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Introduction

“Take up one idea. Make that one idea your life - think of it, dream of it, live on idea. Let the brain, muscles, nerves, every part of your body, be full of that idea, and just leave every other idea alone.This is the way to success.”

Swami Vivekananda

For a State an idea means a manifestation, the conjunction of the wish to reach out to the last person within a geographical limit and the aspiration for complete well-being.Therefore, when Swami Vivekananda speaks of an idea taking over ones very existence, for a State it would mean a well-balanced, inclusive approach, according to certain standards and ideals, where governance and modernity are intrinsic.

This has been the story of the grand State of Karnataka in the past two years, under the stewardship of Chief Minister

B S Yeddyurappa.To exemplify, the State’s Capital and showcase

city of Bangalore, according to the global list of cities compiled by HR Consultancy Mercer for 2010, has climbed a couple of notches and continues to be the best place to live in among Indian cities.

Bangalore’s ranking is but the reflection of exemplariness and distinction Karnataka has earned within the Union of India. In the past two years the State has raked an impressive Rs. 5 lakh crore industrial growth, in spite of the global financial crisis, to remain in the forefront as one of the most-developed States in the country.

Karnataka’s renewed developmental thrust in the past two years shows in its governance, driven by the technology of the times and the best practices across the globe. In a short span, the State Government has been able to make it clear on the ground that a holistic intra-State approach is the only way to emulate its own Bangalore and information technology success stories.

The Government has successfully put in place the new Industrial Policy 2009-14, an effort to enhance industry’s share in the Gross State Domestic Product to 20% by 2014, generate 10 lakh jobs, double the State's exports from the current level of Rs. 1,30,000 crore, focus on providing quality infrastructure, focus on skill development and entrepreneurship, and enhance the development of micro, small and medium enterprises.

It is to the Government’s credit that the Global Investors Meet

2010 has already garnered investments worth Rs 3.5 lakh crore,which in turn is expected to create 6.53 lakh employment

2010 has already garnered investments worth Rs 3.5 lakh crore,which in turn is expected to create

Mangaloreopportunities. The new industrial policy is aimed at making the State prosperous through development of human and natural resources in a systematic, scientific and sustainable manner.

In Budget 2008-09, the State Government spelt out its intension to implement Suvarna Karnataka Development Corridor Programme embracing the entire State. Such a corridor will possibly benefit many potential areas in the Karnataka region from Bangalore to Belgaum and laterals of about 50 to 1500 km from the National Highway and rail network, necessary freight corridor for trade industry. Sectors such as energy, road and rail linkages, inland container depots, free trade zones and urban infrastructure are the major key segments to benefit from this Corridor and make a significant impact on Karnataka’s economic growth. The Corridor proposes to cover 11 district headquarters and more than 20 major towns along the highways/major roads and rail links.

I have a dream, a vision for this one State with many opportunities. Vision 2020 for Karna- taka seeks to propel a holistic growth by promoting equitable development of sectors and districts, by providing employment to all sections of people and regions of the State. It will also focus on ensuring excellent infrastructure, quality education, decent living conditions and life security for all our citizens.

B.S.Yeddyurappa Chief Minister of Karnataka

Karnataka - The Knowledge Hub of Asia

Karnataka accounts for around 5% of India’s national income and the State has been ranked No. 1 by the World Bank for its investment climate in a study that analysed 16 States using 46 investment parameters.The fact that one new MNC invests in the State every week is testimony for the fact that Karnataka is the leading investment destination in the country. One of the fastest-growing states in the country, Karnataka has a strong industrial base and vibrant tertiarry sector. It’s services sector, has in fact been, the engine of growth.

The reasons that make Karnataka an attractive destination for investors are:

• Excellent infrastructure

• Readily available land

• Highly skilled technical manpower base

• Large number of technical and research institutes

• Techonology savvy work force with proficiency in English

• Cultural diversity and cosmopolitan urban centres

• Advanced healthcare facilities

• Connectivity through air, rail, sea and road network integrated with the rest of the world

• A State with effective law and order

• Liberalised economy with single window clearance for investors

• Excellent logistics support

• Abundant primary resources

Home to 700 MNCs and 87 Fortune 500 companies, Karnataka

is a State with varied agricultural and mineral resources, and strong manufacturing capabilities.

Karnataka is one of India’s leading industrial states, contributing almost 8% to the national manufacturing income. It has a long tradition of supporting entrepreneurs, and encouraging innovation and research. Its strong and vibrant industrial base combines the intrinsic strengths of large industrial public sector undertakings, large and medium privately owned industries, a wide range of small-scale units.While at one end of the spectrum, the State is the aerospace hub of the country operating on cutting-edge engineering and IT capabilities, on the other end, its garment sector, dominated by small units, contributes 20% to the national output.

Karnataka is also the State with an impressive number of education and skill-development institutes and organisations - it has one of the highest number of medical colleges, third-highest number of engineering colleges, highest number of Industrial Training Institutes in the country and is home to several premier research institutes of international repute.

The State is the pioneer and global face for India in Aerospace and Biotech. Brand Bangalore has become synonymous with cost-effective and quality solutions.While at the beginning, this represented off-shoring of low-end services in the BPO sector, the latent strengths of the State has now made it the first-stop destination for cutting-edge research and manufacturing centres. Bangalore is the world’s fourth-largest technology cluster as it has the perfect ecosystem fostering growth and development of state-of-the-art technology.The city is also well known on the global medical map as one with many super-speciality hospitals providing excellent international quality health care.

The Karnataka State Government has strived to provide an

investor-friendly responsive administration.The Karnataka Udyog Mitra, set up more than a decade ago, works as single contact point for all investors - from receiving a proposal to ensuring its implementation. KUM is actively working with the investors at all stages.The State Level Single Window Clearance Committee and the State High Level Clearance Committee (for investments more than Rs. 50 crore) have been working to clear proposals in

a hassle-free manner.

The Government has put in place the all-new Karnataka State Industrial Policy 2009-14, with various improvements over the

The Government has put in place the all-new Karnataka State Industrial Policy 2009-14, with various improvements

one of 2006-11. The policy includes:

• One main policy measure intended to smoothen the path for investors is the exclusive land acquisition policy and development of a Land Bank – each district to have 2,000 to3,000 acres acquired by the Karnataka Industries Development Board for industrial development.

• The Suvarna Karnataka Development Corridor Initiative has been planned to connect cities in all districts through a network of highways, with cluster development in designated zones.

• Sector-specific industrial zones and SEZs have been identified that match the natural resources and capabilities of a district with industry requirements

• There is a special focus on skill development to enhance generation of technical manpower and ensure that Karnataka’s lead in providing skilled workforce is sustained.

• Creation of world class infrastructure through investments in power, roads, water, warehouse and logistic facilities, connectivity through rails and ports etc. has been planned to facilitate entry of investors.

In addition to the regular State industrial policies, Karnataka has formulated sector-specific policies – IT, Biotech, Semiconductor, Renewable Energy Policy, Suvarna Vastra Neethi for textiles, Tourism Policy. Each of these policies targets a specific sector with incentives, concessions and development schemes that are suited to specific needs.The Semiconductor Policy 2010 deserves special mention as it ties in with both the State IT and Renewable Energy Policies by encouraging programmes like the Smart Grid pilot project at the Electronic City, geared to raise energy efficiency in the State.

The State government well understands the pressing need to upgrade infrastructure, and Karnataka aims to double investment in the sector to meet the needs of a fast-growing economy. Private sector partnership is being actively sought by the investor-friendly Government – more than 200 projects worth Rs. 135,000 crore are in various stages of implementation.

Karnataka is a State known for its stable and forward looking government, effective law and order and minimal disruption to economic activity. In the India Today State of the States Ranking 2009, Karnataka has maintained its fourth rank in governance. Karnataka is a State that has put its IT capabilities to optimum use not just to attract global high-technology investment, but also to raise domestic efficiency through e-governance initiatives.

The key factors that make Karnataka stand out as an investment

destination is the State’s rich resource base and progressive policies that have combined over the years to create a rapidly growing economy, attract global investment and make it a truly Global State.

Karnataka is well set to lead the nation, showing the way through effective public-private partnership. For investors in any field, the two primary inputs that are vital for production are land and labour; Karnataka leads the country in both. Karnataka’s new Industrial Policy 2009-14 has provided for 50,000 acres of land across 5 industrial corridors to facilitate project implementation, especially for large projects facing land acquisition issues in other States. In addition, Karnataka ranks first amongst all the States in India in the labour supply ecosystem , providing access to a vast pool of skilled manpower as well as research, engineering and design capabilities in all frontier sciences, the State is in fact the Knowledge Hub of Asia.

India and Karnataka

India’s impressive growth performance over the past decade has made it a global powerhouse today, a force to be factored in all the calculations of world growth and development. High economic growth in a country that has a stable democracy and free market has in fact made India the cynosure of the world in the new millennium. Add to this a large stock of manpower, the fastest growing population of workers and consumers, strong spirit of entrepreneurship and innovation that has been given free rein with the economic reforms over the past two decades, and it is clear why India has attracted global investors from all sectors.

India ranks 13th in Global FDI flows ; but more importantly, it ranks third on the list of most-favoured FDI locations, as is true for the State of Karnataka.While India burst onto the global scene by establishing its leadership in information technology, the past few years have seen its stature rise in various sectors, including Steel, Auto, Biotech and Pharma. India’s potential for growth has been recognised time and again and the economy is expected to grow in size from 7% of the US’s in 2007 to 88% in 2050. Going ahead, the strong boost for infrastructure and a liberalised environment are a sure recipe to achieve India’s aim of sustainable growth at 8.5% per annum for the next decade.

The country is in fact poised for greater achievements ahead as India has bucked the global slowdown.While the developed world was in a contraction mode following the global financial crisis, India registered a 6.7% growth in 2008-09 and 7.2% the following year; the country continued to be the second-fastest

India registered a 6.7% growth in 2008-09 and 7.2% the following year; the country continued to
growing economy in the world for the fourth year in a row.The twin engines of
growing economy in the world for the fourth year in a row.The twin engines of

growing economy in the world for the fourth year in a row.The twin engines of growth have been the service and the manufacturing sectors, which have expanded at 7.5% and 10.3% per annum over the period 2004-2009.The world now looks to the developing economies for the much needed push to growth as China and India power the world.

Karnataka, the eighth largest State in India, has contributed significantly to India’s rising success . Karnataka, with its varied agricultural and mineral resources and strong manufacturing capabilities accounts for close to 10% of India’s product exports. The capital Bangalore is in fact known globally as the IT capital of India, the State’s software exports form more than 35 % of India’s software exports. Karnataka is also the Knowledge Hub of the nation – it has the highest number of medical colleges and third highest number of engineering colleges in the country.The State is the pioneer in two cutting edge industries, aerospace and biotech, where it is the global face for India. Brand Bangalore has come to mean cost effective and quality solutions in numerous industries.While at the beginning, this represented off-shoring of low-end services in the BPO sector, the latent strengths of the State have now made it the first stop destination for high-technology cutting edge research and manufacturing centres of global majors. Bangalore is the world’s fourth largest technology cluster as it has the perfect ecosystem fostering growth and development of State-of-the-art technology.

The State economy has a sound base in its rich resources, manufacturing expertise and proactive
The State economy has a sound base in its rich resources,
manufacturing expertise and proactive government policies that
have kept growth going in tough times.
Agriculture sustains around 63 % of the population and the State
accounts for 6% of all food grains production in India and 14% of
India’s groundnut output.The State government is encouraging
horticulture and agro-processing to utilize the full potential of
resources. Karnataka is one of the country’s largest producers of
fruits and vegetables, it produces 12% of fruits and 8% of
vegetables grown in India.The State ranks second in the
production of flowers, it has in fact the largest area in the country
under horticulture. Karnataka ranks second in area and third in
production of plantation crops. Karnataka contributes 70% of
India’s coffee production and is also the largest producer of
spices, aromatic and medicinal crops.The State is the second
largest producer of tobacco in the country and the third largest
producer of sugar in the country, contributing 5.22% to India’s
sugarcane output. It contributes 6% of the total cotton produced
in the country, 65% of India’s raw silk and 12 % of India’s wool
production, making the State a leading centre for the textile and
garment industry.
Karnataka’s manufacturing sector is well-diversified, it contributes 8% to India’s industrial income, with firms in
Karnataka’s manufacturing sector is well-diversified, it contributes
8% to India’s industrial income, with firms in all sectors of
manufacturing - engineering, auto, chemicals, electrical and
electronic products, food processing etc. Industrial growth has
accelerated from 6.2% in the nineties to 8.9% per annum since
2000. Karnataka is India’s third largest producer of steel and
seventh largest producer of cement. It accounts for 20% of India’s
garment production and 8% of national apparel exports.The
State is India’s fourth largest automobile hub and the largest
contributor to the aerospace industry.
Karnataka currently contributes 5% to India’s service sector
income, however in certain sectors it is the undisputed leader.
Capital, Bangalore, has become the powerhouse of information
technology in the country.The State was the first in India to set
up a Software Technology Park in 1991 and reigns as the leader
in software exports, bringing in Rs. 67,400 crore in 2008-09.The

first State to bring the private sector into higher education, Karnataka has the highest number of medical colleges in the country.The State is one of the main centres for medical tourism in the country, as its super speciality hospitals draw in patients from abroad. Always on the forefront of innovation, the State is the biotechnology hub of the country, home to 187 out of India’s 340 biotech firms, and is leading in nanotechnology research. Currently ranking fourth in tourist destinations in India, the State is set to become the leading destination for tourists, in fact the State policy aims to make Karnataka the single largest sector in the economy by 2014.

Karnataka – a resource rich and well connected State These are the basic facts of the State – location, geography, climate, demography, physical resources, connectivity for transportation and communication have been attuned to the State’s quest for development. For, Karnataka is a leader in innovation -- a major contributor to the State’s strengths in global outlook – a resource base that’s rich in scientific research and training, and skilled manpower resources.

Karnataka: a resource rich State

base that’s rich in scientific research and training, and skilled manpower resources. Karnataka: a resource rich
• Rich in natural resources • 5 National Parks and 21 Sanctuaries • Fourth largest
• Rich in natural resources
• 5 National Parks and 21 Sanctuaries
• Fourth largest State in terms of forest cover
• The Silk State of India – 50% production in Karnataka
• The Coffeemaker of India -- State accounts for 70% of India’s
coffee bean production
• Second largest iron-ore reserves in the country and a quarter
of the nation’s limestone deposits
• State rich in platinum and other high-value minerals
• A Land of Gold: Kolar Gold Fields
• The Sandalwood State: 73% of the aromatic wood found here
• State grows all food crops, leads in horticulture and
floriculture
• Home to premier education and research institutions
• Strong focus on developing skills and employment
opportunities

Karnataka – A tradition for Innovation Innovation has always dominated the academic, corporate and

decision making ethos of Karnataka. It has a number of firsts to its credit and has a long tradition of public-private partnership:

• First major hydro-electric power generating station at Shivasamudram in 1902 with the capacity of 42 megawatt.

• First aircraft producing company Hindustan Aircraft Ltd set up base in Bangalore in 1940

• Cradle of Banking in India – seven of India’s leading banks originated from Karnataka

• First to introduce private sector in higher education – highest number of medical colleges in the country

• First to introduce the concept of a Software Technology Park in India

• First State with an IT Policy and a Semiconductor Policy

• Country’s first private airport with State of the art infrastructure in India at Bangalore

• Leader in biotechnology – home to 187 out of India’s 340 biotech firms

• Yeshaswini Health insurance scheme – Karnataka has become a role model State with the introduction of this scheme. Any farmer who is a member of co-operative society in Karnataka can get the necessary surgical treatment by becoming a member of the scheme.

Karnataka has always been a proactive State, which has today made it into the most sought after destination for cutting edge technology and manufacturing in the country. One of the main advantages for investors in this State is the availability of a large

pool of technical and skilled manpower and the presence of internationally renowned research institutions in every field. As the home to many premier institutions (detailed in Section 9 of this white paper), Karnataka is well known as the ‘Gateway of Knowledge’, it is the Knowledge Hub of Asia.

Karnataka – An enduring strong economy

The State has witnessed economic growth over time, compared to other States in the country. Indeed, there are challenges in human development and infrastructure that are still to be met with, especially in health and education, along with the infrastructure requirements.What has been the enduring fact in all this, however, is the positive stance of the government towards partnering with the private sector to achieve these goals. Karnataka’s Vision 2020 for growth is in synch with the quest.

Karnataka’s growing economy

• GSDP of Karnataka 2008-09: Rs. 1,81,338 crore (US$ 40 billion)

• Average annual growth of more than seven percent since

1999-2000

• Per capita income Rs. 40,309 (US$ 880)

The sectoral composition of State income has changed over the years as the primary sector has reduced in importance, giving way to the tertiary sector.While this is a natural trend in economic growth, it needs to be accompanied by a corresponding shift in employment shares to enable higher levels of income across all sections.The Karnataka Government Vision 2020 seeks to remove the sectoral and regional disparities by encouraging diversified economic activity in all regions of the State as well as through raising skills in the labour force through vocational training and other institutes.

Sectoral Performance of Karnataka Economy

The primary sector in Karnataka has grown at 3.6% over the past eight years.The State government has launched the Karnataka Agriculture Mission to give the necessary boost to the agriculture sector. Other agriculture oriented programs such as Farm Mechanization scheme, Rashtriya Krishi Vikasa Yojana (RKVY) and major irrigation projects are being undertaken to revive the growth of primary sector.

The strong and vibrant industrial sector of Karnataka has been the key growth driver for Karnataka economy. Buoyed by strong fundamentals, industry friendly policies in the State and

the key growth driver for Karnataka economy. Buoyed by strong fundamentals, industry friendly policies in the
the key growth driver for Karnataka economy. Buoyed by strong fundamentals, industry friendly policies in the
the key growth driver for Karnataka economy. Buoyed by strong fundamentals, industry friendly policies in the
infrastructure support, the secondary sector has been growing at an average rate of 11 per

infrastructure support, the secondary sector has been growing at an average rate of 11 per cent during the past eight years.

The mining sector in this mineral rich State has clocked an average annual rate of 14%. while construction activity has grown at 13%.The employment oriented manufacturing sector registered 11% growth rate during the 2000s, pushing the job creation in the State.

The last decade has seen the emergence of Karnataka as the hub of information technology which has rendered impetus to the growth of overall services in the State. Karnataka is the leading exporter of software in India. In the year 2009-10, IT exports from Karnataka amounted to Rs. 70,375 crore, the highest in the country, clocking a growth rate of 28%.

The services sector grew by more than 9% rate over the last eight years in the State. Continuing with the same pace of growth for the next ten years, Karnataka is set to become the global services hub of India by 2020. Within the services sector, financial services grew by 14 % annually and transport and communication sector rose at 13% per annum.Trade, hotels and restaurants have grown by 9.8% and real estate sector witnessed growth in the range of 8-9%.

Infrastructure development: The presence of robust infrastructure in a region is a prerequisite for sustained economic growth.The State government has apportioned resources to build adequate physical infrastructure comprising of road network, transport and communication facilities and energy availability to households.The status of infrastructure availability in Karnataka is discussed below.

infrastructure availability in Karnataka is discussed below. Roads: The road length of Karnataka has been growing

Roads: The road length of Karnataka has been growing at 7% rate annually over the period 2003-04 to 2008-09.The density of roads as measured by the proportion of length of roads to the total area of the State is higher for Karnataka as compared to all India average.

Transportation: The transportation system in Karnataka is well developed comprising of road transport, railways and aviation sector.The density of motor vehicles in Karnataka is higher than the national average.

The total length of railway lines is relatively lower that other industrial states. However, plans for expansion of rail network are set to raise the access across the State within the next five years. On completion of the ongoing projects, Karnataka will have

better rail connectivity and penetration, see table below for comparison of rail network before and after completion of ongoing projects

Karnataka being a global destination for business and commerce, the passengers movement through air transport is one among the highest in the country.

Households with electricity and LPG – Electricity and cooking gas are basic utilities that indicate household access to infrastructure and a better standard of living. The State performs better than Maharashtra and Gujarat, but is a tad lower than other southern States. However the State has to make significant improvement in making the LPG connections available to the households.With only 40% of households having LPG connections, fulfilling the rest is a challenge.

Finances of Karnataka Government

Fiscal stimulus measures to mitigate the slowdown have led to a rise in the fiscal deficit of the Karnataka State. According to the revised estimates for the financial year 2008-09, the gross fiscal deficit of the State was 3.5 of the State’s GSDP. This is highest amongst all the industrially progressive States. The situation has ameliorated to a certain degree. According to the Karnataka State Budget for 2010-11, the fiscal deficit is estimated to be 2.96 % on account of increased revenue as well as capital inflows in the State.

Gross Fiscal Deficit as % of Gross State Domestic Product

States / Year

2006-07

2007-08

2008-09 (RE)

Andhra Pradesh

2.10

2.96

2.80

Tamil Nadu

1.51

2.55

2.70

Karnataka

2.49

2.83

3.50

Maharashtra

2.27

1.82

2.30

Gujarat

2.22

1.76

2.90

Source : State Finances, Reserve Bank of India Note : RE -Revised Estimates , BE- Budgeted Estimate

Karnataka has recorded maximum increase in the State development expenditure in the year 2009-10.Yet, the State has one of the lowest spending on development activities such as health, education, housing, agriculture, rural development, labour welfare etc.

spending on development activities such as health, education, housing, agriculture, rural development, labour welfare etc.
spending on development activities such as health, education, housing, agriculture, rural development, labour welfare etc.

Human Development in Karnataka

Economic progress of a region should have a positive impact on the standard of living and State of human development which are gauged by general health and education indicators. In general, Karnataka performs better on these indicators in comparison to national average situation and other States with a similar economic profile. Social sector development has always been a thrust of Karnataka government’s policies. Even as an average Karnataka citizen lives a better life in terms of availability of health and education facilities, significant efforts are required to further improve the living conditions of the poor and the marginalized.

Health The basic health indicators in Karnataka such as birth rate, death rate, life expectancy suggest better development of health sector in Karnataka as compared to average rate in India and other States such as Maharashtra and Gujarat. However, the State needs to put more emphasis on improvement in the healthcare institutional mechanisms to bridge the gaps in delivery systems.

Karnataka has one of the lowest birth rate and death rate among the industrially prosperous States and fares well when compared to the national average. Other indicators like lower fertility rate, trained birth assistance also provide a better picture of living conditions and status for the women in Karnataka. The State government has initiated the ‘Taayi Bhagya’ scheme aimed at safe delivery, nutrition and diet and antenatal check up and institutional delivery for women in BPL family.

Only 55 % of children under the age group 12 to 35 months are fully immunized.While this performance is better than the all India average of child immunization at 49.7 %, States like Tamil Nadu have been able to fully immunize 81 % of the children.

Health status of Karnataka and other states The status of health infrastructure in Karnataka as determined by the presence of adequate number of hospitals in the State renders a positive positioning of the State at national level and at inter-state comparison as well.The number of rural and urban hospitals in Karnataka is far more than the peer States. An average government hospital in Karnataka serves 64,518 people in a year as compared to more than a lakh people served at India level. The corresponding figure for other States is even higher.

Karnataka also has a well developed primary healthcare system for rural areas. Established and maintained by the State government, Primary Health Centres and their sub-centres are

the first referral point for rural patients. Karnataka has the highest number of Primary Health Centres per lakh rural population among the progressive States.

Education The literacy rate in Karnataka is higher than the national average as per the Census 2001. However Maharashtra,Tamil Nadu and Gujarat have higher literacy rates. The State government spends around 15 % of its total disbursements on education which is higher than all India average as well as that of Andhra Pradesh and Gujarat.

Education Status of Karnataka and other States Literacy rates does not indicate the quality of education which becomes clearer through factors such as proportion of trained teachers and number of students being allocated to a teacher on an average. Karnataka is one of the few States in India to have 100% trained teachers in higher secondary, middle as well as post basic schools. However, in terms of pupil teacher ratio, Karnataka trails behind other industrialised states as well as national average rate. In order to improve the State of primary education, the government has increased recruitment of teachers in government as well as private schools.

Development of economic and social landscape should be in alliance with the economic and industrial growth of the region. The benefits of the economic growth need to percolate to the social sector to ensure balanced human development in the State. The growing economy has also put pressure on demand for physical infrastructure, and the government has tied up with the private sector for building, financing, execution of infrastructure projects of huge size under the Public Private Partnership arrangements, the details of these projects are discussed in Sections 7 and 8.

The Karnataka government fully understands the challenges ahead to raise the State to greater heights and is working towards meeting a set of targets by 2020 through a comprehensive and coordinated strategy.The government is fully committed to orienting its policy measures in an effective manner to achieve these goals as set out in the table below.

2. Karnataka - A leading investment destination

Karnataka’s performance in attracting investments, both domestic and FDI, highlight the State’s robust financial network.

Karnataka, India’s eighth largest economy, accounts for around 5%

FDI, highlight the State’s robust financial network. Karnataka, India’s eighth largest economy, accounts for around 5%
of its national income.The State has been ranked first by the World Bank for its

of its national income.The State has been ranked first by the World Bank for its investment climate in a study that has analysed 16 States using 46 investment parameters (see accompanying image from the report ). The fact that one new MNC invests in the State every week is testimony that Karnataka is the leading investment destination in the country. The reasons that make Karnataka an attractive destination for investors can be summarised in brief here, as details follow in separate sections later.

• Excellent infrastructure

• Readily available land in a land bank

• Highly skilled technical manpower base

• Large number of technical and research institutes

• Techonology savvy work force with proficiency in English

• Cultural diversity and cosmopolitan urban centres

• Advanced healthcare facilities

• Connectivity through air, rail, sea and road network integrated with the rest of the world

• A State with effective law and order

• Liberalised economy with single window clearance for investors

• Excellent logistics support

Home to 700 MNCs and 87 Fortune 500 companies, Karnataka is a State that is already well known on the global investment space. In fact, the term ‘Bengalored’ used to denote jobs moving from the US to India due to the presence of the first outsourcing centres in the nineties. Since then, however, the city has moved up the value ladder to become the first stop destination for cutting edge research in high technology areas like aerospace engineering design, biotechnology, nanotechnology etc.With more than 5300 patents filed from centres in this city, Bangalore now forms the fourth largest technology cluster in the world.

In terms of FDI inflows, Bangalore centre which accounts for FDI investment in Karnataka, ranks third in the country after Mumbai, India’s financial capital and Delhi, the national capital. Contributing to 6.35% of the total FDI flows to India over the period April 2000 till December 2009, Bangalore has brought in $ 6.7 billion, an amount higher than the Ahmedabad, Chennai and Hyderabad centres.

In terms of foreign technical transfer approvals, over the period 2001-2009, Karnataka stands fourth in the country, accounting for a 6.51% share. Maharashtra with Mumbai as the country’s financial and business capital leads in this regard, while Tamil Nadu and Gujarat rank marginally ahead of Karnataka in foreign technical collaborations.

Even with respect to domestic investment, the State is amongst the leading destinations. Amongst the 35 States and union territories, it ranks sixth in India in terms of the number of Industrial Enterpreneur Memorandums filed during the period April 1991 till January 2010 , an indicator of the investment intentions in the State. From January 2006 till January 2010, a total of 927 investment proposals were approved in the State amounting to more than Rs. 4.5 billion – this comprises 9.1% of the total investment proposed in the country during this period.

RBI’s -

     

Percentage

Regional

Office2

State covered

Amount

(Rs. in

FDI Inflows

US$ in

with FDI

inflows (in

crores)

million

rupee terms)

   

(from April 2000 to December 2009)

Mumbai

Maharashtra, Dadra & Nagar Haveli, Daman & Diu

168,442.62

37,803.12

35.89

Delhi

Delhi, Part of UP and Part of Haryana

91,077.15

20,144.47

19.4

Bengaluru

Karnataka

29,789.25

6,736.95

6.35

Ahmedabad

Gujarat

27,927.48

6,328.95

5.95

Chennai

Tamil Nadu,

23,819.42

5,299.34

5.07

Pondicherry

Hyderabad

Andhra

20,043.49

4,531.91

4.27

Pradesh

Karnataka has an investor friendly supportive government.The Karnataka Udyog Mitra, set up more than a decade ago, works as single contact point for all investors - from receiving a proposal to ensuring its implementation KUM is actively working with the investors at all stages. The State Level Single Window Clearance Committee and the State High Level Clearance Committee (for investments greater than Rs. 50 crore) have been working to clear proposals in a speedy manner.

The vibrant, growing economy also generates considerable resources internally.The State has a wide network of banks, the number of branches has been growing to cross 5,600 in 2008. All major domestic and foreign banks have their branches in the State, to tap the funds flows and credit needs of the economy.

major domestic and foreign banks have their branches in the State, to tap the funds flows

The amount of deposits in scheduled commercial banks in the State exceeds that in other States like Tamil Nadu, Gujarat and Andhra Pradesh, standing at Rs. 209,609 in March 2008. Bank credit that had been growing faster than the deposits during the boom years, slowed its rapid rise in 2008 (see graph) and stood at Rs. 197, 630 lakh in March 2008.

Investment from domestic and foreign sources is set to rise rapidly in 2010-11 as the State government has put in a series of measures to smooth the progress of implementation of projects. One of the most important steps taken has been the creation of a 50,000 acre land bank in various locations across the State that will ease the path of investors who are struggling with land acquisition problems in other States. In addition, the boost to infrastructure is another part of the government’s comprehensive and coordinated strategy to facilitate investment in the State. Karnataka, already on the global radar for its positive investment climate, will maintain its lead compared to other States as the No.1 investment destination in the country.

Karnataka:A thriving industrial State The State’s industrial profile, in terms of growth in production, investment approvals et al is well-charted, from manufacturing units in various sectors, to district-wise distribution of industrial activity.

Karnataka is one of India’s leading industrial States, contributing almost 8% to the national manufacturing income. It has a long tradition for supporting industrial entrepreneurs and encouraging innovation and research and its strong and vibrant industrial base combines the intrinsic strengths of large industrial public sector undertakings, large and medium privately owned industries and a wide range of small-scale units. While on one hand, the State is the aerospace hub of the country operating on cutting edge engineering and IT capabilities, on the other, its garment sector dominated by small units contributes 20% to the national garment output.

Karnataka’s industrial sector, as measured by the Index of Industrial Production IIP, rose by 4.72% in 2008-09, lower than the previous two years due to the global slowdown. The IIP comprises mining, manufacturing and electricity production and these three sectors grew at 7.4%, 5.51% and 0.08% respectively. The low growth in electricity generation has been a cause for concern, given the demand stemming from the rapid growing economy. The State government has therefore planned power projects that will enable the State to be energy sufficient by

2013-14.

Looking at the sub-sectors in the IIP, 8 of the 22 sub-sectors recorded high growth of more than 20% in production in 2008-09, a year in which the economy had been hit by the global slowdown:

Manufacture of Publishing and Printing Materials, Manufacture of Furniture, Manufacture of Leather Goods, Manufacture of Rubber & Plastic Products, Manufacture of Office, Accounting & Computing Machinery, Manufacture of Coke, Refined Petroleum Products & Nuclear fuel, Manufacture of Paper & Paper Products, Manufacture of Food Products & Beverages.

Products, Manufacture of Food Products & Beverages. Investment intentions slowed down considerably in 2008-09
Products, Manufacture of Food Products & Beverages. Investment intentions slowed down considerably in 2008-09

Investment intentions slowed down considerably in 2008-09 (see tables below) as the global financial crisis followed by the recession around the world hit investment plans. However, by March 2010, there were clear signals of a firm recovery in the Indian economy and capital investment plans shelved during the crisis have since picked up steam once again. Karnataka will therefore see a revival in investment in the current year 2010-11 as the basic fundamental strengths of the economy – rich resources, progressive policies, stable State, supportive ecosystem for entrepreneurship and investment- continue to stay in place. The compound annual growth rate of investment proposals above the value of Rs. 3 crore has been 25% over the period 2001-02 to 2007-08 and with the renewed vigour of the State policies and support, this growth is set to rise further in the next five years.

According to estimates based on NSSO data, the Indian Industrial Skyline shows that the sector registering the highest value of production is refined petroleum products, followed by basic iron and steel.This reflects the presence of the Mangalore Refinery and Petrochemcials Ltd. in Mangalore, which has a design capacity to process 9.69 million metric tonnes per annum. It is the only Refinery in India to have 2 Hydrocrackers producing Premium Diesel (High Cetane) and also the only Refinery in India to have 2 CCRs producing Unleaded Petrol of High Octane.The State is the third largest producer of steel in the country, as it has the second largest iron ore reserves in India. Karnataka has the capacity to host a manufacturing steel base for more than 100 Million Tons capacity per annum and is gearing up to provide all the infrastructure support to enable full utilisation of its resources. The sector producing the third highest value of production includes firms involved in manufacturing meat, fish, fruits, vegetables, oils and fats & other food products.With fertile soil and six agro climatic zones the State has high volumes and variety of produce, while marine produce is abundant along the long coastline. Karnataka has large resources that support the food

of produce, while marine produce is abundant along the long coastline. Karnataka has large resources that

processing industry - almost 6% of India’s livestock, 12% of India’s fruits, 8% of vegetables, 14% of groundnut etc. Karnataka has the potential to merge as the largest hub for food processing in the country.

In terms of the number of manufacturing units, the largest sector involves tobacco products, followed by wearing apparel(except for fur) and manufacturing of meat, fish, fruits, vegetables, oils and fats and other food products.The State is the second largest tobacco producer in the country, contributes 20% to India’s apparel industry and 8% of India’s garment exports. All these sectors have a large presence of small scale firms; in fact textiles and food products have the largest number of MSME units in the State. The table below detailing the industry profile of the State shows the wide range of products being manufactured in Karnataka.

While industrial activity is spread out across all districts of the State, the top ranking districts are Dakshin Kannada, Bangalore, Mysore, Bangalore Rural, Belgaum and Bellary.These six districts account for more than three-fourths of the total value of industrial production as the large, capital intensive industries are based in these districts.Thus, in terms of the number of manufacturing units, activity is less concentrated and the top five districts account for just 40% of total units. Looking at the employment generated, the top six districts contribute to 50% of the total manufacturing employment in the State : Bangalore, Dakshina Kannada, Shimoga, Bangalore Rural, Chikmagalur,Tumkur. This reflects on the smaller more labour intensive units in districts like Shimoga, Chikmaglur and Tumkur, centres of various agro-based industries, auto component units etc.

The Government of Karnataka data estimate that Karnataka has a strong base of over 3.89 lakh registered units in Small Scale Industries with investments of about Rs 100 billion, employing more than 22 lakh persons. Despite the global slowdown in 2008, MSME investment rose by 8.4% in 2009-10. While textiles and apparels form the largest product segment, food products, articles of wood and cork, maintenance and repair of vehicles and motorcycles and fabricated metal products form the next four largest segments in Karnataka, complementing the well-diversified industrial landscape in the State.The very fact that global procurement centres are located in Bangalore is indicative of the concentration, quality and strength of Karnataka endowments.There are 20 MSME Industrial Clusters that focus on various products – food products, leather goods, light engineering, power looms, dal and oil mills, garments, machine tools etc.There are 10 handloom clusters located in Bagalkote,

Chitradurga, Dharwak, Udupi, Koppal,Tumkur, Mysore, Bangalore, Kolar, Gulbarga and Belgaum districts and more than 140 handicraft MSME clusters

Key industrial clusters in Karnataka

• IT/ITeS cluster in Electronic City and Whitefield, Bangalore

• Biotech park/cluster in Electronic City, Bangalore

• Machine tool cluster at Peenya industrial eState

• Textile cluster at Doddaballapur

• Foundry cluster at Belgaum

• Industrial valve cluster at Hubli-Dharwad,

• Auto component cluster at Shimoga,

• Coir clusters at Hassan

• Coffee production & processing cluster in Madekeri.

Karnataka, as mentioned earlier, is one of India’s leading industrial States and the following table presents the relative importance of the State in various industries, compared to the other industrial States of the country. Compared across 10 industries, the State performs well on each count, showing the well-diversified industrial base.

Karnataka – A robust infrastructure

The status and proposed projects in the infrastructure in the State: Power sector, Irrigation network,Transportation covering roads, rail network, air and ports and SEZs growth and projects underway, are pointers to a State ‘hungry’ to achieve milestones in development.And there’s more – From urban development to the Development Corridor Initiative.

Karnataka aims to double investment in infrastructure to meet the needs of a fast growing economy. Private sector partnership is being actively sought by an investor-friendly government – more than 200 projects worth Rs. 135,000 crore are in various stages of implementation.

Power: The State has a long and enviable history in power generation – Asia’s first major hydro-electric generating station was set up at Sivasamudram as early as 1902 for commercial operation, at a time when technology was still in its infancy.The longest transmission line at then highest voltage in the world, was constructed to meet the power needs of mining operations at Kolar Gold Fields. Karnataka has maintained its tradition of being at the forefront of technology and the Government of Karnataka has always emphasized development of renewable energy, with Karnataka Renewable Energy Development Corporation Ltd (KREDL) as its nodal agency championing the green agenda in

with Karnataka Renewable Energy Development Corporation Ltd (KREDL) as its nodal agency championing the green agenda
with Karnataka Renewable Energy Development Corporation Ltd (KREDL) as its nodal agency championing the green agenda

the energy sector.The three pronged strategy: Energy Sufficiency, Energy Efficiency and Green Clean Power – drive the power policy of the State. Karnataka, a pioneer in wind power projects, stands fourth in the country in wind energy generation. One of the first States to undertake significant reforms in the power sector in the nineties, Karnataka is now pushing for innovative high technology ways to generate electricity efficiently – the Electronic City in Bangalore is India’s first pilot project in Smart Grid, leveraging Karnataka’s IT capabilities to the hilt.The State’s Semiconductor Policy 2010 is one more step that reflects on Karnataka’s commitment to new technology driven efficient energy solutions in the State.

In accordance with the Industrial Policy’s Suvarna Karnataka Corridor Development Initiative, power generation zones are being set up in Raichur, Bellary, Bijapur and Chitradurga districts, while sugar and co-gen zones proposed in Bidar, Belgaum, Bagalkot, Shimoga and Mandya districts will aim to effectively tap the natural resources in these areas to the maximum. In order to address the problem of energy shortage, on going projects planned are slated to bring about energy sufficiency by 2013-14 with a capacity addition of 23,523 MWs in the next four years. An additional 4200MW is planned through tapping non-conventional energy sources.The State’s proactive and investor friendly government is working in tandem with the private sector to ensure that Karnataka’s growing energy requirements are met with ease and efficiency. Karnataka today is a power deficit State. At peak hours in the summer months, the power shortage ranges from 1,000 MW to 1,500 MW.

Energy Shortage

In order to facilitate private investment in development of conventional energy resources, Power Company of Karnataka Limited (PCKL) was formed in the year 2007. PCKL facilitates the entry of private players in power projects in the State and also take up Energy Trading on behalf of all Distribution Companies.

The main source of energy in Karnataka is thermal with the two main power plants at Raichur and Bellary. Hydel power projects on the rivers of Sharavathi, Kalinadi,Varahi, Ghataprabha, Almatti etc. form the second most important source, contributing 37% to total power generation in the State.The State has also been successful in harnessing wind energy, that makes up 6% of power generation. Kaiga Generating Station in Uttar Kannada district is one of India’s six atomic power plants; in operation since 2000, the plant has four units and in November 2009, approval was granted by National Power Corporation for expansion in the

Second Phase that will generate 1400 MW of power when completed.

TRANSMISSION:The power requirement of the State are met through drawing power from the grid and is handled entirely by Karnataka Power Transmission Corporation Limited (KPTCL) which transmits this power from 400 KV and below up to 66 KV. Beyond 66 KV distribution companies handle the transmitted power and distribute to the consumers. Karnataka has the privilege of first transmission line of 78 KV in India from Shivanasamudram generating station to Kolar Gold Fields (KGF) in the year 1902 and has built up a transmission network of 36,492 Ckms with 874 stations.

DISTRIBUTION: Karnataka was the first State in the country to separate distribution from transmission and 4 distribution companies namely BESCOM, MESCOM, HESCOM & MESCOM were started and later CESCO was started.The power transmitted to the distribution companies are distributed to 1.7 crore consumers across various categories.

The distribution companies have 324 33 kV sub-stations, 2,00,452 kms HT lines, 4,47,013 km of LT lines and 3,24,757 distribution transformers. Over the years, Karnataka has built up an efficient and robust distribution in the State which is considered one of the best in the country.

Non-conventional energy sources are also being tapped for optimal power generation in the State, an additional 42,00MW is planned through these sources.

During 2008-09 a number of initiatives were taken up by the

government to address the severe power shortage resulting from inadequate monsoon

• MOU was signed with Chhattisgarh State for putting up 1200 MW planned at the pit-head in Zanzgir, Champa District and a 1600 MWs plant at the pit-head in Jangir,Champa District.

• Work started on 400 MW hydro electric plant at Gundia.

• KPCL in joint venture with BHEL started work for 2400 MW Coal based power plant at Yermarus & Edlapur.

• 3 MW Solar power projects each at Kolar, Belgaum and Raichur were undertaken by KPCL.

• Commissioning of 500 MW of Bellary Thermal Power Station (BTPS) unit-I.

• 230 MW of Varahi Hydro Electric Power Plant Commissioned.

• Renovation and modernization Unit IV of Nagazari Hydro power house which has started producing 15 MWs.

• Agreement with NTPC was signed to put up 4000 MW Ultra

Nagazari Hydro power house which has started producing 15 MWs. • Agreement with NTPC was signed

mega power project at Kudgi and land acquisition process initiated.

• Power Company of Karnataka Limited got the approval for setting up plant through private investors at Jewargi in Gulbarga District for 1320 MW and process of land acquisition started.

• Government land was allotted in Ghataprabha of Belgaum District for establishing 1320 MW power plant through Private Investment.

• PCKL invited bids for 2500 MW of power plant for procurement of energy on long term basis through competitive bidding route (Case-I) under Merchant power plants.

• It also invited bids for 5 MW power plants at Taluk level for decentralised power production in each taluk.

• Wind power project of 500 MW also put up by NTPC in collaboration with KPCL under joint venture.

• Power was purchased from IPPs and through energy exchange.

• All the distribution companies went for roistering of power supply and supplied a minimum of 6 hours of 3 phase and 6 hours of single phase to rural areas during this period.

• From the non-conventional energy sources 422 MW capacity was also added.

The State’s proactive investor-friendly policies have attracted many investors in the recent past as well:

• Two gas pipeline projects of Relogistics Infrastructure and Gas Authority of India Ltd have got in-principle approval from Karnataka State government.

• Reliance (Relogistics) will lay 455-km of gas pipeline through Chennai-Bangalore-Mangalore at a cost of Rs 6,796 crore, GAIL will lay 746-kms of gas pipeline from Dhabol to Belgaum and Bangalore at a cost of Rs 4,544 crore.These pipelines are expected to help the industries as well as the State's proposed gas-based power plants along the pipeline route.

• Oil refinery project at Rs 8,655 crore in Dakshina Kannada is mooted by Mangalore Refinery and Petrochemicals Ltd,

• Solar energy producer Azure Power plans to start a solar plant each in Kolar and Bagalkot and add 12 MW to the grid in 18 months. Azure would invest between Rs 200 crore and Rs 225 crore in both the plants.

• Karnataka Power Corporation may build a 2.5 million metric ton-a-year liquefied natural gas import terminal at Karwar port in Karnataka to help fuel a new plant.The terminal will supply gas to the planned Tadadi plant, which is expected to have a capacity of 2,100 megawatts that will later be doubled to 4,200 megawatts.

• In June 2009, the government also approved two captive power plants - M/s. Athani Farmers Sugar Factory Ltd. in Belgaum for a 24-MW co-gen power plant and M/s. SriKumarswamy Mineral Exports in Bellary District for a 12 MW captive power plant.

• Shree Renuka Infra Projects has been given approval to set up a thermal power plant at an investment of Rs 5,500 crore

• Engineering and construction major Larsen & Toubro (L&T) plans to set up a 1,600 MW power plant in Karnataka and has bid under the PPP model along with KPCL for a coal-based power plant involving an investment of Rs 10,000 crore.

• Bharat Heavy Electricals has been contracted by KPCL to set up an eco-friendly grid-interactive solar power plant of 3MW capacity, on turnkey basis.The company will invest Rs. 420 million in the solar photovoltaic power plant at Yapalaniddi village in Raichur district.The scope of work in the contract envisages engineering, manufacture, supply, erection and commissioning of the equipment, besides operation and maintenance of the plant for three years thereafter.The plant will be completed in a schedule of eight months .

Under the Annual Plan 2010-11, details of the proposed power projects are as follows:

• Raichur Thermal Power Station - KPCL has taken up the new unit of 250 MW capacity plant for implementation by utilising the infrastructure facilities available in RTPS at a project cost of Rs. 1046 crore.The annual energy generation would be 1752 MU.

• Bellary Thermal Power Station Unit – II - KPCL is adding another unit of 500 MW capacity at BTPS by utilizing the infrastructure facilities available in BTPS at a cost of Rs. 2261 crore.The gross energy generation would be 3504 MU per year.

• Grid Connected Solar Photo Voltaic Power Plants- KPCL is establishing Grid connected Solar Photo Voltaic power plants in three districts viz. Kolar, Raichur and Belgaum each of 3 MW capacity.

• Gundia Hydel Scheme (400 MW) - The proposed Gundia Hydel scheme with an ultimate installed capacity of 400 MW is located in Hassan / Dakshina Kannada District. It would generate 1002 MU of energy per annum.The cost of the project is Rs.1333.00 crore

• Yeramarus (2 x 800 MW) & Edlapur (1 x 800 MW)Thermal Power Stations

• Bellary Thermal Power Station, Unit-3, (1 x 500 MW)

• Gas Based Tadadi Combined Cycle Power Plant, (2100 MW)

• Shivanasamudra Seasonal Scheme : (345 MW)

• Additional Unit at Munirabad Hydro Power Station: (10 MW)

(2100 MW) • Shivanasamudra Seasonal Scheme : (345 MW) • Additional Unit at Munirabad Hydro Power

• Wind energy project : (500 MW)

Irrigation: About 28.3% of Karnataka’s net sown area is served by irrigation facilities, mainly tube wells and canals.While 31.32 lakh hectares were irrigated in 2007-08, the cumulative irrigation potential created under major, medium and minor irrigation (only surface water) up to the end of 2009-10 is 34.84 lakh hectares, as against an estimated total irrigation potential of 45 lakh hectares comprising of 35 lakh hectares under major and medium irrigation and 10 lakh hectares under minor irrigation projects. So far 47 Major and medium projects which have been completed have created irrigation potential of 8.96 lakh hectares. 25 major and 53 medium irrigation projects which are under implementation, have so far created 15.32 lakh hectares of irrigation potential. An additional irrigation potential of 0.65 lakh hectares is anticipated during 2010-11 through major and medium irrigation projects, consisting of 0.48 lakh hectares under plan projects and 0.17 lakh hectares under projects pending approval.Through the Upper Krishna project alone, a potential of 0.10 lakh hectares is anticipated in 2009-10. Under minor irrigation (surface water), the additional potential, which will be created this year, is 0.10 lakh hectares, leading to a total of 0.75 lakh hectares from the three categories .

The Minor Irrigation Department has established the Karnataka Jala Samvardhana Yojna Sangha for monitoring and speedy implementation of minor irrigation works with aid from the World Bank. Under this project, the department will rejuvenate 2000 tanks in nine districts namely, Kolar,Tumkur, Bidar, Bellary, Chitradurga, Bagalkote, Haveri, Raichur and Koppal.Water Users Co-operative Societies have been established in the command areas and they are empowered to collect water rates.

During 2010-11, 14 major and medium irrigation projects including Upper Krishna Project Stage-I and II, Karanja, Bennethora, Amarja, Ghataprabha 3rd Stage, and Ubrani-Amrutapura would be completed and 56,000 hectares of land (more than 1.35 lakh acres) would be provided with additional irrigation. Besides, field channels would be constructed in 2 lakh hectares of land. In 2010-11, Rs. 4,256 crore would be provided for major and medium irrigation projects including Accelerated Irrigation Benefit Programmes.

Transportation

Road Network: Karnataka is a State well connected to all parts of India through 14 National Highways (NH), accounting for about six per cent of total NH network in India. District centres are connected to each other through 114 State Highways (SH) and the total road network of NH, SH and district roads is about 52,000 Kms.

The Government intends to upgrade all the State Highways from single lane roads to double lane roads in the coming three years, a plan that calls for total expenditure of Rs. 3000 crore.

Factors such as high growth in traffic, movement of High Load Vehicles, need for increased connectivity with interiors as well as other States, risk of road accidents, high transit time due to traffic jams etc. have precipitated the need for high investment in road development.The Task Force set up by the Karnataka government in 2000 had recommended higher level of private sector participation in construction of new road links, bypasses and reconstruction of bridges.The ‘Policy on Road Development’ formulated in 1998 has been replaced by a new policy in 2009 which stresses the need for capacity building, institutional strengthening and facilitating public private partnerships.

Under the present programmes, development of 66,000 km of core roads has been planned in three phases:

• Phase I - 10,000 kms that are organised in 52 packages

• Phase II - 40,000 kms

• Phase III - 16,000 kms

Further, 12600 Km village roads have been earmarked for development. Under the policy, the State Highways Authority has development and planning rights over a length of 1 km on each side for 2L

carriageway, 2 kms on each side for 4L carriageway and 3 km on each side for 6L carriageway.The first rights of development should be given to the developer at the rate of one acre for every 5 kms to provide for way side amenities. In addition

• A corpus fund of Rs. 500 crore to KRDCL is being proposed

• Multilateral Agencies will be tapped for funding

• Banks being roped in to fund the investment.

• KRDCL will work as a partner with a concessionaire for 66,000 km Core Road Network.

• KPWD, KRDCL, IDD will provide all necessary support for implementation of project.

• An amount of Rs. 50 crore will be provided to make a four-lane road between the twin cities of Hubli -Dharwar.

• An amount of Rs. 50 crore will be provided to make a four-lane road between

PPP in road sector development - Public Private Partnership models such as ‘Build-Operate-Transfer‘ (Tumkur-Nelmangala, Elevated Expressway to E-City) and Annuity projects (Bangalore- Maddur) are being proposed for road development. Karnataka government is also planning to open the work of rural roads to private sector .

Ports: Karnataka has a coastline of around 300 kms between Karwar (at the north) and Mangalore (at the south) flanked by Uttara Kannada and Dakshina Kannada districts, with favourable and strategic port locations.The entire coastal belt as well as the adjacent districts are rich with mineral and natural resources and hence offer very good scope for industrial investment.This belt is well connected by National Highway and the Konkan Railway broad gauge line, both running parallel to the coastline.

The 10 minor ports of the State are Karwar, Belekeri,Tadri, Honnavar, Bhatkal, Kundapur, Hangarkatta, Malpe, Padubidri and Old Mangalore. Out of these ten ports, Karwar is the only all weather port while the other nine are the reverine anchorage lighterage ports.

Major ports New Mangalore Port Karwar Port
Major ports
New Mangalore Port
Karwar Port

The Karwar port being one of the best natural harbors, is being upgraded under Port Development Project and on its completion will offer better and increased berthing and docking facilities to large sea faring vessels.

Karnataka Port Policy aims at the development of port infrastructure and facilities creation through private investment which would in turn boost the industrialization and support maritime related industries.While the policy lays down the privatization programme through BOOST model and provides full freedom for fixing and revising tariffs, the Government will undertake acquisition and allotment of land and provide package of incentives and concessions on case to case basis.

 

(in ‘000

tonnes)

Name of the Port

2005-06

2006-07

2007-08

2008-09

2009-10

(upto

 

Sept.

2009)

Karwar Port

2477.908

2383.2

2715.76

2956.081

828.641

Belekeri Port

1335.939

4054.61

6084.98

1908.474

1151.353

Malpe Port

16.031

16.228

14.281

6

404

Mangalore

82.762

119.05

75.617

88.036

13.463

(Old) Port

Total

3912.64

6573.09

8890.63

4958.591

1993.861

Source: Karnataka Ports & Inland Water Transport

While the traffic handled at Karnataka ports declined in 2008-09 due to the global slowdown, the economic recovery in 2010 has brought back the urgent need to upgrade the capacities at ports in the State.

Tadadi seaport project – An all-weather multi-purpose port is proposed at Tadadi in Uttara Kannada district on a public-private partnership model. About 1,400 acres of land have been earmarked for the Tadadi Port project of the 1,820 acres available with the Government.The port is slated to have a design capacity of 34.25 million tonnes (MT) per annum. KSIIDC is the nodal agency for the implementation of the project and the project is expected to cost Rs. 3,000 crore.

Air Transport

Bangalore and Mangalore are the key airports in the State. Presently, international flights from Mangalore International Airport operate to countries located in Middle East, while the main airport, the Bangalore International Airport, is well connected to domestic and global destinations.The Bangalore International Airport (BIAL) developed under a Public Private Partnership framework at Devanahalli, in the outskirts of Bangalore started operations in May 2008. A State-of-the-art international airport, BIAL is the first airport to be built in the country on a PPP mode and has been a resounding success.

airport, BIAL is the first airport to be built in the country on a PPP mode

The Bangalore Airport has been handling an increasing number of aircraft, passengers and freight, as economic activity has raised demands for higher traffic.

as economic activity has raised demands for higher traffic. Minor Airports/Low Cost Airports: New minor airports

Minor Airports/Low Cost Airports: New minor airports proposed at Hassan, Mysore and Gulbarga are at various stages of approvals/ completion. Government and private sector companies have proposals for low cost airports costing about US$4.8 million per airport at multiple locations in State.The government plans to develop 10 airports, 13 airstrips and 28 heliports in the State, covering the entire State with quick access to air transport.

The status update on Minor Airports in Karnataka is as follows:

Mysore Airport: 175 acres of land in Mandakalli near Mysore has been handed over to AAI for revival and expansion, the MOU was signed in 2005 between the Airport Authority of India / Government of India and Government of Karnataka.While addditional land is being acquired for shifting of National highway, construction of the airport is under progress. Mangalore Airport: 187 acres of land has been handed over to AAI for expansion and development, up gradation work is under progress and the government is committed to acquiring additional land for extension of the runway and construction of approach road, if needed. A new runway for operation of AB-320 type of aircraft in all weather conditions is under construction. Gulbarga Airport: 567 acres have been acquired near Sreenivasa Saradagi village in Gulbarga. Hassan Airport: 474 acres and 10.5 guntas of land have been allotted in Bhuvanahalli village near Hassan abutting the Bangalore-Mangalore National Highway. Land acquisition has been completed and the Public Works Department of Government of Karnataka has been assigned to develop this airport on PPP basis and to seek approvals/clearances from GOI and other statutory authorities. Belgaum Airport: Government Order was issued in October 2006 to acquire 370 acres of additional land for expansion and development.While the land acquisition is under progress, AAI is upgrading the Runway,Terminal Building and Apron Taxiway. Bijapur Airport:The Karnataka government has signed a memorandum of understanding (MoU) with infrastructure development company, Marg, for developing a green field airport at Bijapur.The airport will initially cater to smaller aircraft like ATR 72 or ATR 42. The government has already initiated steps to develop another greenfield airport at Shimoga and upgraded Mysore airport. Steps are also on to expand Hubli and Belgaum airports in north Karnataka.The State government is also in talks with the Indian

Air Force to give permission to use airport at Bidar.

Railways: With the rail network of 3000 kilometers, Karnataka is well connected with other parts of the country. Intra State rail connectivity, especially on the key lines for passenger and freight movements, needs to be augmented.There are extensive projects being developed under the PPP mode in the State for the expeditious development of key railway lines such as gauge conversion of Hassan-Mangalore freight line, Hubli-Ankola lines etc.

K-RIDE is a Special Purpose Vehicle between Sate Government, Railways and other investors with the objective of developing and implementing rail infrastructure projects in Karnataka with a private sector participation wherever found feasible / viable.

Ongoing projects: Presently 6 projects at a cost of Rs. 2029.00 Cr. (969 km) are under implementation by Railways

• Sholapur – Gadag (GC)

• Shimoga – Talaguppa Gauge Conversion Project.

• Kottur-Harihar New Railway Line

• Bangalore-Ramangaram-Mysore Railway Doubling

• Bidar-Gulbarga New Railway Line

• Munirabad-Mehboonagar New Railway Line.

• Road over Bridge / Road under Bridge (RoB/RuB)

In addition, Hassan

conversion is under progress.

Sakhleshwar

Mangalore line gauge

The Karnataka Budget 2009-10 also proposed the extension of BARL Railway Network to implement a super fast train from the city to Bangalore International Airport under PPP mode. In addition to the projects above raising the rail network in the State, other related projects include those in urban infrastructure:

Metro rail and mono-rail projects in Bangalore that are already underway and the Mysore Metro Rail Project where the preliminary feasibility has been considered.

Special Economic Zones (SEZ) are specifically delineated duty-free enclaves for promoting exports.The SEZ Act 2005, enunciated by the Government of India and the consequent SEZ Rules 2006 govern the establishment of SEZs in the country.The Karnataka State SEZ Policy 2009 has been detailed in section 10 and shows the commitment of the government to support and

facilitate setting up of SEZs in Karnataka. So far, the Board of Approval has granted formal approval to 52 SEZ projects in the State with investment of around Rs 29700 crore and employment potential of about 11 lakh.

• Out of 52 SEZs, 41 are IT/ITES, 3 are B.T and 8 are Product Specific SEZs.

and employment potential of about 11 lakh. • Out of 52 SEZs, 41 are IT/ITES, 3
and employment potential of about 11 lakh. • Out of 52 SEZs, 41 are IT/ITES, 3

• 28 SEZs have been notified and 15 are operational.

• Investment made in notified SEZs is Rs 8560 crore, which includes Rs 2600 crore of FDI.

• Exports from the SEZ during 2007-08 totalled Rs 1673 crore and during 2008-09 were Rs 7227 crore.

Important SEZs in the State include :

• Sector-specific SEZ for Pharma & Biotechnology at Hassan

• Sector-specific SEZ for Food Processing and Agro-based industries at Hassan

• Sector specific textile SEZ at Hassan

• IT SEZ at Mangalore

• Coastal SEZ at Mangalore

Karnataka - Its urban infrastructure

This section examines the urbanisation scenario in the State and presents data on the cities in Karnataka – demography, consumer markets, employment trends etc. It highlights the plans of the government to develop infrastructure in Tier II and III cities and in the major cities and also briefly presents Bangalore as the Expo-Hub of the country.

Karnataka ranks the fourth most urbanised State in India, 34 % of the State’s population lives in urban areas. Karnataka’s urban population is likely to grow by 35% in the next 20 years and reach 2.8 crore in 2026 from the current 2.08 crore.The three major cities of the State Bangalore , Mysore and Mangalore account for over 40 per cent of its urban population:

• Bangalore, the capital and largest urban metropolis of the State

• Mysore, emerging as an alternative destination to Bangalore in service and tourism sectors

• Mangalore, with its ports, educational institutes, hospitals and banks, is fast emerging as a hub in services, logistics and manufacturing.

Bangalore stands out as the most affluent city of the State, with 14% of its population in SEC A category. Not only is the market size of Rs. 40,008 crore ten times more than other cities in Karnataka, the population is in tune with global standards and consumer products. As the main economic centre of the State, Bangalore has seen the highest employment generated compared to other States over the decade 1991-2001. However, this has led to a significant burden on the urban infrastructure and the proposed projects to cater to the increased demand are detailed in the section below.

Profile of key cities in Karnataka

City /

Population

Urban

 

Annual Total

 

Annual Total

Indicator

Households

Household

Household

 

Income

Savings

   

(Number)

   

(Rs. Crore)

Bengaluru

6,763,073

1,749,845

   

60,185

 

19,177

Belgaum

1,109,580

238,954

   

5,880

 

1,509

Mysore

1,075,977

253,988

   

7,038

 

2,376

Gulbarga

1,007,125

185,079

   

4,551

 

805

Mangalore

851,843

181,682

   

5,644

 

1,734

Source: City Skyline of India 2008-09, Indicus Analytics Note: Savings and Income are for Urban Households

 

Bangalore, the most affluent city of Karnataka

 

Socio- economic

SEC

SEC

 

SEC

SEC

Classification

A

B

 

C

D & E

Bengaluru

14%

23%

 

30%

33%

Mysore

11%

21%

 

29%

48%

Mangalore

5%

20%

 

27%

40%

Consumer Market Size

 

City

Market Size*

Market Size

Growth Rate#

   

Rs. crore

 

%

Bengaluru

 

41,008

 

13

Mysore

 

4,662

 

12

Belgaum

 

4,371

 

12

Mangalore

 

3,910

 

12

Gulbarga

 

3,746

 

11

Source: City Skyline of India 2008-09, Indicus Analytics

Note: *Market Size-Total annual consumption expenditure (in Rs. crore) of all urban households. # Growth rate between annual total expenditure of urban households between 2006-07 & 2008-09

of all urban households. # Growth rate between annual total expenditure of urban households between 2006-07

Employment Trends

Under the Suvarna Karnataka Development Corridor Programme, industrial corridors and zones have been planned across the State, with the objective of accelerating development of industrial growth through infrastructure support.These corridors will benefit many smaller urban areas by raising the core infrastructure such as energy, road and rail linkages and urban infrastructure.The corridor proposes to cover 11 district headquarters and more than 20 major towns along the highways/major roads and rail links.

Emerging Industrial Centers of Karnataka and their features:

Mangalore

• Salubrious climate, congenial environment, rich culture, cosmopolitan lifestyle, excellent health care and education facilities

• Located on the coast of Karnataka at a distance of 357 kms west of Bangalore

• Connected to Bangalore, Cochin and Mumbai by National Highways

• Connected to Bangalore, Cochin and Mumbai by broad gauge railway.

• A Software Technological Park has been established in Mangalore to cater to the needs of IT Industries.

• Presence of IT Giants - Infosys,Wipro.

• Coastal SEZ - ONGC with an investment of 25,000 crore

• Presence of Sector Specific IT SEZ .

• Presence of multinationals and petrochemical giants- BASF India Ltd and Elf Gas Ltd.

• Oil transportation infrastructure - A pipeline for carrying petroleum products from Mangalore to Bangalore.

• Presence of international quality hotels.

• International airport at a distance of 12 KM from Mangalore.

• New Mangalore port provides excellent shipping facilities

• 6 medical colleges, 4 dental colleges, 5 engineering colleges, 6 polytechnics, 70 degree colleges provide skilled manpower. National Institute of Technology, one of the premium institutions of the country, at Suratkal provides excellent skilled training and research facilities.

• Agri resources - cashew, rubber, cocoa, areca nut, tobacco grown on large scale.

Mysore

• A well-equipped export centre will be established at Mysore for exporting industrial products

• Royal City- Salubrious climate, congenial environment, rich culture, cosmopolitan lifestyle, excellent health care and education facilities.

• City of palaces with great potential for heritage tourism and wild life tourism.

• Located 135 kms south west of Bangalore connected by 4 lane express highway. Also connected by broad gauge railway line.

• Bangalore Mysore Infrastructure Corridor project - 6 lane highway under implementation.

• Air strip located at a distance of 7 KM from Mysore and domestic air port under implementation.

• Nearest port – Mangalore at a distance of 265 kms connected by rail and road. Chennai port is at a distance of 460 kms.

• 6 industrial areas with 3872 acres of developed land in the district.Two more new industrial areas being developed around Mysore city.

• Availability of water in plenty and quality power.

• More than 10 private SEZs under implementation.

• Availability of skilled manpower - 5 engineering colleges, 2 medical colleges, 2 dental colleges, technical institutes.

• Presence of IT giants like Infosys,Wipro, L&T etc

• Presence of Research Institutes - CFTRI,DFRL, CIPET.

• Major Industries- Vikrant Tyres, BEML, L&T,TVS, Reid and Taylor, AT&S, Chamundeshwari Silks, Jubilant Organosys Ltd.

• Presence of Five Star Hotels, clubs, water parks, amusement parks, getaways and other recreational facilities.

• Agri resources-Tobacco is grown on large scale

Hubli –Dharwad

• Salubrious climate, congenial environment, rich culture, cosmopolitan lifestyle, excellent health care and education facilities.

• Located on the Bangalore-Pune 4 lane National Highway, at a distance of 410 kms from Bangalore and 675 Kms from Mumbai. National Highway No 63 connects to Karwar and Hyderabad. National Highway 218 connects to Solapur.

• Hubli airport at a distance of 10 kms from Hubli. Belgaum airport at a distance of 50 Kms and Goa airport at a distance of 135 kms.

• Shipping facilities - Karwar port at a distance of 140 Kms is connected by a national highway. Goa port at a distance of 135 kms. Broad guage rail connectivity to Bangalore, Mumbai and Hyderabad and Goa.

• Hubli has an STPI and an electronic city to cater to the needs of electronics and IT industries.

• Education hub- Presence of Karnataka University and the

city to cater to the needs of electronics and IT industries. • Education hub- Presence of

University of Agricultural sciences. 3 engineering colleges, 2 medical college, 1 dental college, 8 polytechnics, and number of graduate and post graduate colleges provide skilled manpower.

• Presence of industries like Kirloskar Electric,Telcon, Murdeshwar Ceramics

• 8 Industrial Areas with 3294 acres of developed land in the district including Growth Centre at Belur, 12 kms from Dharwad on NH-4.

• Presence of star hotels.

• Agri Resources-Red chilli grown in abundance.

Belgaum

• Salubrious climate, congenial environment, rich culture, cosmopolitan lifestyle, excellent health care and education facilities.

• Excellent Connectivity - Located on Bangalore - Pune 4 way National Highway at a distance of 506 kms from Bangalore. Connected to Goa by National high way.

• Connected to Mumbai, Bangalore and Goa by broad gauge railway line.

• Connected by air - Airport at a distance of 20 kms from Belgaum city.

• Good shipping facilities - Nearest port, Goa is at a distance of 135 kms. Karwar port at a distance of 160 kms and Mangalore port at a distance of 445kms.

• Foundry Cluster at Belgaum offers excellent scope for Engineering Industries

• Good infrastructure - 4 industrial areas in the district with 289 acres of developed land.

• Availability of skilled manpower- 4 engineering colleges, 2 medical college, 1 dental college, 2 management institutes ,12 polytechnics, and other degree colleges provide necessary skilled manpower.

• Presence of major industries -INDAL Aluminium Factory,Tata Power, Forbes Gokak, many sugar industries.

• Agri Resources- Sugarcane, Cotton,Tobacco

Tumkur

• Tumkur district is located north-west of Bangalore at a distance of about 70 kms.The district is bounded by Mandya district in the South; Chitradurga and Hassan districts in the west; Chikamaglur in the northeast and Ananthapura district of Andhra Pradesh State in the southeast direction.

• Tumkur town is the administrative head quarters of the district and is a centre for commercial, business and educational activities.

• It is home to Tumkur University, 4 engineering and 1 medical

college and other institutions of importance.

• The district consists chiefly of elevated land intersected by river valleys.The district is famous for its iron ore deposits.

• Tumkur has good networks of rail and road.The city is situated on the National Highway No.4.

• The city is on the broad gauge train route from Bangalore to Shimoga and Hubli via Kadur.

• Good infrastructure- 7 industrial areas in the district with 1240 acres of developed land.

• Existence of major industries –HMT Watch factory,TVS Electronics,Wipro, Karmobiles, Johnson Tiles, Mysore Cements, Kirloskar Electrical Limited etc.

• Agri Resources- Coconut, Groundnut and Ragi

Kolar

• A landlocked district, Kolar is the eastern gateway to Karnataka. Kolar is popularly known as the golden land of India owing to its famous Kolar Gold Fields.

• Kolar district is located in the southern region of the State of Karnataka. It belongs to the semi-arid drought-prone region of the State.

• The district is bounded by the districts of Bangalore and Tumkur on the west and on all other sides by the districts of the adjoining States of Andhra Pradesh and Tamil Nadu. On the north, it is bounded by Anantapur district; on the east by Chittoor district of Andhra Pradesh and on the south by the districts of Krishnagiri and Vellore of Tamil Nadu.

• Kolar has no airport.The nearest air port to the town is at Bangalore. Bangalore International Airport is at a distance of 85 kms.

• Good shipping facilities- Nearest port, Chennai is at a distance of 330 kms.

• Good infrastructure- 4 industrial areas in the district with 617 acres of developed land.

• Availability of skilled manpower- 2 engineering colleges, 2 medical college, one dental college, two management institutes, 12 polytechnics, and other degree colleges provide necessary skilled manpower.

• Food Park in the district.

• Cultivation of vegetables is becoming more popular in the district.The main vegetables grown in the district are potatoes, tomatoes, brinjal, beans, beetroot, carrot, chow-chow and cabbage. Malur is the prime vegetable growing taluk. Chickballapur taluk is well known for potato cultivation in the State.

.Shimoga

• Salubrious climate, congenial environment, rich Malenadu

is well known for potato cultivation in the State. . Shimoga • Salubrious climate, congenial environment,

culture, and good education facilities.

• Located 278 Kms north east of Bangalore connected by National Highway 206. Also connected by broad gauge railway line.

• Airport is proposed at Shimoga.

• Nearest Port - Mangalore, at a distance of 186 kms connected by National Highway 13 and broad gauge rail, Karwar at a distance of 211 kms connected by National Highway 206.

• 3 industrial areas with 463 acres of developed land in the district developed by KIADB. 3 industrial eStates in district developed by KSSIDC.

• Special Economic Zone for auto components promoted by KIADB is coming up at Machanalahhi, 9 kms from Shimoga on Shimoga - Bangalore National highway.

• Availability of skilled manpower - 1 engineering college, 1 dental college, 8 polytechnics and other colleges & technical institutes. New government medical college sanctioned for Shimoga.

• Major Industries - Mysore Paper Mills,Vishweshwaraiah Iron and Steel Industries, Perfect Alloy Components, Shantala Ductile and Grayiron Foundry Pvt Ltd, Pearlite Liners Pvt Ltd and other alloy casting industries and auto component industries.

• Agri resources - Areca nut, paddy, sugar cane – great potential for areca nut based industries.

Hassan

• Salubrious climate, congenial environment, rich culture, cosmopolitan lifestyle, excellent health care and education facilities.

• Located at a distance of 190 km north west of Bangalore on National Highway 48, connecting Bangalore and Mangalore.

• Famous heritage sites - Belur, Halebid and Shravanabelagola around Hassan city known for world famous sculptures.

• Nearest port - Mangalore, at a distance of 170 kms.

• Land acquired for airport at Hassan. Nearest airports are at Bangalore and Mangalore

• Ideal destination for investment – Presence of sector specific SEZs viz 1.Pharmaceuticals & Biotechnology 2.Food Processing and Agro Based Industries 3.Textiles

• 4 industrial areas with 2184 acres of developed land in the district.

• 2 engineering colleges, 1 dental college, 1 ayurvedic college, 3 polytechnics and 20 other degree colleges provide a large pool of skilled manpower.

• Technology hub - ISRO Master Control Facility at Hassan.

• Spice Research Institute at Sakleshpur.

• Agri resources - Coffee and potato grown on large scale.

Raichur

• Congenial environment and good education facilities.

• Abundant mineral resources like quartz , soap stone offer great potential for mineral based industries.

• Located 416 kms north of Bangalore connected by good road and by broad gauge railway line. Also connected to Mumbai and Hyderabad by rail.

• Nearest airport - Hyderabad at 200 Kms, Hubli Airport at a distance of 324 kms.

• Nearest Port – Goa and Karwar ports at distance of around 500 kms. Mangalore port at a distance of 595 kms.

• 3 industrial areas with 2350 acres of developed land in the district .

• Availability of skilled manpower - 2 engineering colleges, 1 agricultural science college and other colleges and technical institutes.

• Major industries- Raichur Thermal Power Plant with annual generation of 10,000 million units, Hutti Gold Mines, Mysore Petro Chemicals Limited, Raichur Solvents,Vishal Cotspin etc.

• Agri resources- Paddy, cotton and horticultural crops, tremendous potential for agri based industries

Gulbarga

• Gulbarga is located on the northern side of the State.The entire district is situated in the Deccan Plateau and the general elevation ranges from 300 to 750 meters above mean sea level.Two main rivers, Krishna and Bhima, flow in the district.

• Gulbarga is an industrially backward district, but presently is showing signs of growth in the cement, textile, leather and chemical industries.

• It is also very important from tourism point of view, with the most popular tourist destination being the Gulbarga Fort.

• Hyderabad Airport is the nearest airport to Gulbarga city

(225kms).

• Gulbarga is an important station on the Central Southern Railway line.There are daily trains from Bangalore, Mumbai, Delhi and Hyderabad.

• There are frequent buses from Bangalore and Hyderabad to this city. Bangalore and Hyderabad are 610 kms and 225 kms away from Gulbarga respectively.

• Gulbarga has a university and availability of skilled manpower is not a problem with 4 engineering colleges, 6 medical colleges, 8 polytechnics and other colleges & technical institutes.

• Major Industries- ACC Cement Limited,Vasavadatta Cements, Zawar Cements Private Limited Rajashree Cements, Renuka Sugars Pvt Ltd,The Ugar Sugar Works ltd.

Cements, Zawar Cements Private Limited Rajashree Cements, Renuka Sugars Pvt Ltd,The Ugar Sugar Works ltd.

Projects under implementation in the State in urban infrastructure:

Bangalore Megacity Scheme - The Megacity Project envisages the overall improvement in the quality of life of citizens by providing developed infrastructure facilities, modernized transport, road safety, environmental improvements, slum upgradation, easing of traffic congestion by construction of flyovers and under ram, pedestrian subways etc. A total of 54 projects amounting to Rs.800.07 crore have been sanctioned for the Megacity Project. So far, 16 projects have been completed. Subsequently the Megacity Scheme was subsumed in JNNURM.

Accelerated Urban Water Supply Scheme (AUWSP): An upcoming project that the Karnataka Government has given its nod for is the US$ 163 million drinking water project.The Government has decided to extend the 24x7 water supply scheme to the entire city corporations of Hubli-Dharwad, Belgaum and Gulbarga. water supply will be augmented in Hubli-Dharwad City Corporation by taking water from Malaprabha river and from Ghataprabha river for Belgaum city. The major focus of the project is on physical investments in the system, and strengthening of institutions for service delivery. Another set of projects to be cleared by Central government under JNNURM include remodelling of storm water drainages in Byatarayanapura (Rs 117 crore), Krishnarajapura (Rs 118 crore), Rajarajeshwari Nagara (Rs 142.74 crore) and development of 17 lakes (Rs 191.43 crore).

The Chief Minister’s Small & Medium Towns Development Programme was launched in 2009-10 to provide additional grants to smaller ULBs like City Municipal Councils and Town Municipal Councils to improve infrastructure and urban governance in tier II and tier III cities. The total outlay of the programme is more than Rs. 1,400 crore and is expected to be completed within a two year period.

JNNURM – Bangalore and Mysore are the two cities being developed under the central government programme, Jawaharlal Nehru National Urban Renewal Mission.

The Draft Urban Development Policy 2010 for Karnataka has suggested the establishment of the Karnataka Urban Renewal Mission to focus on infrastructure development in small and medium cities as not all the cities in the State are eligible for funds under the Jawaharlal Nehru National Renewal Urban Mission (JNNRUM) scheme. In such a situation, a Karnataka Urban Renewal Mission would help give proper attention to

those cities that are now outside the ambit of JNNRUM.The draft policy has also suggested the establishment of metropolitan planning committee for Bangalore, Hubli-Dharwad and Mysore, and district planning committees in other areas.

Bangalore Metro Project, implemented by the Bangalore Metro Rail Corporation Ltd, covers a length of 33 kms, costing Rs.5,453 crore. The project will be completed by 2011 and will provide the much needed transport infrastructure to the city of Bangalore.The Bangalore Metro has been designed for a capacity of 40,000 PHPDT.The number of passengers expected to travel on the metro everyday is estimated at 10.20 lakh in 2011 and 16.10 lakh in 2021.

ABIDe - Agenda for Bangalore Infrastructure and Development Task Force is an initiative of the Chief Minister Dr. B.S. Yeddyurappa and the Government of Karnataka to build a better Bangalore for its citizens by adopting a new urban planning model, upgrading infrastructure and improving social facilities to create a better environment for a good quality of life.

ABIDe TASK FORCE DELIVERABLES:

• Comprehensive Integrated Development plan for entire Bangalore, wardwise

• (Plan Bangalore 2020) with immediate (2008-2009), medium (2008-2012) and long

• term (2008-2020) objectives and budgeting and financing perspectives as well.

• Review all various existing plans.

• Budget and Financing Plan for Plan Bangalore (Finance Bangalore) that will include increasing Revenues (by increasing per capita revenue of City) and by minimizing dependence on government funds for long term financing (Private Public Partnership, raising of direct funds, Government funding etc).

• Regular Reviewing and overseeing the implementation of the various projects of Plan Bangalore and the agencies involved.

• Make recommendations on the Bangalore governance restructuring (Govern Bangalore).Objective is to reduce multiplicity in planning and create a coordinate structure for execution and financing of Plan Bangalore including the restructuring of Planning. Investment/Financing, Project Execution and Public service Delivery/maintenance of organizational structures of Bangalore City with a view of ensuring better costs, better services, transparency and citizen involvement. Ensure government accepts recommendations.

• Create a permanent platform for “citizens-government” interaction-Involve Bangalore)

accepts recommendations. • Create a permanent platform for “citizens-government” interaction-Involve Bangalore)
accepts recommendations. • Create a permanent platform for “citizens-government” interaction-Involve Bangalore)

a. Website and News letter (English and Kannada)

(Bangalore.gov)

b. 6 monthly State of City survey, State of city summit / progress report.

Scope and Coverage of Plan Bangalore 2020

• Road,Traffic Management and Transportation

• Water and Sanitation

• Urban Poor

• Citizen Centric Governance

• Heritage and Environment

• Education & Health

• City Facilities

• Policing, Law and order and Enforcement

• Power

• Airports & Railway Stations

Bangalore: Bangalore is recognized as the Knowledge Capital of India and has emerged as the most preferred destination for frontier technologies like Information Technology and Biotechnology. Bangalore is the city to showcase technology now. Bangalore IT and Bangalore Bio are recognized as India 's leading events in their fields.The new initiative of launching Bangalore Nano by Dept of IT, Biotechnology and Science & Technology, Government of Karnataka is the first step in fostering a business environment for the development of Nanoscience and the Nanotech industry. Bangalore Space Expo 2008 was India’s first space exhibition organised by ISRO, CII and Antrix Corporation Ltd. Huge participation from domestic and foreign companies – Hindustan Aeronauticals Ltd. Arianespace (France), Infinisat (USA), European Space Agency, Israeli Space Agency etc. The Bangalore International Automotive Expo, the largest in Southern India, showcases over 500 global automotive brands, designs and technology to more than 100,000 visitors comprising buyers, industry leaders, suppliers, government officials and the media. Bangalore is in fact the expo hub of the State and the country, organising conventions on State of the art technology front. BIEC( Bangalore International Exhibition Centre) is India’s first ‘LEED Certified’ Green conference and exhibition facility. Sprawled over 34 acres, near Peenya Industrial township of Bangalore, the beautifully landscaped complex has 40,000 sqm of covered column-less air-conditioned exhibition space (three exhibition halls), a multi-facility conference centre spread over 5,600 sqm including 4 Conference Halls, a Helipad, an Amphitheater,VIP Lounge, Food Court of 7500 sqm, a Machine Tool Training Centre, and large outdoor area. It also has an infrastructure to distribute 11 MW of power supply.With the

above facilities BIEC has been able to cater to well over 20,000 business visitors per day on several exhibition days. BIEC is today the first choice of all major exhibitions/events/conferences organizers from all over the world. BIEC caters to all industry segments such as engineering, auto, furniture, medical, energy, tourism, biotechnology, food processing, agriculture, textiles, printing, logistics and material handling, industrial automation, electronics, IT and other sectors.

Some of the leading exhibitions already held and scheduled at BIEC are IMTEX, EXCON, BANGALORE BIO, INDIA ITME, BANGALORE IT.COM, INDIA WOOD, IETF & IHF, DIEMOULD, EXPODENT, ELECTRONIC INDIA, INTERNATIONAL COMMERCIAL VEHICLE EXPO, ELCA, MDA, INDUSTRIAL AUTOMATION & CeMET INDIA, STONA,VIV, ASIA PRINT EXPO, BUILDARCH & BUILD UP, BANGALORE SPACE EXPO, INSTORE ASIA, etc.

Its international standards have received much acclaim and BIEC is a member of UFI- The global association of exhibition industry and IAEE - International Association of Exhibitions and Events. Deutsche Messe AG - the owners of the world's largest exhibition facility in Hannover, Germany, has a partnership arrangement to promote BIEC globally. Bangalore boasts amusements parks, a planetarium, a water park and an aquarium – all of which are of interest to tourists and for residents of the city. Bal Bhavan is one of the city’s most popular amusement parks. Amusement parks provide excitement and a way to cool off while having fun. Bangalore is the best place to experience adventure sports in India. From waterfalls to rough terrain, lakes and centuries old caves, Bangalore has lots to offer explorers.There are ample opportunities to enjoy aero sports, river rafting, rides at amusement parks, boating on lakes, fishing, go karting, para gliding, cave exploration, cycling etc.The hills in Ramnagara are located around 20kms from Bangalore, and are very popular among rock climbers.The Sri Revanna Sideshwara hills are the biggest draw; and the forested area that surrounds the hills has been proposed as a wildlife sanctuary.The unique wildlife found in this scrub jungle vegetation and also the prehistoric rock formations are a popular attraction for tourists and adventure enthusiasts.

The cities of Karnataka are not just centres for industry and commerce but also major sites for tourism and sports. For instance, another innovative experience coming from Karnataka in recent times is the Toyota Karnataka Golf Festival, another example of the partnership between the tourism department and the private sector in boosting novel forms of tourism in the

example of the partnership between the tourism department and the private sector in boosting novel forms
State. Sponsored by Toyota Kirloskar Motor Pvt. Ltd. the tournament brought more than 250 amateur

State. Sponsored by Toyota Kirloskar Motor Pvt. Ltd. the tournament brought more than 250 amateur and corporate golfers on the course in October 2009. Golf courses in Karnataka have been upgraded at a cost of Rs. 20 crore and apart from Bangalore, Mysore, Chikmaglur and Belgaum are other towns where the sport is popular.

Karnataka - A workforce that delivers Skilled manpower base in the State has attracted global and domestic majors.The State leads all the others in India in its labour supply ecosystem and this section also describes the government’s efforts to maintain this lead through a pro-active strategy.

The Labour Supply Ecosystem Index created by Teamlease Services and Indicus Analytics as part of the India Labour Report 2010 ranks Karnataka no.1 in the country on labour supply parameters or the employability of the workforce. Ranked at 1 together with Goa in the previous study in 2005, Karnataka has moved up to secure No. 1 place alone, with an index value 107 points above Delhi, ranked 2 in 2009.

States

Values 2005

Rank 2005

Value 2009

Rank 2009

Karnataka

478

2

607

1

Delhi

450

4

500

2

Andhra Pradesh

439

5

476

3

Gujarat

418

6

470

4

Goa

478

1

464

5

Kerala

417

7

458

6

Maharashtra

416

8

448

7

Tamil Nadu

475

3

432

8

Bihar

276

18

429

9

West Bengal

343

11

426

10

Punjab

324

14

419

11

Haryana

318

15

415

12

Rajasthan

337

12

363

13

Uttar Pradesh

334

13

359

14

Orissa

318

16

356

15

Himachal Pradesh

373

9

347

16

Madhya Pradesh

362

10

334

17

Assam

272

19

207

18

Jammu & Kashmir

284

17

100

19

Karnataka State has a long tradition in higher education

 

institutions that has created a steady source of skilled workforce, providing a strong base for all economic activity.There has also been an unfailing emphasis over the years on innovation and research in cutting edge fields.The Indian Institute of Science, IISC, India’s premier institution in research and post graduation education in science and engineering, began in 1909, the first private-public partnership in the country spread over 400 acres of land in Bangalore. A pioneer in advancing science and technology, in 1942 the Institute started the first two year programme in aeronautical engineering, creating a nucleus of graduates to serve in the fledgling aerospace industry at that time.

The first State in the country usher the private sector into higher education, one of the most striking features of higher education in Karnataka is the extremely high growth in private sector educational institutes. In university education, the gross enrolment ratio is at 14% which is higher than the national average. Karnataka has the third highest number of engineering colleges in the country and the highest number of medical colleges in the country.While engineering colleges have an intake of more than 50,000 students per year, general bachelor courses in arts, commerce and sciences have a total enrolment of more than 200,000 students in the 648 general colleges across the State.

The State has a number of excellent higher education institutions, set up with public support, that span the entire gamut of educational disciplines.The universities in Bangalore, Mysore and Gulbarga have been rated 5 stars by National Assessment and Accreditation Council while IIISc ranks among the top fifteen global institutions in the country. National Institute of Technology

Karnataka(NITK) at Suratkal, which is celebrating its golden

jubilee in 2009-10, and Visvesvaraya Technology University (VTU) in Belgaum are leading centres for engineering excellence,

providing high-quality graduates.

Some of the other well known institutions in the State span

diverse fields:

• Indian Institute of Management (IIM)

• National Law School of India (NLSIU)

• National Institute of Fashion Technology (NIFT)

• Indian Institute of Social and Economic Change

• National Institute of Mental Health and Neuro Science

(NIMHANS)

• National Institute of Advanced Studies (NIAS)

• National Institute of Biological Sciences (NIBS)

• National Institute of Animal Nutrition & Physiology (NIANP)

• National Dairy Research Institute

• National Tuberculoses Institute (NTI)

Animal Nutrition & Physiology (NIANP) • National Dairy Research Institute • National Tuberculoses Institute (NTI)

• Centre for Liquid Crystal Research

Industrial development in Karnataka has strong linkages with the educational infrastructure in the State. For instance,Wipro’s entry into Karnataka in the early eighties was due to collaborative efforts with IISc, Bangalore.This relationship holds for other non

IT manufacturing entities too, creating an ecosystem in which

growth flourishes.The Central Food Technological Research Institute which was established in 1950, chose to locate in

Mysore largely due to the academic environment, the University

of Mysore, proximity to the IISc and the R&D strengths of

Bangalore and the Nutrition Research Laboratories at Coonoor.

The presence of CFTRI in the State has attracted not just agro-processing firms but also the high-technology biotech industry to Karnataka.

Karnataka also has the largest number, 1162, of Industrial Training Institutes in India, making up 15% of the country’s total. These institutes provide a valuable resource in skilled technicians. According to an ILO study of these institutes in Karnataka and Tamil Nadu,‘The standards at the Karnataka institutes appear to be higher than those in Tamil Nadu, with more up-to-date equipment and better training.

Karnataka took up Skill Development as a major development policy in 2008-09 and a State level corporation, the Karnataka Vocational Training and Skill Development Corporation was set up in August 2008 as a special purpose vehicle to implement the recommendations of the Skill Commission.The Corporation has the target of providing training and jobs to 10 lakh people in 5

years; an objective it is working towards through organising Skill

N Job Fairs, establishing Help Centres in Employment Exchanges,

establishing e-learning labs in SC/ST post matric hostels in the State, in association with NIIT and the Social Welfare Department, introducing an ‘Internship policy’ under the PPP mode with medium and small scale industries etc.

The State Government has planned to increase the intake capacity in ITIs to 5 lakh from the present 1.37 lakh, by starting new ITIs under the PPP mode, establishing 100 Skill Development Centres at most backward talukas to give training

to rural persons etc.The government has partnered with

Non-Resident Indians to start new State-of-the-art ITIs, production cum training institutions etc. to utilise the skill and expertise of the diaspora.

Under the Government of India’s Skill Development Initiative, the Modular Employable Skills Scheme has been initiated in

Karnataka. In 2009-10, 340 modules were developed in 32 professions for training of unorganise labourers, with priority given to automobile, construction of building, hospitality and electronic fields. Under this scheme, the government plans to train ten million persons, by providing training in the ITIs/ITCs and at any other location having facilities. More than 400 centres in the State have registered as Vocational Training Providers under this programme to impart training through courses in auto repair, electronics, fabrication, process instrumentation, plastics, information and communication technology, material management, soft skills etc.

Karnataka had more than 20 million people in the age group of 5 to 24 years in 2006, pointing to the huge demand for school and college education. By 2020, there will be on an average 4 lakh new job entrants every year, add to this the growing aspirations of a middle class with more purchasing power and the demand for higher education and hi-technology skills grows in size.The government recognizes that this demand can be met only through private sector investment and is giving full support through its policies to create an enabling environment and maintain its lead in providing the most employable workforce in the country.

Karnataka – proactive and effective government

The State government policies encourage investments, as well as governance achievements on broad parameters such as effective law and order, e-governance initiatives etc.

The Karnataka State government has always provided an investor-friendly responsive administration.The Karnataka Udyog Mitra, set up more than a decade ago, works as single contact point for all investors - from receiving a proposal to ensuring its implementation KUM is actively working with the investors at all stages.The State Level Single Window Clearance Committee and the State High Level Clearance Committee (for investments greater than Rs. 50 crore) have been working to clear proposals in a speedy manner.

Clearance Committee (for investments greater than Rs. 50 crore) have been working to clear proposals in