Expo 2020: Karnataka's robust aerospace and defence sector eyes $6b investment

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Murugesh Nirani, Minister for Large and Medium Scale Industries, Government of Karnataka, India. KT photo/Neeraj Mjurali
Murugesh Nirani, Minister for Large and Medium Scale Industries, Government of Karnataka, India. KT photo/Neeraj Mjurali

Dubai - Indian minister makes a strong pitch for foreign investments at the Expo.


Anjana Sankar

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Published: Sun 17 Oct 2021, 11:47 PM

Expo 2020 Dubai provides an excellent opportunity for investments in Karnataka’s aerospace, defence, and electronic vehicles sector, a state-government minister told Khaleej Times.

Seeking to highlight the Indian state’s dominant position in the aerospace and defence industry, Murugesh Nirani, Minister for Large and Medium Scale Industries, Government of Karnataka, has made a strong pitch for foreign investments at the Expo.

The minister spoke to Khaleej Times ahead of his talk for a session titled ‘Opportunities in Aerospace, Defence and Space Sector of Karnataka’ on Sunday.

Here are some excerpts from KT’s conversation with Nirani:

>> What will the Karnataka 
government be showcasing at Expo 2020 Dubai?

Karnataka is the leading investment destination in India. It is first in the India Innovation Index; the number of research and development centres; total exports across Indian states; installed renewable energy; aerospace and defence manufacturing and electronics design; venture capital funding; and private equity deals, among other sectors.

We will be showcasing how Karnataka has successfully garnered more than $13.5 billion worth of investments since the beginning of the challenging pandemic situation in March 2020.

>> Can you elaborate on 
Karnataka’s Industrial Policy 2020-25?

Karnataka released the Industrial Policy 2020-25 in August 2020, providing further thrust to key areas — such as Industry 4.0, advanced manufacturing, research and development. It is aimed at becoming an integral part of the global value chain. The objective is to attract investments worth $70 billion and create employment opportunities for two million people in the next five years.

Karnataka is also the start-up capital of Asia, with Bangalore housing 21 (40 per cent) of India’s unicorns and received 50 per cent of the funding in India in H1 2021. There are more than 400-plus global research and development centres and over 4,000 startups in the capital city.

>> What outcomes are you 
expecting from the state’s participation at the Expo?

The UAE has historically also been a strong partner in investing in Karnataka. Our aim is to further strengthen the close relationship between the two intertwined economies. There are strong synergies between the UAE and Karnataka across many sectors such as aerospace and defence, e-vehicles, and electronics, among others.

>> Can you tell us more about the state’s industries and sectors that are open for investment?

Karnataka has always been a preferred destination for investments across sectors. Despite the pandemic, the state has been able to successfully work on multiple initiatives aimed at enhancing the ease of doing business and reducing the compliance burden for investors.

It attracted the third highest FDI in India in 2020-21 at $7.6 billion with a 14 per cent national share.

Karnataka is planning to release the updated Aerospace and Defence Policy 2021-26 with an aim to attract a $6-billion investment and generate additional employment for 60,000 people.

Furthermore, Karnataka has released a special incentives package with the aim to foster high growth for the Electronics System Development and Maintenance (ESDM) industry and create 200,000 new jobs in the sector by 2025. (It aims to) effect a quantum jump in the overall revenues of Karnataka’s ESDM companies to $40 billion by 2025.

Karnataka has also released its Textile and Garment Policy 2019-24, aiming to generate half-a-million new employments and attract investment worth US$1.3 billion.

>> Can you elaborate on some 
investment partnerships you are targeting at the Expo?

At the Expo, we are planning on several business-to-government (B2G) meetings with stakeholders from several leading organisations, such as DP World, Ducab, Electricway, Lulu, Immertech, KEF Holdings, Aster Healthcare, etc.

We will also be signing an MoU with Gulf Islamic Investments to support them in establishing a subsidiary office in Bangalore and invest in start-ups and growth-stage companies. Their cumulative investment will be well over $100 million.

>> What do you think are the challenges in wooing investors and how are you addressing it?

We have implemented several structural interventions to make Karnataka an investor-friendly destination. We have amended the Karnataka Facilitation Act and introduced ABC (Affidavit Based Clearance), which allows the investor to not obtain approvals or clearances from different government agencies, for a period of three years or until commercial operations begin. We have also implemented new reforms to relax labour laws.

We are working actively on land reforms to help investors. The government has amended Section 109 of the Karnataka Land Reforms Act, by which any industrial project approved by single-window clearance committees will be allowed to procure land directly from the owners.

Lastly, the government has been working to promote tier-2 and tier-3 regions of the state through the development of multiple sector-specific clusters.

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