From Rare Earths to Tourism: How Budget 2026 Unlocks Kerala’s Growth Story

Union Budget 2026–27 backs growth over grants, unlocking big opportunities for Kerala in rare earths, MSMEs, coconut, cashew, fisheries, tourism and green growth through record capital outlay.

By Vineeta Hariharan: Union Budget 2026–27 is built less as a grant ledger and more as a growth architecture. It does not hand out state‑wise packages; instead, it puts large, quantified capital behind sectors, value chains and institutional platforms. For Kerala, that distinction matters. The state’s advantage lies in how closely its natural resources, enterprise structure and service strengths align with the Budget’s funded priorities.

A careful reading of the Budget Highlights shows that Kerala stands to gain across critical minerals, infrastructure, MSMEs, coconut, cashew, women‑led enterprise (SHE economy), fisheries, tourism and green growth and the opportunity is best understood through the figures the Budget itself commits.

Critical Minerals: Kerala Explicitly Included in Rare Earth Corridors

One of the most strategically important provisions directly names Kerala among mineral‑rich states selected for Rare Earth Corridors to promote mining, processing, research and manufacturing. The Budget also provides customs duty exemptions on capital goods used for critical mineral processing, lowering project entry costs. For Kerala, with coastal mineral sands and separation capability this creates a pathway from raw mineral extraction to downstream advanced materials.

Record Public Investment: ₹12.2 Lakh Crore Capex, ₹17.1 Lakh Crore Effective Capex

The Budget proposes Public Capex of ₹12.2 lakh crore, the highest ever and Effective Capex of ₹17.1 lakh crore, equal to 4.4% of GDP, the highest in ten years. States receive Special Assistance for Capital Investment (SASCI) of ₹1.85 lakh crore in FY 2026–27, a 23% year‑on‑year increase. Complementing this are new Dedicated Freight Corridors, 20 National Waterways over five years, and a Coastal Cargo Promotion Scheme, all highly relevant for Kerala’s port and logistics ecosystem.

MSME Scale‑Up: ₹10,000 Crore Growth Fund + ₹2,000 Crore Micro Enterprise Support

The Budget introduces a ₹10,000 crore SME Growth Fund and adds ₹2,000 crore to continue support for micro enterprises. It also launches a scheme to revive 200 legacy industrial clusters and increases the Electronics Components Manufacturing Scheme outlay to ₹40,000 crore. Kerala’s MSME sectors viz. food processing, Ayurveda, marine products, coir, coconut and cashew can directly leverage these modernization and scaling windows.

Coconut: Dedicated Promotion Scheme

The Budget promotes high‑value coastal agriculture including coconut and introduces a Coconut Promotion Scheme to increase production and productivity, including replacing old trees with new varieties. This is directly aligned with Kerala’s coconut economy and value‑added product potential.

Cashew: Global Brand Ambition

A dedicated program for cashew and cocoa aims to make India self‑reliant in raw materials, enhance export competitiveness, and transform them into premium global brands by 2030. This creates a modernization and branding pathway for Kerala’s cashew processing sector.

SHE Economy: Market Infrastructure for Women‑Led Enterprises

The Budget establishes SHE‑Marts, community‑owned retail outlets for rural women‑led enterprises supported through innovative financing. This provides structured market access for women‑led coconut, cashew, food and wellness enterprises.

Fisheries: Asset Creation and Duty‑Free Catch

The Budget provides for integrated development of 500 reservoirs and Amrit Sarovars for fisheries growth and strengthens coastal fisheries value chains involving startups and women‑led groups. It also makes fish catch by Indian vessels in EEZ or High Seas duty free directly improving export competitiveness.

Tourism & Hospitality: National Institute and Skill Push

The Budget sets up a National Institute of Hospitality and launches a program to upskill 10,000 tourist guides through standardized 12‑week training at 20 tourist sites supporting service quality in tourism‑strong states like Kerala.

Green Growth: ₹20,000 Crore Carbon Capture Investment

The Budget commits ₹20,000 crore over five years for Carbon Capture, Utilization and Storage (CCUS), supporting green industrial transition and climate resilience.

Conclusion

Union Budget 2026–27 places hard numbers behind growth platforms: ₹12.2 lakh crore public capex, ₹17.1 lakh crore effective capex, ₹1.85 lakh crore state capex assistance, ₹10,000 crore SME Growth Fund, ₹2,000 crore micro enterprise support, ₹40,000 crore electronics components scheme, Rare Earth Corridors including Kerala, coconut and cashew missions, SHE‑Marts, 500 fisheries reservoirs, 10,000 trained tourist guides, and ₹20,000 crore CCUS funding.

Kerala’s gains will depend on how effectively these funded provisions are converted into projects, clusters, brands and exports.

(Author is a public policy exponent and a public figure. She is the Vice President of BJP Kerala Mahila Morcha - women’s wing of BJP)

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