Union Cabinet Approves Palakkad Industrial Smart City Under National Industrial Corridor Programme

What was decided

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has greenlit the development of 12 industrial smart cities across six major industrial corridors in 10 states, with an estimated investment of Rs 28,602 crore. Palakkad, Kerala, was one of the approved locations, with this approval forming part of the Chennai Bengaluru Industrial Corridor (CBIC) extension.

The Union Cabinet Committee on Economic Affairs on Wednesday granted clearance for the Palakkad industrial city as part of "a grand necklace of industrial smart cities" comprising 12 new projects under the National Industrial Corridor Development programme with an estimated investment of ₹28,602 crore. Union Minister of Commerce and Industry Piyush Goyal told the media at an online interaction that the Palakkad project had been given special dispensation regarding the area in which the industrial centre would come up considering the scarcity of land.

Operative details for the Palakkad node

A total of Rs 3,806 crore will be spent in Palakkad alone. The project is expected to generate 51,000 jobs in the district as per the project document released by the Centre. The Palakkad Node in Kerala, covering 1,710 acres, is set for development across three land parcels: Pudussery Central, Pudussery West, and Kannambra.

The project site is located close to the Kochi-Salem National Highway and will be the only industrial area to promote medicinal chemicals and botanical products. The other focus sectors for the Palakkad Industrial Smart City are non-metallic mineral products, rubber and plastic products, hi-tech industry, fabricated metal products and machinery and equipment.

NICDC's own project page cites a higher investment-potential figure separate from the government project cost: with an investment potential of ₹8,729 crore and a project cost of ₹3,806 crore, the node is expected to create 51,000 jobs.

Why Palakkad needed a land-area exception

Palakkad's approved footprint of 1,710 acres is smaller than several of the other 11 nodes cleared the same day, reflecting Kerala's land constraints. Union Minister of Commerce and Industry Piyush Goyal told the media at an online interaction that the Palakkad project had been given special dispensation regarding the area in which the industrial centre would come up considering the scarcity of land.

For comparison, elsewhere in the same CCEA package, the Hyderabad-Nagpur corridor's Zaheerabad, Telangana node was cleared for Rs.2,361 crore on 3,245 acres — roughly double Palakkad's land area for a similar cost, underlining the special land dispensation granted to Kerala.

Pre-conditions the state had already met

The Cabinet clearance followed, rather than preceded, substantial state-level groundwork. A press note issued by Industries Minister P. Rajeeve later in the day said the State government had acquired the land required for the project in record time, and the Union Cabinet approval came in the wake of the State completing the preliminary works spending ₹1,790 crore.

The State government had acquired 82% of the land required for the project in 2022 itself, the Minister said. The project received permission from the National Industrial Corridor Development and Implementation Trust Board in December 2022 and environmental clearance from the Ministry of Environment, Forests and Climate Change in February 2024. The special purpose vehicle for the project is Kerala Industrial Corridor Development Corporation in which the State and the Central governments have 50% stake each.

On-ground land acquisition figures reported around the approval put the state ahead of the formal target: authorities had already acquired 1,274.8 acres of land in the Kanjikkode and Kannambra panchayat near Vadakkancherry, and although the project requires 1,710 acres, the authorities proposed to acquire 1,774.5 acres.

Connectivity and site positioning cited in the decision

Located adjacent to National Highway 544 (Salem–Kochi Road), this highway network ensures seamless movement of goods and people across regional and interstate corridors. Rail connectivity further strengthens the site's logistical advantages, with Palakkad Junction one of Kerala's largest railway stations under the Southern Railway zone serving as a central hub for freight and passenger transport. Air connectivity is equally well-established, with Cochin and Coimbatore International Airports providing reliable domestic and international travel and cargo services. Adding to its strategic appeal, Palakkad is located within close proximity to two major ports Cochin Port (115 km) and Kozhikode Port (124 km).

Practical effect and subsequent implementation (post-decision status)

The August 2024 clearance was an investment/notification decision, not a construction start. Work on the Palakkad industrial city was planned for the current financial year (2024-25), with project completion targeted for 2027, and Union Minister Piyush Goyal explained that state governments are responsible for approving the project master plan and ensuring adequate connectivity to the project area.

Follow-on regulatory steps continued after the Cabinet decision. As of a NICDC/PIB update, environmental clearances for all land parcels were granted on January 01, 2025.

As of October 2025, disbursement and land transfer were progressing in tranches: the Central government sanctioned the third instalment of Rs 300.2 crore for the Palakkad Industrial Smart City Project, allocated to the Kerala Industrial Corridor Development Corporation Ltd. (KICDC), even as the State government transferred an additional 316 acres of land to the corporation; with this, the Centre had released 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.

Separately, the State Government, through the Kerala Infrastructure Investment Fund Board (KIIFB), had invested Rs 14.89 billion to acquire 1,450 acre of land for the project — a figure reported ahead of the third central instalment and reflecting cumulative state spend beyond the pre-2024 ₹1,790 crore figure cited at approval. Kerala has emerged as the first state in India among the 12 proposed Industrial Smart Cities to complete the tendering process for infrastructure development, with the project agreement expected to be signed and preliminary construction work to begin thereafter.