Promise of plenty

Print edition : June 04, 2010

An IT park in Hubli, a file picture. According to World Bank Report, 2009, Karnataka is the No.1 investment destination among India's 16 developing States.-KIRAN BAKALE

KARNATAKA'S illustrious history of industrial and technological initiatives dates back to the days when it was the princely State of Mysore. Today, it is one of the most developed States in the country.

The establishment of Asia's first hydroelectric power station in 1902 at Shivanasamudram, on the banks of the Cauvery, led the industrialisation drive. The power station then boasted of the longest transmission line (147 kilometres) in the world from there to the mines at the Kolar Gold Fields.

If the 1950s and the 1960s saw the public sector companies hold sway in the State, the 1990s belonged to the information technology (IT) companies, both national and international, who set up bases in Bangalore and ushered in the IT revolution. Bangalore is today the fourth largest technology cluster in the world with over 2,025 companies and a global outsourcing hub for IT and IT-enabled services (ITeS).

The State is home to 700 multinational and 87 Fortune 500 companies and the highest number of CMM (Capability Maturity Model) level 5 companies in the world. Besides, an exclusive industrial area for electronic hardware and IT/ITeS is under development at Devanahalli, near the Bangalore International Airport.

In terms of education and research, the Indian Institute of Science (IISc) in Bangalore tops the list of quality institutions in the State providing a ready-made pool of highly skilled human resources for a variety of sectors. It has over 100 research and development (R&D) centres, 11 universities, 135 engineering colleges, 114 medical and dental colleges, 181 polytechnics, 600 Industrial Training Institutes (ITIs) and 13 international schools. The Knowledge Hub of Asia, as it is called, Karnataka is the No. 1 investment destination among India's 16 developing States, according to World Bank Report, 2009. It ranks third in foreign direct investment (FDI) among all States in India, and fourth in terms of popular tourist destinations. It produces 12 per cent of fruits and 8 per cent of vegetables grown in the country, and contributes 70 per cent of India's coffee output.

The mineral-rich State has around 3,447 million tonnes of iron ore deposits, 929 million tonnes of hematite, and 2,518 million tonnes of manganese ore. There are also abundant deposits of granite (pink, green, black, grey and yellow), soapstone, sandstone, graphite, limestone, quartzite and clay. Annually, Karnataka produces over 10.13 million tonnes of cement and 7.29 million tonnes of steel. Yet, a shortage of quality power (since the 1980s) and clear-titled land and the lack of world-class infrastructure has impeded Karnataka's march to become India's most industrialised State.

The Bharatiya Janata Party government led by B.S. Yeddyurappa is taking steps to make Karnataka a dream destination for investors. In 2009, faced with the fallout of the global financial crisis and the economic downturn, the government brought out the Karnataka Industrial Policy 2009-14. Its main objective was to provide a stimulus for industrial growth and to make the State more attractive to investors irrespective of the size of investments.

The salient features of the policy are to make Karnataka prosperous through development of human and natural resources in a systematic, scientific and sustainable manner, and to provide additional employment to around 10 lakh people in the next five years. The new policy also aims to increase the share of industry to the State's gross domestic product (GDP) to 20 per cent by 2014, double the State's exports from the current level of Rs.1,30,000 crore, focus on providing quality infrastructure, provide a thrust to skill development and entrepreneurship, and enhance the development of micro, small and medium enterprises.

Global Investors Meet

The latest exercise of the Yeddyurappa government is the Global Investors Meet (GIM)-2010 in Bangalore on June 3 and 4. The GIM is being held after a break of 10 years and will showcase Karnataka as a State with many opportunities. Said Murugesh R. Nirani, Karnataka's Minister for Large and Medium Scale Industries: Karnataka is the most preferred destination for investors. We are in the process of creating a land bank of one lakh acres (1 acre = 0.4 hectares). Of this, the final notification has been issued for 50,000 acres. The remaining 50,000 acres have been identified. The land bank will avoid hassles associated with land acquisition. He also said that after the GIM the government would hold day-long awareness workshops for young entrepreneurs.

Added V.P. Baligar, Karnataka's Principal Secretary, Industries and Commerce: At the GIM, we will of course be focussing the State's unique selling point as a knowledge hub, but we will also be showcasing opportunities for investors in sectors such as automobiles, aerospace, manufacturing, textiles, and cement.

With its advantages in the IT sector, and as a pioneer in biotechnology development (197 of India's 320 domestic biotech firms are in Karnataka), the State is set to be a prime mover in nanotechnology. The State has a 106-acre biotech park in Bangalore and a pharma special economic zone (SEZ) in Hassan.

Karnataka is a manufacturing hub for auto majors Volvo, Toyota Kirloskar, TVS Suzuki and Telco, heavy industrial equipment makers L&T Komatsu and BEML, and automobile components suppliers such as BOSCH, Siemens, Delphi, Denso, Yuasa and Escorts. There are plans for an auto components SEZ in Shimoga.

The State is also making rapid strides as a manufacturing base for several leading apparel brands (in 2007-08, its exports were worth more than Rs.86.94 billion) and as a sourcing hub for international brands such as Nike, Tommy Hilfiger, GAP and Walmart. Over 300 apparel manufacturing units are located in Karnataka. An SEZ for textiles is being set up in Hassan and textile parks are coming up in Bangalore Rural and Doddaballapur. The government, as part of its textile policy 2008-13, hopes to boost textile-based industries.

With a number of aerospace laboratories and defence public sector and private units located in Bangalore, the government sees tremendous potential in this sector. An aerospace park is being developed at Devanahalli near the Bangalore International Airport. Sectors such as food processing, tourism, oil refining and petrochemicals, health care and medical tourism, contract research and power are also on the government's radar.

The following are some of the key projects approved in recent months: Steel plants by Arcelor Mittal (with an investment of Rs.30,000 crore) and POSCO (Rs.32,336 crore); a refinery by Mangalore Refinery and Petrochemicals Ltd (MRPL), a subsidiary of the Oil and Natural Gas Corporation Ltd, Rs.8,656 crore; gas pipelines by Reliance (Rs.6,796 crore) and GAIL (Rs.4,544 crore); a thermal power plant by Shree Renuka Infra Projects (Rs.5,500 crore); cement plants by Lafarge (Rs.1,500 crore) and Birla Cement (Rs.3,000 crore); a financial district by IFCI (Rs.1,500 crore), an R&D centre by Shell (Rs.1,376 crore), a hardware design centre by Tata Elexi (Rs.486 crore); and a new IT campus by Wipro (Rs.477 crore).

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