Competitiveness of manufacturing sector in Karnataka

Abstract

Analysts across the world attribute the genesis of Indian industrial success to the IT boom in the country. Karnataka has a synonymous story line discussed. India s growth is primarily driven by its stronghold in the tertiary sector. So is the income of Karnataka. However the big question is Is this single focused model of development enough and stainable in the long run? Many industrialists believe Karnataka was so focused on the IT sector that it missed numerous opportunities in manufacturing and a host of other sectors. In the last 5 years Karnataka has taken a back seat while other states have aggressively attracted investment in the manufacturing sector. Tamil Nadu and Gujarat have been the frontrunners, while newly formed states like Chhattisgarh and Uttaranchal are also high on the list of potential investors. These states have done many things right to attract investment: enhanced their infrastructure capacity largely, proactively formulated and implemented an attractive SEZ policy and more importantly gauged the needs of the industry and offered them an attractive incentive package in terms of taxation etc. Karnataka too has been growing in these aspects, but we believe the state has not done enough and has to be more proactive. The insight from the industry brings forth a similar concern. This study in brief captures the industry s opinion on the state s performance in attracting investments in the manufacturing sector. The study also evaluates the performance of the state on various parameters critical to building competitiveness in the manufacturing sector. The concluding section lists the inputs from the industry on the way forward, immediate next steps and long term strategies Karnataka as a state could implement to enable grow of its manufacturing sector.