KARNATAKA STATE GOVERNMENT INDUSTRIAL POLICY

INVESTMENT PROFILE | SNAP SHOTS |

The Government of Karnataka has always been a strong advocate of Industrial liberalisation. The industrial
policies of the Government of Karnataka have reflected the Government's strong desire to ushure in an
environment of successful business propositions. The efforts are paying off :

• Statistics reveal the industrial sector in Karnataka will witness an upsurge with investments to the
tune of Rs 60,000 crore by 2000 A.D
• Reserve Bank Of India lists Karnataka as the 3rd largest beneficiary of projects sanctioned by term
Lending Institutions in 1993-94.

New Industrial policy:

The new Industrial policy's objective is unambiguous and different from the earlier ones. While the growth
objective is a central point, most of the contents of the past have been retained.

1. A high level committee for expeditious clearance of Mega projects constituted.

2. A state level single agency set up for clearing projects.
3. An I.T park with the association of Singaporean investors and Tatas set up.

Attractive Concessions:
The Government revised package of incentives & concessions for new industrial investments in the state
with effect from Nov.1,1990.

• For the purpose of applicability, of this package, the taluks of the State are classified into four
zones, as detailed :
Zone I: Covering 2 Taluks
Zone II: Covering 38 Taluks
Zone III: Covering 129 Taluks
Zone IV: Covering 6 Taluks and 6 Growth centres
to be set up in Hassan,Raichur and Dharwad.

Special concessions to Thrust Sectors: All new tiny, small, medium and large scale industrial units in
'Thrust Sectors' shall be eligible for enhanced incentives and concessions as per details given below:
Investment
Location ST(CST & KST) exemptions
Subsidy
Units set up in Zone I Industrial Areas developed
100% exemption for a period of 3
by Government. Promoter agencies except in As applicable to
yrs from the date of commencement
Bangalore Urban Agglomeration and Mysore City units in Zone II
of commercial production
Corporation Area.
100% exemption for a period of 4
Units set up in Zone II areas of Bangalore Urban & As applicable to years from the date of
Rural Districts units in Zone III commencement of commercial
production.
100% exemptions for a period of 5
Units set up in Zone III(other than Bangalore Rural As applicable to years from the data of
& Urban districts)and Zone IV units in Zone IV commencement of commercial
productions.
100% exemptions for a period of 6
As applicable to
Units set up in Zone IV years from the date of
units in Zone IV
commencement of commercial
 production.

Note:

1. To be applicable for special concessions as mentioned above, industrial units will be required to
produce a certificate from the Department of Industry & Commerce specifying that they come
under the category of Thrust Sector under which the industry is considered and the special
concession is given.
2. Agro-food processing, Agro based industrial High-Tech Packaging units, Cold storages, green
houses, tissue culture lab, bio-fertilizers, Bio technology, Compost, Growth regulators, Seed
production, Informatics software units (industries set up within the Bangalore Urban
Agglomeration ares and Mysore City Corporation areas) in the Tiny and Small Scale sector shall
also be eligible for the special concessions as specified in the I st row of above table.
3. 100% EOUs set up in Zone I including Bangalore Urban Agglomeration area and Mysore City
Corporation area will be eligible for incentives & concessions as specified in 1st row of above
table.

• Special concessions for Electronics, Telecom and Informatics (Software) industries to be set up in
Mysore & Dharwad.They shall be eligible for investments subsidy as applicable to Zone IV areas.
These units shall be eligible for 100% sales tax exemption(KST & CST)on output for a period of 6
yrs. These special incentives are offered in lieu of the normal incentives.
• Special concessions for 100% Export Oriented Industries:
Vide Government Order No.CI 384 SPC 89 dated 29 November 1989, the following concessions
have been extended to 100% EOUs.
a)To offer a capital investment subsidy of 10% of the value of fixed assets, subject to a ceiling , to
be setup in the EOIZ Bangalore and also to all 100% EOUs set up in Zone II & III provided the
units achieve a value addition of at least 25% and also employ local labour to the extend of at least
80% of the requirement.
b)Exemption for payment of Entry Tax on all raw materials, components etc.procured for
processing in the EOUs/EOIZ irrespective of their location
c)All EOUs set up in the State to be exempted from the power cuts imposed by KEB on industrial
concerns from time to time. In addition to the above concessions,100% EOUs to be set up in
EOIZ, Bangalore & in Zones II, III & IV shall be exempted from payment of ST payable on raw
materials, components, packaging materials, consumables, capital goods , spares, material
handling equipments, intermediates and semi finished goods & sub assemblies procured from
industrial units within the state(from the domestic tariff area)

Industrial Growth Centres:

• Dharwad
• Hassan
• Raichur

INVESTMENT PROFILE
Investment Profile
Total Investment: Rs 119,470 crore
Under Implementation: Rs 44,561 crore
24.7% 35.9% 18.3%
Public Private FDI
Joint sector excluded
10 Largest Projects
1. Krishna Bhagya Jala;Irrigation; Rs 6,727.00 crore
2. Mukund Vijayanagar, Steel; Rs 5,462.81 crore
3. Govt Of India, Transport Services; Rs 5,300.00 crore
4. Bangalore Mass Transit, Railways; Rs 4,800.00 crore
5. State Indl Inv.Corp, Petro-Products; Rs 4,800.00 crore
6. Usha Iron & Ferro Metals, Steel; Rs 4,800.00 crore
7. Nagarajuna Power, Thermal Power; Rs 4,591.00 crore
8. Jindal Vijayanagar, Steel; Rs 4,138.00 crore
9. Mangalore Power, Thermal Power; Rs 3,984.00 crore
6. Mangalore Refinery, Petro-Products; Rs 3,690.00 crore

• Investment subsidy to EOUs and SSIs of 25% of fixed assets(Zone II); and 30%(Zone III)
• Additional capital investment subsidy of 5% of fixed capital for thrust-sector projects
• Special incentives, on a case-by-case basis, for mega-projects with investments of Rs 100 crore
• Special incentives, on a case-by-case basis, for automobile sector investments.
• Special package of incentives, concessions, and exemptions for the software industry
• Exemtion from purchase tax and from planned power cuts for 100% EOUs
• Sales tax exemption upto 100% of fixed assets for periods between 4 and 7 years for new units
• Sales tax deferral upto of fixed assets for periods between 6 and 8 years for new units

SNAP SHOTS
Snapshots
Capital Bangalore
SDP Rs. 38,421
SDP Growth 14.64%
Per Capital State Income Rs 8,082
Share Of Industry in SDP 22%
Joint Stock Cos In State 18,122
State Fiscal Deficit Rs. 1,450.70 cr
Inflation Rate(Bangalore) 11.9%
State Bank Credit Rs. 18,841.70 cr
State Market Cap Rs. 109,238 cr
Auto & Auto Ancillaries; Telecom;
Electronics;Infotech;
State Priority Sectors
Agro-Processing;Leather;
Garments;Pharma