The Karnataka government will offer an additional 10% incentive to companies that transition their research and development (R&D) operations into local manufacturing units. This initiative is part of the state’s upcoming industrial policy for 2025-2030, aimed at boosting domestic production, MB Patil, minister for large and medium industries and infrastructure development, told Fe.
“Of the Fortune 500 companies, more than 400 have R&D centres in Bengaluru, including Samsung, Airbus, Boeing, and Mercedes-Benz. However, only about 10% of their manufacturing takes place here. Our new incentive structure is designed to encourage these companies to establish production units in Karnataka,” Patil said.
The revised industrial policy will introduce flexible incentives, allowing businesses to opt between production-linked or capital-based benefits. It will also introduce employment-based incentives, with additional advantages for companies hiring women.
Furthermore, the state will allocate Rs 5,000 crore to enhance infrastructure, ensuring water supply to industrial parks and offering land parcels on a lease basis. Companies will also have the option to generate their own power needs within industrial zones. “We are offering firms the opportunity to invest 26% in solar or wind energy projects,” Patil added. Karnataka currently derives 65% of its installed power capacity from renewable sources.
To streamline business processes, Karnataka is collaborating with Microsoft to launch an AI-driven single-window portal. This platform is expected to cut application processing time from 100 days to 50 and will integrate key information on regulations, land availability, and application tracking in a mobile-friendly format.
The state is also promoting industrial growth beyond Bengaluru. Belgaum is being positioned as a hub for electronic manufacturing, aerospace, and FMCG parks, while Bijapur will cater to water-intensive industries like semiconductors. Mysore, Hubli, and Belgaum will be developed as new IT and startup hubs, with reduced land prices and added incentives.
These policy initiatives come ahead of Invest Karnataka 2025, scheduled for February 12. The annual investment summit aims to secure Rs 10 lakh crore in investments, with a targeted 70% conversion rate.
“Last year, we received commitments worth Rs 9 lakh crore and converted Rs 5 lakh crore. The gap was primarily due to green hydrogen investments, where infrastructure constraints limited feasibility. This time, we have set more realistic investment goals,” Patil explained.
Karnataka has already secured Rs 10,000 crore in investments from Japan and South Korea. “We have successfully attracted high-tech companies in semiconductors, battery manufacturing, and machine tools from these countries,” Patil added.
