Karnataka attracted over Rs 12 lakh crore in investments due to strong economic climate, finds study

The investment climate in the state strongly supports robust foreign direct investment (FDI) along with strategic infrastructure projects, forward-looking policy frameworks, talent and innovation ecosystem, the study says.

Bengaluru: Karnataka has attracted new investment proposals worth over Rs 12 lakh crore between financial years 2021-22 and 2024-25 due to the highly vibrant and progressive investment climate in the state, a study by the MSME Export Promotion Council has revealed.

It said the investment climate in the state strongly supports robust foreign direct investment (FDI) along with strategic infrastructure projects, forward-looking policy frameworks, talent and innovation ecosystem.

This has been revealed by a study on “Investment, Development & Growth in Progressive Karnataka: 2021-22 to 2024-25” by the MSME Export Promotion Council, according to a release on Thursday.

"During the said period, the new investment projects announced amounted to Rs 12,01,175 crore. Projects completed were worth Rs 1,40,476 crore, and pending projects valued at Rs 36,078 crore were revived during the period. Investment projects worth Rs 9,49,370 crore were under various stages of implementation. The data has been sourced from the Centre for Monitoring of Indian Economy (CMIE)," the chairman of the MSME EPC, D S Rawat said.

Citing NITI Aayog, the MSME EPC said Karnataka leads India in innovation and contributes 20 per cent of the country's exports.

The state has a dominant position in aerospace exports with a 65 per cent share and machine tools output by 50 per cent, it said. Karnataka's IT exports account for about 42 percent of India’s software exports.

Noting that investment projects announced during 2021-22 were worth Rs 1,45,035 crore, it was Rs 5,13,364 crore in 2022-23, Rs 2,27,706 crore in 2023-24 and Rs 3,15,069 crore in 2024-25, the release said this includes investment by the private sector worth Rs 10,25,614 crore during this period.

The micro, small and medium enterprises (MSME) are registering growth in Karnataka and it is estimated that the state hosts over 8.5 lakh units collectively employing nearly 70 lakh people, it said. These enterprises span diverse sectors like electronics, food processing, readymade garments, automotive components, and chemicals.

Over 14,000 DPIIT (Department for Promotion of Industry and Internal Trade) recognized startups operate across Karnataka and it hosts 45 unicorns representing a substantial share of India’s total, it added.

According to the study, the state has enormous tourism wealth, but to realise its potential it needs a focused push on infrastructure, branding and experience-building. The government should offer tax breaks subsidies for resorts, eco-lodges, adventure parks, and boutique hotels.

"(The government) also should empower local communities to run home stays, nature tours and handicraft hubs with training and micro-credit," it said.

The study highlights that Karnataka's agriculture sector is on an upward trajectory, registering 4 per cent growth in 2024-25, above the national growth rate of 3.8 per cent,"demonstrating resilience, diversified strength, and strategic growth in high value segments like horticulture and coffee." "However, addressing low irrigation coverage, improving price support mechanisms, ensuring equitable access to finance and deepening value-addition infrastructure will be crucial to long-term sustainability and farmer prosperity," it added.