State riches swell, on paper

Advantage Karnataka: MoUs worth Rs 3.29 lakh crore

By the time the first of the two-day of the investors’ jumboree – with the theme Advantage Karnataka – at the Bangalore Palace Grounds was over, the State Government declared it had belted 205 memoranda of understanding (MoUs).

While the MoU

s, by and in themselves, might not materialise into concrete business projects on the ground, they are an indication of investors’ intent in putting their money and expertise in Karnataka.

In the first Global Investors’ Meet held in 2000, investors had pledged to pump in
Rs 27,000 crore in over 250 projects. Only about 50 per cent of the promised investment has materialised in the last ten years.

There were clear indications that major investments would be made in the steel sector. Several steel giants– ArcelorMittal of Lakshmi Mittal, South Korean POSCO, JSW Steels and Brahmani Steels of Tourism Minister Janardhana Reddy – committed themselves to invest not less than Rs 1.80 lakh crore in the State. As many as seven steel companies have chosen Karnataka as their next investment destination.

On Friday, the concluding day of the Global Investors’ Meet, the B S Yeddyurappa government, which is trying to go to great lengths to showcase Karnataka as a favourable investment haven, expects commitments to the tune of
Rs 2 lakh crore which would rachet up the projected target to Rs 5 lakh crore. By his conservative estimate, Yeddyurappa said he expected at least Rs 3.5 lakh crore in investments.

The first industrialist to sign an MoU was Lakshmi MIttal who said his company may start building a proposed steel plant in Bellary with an investment of Rs 30,000 crore ahead of two pending projects elsewhere in India since he expected to receive regulatory approval and iron ore mining leases in the State faster.

Karnataka’s own mining tycoon Janardhana Reddy surprised one and all when his wife Aruna Lakshmi signed an MoU on behalf of Brahmani Steels, proposing to set up a
Rs 36,000-crore steel plant in Sandur and Hospet in Bellary— t

he single largest commitment so far at the GIM. The group already runs one plant in Andhra Pradesh’s Cuddapa.

Declaring that he would invest on both the plants, Reddy also claimed work on the Bellary plant will begin within three months.

The government had not disclosed Reddy’s investment plans despite the State High Level Clearance Committee clearing the project. Soon after signing the MoU, Reddy’s wife fell at Yeddyurappa’s feet, seeking his blessings.

Interestingly, POSCO, which earlier insisted the government sanction mining leases, assured water and power supply for it to sign the MoU, too joined the steel majors’ league to invest Rs 32,336 crore in Bagalkot.

The company signed the MoU although the government refused to fulfil its conditions. Karnataka’s industrial bigwigs did not lag behind in signing business pacts with the government. Wipro announced it would invest Rs 537 crore for a software development centre in Bangalore. Infosys signed an MoU with the government to invest Rs 2,250 crore on two software development centres in Bangalore.

Other investments came in the form of Rs 990 crore by Narayana Hrudayalaya for a 5,000-bed super speciality hospital, a star hotel and service apartments in Devanahalli and Rs 45 crore by the UB Group to set up a beer manufacturing unit in Nanjungud.

The GIM inauguration was marked by effusive words for Karnataka’s potential as an investment haven. Union ministers M Veerappa Moily and Subodh Kant Sahai praised the Yeddyurappa government, saying that the state was a role model for states in India’s north.

Industrialists on the dais said they have found Karnataka industry-friendly, lauding the government for organising the GIM conclave. They steered clear of pointing out the reality regarding the state’s infrastructural inadequacies. No sooner was the event launched that it was brisk business for Karnataka.

Investments poured in with industry captains lining up to sign MoUs, forcing the government to announce setting up a chief secretary-headed high level committee that would ensure smooth and seamless implementation of projects, if they were to be finalised.

Earlier, Yeddyurappa, reading out his speech in English, said he wants to transform Karnataka into a model state by achieving equitable development covering all sectors.
State Industries Minister Murugesh Nirani, while welcoming the delegates, assured that his government was prepared to do everything for speedy and smooth implementation of projects.