Kerala Finalises ₹1,316 Crore EPC Contract for Palakkad Smart City to Dilip Buildcon–PSP Projects JV

What Was Decided

On 24 September 2025, Kerala announced the completion of the tender process for the core infrastructure of Palakkad Smart City, the first node of the Kochi–Bengaluru Industrial Corridor. Kerala has achieved a landmark in industrial development by completing the tender process for the core infrastructure of the Palakkad Smart City, the first node of the Kochi-Bengaluru Industrial Corridor, making it the state is the first in India to finalise tendering for basic infrastructure under the Central government's flagship industrial corridor programme.

The construction contract is awarded to a joint venture between Dileep Buildcon Limited (DBL) and PSP Projects Limited. The contract, valued at Rs 1,316.13 crore (including GST), was signed after a competitive national tender process in which four companies participated, a KINFRA (Kerala Industrial Infrastructure Development Corporation) statement said. The EPC (Engineering, Procurement, and Construction) bid was originally invited at Rs 1,324 crore. The project must be completed within 42 months from the date of signing, it said.

With this, Kerala has become the first state to complete the procedures for infrastructure development among the 12 industrial corridor-smart city projects sanctioned in the country last year, it said.

The Authority Behind the Decision

The Palakkad Smart City project is being coordinated by Kerala Industrial Corridor Development Corporation Limited (KICDC), a special purpose vehicle jointly promoted by KINFRA (under the Government of Kerala) and the National Industrial Corridor Development and Implementation Trust (NICDIT) under the Government of India. KINFRA issued the formal statement confirming the tender result, while the announcement was also carried by the Chief Minister's Office.

KICDC is structured with equal ownership on both sides: the KICDC, a Special Purpose Vehicle (SPV) jointly formed by Kerala's KINFRA and the National Industrial Corridor Development and Implementation Trust (NICDIT) with equal equity participation, is implementing and coordinating the project.

Operative Details: Scope, Area and Cost

The EPC package covers a wide range of trunk infrastructure works. The EPC contract covers the complete design, construction, and maintenance of essential infrastructure, including roads, bridges, drainage systems, water supply networks, fire-fighting systems, water reuse facilities, sewer lines, power distribution systems, a sewage treatment plant, and industrial effluent collection and treatment plants.

This contract was tendered against a package covering already-acquired land: tenders have been invited to develop infrastructure in the Puthussery Central and Kannambra areas of the Palakkad Smart City (Integrated Manufacturing Cluster), with the first-phase package estimated at ₹1,100 crore targeted for completion within four years, covering development activities on 1,400 acres of already acquired land, for an EPC contract encompassing design, construction, and maintenance. The final awarded value after competitive bidding came in at ₹1,316.13 crore.

The wider Palakkad node itself spans a larger footprint: the Palakkad Node in Kerala, covering 1,710 acres, is set for development across three land parcels: Pudussery Central, Pudussery West, and Kannambra. Official project figures on the KICDC/NICDC site put the node's investment potential at ₹8,729 crore and a project cost of ₹3,806 crore, with the node expected to create 51,000 jobs. Media reports at the time of the award cited a total project estimate closer to Rs 3,600 crore, marking a significant milestone in Kerala's industrial growth journey.

Land and Funding Context

The contract sits on land already secured by the state. Earlier, the state government had spent Rs 1,489 crore through the Kerala Infrastructure Investment Fund Board (KIIFB) for land acquisition, securing 1,450 acres for the project. The acquired land, currently held by KINFRA, is being transferred in phases to the Kerala Industrial Corridor Development Corporation Limited (KICDC); in December last year, 110 acres were transferred, followed by another 220 acres in March this year. The central government subsequently released Rs 313.5 crore in two phases.

Funding and land transfers continued after the award. By late October 2025, the State government had transferred an additional 316 acres of land to the corporation, with the Centre releasing a total of Rs 613.7 crore in three instalments, while Kerala had handed over 646 acres of land, accounting for nearly 45 per cent of the total project cost and land requirement.

Kerala's earlier land drive was rapid: by July 2022, Kerala had completed 85 per cent of land acquisition, with 1,152 acres acquired in just 14 months, it said.

Practical Effect: What Happens Next

Following the contract award, project agencies moved to finalise signing and mobilise the contractor. A high-level review in Kochi with KICDC, NICDIT and the JV concluded that the meeting decided to sign the project agreement within this month and begin groundwork immediately, with a collective emphasis on completing the infrastructure ahead of schedule.

On 9 October 2025, KICDC clarified how the works would be sequenced: KICDC announced that the infrastructure development of the Palakkad Industrial Smart City will be implemented in a single phase, and said it has initiated preliminary steps in this regard. The first coordination meeting involving representatives of the contracting consortium Dilip Buildcon–PSP Projects and NICDIT was scheduled for the following week, and the project's development works were expected to commence by the end of that month or early the next, per Industries Principal Secretary APM Mohammed Hanish.

The practical effect for investors and locals: the roads, drainage, water, power and effluent-treatment backbone for the 1,400-acre first-package area is now under contract with a fixed 42-month build clock, ahead of the SPV allotting serviced industrial plots to manufacturing tenants once infrastructure is delivered.