From Our Special Correspondent

Daijiworld Media Network

Bengaluru, Jul 23: The B S Yediyurappa-led BJP regime in Karnataka has unveiled the state’s new industrial policy for the period 2020-25 with an ambitious target of generating Rs 5 lac crore investment in industrial enterprises and creation of 20 lac jobs.

The new industrial policy for the five-year period also sets its sight on making the state reach the number 3 place in merchandise exports in the entire country over the next five years. 

Briefing reporters after securing formal approval for the new industrial policy at the State Cabinet meeting held in Vidhana Soudha on Thursday, Karnataka’s large and medium industries minister Jagadish Shettar said another major thrust of the new policy is to maintain industrial growth rate at 10% per annum.

The new industrial policy is also aimed at ensuring a well-balanced, sustainable and inclusive industrial development throughout the state.

The last industrial policy was brought out in 2014 and 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, Shettar said.

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 and tier-3 cities while ensuring inclusive development of investment within the state.

Vision and objectives of the New Industrial Policy 2020-25:

Vision:

To emerge as a global leader in advanced manufacturing, research and development, and innovation and to create an ecosystem for an inclusive, balanced and sustainable development of the state.

Objectives

a) To attract investments worth Rs 5 lac crore

b) To create employment opportunities for­­­­­­­­­­ over 20 lac people

c) To reach the third position in merchandise exports in the next five years

d) To maintain an industrial growth rate of 10 per cent per annum

e) To provide an enabling ecosystem for technology adoption and innovation

The New Industrial Policy 2020-25 aims at holistic development of the state and looks beyond Bengaluru 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 and 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 and Auto components, Pharmaceutical and Medical Devices, Engineering and Machine Tools, Knowledge-based industries, Logistics, Renewable Energy, Aerospace and 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 and Development, Intellectual Property Rights (IPR), Technology Adoption and Innovation, Cluster Development Initiatives and Sustainable Industrialization.

Promotion of MSMEs:

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

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

3) Technology Up-gradation and technical support.

4) Vendor development and facilitation.

5) Marketing support in public procurement.

6) Skill development and EDP.

7) MSME Manufacturing Excellence Awards

8) Equity funding.

9) Incentives and concessions.

Promotion of Large & Mega Projects:

i) Integrating Karnataka with the Global Value Chains

ii) Making the state a preferred destination for OEMs

iii) Annual action plans for investment generation.

iv) Infrastructure support - KIADB will earmark 70% of allottable land in their industrial areas.

v) International Investment Facilitation Desk.

vi) Investors Meet.

Incentives and Concessions:

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

Making land easily available for Manufacturing:

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

2) Encouraging the establishment of Private Industrial Parks like Integrated Industrial Parks, Sector-Specific Parks, Logistics Parks and Flatted Factories by private developers.

3) Leveraging development of Industrial Nodes under the Chennai-Bengaluru Industrial Corridor and Bengaluru-Mumbai Economic Corridor.

4) 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 km and deemed to be Industrial Township. It is proposed to notify the first SIR-Dharwad SIR encompassing Dharwad, Gadag, Haveri and Belagavi districts. SIRs will also be notified in Shivamogga encompassing Shivamogga, Davanagere, Chitradurga and Chikkamagaluru districts and Kalaburagi encompassing the Kalyana Karnataka districts.

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

6) Existing large industrial areas in the state will be declared as an industrial township under appropriate Laws.

Reforms in labour laws:

a) 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 7 pm to 6 am in the factories registered.

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

c) Industrial Employment (Standing Order) Act, 1946 has been amended to permit the Fixed Term Employment (FTE)/Contract Employment. The rules have been notified on June 30, 2020.

d) 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).

e) 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:

A) To facilitate the 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.

B) 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.

C) An acknowledgement certificate will enable the starting/commencement of work on the site.

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

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

Incentives and concessions offered:

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.

1) 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.

2) Exemption from stamp duty and concessional registration charges.

3) Reimbursement of land conversion fee.

4) Exemption from tax on electricity tariff for MSMEs.

5) Power subsidy for micro and small enterprises.

6) Support for artisans.

7) Interest subsidy on MSME technology Up-gradation loans.

8) Incentives for rainwater harvesting and wastewater recycling.

9) Incentives for the establishment of ETP / CETP.

10) Additional incentives to special category entrepreneurs viz., SC/ST, women, minority, physically challenged and former servicemen enterprises.

11) Incentives for Export Oriented Units.

12) Investment subsidy for anchor industries (minimum investment Rs 100 crores) in taluks lacking any major industries.

13) 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.

14) Incentives and concessions for the development of Private Industrial Parks.

15) Support for research and development and Industry 4.0.