New industrial policy for Karnataka: Business turnover, jobs added to decide state sops

Bengaluru: Karnataka has switched from tax-based sops for investors to an incentive system linked to the size of business turnover and new jobs added, under the new industrial policy that the cabinet cleared on Thursday.

The policy, which will be valid for the next five years, seeks to offer more sops if industries decide to invest in remote areas of Karnataka, away from big cities, in order to achieve equitable development across the state.

“We aim to attract investments of 5 lakh crore and add two million jobs over the next five years. We want to improve Karnataka’s ranking in merchandise exports from the current fourth to third position in the next five years,” industries minister Jagadish Shettar told ET.


One of the focus areas of the policy, he said, is to develop an enabling ecosystem for technology adoption and innovation. The policy, the minister said, has removed bottlenecks with regard to buying of land for industrial purposes, and compliance with labour laws and regulations.

The policy has grouped districts into three zones, with backward districts falling into the top two zones, and seeks to give a push to automobile and auto components, pharmaceutical and medical devices, engineering and machine tools, knowledge-based industries, logistics, electric vehicles, aerospace and defence, and renewable energy.

The government has sought to give a big push to medium, small and micro industries (MSMEs), as the Karnataka Industrial Areas Development Board (KIADB) will reserve 30% of plots in its industrial estates for MSMEs. The government has also decided to extend a slew of support to MSMEs, including equity and incentives, considering their potential to add jobs.

The government will issue an acknowledgement certificate to investors after they receive approval from the high-level or single-window committee, which is treated as deemed approval for downstream approvals for an initial period of three years or from the date of commencement of commercial operations. The certificate will enable starting of work at the industrial plot, as per the policy.

Under the new policy, all industries must create jobs in such a way that 70% of those hired are Kannadigas on an overall basis, and 100% at the lowest level.