Here's How Country's Tech Hub Karnataka Plans To Transform Into A Manufacturing Powerhouse

It was a momentous occasion, when a year ago, our leader Shri BS Yeddyurappa, took oath as the Chief Minister of Karnataka.

From the very beginning we wanted to respect the people’s mandate and ensure them a prosperous state in the future.

Keeping a prosperous future in mind, we made our primary focus creating jobs for the youth of Karnataka and achieving high economic growth.

We have retained this focus despite having to face terrible tragedies like the floods in North Karnataka and the COVID -19 pandemic.

It is CM BS Yediyurappa’s and this government’s firm belief that achieving both these goals are necessary for the government to increase its tax revenues and be in a position to fund much needed welfare programmes dedicated to all sections of society - farmers, rural and urban poor, women and children, disabled and more.

Ofcourse, it needs to be added that we are indeed fortunate to have the resources and talent our state has to make such bold ambitions.

It will not be incorrect to say that Namma Karnataka has been the national leader in the realm of IT, BT and technology as a whole, the credit for which should go to the state’s capacity to provide a competitive business environment and its ability to attract foreign investment. Our efforts have made our capital Namma Bengaluru a global tech hub.

However, even though we are leading in attracting technology giants, we have lagged behind in another arena which has been proved to be a contributing factor to the economic development of many nations: building up manufacturing capacity.

If we look at Vietnam, Taiwan and China, we will see that these nations have invested a lot of their resources and efforts in developing deep manufacturing capacity, starting with textiles, toys and minor electronics and slowly building it up to high end and high technology consumer as well as industrial products.

This has propelled them to greater heights of economic growth as well as lifted hundreds of millions out of abject poverty.

Even our eastern neighbour Bangladesh has focussed on ramping up its capabilities in the textile as well as other labor intensive industries in order to put its society on a high growth trajectory.

One may ask, what is the hurdle we face that the aforementioned nations don’t?

A frequent complaint our government heard from investors, both domestic and foreign, was the difficulty they faced in purchasing land as well as the overall ease of doing business.

Hence it has been a matter of priority to the B S Yeddiyurappa led Karnataka government to rectify this situation, thus paving the way for increased investments in the state which would lead to high levels of job creation.

With that in mind, we took the bold step to amend the Karnataka Land Reforms Act via an ordinance which removed restrictions which historically were used to harass the farmers.

This has, at the same time made it easier for industry to purchase land in a transparent manner. This bold step will not only increase the overall wealth of farmers but also help prevent them from all sorts of harassment due to the antiquited rules.

In addition to this,we are aiming to smoothen the process of land purchase and make it completely transparent, by interlinking the Karnataka Udyog Mitra with both Bhoomi and Kaveri portals.

This, essentially, means that the government will connect the single-window clearance portal for industry with the online land records registry as well as the online registry of the Department of Stamps & Registration - thus eliminating any need for continuous running around between various government offices.

Another problem that discourages investors is the lengthy process of getting clearances to setup and operate an industry. As a solution to this, we amended the Karnataka Industrial (Facilitation) Act 2002 to allow industries to beset up via self certification for the first 3 years instead of being in limbo trying to permissions.

I wish to point out that unlike Gujarat and Rajasthan, this amendment is applicable to all industries and not just Micro, Small and Medium Enterprises (MSMEs) and Small and medium-sized enterprises(SMEs). The clearances will still be subject to the SAKALA Act, thus ensuring that it is time bound.

In addition to this, our state’s single window clearance system is being perfected to ensure that investors need not struggle for permissions.

Besides the hurdles with regards to acquiring land and clearances, another major impediment for our manufacturing sector was the fact that our labour laws had a major disconnect with the contemporary requirements of the sector, especially sections which need to globally compete with businesses and manufacturing units based out of China and Vietnam for their investments.

An important move to bridge that gap has been the recognition of the concept of ‘Fixed Term Workmen’ done through the amendments to ‘The Karnataka Industrial Employment (Standing Orders) Rules, 1961’.

The primary purpose of this amendment was to boost investment in labor intensive industries across the state which goes with our overall aim to produce more jobs.

This major change provides investors and industry the required flexibility in terms of providing employment while at the same time securing protections for workmen.

In continuing our focus on job creation, we amended the APMC Act through an ordinance to enable the development of the food processing industry, a highly labour-intensive industry which has the potential to create a large number of jobs in the state while simultaneously increasing the incomes of our farmers.

This, coupled with the fact that Bengaluru is also a major Agri-tech hub of India will further boost the growth of the agriculture sector and the food processing industry.

In another major step, last week, the state cabinet approved the New Industrial Policy with an aim to attract investments worth Rs 5 Lakh Crore and more importantly create 20 Lakh new jobs.

Through this policy, for the first time in India, Karnataka will adopt production ‘turnover based incentives’ over ‘tax based incentives’ to encourage a focus on performance (and not on the tax incentives themselves). MSMEs will get an incentive ranging from 1.7 per cent to 2.5 per cent of their turnover for the first 5 -10 years.

Another major aim of the policy is for Tier 2 and 3 cities of the state to become the beneficiaries of economic growth through the development of 100 Sq Km Special Industrial Regions (SIR’s) in Dharwad, Shivamogga and Kalaburagi, also encompassing neighbouring districts.

For long, the economic growth of our state has been focussed on the Greater Bengaluru region.

For the long term interest of the state, it is imperative for us to develop major industrial clusters across various parts of central and north Karnataka. This policy will help us achieve this aim.

It is my firm belief that these efforts will help the state in creating an environment for effective industrial development. Under the able leadership of B S Yediyurappa, we are committed to reach our dual objectives of industrial development and job growth.

It is essential for our society’s prosperity for Karnataka to become AtmaNirbhar and transform the state’s economy from a $230 billion economy to a $500 billion one.

(The author is Deputy Chief Minister of Karnataka and Minister of Higher Education, Information Technology, Biotechnology, Science & Technology, Skill Development, Entrepreneurship and Livelihood, and tweets at @drashwathcn)