Industrial Development & Economic Growth in Karnataka

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) stood at ~Rs. 18.03 trillion (US$ 247.38 billion) in 2020-21. The state’s GSDP increased at a CAGR of 8.47% between 2015-16 and 2021-22. Merchandise exports from the state reached US$ 16.64 billion in 2019-20 and US$ 15.14 billion in 2020-21.

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, and engineering, food processing and aerospace.

Karnataka is the IT hub of India & home to the fourth largest technology cluster in the world. It has 34 operational SEZs as of October 2020. Karnataka boasts of a diverse flora and fauna and a 320 km natural coastline, which makes it a nature tourist's paradise.

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 increased from 214.85 million in 2018 to 228.54 million in 2019.

Karnataka offers a wide range of fiscal and policy incentives for businesses under the Karnataka Industrial Policy, 2014 19. 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$ 11.95 billion between October 2019 and March 2021, the third highest in India after Gujarat and Maharashtra, and accounted for 14% of India’s cumulative FDI inflow.

Key Sectors:

• 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 April 2021, the state had an installed power-generation capacity of 30,105.02 MW. Of this, central utilities contributed 4,047.70 MW, private utilities (17,256.84 MW) and state utilities (8,800.49 MW).
• 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, respectively (until November 2020). 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.

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