Karnataka-Investment and Industrial Policies
The ongoing process of opening up of the Indian economy, changing Industrial and trade policies over the last decade and the formation of WTO have together given rise to stiff challenges as well as tremendous opportunities for Indian Industry. While the challenges are the result of liberalised imports of raw materials, components and finished products from across the globe in an increasingly reducing tariff regime, the opportunities arise from the opening up of the world markets for Indian industry.
The Government of Karnataka considers high growth of agriculture and allied sectors as a means to accelerate the state's GDP growth, enable farmers to earn higher income and ensure food security. Karnataka has rich biodiversity and ten agro-climatic zones suited for majority of the agricultural & horticultural crops and a long coastline that encourages fisheries. The state contributes around 7% of the agricultural production and 15% of the horticultural production in the country. It contributes around 10% of the fruit & vegetable production in India. Its climate endowment suits cultivation of cash crops like coffee, coconut, mango, spices, commercial flowers, aromatic plants, cotton, sugarcane, oilseeds, grapes, pomegranate, sapota, etc.
Karnataka is one of the Industrially forward States of India. The State has a host of large industries ably supported by a strong base of Micro, Small and Medium Sectors. Due to inherent advantages of the State, the industry and trade sectors including service sector are propelling the overall economic development of Karnataka.
Karnataka has 307 lakh livestock,424 lakh domestic poultry and produces 45 lakh MT of milk, 1.14 Lakh MT of meat and 18600 lakh eggs annually (2008-09).The state ranks 10th and 3rd in the country in milk and egg production respectively. 38 rural households have livestock and ,or poultry. The annual growth is 5% and livestock sector contributes 2.96% to State GDP.
The Government of Karnataka had come out with the first Infrastructure Policy in 1997. The Infrastructure Policy of 1997 aimed at expanding and upgrading infrastructure to meet the growing needs of industrial and agricultural sectors, inviting private investment and adopting an integrated approach to infrastructure development. This policy had specific incentives and concessions for infrastructure projects. However, with the efflux of time there have been changes in the tax and stamp duty regime, formulation of Govt. of India's Policy on Public-Private-Partnership (PPP) in infrastructure projects and the concept of Viability Gap Fund (VGF). In line with these changes, the existing policy needs to be revised.
The Government of India have announced the concept of Special Economic Zones (SEZs) in the year 2000 through a revision in the EXIM Policy 1997-2002 with a view to providing an internationally competitive and hassle free environment for production of goods and services for exports. These SEZs are virtually deemed to be a foreign territory within the Country, free from all the rules and regulations governing the import and export. The SEZs are specifically treated as duty free enclaves for the purpose of industrial, service and trade operations with exemption from customs duties and a more liberal regime on levies, foreign investment and other transactions. The domestic regulations, restrictions and infrastructure inadequacies are sought to be removed for creating an investor and industry friendly environment. The SEZs would be islands of excellence and efficiency.
Karnataka was among the first States in the country to bring out a progressive Tourism Policy as early as June 1992. This had the twin objective of promoting tourism-related activities and enhancing employment and income-generation among all sections of the society to further promote tourism in the State. The Government announced an updated tourism policy with effect from June 1997 for a period of five years with certain modifications vide Government Order No. ITY/137/TTM/96 Bangalore dated 4 July 1997.
The above policy generated considerable flow of investment from the private sector and also led to several other developments in the tourism sector. Today, the State Government is giving new thrust to promote tourism in the State. All bona fide tourism related enterprises are duly recognised and given special incentives and concessions. Areas that need rapid development have been identified. Infrastructural facilities need considerable investment and the private sector is invited to participate in such areas. They are encouraged to invest in hotels, beach resorts, eco-friendly resorts, wayside facilities, adventure/recreation centers like golf courses, aero sports, amusement parks and other tourism related activities.
In India, it is the State of Karnataka that holds the pre-eminent position in the field of Information Technology & Biotechnology. In fact, the State is called the 'Silicon State of India' and Bangalore, its capital, is referred to as the 'IT Capital of India' as well as the 'Biotech City'.
Karnataka in the recent past has attracted a spectacular amount of foreign investment. To be precise, the state has seen at least one new foreign IT Company setting up shop, every week for the past 150 weeks. The State also has the enviable record of attracting one new Biotech Company every month for the last two years.
Hon'ble Chief Minister, Mr. S. M. Krishna in his budget speech for the year 2000-2001 has said, "While Karnataka is the acknowledged leader in IT, I would like the State to lead the next revolution in Biotechnology. Karnataka already has the training and knowledge base necessary to drive the revolution. We have the critical mass of biotech companies and the best research institutions. The immediate challenge is how to nurture that innovation, promote entrepreneurship and facilitate effective technology transfer to the end users. I am happy to announce a Vision Group on biotechnology is being set up to advise the government on future strategies."