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 gross state domestic product (GSDP) is projected to be ~Rs. 18.85 trillion (US$ 243.56 billion) in 2022-23. The state’s GSDP increased at a CAGR of 8.79% between 2015-16 and 2022-23.

Total exports from the state stood at US$ 25.87 billion in FY22, and US$ 12.51 billion in FY23 (until August 2022).

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 is home to 34 operational SEZs, 61 SEZs with formal approvals and 50 notified SEZs, as of July 2022.

Karnataka boasts of a diverse flora and fauna and a 320 kms 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. 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).

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. In FY22, Karnataka was the top FDI equity inflow recipient in India, with a 38% share of the total US$ 83.57 billion.

In December 2019, the New South Parallel Runway (NSPR) at Kempegowda International Airport became operational. This will enable the airport to handle around 35 million passengers per year. The airport became the first in country to operate independent parallel runways, enabling aircraft to land and take off simultaneously on both runways.

As of March 2022, the state had an installed power generation capacity of 30,577.59 MW. Of this, central utilities contributed 4,047.70 MW, private utilities (17,684.41 MW) and state utilities (8,845.49 MW). Of the total installed power generation capacity, 9,544.90 MW was contributed by thermal power, followed by nuclear (698.00 MW), renewable power (16,212.02 MW) and hydropower (3,631.60 MW).

In April 2022, the government of Karnataka accepted Azure Power's expression of interest (EoI) to develop solar, wind, and hybrid renewable energy projects totaling 1,700 MW capacity at a cost of Rs. 13,300 crore (US$ 1.62 billion).

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.

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.

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).

In May 2022, the Karnataka government signed an MoU with Israel-based ISMC Analog Fab Private Limited to set up a semiconductor fabrication plant in the state with an investment of Rs. 22,900 crore (US$ 2.95 billion).