochi. There are around 7,300 firms in Kerala in IT and ITES industries
taken together with an overall annual turn over of Rs.1,185 crore and direct employment of more than 40,000 people.
Hardware assemblers and vendors in the State occupy a major space in Kerala’s IT industry and employ close to
34,000 people. Domestic hardware turnover for 2003-04 was Rs.400 crore and exports of hardware was to the tune
of Rs.180 crore.
A major problem with regard to the software exports from the State is the absence of major Indian and multinational
firms, which is slowly being resolved with a potential entry of major players in the field. Another problem faced
by the industry is the shortage of highly skilled and adequately trained manpower, even though the State is having
enough educated manpower. The State needs to facilitate the creation of an adequate pool of trained human
resources for the ITES industry in particular. The language and communication skills and other soft skills essential
for the ITES industry need to be imparted. There should be more interaction between industry, academia and the
State, and manpower should be planned according to the needs of the industry. The State has a disadvantage in
terms of the non-availability of metropolitan social infrastructure, which is critical for the industry to retain its
human resources. The State also lacks associated infrastructure, including convenient and frequent national flight
connectivity (it has more international connectivity through the Gulf), to centres of technical and management
excellence, etc, which are considered vital for the industry. Attempts should be made to develop the Cochin
Special Economic Zone as a hub for assembling the widest range of electronic hardware items for national and
international markets and a major centre for ITES and business process outsourcing (BPO). Kochi has the advantage
of having international bandwidth availability of SEA-MEWE3 and SAFE and is a bandwidth surplus city in India.
The opportunities for Kerala IT and ITES industry lie in generating a goodwill for the State as an investor friendly
one and also generating adequate demand within the State itself. The potential for introducing e-governance in a
wide range of public services as well as internal functioning of the Government is immense. Similarly, in order to
reap the full potential of ICT and ITES industry, the State needs to adopt a long run strategy focusing on facilitation
policy, improving the quality of physical infrastructure, qualitative improvement in educational capabilities and
enterprise promotion.