Impact of FDI on Kerala Economy has been quite strong in recent years. The state is highly well-developed in terms of literacy, education and health. Kerala has an abundance of natural resources which is conductive to Foreign Direct Investments in the state. Kerala has gained from FDI inflows in terms of technological advancements, increased competitiveness and growth in export production.

Kerala has an abundance of natural resources.

• The state is highly well-developed in terms of literacy, education and health.
• Advantage of location is an important factor as Kerala is located on the trans- national trade corridor.
• It is well connected to other important states of India.
• Kerala provides considerable advantage in terms of cost structure to foreign investors.
• Communication networks are quite well-developed in the state.
• The state government policies are proactive and provide incentives to various enterprises.
• The investment patterns are quite simplistic and limpid.
• The service sector in Kerala has occupied almost two-thirds of the state’s economy.

Sectors with high Foreign Direct Investment Inflows in Kerala

• Mineral and Clay based products
• Traditional Industries
• Tourism
• Auto Components
• Agro Processing

Significant impacts

Impact of FDI on Kerala Economy has been quite strong in the recent years. Significant foreign direct investments have taken place in Kerala in the past few years and it has also introduced a set of welfare measures in order to provide financial assistance in the form of commercial debt or portfolio investment. FDI Inflows in Kerala also include non financial assets in production and sales purposes. FDI Inflows in Kerala has improved the state’s economy by increasing the output and income.

Some of the major benefits to Kerala from FDI Inflows are

• Foreign Direct Investments have brought technological advancements in various industrial sectors in the state.
• It has increased competition in the major economic areas of Kerala.
• Foreign Direct Investments have also led to the success in export-production.
• FDI Inflows have diminished the gap in foreign exchange reserves.