The Government of Karnataka has always been a strong advocate of Industrial liberalisation. The industrial policies of the Government of Karnataka have reflected the Government’s strong desire to ushure in an environment of successful business propositions. The efforts are paying off :

    • Statistics reveal the industrial sector in Karnataka will witness an upsurge with investments to the tune of Rs 60,000 crore by 2000 A.D
    • Reserve Bank Of India lists Karnataka as the 3rd largest beneficiary of projects sanctioned by term Lending Institutions in 1993-94.


New Industrial policy:
The new Industrial policy’s objective is unambiguous and different from the earlier ones. While the growth objective is a central point, most of the contents of the past have been retained.

    1. A high level committee for expeditious clearance of Mega projects constituted.


    1. A state level single agency set up for clearing projects.
    2. An I.T park with the association of Singaporean investors and Tatas set up.


Attractive Concessions:
The Government revised package of incentives & concessions for new industrial investments in the state with effect from Nov.1,1990.

  • For the purpose of applicability, of this package, the taluks of the State are classified into four zones, as detailed :
    Zone I: Covering 2 Taluks
    Zone II: Covering 38 Taluks
    Zone III: Covering 129 Taluks
    Zone IV: Covering 6 Taluks and 6 Growth centres
    to be set up in Hassan,Raichur and Dharwad.

Special concessions to Thrust Sectors: All new tiny, small, medium and large scale industrial units in ‘Thrust Sectors’ shall be eligible for enhanced incentives and concessions as per details given below:

LocationInvestment SubsidyST(CST & KST) exemptions
Units set up in Zone I Industrial Areas developed by Government. Promoter agencies except in Bangalore Urban Agglomeration and Mysore City Corporation Area.As applicable to units in Zone II100% exemption for a period of 3 yrs from the date of commencement of commercial production
Units set up in Zone II areas of Bangalore Urban & Rural DistrictsAs applicable to units in Zone III100% exemption for a period of 4 years from the date of commencement of commercial production.
Units set up in Zone III(other than Bangalore Rural & Urban districts)and Zone IVAs applicable to units in Zone IV100% exemptions for a period of 5 years from the data of commencement of commercial productions.
Units set up in Zone IVAs applicable to units in Zone IV100% exemptions for a period of 6 years from the date of commencement of commercial production.


  1. To be applicable for special concessions as mentioned above, industrial units will be required to produce a certificate from the Department of Industry & Commerce specifying that they come under the category of Thrust Sector under which the industry is considered and the special concession is given.
  • Agro-food processing, Agro based industrial High-Tech Packaging units, Cold storages, green houses, tissue culture lab, bio-fertilizers, Bio technology, Compost, Growth regulators, Seed production, Informatics software units (industries set up within the Bangalore Urban Agglomeration ares and Mysore City Corporation areas) in the Tiny and Small Scale sector shall also be eligible for the special concessions as specified in the I st row of above table.
    1. 100% EOUs set up in Zone I including Bangalore Urban Agglomeration area and Mysore City Corporation area will be eligible for incentives & concessions as specified in 1st row of above table.


  • Special concessions for Electronics, Telecom and Informatics (Software) industries to be set up in Mysore & Dharwad.They shall be eligible for investments subsidy as applicable to Zone IV areas. These units shall be eligible for 100% sales tax exemption(KST & CST)on output for a period of 6 yrs. These special incentives are offered in lieu of the normal incentives.
  • Special concessions for 100% Export Oriented Industries:
    Vide Government Order No.CI 384 SPC 89 dated 29 November 1989, the following concessions have been extended to 100% EOUs.
    a)To offer a capital investment subsidy of 10% of the value of fixed assets, subject to a ceiling , to be setup in the EOIZ Bangalore and also to all 100% EOUs set up in Zone II & III provided the units achieve a value addition of at least 25% and also employ local labour to the extend of at least 80% of the requirement.
    b)Exemption for payment of Entry Tax on all raw materials, components etc.procured for processing in the EOUs/EOIZ irrespective of their location
    c)All EOUs set up in the State to be exempted from the power cuts imposed by KEB on industrial concerns from time to time. In addition to the above concessions,100% EOUs to be set up in EOIZ, Bangalore & in Zones II, III & IV shall be exempted from payment of ST payable on raw materials, components, packaging materials, consumables, capital goods , spares, material handling equipments, intermediates and semi finished goods & sub assemblies procured from industrial units within the state(from the domestic tariff area)


Industrial Growth Centres:

    • Dharwad
    • Hassan
    • Raichur



Investment Profile
Total Investment: Rs 119,470 crore
Under Implementation: Rs 44,561 crore
Joint sector excluded
10 Largest Projects
1. Krishna Bhagya Jala;Irrigation; Rs 6,727.00 crore
2. Mukund Vijayanagar, Steel; Rs 5,462.81 crore
3. Govt Of India, Transport Services; Rs 5,300.00 crore
4. Bangalore Mass Transit, Railways; Rs 4,800.00 crore
5. State Indl Inv.Corp, Petro-Products; Rs 4,800.00 crore
6. Usha Iron & Ferro Metals, Steel; Rs 4,800.00 crore
7. Nagarajuna Power, Thermal Power; Rs 4,591.00 crore
8. Jindal Vijayanagar, Steel; Rs 4,138.00 crore
9. Mangalore Power, Thermal Power; Rs 3,984.00 crore
6. Mangalore Refinery, Petro-Products; Rs 3,690.00 crore
    • Investment subsidy to EOUs and SSIs of 25% of fixed assets(Zone II); and 30%(Zone III)


    • Additional capital investment subsidy of 5% of fixed capital for thrust-sector projects
    • Special incentives, on a case-by-case basis, for mega-projects with investments of Rs 100 crore
    • Special incentives, on a case-by-case basis, for automobile sector investments.
    • Special package of incentives, concessions, and exemptions for the software industry
    • Exemtion from purchase tax and from planned power cuts for 100% EOUs
    • Sales tax exemption upto 100% of fixed assets for periods between 4 and 7 years for new units
    • Sales tax deferral upto of fixed assets for periods between 6 and 8 years for new units



SDPRs. 38,421
SDP Growth14.64%
Per Capital State IncomeRs 8,082
Share Of Industry in SDP22%
Joint Stock Cos In State18,122
State Fiscal DeficitRs. 1,450.70 cr
Inflation Rate(Bangalore)11.9%
State Bank CreditRs. 18,841.70 cr
State Market CapRs. 109,238 cr
State Priority SectorsAuto & Auto Ancillaries; Telecom;
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