Karnataka is in the southern region of India. It is surrounded by the Arabian Sea on the west, Goa on the northwest, Maharashtra on the north, Andhra Pradesh on the east, Tamil Nadu on the southeast, and Kerala on the southwest.
At current prices, Karnataka’s revised gross state domestic product (GSDP) was estimated to be ~Rs. 30.70 trillion (US$ 359.45 billion) in FY26. The state’s GSDP increased at a CAGR of 11.38% between FY16 and FY26.
Total exports from the state stood at Rs. 1,04,354 crore (US$ 11.81 billion) in FY26 (April-July 2025).
Electronic Goods were the top exported item from Karnataka, accounting for 25.75% of the total exports in FY25, followed Engineering Goods by 23.88%.
Karnataka’s services-sector exports hit Rs. 14,03,811 crore (US$ 159 billion) in FY25, marking a 13.7 % rise over the previous year and nearly doubling from Rs. 6,86,896 crore (US$ 77.8 billion) in FY19; the state led the country in total services exports.
Karnataka has a vibrant automobile, agro, aerospace, textile and garment, biotech, and heavy engineering industries. The state has sector-specific Special Economic Zone (SEZs) for key industries such as IT, biotechnology, engineering, food processing and aerospace. Karnataka is the IT hub of India & home to the fourth-largest technology cluster in the world. Karnataka is home to 34 operational SEZs, 61 SEZs with formal approvals and 50 notified SEZs, as of July 2022.
Karnataka boasts of diverse flora and fauna and a 320 km natural coastline, which makes it a nature tourist's paradise. Tourist arrivals in the state stood at 81.33 million in 2021, compared with 77.45 million tourists in 2020
Karnataka offers a wide range of fiscal and policy incentives for businesses under the Karnataka Industrial Policy 2020-25, with simplified procedures for investment.
Karnataka has a stable political environment and ranked third in terms of attracting private sector investments in India. According to the Department for Promotion of Industry and Internal Trade (DPIIT), the state’s cumulative FDI inflow stood at Rs. 5,59,273 crore (US$ 63.34 billion) between October 2019-June 2025, the second highest in the country after Maharashtra, and accounted for 21% of India’s cumulative FDI inflows.
For FY25, Rs. 150 crore (US$ 17 million) was allocated for the development of minor airports, of which Rs. 100 crore (US$ 11.3 million) was released up to December 2024. This includes Rs. 20 crore (US$ 2.3 million) for land acquisition at Raichur Airport and Rs. 75.75 crore (US$ 8.6 million) for ongoing works at Shivamogga Airport.
As of August 2025, the state had an installed power generation capacity of 36,271.36 MW. Of this, central utilities contributed 4,687.70 MW, private utilities 22,364.13, and state utilities 9,219.54 MW.
Of the total installed power generation capacity, 10,814.95 MW was contributed by thermal power, followed by nuclear 698.00 MW, renewable power 24,758.41 MW and hydropower 3,631.60 MW.
As per the State Budget FY26:
- Chief minister’s infrastructure development program has been announced with an allocation of Rs. 8,000 crore (US$ 936.7 million). The focus will be placed on minor irrigation, roads, and urban infrastructure throughout the state.
- Rs. 16,021 crore (US$ 1.8 billion) has been allocated for subsidies to supply free power to irrigation pump sets.
- The Gruha Jyothi scheme has been allocated Rs. 10,100 crore (US$ 1.18 billion).
- Rs. 3,715 crore (US$ 435 million) has been allocated towards Samagra Sikshana Karnataka.
- Rs. 1,235 crore (US$ 144 million) has been allocated for Ayushman Bharath scheme.
- Policy for agriculture: An additional Rs. 450 (US$ 5.28) will be provided over the Rs. 7,550 (US$ 88.58) per quintal minimum support price for toor dal procurement, with a total allocation of Rs. 138 crore (US$ 16.2 million)
Karnataka has seen significant growth in rooftop solar installations, surpassing 600 MW total capacity, but experts highlight the need for increased consumer awareness and state promotion of the Surya Ghar: Muft Bijli Yojna to fully tap its solar potential.
The Government of Karnataka launched its Industrial Policy 2024-29, targeting generation of 20 lakh jobs by 2029 and attracting investments of around Rs. 7,50,000 crore (US$ 84.95 billion).
Karnataka is set to launch a Rs 48,686 crore (US$ 5.84 billion) long-term infrastructure plan for Bengaluru, aimed at transforming the city into a world-class tech hub, with projects including improved transportation, highways, and the Peripheral Ring Road to address traffic congestion and enhance economic growth.
Karnataka reached another milestone in terms of improving connectivity as the Shree Siddharoodha Swamiji Station in Hubballi now has the longest platform in the world. It is a 1,507-metre-long platform and was built at a cost of about Rs. 20 crore (US$ 2.4 million).
The Karnataka government and the British Council have launched four skilling programs, SCOUT, English Skills for Youth, Capacity Building Training for International Officers, and a Freemium Digital Library Wall, aimed at enhancing higher education, improving employability, and facilitating students' transition into the workforce.
Karnataka is the first state which came out with an aerospace policy in the country. Karnataka Aerospace Policy has identified an investment potential of US$ 12.5 billion in this sector during 2013-23 and plans to develop aerospace clusters in different regions of the state. In August 2022, the Karnataka government cleared the 'Karnataka Aerospace and Defence Policy 2022-27‘, which is expected to attract investments worth Rs. 45,000 crore (US$ 5.48 billion).
Karnataka continues to stand out as one of India’s most competitive and investment friendly states, supported by strong industrial capabilities, a thriving services ecosystem and a clear policy focus on technology driven growth. The state’s leadership in IT, electronics, aerospace, biotechnology and advanced manufacturing reflects a diversified economic base that is both resilient and future ready. Significant progress in infrastructure, renewable energy, skilling, regional development and connectivity is further strengthening its growth fundamentals. With rising exports, steady FDI inflows, long term industrial and urban development plans and a supportive governance framework, Karnataka is well positioned to sustain its upward economic trajectory and reinforce its role as a key driver of India’s long term growth story.
