Growth Sector
Industrial Development
Current Scenario
Growth Sector : Industrial Development
• Karnataka is the IT hub of India & home to the 4th largest technology cluster in the
world.
• The state has 26 operational, 51 notified SEZs and 62 formal approval SEZs as of
September 2017.
• In 2016-17, Karnataka’s GSDP grew by 16.38 per cent. The services sector, contributes to 63
per cent to the GSDP, grew at 8 per cent.
• Manufacturing sector in Karnataka comprised 24 per cent of Gross State Domestic Product in
2016-17
• Karnataka has one of the best manufacturing process ratio of 2.63 with a maximum value of
goods being converted into finished goods valuing over INR20 billion.
• The SME landscape in Karnataka is dominated by textile followed by the food and beverage
industry. The Karnataka state industrial policy 2014-19 sets aside a minimum of 20-30 percent
of allocable land for industrial development to SMEs.
IT/ITeS68%
Precision, Engineering
Product4%
Multi Product4%
Textile4%
Pharmaceuticals4%
Aerospace and Industry
4%
Electronics/hardware and
Softwware/ITeS4%
Hi-tech engineering products and
related services4%
Biotechnology4%
Sector-wise Operational SEZs in Karnataka (as on July 2016)
Source: Department of Commerce, Ministry of Commerce and Industry Karnataka
Cumulative Investments of
about US$ 22.4 billion till
March 2017
FDI
4th highest FDI in
the country
IIP Growth Rates (Manufacturing) 2015-2016 (Base Year 2004-05)
2.0
2.34Karnataka
National
Annual Survey of Industries
• Ranked 4th among all India States/
Union Territory
• Total Persons Engaged 7.02%
• Output 6.71%
• GVA- 6.17%
MSME Contribution in
Industrial Growth
• 40 lakh people employed in
2017-18
• 6 lakh MSME units
registered in the state
• 54k Women MSME units
Karnataka Industrial Policy 2014-19 – Key Highlights and Achievements
Growth Sector : Industrial Development
• During 2014-17, 1823 projects have been approved by the State Level Single Window Clearance
Committee/State High Level Clearance Committee, with an investment of INR 3.34 Lakh Crore
Investment, generating employment to 8.98 lakh persons.
• During 2014-17, 1.89 Lakhs employment in large industry sector and 12.30 Lakhs employment in MSME
Sector i.e., totally 14.19 Lakh employment has been generated.
• Efforts towards development of Industrial Corridors:
• Chennai-Bangalore-Chitradurga Industrial Corridor (CBCIC) and Bangalore-Mumbai
Economic Corridor (BMEC) would be expedited on the lines of Delhi-Mumbai Industrial Corridor
(DMIC) with the support of Government of India.
• Government is establishing Tumkur Industrial Node in 9,629 acres at Vasanth Narasapura,
Tumkur under Chennai – Bengaluru – Chitradurga Industrial Corridor.
• In association with Government of India, the State Government is establishing Machine Tool
Park in an extent of 540 acres at Vasantha Narasapura Industrial area, Tumkur with a project cost
of Rs. 425 Crores.
• State Government is developing Japanese Industrial Township at Vasanth Narasapura, Tumkur
in an extent of around 500 acres in consultation with JETRO to promote Japanese Investments in
the State.
• Karnataka is giving focus for Labour intensive sectors like Toy Manufacturing, Mobile Phones, Tablets,
Electronic Components and assemblies etc. and also to create more employment in manufacturing sector.
• Government is establishing 6 Exclusive Women industrial parks in the state:
• Harohalli Industrial Area, Kanakapura
• Kudithini Industrial Area, Bellary
• Gamangatti Industrial Area, Dharwad
• Nandur – Kesartegi Indl. Area, Kalburgi
• Thandya Industrial Area, Mysore
• Canara Industrial Area, Mangalore
Regional spread of Industrial Activity in the state
Growth Sector : Industrial Development
Industrial Corridors – Potential Industrial Corridors
A Inter-state corridor
Karnataka- Maharashtra 1
Karnataka- Telangana 2
Karnataka- Andhra
Pradesh
3
Karnataka- Tamil Nadu 4
Karnataka- Kerala 5
Karnataka- Goa 6
B Intra-state corridor
Bengaluru-Mandya-
Mysuru-Chamrajnagar
1
Chitradurga-Bellary-
Gulbarga-Bidar
2
Dharwad-Koppal-Raichur 3
Bengaluru-Hassan-Mysuru 4
Chitradurga-Haveri-Karwar 5
Tumakuru-Shimoga-
Honnavar
6
Raichur-Bagalkot-Belgaum 7
Agro processing clusters
Sub-sector Scenario
Growth Sector : Industrial Development
Heavy Manufacturing
Automobile & Engineering
Aerospace & Defense
Manufacturing
Pharma
Healthcare
MSMEs and Traditional
Textiles
Food Processing
MSMEs
Services
Tourism
Construction
BFSI
Retail
Automobile
and
Engineering
• Karnataka is the 4th largest state in automotive production.
• Contributes 8.5 per cent to the overall automobile sector of the country.
• Provides employment to more than 55,000 workers.
• The engineering segment is the fastest growing sector of the state, which grew
at a CAGR of 14.22 per cent between 2010-11 and 2015-16.
Aerospace
and Defense
• Karnataka attracts 65 per cent of Aerospace investments in the country.
• In 2016, Karnataka approved amendments to the Karnataka Aerospace
Policy 2013-23 to provide special incentives for development of MRO
sector.
• Of all aircraft and helicopters available with the nation’s Defense Services,
67 per cent originates from Karnataka.
Pharma and
Healthcare
• State‘s Pharmaceutical industry generated INR80,000 million in revenue
contributing 8 per cent of the country’s total revenues.
• Global healthcare company GlaxoSmithKline Ltd is investing INR10 billion in a
new state-of-the-art pharmaceutical unit in Karnataka .
• As of 4 October 2017, the state has 12,568 active health institutions out of total
12,990 health institutions in the state.
Food
Processing
• The state consists of 7 food parks, a spice park and has a seafood park.
• A rice technology park is on its way to establish.
• Food Processing sector in the State has witnessed a steady growth. The
export of agriculture and processed food in the state grew at a CAGR
of 22.96 per cent between 2010-11 & 2015-16.
• Sector contributes five per cent of India's GDP.
• Second largest employment generating sector in India. It is the only industry
generating huge employment for both skilled and unskilled labour
• Karnataka is a major apparel sourcing destination for the global market. The
state accounts for 20% of the national garment production.
• Textile Policy offers various incentives for investments in the textile sector
• In 2016-17 (up to September 2016) 32.50 million meters of handloom textiles
was produced in Karnataka
Textiles
Growth Sector : Industrial Development
Growth Drivers
Growing
international
investments
Cumulative FDI inflows in the state from April 2000 to June 2017
were recorded at INR1,609.8 billion .
Rich talent pool Karnataka is termed as the Knowledge Capital of India
Availability of a large, highly skilled workforce is Karnataka’s
greatest asset
Preference for
Goods
Manufactured
Locally
State Government has amended the Karnataka Transparency in
Public Procurements Act (KTPP) to reserve 350 times (products)
for exclusive manufactures of MSME and SSIs.
Proximity to other
Automobile
Clusters
Karnataka’s proximity to the Western and Southern auto clusters in
the country makes it an attractive destination for investors.
Opportunities
PPP Model
The GoK is focusing on PPP model to expand the
manufacturing and service industry in the state.
Projects based on PPP model are already started in
aerospace sector.
Dedicated
Aerospace
Policy
Karnataka is the first and only state so far to have an
aerospace policy as well as two exclusive aerospace parks in
the state.
GoK has proposed to set up India’s first Multi-Skill Training
Institute for Aerospace and Aviation.
Development of
NIMZs
Karnataka is at the forefront of developing National
Investment and Manufacturing Zones (NIMZs) to promote
world-class manufacturing activities.
Benefits of
Hyperloop
Technology
Virgin Hyperloop One has announced its partnership with the
GoK to conduct its preliminary study to understand
hyperloop’s feasibility and economic impact in the region.
Joint Venture &
Partnering
Opportunities
Investors and foreign companies can join SMEs through joint
venture partnership to access the market.
Growth Sector : Industrial Development
SDG’s
Linked
Sector
Vision
Build a prosperous Karnataka through inclusive,
sustainable and balanced industrial development thereby
creating large employment opportunities.
Sector Goals
G1Enhance the contribution of manufacturing sector to
the State GDP from present level of 16.87% to 20%
Create employment opportunities for 15 lakh
persons in core manufacturing, pharma and health
care
Attract large investments in tune of INR 5.00 lakh
crore in the state by building strong PPP in the state
Strengthening sector-specific vocational skills
G2
G3
G4
G5
G6
Improving ease of doing business
Increasing focus on MSMEs
G7 Increasing focus on Traditional Industries
Growth Sector : Industrial Development
1. Enhance the contribution of manufacturing sector to the State GDP from present level of
16.87% to 20%
Strategic Interventions
• Creating Brands in Districts through identifying Local entrepreneurs and promoting clusters ( Top 10
Clusters in various districts) viz Chennapatna Toy Cluster to be promoted like Lego brand
• Reverse Market linkages by adoption of Communities and SHG’s by Industry, Government
agencies and Private institutions- Identification of Pilot Projects ( Top 10 projects in satellite towns)
• Exploring innovative models to promote entrepreneurs who can provide Service to Industry and
locals E.g. Taxi Service, Tourist guides etc. at Mysuru
• Cluster based localized industrial zones can be created in districts such as Kodagu’s Ayurvedic
products, tourism and homemade food products etc.
• Sector-aligned Vocation Training Courses for Youth
• Koushalya Karnataka needs to be aligned to Central Government schemes
• Local industries that are micro and small could be encouraged to provide employment opportunities.
2. Create employment opportunities for 15 lakh persons
Strategic Interventions
Enhance design and innovation capacity to achieve international competitiveness. Penetrate into rural
market in Karnataka
Promotion to Global OEM’s into the cluster for focused development of Tier 1 and Tier 2 Ancillaries
Re-engineer policies and directives to support wide-spread manufacturing growth in the state
Fast track development of industrial corridors in the state
3. Attract large investments in tune of INR 5.00 lakh crore in the state by building strong
PPP in the state
Strategic Interventions
• PPP model for infrastructure projects in these cities can speed up the process and provide world-
class infrastructure for Smart Cities for Top 5 Cities as identified under Smart Cities Challenge project
• Joint Projects through Multilateral funding agencies to create Industrial Zones and Clusters which are
world-class viz Thirungrea Automotive Cluster in Germany
• Strong Bilateral partnerships in creating Shared Infrastructure facility for MSMEs in Manufacturing
and Engineering ( Plug and Play model )
• Create top 5 Clusters for Manufacturing beyond Bangalore- Hubbali- Dharward, Belgaum, Tumkur,
Mangalore, Shimoga
Strategic Interventions
Paperless approvals and online process without repetitive submissions and referrals to departments ,
penalty for inability to revert within a fixed timeframe and minimal interface from Government
Departments
Convergence of Departments by Champion Officers
Capacity Building of Government employees with a focus on Customer Centricity, Sense of pride and
ability to translate action on ground
Timely feedback and Customer satisfaction Surveys from Industry and Inter Departmental
Stakeholders
4. Improving ease of doing business
Growth Sector : Industrial Development
5. Strengthening sector-specific vocational skills
Strategic InterventionsProviding Incentives to MSMEs and giving an impetus to creation of 4 lacs additional Units by 2025
Disbursal of loans by Funding agencies like SIDBI, MSME Ministry and other private agencies –
Approx 1 Lac Crore upto 2025
Incentives for technology Upgradation and Technology transfers to enhance competitiveness and
capabilities
Tie up with Industry Mentors for handholding and capacity building through institutionalized
mechanisms
C&I Department to institutionalize a Buyer Seller meet Annually with a view to create business and
promote MSMEs
Cluster development approach can enhance the productivity and competitiveness as well as capacity
building of MSMEs.
MSMEs need to be educated about pollution generated by them and how the waste can be minimized.
6. Increasing focus on MSMEs
Strategic Interventions
Work with State Private agencies/ Training Partners and earmark Vocational Training Centres in
Sunrise Skills of the future with a vision to target 2 Lacs Apprentices per year
To identify Skill Programmes ( In house of Companies and State driven) with a specific outcome to
create jobs to beneficiary companies in Manufacturing and Services Industry
To have a District level Skills competition which culminates at a State and National level or
participation in International World Skills Competition with a view to attach importance to Skills in India
To run Sector Specific Skill projects with local associations in a Project mode with Monthly targets and
budgets accordingly
Strategic Interventions
Creation of textile specific infrastructure in the state such as Mega Textile Parks
Augment Power loom infrastructure by addition of high-tech looms
Supporting traditional varieties of weaving by producing niche products. Support in branding support,
infrastructure facilities, upgradation of skills etc.
Increased R&D in textile sector to create new techniques of value-addition in the sector
7 Increasing focus on Traditional Industries
Key Performance Indicator Target 2022 Target 2025
Industrial growth % 12% p. a. 12% p.a.
State Manufacturing GSDP contribution 16.87% 20%
Employment Opportunities 1000000 1500000
Mega Textile Parks - 4
Investments in Textile Sector - 30000 Cr
New Hi-tech Power Looms - 10000
26%Increase
contribution to
State GDP by 2025
Total Tourist Footfalls INR 2.2 lakh crore (USD 33B)
Contribution to GSDP) 14.8%
Visitor Exports INR 1,24,930 crore
Direct Employment 15 lakh
Annual employment growth rate 7%
Number of UNESCO Heritage sites3 (Hampi, Pattadakal, Western
Ghats)
Number of Heritage monuments 507 centrally protected monuments
Ranking – Domestic footfalls 4th (2015)
Ranking – Foreign footfalls 9th (2015)
With around 13 crore tourists, 2016 saw an 8%
year on year growth in total tourist arrivals
• According to Karnataka tourism policy 2015-20, it is envisaged that
INR 54,000 Cr investments will be made during 2015-20 period
(more investment expected from private sector or under PPP)
which can generate around 30 lakhs employment
• As per WTTC 2016 report, Karnataka tourism contributes ~ 8% to
India’s total tourism GDP (assuming tourism share of 14.8% GSDP
in 2015)
• Bengaluru became the first Indian city
to have its own logo
Karnataka ranks 4th for domestic footfalls and 9th for foreign footfalls as per 2015 data
MAJOR
CONCERNS
Competition from
other states
Tourism
infrastructure and
connectivity
Qualified skilled
labor shortage
Karnataka Tourism Vision Group was created in 2013 which identified clusters of tourism interest
Urban Tourism
Heritage
Nature & Wildlife
Wellness & Spiritual
This region has been the most popular one in Karnataka for long. It
also has the highest number of rooms in multiple locations. Bangalore-
Mysore-Ooty is one of the oldest circuits in Southern India.
Hampi has been gaining fame as one of the greatest destinations in India.
Along with the other ancient locations around Hampi, it has become
Karnataka’s top destination for Inbound tours
Western Ghats is a biodiversity hotspot with potential to be developed as
a regulated tourism area in lines with Botswana’s Gorilla Tourism.
Karnataka has the largest population of Asian Elephants and tigers
Medical and wellness tourism has already made substantial headway,
primarily in Bangalore. Karnataka already has highly developed individual
Spiritual Sites. However, sites need to be connected and developed further to
1
2
3
4
5 Sun, Sea & Sand
The coastline of Karnataka extends over 300 km. However, significant
efforts & investments are needed to build world class beaches
comparable to international destinations like Maldives & Mauritius
Growth Sector : Tourism
Current State Assessment
STRENGTHS WEAKNESSES
1. The state enjoys the presence of
wonderful locations and destinations
across all tourism themes
2. Karnataka has a rich and unique
heritage and culture
3. Carrying capacity of most
destinations has not reached
saturation levels
4. Bengaluru, the origin hub for most
visitors, is well connected to the rest
of the country and has India’s third
busiest airport
5. The state has a progressive tourism
policy which encourages private
partnership and ICT use
1. Not all tourist destinations have
adequate last-mile connectivity
2. Basic tourism infrastructure – toilets,
wayside amenities, guides – needs
improvement
3. Promotion and marketing of
Karnataka destinations could be
better
4. Need for more participation from the
private sector in promoting the
Karnataka Tourism brand
OPPORTUNITIES THREATS
1. Karnataka has all tourism products
except snow. Branding and
promotions of Karnataka tourism
can propel it to become the leading
tourism state in India
2. It has 2nd highest number of
centrally protected monuments after
Uttar Pradesh. With its strength in
Heritage products, it can be
positioned as a leading heritage
tourism destination in India
3. Bengaluru is a globally recognized
city and can leverage this position to
attract more foreign tourists to
Karnataka
4. As Bengaluru is the innovation
capital of India, Karnataka can reap
the most benefits from tourism
technology start ups in India
1. Competition from other states,
mainly the other southern states -
Kerala, Andhra Pradesh, Telangana
and Tamil Nadu and from Goa
2. Competition from other international
destinations such as Sri Lanka
3. A career in tourism in not perceived
as attractive for many students
4. Limited rail connectivity and while
the road infrastructure is excellent, it
can often get congested, making it
unattractive to travel to far-flung
destinations
Growth Sector : Tourism
SDG’s Linked
Sector
Vision
To make Karnataka one of the top two states in the country in terms of
domestic footfalls by creating a world class tourism infrastructure, thematic
circuits, sustainable tourism practices, encouraging private partnerships and
investments by providing a conducive business environment, branding and
positioning Karnataka Tourism nationally and internationally and becoming
one the largest direct and indirect employment generator sector in the state
G1Increase tourism contribution to GSDP from current 14.8%
to 26%
Provide more than 3 million tourism industry jobs in the state
Build a world class tourism infrastructure to position
Karnataka as a world class tourism destination
Make Karnataka one of the two top states in India in terms
of domestic footfallsG2
G3
G4
By 2026, the number of people
employed in the Tourism
Industry shall surpass the IT
Industry in the state
Growth Sector : Tourism
1. Increase tourism contribution to GSDP from current 14.8% to 26%
Strategic Interventions
Increase spend per user by providing new tourism products such as aero sports and bike tourism
and creating an increasingly bigger assortment of choices at tourism destinations
Increase stay duration per user by providing attractive tourism infrastructure and creating tourism
circuits that encourage tourists to visit all attractions on the route
Increasing promotional activity to attract high-value clientele such as foreign tourists and MICE
Greater adoption of ICT-based initiatives to improve quality of tourism products and services
Creating incentives to attract domestic and foreign investments into the sector for development of
new destinations, products, services, and infrastructure
2. Make Karnataka one of the two top states in India in terms of domestic
footfalls
Strategic Interventions
Leveraging the diversity of tourism products available in the state to create circuits around themes
such as heritage, culture, pilgrimage, rural, adventure, and eco-tourism
Positioning Karnataka as a preferred tourism destination at the state and national level through
branding and promotional activities such as Theme of the Year”
Organize travel marts and exhibitions to attract more tourism promoters and operators to the
state and engage multiple stakeholders in the development of tourism in Karnataka
3. Provide more than 3 million tourism industry jobs in the state
Strategic Interventions
Encourage increased CSR spending from the private sector for development of tourism through
activities such as skill development and sustainability programs
Create a rich tourism startups ecosystem by providing professional and policy support
Making tourism an aspirational career choice by enhancing training and professional education
with necessary infrastructural support and programs such as tourism apprenticeship program
Creating a academia-industry-government interface and encouraging R&D in the sector
4. Build a world class tourism infrastructure to position Karnataka as a
world class tourism destination
Strategic Interventions
Development of infrastructure to ensure last-mile connectivity to all significant tourism
destinations and providing adequate facilities for communal and public transport
Ensuring adequate support infrastructure such as wayside amenities, accommodation facilities,
tourist information, and other servicing facilities to meet the needs of tourists
Building a world class tourism information database to support future policy development and
help with identifying areas and opportunities for interventions
Vision 2025 – Strategic Interventions
Growth Sector : Tourism
Key Performance Indicators Current 2022 2025
Increase in the Tourism
Contribution to State GDP14.8% 20% 26%
Total Tourism Contribution to State
GSDPINR 77,494 crore1 INR 170,790
crore
INR 268,940
crore
Increase Spend per Footfall for
international touristsINR 175,1651 INR 306,200 INR 428,100
Total employment in the Tourism,
Travel and Hospitality Sector9.3 lakh2 13.44 lakh 16.74 lakh
Number of of UNESCO World
Heritage Sites3 4 6
State Rank for Domestic tourist
footfalls4 3 2
State Rank for International tourist
footfalls9 6 3
Share of Foreign Tourist Arrivals in
the State2.7% 5% 10%
Number of Tourism Tech Startups 363 68
105
(with at least
one unicorn)
Investment in Tourism Not availableINR 31,060
crore1
INR 36,860
crore1
Contribution to India Tourism GDP 8% 10% 12%
Visitor Exports Not availableINR 21,495
crore1
INR 32,850
crore1
Note –1 estimate based on 2015 Ministry of Tourism, GOI data2 based on 2015 Ministry of Skill Development and Entrepreneurship data3 Total number of startups in Karnataka in the domains of travel & transport and of rentals as per www.tracxn.com
Growth Sector : Tourism