Industries in Karnataka| Karnataka Government Industry Policy

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. Here is a snapshot of Karnataka industry and its growth.

Karnataka industry — Kanataka GSDPY yearly growth. Image courtesy Indiandefender2

Among the key industries of Karnataka are:

Major Industries in Karnataka

Aeronautics	Automobiles
Bio Technology	Cement
Chemicals	E-commerce
Electrical - Electronics	Engineering Industry
Film Industry	Floriculture
Health Care	Internet Industry
Iron & Steel	Leather
Minerals	Pharmaceuticals
Plantation Industry	Construction
Power	IT and ITEs
Solar Energy	Stock Market
Sugar	Textiles
Telecom	Wine
Renewable Energy	Agriculture
Tourism	Petrochemical

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 the 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 a rate of 12.91% and reached $2,557. The growth rates indicated are compound annual growth rates.

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.

Initiatives Adopted by the State Government to Strengthen Karnataka Industry

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.

Associations

Karnataka has got 123 associations representing various trade, banking and industrial organisations. Prominent among the manufacturers association is 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 (FKCCI).

Foreign Investments

Foreign investment approved in Karnataka during 1993-94 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.