Karnataka Calling

The stage is set. The Karnataka State Government is geared up to host Invest Karnataka 2016, its biggest and grandest global investors meet ever. The State Government is investing in a big way. Its infrastructure is to be upgraded not just in the capital city of Bengaluru but across all tier II and tier III towns and cities, and backward regions.

It has held road shows in key financial centres worldwide in the US, UK, France and other countries. This has helped generate interest among both Indian and global investors and built momentum for the mega event set for February 3 to 5, 2016 in Bengaluru.

Already home to the fourth largest technology cluster in the world after Silicon Valley, Boston and London, the State Government will also showcase over a hundred projects across numerous other sectors at the grand event. From traditional opportunities in sectors such as mining to more advanced and futuristic scenarios in nano medicine, the State is gung-ho about opportunities across the board. Particularly, the Government believes the sectors with very high growth potential lie in manufacturing, such as automobiles, aerospace, machine tools, defence and heavy engineering. It has even identified signature projects across sectors and is developing a strategic infrastructure plan with key initiatives in each sub-sector.

Greenfield industrial townships are envisaged at nine locations and the State will also see two main industrial corridors passing through it as part of a larger national plan. In the backdrop of mixed success nationwide with respect to private public partnership (PPP) projects, Karnataka highlights the fact it has been a PPP-friendly State with many flagship projects commissioned successfully. A shining example of this is the Kempegowda International Airport.

Roads, Railways, urban water supply, solid waste management and agri food parks are other areas where the State has demonstrated its mettle in executing PPP projects successfully.

Key to its achievements over the years have been the Government´s pro-investment and industry-friendly approach. Already boasting the tag of being considered the fastest growing market in India, the Government´s infrastructure policy 2007 aims to ease the bottlenecks even further to attract more investors and facilitate the progress of its strategic infrastructure development programme.

Attention has been given to initiatives with respect to ease of doing business with the Labour department, commercial tax department and others. Also, this time, the Government is aiming to persuade investors to look beyond the first tier cities. Officials said investors have already chosen areas such as Mysore, Hassan and other northern parts of the State.

The new policy takes due note of the longer gestation periods of large-scale infrastructure projects, their unique funding requirements, as well as assures the State´s support during hurdles in land acquisition. Obtaining clearances and approvals is also well-facilitated as well as the steady and quality supply of basic requirements such as roads, power and water.

In fact, the Government´s infrastructure policy document begins by envisioning building strong PPP in infrastructure and achieving the twin objectives of high growth and equity. It expects to expand, deepen and develop private investment in infrastructure as the means to achieve that high growth; and establish Karnataka as a role-model for infrastructure development, where governance is based on inter¡national best practices.

If that aim seems lofty, no less dizzying is the target of Rs.1 lakh crore that the State Government has set for itself at the upcoming investor meet. ¨In view of the overwhelming response to our road shows held across the country and overseas, we are setting a realistic target of Rs.1 lakh crore from the GIM-Invest Karnataka 2016,¨ the Additional Chief Secretary Smt. Ratna Prabha told reporters earlier in December 2015.

In the run-up to the event, Karnataka organised 72 Business to Government (B2G) meetings in Delhi, Mumbai, Hyderabad, as well as the US, France and Dubai, identifying 12 focus sectors.

In the road shows in India, the State received investment proposals worth Rs.25,000 crore and is hopeful of receiving more from domestic and overseas investors during the summit.

Total proposals received for the meet totalled Rs.62,770 crore. The aim is to get another Rs.40,000 crore to reach the target of Rs.1 lakh crore (Rs.1 trillion). According to the land audit committee meeting held on November 27, 2015 another Rs.36,193 crore worth of projects were in the pipeline, said an official statement. ¨We will catch up with our target of Rs.1 lakh crore with the investors´ meet. We do believe that more is possible,¨ Smt. Ratna Prabha said. She added that the event is being promoted as ¨the preferred investment destination for companies creating the world´s future¨.

Major investments so far include a Rs2,300 crore Asian Paints plant in Mysuru, Rs.1,000 crore GSK pharmaceutical plant, Rs600 crore Tata Power SED plant in Vemgal, Scania bus plant in Narasapura and Toyota engine plant in Bengaluru, among others.

The three-day event will have ´Karnataka is the State of the Future´ as its theme. During the event, there will be deliberations on topics such as making small and medium enterprises (SME) globally competitive and promoting women entrepreneurship. Participants and panellists will also discuss promoting a start-up culture in manufacturing and other sectors, ease of doing business, attracting non-resident Indian (NRI) investment and public-private partnership in industrial infrastructure.

The session on women´s entrepreneurship will be the first of its kind. Titled ¨Promoting women Entrepreneurship in Karnataka¨, the session will be held on February 4. The State has aimed at offering a much needed impetus to women entrepreneurs through the Industrial Policy 2014-19 and gives them an investment promotion subsidy based on the size of their units. With a letter of intent signed between Bengaluru and San Francisco recently, a delegation of women entrepreneurs from San Francisco is also expected to participate in Invest Karnataka 2016.

The Karnataka State Government has also roped in seven partner countries for the event which include France, Japan, Sweden, South Korea, the UK, Italy and Germany. Shri.Gaurav Gupta, Commissioner for Industrial Development said that 50 delegates from France and 15 from Italy have already confirmed their visit. Companies like Boeing, Airbus, Toyota, Mahindra and Mahindra, Tatas and Biocon are also partnering the event.

Investment facilitation

• IDD (nodal Department for PPP)-shall assist the State Level Single Window Agency for PPP and SHLCC in evaluating and deciding upon the specific proposals.
• Single Window Agency (SWA): Chaired by Chief Secretary to approve projects with investments upto USD 8.33 mn (INR 50 Cr.)
• State High Level Clearance Committee (SHLCC): Chaired by Hon´ble Chief Minister of State of Karnataka to approve projects with investments above USD 8.33 mn (INR 50 Cr.)

Focus sectors for infrastructure development

• Agri infrastructure
• Irrigation
• Education
• Energy
• Healthcare
• Industrial infrastructure
• Rural development
• Sports and youth services
• Public market
• Telecommunication
• Tourism
• Transportation & logistics
• Urban and municipal infrastructure
• Housing

Key highlights

• Sectoral sessions
• Partner Country /State sessions
• B2B/B2G networking opportunities
• Expo

Incentives and Concessions General

• Projects would be allowed to charge user fees during the gestation period
• Special consideration for infrastructure projects due to long gestation periods
• Financial Support in the form of Viability Gap Funding from GoI and GoK Facilitation
• Government would help in acquisition of land where private investors face difficulties in acquisition
• Support in obtaining clearances and approvals and also in provision of providing basic and linkage infrastructural needs like roads, power and waterExemption from Entry Tax
• Exemption for a period of three years or till date of completion of the project whichever is earlier upto Rs. 25 lakhs (USD 0.0416 mn) machinery and equipment, and Rs. one lakh (USD 0.0016 mn) per invoice for construction material Concession on Stamp Duty and Conversion Fine on land
• Concession based on zonal classification* and regional classification*

Infrastructure Policy 2007

Key highlights

• Enabling legal framework ? Contracting method clarity
• Single nodal agency ? District committees for speedy implementation