The cabinet, on September 29, 2008, gave green signal to the applications for 10 Special Economic Zones (SEZ) in Kerala. This development followed the clearance of the same last week by the state committee of the ruling Left Democratic Front (LDF). The proposal to set up SEZ in Kerala was being opposed by The Communist Party of India (CPI), a key partner in the ruling coalition headed by the Communist Party of India-Marxist (CPI-M).

The CPI's demand was that that the state first make laws in tandem with the central government's SEZ Act 2005 prior permitting them. The SEZ in Kerala got cleared after the LDF quickly convened a meeting on Monday and directed the former to clear their applications without wasting time. Post cabinet meeting, Chief Minister VS Achuthanandan said that the 10 SEZ applications will be sanctioned subject to 13 conditions laid down by the state government.

The following are the conditions laid down by the state government - no agricultural land will be used for SEZ, land will not be acquired for sanctioning SEZ in the private sector, no rebates will be given for electricity, Panchayati Raj rules will apply, tax holidays will be there only for 10 years, 70 per cent of land will be used for industrial purpose and in the balance no flats can be sold to outside parties. All labour laws prevailing in the state will also be applicable to these SEZs.