Industrial Development & Economic Growth in Karnataka

Karnataka is located 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, the Gross State Domestic Product (GSDP) of Karnataka stood at about Rs 15.88 trillion (US$ 226.06 billion) in 2019-20. The GSDP (in Rs) of the state grew at a CAGR of 12.80 per cent between 2011-12 and 2019-20. The state’s per capita GSDP was Rs 227,725 (US$ 3,258) in 2018-19. The per capita GSDP (in Rs) increased at a CAGR of 12.71 per cent between 2011-12 and 2018-19.

Merchandise exports from Karnataka reached US$ 17.36 billion in 2018-19 and US$ 12.94 billion in April-December 2019.

Karnataka has vibrant automobile, agro, aerospace, textile & garment, biotech and heavy engineering industries. The state has sector specific 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 23 operational IT/ ITeS SEZs, 5 software technology parks & dedicated IT investment regions. In 2017- 18, total exports from the state aggregated to US$ 39.38 billion (up to November 2017). Karnataka has 47 IT/ITeS SEZs, three software technology parks and dedicated IT investment regions.

Karnataka boasts of a diverse flora and fauna and a 320 km natural coastline, which makes it a nature tourist's paradise. Tourist arrivals in the state increased from 36.7 million in 2006 to 102.3 million in 2017.

Karnataka offers a wide range of fiscal and policy incentives for businesses under the Karnataka Industrial Policy, 2014-19. Through the ESDM Policy 2013, the government of Karnataka has planned 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’.

The cumulative FDI inflows in the state April 2000 to September 2019 were recorded at US$ 42.32 billion, the third highest in India after Maharashtra and New Delhi and accounted for a share of 9.0 per cent in India’s cumulative FDI inflows. 251 investment intentions worth Rs 84,392 crore (US$ 11.95 billion) were filed in Karnataka during 2019.

Key Sectors:

• Karnataka government gives approval for investment of Rs 480 crore (US$ 68.68 million) to Goodrich Aerospace Service Pvt Ltd to establish a unit in Bengaluru.
• 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 November 2019, the state has 32 operational, 51 notified SEZs and 62 formally approved SEZs.
• As of February 2020, the state had an installed power generation capacity of 29,824.81 MW. Out of this, central utilities contributed 4,012.45 MW, private utilities contributed 17,011.88 MW and 8,800.49 MW was under state utilities.
• As per the Budget 2019-20, the state government has allocated US$ 1.6 billion for enhancement of the power sector in the state
• Karnataka has emerged as an information technology (IT) hub of India. The state is India’s largest software exporter, with electronics and computer software exports totalling to US$ 77.9 billion in 2018-19 and reached US$ 42.5 million during 2019-20 (till November 2019).
• According to the State Budget 2019-20, Rs 2,067 crore (US$ 295.75 million) is allocated towards medical education and research.
• 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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