Karnataka targets 10% industrial growth annually; releases new industrial policy

In a bid to attract Rs 5 lakh crore investment and create 2 million jobs over the next five years, the Karnataka government on Tuesday released a new industrial policy 2020-25.

The government also aims to become the third top merchandise exporter in the next five years. The government is also aiming at maintaining an industrial growth rate of 10% per annum, Jagadish Shettar, minister for large and medium industries said after releasing the policy document.

"This industrial policy is very forward-looking and brings several incentives and regulatory reforms such as land access and labour market regulation. Promoting our state's economic and industrial development has always been a top priority for our government,” Shettar said.

The New Industrial Policy is aimed at achieving the holistic development of the state and looks beyond Bengaluru. The focus has been given to promote Tier-2 and Tier-3 cities as engines of economic growth. The policy has grouped districts of the state into three zones, to incentivise investments in the industrially backward districts. Industrially backward districts are classified in Zone-1 & 2, and Bengaluru Urban and Rural districts are classified in Zone-3, Shettar said.

In terms of business reforms, the state has taken various historic steps to improve multiple stakeholders' business climate. These reforms include land reforms, labour reforms, auto-renewal of different licences/clearances and central inspection system.

Shettar also stressed upon employing locals in the new industrial investment projects and making it mandatory to employ Kannadigas aggregate basis of at least 70% and 100% in Group C and D jobs.

According to the Ministry of Industry and Internal Trade Promotion (DPIT) of the Ministry of Commerce and Industry, as many as 95 investment proposals have been registered in the state amounting to Rs 1,54,937 crore. Between August 2019 and December 2020, the State High-Level Committee and the State High-Level Single Window Clearance Committee have approved the 410 new projects, Shettar said.

These proposals would bring in an investment of Rs 82,015 crore in the state, which would create 2,27,147 jobs. From October 2019 to September 2020, the FDI flow has been Rs 58,204 crore and stands in 3rd place in the country, he added.

“The government will support the development of clusters to ensure the rapid growth of industries. The state government is restoring the toy, textile, agricultural implements, ESDM, FMCG, and wellness clusters. Already, separate policies for the toy, textile and ESDM clusters are in the process of being rolled out," Gaurav Gupta, Additional Chief Secretary, Commerce & Industries Department, Government of Karnataka said.

Under the policy, there will also be an economic incentive for manufacturing industries to adopt water harvesting/ saving measures in their premises without interrupting industrial production. The "zero discharge process" industries will also be promoted to encourage pollution, mitigation and waste control in manufacturing industries, Gunjan Krishna, Commissioner for Industrial Development and Director of Industries and Commerce said.

“Ultra and super mega industries will be offered special packages/ discounts with priority given to investment, project space, direct and indirect job creation in the new Industrial Policy 2020-2025. The state is keen on further expanding the existing industrial base by facilitating investors to set up Private Industrial Parks,” she added.