| 38 | | 39 | INTERVIEW: GOVERNMENT OF KARNATAKA Karnataka will be a $1 Trillion Economy in 2032 What changes have been initiated by the new government to increase FDI investment. The new State government is committed to bringing Karnataka on a path of transformative growth. The establishment of platforms like the Invest Karnataka Forum Board and Strategic Investments Committee showcase a holistic approach, bringing together industry experts to drive progress. Additionally, vision groups spanning nine pivotal sectors have been created to streamline operations, eliminate potential bottlenecks, and foster an environment conducive to more investments in Karnataka. A flagship project of the government is the Knowledge Healthcare Innovation and Research (KHIR) City in the outskirts of Bangalore. Building clusters of knowledge and health will lead to a significant impact on the economic development of the city as clusters promote collaboration, cross-functional synergies and enhanced resourcing opportunities. Through strategic alliances with global industry leaders like Foxconn, Tata Electronics and IBC, the state has developed an investment pipeline of nearly `50,000 Cr. Another testament to the new administration’s responsiveness is the forthcoming single-window system, designed to bolster the Ease of Doing Business in Karnataka. The government is also working on revamping key policies such as the New Industrial Policy and some sectorspecific policies to make them more holistic and aligning them with global trends. What are you showcasing at WEF Davos 2024? At WEF Davos, state government delegates plan to showcase Karnataka’s offerings to potential investors to attract new investments. Meetings are to be conducted with top industry global leaders across manufacturing, IT, knowledge, health and academia. Can you provide an overview of the recent surge in FDI inflows into Karnataka? Karnataka has been second highest in attracting $47 billion FDI inflows over last four years— accounting for 23% of India’s total FDI inflow. The presence of large multinational companies has attracted other new investors also and Karnataka has become a hub of investment. Top sectors which are attracting potential investors include electronics, electric mobility, and aerospace and defence. Karnataka has also seen significant investments in the R&D/ GCCs, electronics manufacturing companies, battery manufacturing companies, aerospace and defence. The FDI has accrued from several countries, including United States, Singapore, and Switzerland. More recently we are seeing the entry of Taiwan and South Korea. Why is it that some states are more successful in attracting foreign investments? FDI is influenced by various factors, and its distribution varies across Indian states. For the last decade, Karnataka is among the top three states in attracting FDI. A key reason is the investor-friendly ecosystem and the supply of skilled, semi-skilled and unskilled labour. The state is also equipped with robust industrial infrastructure. In short what works in favour of Karnataka is the availability of labour and infrastructure, together with progressive policies to improve the ease of doing business. How does Karnataka propose to transform into a $1 trillion economy? Karnataka’s economy is projected to reach $500 billion by 2026-27 and $1 trillion by 2032. We aim to boost economic growth rate from 13% to 17% per year to achieve this target. This requires a sustained growth in all sectors: • Agriculture by 16-17% (contributing $160-170 billion to the state GDP); • Manufacturing by 21-22% ($210-220 billion); • Services by 61-62% ($610-620 billion). We propose to prioritize sectors like aerospace, defence, electronic components, core industries, warehousing, and logistics. These include attracting MRO (Maintenance, Repair, and Overhaul) investments, promoting engine indigenization, setting up re-investment desks, and launching favorable policies. At the same time, we propose to encourage employment friendly sectors like textiles, electronics manufacturing systems, GCCs, R&D, and manufacturing support services. To encourage innovation, we will focus on sunrise sectors such as future mobility, green hydrogen, drones, industrial robots, semiconductor manufacturing, AR/ VR, MedTech, and SpaceTech. The plan here is to launch sector specific policy in consultation with strategic groups to conduct targeted outreach to manufacturing players, facilitating upskilling initiatives, and establishing dedicated clusters or testing parks. What are the challenges and plans of transforming Bangalore into a world class city? Bangalore, often referred to as the “Silicon Valley of India,” is a major technological and innovation hub in the country. While Bangalore’s prominence as a technology hub is well established, it continues to evolve and adapt to emerging trends, ensuring its place as a key player in the global tech landscape. Sunrise sectors are also a key focus area for Bengaluru. We see that 45% of generative AI startups are based in Bengaluru. The highest startup activity in terms of PE/VC funding in India is happening in Karnataka. Bangalore administration has been actively working on various plans and initiatives to enhance the city’s infrastructure, promote sustainable development, and elevate its status to that of a world-class city. A flagship project of the government is the Knowledge Healthcare Innovation and Research (KHIR) City in the outskirts of Bangalore. Building clusters of knowledge and health will lead to a significant impact on the economic development of the city as clusters promote collaboration, cross-functional synergies and enhanced resourcing opportunities. Additionally, there has been a concerted effort to improve the city’s infrastructure, including road networks, public transportation, and utilities. The 74-km Peripheral Ring Road (PRR) project connecting Tumakuru and Hosur road remains a key priority for the Bangalore Development Authority (BDA). The Kempegowda International Airport (KIA) plans to construct a new terminal (Terminal 3) in view of the growing demand for domestic travel where Bengaluru airport is inherently the ‘natural gateway’ for South India. What are the policies and initiatives, both at the state and national level that are creating a more investorfriendly environment? Some of the initiatives at national level include progressive liberalization of FDI policies allowing higher levels of foreign investment in several industries, National Infrastructure Pipeline (NIP) to encourage foreign investment in infrastructure projects through public-private partnerships (PPPs), FDI facilitation through dedicated bodies such as Invest India, and New Industrial Policy to enhance the competitiveness of Indian industries and attract foreign investment. At state level, several states have introduced single window clearance mechanisms to simplify and expedite the approval process for setting up businesses, sector specific policies to attract investment in key sectors like IT and logistics, investor summits and roadshows to showcase investment opportunities, and land and labor reforms to address issues related to land acquisition, labor laws, and industrial disputes. • Sri. M.B. Patil Minister for Large & Medium Industries
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