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Growth Sector Industrial Development

Growth Sector Industrial Development The SME landscape in Karnataka is dominated by textile followed by the food and beverage industry. The Karnataka state industrial policy 2014-19

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Page 1: Growth Sector Industrial Development The SME landscape in Karnataka is dominated by textile followed by the food and beverage industry. The Karnataka state industrial policy 2014-19

Growth Sector

Industrial Development

Page 2: Growth Sector Industrial Development The SME landscape in Karnataka is dominated by textile followed by the food and beverage industry. The Karnataka state industrial policy 2014-19

Current Scenario

Growth Sector : Industrial Development

• Karnataka is the IT hub of India & home to the 4th largest technology cluster in the

world.

• The state has 26 operational, 51 notified SEZs and 62 formal approval SEZs as of

September 2017.

• In 2016-17, Karnataka’s GSDP grew by 16.38 per cent. The services sector, contributes to 63

per cent to the GSDP, grew at 8 per cent.

• Manufacturing sector in Karnataka comprised 24 per cent of Gross State Domestic Product in

2016-17

• Karnataka has one of the best manufacturing process ratio of 2.63 with a maximum value of

goods being converted into finished goods valuing over INR20 billion.

• The SME landscape in Karnataka is dominated by textile followed by the food and beverage

industry. The Karnataka state industrial policy 2014-19 sets aside a minimum of 20-30 percent

of allocable land for industrial development to SMEs.

IT/ITeS68%

Precision, Engineering

Product4%

Multi Product4%

Textile4%

Pharmaceuticals4%

Aerospace and Industry

4%

Electronics/hardware and

Softwware/ITeS4%

Hi-tech engineering products and

related services4%

Biotechnology4%

Sector-wise Operational SEZs in Karnataka (as on July 2016)

Source: Department of Commerce, Ministry of Commerce and Industry Karnataka

Cumulative Investments of

about US$ 22.4 billion till

March 2017

FDI

4th highest FDI in

the country

IIP Growth Rates (Manufacturing) 2015-2016 (Base Year 2004-05)

2.0

2.34Karnataka

National

Annual Survey of Industries

• Ranked 4th among all India States/

Union Territory

• Total Persons Engaged 7.02%

• Output 6.71%

• GVA- 6.17%

MSME Contribution in

Industrial Growth

• 40 lakh people employed in

2017-18

• 6 lakh MSME units

registered in the state

• 54k Women MSME units

Page 3: Growth Sector Industrial Development The SME landscape in Karnataka is dominated by textile followed by the food and beverage industry. The Karnataka state industrial policy 2014-19

Karnataka Industrial Policy 2014-19 – Key Highlights and Achievements

Growth Sector : Industrial Development

• During 2014-17, 1823 projects have been approved by the State Level Single Window Clearance

Committee/State High Level Clearance Committee, with an investment of INR 3.34 Lakh Crore

Investment, generating employment to 8.98 lakh persons.

• During 2014-17, 1.89 Lakhs employment in large industry sector and 12.30 Lakhs employment in MSME

Sector i.e., totally 14.19 Lakh employment has been generated.

• Efforts towards development of Industrial Corridors:

• Chennai-Bangalore-Chitradurga Industrial Corridor (CBCIC) and Bangalore-Mumbai

Economic Corridor (BMEC) would be expedited on the lines of Delhi-Mumbai Industrial Corridor

(DMIC) with the support of Government of India.

• Government is establishing Tumkur Industrial Node in 9,629 acres at Vasanth Narasapura,

Tumkur under Chennai – Bengaluru – Chitradurga Industrial Corridor.

• In association with Government of India, the State Government is establishing Machine Tool

Park in an extent of 540 acres at Vasantha Narasapura Industrial area, Tumkur with a project cost

of Rs. 425 Crores.

• State Government is developing Japanese Industrial Township at Vasanth Narasapura, Tumkur

in an extent of around 500 acres in consultation with JETRO to promote Japanese Investments in

the State.

• Karnataka is giving focus for Labour intensive sectors like Toy Manufacturing, Mobile Phones, Tablets,

Electronic Components and assemblies etc. and also to create more employment in manufacturing sector.

• Government is establishing 6 Exclusive Women industrial parks in the state:

• Harohalli Industrial Area, Kanakapura

• Kudithini Industrial Area, Bellary

• Gamangatti Industrial Area, Dharwad

• Nandur – Kesartegi Indl. Area, Kalburgi

• Thandya Industrial Area, Mysore

• Canara Industrial Area, Mangalore

Regional spread of Industrial Activity in the state

Page 4: Growth Sector Industrial Development The SME landscape in Karnataka is dominated by textile followed by the food and beverage industry. The Karnataka state industrial policy 2014-19

Growth Sector : Industrial Development

Industrial Corridors – Potential Industrial Corridors

A Inter-state corridor

Karnataka- Maharashtra 1

Karnataka- Telangana 2

Karnataka- Andhra

Pradesh

3

Karnataka- Tamil Nadu 4

Karnataka- Kerala 5

Karnataka- Goa 6

B Intra-state corridor

Bengaluru-Mandya-

Mysuru-Chamrajnagar

1

Chitradurga-Bellary-

Gulbarga-Bidar

2

Dharwad-Koppal-Raichur 3

Bengaluru-Hassan-Mysuru 4

Chitradurga-Haveri-Karwar 5

Tumakuru-Shimoga-

Honnavar

6

Raichur-Bagalkot-Belgaum 7

Agro processing clusters

Page 5: Growth Sector Industrial Development The SME landscape in Karnataka is dominated by textile followed by the food and beverage industry. The Karnataka state industrial policy 2014-19

Sub-sector Scenario

Growth Sector : Industrial Development

Heavy Manufacturing

Automobile & Engineering

Aerospace & Defense

Manufacturing

Pharma

Healthcare

MSMEs and Traditional

Textiles

Food Processing

MSMEs

Services

Tourism

Construction

BFSI

Retail

Automobile

and

Engineering

• Karnataka is the 4th largest state in automotive production.

• Contributes 8.5 per cent to the overall automobile sector of the country.

• Provides employment to more than 55,000 workers.

• The engineering segment is the fastest growing sector of the state, which grew

at a CAGR of 14.22 per cent between 2010-11 and 2015-16.

Aerospace

and Defense

• Karnataka attracts 65 per cent of Aerospace investments in the country.

• In 2016, Karnataka approved amendments to the Karnataka Aerospace

Policy 2013-23 to provide special incentives for development of MRO

sector.

• Of all aircraft and helicopters available with the nation’s Defense Services,

67 per cent originates from Karnataka.

Pharma and

Healthcare

• State‘s Pharmaceutical industry generated INR80,000 million in revenue

contributing 8 per cent of the country’s total revenues.

• Global healthcare company GlaxoSmithKline Ltd is investing INR10 billion in a

new state-of-the-art pharmaceutical unit in Karnataka .

• As of 4 October 2017, the state has 12,568 active health institutions out of total

12,990 health institutions in the state.

Food

Processing

• The state consists of 7 food parks, a spice park and has a seafood park.

• A rice technology park is on its way to establish.

• Food Processing sector in the State has witnessed a steady growth. The

export of agriculture and processed food in the state grew at a CAGR

of 22.96 per cent between 2010-11 & 2015-16.

• Sector contributes five per cent of India's GDP.

• Second largest employment generating sector in India. It is the only industry

generating huge employment for both skilled and unskilled labour

• Karnataka is a major apparel sourcing destination for the global market. The

state accounts for 20% of the national garment production.

• Textile Policy offers various incentives for investments in the textile sector

• In 2016-17 (up to September 2016) 32.50 million meters of handloom textiles

was produced in Karnataka

Textiles

Page 6: Growth Sector Industrial Development The SME landscape in Karnataka is dominated by textile followed by the food and beverage industry. The Karnataka state industrial policy 2014-19

Growth Sector : Industrial Development

Growth Drivers

Growing

international

investments

Cumulative FDI inflows in the state from April 2000 to June 2017

were recorded at INR1,609.8 billion .

Rich talent pool Karnataka is termed as the Knowledge Capital of India

Availability of a large, highly skilled workforce is Karnataka’s

greatest asset

Preference for

Goods

Manufactured

Locally

State Government has amended the Karnataka Transparency in

Public Procurements Act (KTPP) to reserve 350 times (products)

for exclusive manufactures of MSME and SSIs.

Proximity to other

Automobile

Clusters

Karnataka’s proximity to the Western and Southern auto clusters in

the country makes it an attractive destination for investors.

Opportunities

PPP Model

The GoK is focusing on PPP model to expand the

manufacturing and service industry in the state.

Projects based on PPP model are already started in

aerospace sector.

Dedicated

Aerospace

Policy

Karnataka is the first and only state so far to have an

aerospace policy as well as two exclusive aerospace parks in

the state.

GoK has proposed to set up India’s first Multi-Skill Training

Institute for Aerospace and Aviation.

Development of

NIMZs

Karnataka is at the forefront of developing National

Investment and Manufacturing Zones (NIMZs) to promote

world-class manufacturing activities.

Benefits of

Hyperloop

Technology

Virgin Hyperloop One has announced its partnership with the

GoK to conduct its preliminary study to understand

hyperloop’s feasibility and economic impact in the region.

Joint Venture &

Partnering

Opportunities

Investors and foreign companies can join SMEs through joint

venture partnership to access the market.

Page 7: Growth Sector Industrial Development The SME landscape in Karnataka is dominated by textile followed by the food and beverage industry. The Karnataka state industrial policy 2014-19

Growth Sector : Industrial Development

SDG’s

Linked

Sector

Vision

Build a prosperous Karnataka through inclusive,

sustainable and balanced industrial development thereby

creating large employment opportunities.

Sector Goals

G1Enhance the contribution of manufacturing sector to

the State GDP from present level of 16.87% to 20%

Create employment opportunities for 15 lakh

persons in core manufacturing, pharma and health

care

Attract large investments in tune of INR 5.00 lakh

crore in the state by building strong PPP in the state

Strengthening sector-specific vocational skills

G2

G3

G4

G5

G6

Improving ease of doing business

Increasing focus on MSMEs

G7 Increasing focus on Traditional Industries

Page 8: Growth Sector Industrial Development The SME landscape in Karnataka is dominated by textile followed by the food and beverage industry. The Karnataka state industrial policy 2014-19

Growth Sector : Industrial Development

1. Enhance the contribution of manufacturing sector to the State GDP from present level of

16.87% to 20%

Strategic Interventions

• Creating Brands in Districts through identifying Local entrepreneurs and promoting clusters ( Top 10

Clusters in various districts) viz Chennapatna Toy Cluster to be promoted like Lego brand

• Reverse Market linkages by adoption of Communities and SHG’s by Industry, Government

agencies and Private institutions- Identification of Pilot Projects ( Top 10 projects in satellite towns)

• Exploring innovative models to promote entrepreneurs who can provide Service to Industry and

locals E.g. Taxi Service, Tourist guides etc. at Mysuru

• Cluster based localized industrial zones can be created in districts such as Kodagu’s Ayurvedic

products, tourism and homemade food products etc.

• Sector-aligned Vocation Training Courses for Youth

• Koushalya Karnataka needs to be aligned to Central Government schemes

• Local industries that are micro and small could be encouraged to provide employment opportunities.

2. Create employment opportunities for 15 lakh persons

Strategic Interventions

Enhance design and innovation capacity to achieve international competitiveness. Penetrate into rural

market in Karnataka

Promotion to Global OEM’s into the cluster for focused development of Tier 1 and Tier 2 Ancillaries

Re-engineer policies and directives to support wide-spread manufacturing growth in the state

Fast track development of industrial corridors in the state

3. Attract large investments in tune of INR 5.00 lakh crore in the state by building strong

PPP in the state

Strategic Interventions

• PPP model for infrastructure projects in these cities can speed up the process and provide world-

class infrastructure for Smart Cities for Top 5 Cities as identified under Smart Cities Challenge project

• Joint Projects through Multilateral funding agencies to create Industrial Zones and Clusters which are

world-class viz Thirungrea Automotive Cluster in Germany

• Strong Bilateral partnerships in creating Shared Infrastructure facility for MSMEs in Manufacturing

and Engineering ( Plug and Play model )

• Create top 5 Clusters for Manufacturing beyond Bangalore- Hubbali- Dharward, Belgaum, Tumkur,

Mangalore, Shimoga

Strategic Interventions

Paperless approvals and online process without repetitive submissions and referrals to departments ,

penalty for inability to revert within a fixed timeframe and minimal interface from Government

Departments

Convergence of Departments by Champion Officers

Capacity Building of Government employees with a focus on Customer Centricity, Sense of pride and

ability to translate action on ground

Timely feedback and Customer satisfaction Surveys from Industry and Inter Departmental

Stakeholders

4. Improving ease of doing business

Page 9: Growth Sector Industrial Development The SME landscape in Karnataka is dominated by textile followed by the food and beverage industry. The Karnataka state industrial policy 2014-19

Growth Sector : Industrial Development

5. Strengthening sector-specific vocational skills

Strategic InterventionsProviding Incentives to MSMEs and giving an impetus to creation of 4 lacs additional Units by 2025

Disbursal of loans by Funding agencies like SIDBI, MSME Ministry and other private agencies –

Approx 1 Lac Crore upto 2025

Incentives for technology Upgradation and Technology transfers to enhance competitiveness and

capabilities

Tie up with Industry Mentors for handholding and capacity building through institutionalized

mechanisms

C&I Department to institutionalize a Buyer Seller meet Annually with a view to create business and

promote MSMEs

Cluster development approach can enhance the productivity and competitiveness as well as capacity

building of MSMEs.

MSMEs need to be educated about pollution generated by them and how the waste can be minimized.

6. Increasing focus on MSMEs

Strategic Interventions

Work with State Private agencies/ Training Partners and earmark Vocational Training Centres in

Sunrise Skills of the future with a vision to target 2 Lacs Apprentices per year

To identify Skill Programmes ( In house of Companies and State driven) with a specific outcome to

create jobs to beneficiary companies in Manufacturing and Services Industry

To have a District level Skills competition which culminates at a State and National level or

participation in International World Skills Competition with a view to attach importance to Skills in India

To run Sector Specific Skill projects with local associations in a Project mode with Monthly targets and

budgets accordingly

Strategic Interventions

Creation of textile specific infrastructure in the state such as Mega Textile Parks

Augment Power loom infrastructure by addition of high-tech looms

Supporting traditional varieties of weaving by producing niche products. Support in branding support,

infrastructure facilities, upgradation of skills etc.

Increased R&D in textile sector to create new techniques of value-addition in the sector

7 Increasing focus on Traditional Industries

Key Performance Indicator Target 2022 Target 2025

Industrial growth % 12% p. a. 12% p.a.

State Manufacturing GSDP contribution 16.87% 20%

Employment Opportunities 1000000 1500000

Mega Textile Parks - 4

Investments in Textile Sector - 30000 Cr

New Hi-tech Power Looms - 10000

Page 10: Growth Sector Industrial Development The SME landscape in Karnataka is dominated by textile followed by the food and beverage industry. The Karnataka state industrial policy 2014-19

26%Increase

contribution to

State GDP by 2025

Total Tourist Footfalls INR 2.2 lakh crore (USD 33B)

Contribution to GSDP) 14.8%

Visitor Exports INR 1,24,930 crore

Direct Employment 15 lakh

Annual employment growth rate 7%

Number of UNESCO Heritage sites3 (Hampi, Pattadakal, Western

Ghats)

Number of Heritage monuments 507 centrally protected monuments

Ranking – Domestic footfalls 4th (2015)

Ranking – Foreign footfalls 9th (2015)

With around 13 crore tourists, 2016 saw an 8%

year on year growth in total tourist arrivals

• According to Karnataka tourism policy 2015-20, it is envisaged that

INR 54,000 Cr investments will be made during 2015-20 period

(more investment expected from private sector or under PPP)

which can generate around 30 lakhs employment

• As per WTTC 2016 report, Karnataka tourism contributes ~ 8% to

India’s total tourism GDP (assuming tourism share of 14.8% GSDP

in 2015)

• Bengaluru became the first Indian city

to have its own logo

Karnataka ranks 4th for domestic footfalls and 9th for foreign footfalls as per 2015 data

MAJOR

CONCERNS

Competition from

other states

Tourism

infrastructure and

connectivity

Qualified skilled

labor shortage

Karnataka Tourism Vision Group was created in 2013 which identified clusters of tourism interest

Urban Tourism

Heritage

Nature & Wildlife

Wellness & Spiritual

This region has been the most popular one in Karnataka for long. It

also has the highest number of rooms in multiple locations. Bangalore-

Mysore-Ooty is one of the oldest circuits in Southern India.

Hampi has been gaining fame as one of the greatest destinations in India.

Along with the other ancient locations around Hampi, it has become

Karnataka’s top destination for Inbound tours

Western Ghats is a biodiversity hotspot with potential to be developed as

a regulated tourism area in lines with Botswana’s Gorilla Tourism.

Karnataka has the largest population of Asian Elephants and tigers

Medical and wellness tourism has already made substantial headway,

primarily in Bangalore. Karnataka already has highly developed individual

Spiritual Sites. However, sites need to be connected and developed further to

1

2

3

4

5 Sun, Sea & Sand

The coastline of Karnataka extends over 300 km. However, significant

efforts & investments are needed to build world class beaches

comparable to international destinations like Maldives & Mauritius

Growth Sector : Tourism

Current State Assessment

Page 11: Growth Sector Industrial Development The SME landscape in Karnataka is dominated by textile followed by the food and beverage industry. The Karnataka state industrial policy 2014-19

STRENGTHS WEAKNESSES

1. The state enjoys the presence of

wonderful locations and destinations

across all tourism themes

2. Karnataka has a rich and unique

heritage and culture

3. Carrying capacity of most

destinations has not reached

saturation levels

4. Bengaluru, the origin hub for most

visitors, is well connected to the rest

of the country and has India’s third

busiest airport

5. The state has a progressive tourism

policy which encourages private

partnership and ICT use

1. Not all tourist destinations have

adequate last-mile connectivity

2. Basic tourism infrastructure – toilets,

wayside amenities, guides – needs

improvement

3. Promotion and marketing of

Karnataka destinations could be

better

4. Need for more participation from the

private sector in promoting the

Karnataka Tourism brand

OPPORTUNITIES THREATS

1. Karnataka has all tourism products

except snow. Branding and

promotions of Karnataka tourism

can propel it to become the leading

tourism state in India

2. It has 2nd highest number of

centrally protected monuments after

Uttar Pradesh. With its strength in

Heritage products, it can be

positioned as a leading heritage

tourism destination in India

3. Bengaluru is a globally recognized

city and can leverage this position to

attract more foreign tourists to

Karnataka

4. As Bengaluru is the innovation

capital of India, Karnataka can reap

the most benefits from tourism

technology start ups in India

1. Competition from other states,

mainly the other southern states -

Kerala, Andhra Pradesh, Telangana

and Tamil Nadu and from Goa

2. Competition from other international

destinations such as Sri Lanka

3. A career in tourism in not perceived

as attractive for many students

4. Limited rail connectivity and while

the road infrastructure is excellent, it

can often get congested, making it

unattractive to travel to far-flung

destinations

Growth Sector : Tourism

Page 12: Growth Sector Industrial Development The SME landscape in Karnataka is dominated by textile followed by the food and beverage industry. The Karnataka state industrial policy 2014-19

SDG’s Linked

Sector

Vision

To make Karnataka one of the top two states in the country in terms of

domestic footfalls by creating a world class tourism infrastructure, thematic

circuits, sustainable tourism practices, encouraging private partnerships and

investments by providing a conducive business environment, branding and

positioning Karnataka Tourism nationally and internationally and becoming

one the largest direct and indirect employment generator sector in the state

G1Increase tourism contribution to GSDP from current 14.8%

to 26%

Provide more than 3 million tourism industry jobs in the state

Build a world class tourism infrastructure to position

Karnataka as a world class tourism destination

Make Karnataka one of the two top states in India in terms

of domestic footfallsG2

G3

G4

By 2026, the number of people

employed in the Tourism

Industry shall surpass the IT

Industry in the state

Growth Sector : Tourism

Page 13: Growth Sector Industrial Development The SME landscape in Karnataka is dominated by textile followed by the food and beverage industry. The Karnataka state industrial policy 2014-19

1. Increase tourism contribution to GSDP from current 14.8% to 26%

Strategic Interventions

Increase spend per user by providing new tourism products such as aero sports and bike tourism

and creating an increasingly bigger assortment of choices at tourism destinations

Increase stay duration per user by providing attractive tourism infrastructure and creating tourism

circuits that encourage tourists to visit all attractions on the route

Increasing promotional activity to attract high-value clientele such as foreign tourists and MICE

Greater adoption of ICT-based initiatives to improve quality of tourism products and services

Creating incentives to attract domestic and foreign investments into the sector for development of

new destinations, products, services, and infrastructure

2. Make Karnataka one of the two top states in India in terms of domestic

footfalls

Strategic Interventions

Leveraging the diversity of tourism products available in the state to create circuits around themes

such as heritage, culture, pilgrimage, rural, adventure, and eco-tourism

Positioning Karnataka as a preferred tourism destination at the state and national level through

branding and promotional activities such as Theme of the Year”

Organize travel marts and exhibitions to attract more tourism promoters and operators to the

state and engage multiple stakeholders in the development of tourism in Karnataka

3. Provide more than 3 million tourism industry jobs in the state

Strategic Interventions

Encourage increased CSR spending from the private sector for development of tourism through

activities such as skill development and sustainability programs

Create a rich tourism startups ecosystem by providing professional and policy support

Making tourism an aspirational career choice by enhancing training and professional education

with necessary infrastructural support and programs such as tourism apprenticeship program

Creating a academia-industry-government interface and encouraging R&D in the sector

4. Build a world class tourism infrastructure to position Karnataka as a

world class tourism destination

Strategic Interventions

Development of infrastructure to ensure last-mile connectivity to all significant tourism

destinations and providing adequate facilities for communal and public transport

Ensuring adequate support infrastructure such as wayside amenities, accommodation facilities,

tourist information, and other servicing facilities to meet the needs of tourists

Building a world class tourism information database to support future policy development and

help with identifying areas and opportunities for interventions

Vision 2025 – Strategic Interventions

Growth Sector : Tourism

Page 14: Growth Sector Industrial Development The SME landscape in Karnataka is dominated by textile followed by the food and beverage industry. The Karnataka state industrial policy 2014-19

Key Performance Indicators Current 2022 2025

Increase in the Tourism

Contribution to State GDP14.8% 20% 26%

Total Tourism Contribution to State

GSDPINR 77,494 crore1 INR 170,790

crore

INR 268,940

crore

Increase Spend per Footfall for

international touristsINR 175,1651 INR 306,200 INR 428,100

Total employment in the Tourism,

Travel and Hospitality Sector9.3 lakh2 13.44 lakh 16.74 lakh

Number of of UNESCO World

Heritage Sites3 4 6

State Rank for Domestic tourist

footfalls4 3 2

State Rank for International tourist

footfalls9 6 3

Share of Foreign Tourist Arrivals in

the State2.7% 5% 10%

Number of Tourism Tech Startups 363 68

105

(with at least

one unicorn)

Investment in Tourism Not availableINR 31,060

crore1

INR 36,860

crore1

Contribution to India Tourism GDP 8% 10% 12%

Visitor Exports Not availableINR 21,495

crore1

INR 32,850

crore1

Note –1 estimate based on 2015 Ministry of Tourism, GOI data2 based on 2015 Ministry of Skill Development and Entrepreneurship data3 Total number of startups in Karnataka in the domains of travel & transport and of rentals as per www.tracxn.com

Growth Sector : Tourism