Karnataka is a leading state in terms of industrial growth in India. It is the hub of the IT industry in the country. The technology cluster in Karnataka ranks as the fourth largest in the world. The state has 47 IT and ITeS SEZs, several regions dedicated to IT investment, and three software technology parks.
Apart from the IT industry, the state also has sector-specific SEZs dedicated for other major industries. Karnataka’s flora and fauna along with a natural coastline of 320 km provide its tourism industry a major boost.
GDP Contribution of Karnataka Industry
Karnataka occupies its position among the high economic growth states of India. In the year 2015-16, Karnataka contributed 7.54% to GSDP of India. The state’s GSDP was 156.23 billion US dollars. During the period between 2004 and 2016, the state’s GSDP increased at a rate of 13.93% and reached 156.23 US dollars. The NSDP increased at a compound annual growth rate of 14.19% and reached 142.9 billion US dollars. The per capita GSDP grew at rate of 12.91% and reached 2557 US dollars. The growth rates indicated are compound annual growth rate.
Karnataka industry: An Ideal Choice for Investment
Karnataka is a land rich in natural resources. Its policy incentives and infrastructure play a significant role in attracting investments for the various industrial sectors in the state. As per the data released by the Department of Industrial Policy and Promotion (DIPP), Karnataka has attracted FDI equity inflows amounting to 20.24 billion US dollars during the time frame of April 2000 to March 2016.
Karnataka is an ideal choice for investment due to a number of reasons. Some of the reasons are as follows:
- Superior manpower: Karnataka boasts of trained human resource in the streams of basic science, engineering, and management.
- Research and development facilities: The state has a number of Central Government research institutions and laboratories that provide high-quality research and development facilities
- Favourable climate: The climate of Karnataka is favourable for the growth of certain industries
- Good communication facilities: The communication facilities in the state are of the first-rate. The state is connected through airports, national highways, broad gauge railway, and sea ports.
The state government is making huge investments to strengthen industrial segment and its infrastructure with the objective to further promote industrial development in the state. By creating industrial clusters, public-private partnership (PPP) projects and SEZs, the government is trying to give a boost to the industrial infrastructure scenario existing in the state. According to the Start-up Policy 2016, Karnataka aims to:
- Stimulate the growth of its technology start-ups
- Create around 6,000 start-ups that focuses on products
- Mobilize funds worth about INR 2,000 crores.
A few of the important initiatives by the Government to promote the state as an industrial destination are:
- Under the Karnataka Industrial Policy, 2014-19, the state has come up with a number of fiscal and policy incentives for businesses.
- The state has planned to develop 12 biotechnology schools under the Millennium Biotech Policy
- The state government has sanctioned an amount of 551.32 million US dollars in the 2016-17 budget for the betterment of the state’s rural roads
- A SEZ around 300 acre has been formed in Belgaum in order to create a precision engineering and manufacturing supply chain ecosystem. This will be quite beneficial for the manufacturing industries.
Organization to Provide Infrastructure Support to Karnataka industries
The State Government has created several organizations and Institutions to provide infrastructural support to the private sector enterprises.
- The Directorate of Industries and Commerce co-ordinates all activities required for industrial development. It allots to the entrepreneur, power, land and water besides sanction of fiscal incentives.
- Karnataka Industrial Area Development Board (kiadb.com is not active anymore) acquires tracts of land for development into industrial sites.
- The Technical Consultancy Services Organisation of Karnataka offers expert consultancy services to small entrepreneurs at moderate rates.
- The Karnataka State Finance Corporation, Industrial Investment Development Corporation, Small Scale Industries Development Corporation and Karnataka Electronics Corporation provide them finance, equity participation, factory sheds and raw material supplies.
Karnataka has got 123 associations representing various trade, banking and industrial organisations. Prominent among the manufacturers association are Karnataka State Small Scale Industries Association, Confederation of Electronic Industries of Karnataka and Peenya Industries Association.
All the 123 associations are affiliated to a parent : Federation of Karnataka Chambers of Commerce and Industries
Foreign investment approved in Karnataka is brought about 169 foreign investors from Germany, Japan, USA, UK, Switzerland and Sweden. They have invested in computer software, telecommunications equipment, electronics and electrical, machine tools and engineering products, medical and laboratory equipment, minerals, ceramics, chemicals, leather products, food processing and tourism.
The Government of Karnataka launched the New Industrial Policy for 2014-2019 with the intention to revive the state’s financial growth and improve employment prospects.
Let us take a look at the salient features of Karnataka Industrial Policy for 2014-2019.
Karnataka Industrial Policy Objectives
- To establish brand Karnataka in the global market
- To make Karnataka one of the top 3 investment destinations in the country
- To create a business friendly environment in the state in order to project Karnataka as a state that promotes and encourages entrepreneurship
- To maintain an industrial growth rate of 12 % per annum
- To increase the manufacturing sector’s contribution to the State GDP to 20% by 2019
- To attract minimum investments worth Rs 5 lakh crore by 2019
- To create additional employment for 15 lakhs people by 2019
Karnataka Industry Policy Highlights
Promote Karnataka as a hub for entrepreneurs: The State Government wants to promote Karnataka as a hub for entrepreneurs. To fulfil this objective it has plans for establishment of new industrial areas through KIADB (Karnataka Industrial Areas Development Board). The policy highlights the government’s plan to make sufficient land readily available for business. It plans to make arrangements for adequate availability of power, water and transportation for industrial areas.
Upgrade existing industrial areas: The government also has plans to upgrade existing industrial areas and estates by providing monetary assistance to improve their infrastructure.
Establish new industrial corridors: The policy proposes the establishment of new industrial corridors within the state to boost industrial growth. These intra-state industrial corridors will be:
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