Will GIM proposals become reality?

The three-day Global Investors’ Meet (GIM) organised by the Karnataka government has ended on a high note with investment proposals of nearly Rs 10 lakh crore made, almost double the government’s expectation at the start of the summit. Investments have been proposed in the areas of renewable energy (35% of the proposed investments), green hydrogen and green ammonia (35%); and in sunrise sectors including electronics, semiconductor fabrication, lithium-ion battery manufacturing and e-mobility (9%); infrastructure such as 5G telecom, city gas distribution, industrial and logistical parks (9%); and core sectors, which include iron and steel, cement and mining (7%). While it is a good sign that the bulk of the proposed investments are in the areas of green and renewable energy, those into the manufacturing sector is disappointing. According to Chief Minister Basavaraj Bommai, Karnataka currently accounts for 45% of the renewable energy generation in the country and the state would now aim to compete with the Gulf countries in the production of hydrogen fuel and ammonia. The government has already approved Rs 2.8 lakh crore worth of projects by 608 companies, while Rs 5.4 lakh crore worth of MoUs were signed by 57 companies. Another Rs 1.6 lakh crore in investments have been announced by major corporations.

While the picture may appear rosy at the moment, the reality may turn out to be quite different going by past experience. Most investments promised at past GIMs in Karnataka and elsewhere have not materialised. Bommai himself expressed this apprehension at the closing ceremony when he mentioned that the MoUs, which are non-binding agreements, meant little to him unless the promises were fulfilled. Though 30% of the MoUs signed, which by itself exceeds the value of all the projects approved during previous GIMs, have already been given the necessary clearances, the state’s notorious bureaucracy could still play spoil sport. At the same time, the government should ensure that norms, especially those pertaining to environmental clearances, are not thrown to the wind in its eagerness to attract investments.

A serious concern that remains is that while the government has for long promised to develop tier-2 cities into industrial hubs and thus reduce the pressure on Bengaluru, it has failed to provide the required infrastructure to make them attractive to investors. Bengaluru itself has lost much of its sheen due to urban floods, bad roads and mobility challenges. Unless the government fixes these issues and ensures ease of doing business by cutting red tape and corruption, both of which have been stumbling blocks to greater investments in the state, the tall promises made at the GIM will remain only on paper.