Kerala has come up with India’s first state-level environmental, social and governance (ESG) policy, aiming to attract investments that align with green and ethical standards.
The policy, announced on October 2, lays out a basket of incentives — tax credits, subsidies, loan concessions and startup incubation — for businesses and individuals who comply with ESG goals.
The document says investors who meet ESG criteria will be eligible for tax credits, including 100% reimbursement on capital investment for five years. This means their tax liability could reduce, depending on the nature of investment. There will also be deferrals on capital gains for investments in ESG-focused mutual funds.
For enterprises taking up fixed capital investment, the government will give a 10% subsidy capped at ₹50 lakh. The Kerala State Industries Development Corporation (KSIDC) will step in with low-interest loans for machinery and technology, while also monitoring ESG adoption.
In public procurement, local enterprises that follow the ESG framework will get a 20% purchase preference margin, giving them an advantage over competitors.
The government plans to use its MSME clinics to help investors prepare project reports and access entrepreneurship support schemes. Startup incubation and market access are part of the package.
Officials said the idea is to make Kerala a friendlier destination for businesses that already put ESG at the core of their strategy worldwide.
Kerala has set ambitious green targets: a complete shift to renewable energy by 2040 and carbon neutrality by 2050. Planned investments include solar parks, floating solar and wind farms, hydroelectric projects and biomass initiatives.
On the social side, the state wants to see more women in the organised workforce, stronger labour standards, higher transparency, respect for human rights, anti-corruption measures and public ESG disclosures.
The industries and law minister P Rajeeve said the new policy was designed to draw ESG-friendly investments and build awareness among both entrepreneurs and the public.