The rise of big business in Karnataka

As 2017 drew to a close, Bengaluru cheered to news from New Delhi that the aviation regulator had decided to allow Dornier 228 aircraft for civilian use. These aircraft, manufactured by Bengaluru-headquartered defence public sector unit Hindustan Aeronautics, are already in use by the Indian Armed Forces.
HAL and other defence-related research labs, besides premier institutions such as the Indian Institute of Science and the National Aerospace Laboratories, have been active in Bengaluru for a few decades now. Towards the end of the previous century, Karnataka also made giant leaps in the technology sector with the first seeds sown in 1981 by NR Narayana Murthy, the iconic founder of information technology giant Infosys.

Over the decades, Bengaluru has developed into a global hub for scientific research and innovation. The city made several components for the recently fired BrahMos supersonic cruise missile. The Bengaluru lab of Huawei developed the bluetooth features that run on the Chinese telecom giant’s flagship smartphone Mate 10, a product meant for global markets.

In recent years, a few cities, especially Hyderabad, have been trying to give Bengaluru tight competition in attracting investments in the technology sector. But Bengaluru retains its epithet as India’s Silicon Valley. The city is still a favourite destination for technology multinationals for setting up innovation labs. While other cities are catching up with Benglauru in the area of information technology, the city has moved ahead, conquering the startup space. Bengaluru is home to successful startups including the big daddy of ecommerce, Flipkart, ridehailing service Ola, fin-tech company PhonePe (acquired by Flipkart), fooddelivery startup Swiggy, and ed-tech firm Byju’s.

Karnataka IT minister Priyank Kharge sees huge opportunity in the animation, visual effects, gaming and comics sector (AVGC), and believes the state is headed in that direction. Karnataka was the first state to recognise animation and gaming as an emerging sector, the minister said. His department even framed a dedicated AVGC policy to promote the sector and encourage entrepreneurs to create original content.

In another first, the Karnataka government came up with a policy on electric vehicles and energy storage to develop Bengaluru into India’s electric vehicles capital. “We want to prepare Bengaluru first in terms of building infrastructure such as charging facilities before we consider other places in Karnataka,” Karnataka industries and infrastructure minister RV Deshpande said recently. To a question in the Lok Sabha in July, Union power and renewable energy minister Piyush Goyal said Mahindra Reva had installed 25 charging stations in Bengaluru at six locations as part of a pilot project.

Towards this, Thunder Volt Singapore has proposed establishing an electric vehicle and lithium battery manufacturing unit at Gowribidanur industrial area, about 80 km from Bengaluru, at an investment of Rs 1,600 crore. Mahindra Electricals has proposed an R&D centre for electric vehicles at the IT Park area in Devanahalli at an investment of Rs 74 crore.

Global furniture giant Ikea is also all geared to set up a 450,000 sq ft store in Bengaluru, where about half of its employees will be women. “We are looking to source more from India, especially from Karnataka,” Ikea India chief executive Peter Betzel said at a recent event.

In a chat with ET, CM Siddaramaiah said the state had progressed by leaps and bounds in attracting industrial investments in the last four years. The southern state—the only large state in the country ruled by the Congress party—received $4.7 billion, or Rs 30,000 crore, in foreign direct investment (FDI) in the first six months of 2017-18, show RBI data. That was more than double the FDI the state received in all of 2016-17. As per the RBI data, FDI inflows into Karnataka made up about one-fifth of what the entire country received in the first two quarters of this fiscal year.



As per data from the Department of Industrial Policy and Promotion (DIPP), Karnataka was at 11th place in terms of investment intention in 2013. The state moved up to the fifth and fourth spots, in that order, in 2014 and 2015 before occupying the first place in 2016 with an investment intention of Rs 1,54,173 crore. Although proposed investments in the state dropped to Rs 1,47,625 crore in 2017, Karnataka retained the pole position. The state’s industrial policy, drafted for the period 2014-19, targets Rs 5 lakh crore in investments and the creation of 1.5 million jobs.

According to Deshpande, in the last four years, the state-level single-window committee cleared 1,823 projects, which will translate into about 898,000 jobs. The major investments approved include those of Oracle India, TVS Motors, MRPL (Ethanol Plant), Ikea, SAP Labs, Wipro Aerospace, Molex India, HNI Autotech, and ACE Bright Pharma. Between 2013-14 and 2017-18, Karnataka generated 1.2 million jobs in the micro, small and medium enterprises (MSME) sector and 188,000 jobs in the large industries sector. Another 579,000 jobs are in the pipeline, industries department data show. “Proud to know that we are a frontier state in the country with a huge plethora of capabilities when it comes to industrial manufacturing. People of Karnataka are what make us so successful,” said Biocon founder Kiran Mazumdar-Shaw.” The state government plans to provide public Wi-Fi hotspots at all 11 municipal corporations in Karnataka. Bengaluru will have about 5,000 public hotspots before the Assembly election in April-May.

On the flipside, Bengaluru is battling several issues including serious infrastructure deficits and transportation challenges. Chief minister Siddaramaiah said his government is doing its best to address these issues. “After we came to power, we focused on solving transportation issues and reducing congestion in a big way. The biggest problem is the number of two-wheelers in Bengaluru, which is far higher than in any other city. I have provided Rs 7,300 crore for improving roads in the city.”