New IT policy aims to make city IT product hub

The Karnataka government today announced the new Information Communication and Technology Policy 2011. The policy is considered as the version 2.0 of the Millennium IT policy released by the state in 2000. The policy envisages positioning Bangalore to be the IT R&D and product hub of India, to enable Karnataka to be the most preferred destination for MSME and also to retain the state’s position as the leaders in the information technology arena of the state.

As per the new policy the state government will focus more on branding Bangalore and branding Karnataka. According to the new initiative, the government will brand Bangalore a global hub for IT products and technology while the Tier 2 and Tier 3 cities in Karnataka as the centres for BPO and, ITeS and telecom services. The government also plans to establish institutes of higher learning with a focus on the software product development and to fund market-relevant research in concert with institutes of higher learning.

“We have come out with a policy to retain the number one position in the IT map of the country. We have worked closely with industry bodies for formulating the policy by learning their needs,” said Murugesh R Nirani, Minister for Large and Medium industries, Government of Karnataka. As per Nasscom’s annual survey for FY 2010-11 the Indian IT-BPO exports are projected to grow 13-15 per cent, while domestic IT-BPO sector is expected to grow 15 per cent to 17 per cent. It also said the Indian IT-BPO industry is expected to touch the $70 billion mark in exports in FY 2010-11.

According to STPI, the number of IT companies in the state has trebled, crossing the 2,100 mark and contributing over Rs 76,000 crore during 2009-10 up from around Rs 6,200 crore during 2000-01.

In order to foster research and development, the new policy proposes to set up a research hub in Bangalore along with a prototype and testing laboratory with state funding limited to 50 per cent of the cost of setting up the necessary infrastructure and the remaining would come from the industry or through a PPP model.

Meanwhile, in an effort to promote and develop the electronics hardware manufacturing in the state, the state also unveiled the 'Karnataka Electronics Hardware Policy 2011'. The chief objective of the policy is to lure more investment into the state and position Karnataka a leader in manufacturing of electronics component in India.

The state is also planning to launch a Karnataka Electronics Innovation Fund with an initial corpus of Rs 25 crore which will provide funding to entrepreneurs for developing new products that will in turn be manufactured in the State. A sum of Rs 5 lakh or 50 per cent of the total cost for each activity will be provided as grant towards research taken up by an entrepreneur who is an engineering graduate and with an annual turnover of less than Rs 100 lakh.

The selection of projects for such funding will be done by a committee.

In order to boost the investment in electronics manufacturing, the government also intends to set up four Electronics Hardware Manufacturing Hubs (EHMH) in the corridors identified which shall be operated in line with the Special Economic Zone policy. The proposed Bangalore-Tumkur corridor will focus on semiconductors, alternate/solar energy, aerospace, medical electronics and embedded systems, and medical electronics. The west Karnataka (Shimoga-Hassan) will focus more on manufacture of electronics components, plastics, metal fabrication and for electronics manufacturing services. The North Karnataka Corridor (Hubli-Dharwad) will focus on the automotive electronics, high tech machining while the Mysore-Nanjangud corridor for medical electronics and computer peripherals.

The new policy proposes to set up satellite townships and they would be developed to decongest Bangalore city. The government will promote green satellite townships at Ramanagaram, Devanahalli, Hoskote and Bidadi.

It proposes to develop Tier 2-3 cities as the next centres of growth and plans to develop infrastructure in those cities. As part of that it plans to develop IT parks, roads, rail and air connectivity, telecom and broadband connectivity, incentives for social infrastructure in town like Mysore, Mangalore, Shimoga, Hubli-Dharwad, Belgaum and Gulbarga.

The new policy also proposes to provide fiscal incentives to IT and BPO companies like exemption of stamp duty, concessional registration charges, incentives for export oriented enterprises, subsidy for effluent treatment plants and interest free loan on VAT and exemption from electricity duty etc.,