Karnataka Calling

Question: Karnataka is known as a knowledge hub of Asia. What policies has the government of Karnataka taken to become this hub?

Answer: Yes, nowadays Karnataka is a knowledge hub. Our government is a stable government. In the IT sector, it is still the Silicon Valley of India. Everybody knows that the IT sector is in Bangalore. But in the 80s, when the place was just set up, we had Karnataka State Finance Corporation. It was a state funded finance company which gave loans to Infosys as one of the ways to promote industry in the 80s. It gave loans to IT companies and subsidies to manufacturing companies.

Also, we set up the first software technology park in the 1990s with the help of the government of Singapore. The software technology sector of India was established to promote connectivity to the IT industries. We set up and established it in Bangalore first. Karnataka also has a history of education in the private sector. The first college was set up in the 1950s. Today we have 153 colleges, because in the 60s, 70s and 80s we gave funds to the private sector to set up colleges. Because of that, nearly 45,000 engineers enter engineering colleges every year. So the 70s, 80s and 90s supplied the manpower that is now the IT industry. Texas Instruments was the first to set up in Bangalore in the 80s, one of the first companies. After it came Infosys, then Wipro, then TCS. To polish their personnel they sent them to Silicon Valley, and then they came back and set up companies in Karnataka.

To support this, in Bangalore we developed the Electronic City. We also set up KEO NICS. We established the infrastructure, the connectivity, we established the software tech market with foreign investment from Singapore, started acquiring land, and then created incubation sectors in Electronic City. So this proactive role of the government did help a large number of companies to be established and to grow big. We also started giving export awards for industries – some incentives, some support, some cooperation was there from the government for these companies from the very beginning.

Q: What difficulties would a foreign company experience in expanding to Karnataka, and how can you help smooth these difficulties?

A: We have some constraints in power supply. In the presentation today we mentioned a 15 percent shortage of power. In Bangalore there is less, but all over the state there is a problem. But we are setting up a large number of power projects to mitigate this problem.

Also, the cost of land can be a problem, because Bangalore is the fastest growing city in Asia, so the cost of land has gone up. Therefore, we are asking IT companies to go to Mysore and other cities in the state. Or to go to the outskirts of Bangalore rather than the center of Bangalore. We have acquired 1,000 acres of land next to the Bangalore airport where we are giving cheaper land to investors. Our airport itself is 35 km from the center of the city, so if you go 35 km away from Bangalore, the cost of land will come down drastically. So, while land cost has been an issue we are addressing that as well.

The cost of manpower is another one. Because a large number of companies are coming into Bangalore, the cost of hiring is going up, at least compared to other cities in India. So we are trying to lure investment to other cities so that the cost of manpower will go down. It is about 30 percent cheaper outside Bangalore than inside Bangalore. Other regions would benefit from the development as well. There are many opportunities to invest in the power sector, for instance.

Q: Can you speak more about the land bank that the government has set up? How does that work? Will there be angry farmers protesting the land sales?

A: There are 50,000 acres of land already designated. Approximately another 50,000 acres is in the final stage of becoming available, so altogether it is 100,000 acres. This land is not only in Bangalore, but also in other cities. Maybe about 10 percent of the landowners are unhappy and are asking for higher compensation. We have acquired more than what we need so maybe protests or difficulties will dock 5 to 10 percent off the final amount. Also, depending on the demand during the Global Investors Meet we can acquire more land if necessary.

During the Global Investors Meet, we will provide services to investors if they want to check out the land that is available. If they come early, we can match them up with a guide who will take them to the actual land and back. Two hours drive from Bangalore we have 10,000 acres available. We will take them to the place and show them the land if they are interested. We are also setting up a global financial district near the airport. About 50 acres is already given to infrastructure, for IFCA has already been given the land. We will also develop an industrial township next to the international airport, so people who work in this industry will still be nearby. Bangalore will be about 30 to 35 km away. About 250 acres of land will be earmarked for this township near the airport, and if investors want to see that during the Meet, they will be able to.

Q: Can you tell more about what will be at the global investor’s meeting in June?

A: We are expecting to attract investors from June 3-4. We have the facilities now that we need: land, water and power. We are hoping to attract $40 billion to $50 billion in investment this year. Important sector are steel, cement, power, fertilizer, chemicals, food processing, infrastructure and IT . We expect some companies like Arcelor Mittal, the number one steel manufacturer. Now, the company is producing about 6 million tons of steel. We expect them to invest about $6 billion at the event. At the same time, POSCO is also interested in a similar project and similar investment. Yesterday we had a meeting with POSCO executives, and they said that they will make a decision about the project next week. They have gone to see the sites and applied for a mining release. Also, Shell is setting up an R&D sector in Bangalore. Laforge, the largest cement manufacturer, will also attend the event and do some investment. Altogether, we expect about 500 companies are going to attend the investment meet for those two days. It might become over 1,000 companies, but we only expect about 500 investors from the event.

The event will be attended by central ministers, commercial ministers and enough government people to make sure that everything is taken care of. We are planning to consider proposals during those two days. Companies can submit proposals then, and we are planning to hold a high-level committee meeting on June 4 to consider the proposals and approve them right away.

We are also having sector-specific seminars during those two days. Like aerospace, automobile, biotechnology and others. There will also be an exhibition of the different product sectors manufactured in Karnataka. Each sector, like for instance tourism, will showcase what is going on in Karnataka. Not only what tourism projects are offered, but also what has been manufactured here, like aerospace manufacturing components are already manufactured in Karnataka, so they will have an idea of what can be done in the state.

Q: Your project near the airport in Bangalore is reminiscent of the New Songdo City project here in Korea, near Incheon International Airport. You have made Karnataka into an excellent technology hub, and have many other strong industries there. Can you give any advice to other countries who are trying to do the same thing?

A: You must allow for thoughts from outside. People from other countries and other states should feel welcome in your country. Karnataka has several Fortune 500 companies and their executives are living in Bangalore, not just visiting. They live there permanently. So we have a strong, multicultural society in our state. I believe that we should build a multicultural society like that in every country. We should invite and welcome people from other countries and act as if it is their land too. We should, of course, respect other people’s cultures and religion. We have a saying in India that a guest is like god. We should treat them with respect, so that they can stay there and grow there. We have another saying in India, which is that the whole universe is our family. The concept of the universal brotherhood of universal family should be present in any culture. We should not build walls around us. Or, even if there are walls, there should be doors and windows for new ideas and thoughts to come in.