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State Budget includes proposals to boost Startup Ecosystem

Kerala Budget 2020 presented by Dr. T M Thomas Isaac, State Finance Minister, in the first week of February proposed that the total area of Technopark, Infopark and Cyberpark would be raised to 245 lakh sq. ft. by 2021. “In 2016, the total area of Technopark, Infopark and Cyberpark was about 145 lakh sq.ft. In

Kerala Budget 2020 presented by Dr. T M Thomas Isaac, State Finance Minister, in the first week of February proposed that the total area of Technopark, Infopark and Cyberpark would be raised to 245 lakh sq. ft. by 2021. “In 2016, the total area of Technopark, Infopark and Cyberpark was about 145 lakh sq.ft. In 2021 this will be raised to 245 lakh sq.ft. In 2016 around 78,000 persons were employed in IT/IT related fields. Now the number has risen to nearly 1 lakh. In 2021, another 85,000 persons are expected to be employed here. Most prominent electronic companies in the world have expressed their desire to invest in Kerala. Since there is non-disclosure clause their names cannot be revealed,” the Finance Minister said in his Budget speech.
Besides, the Minister said, the building of Technocity having an area of 2 lakh sq.ft., which is expected to be completed by March, has been fully booked by various companies. “Further, the government is adopting a policy that encourages the private companies also to establish parks,” the Budget noted.
Minister Isaac mentioned that all the prominent corporate companies that had expressed their desire to make investments in Industrial Parks, as mentioned in the previous budget speech, have already commenced their operations in Kerala. “Nissan has given employment to 800 persons at Technopark in the field of data science and artificial intelligence. An understanding has been reached to establish a new centre for the electrical vehicles segment of the company on a 30-acre plot in Technocity. Taurus has commenced the work of its two buildings at Technopark having an area of 27 lakh sq.ft. A complex having 57 lakh sq.ft. space will be completed before 2024. H R Block has operationalised its 40,000-sq.ft. building and given employment to 800 persons,” the Budget said.
In another major development that would give further impetus to the growth of Kerala’s startup ecosystem, the Finance Minister has proposed sanctioning of loans to startups without asset security. “Today, 2300 startups are working across various sectors. Paucity of capital is the biggest issue faced by them. As a solution to this, loans would be made available without asset security to those who have secured work order from government/quasi government/major corporates or institutions,” it said.
The proposals are:
A scheme for providing 90 per cent of work order as loan, up to a maximum of Rs. 10 crore at an interest rate of 10 per cent. If these are purchase orders, money will be given after discounting them. KFC & KSIDC will give money across the counter without any collateral security on the recommendation of an expert committee chaired by the IT Secretary. Any loss sustained on account of this will be made good by the government.
Financial assistance of up to Rs. 1 crore will be provided at the time of development of new product prototypes that are linked to the sustainable development goals of the UN and are also required by any government department. For this, an amount of Rs. 10 crore is provided to KFC. An amount of Rs. 73.50 crore is earmarked for Startup Mission for 2020-21.
There has been a criticism that new companies set up their headquarters in Chennai and Bengaluru since the stamp duty in Kerala for starting and merging the companies is higher compared to that in Tamil Nadu and Karnataka. The issue will be included in the Finance Bill to examine and rationalise the rates.

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