Karnataka to woo FMCG investments with 20% subsidy

Two years after it was announced, the state government has finally given a push to a Fast-Moving Consumer Goods (FMCG) cluster in Dharwad by offering a 20% investment subsidy for a five-year period to industries wanting to start operations there.

The FMCG cluster is set to come up in the Mummigatti industrial area in Dharwad, with a targeted investment of Rs 3,000 crore and aiming to generate about 26,500 jobs.

It will cater to three broad categories of products — personal and home care (such as cosmetics, perfumes and kitchen utility products), food processing (frozen foods, energy drinks, desserts, etc.) and healthcare products.

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FMCG manufacturing in Karnataka is largely limited to agro and food processing.

Despite a ‘dominant white-collar consumer base’ and raw material availability around Bengaluru, none of the FMCG majors in non-food category has its facilities in Karnataka, a recent government order in this regard notes, highlighting the need for a strong policy to expand the industry in the state.

To encourage industries, the government has promised a 20% subsidy up to a maximum of Rs 25 crore. A performance-linked incentive of 3% of annual turnover for five years is also in the offing.

The government order comes even as Chief Minister Basavaraj Bommai has been pitching this FMCG cluster to investors at the Davos summit. While the cluster was initially announced in the 2020-21 budget by the then chief minister B S Yediyurappa, the project has received a push only now.

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The government has envisaged to develop the cluster on the lines of an initiative in Guwahati, Assam.

The cluster was the brainchild of the then industries minister Jagadish Shettar. Shettar told DH that he was inspired to initiate it in Karnataka after a visit to Guwahati.

“The Guwahati cluster was started during the A B Vajpayee regime at the Centre. They offered tax-free incentives to industries and were able to draw many investors. The tax-free period has come to an end now. We hope that we can woo investors to our state with these incentives,” Shettar said.

The government had earmarked 200 acres of land, which is available for use now, the former chief minister said.