Chief Minister V D Satheesan on Wednesday introduced what he called a "revolutionary step" to accelerate investments into Kerala. SARAL Kerala. Simplified and Accelerated Regulatory Approvals and Licenses.

"A single body will be formed to grant approval for investments," the Chief Minister said at his customary post-Cabinet press briefing. "What has been created is a major project intended to simplify licensing procedures," he said. The CM even had a slogan for the SARAL Kerala project. 'One State. One Approval. One Document.'

There will be two such centralised licensing authorities. District-level ones to grant approval for projects between ₹25-50 crore. And a state-level one for projects with investments above ₹50 crore.

He said that SARAL Kerala would stipulate a maximum number of days for a State Government Department to scrutinise a project. "The concerned department should examine a project within a specified number of days. Once it is sent back, the appraisal body will examine the proposal and place it before the committee for approval," the CM said.

The state government departments have been asked to finalise a deadline based on their requirements. There are departments like Groundwater and Mining and Geology that have legally mandated safety protocols which prevents them from completing the scrutiny and inspection of projects within the prescribed 30 days. For instance, the pumping test conducted by the Groundwater Department and the slope stability test carried out by Mining and Geology cannot be done during the rainy season. So it would be unrealistic to prescribe a deadline in these cases.

SARAL Kerala is the latest version of the single window clearance that Kerala has had since 1999. The single window system began in 1999 with the Kerala Industrial Single Window Clearance Boards and Industrial Township Area Development Act, 1999.

Under the 1999 Act, there were three levels of clearances. One for industrial parks operated by government entities like KSIDC, KINFRA and Technopark. And then district- and state-level single-window clearance boards. Initially, clearances had to be given in 45 days, and later, it was amended to 30 days.

Two decades later, following the Centre's insistence on improving the ease of doing business index, Kerala made the entire licensing process online through the K-SWIFT portal. K-SWIFT is short for Kerala Single Window Interface for Fast and Transparent Clearance. If approval is not given in 30 days, then consent is deemed to be given.

The concept of a time-frame for granting licences, therefore, already exists. So how different is SARAL from SWIFT? In K-SWIFT, even though an application is filed before a single window clearance body, the licences are issued by the departments concerned: town planning, panchayats, fire and rescue, mining and geology.

Under SARAL, the power of these state government departments to issue licences will be taken away and placed in the hands of the centralised approval body at the district and state levels. This is why the Chief Minister said that 19 laws would have to be amended for the realisation of SARAL Kerala.

However, this de-throning cannot be made applicable to entities that operate under central laws like the Pollution Control Board or the Coastal Zone Management Authority. They will continue to hold the power to issue environment clearances.

These state government departments, whose power to issue licences will be nullified, can still put up their queries and objections, but with a difference. They cannot put them up to the investors/applicants, like it is done now. These objections or queries will have to be conveyed to the centralised approval body.

In the existing system, certain departments like the Local Self Government Department are in the habit of putting up a query to the applicant at the 11th hour, on the 29th day. The harried investor will then have to run around to find a solution, causing huge delays. Satheesan said that there were project proposals that were languishing for seven years.

Once SARAL Kerala becomes operational, if at all departments want to shoot mischief queries intended purely to trouble investors, they will have to be taken directly to the approval body.

"Department honchos will think twice before doing this as this approval body will be led by the Chief Secretary himself," a government source said.

This is why the government feels that SARAL can considerably reduce harassment of investors. At this stage it is not clear whether the departments have agreed to part with their powers. The Chief Minister said that all the departments had been consulted. "Some of their suggestions have been incorporated in the final draft," the CM said.

In addition to K-SWIFT, Kerala also has a widely applauded law called Kerala Micro Small and Medium Enterprises (MSME) Facilitation Act, 2019. Under this law, a project with an investment up to ₹125 crore can be started without waiting for all the legal clearances from officers who can at times act vindictively. The only condition is that the investor has to secure all the clearances within three-and-a-half years.

This was such a boon for small and medium entrepreneurs that Kerala had already granted over one lakh certificates of in-principle approvals (CIPAs) under the MSME Facilitation Act. A government source said that at this stage the understanding was that the Act would continue even after SARAL Kerala becomes operational.

The MSME Facilitation Act, however, is not applicable universally. It is only for industries that operate under six acts, namely Kerala Municipality Act, Kerala Panchayat Raj Act, Kerala Shops and Commercial Establishments Act, Kerala Lifts and Escalators Act, Travancore Cochin Public Health Act, and Madras Public Health Act.