Making Karnataka/Bangalore the manufacturing hub of India: a roadmap for the government

Abstract

The objective of the report is to examine the competiveness of Karnataka / Bangalore region from a manufacturing perspective and to arrive at a roadmap for leadership. Objectives include: - Examine the attractiveness of Karnataka for manufacturing companies - Examine the manufacturing competitiveness of the region - Compare and benchmark the region against leading states/regions in the country - Create a roadmap for the region in order to attain leadership in the manufacturing segment Karnataka has long been a leader in industrialization in India. However over the past few decades, the software sector had eclipsed the manufacturing sector. In the meantime, states like Gujarat, Tamilnadu and Maharashtra have forged ahead of Karnataka in the manufacturing space. As part of this report, we examine the investment climate in Karnataka, benchmark the same against other states and countries and identify gaps and issues. We take a holistic viewpoint of the sector looking at broad indicators like skill, power, role of agencies etc. A framework/report developed by World Bank provides the central set of data. This focuses on four key areas for evaluation and from the analysis, it is evident that Karnataka has to work on certain factors to improve the investment climate the most important areas being power, regulation and skills. In addition, we examine the current initiatives from the Karnataka government events like Global Investors Meet ( GIM), the Suvarna Karnataka Corridor program, Karnataka Udyog Mitra, sector focus etc. A snapshot from states like Gujarat, Maharashtra and Tamilnadu provides a high level view of the competition that Karnataka faces while attracting investments. On an overall basis it is evident that Karnataka is trailing these states on various factors on the industrial front and has not been able to attract the kind of investments that these states have. Another factor is that the value generated in terms of industrial output in Karnataka is much lower than states like Gujarat and Maharashtra. Some of the perceived constraints in Karnataka include facets like regulation and corruption, lack of infrastructure, skill shortage, high taxes etc. The objective of this report is to be more future oriented and to generate fresh ideas and not to dwell on already known factors like corruption, taxes, regulation etc. Hence, this above information is supplemented by ideas from the author and people from various sectors who were interviewed for this report. A set of ideas are generated around industry multipliers, integrated townships, industrial exchanges, integrated development of ports, e-governance, tapping the kannadiga diasporas and appropriate industry selection. The report ends with a series of recommendations which flow from an amalgamation of the above information. Twelve key recommendations have been generated based on the analysis. As an outcome of the report, the biggest cause for concern is poor implementation: On paper, there are enough number of schemes, plans, policies, agencies, intent to be transparent etc. but the effectiveness as a whole is far below expectation. The government has to focus on implementation it has to take targets on key parameters and deliver to promise. It has to ensure transparency and sufficient insights to the general public and most importantly, the companies planning to invest in the state. Therefore, the first and most important recommendation is to have a target based planning to improve the investment climate: the government has to benchmark against the best in the country and across countries and deliver to these targets within a timeframe. There are supporting recommendations to help achieve these targets and to improve the overall momentum in the state. But unless we have a mechanism to improve implementation , which boils down to the attitude, intent and the focus of the ruling government, many of the things will remain on paper and things will continue as they are.