Karnataka State

The Future being made in Karnataka

Karnataka is situated on the south west region of India. Bordered by the Arabian Sea and the Lakshadweep Sea to the west, Goa to the north-west, Maharashtra to the north, Telangana to the north-east, Andhra Pradesh to the east, Tamil Nadu to the south-east and Kerala to the south-west. The State covers an area of 191,976 square kilometres (74,122 sq mi) – about 5.80 percent of the total geographical area of India. It is the seventh largest State of India by area and the eighth largest state in India by population.

Karnataka has the distinction of being one of the fastest growing economies in the country. In the past two decades, economic and administrative reforms have transformed Karnataka from being an inward looking state-based economy into a globalized market-based economy, now identified as one of the most attractive investment locations globally.

Karnataka accounts for a significant share in the total FDI that flows into India. Karnataka has attracted FDI of US$ 24.63 billion (Rs. 137,774 crore) during the period of April 2000 to June 2017. Karnataka has also achieved the top spot as the country's most attractive investment destination as per the DIPP’s SIA Index up to September, 2017 with investment intentions worth Rs 1,47,625 crore accounting to 44.43 per cent of the total investment intentions in the country.

The major contributors to the Indian FDI are made by US, Japan, UK, UAE and Germany.

The Advance estimates shows that the Gross State Domestic Product (GSDP) of Karnataka is expected to grow at 9.6% at constant (2011-12) prices and reach Rs.10,82,534 crore in 2018- 19.

Agriculture sector is -4.8% in 2018-19 compared to 14.2% in 2017-18 on account of fall in production of food grains from 144 lakh ton in 2017-18 to 100 lakh ton (expected) during 2018-19 due to prevailed drought conditions in 100 taluks in kharif and 156 taluks in rabi season.

The industry sector (comprising mining & quarrying, manufacturing, construction and electricity, gas & water supply) is expected to rise by 7.4% in 2018-19 against a growth of 4.7% during 2017-18.

The service sector is expected to grow by 12.3% in 2018-19 as against a growth of 12.2 % during 2017-18.

The Public Administration with 21.4%, Other services (includes Education, Health and other remaining services) with 14.4%,

Trade and Repair Services with 14.1%, and Real Estate, Professional Services & Ownership of Dwellings with 12.9% growth are the major contributors to achieve 9.6% growth of GSDP in 2018-19, i.e. from Rs.9,87,832 crore in 2017-18 to Rs.10,82,534 crore in 2018-19.

This position of strength is vastly driven by three strong growth factors. Firstly, the location advantage that easily connects Bangalore directly with the most of the world; Secondly, the solid foundations that aid knowledge capital here: the state has many building blocks to its credit - It is the largest bio technology hub In India, It has the largest number of R&D centers, The largest number of medical institutes, industrial training institutes; largest software technology parks and 3rd largest engineering colleges in India.

Exports of Karnataka

Karnataka has a long tradition of overseas trade. Historically, Karnataka has been a major exporter of commodities like coffee, spices, silk, cashew nuts, handicrafts and incense sticks. In the last two decades, the pattern has shifted to include modern goods. It constitutes the largest share in the State's exports. Its share was of the order of 39% in 2017-18. The other commodities which have substantial share in Karnataka's exports in 2017-18 as compared to 2016-17 are petroleum products (30%), manganese ore (85%), leather products (40%), Marine products (20%) and coffee (12%).

Karnataka's exports amounted to about Rs. 545780 crore in 2017-18 which constituted about 18.05% of the Country's exports in that year. Karnataka's exports were Rs.324078.10 crore during the period of April-Sept 2018.

Export of electronics and software constitute the largest share in the state's exports. The other commodities with significant share in exports in 2018-19 (up to Sept 2018) are Engineering products, Readymade garments and Basic Chemicals and Pharmaceuticals.

Top sectors in Karnataka

Karnataka has also been attracting a global audience with its integrated and strategic growth plans that offer immense investment potential across its varied sectors in Aerospace & Defense, Electronics system design and manufacturing (ESDM), Bio Technology & Pharmaceuticals, Auto and Auto Components, Precision tools & Heavy Engineering, Leather & Apparels.

Karnataka Compete with China scheme, 2018

As part of the ‘Compete with China’ scheme, the Karnataka Government has identified nine districts to foster innovation and product diversification. It also plans to have manufacturing and assembling activities right from the village level to the taluk and district level in each cluster.

The existing manufacturing and service base of the district would be adequately utilised and scaled up.

Programmes to be implemented in various districts include

  • Kalaburgi for manufacturing of solar power goods,
  • Chitradurga for manufacture of LED lights,
  • Hassan for manufacture of sanitary goods,
  • Koppal for manufacture of mechanised toys,
  • Mysuru for an ICB manufacturing unit,
  • Bellary for the textile industry,
  • Chikkaballapur for mobile phone components,
  • Tumkur for sports and fitness goods, and
  • Bidar for the manufacture of agricultural implements.

Some of the start-up friendly initiatives taken by GoK recently

  • Karnataka startup policy 2015-2020 aims to create a world-class startup ecosystem in the state through strategic investment and policy interventions leveraging the robust innovation climate in Bangalore
  • Karnataka 'Elevate 100' scheme for start-ups: In 2017, GoK has launched the ‘Elevate 100’ scheme to identify and nurture innovative start-ups from various sectors including Manufacturing; Pharma; Agritech; IT; Biotech and Animation. The aim is to identify 100 most innovative start-ups in the state to elevate them to the next level of success. Through Elevate, the state Government will help startups with funding, technical and business support based on their need.
  • September 2017: Approved Electric Vehicle and Energy Storage Policy 2017 – The Electric Vehicle policy of Karnataka is aimed at making the state a hub for the production of alternative fuel vehicles, and bolstering the ‘Make In Karnataka’ initiative.
  • July 2017: Announced plans to set up Startup Coast in Karnataka – Geared towards facilitating entrepreneurship, the coast would include two innovation centres, five incubation hubs in colleges, a 100-seater workspace in Mangaluru and 20 to 30 tinkering labs in schools.
  • May 2017: Started an INR 97.5 million (US $1.5 million) fund for agritech startups; INR 107.3 million (US $1.65 million) for 26 biotech startups – The Department of Agriculture, Government of Karnataka spearheaded the initiative to bolster growth in agritech and biotech segments.
  • Ease of doing business- Karnataka Government has been progressively working towards simplifying regulatory mechanisms so that a conducive environment can be provided for businesses in the state. The state has been successful in implementing reforms for simplifying procedures along with providing an investor facilitation for the investors to invest in Karnataka.

In the last 3 years, there has been considerable improvement in business facilitation and easing of business regulatory environment in terms of EODB ranking, the state had secured 9th rank in 2015, 13th in 2016 and progressed to 8th rank in 2017. In 2017, the state secured 98.64% in reform implementation and 77.66% in industry feedback, with 96.42% in overall implementation. The state government is striving towards further improving its current EODB position in the country. For EODB implementation, DIPP has included industry feedback in finalising the state ranking for 2018-19, giving it equal weightage as reform implementation.