Introduction
Karnataka is located in the south 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) is estimated to be ~Rs. 22.4 trillion (US$ 271.39 billion) in 2022-23. The state’s GSDP increased at a CAGR of 11.51% between 2015-16 and 2022-23.
Total exports from the state stood at US$ 15.52 billion in FY23, and US$ 25.87 billion in FY22.
In overall exports, sectors such as petroleum products, iron & steel and organic chemicals were the key contributors. According to an EXIM Bank report, by 2024-25, Karnataka’s merchandise exports can reach US$ 35.3 billion, and software and services exports can reach US$ 150 billion.
Karnataka has 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 boasts of a diverse flora and fauna and a 320 km natural coastline, which makes it a nature tourist's paradise.
According to the Department for Promotion of Industry and Internal Trade (DPIIT), the state’s cumulative FDI inflow stood at US$ 36.83 billion between October 2019-June 2022, the second-highest in the country after Maharashtra, and accounted for 23.17% of India’s cumulative FDI inflows.
Karnataka offers a Wide range of fiscal and policy incentives for businesses under the Karnataka Industrial Policy 2020-25, with simplified procedures for investment. Through the ESDM Policy 2017-22, the Government of Karnataka plans to facilitate, promote and develop the ESDM sector in Karnataka and make the state a preferred destination for investment in this sector. In September 2017, the government of Karnataka passed the ‘Karnataka Electric Vehicle and Energy Storage Policy 2017’. In June 2021, the Karnataka government amended the policy to offer more impetus to the electric mobility sector. As per the amendment, a 15% subsidy was announced on capital expenditure on land value (fixed value assets up to a maximum limit of 50 acres land).
As of May 2023, the state had an installed power generation capacity of 31,743.52 MW. Of this, central utilities contributed 4,047.46 MW, private utilities (18,850.58 MW), and state utilities (8,845.49 MW).
As per the State Budget 2022-23, Rs. 12,226 crore (US$ 1.57 billion) has been allocated for the energy sector. Out of this, Rs. 9,419 crore (US$ 1.21 billion) has been allocated to provide subsidies to the Karnataka Power Transmission Corporation Limited.
Recent Developments in Key Sectors
- The Centre in March 2022 approved two major road projects in Karnataka at a cost of more than Rs. 890 crore (US$ 107.7 million).
- Karnataka has 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 has been built at a cost of about Rs. 20 crore (US$ 2.4 million).
- The Karnataka government in November 2022 signed memorandums of understanding (MoUs) worth Rs. 1.29 lakh crore (US$ 16 billion) were signed under the ‘Renewable Energy’ sector with Vedanta assuring Rs. 80,000 crore (US$ 9.68 billion) investment, during the inaugural day of the three-day Invest Karnataka 2022–Global Investors Meet.
- The state is India’s largest software exporter, with electronics and computer software exports totalling US$ 81.4 billion in FY20 and US$ 70.9 billion in FY21, US$ 91.8 billion in FY22, and US$ 57.5 in FY23 (until September 2022).
- On November 10, the Vande Bharat Express will make its debut in South India on the route connecting the capitals of Tamil Nadu and Karnataka (Chennai-Mysuru via Bengaluru).
- In October 2022, Karnataka Governor Mr. Thawar Chand Gehlot virtually launched the Tele Mental Health Assistance and Networking Across States (Tele-MANAS) programme, which provides 24/7 counselling and mental health services.
- In October 2022, Chief Minister Mr. Basavaraj Bommai stated that Karnataka has been in the forefront of agriculture sector digitisation, and by connecting farmers with survey numbers and Aadhaar details, 78 lakh farmers have been brought under its purview.
- In September 2022, Prime Minister Mr. Narendra Modi approved the New Coastal Zone Management Plan for Karnataka and set the foundation stone for numerous projects totaling Rs. 3,800 crore (US$ 462.69 million) in Goldfinch City.
- In September 2022, according to Karnataka Chief Minister Mr. Basavaraj Bommai, the state has agreements worth Rs. 1.3 lakh crore (US$ 15.83 billion) in the field of renewable energy, and shortly work will begin on hydrogen fuel.
- In July 2022, the Karnataka Industries Department approved 61 industrial projects worth Rs. 3,830 crore (US$ 463 million), which are expected to generate over 19,500 jobs.
- In June 2022, a number of rail and road infrastructure projects totaling more than Rs. 27,000 crore (US$ 3.29 billion) were officially opened and the foundation stones were laid by Prime Minister Mr. Narendra Modi in Bengaluru, Karnataka.
- In May 2022, the Karnataka Government announced the new ‘Karnataka Renewable Energy Policy’ for the 2022-27 period. The policy intends to position Karnataka as a preferred renewables investment location and to build a sustainable and green energy-friendly economy.
- In FY22 (till January 2022), Karnataka produced 33.91 million tonnes of iron ore, which was an 18.80% growth YoY.
- Total export value of iron & steel from Karnataka in FY22 was US$ 2.22 billion.
- Karnataka has emerged as the information technology (IT) hub of India. Export of electronics and computer software from the state reached US$ 81.4 billion in FY20 and US$ 38.8 billion in FY21 (until November 2020), respectively. Export of electronics and computer software accounted for 85% share in Karnataka’s overall exports.
- More than 60% of the biotechnology companies in India have a base in Bangalore and the state drives 50% of the total revenue in India’s biotechnology sector.
- The Information Technology, Electronics and Communication department of the state has established a new IoT policy within the state with a view to attain a substantial market share in India’s IoT market by 2020.
- Karnataka is the first state which came out with an aerospace policy in the country. The 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. The Karnataka Government has granted approval for investment of Rs. 480 crore (US$ 68.67 million) to Goodrich Aerospace Service Pvt Ltd to establish a unit in Bengaluru.
FACTFILE
Capital
BengaluruGeographical Area (sq km)
192,000State Language
Kannada, Tulu, Kodava, Hindi and EnglishLiteracy Rate
75.6 per centKey Industries:
IT and ITeS
Biotechnology
Engineering
Electronics and telecom
Automotive
Textiles and apparel
Aerospace
Animations
Tourism
Renewable energy
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