Karnataka govt, Nasscom launch ER&D policy to foster innovation in state

50% rent reimbursement, recruitment assistance and investmengt subsidy on anvil for MNCs looking to establish new R&D facilities or expand existing ones

The Department of Information Technology Biotechnology and Science and Technology, Karnataka and industry body National Association for Software and Service Companies (Nasscom) on Tuesday launched the Karnataka State policy for Engineering, Research and Development (ER&D), approved by the State cabinet.

The policy aims to foster innovation and increase multinational ER&D presence in the State by providing subsidies to global organisations looking to establish new R&D facilities or expand existing ones.

Under the policy, the Karnataka government will provide certain subsidies to MNC's Indian entities setting up or expanding their global capability centre (GCC) in engineering R&D beyond Bengaluru urban district. These include reimbursement of up to 50 per cent rent, up to Rs 2 crore or Rs 1,666 per employee per month, recruitment assistance of Rs 20 lakh, investment subsidy equal to 20 per cent of investment up to Rs 2 crore.

It will also consider further subsidy on a case to case basis if an R&D centre provides more than 3,000 jobs or investment of Rs 250 crore or more.

The policy further aims to foster innovation and R&D ecosystem by funding commercial innovation and research programmes in emerging technologies, establishing world-class R&D infrastructure (testing and prototyping) to broaden the portfolio of R&D services. The policy says the State Government would help in the establishment of open innovation labs for corporate-startup collaboration and facilitating digital innovation with government entities to support the industry by allowing field trials on government infrastructure.

Another area that the policy will address is enabling skill development required to address the evolving needs of changing global technology landscape and evangelize India's ER&D prowess.

 “The new policies are focused on invigorating the R&D landscape in the state and enhancing its global competitiveness. We expect the new policies to improve the FDI inflows in R&D and provide a boost to the innovation & research ecosystem,” said Ashwathnarayan C. N., Deputy Chief Minister of Karnataka.

According to the policy document, Karnataka contrinutes nearly 40 per cent to India's ER&D revenue, and hosts over 400 R&D centres and global innovation centres. The State also has 50 per cent of the country's R&D talent, including a large pool of people skilled in automotive R&D.

The policy envisages making Karnataka contribute nearly 45 per cent to India's ER&D during the policy period, and create additional 50,000 jobs.

It has identified five priority sectors for the purpose of the policy- aerospace and defence; auto, auto components and electric vehicles; biotechnology, pharma and medical devices; semiconductors, electronics system design and manufacturing, telecom; and software products.  

“Nasscom is proud to be associated with this high impact policy initiative focusing on fostering Engineering and R&D in Karnataka. We strongly believe that the new policies will provide a big impetus to the growth of ER&D ecosystem within the state. The state of Karnataka has been the pioneer in creating a thriving ecosystem for R&D and these policies will further strengthen its position as the prime destination for Engineering and Research within the country. The new policy initiatives will provide a benchmark for other states to follow and would help India become a global hub for Research and Development," said  Debjani Ghosh, President, Nasscom.

The policy is in line with the observations made on country's the larger R&D ecosystem in this year's Economic Survey. It said ramping up investment in research and development will be crucial for India to emerge as the third largest economy by gross domestic product, and key to this will be increased investment from the private sector.