KARNATAKA

MALLIKARJUNA TEMPLE IN ,

March 2021 For updated information, please visit www.ibef.org Table of Contents

Executive Summary 3

Introduction 5

Economic Snapshot 10

Physical Infrastructure 16

Social Infrastructure 25

Industrial Infrastructure 28

Key Sectors 30

Key Procedures & Policies 40

Appendix 51

2 Executive summary…(1/2)

Strong growth in GSDP • At current prices, Karnataka’s gross state domestic product (GSDP) stood at ~Rs. 16.65 trillion (US$ 225.99 billion) in 2020-21. 1 • TheSDPG (in Rs.) of the state increased at a CAGR of 9.76% between 2015-16 and 2020-21.

IT hub of • Karnataka is the IT hub of India & home to the fourth largest technology cluster in the world. It has 23 operational IT/ ITeS SEZs, five software technology parks & dedicated IT investment regions. 2 • Export of electronics and computer software from the state reached US$ 42.16 billion in FY20 (till November 2019). Export of IT and electronic products accounted for around 38.99% share in India's electronics and computer software export and 76.36% share in Karnataka’s overall export.

Vibrant industrial base • Karnataka has vibrant automobile, agro, aerospace, textile & garment, biotech & heavy engineering industries. The 3 state has sector-specific SEZs for key industries such as IT, nanotechnology, biotechnology, engineering, food processing and aerospace.

One of the preferred investment destinations • The cumulative FDI inflow in the state reached US$ 46.61 billion between April 2000 and March 2020, the third highest in India after Maharashtra and New Delhi. It accounted for a share of 9% of India’s cumulative FDI inflow. 4 • Karnataka attracted Rs. 1.20 lakh crore (US$ 16.38 billion) investments during COVID-19

Source: Visvesvaraya Trade Promotion Centre, Karnataka Economic Survey 2019-20

3 Executive summary…(2/2)

Strong growth in export • In 2020-21, the state’s total exports stood at US$ 13.19 million (as of March 2021). In the overall exports from the 5 state, sectors such as iron & steel, petroleum products, electronic instruments and cotton accessories were the key contributors.

Strong knowledge infrastructure • Karnataka has 52 universities, 4,519 pre-university colleges, 535 Technical Institutions, 206 engineering colleges & 314 polytechnics, 47 medical colleges & 38 dental colleges. 6 • The state also houses 401 R&D centres; around 400 of the Fortune Global 500 companies outsource their IT services to firms in Bengaluru.

Significant agriculture base • Sugarcane is the key crop of the state, with production of ~39.6 million tonnes in 2019-20**. The state’s total food 7 grain production was estimated to be 11.9 million tonnes in 2019-20**. Karnataka is also the third largest producer of plantation crops in the country.

Strong growth in tourism sector • Karnataka boasts of a diverse flora & fauna & a 320km 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, at a growth 8 rate of 6.37% between 2018 and 2019. The state has world heritage sites at Hampi and Pattadakal. The sector contributes 14.8% to GSDP of Karnataka; plans are afoot to expand to 26% by 2020.

Source: Economic Survey of Karnataka 2019-20, Karnataka State Budget 2020-21, Ministry of Tourism,GoI,**2019 - 20 As per 2ndAdvance Estimates.

4 INTRODUCTION

5 Karnataka fact file

Bengaluru Capital 319 persons per sq km 61.1 million Population density total population

192,000 sq.km. geographical area 68.1% 82.5% Female literacy rate Male literacy rate

Source: Maps of India 973:1000 Sex ratio 75.6% administrative districts: 30 (females per 1,000 males) Key Insights literacy rate

• Karnataka is located in the southern region of India. The state is surrounded by the Arabian Sea in the west, Goa in the northwest, Maharashtra in the north, Andhra Pradesh in the east, Tamil Nadu in the southeast, and in the southwest. • Languages spoken are , Tulu, Kodava, Hindi and English. • Some of the prominent cities in the state are , Bengaluru, Bagalkot, Belgaum, Bidar, Bijapur, Chikmagalur, Chitradurga, Dandeli, - Dharwad, , and Shimoga. • Karnataka has a tropical climate with three major seasons: warm and dry from February to May, monsoon from June to October and winter from November to January.

Source: Economic Survey of Karnataka 2019-20, Census 2011 Office of Registrar General, India.

6 Advantage: Karnataka

Policy support Infrastructure • Wide range of fiscal and policy incentives for • Well -developed social, physical and businesses under the Karnataka Industrial industrial infrastructure and substantial port Policy, 2020-25 with simplified procedures for infrastructure. investment. • Well-developed telecom infrastructure. • In January 2017, Karnataka Department of • Excellent healthcare facilities. Commerce and Industries introduced an NRI policy to attract investments from non-resident Kannadigas.

High economic growth Rich talent pool • Karnataka is termed as the • The state’s GSDP Knowledge Capital of India. expanded at a CAGR of • The state has successfully 9.76% between 2015-16 attracted skilled labour, especially, and 2020-21. in the knowledge sector. Karnataka • Buoyant services (IT, is among the states that produce a tourism) and industries large number of doctors, engineers driving economic growth. and medical technicians in the • Sector specific SEZs and country. SIRs facilitating growth.

Source: Ministry of Statistics and Programme Implementation, News articles

7 Karnataka in figures

Karnataka’s Contribution to Indian Economy (2018-19) Physical Infrastructure in Karnataka Installed power capacity (MW) (as of February GSDP GSDP as a percentage of all states’ GSDP India: 100.0 | Karnataka: 7.93 2021)India: 379,130.41 | Karnataka: 30,056.48 GSDP growth rate** (%) Wireless subscribers (million) (as of January India: 10.5 | Karnataka: 9.76 2021)India: 1,163.41 | Karnataka: 67.45

Per capita GSDP* (US$) Internet subscribers (in June 2020) (million) India: 1877.76 | Karnataka: 3,392 India: 749.07 | Karnataka: 46.11 National highway length (km) (as of March 2019) Social Indicators India: 132,499.5 | Karnataka: 7,334.8 Literacy rate (%) India: 73.0 | Karnataka: 75.6 Major and minor ports (No.) India: 13+187 | Karnataka: 1 + 10 Birth rate (per 1,000 population) (2018) Airports (No.) India: 20.0 | Karnataka: 17.2 India: 125 | Karnataka : 5

Industrial Infrastructure Investments

Operational PPP projects (No.) Cumulative FDI equity inflows (from October India: 1,824 | Karnataka: 139 2019 to December 2020) (US$ million) Operational SEZs (No) (as of February 2020) India: 75,351.56 | Karnataka: 10,659.45 India: 240 | Karnataka: 32

Note: GSDP, per capita GSDP figures are taken at current prices, For source refer to Annexure

8 Karnataka Vision 2022

8 POOR AND BACKWARD 1 INFRASTRUCTURE • Build infrastructure to boost productive CLASSES potential of the economy. • Increase rural incomes through • Various metro rail and mono rail greater viability of agriculture and projects are in progress. allied activities. • Bridge the gap between socially 1 8 backward and vulnerable groups and 2 EDUCATION/ rest of the people. SKILL DEVELOPMENT • Develop the state as a vibrant knowledge society. 7 HEALTHCARE/ • Focus on job oriented growth through SOCIAL AMENITIES skill development of the workforce. 2 7 • Improve access and availability of quality healthcare for all.

3 GOVERNANCE 6 TOURISM • Better governance through wider participation and deep democratic • Preserve and promote Karnataka’s decentralisation. 3 6 rich heritage. • Encourage transparency and • Karnataka Tourism Vision Group accountability. (KTVG) was set up in October 2013 to advise on promoting tourism in state.

4 INDUSTRY • Build and sustain ’s 4 5 5 WOMEN leadership in science, technology and EMPOWERMENT knowledge based industries. • Enhance opportunities and empower • Achieve a sustainable and orderly women across economic, social and process of industrialisation and political spheres. urbanisation.

9 ECONOMIC SNAPSHOT

10 Economic snapshot – GSDP

GSDP at current prices GSDP per capita at current prices

CAGR 9.76% 4,000 CAGR 8.95% 300000 250 18 3,500 16 250000 3,000

200 3,496 16.65

14 3,392 16.29 231.09 3,252 3,252

225.99 200000 3,189 3,189 249,947 249,947 246,419 246,419 14.91 2,500 213.28 12 207.43 227,299 227,299 2,773 2,773

150 13.37 10 2,000 150000 180.00 205,499 205,499 2,487 2,487 12.08 186,072 186,072 159.67 8 100 10.45 1,500 162,796 162,796 100000 6 1,000 50 4 50000 500 2

0 0 - 0 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 US$ billion Rs. trillion US$ Rs.

. At current prices, Karnataka’s gross state domestic product (GSDP) . The state’s per capita GSDP was Rs. 249,947 (US$ 3,392) in 2020- stood at Rs. 16.65 trillion (US$ 225.99 billion) in 2020-21. 21.

. The state’s GSDP increased at a CAGR of 9.76% between 2015-16 . The per capita GSDP (in Rs.) increased at a CAGR of 8.95% and 2020-21. between 2015-16 and 2020-21.

Note: Exchange rates used are averages of each year, provided on page 53 Source: Directorate of Economics & Statistics of Karnataka, Central Statistics Office

11 Economic snapshot – NSDP

NSDP at current prices NSDP per capita at current prices

CAGR 8.90% CAGR 9.71% 240 16 3600 240000

14 210000 200 3000 15.11 14.75 12 180000 226,796 223,175 209.29 13.49

205.06 2400

160 3,166.05 205,697 3,077.70 193.01 150000

12.13 10 188.16 2,943.15 2,892.24 186,405 11.03 169,898

164.35 1800 120000

120 8 2,532.39 9.51 145.26 148,108 2,262.57 90000 6 1200 80 60000 4 600 40 30000 2 0 0 0 0 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 US$ Rs. US$ billion Rs. trillion

. Thet ne state domestic product (NSDP) of Karnataka was recorded . The state’s per capita NSDP in 2019-20 was Rs. 226,796 (US$ at ~Rs. 15.11 trillion (US$ 205.06 billion) in 2020-21. 3,077.70).

. The state’s NSDP expanded at a CAGR of 9.71% between 2015-16 . The per capita NSDP (in Rs.) increased at a CAGR of 8.90% and 2020-21. between 2015-16 and 2020-21.

Note: Exchange rates used are averages of each year, provided on page 53 Source: Directorate of Economics & Statistics of Odisha, Central Statistics Office, Economic Survey 2019-20

12 Economic snapshot – Percentage distribution of GSVA

. In 2019-20, the tertiary sector contributed 66.53% to the state’s VisakhapatnamGSVA composition port traffic by (million sector tonnes) GSVA at current prices, followed by secondary (19.79%) and primary (13.68%) sectors. 100% . AtAGR*a C of 11.52%, primary sector was the fastest growing CAGR* among the three sectors between 2015-16 and 2020-21. 90%

. Tertiary sector rose at a CAGR* of 10.50 % between 2015-16 and 80% 2020-21. This was driven by trade, hotels, real estate, finance, 70% insurance, transport, communications and other services. 64.04% 10.50% 66.53% . Secondary sector increased at a CAGR* of 6.05% between 2015-16 60% and 2020-21. This was driven by manufacturing, construction and 50% electricity, gas and water supply segments. 40%

30% 23.39% 6.05% 19.79% 20%

10% 12.57% 11.52% 13.68% 0% 2015-16 2019-20

Primary Sector Secondary Sector Tertiary Sector

Note: *CAGR in Rs. term Source: Directorate of Economics & Statistics of Karnataka, Central Statistics Office, Sector-wise %, share of GSDP

13 Economic snapshot – FDI inflow & investments

Investment intentions in terms of IEMs filed, LOIs/DILs issued in FDI Inflow to Karnataka (US$ billion) Karnataka 50 8.94 46.61 300.0 40 250.0 8.57 6.73 285 6.45

200.0 251 30 4.12 2.13 150.0 194 20 3.44 1.89 100.0 2.55 142 8.23

120 10 106 23.93 23.50 50.0 22.42 13.25 11.95 4.84 0.0 0 2015 2016 2017 2018 2019 2020 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

Number of Investment Intentions Proposed Investments (US$ Billion) FY01-11 FY01-20

. Karnataka has a stable political environment and ranked third in terms of attracting private sector investments in India. According to Department for Promotion of Industry and Internal Trade (DPIIT), the state’s cumulative FDI inflows stood at US$ 10.66 billion between October 2019 and December 2020, the third highest in India after Gujarat and Maharashtra, and accounted for 14% of India’s cumulative FDI inflows.

. In 2020, 120 investment intentions worth Rs. 162,492 crore (US$ 22.42 billion) were filed in Karnataka.

Source: Department for Promotion of Industry and Internal Trade, Directorate of Economics and Statistics, Government of Karnataka

14 Economic snapshot – Export

Merchandise Export from Karnataka (US$ billion) Principal Commodities Exported in FY21*

25.00 Iron & Steel 23.62 20.00 8% Petroleum products 19.26 19.68 5% 18.05 17.36 5% 15.00 16.64 Electronics instruments 5% 13.20 RMG cotton including 10.00 5% accessories 4% Drug formulations, 5.00 68% biologicals Electronics Components 0.00 Others 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21*

. Iron & steel is the top exported item from Karnataka, accounting for ~8% of the total exports in FY21*, followed by petroleum products (5%) and electronics instruments (5%).

. Merchandise exports from the state reached US$ 16.64 billion in 2019-20 and US$ 13.20 billion in 2020-21.

. Karnataka is home to over 5500+ IT/ITES companies and ~750 MNCs which contribute more than Rs. 58 lakh crore (US$ 58 billion) of exports, giving direct employment to over 1.2 million professionals and creating over 3.1 million indirect jobs.

Note: *- until January 2021 Source: Directorate General of Commercial Intelligence and Statistics, Ministry of Commerce and Industry

15 PHYSICAL INFRASTRUCTURE

16 Physical infrastructure – Roads

Road infrastructure in Karnataka (km)

Road type 2019-20

National highways 7,335 (March 2019) State highways* 27,163

Major district roads* 55,515

Municipal roads* 8,366

Rural roads* 177,542 Source: Maps of India

. Karnataka provides efficient public transport to people of different income groups across the state as well as in neighbouring states. The state has a total of 275,158 km of road area. The national highways run for around 7,335 km and the state highways extend as much as 27,163 km.

. Public Works Department (PWD) of the state is using hi-tech vehicles to help in improvement of roads. The vehicles will be used to check the status of 20,000 km of core roads in the state according to the department.

. As per Budget 2020-21, Rs. 519 crore (US$ 70 million) has been allocated towards state highways and Rs. 849 crore (US$ 115 million) towards district and other roads.

. On December 19, 2020, the Union Minister for Road Transport & Highways Mr. Nitin Gadkari inaugurated and laid the foundation for 33 national highway projects in Karnataka. These projects include 1,197 km long roads worth Rs. 10,904 crore (US$ 1.48 billion). Note: * 2016-17 Source: Ministry of Road Transport & Highways, Government of Karnataka, State Budget, 2020-21

17 Physical infrastructure – Railways

Status of Rail projects in Karnataka (2019-20) Status of Bangalore Metro Rail projects (2019-20)

Railway project Track Length (kms) Status Metro Railway Track Length (kms) Status Land acquisition is Chikkamagalur- project 46.0 in Sakaleshpura progress

Land acquisition is Completed on Phase - 1 42.3 Bagalkot-Kudachi 144.0 in 17.06.2017 progress

Land acquisition is Tumkur-Rayadurga 102.6 in Phase - 2 72.1 Under progress progress

Land acquisition is Phase - 3 105 (Proposed) Under preparation Gadag-Wadi 252.5 in progress

. Karnataka is well connected to other parts of the country through the railways. The state has a railway network of 3,540 kms.

. In Union Budget 2018-19, the Government approved for 160 kms rail network sum of Rs. 17,000 crore (US$ 2.53 billion) for the growth of Bengaluru metropolis and was to be executed by both State and Central Government in 50:50 ratio.

. In Budget 2019-20, a feasibility study to develop 105.55 kms new metro lines (Phase-3) has been proposed.

. In January 2021, Union Minister of Road Transport & Highways Mr. Nitin Gadkari laid the foundation stone for two national highway projects in the Hubli-Dhadwad district. The new road projects are to be built at a cost of Rs. 323 crore.

Source: Economic Survey of Karnataka, 2019-20, State Budget 2018-19

18 Physical infrastructure – Airports

Karnataka airport statistics (FY21*)

Passenger Aircraft Freight Airport traffic (No.) movement (No.) (tonnes)

Bangalore 4,847,588 54,830 197,530

Mangalore 206,211 2,523 1,541

. The state has five domestic airports. These are located in Bengaluru, Mangalore, Hubli, Mysore and Belgaum. In March 2017, the Government gave ‘in principle’ approval for construction of an airport at Shimoga.

. International flights operate from the airports at Bengaluru (Kempegowda International Airport), the country’s first greenfield international airport, has been developed at Devanahalli in Bengaluru as a passenger and cargo department hub and Mangalore (Mangalore International Airport).

. 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.

Note: * Till November 2020 Source: Airport Authority of India

19 Physical infrastructure – Ports

. There are 13 ports in Karnataka, of which New Mangalore is a major port. New Mangalore Port is the ninth major port in India with the deepest inner harbour on the west coast.

. The state Government has initiated the work on development of Pavinakurve port, under PPP mode, in the district of Uttar Kannada. The draft concessional agreement and pre-feasibility report preparations related to the port are under process.

. The work on development of the second stage of port has been initiated under the concept of D-BOOST in PPP mode.

Ports Cargo handled by new port in Mangalore (in ‘000 tonnes) Major ports . New Mangalore Port . Karwar 50000 . Belekeri . Tadri 40000 . Honavar 30000 42,055

. 39,940 39,145 Minor ports 38,487 . 20000 35,590

. Hangarkatta 10000 25,790 . . 0 FY16 FY17 FY18 FY19 FY20 FY21 . Old Mangalore

Source: Indian Port Association

20 Physical infrastructure – Power

. Karnataka was one of the first Indian States to implement power Installed Power Capacity (GW) sector reforms. The Karnataka Electricity Regulatory Commission

(KERC) was established as a regulatory authority of the State's 35.00 Power Sector. 30.00 . As of February 2021, the state had an installed power generation 30.06 capacity of 30,056.48 MW. Of this, central utilities contributed 25.00 29.85 28.10

4,047.70 MW, private utilities (17,208.30 MW) and state utilities 26.70 (8,800.49 MW). 20.00 21.31

. Of the total installed power generation capacity, 10,343.40 MW was 15.00 contributed by thermal power, followed by nuclear (698.00 MW), 10.00 renewable power (15,428.48 MW) and hydropower (3,586.60 MW).

5.00 . As per State Budget 2020-21, Rs. 9,115 crore (US$ 1,245 million) has been allocated towards subsidies to Karnataka Electricity Board. 0.00 FY17 FY18 FY19 FY20 FY21*

Note: MW- Megawatt, * Until February 2021 Source: Central Electricity Authority, News Articles

21 Physical infrastructure – Renewable Energy

. Karnataka Renewable Energy Development Limited (KREDL) was established in 1996 to promote the development of renewable energy sources in the state

. Karnataka is endowed with high renewable energy potential such as wind, hydro, solar, tidal & geothermal energy resources. It is now India’s top solar photovoltaic (PV) state as it crossed the 5GW mark in the first quarter of 2018.

. By November 2020, installed wind energy capacity was recorded at 4,859.54 MW. Wind energy accounted for 32.42% of the total installed capacity recorded in this period.

. The state has a solar energy potential of 10,000 MW. Karnataka Solar Policy 2014-2021 plans to add solar generation of minimum 2,000 MW by 2021. The total capacity installed for solar energy stood at 7315.87 MW as of November 2020.

Progress in Renewable Energy as of November 2020

No. Renewable energy source Capacity allotted (MW) Installed capacity (MW) 1 Wind 18,540.57 4859.54 2 Hydro 3010.25 903.46 3 Synergistic 2,212.65 1,731.16 4 Chemistry Biological 395.13 139.03 5 Solid Waste 51.00 0.00 6 SolarGrid 9,820.95 7,354.03

Grand total 34,030.55 14,987.22

Source: KREDL, Central Electricity Authority, Karnataka Renewable Energy Policy, Ministry of New and Renewable Energy (MNRE),

22 Physical infrastructure – Telecom

Telecom Infrastructure (as of January 2021) Performance status of Bharat Net Project

Wireless subscribers 67,446,937 No. of GPs (service ready) (as of November 6,247 2020) Wireline subscribers 2,150,628

Internet subscribers (as of June 2020) 46.11 (million)

Teledensity (in %) 104.19

. Karnataka is the seventh largest wireless telecom market in India. The entire state is networked through optical fibre cables (OFCs) of the state-owned company, Bharat Sanchar Nigam Limited (BSNL), as well as private companies such as Bharti, Reliance, VSNL and TATA Tele Services. The state Government is planning to provide technology at the gram panchayat level by providing free Wi-Fi to the youth.

. According to the Telecom Regulatory Authority of India (TRAI), there were 67.45 million wireless and 2.15 million wireline subscribers in Karnataka, as of January 2021.

. By January 2021, 46.63 million subscribers had submitted requests for mobile number portability in Karnataka.

Source: Telecom Regulatory Authority of India, Bharat Broadband Network Limited (BBNL)

23 Physical infrastructure – Urban Infrastructure

. Karnataka is among the top ten most urbanised states in India. Seven Fund classification under each component of AMRUT for Karnataka (as on January 2019) (US$ million) cities of Karnataka have been selected under the Smart Cities Mission to be developed as smart cities. IT has ten city corporations, 57 city Total allocation Committed Sanctioned Central for projects* Central Central Assistance municipal councils, 113 town municipal councils, 90 town panchayats & Assistance Assistance released since 4 notified area committees. 2015

. In 2019-20, under Vajpayee Housing Scheme 5,705 houses have been 686.47 321.38 196.80 162.77 completed (as of November 2019), while 233 and 3,005 houses have Water supply Sewerage system been constructed (as of November 2019) as part of Devarajurs Housing . The Karnataka Urban Water Scheme and Dr. B.R. Ambedkar Nivasa Yojane, respectively. Supply and Drainage Board (KUWSDB) has implemented . The Bengaluru Water Supply . The state is projected to reach an urban population proportion of 50% surface-based drinking water and Sewerage Board by 2026. Some of the key areas of development are roads and flyovers, supply schemes in 231 urban (BWSSB) is responsible for water supply, storm-water drainage, sewerage and urban transport. As areas to provide assured safe providing water supply, per budget 2020-21, Rs. 13,749 (US$ 1.87 billion) has been proposed drinking water. sewerage system & sewage disposal in the Bengaluru for water supply, sanitation, housing and urban development. . KUWSDB is implementing five Metropolitan area. schemes at Malur, Bangarpet, . Under the State Budget 2020-21, sectors such as irrigation and flood , Naregal and . In 2019-20, there were 49 Anekal to shift their water ongoing underground drainage control (29%), rural development (23%) and water supply, sanitation, source from ground water to (UGD) schemes at a budget of housing and urban development (13%) saw the highest increase in the assured surface water Rs. 520.18 crore (US$ 74 budget allocations. source. All these schemes will million). be completed by December 2020. Note: * Including state share Source: JNNURM, Ministry of Urban Development, Economic Survey of Karnataka 2019-20, PRS Legislative Research, State Budget 2020-21

24 SOCIAL INFRASTRUCTURE

25 Social infrastructure – Education

. In terms of the number of universities, Karnataka ranks fifth among all Indian states and union territories, with 65 universities. Of these, Karnataka education statistics (2019-20) 28 are state public universities and 11 are private deemed universities. Lower primary: 24,316 Number of schools Higher primary: 38,003 . The state has 4,519 pre-university colleges to impart general Secondary schools: 16,808 education. There are more than 1 million students in the Lower primary: 1.93 pre-university colleges. School dropout rate (in %) Higher primary: 2.94 . The state has a literacy rate of 75.6%, the male literacy rate is 82.8% Average: 23.18:1 and the female literacy rate is 68.1%. Pupil-teacher ratio Private Aided schools: 55.48:1 Unaided schools: 31.61:1 . Under the State Budget 2020-21, Rs. 371 crore (US$ 50 million) has been allocated to child welfare and Rs. 179 crore (US$ 25 million) Educational infrastructure (2019-20) towards women’s welfare.

. In January 2021, the Karnataka education department announced Institute type Number Enrolments that for 2020-21 school year, tuition fees will be reduced to 70% Medical colleges 52 6,753 across school boards and no other fees (such as term fees or school development fees) will be charged by schools. Ayurvedic colleges 58 4,085

Homoeopathic colleges 15 1,190 Karnataka is home to several premier institutions: Unani colleges 04 240 . Indian Statistical Institute. Naturopathy & Yogic Sciences 08 600 . Indian Institute of Science. (BNYS)

. Indian Institute of Management. Dental colleges 38 2,487

. National Law School of India University. Pharmacy colleges 61 4,784

. Institute for Social and Economic Change Nursing colleges 323 19,415

Source: Economic Survey of Karnataka 2019-20, Census 2011, State Budget 20-21

26 Social infrastructure – Health

. Karnataka has made tremendous effort in improving the health status of Health Indicators, 2018 (As per SRS Bulletin May 2020)

its people in the last few decades. The State has made substantial 1 Birth rate 17.2

progress in building credible health infrastructure with a wide 1 Death rate 6.3 institutional network providing health services both in urban and rural 2 areas. Infant mortality rate 23 Natural Growth Rate 10.9 . The State has 63 district Hospitals, 555 sub district Hospitals and 31 Autonomous and Teaching Hospitals and 146 Taluk / General Life expectancy at birth (years) Hospitals in the state.

Male (2015) 63.6 . According to the State Budget 2020-21, Rs. 1,433 core (US$ 195 Female (2015) 67.1 million) has been allocated towards urban health services and Rs. 1,413 crore (US$ 193 million) towards rural health services. No of institutions Total Facilities (May 2020) Programmes under AYUSH health care services: Sub Centers 9,613 . AYUSH Health camp. Community Health 321 . District and Taluk Seminars / Workshop. Centres

. Home remedy and Ayush awareness. Primary Health Centres 2,649

. Diabetic control programme. Sub District Hospitals 555

. School health programme. District Hospital 63

. AYUSH health expo. Total Institutions 13,201

Source: Economic Survey of Karnataka 2019-20,Ministry of Health & Family Welfare, Sample Registration System (SRS) Bulletin May, 2020, 1Per thousand persons,2Per thousand live births.

27 INDUSTRIAL INFRASTRUCTURE

28 Industrial infrastructure: SEZs and industrial estates

Sector-wise Operational SEZs In Karnataka . As of February 2020, the state has 32 operational, 52 notified SEZs (as of February 2020) and 63 formally approved SEZs. The Karnataka Industrial Areas Development Board has developed 141 industrial areas spread IT/ITeS across the state. The state plans to develop and upgrade eight clusters around Bengaluru with an investment of US$ 348.4 million in Biotechnology coming years. 3% 3% Hi-tech Engineering Products 3% 3% and related services . The Karnataka State Industrial & Infrastructure Development 3% 3% Electronics Hardware and Corporation has promoted more than 135 start-up ventures in the Software/ITES 3% state through equity participation and has provided debt to core 4% Aerospace and Industry industries such as steel, cement, mining and textiles, as well as new Pharmaceuticals sectors such as IT, aerospace and telecom. 75% Textile . Karnataka is the first in the country to provide bespoke policy

ecosystem for automobile sector .The state has introduced a Multi Product comprehensive and well-designed Electric Vehicle and Energy Precision Engineering Product Storage Policy.

Source: Department of Commerce, Ministry of Commerce & Industry

29 KEY SECTORS

30 Key sector – IT and IT- enabled services…(1/2)

. Karnataka has emerged as an information technology (IT) hub of Electronics and software exports from Karnataka (US$ billion) India. Bengaluru is the fourth largest technological cluster in the world after Silicon Valley, Boston and London.

. About 50% of the world's SEI CMM Level 5 certified companies are located in Bengaluru. 90.00

80.00 . The state is India’s largest software exporter, with electronics and computer software exports totalling to US$ 77.9 billion in 2018-19 77.9 70.00 and reached US$ 42.5 billion during 2019-20 (till November 2019).

60.00 62.7 . Karnataka has 47 IT/ ITeS SEZs and dedicated IT investment 60.5 61.4 regions. There are 3,500 IT companies in the state. The state houses 50.00 550,000 IT professionals or 1/3rd of the total IT professionals in the country. 40.00 42.5

. In November 2020, the Government of Karnataka launched the 30.00 ‘Beyond Bengaluru’ initiative to build innovation and technology ecosystem beyond the capital city. 20.00

. In November 2020, the government announced eight MoUs with 10.00 various organisations from the Global Innovation Alliance (GIA) partner countries across the AI, IoT, cybersecurity, biotech and 0.00 semiconductor sectors. 2015-16 2016-17 2017-18 2018-19 2019-20

Source: : Economic Survey of Karnataka 2019-20

31 Key sector – IT and IT- enabled services…(2/2)

. Wipro has presence in areas such as IT services, product engineering, technology infrastructure services, BPO and other consulting solutions. Based in Bengaluru, the company has 72 plus global delivery centres and 50 plus industry-specific centres of excellence in more than 54 countries. In September 2009, the company launched its centre of excellence at its Electronic City campus to work with other leading IT firms for developing innovative IT solutions. Wipro Ltd

. Infosys Technologies Ltd was set up in 1981. The company operates in areas such as IT consulting, modular global sourcing, process re-engineering and BPO services. The company has 11 operation centers at multiple Infosys locations in Bengaluru, Mangalore and Mysore. Technologies Ltd

. Genpact was set up in 1997 in India. Formerly known as GE Capital International Services. The company provides a wide range of business process, technology and knowledge services including finance and accounting, collections and customer relations, insurance, procurement and supply chain, analytics, software and IT infrastructure. The company has one office in Bengaluru in Karnataka. Genpact

. Accenture is a global management consulting, technology services and outsourcing company with approximately 275,000 people serving clients in more than 120 countries.

Accenture

32 Key sector – Metals and mining

Mineral Production in Karnataka Iron & Steel Exports from Karnataka (US$ million)

Mineral 2018-19 2019-20** 2000

1500 Iron Ore (total) (‘000 29,796 29,961 1,536 tonnes) 1000 1,203 1,169 1,088 Gold (total) (kgs) 1,661 1,572 500 745 600 341 Silver (kgs) 204 172 0 FY15 FY16 FY17 FY18 FY19 FY20 FY21* Limestone (‘000 34,303 31,716 tonnes)

. Karnataka is rich in mineral resources, which are spread over 1.92 lakh sq. kms and has >40,000 sq. kms. of green stone belt, which is a treasure trove of several mineral deposits and indicates occurrence of polymetallic deposits, diamonds and gold.

. In 2019-20**, Karnataka was the third-largest producer of iron ore in India, followed by Maharashtra and Chhattisgarh

. Total value of all minerals produced (excluding fuel & atomic minerals) was Rs. 8,741 crore (US$ 1.24 billion) in 2018-19.

. In 2019-20, the total export value of iron & steel in Karnataka was US$ 1,202.77 million and reached US$ 1,088.21 between April 2020 and January 2021.

Note: * Until January 2021; ** till February 2020 Source: Indian Bureau of Mines

33 Key sector – Engineering…(1/2)

Engineering products exports (US$ billion) . The engineering industry in Karnataka has positive prospects, given (Up to November 2019) its performance. 6.00 . The state exported engineering products worth US$ 4.78 billion in 2018-19 and reached US$ 2.75 during April-November 2019. 5.40 5.00

. The state is exporting engineering products to Germany, China, 4.78 South Korea, Brazil, USA, Malaysia, Thailand, South Africa and 4.00 Singapore. Most of the exporters in state are based in Bengaluru, 4.09 Hubli, Mysore, Belgaum, Mangalore, and Shimoga 3.00 3.08 . Exports include machine tools, industrial machinery, cutting tools, 2.75 castings, automotive components, electrodes, welding equipment, 2.00 construction and earthmoving equipment, and helicopter spares.

1.00

0.00 2015-16 2016-17 2017-18 2018-19 2019-20

Source: : Visvesvaraya Trade Promotion Centre, Government of Karnataka

34 Key sector – Engineering…(2/2)

. BEML Limited (formerly Bharat Earth Movers Limited) was established in 1964. BEML manufactures a wide range of earth moving and other heavy industrial equipment for the mining and civil engineering industries.

. BEML has a registered office in Bengaluru and units in Kolar Gold Fields, Mysore and Bengaluru. BEML Limited

. HMTs wa established in 1953. The company manufactures various types of machine tools including watches, tractors, printing machinery, metal forming presses, die casting & plastic processing machinery, CNC systems & bearings. HMT Ltd

. Saint -Gobain India was established in India in 1996. The group has eight manufacturing plants in India (including Bangalore) for various products ranging from glass to engineering products.

. In 2019, the company registered sales worth US$ 1.1 billion. Saint-Gobain India

35 Key sector – Automotive and aerospace…(1/2)

Automotive

. Karnataka has a huge local market with over 14 million registered vehicles. Over 400 R&D centres and 200 engineering colleges are driving innovation in the state.

. The state is the fourth-largest automobile producer in India, contributing 8.5% to the total national automobile output. The state has presence of auto clusters at Dharwad, Belagavi, Shivamogga, Ramanagara and Bengaluru Rural.

. The state is also home to Reva Mahindra, the first indigenously built electric car in the country, and key OEMs such as Toyota, Volvo, Honda, Scania and TVS.

. In February 2021, Tesla announced that it would be setting up a manufacturing plant in Karnataka for production of electric cars.

Aerospace

. Karnataka is known as the pioneer in the Indian aerospace industry after the establishment of Hindustan Aeronautics Limited (HAL) in Bangalore in 1940. Karnataka produces more than a quarter of India’s aircrafts and space crafts. The state is exporting aerospace products to US, UK, Germany, Russia Mauritius, Malaysia, Nepal, Oman and Ecuador.

. The state contributes 65% to aerospace-related exports from India. Last year, Karnataka Government has given approval for investment of Rs. 480 crore (US$ 68.67 million) to Goodrich Aerospace Service Pvt Ltd to establish a unit in Bengaluru.

. India’s first aerospace SEZ of 300 acres is operational at Belgaum. Aerospace Technology Centre (ATC) in Bengaluru would be established under the PPP model.

. It is the first state in the country to introduce a dedicated Aerospace policy (2017-23). Furthermore, it contributes to 67% of country’s helicopter and aircraft for Defence Services.

Source: : Invest India, Invest Karnataka, Economic Survey of Karnataka 2019-20

36 Key sector – Automotive and aerospace…(2/2)

. Volvo India has a state-of-the-art bus manufacturing unit near Bengaluru. The Volvo Group has ~104,000 employees worldwide, production facilities in 18 countries and sales activities in more than 190 countries.

. The Hoskote plant at Bengaluru has an installed production capacity of 1,500 buses per annum .It has strong association with Karnataka. Volvo India

. Delphi India was incorporated in 1995 as a wholly owned subsidiary of Delphi. The company is a leading global supplier of electronics & technologies for automotive, commercial vehicles and other market segments.

Delphi Automotive . Delphi India has a technical centre in Bengaluru, which is the largest technical centre outside the US. Systems Pvt Ltd

. In India, Boeing is represented through its wholly owned subsidiary, Boeing International Corporation India Private Limited (BICIPL).

. Boeing established its first R&D centre in India - the Boeing Research & Technology Centre - in Bengaluru in 2009. The centre develops high-end technology solutions, particularly in the areas of aero structures and avionics. Boeing

. Hindustan Aeronautics Limited (HAL) is ranked 40th in Flight International's list of the World’s Top 100 aerospace companies in 2008.

. HAL, headquartered in Bangalore, has 20 production units and 11 R&D centres in eight locations across the country. HAL

37 Key sector – Agro and food processing

Coffee exports from Karnataka (US$ million) Production of major crops in Karnataka (‘000 tonnes)

600 Crop 2018-19 2019-20** 500 Rice 3458 3,463 507 400 443 Wheat 163 143 300 360 320 310 Nutri/Coarse Cereals 9200 10,203 200 Pulses 1,846 1,737 100 Total Food Grains 11,046 11,940 0 Total Oilseed 792 1,073 Sugarcane^ 42,411 39,600 2016-17 2017-18 2018-19 2019-20 2020-21*

. Karnataka, with a good agricultural base including various food crops, offers immense scope for the development of food processing industries. Karnataka is the largest producer of coffee & cocoa in the country.

. In 2019-20**, the total oilseed production in the state was ~1 million tonnes. Production of cereals and pulses in the state was estimated to be 10.2 million tonnes and 1.7 million tonnes, respectively, during the same period

. In 2019-20, the total production of sugarcane in the state was 39.6 million tonnes.

. Karnataka is the first state to go online mandis, which would integrate 150 mandis on a single online platform.

Note: ^sugarcane production for the harvested area during the year, ,*- until March 2021,**2019 - 20 As per 2ndAdvance Estimates. Source: : Economic Survey of Karnataka 2019-20, Directorate General of Commercial Intelligence and Statistics

38 Key sector – Agro and food processing…(2/2)

. Hindustan Unilever Limited (HUL) is India's largest fast-moving consumer goods (FMCG) company, with leadership in home & personal care products and foods & beverages. The company recorded revenue worth US$ 5.4 billion in 2019-20, with >18,000 employees nationwide.

. The company has a manufacturing plant and an R&D centre at Bengaluru. Hindustan Unilever Ltd

. Nestle has been in India for almost a century, with seven production facilities across the country, including one at , Karnataka. The company produces chocolates and confectionaries, prepared dishes and cooking aids, beverages and milk products and nutritional supplements. Nestle India

. Britannia is a leading food processing company in India. The company manufactures food products such as biscuits, cheese and bread. Based in Bengaluru. Britannia Industries Ltd

. United Breweries Limited (UBL) is a flagship company of the UB Group. The company is also referred to as the beer division of the UB Group and is based in Bengaluru.

. The company has around 2,489 employees and manufactures products primarily under the Kingfisher, London Pilsner and UB Premium Ice brands. United Breweries Ltd

39 KEY PROCEDURES AND POLICIES

40 Contact list

Agency Contact information

No 49, South Block, Khanija Bhavan Race Course Road Bengaluru - 560 001 Department of Industries and Commerce Phone: 91-80 2238 9901-08 (DIC) Fax: 91-80-2238 9909 E-mail: [email protected] Website: www.karnatakaindustry.gov.in

No 49, South Block, Khanija Bhavan East Entrance, Race Course Road Bengaluru - 560 001 Karnataka Udyog Mitra Phone: 91-80-2228 2392/5659, (KUM) Fax: 91-80-2226 6063 E-mail: [email protected] Website: www.kum.karnataka.gov.in

41 Key investment promotion offices

Agency Description

District Level Single Window Clearance . Functions under the chairmanship of respective Deputy Commissioners for industrial projects for Committee (DLSWCC) investments less than US$ 0.65 million.

State Level Single Window Clearance . Functions under the chairmanship of Minister for Large and Medium Industries for investments Committee (SLSWCC) that range between US$ 0.65-10.9 million.

State High Level Clearance Committee . Functions under the chairmanship of the Chief Minister for projects involving investment of more (SHLCC) than US$ 10.9 million.

. Nodal agencies for approval of projects at the district level. District Industries Centres . Primary focus is to promote small scale, village and cottage industries.

. Various sector specific departments such as Department of Tourism, Department of Information Other departments Technology and Biotechnology, Department of Food Processing, Department of Textiles and Department of Mines and Geology.

42 Key approvals required…(1/2)

Approvals and clearances required Departments to be consulted

Registration, Industrial Entrepreneurs Memorandum Department of Industries and Commerce Department, (IEM), Industrial Licenses Karnataka Udyog Mitra (Single Window Agency)

Allotment of Land/Shed in Industrial Estates or Karnataka Industrial Areas Development Board Industrial Areas

State Department of Industries, Department of Town and Permission for land use Country Planning

State Pollution Control Board and Ministry of Environment Site environmental approval and Forests

No objection certificate under Water and Air Act Karnataka State Pollution Control Board

Approval for construction activity and building plan Development Authority/Urban Local Body

Sanction of power State Electricity Board

Source: Commissionerate of Industries

43 Key approvals required…(2/2)

Approvals and clearances required Departments to be consulted

No objection certificate Fire Department and Directorate of Factories and Boilers

Provisional trade tax registrations Central and State Excise Departments

Registration under Central Sales Tax Act Central and State Excise Departments

Permanent Trade Tax registration Central and State Excise Departments

Registration under Central Sales Tax Act, 1956 Central and State Excise Departments

Department of Industries and Commerce and respective Registration sector departments such as IT/BT/Tourism etc.

Source: Commissionerate of Industries

44 Cost of doing business in Karnataka

Cost parameter Cost estimate

Industrial land (US$ per hectare) 129,191.51

Metropolitan area: 12.13 Power cost (US cents per kWh) Non metro area: 8.7

Labour (US$/man year) 1,522

Occupation costs (US$/sq ft/year) 16.44

Employee cost (US$/ man year)

Software developers 6,383

Team leads 14,893

Architects 21,276.5

Project managers 31,915

45 Electronics systems design and manufacturing policy 2017–22

. Electronic Systems Design and Manufacturing (ESDM) is the fastest growing segment of the Information and Communications Technology (ICT) sector.

. According to Ministry of Electronics and Information Technology (MeitY), ESDM to be a part of national IT policy to encourage state to come up with more productive policy which could attract more private investment in ESDM sector.

. As per the National Electronics Policy - 2012 (NEP-2012), ESDM is expected to grow to US$ 400 billion by the year 2020 and will generate a total employment of over 28 million.

. The objective of the Karnataka ESDM Policy is to facilitate, promote and develop the “ESDM” sector in the State of Karnataka and make Karnataka a preferred destination for investment in Telecommunications, Defense, Medical, Industrial, Automotive, Consumer Products, applications and components, parts, and accessories required for the aforesaid products and applications. The following targets are set for Karnataka ESDM Policy: • Emerge as the leading contributor to India's ESDM sector by accounting for at least 10% of the US$ 400 billion by 2020 • Generate over 20% of the country's total ESDM exports target of US$ $80 billion by 2020. • Develop core competencies in specific ESDM verticals such as telecom, defence electronics, avionics and energy. • Make Karnataka the country's preferred destination for investments in ESDM. • Generate at least 240,000 new jobs, 25% of India's PhDs and 5000 patent filings in ESDM sector in Karnataka by 2020. . Several incentive options have been designed for enterprises, start-ups and MSMEs to avail reimbursements and grants under the following schemes: • Patent registration incentive, international marketing incentive and PF/EDI incentive • Capital subsidy, ETP set-up subsidy and Interest subsidy • R&D grant, concession on registration charges and power tariff concession • Reimbursement of quality certification costs, prototyping costs and land conversion fee • Exemption from stamp duty

46 Karnataka startup policy 2015-20

. A Karnataka Startup Cell has been set up to address the needs and demands of the rapidly expanding Startup Community and promote Karnataka's Startup Ecosystem.

. Following are the highlights of the startup policy:

• Capacity Building through New Age Incubation Network

• Technology Based Incubators: Fostering links between R&D and Commercialization of Technologies.

• CIDEA2Po Fund: Taking ideas to Proof of Concept.

• Startup Fund of Funds.

• Incentives and Concessions: VAT/CST and ST, Patent and Marketing Reimbursements

• ‘Elevate 100’ scheme to identify 100 innovative start-ups and support them till the next level of success.

• Capacity Building Through Exposure Visits and Workshops

• Creating incubation infrastructure through PPP

47 State acts & policies…(1/4)

NRI Policy 2017 The policy was introduced in January 2017, to attract investments from non-resident Kannadigas. The policy aims at helping improve the privileges and speedy services to NRKs, 1 through a card.

Karnataka State Electric Vehicle and Energy Storage Policy 2017 To make Karnataka a preferred investment destination for manufacturing of electric vehicles, promote a conducive manufacturing ecosystem in the industry and develop human capital 2 required by the industry.

IT Policy 2020-2025 The policy is focused on continued development of infrastructure, markets, ecosystem, talent 3 and ease of doing business to support growth of the IT industry in the state.

Karnataka Tourism Policy 2020-25 To position Karnataka as the most preferred tourism destination that provides a safe and memorable experience for tourists through diverse high-quality tourism offerings developed 4 in collaboration with tourism stakeholders and local communities to create sustainable and inclusive socioeconomic development for all.

48 State acts & policies…(2/4)

AVGC Policy 2017-22 Encourage and support appropriate manpower development, infrastructure development 5 and business development in the AVGC sector.

Solar Policy 2014-21 To add solar generation of at least 2,000 MW by 2021 in a phased manner. To encourage PPP model and R&D and innovation in the sector. 6 To promote Roof Top Generation and Technologies. To transform Karnataka into an investor friendly state.

Karnataka Industrial Policy 2020-25 To retain Karnataka’s position as a global manufacturing hub and achieve higher and sustainable industrial growth through capital infusion, technology transfer, world-class 7 industrial infrastructure, skill upgrade and benchmarking of policies and practices to the best global standards.

ESDM Policy 2013 To facilitate, promote and develop the ESDM sector in Karnataka and make Karnataka a 8 preferred destination for investment in this sector.

49 State acts & policies…(3/4)

Aerospace Policy 2013-23 To position Karnataka as a vibrant aerospace hub of Asia and a globally recognized aerospace destination by enabling the environment for holistic and sustained growth of the 9 aerospace sector. Increase the contribution of the aerospace sector towards enhancing the share of industry in the state’s GSDP from 28.0% to 32.0% by 2022.

Integrated Agribusiness Development Policy 2011 To position Karnataka on a sustained growth path in the field of agricultural and allied sectors through global technologies and innovative tools by creating enabling frameworks 10 and state-of-the-art infrastructure facilities, thereby generating higher returns for farming communities.

Information and Communication Technology Policy 2011 To maintain Karnataka’s leadership in outsourced IT services. To retain Karnataka’s position as the state with the largest skilled workforce in India for IT 11 services, products and R&D. To enable Karnataka to be the most preferred destination for MSMEs (micro, small and medium enterprises).

Energy Conservation and Energy Efficiency Policy 2020-25 To outline an overarching framework for identification, development, implementation, monitoring and verification of energy efficiency programmes to be undertaken in the state 12 to tap huge energy savings potential.

50 State acts & policies…(4/4)

Karnataka start-up policy 2015-20 A Karnataka start-up cell has been set up to address needs and demands of the rapidly 13 expanding start-up community and promote Karnataka's start-up ecosystem.

51 APPENDIX

52 Sources

Data Sources

GSDP (state) Economic Survey 2019-20 (Karnataka), Directorate of Economics & Statistics of Karnataka

Per capita GSDP figures Economic Survey 2019-20 (Karnataka), Directorate of Economics & Statistics of Karnataka

GSDP (India) Economic Survey 2019-20 (India)

Installed power capacity (MW) Central Electricity Authority

Wireless subscribers (No) Telecom Regulatory Authority of India

Internet subscribers (million) Telecom Regulatory Authority of India

National highway length (km) NHAI, Roads and Building Department-Government of India

Major and minor ports (No) India Ports Association

Airports (No) Airports Authority of India

Literacy rate (%) Economic Survey 2019-20 (Karnataka)

Birth rate (per 1,000 population) Economic Survey 2019-20 (Karnataka)

Cumulative FDI equity inflows (US$ billion) Department for Promotion of Industry and Internal Trade

Operational PPP projects (No) DEA , Ministry of Finance, Government of India

Operational SEZs (No) Ministry of Commerce & Industry, Department of Commerce

53 Exchange rates

Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)

Year Rs. Equivalent of one US$ Year Rs. Equivalent of one US$ 2004-05 44.95 2005 44.11 2005-06 44.28 2006 45.33 2006-07 45.29 2007 41.29 2007-08 40.24 2008 43.42 2008-09 45.91 2009 48.35 2009-10 47.42 2010 45.74 2010-11 45.58 2011 46.67 2011-12 47.95 2012 53.49 2012-13 54.45 2013 58.63 2013-14 60.50 2014 61.03 2014-15 61.15 2015 64.15 2015-16 65.46 2016 67.21 2016-17 67.09 2017 65.12 2017-18 64.45 2018 68.36 2018-19 69.89 2019 69.89 2019-20 70.49 2020 74.18 2020-21 72.59 2021* 73.69

Note: As of February 2021 Source: Reserve Bank of India, Average for the year

54 Disclaimer

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