Thiruvananthapuram: The Kerala startup sector received a significant boost in the State Budget 2026-27, with Chief Minister V D Satheesan allocating ₹79 crore to strengthen the ecosystem and support innovation-driven enterprises across the state.
Presenting his first budget in the Kerala Assembly, the Chief Minister also announced a dedicated ₹50 crore fund aimed at encouraging Gen-Z entrepreneurs and nurturing next-generation technology ideas.
The allocation underscores the government’s commitment to accelerating growth in the Kerala startup sector while fostering innovation, research, and technology-led economic development.
The overall allocation for the Information Technology sector has been fixed at ₹434.40 crore.
During his budget speech, Satheesan said, “The creative abilities and technological excellence of the younger generation can be brought together to develop Kerala’s startups, innovation hubs, research centres, and smart industries, while emphasizing digital ethics, privacy protection, cyber security, and core human values.”
He further noted that by developing technological solutions to complex challenges and driving systemic changes, the younger generation would emerge as a key force shaping future industries and the economy.
The budget measures are expected to further strengthen the Kerala startup sector and create opportunities for emerging entrepreneurs.
₹5 Crore Allocated for Space Sector Development
The State Budget has also earmarked ₹5 crore for the space sector to unlock employment opportunities for young engineers across the entire value chain, ranging from satellite and rocket manufacturing to downstream activities such as data analytics.
According to the Chief Minister, strong support will be extended to private satellite manufacturing and launch enterprises, with the government ensuring the availability of land required for their operations.
The government will also take decisive measures to improve the functioning of the Space Park.
The initiative is expected to open new avenues for innovation and technology-driven ventures, complementing the growth of the Kerala startup sector.
₹10 Crore for Malayalam AI Initiative
In another major announcement, the government allocated ₹10 crore for a Malayalam AI Initiative.
The initiative aims to fund the creation of an open Malayalam dataset and support the development of Malayalam artificial intelligence models that innovators can commercialize and take to market.
The Malayalam AI Initiative is expected to create opportunities for technology entrepreneurs and researchers while further strengthening the innovation landscape within the Kerala startup sector.
Incubation Centre to Support Emerging Entrepreneurs
The budget has also set aside ₹10 crore for establishing an incubation centre designed to help aspiring entrepreneurs launch business ventures with minimal risk.
The proposed incubation centre will provide management training, office infrastructure, and seed capital assistance to startups and individual entrepreneurs seeking to build sustainable enterprises.
The initiative is expected to play a crucial role in expanding the Kerala startup sector by nurturing early-stage ventures and promoting entrepreneurship.
₹100 Crore MSME Growth Scheme Announced
Satheesan also announced an allocation of ₹100 crore for the “Kerala MSME Growth Scheme,” a comprehensive initiative aimed at supporting the establishment of 10,000 new MSME ventures across the state.
Highlighting the growing capabilities of the MSME sector, the Chief Minister said, “Empowered by digital technology, e-commerce, Artificial Intelligence (AI), and advanced automation, our MSMEs are now fully equipped to penetrate global markets and compete effectively with multinational conglomerates.”
The government will also provide tax incentives and institutional support to enterprises built on innovative technologies. These measures are expected to complement the growth trajectory of the Kerala startup sector and encourage technology-driven business creation.
“To guarantee entrepreneurial success, Revolving Fund, Technology Fund, and Challenge Fund will be made readily available to those facing financial roadblocks.
The expertise of specialized techno-mentors and manage-mentors will be ensured to provide guidance in technical and management domains,” said the Chief Minister.
Cyberpark Kozhikode to Be Upgraded
Another key announcement in the budget pertains to Cyberpark in Kozhikode. The government has decided to upgrade the facility to the level of Infopark in Kochi and Technopark in Thiruvananthapuram.
The move is expected to strengthen the state’s technology infrastructure and create a more conducive environment for startups, innovation-driven enterprises, and digital businesses, further supporting the expansion of the Kerala startup sector.
