Karnataka to announce new policy for IT industry

Expects Bangalore to become world's biggest IT cluster by 2020; new policy to boost investment in tier-II, tier-III cities

The Karnataka government is set to announce a new information technology (IT) policy to attract more investment into the state, with a special focus on raising investor interest in tier-II and tier-III cities.

The new policy, to be unveiled at the flagship ITE.Biz event on Tuesday, also seeks to increase employment. The government expects the new IT policy would enable the sector to employ about two million people in the state directly by 2020, against the current 900,000.

The policy also aimed to raise the state’s annual IT exports from Rs 1.65 lakh crore to Rs 4 lakh crore by 2020, said Srivatsa Krishna, secretary in the department of IT, BT and S&T, Karnataka. The policy would enable the state to become the “largest IT cluster on the globe” and the “world leader, overtaking Silicon Valley”, he added.

While Bangalore has remained the heart of IT activity in India, other cities in Karnataka have also emerged as potential IT destinations. These include Mysore, where Infosys has set up a 270-acre campus.  Mangalore and Hubli are also emerging as IT hotspots.

“We are bringing a radical change in our IT policy, making it more investor-friendly,” said S R Patil, minister for IT, biotechnology, science and technology, planning and statistics, Karnataka. “The ITE.Biz event will be more meaningful this time because we are set to announce several incentives and exemptions to the IT sector, especially for start-ups. These incentives include helping tier-II and III towns attract investments,” he added.

The minister said the announcement of the policy would be a “historic announcement”.

The policy, he said, would offer some stamp duty exemptions and power rate concessions. It is also likely to offer incentives with employment-linkages.

Patil said the state government would reduce power rates for IT companies from Rs 7.25 a unit to Rs 5.75 a unit in tier-II and tier-III cities, subject to the fulfillment of some employment-related conditions. It is likely to boost investments in allied sectors such as electronics hardware manufacturing.

The organisers expects over 1,200 representatives from over 45 companies to attend the event this year.