Karnataka State Sectoral Policies Supporting Industries and Startups
Karnataka has implemented several sectoral policies to booster industries and startups, aiming to position the state as a global innovation hub. Below is a detailed overview of these initiatives, structured for clarity and ease of understanding.
1. Karnataka Start-up Policy 2022-27
Objective: Stimulate the growth of 25,000 startups by 2027.
Key Features:
New Age Innovation Network (NAIN) Centres: Establishment of 50 NAIN centres in higher education institutions outside Bengaluru Urban district, with 35 focusing on IT/electronics and 15 on biotechnology. Each centre receives up to ₹5 lakh per student project (maximum of 10 projects annually) and ₹12 lakh annually for operational expenses.
Venture Capital Fund: A ₹100 crore fund to support startups in emerging technologies such as artificial intelligence, machine learning, electric vehicles, med-tech, robotics, and drones. Notably, 25% of this fund is reserved for women-led startups.
Beyond Bengaluru Initiatives: Introduction of a Cluster Seed Fund dedicated to emerging technology hubs in Mysuru, Hubballi, and Mangaluru, promoting startup growth beyond the state capital.
Support for Underrepresented Groups: The policy emphasizes nurturing startups led by women, as well as those from SC, ST, OBC, and minority communities.
2. Incentives for Global Capability Centres (GCCs)
Objective: Double the number of GCCs to 1,000 and create 350,000 jobs by 2029.
Key Features:
Incentives: Provision of rent reimbursement, patent fee subsidies, and electricity duty exemptions based on employment numbers.
Economic Impact: Aim to generate $50 billion in economic output through these centres.
Infrastructure Development: Plans to establish three new tech parks and offer skill development courses, especially in artificial intelligence.
3. Clean Mobility Initiatives
Objective: Promote the adoption of clean mobility solutions, including electric and hybrid vehicles.
Key Features:
Tax Waivers: Significant reduction in road tax and registration fees for hybrid cars priced below $30,000.
Financial Incentives: Capital investment incentives ranging from 15% to 25% for manufacturers of electric vehicles, battery components, and charging equipment, determined by investment size and employment numbers.
4. Local Employment Promotion
Objective: Enhance employment opportunities for local residents.
Key Features:
Job Reservation: A proposed bill mandates companies to allocate 50% of management roles and 70% of non-management positions to local residents.
Industry Response: While aimed at reducing unemployment, this initiative has faced criticism from industry leaders who argue it may hinder the ability to attract top talent.
5. Major Investments
- Chevron's R&D Hub: Chevron plans to invest approximately $989 million in Bengaluru to establish its largest technology center outside the U.S., focusing on research and development and expected to create 600 engineering jobs by the end of 2025.
6. New Industrial Policy 2020-25
- Vision: To make Karnataka a global leader in advanced manufacturing, R&D, and innovation.
- Objectives:
- Attract investments worth ₹5 lakh crore.
- Create employment opportunities for 20 lakh people.
- Achieve 3rd position in merchandise exports.
- Maintain a 10% annual industrial growth rate.
- Key Features:
- Sector-specific incentives: Tailored support for key sectors like aerospace, biotechnology, and electric vehicles.
- Focus on Tier-2 and Tier-3 cities: Promoting industrial development beyond Bengaluru.
- Emphasis on MSMEs: Support for small and medium enterprises.
- Skill development and infrastructure: Initiatives to enhance workforce skills and improve infrastructure.
- Turnover-based incentive system: Ensuring balanced industrial development.
- Current Affairs: The policy aims to leverage Karnataka's existing strengths in technology and innovation to drive industrial growth. It addresses the challenges of unemployment and regional disparities.
7. Other Relevant Policies
- Karnataka Biotechnology Policy: Promotes the growth of the biotechnology sector.
- Karnataka Aerospace Policy: Aims to make Karnataka a global aerospace hub.
- Karnataka Electric Vehicle and Energy Storage Policy: Encourages the adoption of electric vehicles and the development of energy storage solutions.
These policies and initiatives underscore Karnataka's commitment to fostering a dynamic environment for industries and startups, ensuring sustainable economic growth and technological advancement.
UPSC-level multiple-choice questions (MCQs) based on Karnataka’s sectoral policies supporting industries and startups:
1. Karnataka Startup Policy 2022-27 aims to establish how many startups by 2027?
a) 10,000
b) 15,000
c) 20,000
d) 25,000
Answer: d) 25,000
Explanation: The Karnataka Startup Policy 2022-27 aims to facilitate the growth of 25,000 startups by 2027. The policy focuses on fostering entrepreneurship in emerging technologies and providing funding support.
2. Under the Karnataka Startup Policy, what percentage of the ₹100 crore Venture Capital Fund is reserved for women-led startups?
a) 10%
b) 15%
c) 20%
d) 25%
Answer: d) 25%
Explanation: Karnataka has reserved 25% of its ₹100 crore venture capital fund specifically for startups led by women entrepreneurs. This initiative aims to bridge the gender gap in the startup ecosystem.
3. The "Beyond Bengaluru" initiative under the Karnataka Startup Policy focuses on which of the following cities?
a) Mysuru, Hubballi, Mangaluru
b) Ballari, Tumakuru, Dharwad
c) Belagavi, Davanagere, Shivamogga
d) Kalaburagi, Bidar, Hassan
Answer: a) Mysuru, Hubballi, Mangaluru
Explanation: The "Beyond Bengaluru" initiative aims to promote startup ecosystems in cities like Mysuru, Hubballi, and Mangaluru, reducing dependence on Bengaluru as the sole tech hub.
4. What is the primary objective of Karnataka’s Global Capability Centres (GCCs) policy?
a) To promote IT exports
b) To double the number of GCCs to 1,000 by 2029
c) To provide free internet in startup zones
d) To make Karnataka a manufacturing hub
Answer: b) To double the number of GCCs to 1,000 by 2029
Explanation: Karnataka aims to increase the number of Global Capability Centres (GCCs) from the current 500 to 1,000 by 2029, creating over 350,000 jobs and boosting IT-led economic development.
5. Which sector receives special incentives under Karnataka’s clean mobility initiatives?
a) Pharmaceuticals
b) Agriculture
c) Electric Vehicles (EVs)
d) Textile
Answer: c) Electric Vehicles (EVs)
Explanation: Karnataka’s clean mobility initiatives provide incentives such as tax waivers and capital investment support for the electric vehicle industry, including battery manufacturing and charging infrastructure.
6. Under Karnataka’s local employment bill, what percentage of non-management jobs must be allocated to local residents?
a) 30%
b) 50%
c) 60%
d) 70%
Answer: d) 70%
Explanation: The Karnataka government has proposed a bill requiring industries to allocate 50% of management jobs and 70% of non-management jobs to local residents, aiming to boost employment opportunities for the state’s workforce.
7. Which multinational company recently announced a major R&D investment in Karnataka?
a) Microsoft
b) Chevron
c) Tesla
d) Amazon
Answer: b) Chevron
Explanation: Chevron, a U.S.-based energy giant, has announced an investment of approximately $989 million in Bengaluru to set up its largest R&D centre outside the U.S., creating around 600 engineering jobs.
8. What is the key objective of Karnataka’s New Age Innovation Network (NAIN) initiative?
a) To create more startup-friendly laws
b) To provide research funding in premier institutes
c) To establish innovation centres in colleges outside Bengaluru
d) To offer tax exemptions for new businesses
Answer: c) To establish innovation centres in colleges outside Bengaluru
Explanation: The NAIN initiative focuses on setting up innovation centres in educational institutions outside Bengaluru Urban district, encouraging students to develop entrepreneurial projects with financial support.
9. Consider the following statements regarding Karnataka’s Startup Policy 2022-27:
- It aims to establish 50 New Age Innovation Network (NAIN) centres in Bengaluru to support startups.
- It includes a ₹100 crore venture capital fund to support startups, with 25% reserved for women entrepreneurs.
- The policy focuses on emerging technologies such as AI, ML, electric vehicles, and robotics.
Which of the statements given above are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2, and 3
Answer: b) 2 and 3 only
Explanation: The policy establishes 50 NAIN centres outside Bengaluru, not within it, making Statement 1 incorrect. The other two statements correctly highlight the ₹100 crore venture fund (with 25% reserved for women) and the focus on emerging technologies.
10. Consider the following statements about Karnataka’s Global Capability Centres (GCCs) policy:
- The state aims to increase the number of GCCs to 1,000 by 2029.
- The initiative offers incentives such as rent reimbursement and patent fee subsidies.
- The policy is primarily focused on the automobile sector.
Which of the statements given above are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2, and 3
Answer: a) 1 and 2 only
Explanation: The GCC policy aims to increase the number of GCCs to 1,000 by 2029 and offers rent reimbursement and patent fee subsidies to attract investment. However, the policy is not focused on the automobile sector but rather on IT and emerging technologies.
11. With reference to Karnataka’s Clean Mobility Initiative, consider the following statements:
- It provides tax waivers for hybrid and electric vehicles.
- The policy includes capital investment incentives for EV manufacturers and battery component makers.
- Karnataka was the first state in India to introduce an EV policy.
Which of the statements given above are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2, and 3
Answer: d) 1, 2, and 3
Explanation: Karnataka’s Clean Mobility Initiative includes tax waivers and capital investment incentives for EV-related businesses. Karnataka was the first state in India to introduce an EV policy in 2017, making all statements correct.
12. Consider the following statements regarding Karnataka’s job reservation policy for locals:
- The bill mandates that 50% of managerial positions be reserved for locals.
- The policy is applicable only to IT sector companies.
- The bill has been widely opposed by industry leaders, citing talent acquisition challenges.
Which of the statements given above are correct?
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1, 2, and 3
Answer: b) 1 and 3 only
Explanation: The bill requires 50% reservation in managerial roles and 70% in non-managerial roles for locals. However, it is not limited to IT but applies to various sectors. It has faced criticism from industries, making Statements 1 and 3 correct.
13. Which of the following are key focus areas of Karnataka’s Startup Policy 2022-27?
- Artificial Intelligence and Machine Learning
- Biotechnology
- Defence Manufacturing
- Agri-Tech
Select the correct answer using the code below:
a) 1 and 2 only
b) 1, 2, and 4 only
c) 2, 3, and 4 only
d) 1, 2, 3, and 4
Answer: d) 1, 2, 3, and 4
Explanation: Karnataka’s Startup Policy focuses on multiple emerging technologies, including AI, ML, biotechnology, defence manufacturing, and agri-tech, making all options correct.
14. Consider the following statements regarding the Chevron R&D hub in Karnataka:
- Chevron is investing around $989 million in Bengaluru.
- It will be the company’s largest technology centre outside the U.S.
- The centre will primarily focus on electric vehicle research.
Which of the statements given above are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2, and 3
Answer: a) 1 and 2 only
Explanation: Chevron is investing $989 million in Bengaluru for its largest technology centre outside the U.S., but the centre will focus on energy research, not electric vehicles, making Statement 3 incorrect.
15. Which of the following incentives are provided under Karnataka’s GCC policy?
- Rent reimbursement
- Patent fee subsidy
- Subsidies on imported IT hardware
- Electricity duty exemption
Select the correct answer using the code below:
a) 1 and 2 only
b) 2 and 3 only
c) 1, 2, and 4 only
d) 1, 2, 3, and 4
Answer: c) 1, 2, and 4 only
Explanation: The GCC policy offers rent reimbursement, patent fee subsidies, and electricity duty exemptions but does not provide subsidies on imported IT hardware.
16. Consider the following statements regarding the Karnataka Innovation Authority (KIA):
- KIA was established to regulate and promote innovation in high-growth sectors.
- The authority has the power to create special regulatory zones for emerging industries.
- It exclusively supports startups in the IT sector.
Which of the statements given above are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2, and 3
Answer: a) 1 and 2 only
Explanation: The Karnataka Innovation Authority (KIA) regulates and promotes innovation across multiple sectors, not just IT. It also creates special regulatory zones to facilitate new technologies, making Statements 1 and 2 correct.
17. The Karnataka Agri-Tech Policy focuses on which of the following?
- Adoption of AI and IoT in agriculture
- Promotion of agribusiness startups
- Providing land subsidies to agritech firms
Select the correct answer using the code below:
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2, and 3
Answer: a) 1 and 2 only
Explanation: The policy promotes AI and IoT in agriculture and supports agribusiness startups, but does not provide land subsidies to agritech firms.
18. Which of the following are features of Karnataka’s Biotechnology Policy?
- Establishment of biotech parks
- Subsidies for clinical trials
- Special tax exemptions for biotech firms
Select the correct answer using the code below:
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2, and 3
Answer: a) 1 and 2 only
Explanation: The policy focuses on biotech parks and clinical trial subsidies, but does not offer special tax exemptions to biotech firms.