Karnataka is a land of immense opportunity and innovation. The state’s manufacturing process is supported by critical factors such as a thriving ecosystem, a highly skilled and talented workforce, an empowering policy environment, favorable business climate, and robust infrastructure. The government has taken immense measures for its development as it is a leading high-tech industrialized state. The state government comes up with various policies to ensure a well-balanced and inclusive industrial development.

Karnataka's New Industrial Policy 


Karnataka’s current strength in international competition is mainly dependent on its industries. The state’s new industrial policy incentivizes high-tech investments, boosts local job creation, and seeks to move industrial and technology hubs beyond the state capital, Bengaluru. The Karnataka state cabinet on July 23, 2020, cleared the New Industrial Policy 2020-25 that aims to attract ₹5 lakh crore worth investments over the next five years and create about 2 million jobs to help mitigate the economic impact of the COVID-19 crisis. 


The aim of this policy is to make Karnataka a global leader in advanced manufacturing, research and development, and innovation and to create an ecosystem for an inclusive, balanced, and sustainable development of the State. Currently, the state's share in the country is 1-1.5 percent (Rs 2,500 crore) of mobile production, which is expected to cross 7 percent or Rs 30,000 crore by 2023! The policy aims at the holistic development of the State and looks beyond Bengaluru with an aim to promote tier-2 and tier-3 cities as engines of economic growth. 


Read this document by the Karnataka government to know the specific details about this industrial policy 


The Focus Points of the New Policy


1. Developing the state as a whole


The new modern strategy bunches Karnataka's locale into three zones to create zones viewed as industrially backward. The industrially backward regions go under Zone-1 and Zone-2 while all the more industrially developed regions are arranged under Zone-3 and Zone-4. Urban centers Bengaluru and Mysuru go under Zone-4. Incentives will be rolled out to direct greater investment to the industrially backward districts.


2. Sector-wise focus


Key focus sectors have been identified under the policy – automobiles and auto components, pharmaceuticals, medical devices, engineering and machine tools, knowledge-based industries, logistics, renewable energy, aerospace, defense, and electric vehicles.


3. MSME Subsidies


The policy offers creation turnover-based endowments for micro, small, and medium-sized enterprises (MSMEs) so as to support industrial advancement. The investment promotion subsidy will be based on 10% on turnover every year for a time of five years and restricted to 20 to 30 percent of the value of fixed assets(VFA). Other incentives incorporate – exemption from stamp duty and concessional registration charges; reimbursement of land conversion fee; tax exemption on electricity tariff for MSMEs; and power subsidy for MSMEs.


4. Direct Employment 


The approach will require new industrial projects to make however much direct work as could be expected and enlist locally – at least 70% of the workforce should comprise of local people and 100% on account of Group D sort of representatives (housekeeping and sanitation staff, non-specialized posts, drivers, etc.). The draft variant of the policy mandated the minimum direct employment for 100 employees for the initial investment of INR 2.5 billion and additional employment of 20 personnel for every additional investment of INR 500 million.


5. Training and Certification 


The policy highlights on up-gradation of aptitudes so as to encourage financial development in the state. It says that the Department of Industries and Commerce along with the Department of Employment and Training would focus on issues identified with quality preparation and confirmation. Different advantageous plans like Suvarna Kayaka Kaushalyabhivruddhi Yojana (SKKY) are set to be amended.


6. Women Entrepreneurship 


The policy encourages women enterprise just as a business from a special category like SC/ST/Differently-abled/ex-servicemen. The administration has proposed various endowments and motivations to elevate business visionaries having a place with the women and extraordinary classifications.


7. Focus on Energy

The policy focuses on export promotion, renewable energy projects, and is focused on providing support to enterprises that adopt energy efficiency measures. It also extends support to Research & Development and Direct Digital Manufacturing. The policy highlights aerospace, machine tool, steel & cement sectors as focus industries and focuses on treating all energy projects, including renewable energy projects, as an industry, and makes them eligible for all incentives.

This article by Karnataka.com which summarises the entire policy!


Conclusion

This southern state is India's driving center for innovation organizations, which are found transcendently in its capital Bengaluru. Karnataka is additionally a famous objective for auto, hardware, food preparation, hefty apparatus, and the materials business. The state is India's biggest programming exporter, the biggest maker of aviation and safeguard gear, has the biggest biotech center, and is the biggest maker of coffee in the nation. 

Industry pioneers who present in the policy meeting were of the assessment that, to help the business feeling in Karnataka, the State needs to improve the working of the Single Window Clearance System for endorsements, facilitating land obtaining guidelines, and increment administrative lucidity for endorsements to set up another manufacturing plant in the State. Given the interest shown by some companies in moving their manufacturing bases out of China, the industry leaders recommended that the State government identify a target list of 100 firms to reach out to, and assured cooperation from the private sector.

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Written By - Riya Garg

Edited By - Neha Kundu