Karnataka's Mission is to achieve an economic growth rate of 8% to 9% over the next decade by promoting the rapid growth of a market driven, knowledge based, efficient and competitive industrial sector. This will be done by providing industry access to high quality infrastructure, extending institutional support for technology upgradation, deregulating the business environment for an efficient, proactive and transparent administrative framework and catalysing the entrepreneurial as well as creative capabilities of the human resources.

The proposed Industrial Policy will therefore aim to achieve an average industrial growth rate of 10% to 12% per year and attract investments of atleast Rs.20,000 Crores per year and create, on an average, employment potential of atleast 1.5 lakhs per year.  

In achieving this Mission, the focus will be on the objectives set out below:-

a)    Encourage rapid growth of sectors and markets in which Karnataka has strategic advantages.

b)    Enhance value addition in products and processes through rapid technology upgradation.

c)    Enable optimal utilisation of capacity and resources in different sectors viz., Agriculture, Horticulture,  Animal Husbandry, Minerals and Human capital.

d)   Enable industry to access new markets - domestic and export - through new products that meet global standards of quality and competitiveness.

e)    Give impetus to knowledge based industries and the service sector.

f)     Create a market driven environment with the private sector being the primary engine for growth.

g)    Provide Industry access to high quality infrastructure.

h)    Fully tap the potential of the Small Scale Sector and encourage establishment of new tiny and Small Scale Industries, particularly in the rural areas to achieve the twin objectives of employment generation and utilisation of local resources.

Towards this end Government will undertake, through an expert group, a detailed study of the small scale industrial sector in the state to ascertain their present status; problems and prospects and come out with a separate policy on employment generation in the industrial sector which among other things would also include a suitable incentives scheme linked to employment generation. This Study will be completed in the next six months time.  

a)  Forge a strong partnership with the private sector in all aspects of Industrial Policy and its implementation to provide for a demand driven decision making process in an increasingly market oriented economy

b)   Create a policy framework to facilitate competitiveness of local industry and enabling ease of doing business

c)   Enhance public and private expenditure to build efficient and competitive Industrial infrastructure

d)  Give impetus to technology upgradation by forging symbiotic and mutually beneficial institutional arrangements between Government Academic - R&D Institutions and Industry

e)   Focus on catalysing comparative advantages that Karnataka has in the Global market by increasing its exports in information technology, bio-technology, food processing, electronics and communication, garments, machine tools and precision engineering goods; 

f)    Assist the tiny, small and medium scale industries to upgrade their technologies and manufacturing processes to face the increasing competition; and

g)   Radical restructuring of the State Public Sector undertakings as well as Government infrastructure agencies and Financial Institutions by promoting private sector initiative in these activities.

The first principle of the Industrial Policy will be technology. In particular, putting in place an institutional mechanism and a viable revenue model for the rapid technological upgradation of the small and medium industries in Karnataka will receive special attention. The objective will be to facilitate a cluster based approach aimed at meeting the sectoral/sub-sectoral technology needs on a demand driven basis. To catalyze the efforts of technology upgradation, the Government of Karnataka will establish a corpus called The Technology Upgradation Fund of Rs.50.00 Crores over a period of 5 years. The fund will be administered through a Government/ Industry partnership and its deployment dictated by the logic of the market and by industry. In particular, this fund will focus on niche products and processes in the value chain of industries in which Karnataka has comparative advantages and reinforce best practices in technology and business. The following specific schemes and proposals will be implemented under this scheme:

(a)  Interest subsidy to SMEs who avail loan from State Financial Corp. for technology upgradation and modernisation for which separate orders have been issued;

(b)   Promoting Technology Business Incubators/Accelerators with the active involvement of private sector in identified potential locations in the State. This Technology Business Incubator will aim to build on the strengths of small decentralised Technology Development Groups and are expected to spawn high value SMEs. Government assistance will be in the form of providing financial assistance for creation of basic infrastructure facilities subject to a ceiling of Rs.50 lakhs per incubator.

(c)  To establish, over the next 5 years, ten more Science & Technology Entrepreneurs Parks [STEPs] in potential districts of the State. Government assistance will be in the form of capital grants for creating basic infrastructure facilities to the extent of 25% of the cost of each STEP subject to a ceiling of Rs.25 lakhs.

(d)  To assist and encourage the private sector to establish material and product testing as well as quality assurance laboratories in different districts of the State. These laboratories will focus on ensuring compliance with Product & Process Methods [PPM] and Sanitary & Phyto Sanitary [SPS] measures of the WTO. Government assistance for establishing such laboratories and testing centres would be in the form of capital grants of 10% of the capital cost subject to a ceiling of Rs.10 lakhs per Centre; and

(e) Government will encourage the SMEs to obtain ISO 9000, ISO 14000 and similar international certification with a view to promote total quality management and best practices in SMEs. Government Assistance will be in the form of; meeting 50% of the cost of obtaining such certification, subject to a ceiling of Rs.75, 000 per industry.

(a)  The Government of Karnataka recognises that a key parameter to make local industry globally competitive is to provide industry access to high quality industrial infrastructure at competitive prices. Towards this end the Government will establish an Infrastructure Development Fund with an initial corpus of Rs.100 Crores. This fund will seek to leverage the strengths - technical and financial - of major private infrastructure providers through a Public-Private partnership. The Government will significantly enhance expenditure on infrastructure development and infuse efficiency in the management of industrial infrastructure. The common infrastructure fund will be aimed at meeting the infrastructure needs of sector specific and location specific technology parks/industrial estates/industrial areas/ industrial corridors for the focus sectors. This corpus fund would be used to kick-start investments in common industrial infrastructure, which could be accessed by industry.

(b)  In keeping with the Government's objective of developing a market driven and efficient management of industrial infrastructure, the Govt. of Karnataka will establish Industrial townships in major locations that have clusters of industries. The Industrial Townships will provide for management of the Industrial Infrastructure by private industry associations/user groups. The Industrial Townships are expected to allow industry to manage their own assets and ensure a high order of maintenance of the basic infrastructure like roads, power, water supply, telecommunication etc. within the Industrial Estate/Industrial parks.

(c)  The Karnataka Industrial Areas Development Board will act as a key Govt. agency to develop sector specific/location specific industry parks over the next five years. Among others, the Government through the KIADB, will promote the following:

i)    Five Agro Food Processing Parks at Malur, Bagalkot, Belgaum, Chitradurga and Maddur.

ii)   Two Apparel Export parks, one each at Bangalore and Bellary.

iii)   A special Economic Zone in Hassan

iv)   An Export Promotion Industrial park in Mangalore.

v)    Three Auto parks, one each at Bidadi, Shimoga and Dharwad.

vi)   A knowledge park dedicated to BioTechnology and related industries near Bangalore. vii) A full-fledged Financial District near Bangalore. These projects will be implemented by KIADB with the active participation of the private sector. While Government of Karnataka will provide margin money support to the KIADB to an extent of 15% of the equity contribution for these projects, financial assistance will be mobilised from the Govt. of India, multilateral funding agencies as well as from Industry.

(d)   In order to ensure that cost of land to the entrepreneur is not exorbitant, wherever Government land is available, the same will be transferred to KIADB free of cost so that this could be used as a cushion to reduce the price of land acquired and developed by KIADB for allotment to entrepreneurs;

(e)   KPTCL will take steps to ensure uninterrupted and quality power to the Industrial sector by:

i)    Establishing dedicated sub-stations of adequate capacity in all major Industrial Areas/Estates over the next five years; and

ii)  Conversion of 11 KVA feeders with more than 50% Industrial loads into exclusive Industrial feeders/express feeders; and

a)   Developing a large skill/knowledge based workforce is fundamental to a self-sustaining industrial sector. Recognising this imperative, the Govt. will, with the active participation of Industry, revitalise the network of Artisan Training Institutes, the District Training Institutes and Polytechnics to upgrade the quality and skill of manpower employed by SMEs. This effort will be driven by market needs dictated by private industry. The effort to retrain the existing Industrial workforce, upgrade training systems/methods, will receive impetus from industry. It is envisaged that the focus of this programme will be to allow industry to manage the training institutions such that skill upgradation is market driven on the supply side of the formal labour market.

(b)   As part of the initiative to promote a strong entrepreneurial, base, the Government will strengthen the Centre for Entrepreneurship Development of Karnataka (CEDOK) The objective will be to utilise the creative capabilities of the local people particularly in less industrialised districts. CEDOK will be encouraged to collaborate with recognised National/International organisations involved in Entrepreneurship Development. In partnership with the private sector, the Government of Karnataka will seek to develop CEDOK into a Centre of excellence in Entrepreneurship Development, Business Management and Training.

(c)   In order to encourage micro enterprises in rural and backward areas the Government of Karnataka will continue its programme of establishing Rural Development and Self-Employment Training Institutes (RUDSETI's) in all Districts of the State. Government has successfully established nine RUDSETI's in collaboration with financial institutions and banks. Over the next five years, the Government of Karnataka will establish one RUDSETI in each District of the State. The Management of these institutions will be largely through private initiative to meet the needs of local industry.

(d)   In addition, the Government will also promote specialised training institutes, viz:

a)   Steel Technology Institute at Bellary;