In Conversation With Karnataka Industries Minister Dr Murugesh Nirani On His Plan To Propel State As Global Manufacturing Hub

Q: Services-led growth has been powering Karnataka. Even the state economic survey points out that the industry/manufacturing sector contribution to the overall value add in the State is slightly underwhelming. Basically, the State's economy is very skewed towards services. How do we plan to address this imbalance?

We recognise this but things are changing rapidly.

We are working with a focused action plan to enhance Karnataka's stature as one of the country's leading high-tech industrialised states. We have unveiled a New Industrial Policy for the period 2020-25 to propel the State has a global manufacturing hub.

For Karnataka to emerge as a global industrial hub, providing easy access to land, labour and finance is the key. Our industrial policy emphasises simplification of regulatory framework and ease of doing business with respect to land and labour.

Recently, Karnataka has been at the forefront of attracting investments from across the country and abroad. Karnataka has already emerged as the top investment destination and top recipient, with a 48 per cent share of the total FDIs in India in the last three quarters.

The FDI inflow to Karnataka has been across sectors- aerospace and defence manufacturing, agrotech, fintech, biotech, nanotechnology, electronics, drone technology, hospitality, food processing, hardware, and electronic system design and manufacturing (ESDM).

Just yesterday, the Karnataka government signed an MoU with an international consortium for setting up India's first semiconductor fabrication plant in the State at a whopping investment of ₹22,900 crores ($3 Billion). This is a historic moment that will pave the way for the emergence of the State as a semiconductor manufacturing hub.

A couple of weeks back, the State High-Level Clearance Committee (SHLCC) approved several industrial projects worth Rs 11,495.4 crore ($1.5 Billion), including a proposal to set up a lithium-ion cell manufacturing unit . Exide Industries will be investing Rs 6,000 crore investment in setting up India's largest Lithium-Ion cell manufacturing Giga factories for Advanced Cell Chemistry Technology near Bengaluru airport.

Tumakuru Industrial Node has been established over 13,490 acres at Vasanthanarsapura near Tumakuru under the Chennai Bengaluru Industrial Corridor (CBIC) Project. We are hoping to attract Rs 50,000 crore ($6.5 Billion),investment and generate over 2 lakh jobs. Tumakuru Machine Tool Park and Japanese Industrial Township.

Karnataka leads the rest of the country in Research & Development, and Innovation. I am confident that state will emerge as an advanced manufacturing hub through a combination of proactive policies, world class industrial infrastructure, skilled workforce, capital infusion, technology transfer etc.

Q: Another challenge for Karnataka is with lot of dependence on Bengaluru. While Bengaluru is India's economic powerhouse, what measures are being undertaken to develop the manufacturing sector, particularly in Tier2 and Tier3 cities in Karnataka. The State is also attempting a cluster-based approach to industrialisation. Can you give us some idea of the thinking and execution behind this?

A: Aligning with the Government of India's vision, under 'AtmaNirbhar' Scheme, the state government is implementing the 'One District One Product (ODOP) initiative

Under the policy, one product in each district is identified. Entrepreneurs involved with these products can avail of credit-linked capital subsidy at 35% of the project cost, with a maximum ceiling of ₹10 lakh per unit. The maximum credit will be ₹30 lakh per project.

Another key initiative that we have taken to ensure balanced industrialisation across the State is the 'product specific industrial cluster program', which aims to create product-specific manufacturing clusters in the State. Many industrial clusters have been identified through the program. Special incentives and concessions specific to the respective product sector have been announced for each cluster.

Koppal was identified as a Toy cluster. Koppal Toy Cluster (KTC) has already commenced operations. The cluster brings together in-campus business support services, including social infrastructure and residential accommodation, to support the workforce.

Hubli Dharwad will be developed as a Home and Personal Care Consumer Goods( FMCG) cluster. After setting up a toy cluster in Karnataka, Aequs Infra has already started work on developing India's first consumer durable goods cluster here. Hubballi Durable Goods Cluster (HDC) will cater to the durable goods industry's manufacturing infrastructure requirements,

Mysore district has been identified as the hub for Electronic System Design and Manufacturing (ESDM) sector. The consortium that is setting up India's first semiconductor chip manufacturing plant has requested 150 acres of land in this cluster.

We are also working on developing the following clusters

Kalaburgi - Jewellery Park

Ramanagara - EV hub

Harohalli - 3 D Printing

Kadechur - Yadgiri- Pharma

Belgaum - Foundry cluster

Devanahalli - Aerospace and Defence

Davangere - Textile hub

The state IT department has launched the 'Beyond Bengaluru' initiative under the State's new IT policy 2020-25. Under this program, we aim to focus on growth in the IT /ITeS, Business Processing Outsourcing (BPO), Electronic System Design Manufacturing (ESDM), and Telecom services in six clusters-- Mangaluru, Tumukuru, Mysuru, Hubli, Shivamogga, and Kalaburagi.

Q: Some states are trying to woo potential investors for setting up factories by offering readily -available 'land bank'. What is Karnataka's approach to this model?

The availability of 'land bank' is very critical for Karnataka's industrial growth.

During my previous tenure as the Industries Minister, I introduced the 'land bank' concept by securing 1.25 lakh acres of uncultivable land from farmers for industrial purposes. There was no opposition from landowners as the bulk of it was uncultivable, arid land.

You may also remember that Karnataka moved quickly to offer Tata Motors immediate possession of 500 acres in the State to set up the Nano car (when the company decided to move out of Singur after protests) in North Karnataka. I spoke to Tata Motors MD on the same day the company decided to pull out of Singur and promised to make available another 500 acres within three months. Though the project did not materialise for a few other reasons, we were able to offer a proposal quickly.

The availability of ready parcel of land is a prerequisite for attracting further industrial investment. And i am working on building a' land bank' to ensure that we do not lose any investment opportunities due to the inability to offer land.

We are reviving the 'land bank' idea and acquiring 50,000 acres with the consent of landowners. We plan to keep land ready ahead of the flagship global investors meet Invest Karnataka scheduled for Nov 2022.

Q: While some of our neighbouring states like Tamil Nadu have been experiencing power shortage Karnataka has managed the power situation very well. Stable power situation could be a major incentive for investors. What are plans to strengthen the power situation?

Karnataka has a good mix of renewable energy (RE) and non-renewable energy resources. We have worked to minimise the dependence on thermal power generating units. The state also has a very high installed capacity of Solar Power at over 7000 MW.

In 2021-22, the state generated a record 32,503 (million units) of power. We have been able to meet peak demand most of the time without facing the shortage like other states.

While the overall power situation is good, i would be really happy if we can further reduce the cost of electricity for business. We still have a system that cross subsidies section of consumers by charging a differentiated rate for industries and business. We are looking to address this too.

Q: Some firms have opted to locate EV manufacturing facilities across the border in Tamil Nadu despite design centres in Bengaluru. Any lacunae in the State's EV policy that resulted in this?

We have overhauled some land-related laws and taxation policies to make Karnataka the preferred hub for EV manufacturing.

Neighbouring states are attempting to locate factories close to the border by leveraging on the proximity to Bengaluru. Also as part of our current policy, we provide huge incentives for industries to set up units outside Bengaluru Urban and Rural. However we have plugged some gaps in the policy, and we have already seen the results.

Omega Seiki Mobility recently announced the setting up of the world's largest electric three-wheeler manufacturing plant in Karnataka. With an investment of $250 million, the plant will come upon 250 acres of land and will produce around 10 lakh electric three-wheelers.

We hope to set up EV hub in Dharwad, Kalaburagi, Mysuru, and Tumakuru districts.

Q: Coastal Karnataka has seen very little industrial growth in recent decades. Any efforts to change this? Also, the road and rail connectivity to ports in coastal Karnataka from industrial centres in the State has been a major bottleneck for the industry. Any projects in the pipeline undertaken to ease this?

We are trying to develop export-oriented and eco-friendly industries in coastal Karnataka.

Under the 'one district, one product,' we plan to develop the furniture industry in this region. We are planning a furniture park in Udupi district.

New Mangaluru Port Trust (NMPT) is critical to the State as it caters to EXIM cargo movement.

Recently, New Mangalore Port Trust (NMPT) signed an agreement to develop a Liquefied Natural Gas (LNG) import terminal with an initial capacity of 4 4 million tonnes per annum (MTPA). We are also in the process of finalising an integrated fertiliser unit in the region.

One challenge we face in driving industrialisation in coastal Karnataka is environmental and pollution clearance. Also, given the location of Mangalore, it becomes a bit of a logistic challenge to cater to domestic demand.

An enduring solution will be to build a tunnel through the Shiradi Ghat on the connectivity challenge. However, the proposal faces resistance from environmentalists as they think it will destroy the ecologically-sensitive Western Ghats. The tunnel can reduce the travel time sharply and cut down the distance by 30 kilometres.

Q: We heard from many quarters that you are making a tremendous effort to ensure Karnataka Global Investors Meet will reinforce the State's position as one of India's preeminent investment destinations. What kind of investments are we looking to attract during the conclave? And what do you think will be the pitch to attract potential investors?

We are fully geared to host the Global Investors Meet (GIM) in November. My department officials are in touch with the Centre and Indian embassies in major foreign countries to ensure that meet will be another major turning point for the State in attracting big industrial investments.

We have prepared a detailed roadmap explaining the investment opportunities available in the State in all the sectors. We have joined hands with several foreign countries and private entities to conduct this mega business summit.

We will showcase opportunities across sectors - Automobiles & Auto components, Pharmaceutical & Medical Devices, Engineering and Machine Tools, Knowledge-based industries, Logistics, Renewable Energy, Aerospace & Defence, and Electric Vehicles.

Q: Any plans to further enhance the road/rail/air connectivity within the State?

To promote regional air connectivity and to meet the requirement of creating and providing airport infrastructure in districts or locations that are not connected within the 150 km of the existing airports, the Government is developing five minor airports at Shivamogga Chikkamagalur, Kalaburagi, Hassan and Bidar.

Two expressway projects are currently under construction. Bengaluru-Mysuru expressway and Chennai-Bengaluru expressway. We also have a significant portion of the Chennai-Surat economic corridor passing through our State.

The Government has been taking steps to augment the railway network in the State further. I have always been a big proponent of high-speed rail.

You may be aware that during my last tenure as the Industries Minister, I tried to push high-speed rail connectivity between Bangalore, Belgaum, and Gulbarga. I also tried to push for the preparation of a Detailed Project Report (DPR) for the high-speed rail on Chennai-Bangalore-Mysore corridor.

During my visit to Japan a few year back, I met Diazo Nozawa, who was associated with the first Bullet Train project in Japan and sought the assistance of Japan International Consultants for Transportation to provide technical consultancy for projects. In fact, I had the opportunity to discuss this with Prime Minister Shri. Narendra Modi (who was then the CM of Gujarat) on the need for high-speed rails in India. However, the next Government in Karnataka did not show much interest in it.

Q: Karnataka has a good educational infrastructure but students, as is often the complaint, are not often readily employable. How does the Government intend to skill them to make them industry ready?

Personally, I have plans to provide skill training to students in Bagalkot district and use that as a model study for the Government to be able to implement something on similar lines in all Talukas. I have also proposed that the industry players provide us syllabus which can equip the youngsters to be industry ready and not just academically qualified. Whichever new industry proposes to take off in our State, we intend to have them also say provide a' skill requirement 'both technical as well as as a soft skill syllabus that can be then taught in our Government ITIs, so that we equip them before they can join work.

Also, our 'Udyami aagu udyoga needu' programmes are encouraging thousands of youngsters, especially in tier II and III cities to start something of their own. Even if one percent of those thousands who attend turn entrepreneurs, they will be able to provide employment to the rest who don't. We are enabling this process of various levels and are confident that we will see a positive outcome in the days to come. I personally go talk to these youngsters and share my tale of starting with almost nothing to today being Asia's largest producer of ethanol and India's largest producer of sugar, among others and they are inspired to emulate.