The Karnataka cabinet cleared the new industrial policy
Industry Investment

The Karnataka cabinet cleared the new industrial policy

The Karnataka cabinet on Thursday cleared the new industrial policy that aims to attract investments worth Rs five lakh crore and employment opportunities for 20 lakh people in the next five years by offering a slew of incentives and concessions. It also aims to reach the third position in merchandise exports and to maintain an industrial growth rate of 10 per cent per annum in the next five years. The policy aims to provide an enabling ecosystem for technology adoption and innovation.

An official statement said, “The policy, which will introduce significant fiscal, labour, and land reforms will focus on facilitating investments to the state by providing fresh incentives and easing regulatory processes. The focus of the New Industrial Policy 2020-25 is to exploit Karnataka’s industrial prowess, creation of enabling environment, development of infrastructure, provide equitable opportunities for the people of the state particularly in industrially backward districts and Tier-2 & Tier-3 cities & ensuring inclusive development of investment within the state.”


Addressing a press conference, state Minister for Large and Medium Industries Jagadish Shettar said, “The last industrial policy was brought out in 2014. Since then, a lot of changes have happened, and new opportunities have emerged, particularly in manufacturing and manufacturing-related service industries including smart manufacturing, customization, collaborative production etc.”

* The New Industrial Policy 2020-25 aims at holistic development of the State and looks beyond Bangalore with an aim to promote Tier 2 and Tier 3 cities as engines of economic growth. The Policy has grouped districts of the State into three Zones, with a view to incentivise investments in the industrially backward districts. Industrially backward districts are classified in Zone-1 & 2 and Bengaluru Urban and Rural districts are classified in Zone-3.

* Based on competitive strengths and potential for growth, the Policy has identified certain Focus sectors: Automobiles & Auto components, Pharmaceutical & Medical Devices, Engineering and Machine Tools, Knowledge-based industries, Logistics, Renewable Energy, Aerospace & Defence and Electric Vehicles.

* To emerge as globally competitive with skill and scale that leverage hi-tech growth, following Thrust Areas have been recognized: Industry 4.0, Research & Development, Intellectual Property Rights (IPR), Technology Adoption & Innovation, Cluster Development Initiatives and Sustainable Industrialization.

* Promotion of MSMEs:

* SARTHAK – Centre of Excellence for MSMEs-Deploying an online technology platform for raw material suppliers, market access, quality control & certifications and enhance access to credit.

* Infrastructure Support – KIADB will earmark minimum 30% of allottable land in their industrial areas for MSMEs.

* Technology Up-gradation and Technical Support.

* Vendor Development and Facilitation.

* Marketing Support in Public Procurement.

* Skill Development & EDP.

* MSME Manufacturing Excellence Awards

* Equity Funding.

* Incentives & Concessions.

* Promotion of Large & Mega Projects:

* Integrating Karnataka with the Global Value Chains

* Making the state as preferred destination for OEMs

* Annual Action Plants for Investment Generation.

* Infrastructure Support – KIADB will earmark 70% of allottable land in their industrial areas.

* International Investment Facilitation Desk.

* Investors Meet.

* Incentives & Concessions.

* Keeping in view the new opportunities post COVID 19 & to attract large investments across the sectors, the Policy has addressed many reforms especially in procurement of land, compliance of labour laws and offer attractive incentives and concessions.

* Making land easily available for Manufacturing:

* Karnataka Land Reforms Act, 1961 has been amended modifying provisions of Sec. 109 making it easier to procure land.

* Encouraging establishment of Private Industrial Parks like Integrated Industrial Parks, Sector Specific Parks, Logistics Parks and Flatted Factories by Private Developers.

* Leveraging development of Industrial Nodes under Chennai-Bengaluru Industrial Corridor and Bengaluru-Mumbai Economic Corridor.

* Enacting new Special Investment Region (SIR) Act to establish, develop, operate and regulate the SIRs in the State, which would be notified areas with an area of more than 100 Sq.Kms and deemed to be Industrial Township. It is proposed to notify the 1st SIR-Dharwad SIR encompassing Dharwad, Gadag, Haveri and Belagavi Districts. SIRs will also be notified in Shivamogga encompassing Shivamogga, Davanagere, Chitradurga and Chickamagaluru Districts & Kalaburagi encompassing the Kalyana Karnataka Districts.

* Industrial Area Development Authority of Karnataka shall be constituted under the KIAD Act 1966 to perform statutory powers / functions of local body.

* Existing large industrial areas in the State will be declared as Industrial Township under appropriate Laws.

* Reforms in Labour Laws:

* An amendment has been made under the Factories Act, 1948 to allow women workers, who come forward to work during night shifts, i.e., between 7PM to 6AM in the factories registered.

* Section 64 & 65 of the Factories Act, 1948 is being amended to allow overtime working hours to be extended to 125 hours per quarter.

* Industrial Employment (Standing Order) Act, 1946 has been amended to permit Fixed Term Employment (FTE) / Contract Employment. The Rules have been notified on 30/06/2020.

* Periodicity of revision of minimum wages will be fixed under the Minimum Wages Act and also shall be linked to factors like inflation and consumer price index (CPI).

* To encourage merchandise exports, State labour laws are amended / relaxed vide Notification no. LD 194 LET 2016 dtd 28/11/2019 extending similar relaxation to manufacturing SEZs as provided to IT / ITES establishments under the Industrial Employment (Standing Orders) Act, 1946.

* Karnataka Industries (Facilitation) (Amendment) Act:

* To facilitate establishment of manufacturing Industries/Enterprises after obtaining approval from the SHLCC/SLSWCC/DLSWCC, Acknowledgement Certificates would be given to the Enterprises. This certificate shall be the deemed approval/clearance for the downstream approvals by various Departments for an initial period of three years or from the date of commencement of commercial operations whichever is earlier.

* A Common Application Form, self-certification and online payment of fees shall be enabled for the Industries/Enterprises at the web-portal of Karnataka Udyog Mitra.

* An Acknowledgement Certificate will enable the starting/commencement of work on the site.

* Before commencement of the commercial production, the concerned manufacturing industry/enterprise shall have to obtain necessary clearance/approvals.

* All new industrial investment projects shall create maximum possible direct employment opportunities with a minimum employment of 70% to Kannadigas on an overall basis and 100% in case of Group D employees.

* Incentives & Concessions offered in the New Industrial Policy 2020-25

* For the first time in India, Karnataka State has adopted a production turnover based incentive system instead of tax based incentives to encourage production based performance.

* Industrially backward districts will get more incentives to attract investments so as to ensure balanced industrial development of the State.

* Investment Promotion Subsidy to Micro and Small Enterprises based on the turnover – 10% on turnover in each year for a period of 5 years and limited to 20-30% of VFA.

* Exemption from Stamp Duty and Concessional Registration Charges.

* Reimbursement of Land Conversion Fee.

* Exemption from Tax on Electricity Tariff for MSMEs.

* Power Subsidy for Micro & Small Enterprises.

* Support to Artisans.

* Interest Subsidy on MSME Technology Up-gradation loans.

* Incentives for Rain Water Harvesting and Waste Water Recycling.

* Incentives for establishment of ETP / CETP.

* Additional incentives to special category entrepreneurs viz., SC/ST, Women, Minority, Physically Challenged and Ex-Servicemen Enterprises.

* Incentives for Export Oriented Units.

* Investment Subsidy for Anchor Industries (minimum investment Rs 100 crores) in taluks lacking any major industries.

* Investment Promotion subsidy based on turnover in the form of a grant for Medium, Large and Mega Enterprises ranging from 1.75% -2.50% on turnover in each year for a period of 5-10 years and limited to 35-60% of VFA.

* Incentives & Concessions for development of Private Industrial Parks.

* Support to Research & Development and Industry 4.0.

Source : Zee News

Photo | ANI

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