Karnataka is unique when it comes to investment

Karnataka is unique when it comes to investment

Karnataka, which was the base of industrial and investment programmes backed by solid governance, since the era of the Wadiyars, is embarking on yet another journey of investment and business, with the Global Investors Meet, ‘Invest Karnataka 2016’, which will begin on February 3, in Bengaluru.

The immediate thought that comes to the mind is the reasons for an investors’ summit, and the state machinery giving primacy for it. Since the time of consumerism gripping the society and services becoming the centre-stage of a state’s GDP, there is an immediate requirement to give importance to manufacturing-led industrialisation in the state. The new investment meet really sets the ground for this by attracting fresh investment in this regard and thus, pave the way for generating employment and meet the growing aspirations of the people.
Even though the state has its share of investments from private, central and state government establishments, the government is looking at more growth, which can be garnered by new investments in diverse sectors of manufacturing, where it can make an impact.

Karnataka enjoys the geographical diversity that helped it harvest diverse crops, which ultimately fostered various anciliary industries. It also helped in building  tourism, infrastructure and education. Its diversity in farming and mining dates back ages, while the sphere of the services sector, backed by IT, has brought laurels to the state and the country.

With a solid foundation in R&D, and importance given to IT, BT, Nanoscience, and Medicine, Karnataka has achieved a unique identity in India. Besides emerging as the most favoured state among overseas companies, its cities, led by the world’s second largest R&D ecosystem — Bengaluru — have made a solid contribution for its emergence as a frontier state in India for investment.

Meeting of the minds
According to Chief Minister Siddharamaiah, Invest Karnataka aims to create a platform for the best minds to meet, exchange ideas and drive forward the state’s vision of prosperity for all — by employing technology, innovation, inclusivity and sustainability as key factors for development. The investors meet will have focus sectors with very high growth potential, which include Manufacturing, (Automobile, Aerospace, Machine Tools, Defence and Heavy Engineering), ITBT&Electronics (Information Technology, Bio-Technology), Agro and Food Processing, Textiles and Garments, Smart Cities and Urban Infrastructure, Energy, and Tourism.

Organisers had earlier said that partner countries which have confirmed their participation in the summit include France, Japan, Sweden, South Korea, the UK, Italy and Germany. Karnataka will be showcasing 145 projects to investors, during the event. The summits have succeeded in enthusing the investor community around the globe and in the country, as the roadshows organised by the state government got an overwhelming response.

But the naysayers have another story to share. They find that the last two meets, held in 2010 and 2012, failed to materialise in investments promised. As per official data, only 108 out of 389 projects have taken off with an implementation rate of 28 per cent.

As per statistics, of the 439 projects committed during the 2012 Global Investors Meet, 58 per cent dropped, and the remaining 244 are still under implementation. Additional Chief Secretary at the Industries Department, K Ratna Prabha, said that these investments were mainly in the mining industry. Recently, Karnataka Industries and Tourism Minister R V Deshpande, during the Assembly session, said that less than 15 per cent projects cleared by the state in the last seven years, have seen the light of day.

The concept of global investors meet was initiated by Karnataka in 2000, by Deshpande, who was the Industries Minister at that time, when out of the Rs 27,000 crore investment offers the state received, Rs 17,000 crore became reality.

Even though the big ticket investment from two-wheeler major Hero MotoCorp (Rs 2,200 crore), and South Korean steelmaker Posco’s $5.3-billion steel plant, and the state has failed to attact $5 billion investment by Foxconn, as part of ‘Make in India’. Recently, eCommerce major Amazon also decided to set up its warehouse in Telengana, after it was unable to resolve tax disputes with the Karnataka government.

Ratna Prabha told Deccan Herald that the state government is only eyeing realistic projects. “This time, we are not running behind big ticket investments and investment on mining. The Industries Department has already received proposals worth Rs 62,770 crore for the GIM, out of which, Rs 24,577 crore has been cleared. The rest is in the pipeline. Our aim is to get Rs 40,000 crore or so in the next 40 days, to reach a realistic target of Rs 1 lakh crore in this meet,” she said. “Land is one of the biggest road blocks in Karnataka. We have noticed lots of land parcels available with the KIADB that are allotted, but unutilised till now. The government should come up with stringent measures to tackle it,” said an official working with the Japanese External Trade Association.

In an exclusive interaction with Deccan Herald, ahead of Invest Karnataka 2016, German Consul General  Jörn Rohde expressed that the state government take up the infrastructure issue seriously to attract more investments.

“It is a reliable parameter for investment so that you can have sustained growth. Reliable investment parametres and infrastructure are the preconditions for becoming competitive in a globalised economy. Karnataka is competing with other states, and other destinations in Asia,” he said.

Karnataka, blessed with the presence of a majority of Fortune 500 companies, can steer the destiny of India. Siddaramaiah has claimed that the state’s GDP saw a growth of 7 per cent for 2014-15, as against 5 per cent in 2013-14. The State Budget claims that the industrial sector in the state has registered a growth of 4.4 per cent, while the services sector has seen a growth of 8.9 per cent.

Now it is the turn of investors to bring fresh investment to further boost the growth of Karnataka, and there by catapulting India’s entry into the full-fledged developed nation status.

Industrial past
Karnataka’s industrial legacy stems from the princely state of Mysore, and backed by the Hubli-Karnataka region, the Hyderabad-Karnataka region, Dakshina Kannada, and Kodagu.
Chamarajendra Wadiyar X, who ascended the throne of the Mysore Kindom on March 25, 1881, as the 23rd Maharaja, was backed by democratic administrative practices, thanks to a representative assembly, which heralded the industrialisation of the state. He gave emphasis to industrialisation of the Mysore Kingdom by instituting several industrial schools, and other educational institutions. Besides founding agricultural banks, he started the annual Dasara Industrial Exhibition.

The illustrious Maharaja Sri Sir Nalwadi Krishnaraja Wadiyar IV, who ruled the princely state of Mysore from 1894 until his death in 1940, further pushed industrialisation with the guidance of his Diwan, Sir M Visvesvaraya. During the British rule, areas that now comprise Karnataka were under as many as 20 different administrative units with the princely state of Mysore, the Nizam-ruled Hyderabad, the Bombay Presidency, the Madras Presidency and the territory of Kodagu being the most important ones. In effect, nearly two-thirds of what is now Karnataka fell outside the rule of the Wadiyar kings of Mysore.

Mysore became the first Indian state to generate hydroelectric power in Asia, and Bengaluru became the first Asian city to have street lights, first lit on August 5, 1905, the Hydro Electric Project at Shivanasamudra Falls in 1902. Vani Vilasa Sagara Chitradurga, completed in 1907, the first dam in Karnataka state.

The Unification of Karnataka gave birth to the formation of the Indian state of Karnataka, then named Mysore State, in 1956. Regional imbalances in Karnataka have been an area of concern hindering the state’s sustainable economic growth. The income generated from industries is largely concentrated in a few districts in the state, especially Bengaluru Urban.
Of the total income generated from manufacturing in Karnataka, about 81 per cent is generated from just nine districts, while the remaining 19 per cent is from 21 districts. As few districts in the state generate a major chunk of manufacturing income, this results in lop-sided growth in the manufacturing sector of the state.

In order to reduce the regional imbalances, the Government of Karnataka aims to provide equal opportunities for industrial and urban development in every district/zone, and create job opportunities for youth and women, across all regions of the society. The state aims to enhance the development of tier-II cities to take the pressure off Bengaluru. The state government encourages setting up of semiconductor units in tier-II cities other than Mysuru, Mangaluru and Hubballi. Besides, the Karnataka State Electronics Development Corporation (KEONICS), whose main objective is to promote electronics industries, is involved in establishing IT Parks in tier-II cities, such as Hubballi, Kalaburagi, Shivamogga, Mysuru and Mangaluru. In addition, the state government is also looking at taking measures to improve connectivity, removal of VAT on aviation turbine fuel (ATF), setting up airports in smaller cities, development of industrial corridors, public-private partnership initiatives, and ease of land acquisition, among others.

Special focus on industrial development in Hyderabad-Karnataka through the provisions of Article 371 (J) of the Constitution is also in place, which provides Special Status to the region, which includes six districts: Kalaburagi, Yadgir, Ballari, Bidar, Raichur and Koppal. During the first three decades post-independence, India witnessed Hindu rate of growth, and later got its big push with the first phase of economic reform in the 1980s. Later, following the liberalisation of the economy after 1991, India registered a stellar growth performance with per capita income rising to Rs 38,408 in FY 2010. But around 30 per cent of the nation’s citizens still live in abject poverty, and there is a growing divide in haves and have-nots.
Meanwhile, in Karnataka, the previous BJP government held two investors’ meets — popularly called the Global Investors’ Meet — in June 2010 and 2012. It conducted the Global Agribusiness and Food Processing Summit in 2011.
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