View from India: Karnataka rolls out red carpet for investors

The manufacturing sector in Karnataka is gearing up for a new innings, in which it aims to create and distribute wealth and bring the downtrodden into mainstream development. The Ministry of Pharma is preparing to launch the state’s first ever Medical Tech Pharma Park near Bangalore, and there are plans for a urea fertiliser plant and a Machine Tool Park.

All this and more has been revealed at the Make in India-Karnataka event being held in Bangalore. The two-day conference is organised by the Government of Karnataka (GoK) in association with Department of Industrial Policy and Promotion (DIPP), Government of India, and Confederation of Indian Industry (CII).

The high-profile event, which has global dignitaries and Union Ministers among its speakers, aims to boost the domestic manufacturing industry and attract foreign investment. “Make in India initiative exemplifies co-operative federalism with the central and various state governments. The event is expected to be a platform for 600 B2B meetings,” said Chandrajit Banerjee, director general, Confederation of Indian Industry.

Make in India-Karnataka Conference is a celebration of the manufacturing prowess in Karnataka and rightly so, as the state is one of the most progressive and industrious states in India. Nano-tech, robotics, 3D printing, space, drone, rocket, military and aircraft technologies, as well as high-end electronics, all have their manufacturing roots in Karnataka. The State’s GDP growth at 7 per cent is at par with the national average. It is the fourth largest skilled workforce constituting 6.6 per cent of the country's industrial employment. No surprise that the state has already attracted investments to the tune of $5bn in the last three years.

“Karnataka has investment-friendly policies for electronics, biotech, auto and pharma. Foreign direct investment worth $22bn has come into the state since it hosted the first Global Summit in 2000,” highlighted Shobana Kamineni, President-designate, CII and executive vice chairperson, Apollo Hospitals Enterprise.

Karnataka’s industrial policy for the period 2014-19 is manufacturing-centric. An award has been instituted for the best performing manufacturing company in the state. This will have a cash award of 100,000 rupees (Rs. One Lakh) and will be announced along with the Kannada Rajyotsava Awards on 1 November each year starting in 2017.

At the conference it has been proposed to declare certain sectors such as Aerospace and Defence, Renewable Energy and Electronic Hardware as strategic sectors that should be given special and concerted attention. An aerospace park at Belagavi in Karnataka is on the anvil. “Around 3,000 acres of land is being developed for creating a world-class aerospace park with IT and hardware near our airport. Besides our policies we have a large land bank: we have over 40,000 acres of land to offer. Though all states have invested in Karnataka, there’s a lot to be leveraged,” reasoned RV Deshpande, Minister for Large & Medium Industries and Infrastructure, Government of Karnataka.

The Indian economy ranks as the 10th largest in the world and third largest in terms of gross domestic product on a purchasing power parity basis. A large part of this growth can be attributed to the contribution of Karnataka, especially in the services sector. “The fast-changing world is creating opportunities for everyone,” Karnataka’s Chief Minister, Siddaramaiah, told the conference. “India is poised to become a competitive manufacturing economy and this can happen if we focus on creating a domestic capital and encouraging home-grown technology. In the last decade, increasing urbanisation and rising income levels have accelerated consumer demand for manufactured goods in India. By 2030, India is expected to become world’s fifth largest consumer market.

“While we are focused on developing skills at the grass-root level, we should not lose sight of research and development and innovation. Today, most research happens inside Government institutions. These institutions have done outstanding service to the nation. All public sector labs should be thrown open for joint partnerships with private sector in such a way that risks and rewards are equally shared,” Siddaramaiah added.

In its effort to promote talent and new ideas, the Government of Karnataka has already created start-up incubators in Bangalore. It is intended to set aside a seed fund of 50 million rupees (Rs Five Crore) to fund these start-ups, besides providing one acre of land in selected industrial areas at a subsidised cost.

Besides seed funding, there’s also a move towards developing industrial corridors as manufacturing and investment hubs. The proposed Chennai-Bangalore Industrial Corridor (CBIC) and the Bangalore-Mumbai Economic Corridor (BMEC) aim to promote industrial and trade and commerce clusters. It is hoped that these corridors will generate employment for people in bordering areas.

“The investment and economic expansion is happening in line with the Make in India vision. Karnataka has been at the forefront in many ways. It’s the first state to be the country’s education hub. However the state got its identity from IT,” said Arun Jaitley, Minister of Finance & Corporate Affairs, Government of India (GoI). He added, “India has a hunger to grow faster. This impetus should compel us to take a clue and move forward. The Goods and Services Tax is expected to be reality by mid-2017 after which the whole country will be one big market, with easy flow of goods. This will integrate the informal with the formal economy and scale up the existing revenue in our country.”

The minister also indicated that the spotlight is on agriculture and rural development to bridge the rural-urban divide. A sum of Rs 3,96,000 crore has been earmarked in the Budget for development of infrastructure to attract more investments and lead to industrial growth.

Make in India-Karnataka’s focus areas include Aerospace and Defence Sector, Biotech & Pharmaceuticals, Leather & Apparel Industry, Precision Tools & Heavy Engineering, Electronics Hardware & Electrical, Agri & Food Processing, Automobile & Auto Components, Manufacturing Start-ups and Plastics & Chemicals. “Around 400 out of 500 global fortune companies outsource from Bangalore. The government of Karnataka fosters an innovative spirit that encourages entrepreneurs,” explained Amitabh Kant, a member of the Indian Administrative Service and chief executive officer of NITI Aayog, a Government of India institution for catalysing development.

Looking back, around 2.5 years ago, the Prime Minister Narendra Modi envisioned Make in India. It’s a clarion call to push the manufacturing sector ahead; the dream is to make India a world-class manufacturing hub. Since then, we have seen a spurt of activities across sectors. Notwithstanding that, every state strives to create a proactive investment climate through friendly policies, supporting schemes and single-window clearance for investments.

Globally, greater importance is being given to home-grown products and services. This is a cue for the manufacturing sector to develop Indian products and technologies. Let’s hope all regulations will be aligned accordingly.

One wishes that the manufacturing sector scales to higher levels of growth. “World over, India is a favourite destination for investment. But for Make in India to be successful, it should translate as make in every state. This can happen through skilled manpower and infrastructure, apart from investment-friendly policies” concluded M Venkaiah Naidu, Minister of Urban Development, Information & Broadcasting, Housing, Government of India.

A coffee table book on Make in Karnataka was released at the event.

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