Karnataka’s new industrial policy sets out to attract ₹5-lakh-cr investment

Anil Urs Bengaluru | Updated on July 23, 2020

New policy aims to focus on advanced manufacturing, R&D and innovation, create 20 lakh employment

The Karnataka Cabinet on Thursday cleared the State’s New Industrial Policy 2020-25.

After the Cabinet meet, Jagadish Shettar, Minister for medium and Large Industries told reporters that The New Industrial Policy 2020-25 aims at holistic development of the State and looks beyond Bengaluru with an aim to promote tier-2 and -3 cities as engines of economic growth. The Policy has grouped districts into three Zones to incentivise investments in the industrially backward districts which are classified in Zone-1; 2 and Bengaluru Urban and Rural districts are classified in Zone-3.

He added “Keeping in view the new opportunities post Covid-19 and to attract large investments across the sectors, the policy has addressed many reforms especially in procurement of land, compliance of labour laws and offer attractive incentives and concessions.”

Focus sectors

Based on competitive strengths and potential for growth, the Policy has identified certain focus sectors: Automobiles and Auto components, Pharmaceutical and Medical Devices, Engineering and Machine Tools, Knowledge based industries, Logistics, Renewable Energy, Aerospace and Defence and Electric Vehicles.

Shettar said “To emerge as globally competitive with skill and scale that leverage hi-tech growth, following thrust areas have been recognised: Industry 4.0, Research and Development, Intellectual Property Rights (IPR), Technology Adoption and Innovation, Cluster Development Initiatives and Sustainable Industrialisation.”

According to Shettar the new policy is set out to to attract investments worth ₹5 lakh crore, create 20 lakh jobs, third position in merchandise exports in the next five years, maintain an industrial growth rate of 10 per cent per annum and provide an enabling ecosystem for technology adoption and innovation.

Incentives offered

Incentives and concessions offered in the New Industrial Policy 2020-25 are that for the first-time in India, Karnataka has adopted a production turnover based incentive system instead of tax-based incentives to encourage production based performance.

Industrially backward districts will get more incentives to attract investments so as to ensure balanced industrial development of the State.

Investment promotion subsidy to Micro and Small Enterprises based on the turnover – 10 per cent on turnover in each year for a period of five years and limited to 20-30 percent of VFA; Exemption from stamp duty and concessional registration charges; Reimbursement of land conversion fee; Exemption from tax on electricity tariff for MSMEs; Power subsidy for micro and small enterprises; Support to artisans; Interest subsidy on MSME technology up-gradation loans; Incentives for rain water harvesting and waste water recycling; Incentives for establishment of ETP / CETP; Additional incentives to special category entrepreneurs such as SC/ST, women, minority, physically challenged and ex-servicemen enterprises; Incentives for export oriented units; Investment subsidy for anchor industries (minimum investment ₹100 crore) in taluks lacking any major industries; Investment promotion subsidy based on turnover in the form of grant for medium, large and mega enterprises ranging from 1.75 to2.50 per cent on turnover in each year for a period of 5-10 years and limited to 35-60 per cent of VFA; Incentives and concessions for development of private industrial parks and support to Research and Development and Industry 4.0.

Published on July 23, 2020

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