On Thursday, the Karnataka cabinet cleared a new industrial policy that aims to attract investments worth Rs 5 lakh crore and employment opportunities for 20 lakh people in five years by offering a slew of incentives and concessions.
According to the industries department, under the new industrial policy (2020-25) for the first time in India, Karnataka has adopted a production turnover based incentive system instead of tax-based one to encourage production-based performance.
Also, industrially backward districts will get more incentives to draw investments so as to ensure balanced industrial development of the state, it said.
"The new industrial policy is with a vision to emerge as a global leader in advanced manufacturing, research and development, innovation, and to create an ecosystem for an inclusive, balanced and sustainable development of the state," Industries Minister Jagadish Shettar said.
On production turnover based incentive systems, Shettar said for the first time in the country this is being done and it will encourage investment.
Investment promotion subsidy, based on turnover in the form of grant for medium, large and mega enterprises ranges from 1.75 to 2.50 percent on turnover in each year for a period of 5 to 10 years and limited to 35-60 percent of VFA (Value of fixed asset).
For Micro and Small Enterprises it will be 10 percent on turnover in each year for a period of 5 years and limited to 20-30 percent of VFA.
The other concessions or incentives include 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.
Noting that industries are now concentrated mostly in and around Bengaluru, Shettar said the new policy also envisages to take industries to tier two and tier three cities.
The policy has grouped districts of the state into three zones with a view to incentivise investments in industrially backward districts, classified as zone 1 and 2, while Bengaluru urban and rural districts are classified in zone 3, he said.