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 12.69 trillion (US$ 196.88 billion) in 2017-18. The GSDP (in Rs) of the state grew at a CAGR of 13.11 per cent between 2011-12 and 2017-18. The state’s per capita GSDP was Rs 193,409 (US$ 3,001) in 2017-18. The per capita GSDP (in Rs) increased at a CAGR of 11.89 per cent between 2011-12 and 2017-18.

The state has attracted Foreign Direct Investment (FDI) equity inflows worth US$ 32.72 billion during the period April 2000 to June 2018, according to data released by Department of Industrial Policy and Promotion (DIPP).

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 and home to the fourth largest technology cluster in the world. In 2017-18, merchandise exports from the state aggregated to US$ 18.05 billion. 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 coast line, 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’. Electric Vehicles manufacturing in Karnataka is expected to attract investments worth US$ 4.82 billion and create 55,000 jobs.

Key Sectors:

• As of July 2018, the state has 28 operational, 51 notified SEZs and 62 formally approved SEZs. The Karnataka Industrial Areas Development Board has developed 141 industrial areas spread across the state. The state plans to develop and upgrade eight clusters around Bengaluru with an investment of US$ 348.4 million in coming years.
• As of December 2018, the state had an installed power generation capacity of 27,157.15 MW. Out of this, central utilities contributed 3,527.20 MW, private utilities contributed 14,740.10 MW and 8,889.85 MW was under state utilities.
• Of the total installed power generation capacity, 9,960.82 MW was contributed by thermal power. Capacities of 698.00 MW and 12,911.73 MW were contributed by nuclear & renewable power, respectively, while hydropower contributed 3,586.60 MW.
• As per the Budget 2018-19, the state government has allocated US$ 2.18 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 IT & electronic products exports totalling to US$ 30.41 billion in 2017-18 (up to September 2017).
• The state exported engineering products worth US$ 2.72 billion in 2017-18 (up to September 2017).
• As per Budget 2018-19, an amount of US$ 697.25 million has been proposed for higher education
• As per Budget 2018-19, the state government has decided to allocate Rs.459 crore (US$70.90 million) to tourism department
• More than 60 per cent of the biotechnology companies in India have a base in Bangalore and the state drives 50 per cent of the total revenues in India’s biotechnology sector.
• The ITE&C (Information Technology, Electronics & Communication) department of the state has established a new IoT policy within the state with a view to attain a substantial market share in India’s IoT market by 2020.
• Karnataka is the first state which came out with an aerospace policy in the country. Karnataka Aerospace Policy has identified an investment potential of US$ 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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