Prevailing high costs will discourage investment: FKCCI

BANGALORE: Prevailing high land prices, power tariffs and labour costs in Karnataka will discourage new investments in from coming the industrial sector, a state industry body has said.

"Any prospective investor evaluates all the costs before making the final decision for investment," Federation of Karnataka Chambers of Commerce and Industry President D Muralidhar told reporters here last night.

"On a cursory analysis, all the major component of costs in Karnataka are not favourable compared to the neighbouring states," he said.

According to him, power costs are almost 20 to 30 per cent higher in Karnataka. "The availability is also an issue whereas other states have almost frozen their power tariff for the last 4-5 years, and have a comfortable power situation," he said.

Muralidhar said the cost of administering labour in Karnataka is perceived to be higher due to the archaic rules and unhelpful attitude of the bureaucracy.

He said though Karnataka has above-average record on most of the socio economic indicators, its is quite below Punjab, Tamil Nadu, Gujarat and Maharashtra.

"The (Karnataka) economy has become dangerously unidimensional and over dependent on IT and offshoring, and is vulnerable, going forward, to global trends in this sector," Muralidhar said.