The Global Investors Meet 2012 aims to attract investments to Karnataka that will not only help in generating employment opportunities but also contribute to the overall economic growth of the state, an exclusive analysis by Subhajit Roy & Relin Hedly
At the GIM 2010, Karnataka had signed over 389 MoUs worth around Rs.3.92 lakh crore. This time, we are targeting to attract investment commitments of up to Rs. 6 lakh crore-Karnataka Chief Minister DV Sadananda Gowda
We have been continuously making efforts to introduce new and industrial friendly policies, simplified government procedures and speed-up approval processes within the government’s system -Murugesh R Nirani, Minister for Large & Medium Scale Industries of KarnatakaEvery state is in a race to showcase its strength and potential to attract investors as part of its growth strategy. Karnataka is no exception. This is the main aim of The Karnataka Global Investors Meet (GIM) to be held in Bangalore from the 7th to 8th of June 2012. Initiated to showcase the investment potential of the state in various sectors: the summit will have a confluence of business leaders, prospective investors, governments, trade bodies and associations, entrepreneurs grace the event.
As a prelude to GIM 2012, a road show was organised in Mumbai on 7th of March. Initiated to spread information about the available investment opportunities in Karnataka, the road show also intended to provide various investor friendly policies and incentives offered by the state government to encourage the inflow of investment into Karnataka.
The programme was attended by several accomplished state dignitaries from Karnataka. Offering an interactive platform to potential investors and business delegates, the road show served as a forum for one-on-one interaction with decision makers to initiate a process of setting up businesses in the state.
Present at the occasion DV Sadananda Gowda, Chief Minister of Karnataka informed, “At the GIM 2010, Karnataka had signed over 389 MoUs worth around Rs. 3.92 lakh crore. This time, we are targeting to attract investment commitments of up to Rs. 6 lakh crore”. Taking the discussion further State Chief Secretary SV Ranganath claimed, “More than 60 per cent of the commitments made at the last summit have already fructified, placing the state as one of the best in terms of conversion ratios’’. Out of 389 MoUs signed in GIM 2010, 17 projects are already implemented and effective steps taken to in respect of materialising 210 committed projects. However, 162 MoUs are pending without any progress.
Advantage KarnatakaHighlighting the paradigm shift in infrastructure development within Karnataka; Seshagiri Rao, Joint Managing Director & CFO at JSW said, “In 1994, we started with only 1.2 million tonne steel plant with an investment of 3,300 crore investment. Today, we have invested around ` 40,000 crore which is almost 13 times of the initial investment”.
According to him,”Responsiveness of the bureaucracy, building harmonious industrial relations and the culture of Karnataka are some of the USP’s that attract investors towards the state of Karnataka’’. Looking forward to investing opportunities in the state, Mr. Rao said, “We are expanding steel production capacities from 10 million tonne to 16 million tonne and also setting up another 660 megawatts of power plants. We would like to commit more and more investments particularly in a state which is very proactive and supports the industry”.
Karnataka’s hospitality is another major attraction for investors. “After the two successful business ventures in the name of Tech Mahindra and Mahindra Satyam who together employed more than 10,000 people in Bangalore; we recently acquired interest in Mahindra Reva and are leveraging the manufacturing and IT strengths of Bangalore in delivering green vehicle”, stated Hemant Luthra, Member, Mahindra Group Executive Board and President – Systech.
Karnataka is having huge advantages in terms of its location. Emphasising the importance of location in the following words, Mr. Luthra said, “In the world of real estate, the three most important factors are said to be location, location and location. Though it is not the only criteria for our business interest at Mahindra, location plays a vital role in predicting the future success”.
Mahindra Aerospace, a part of US $12.5 billion Mahindra Group, and CSIR-NAL (a constituent laboratory of the Council for Scientific and Industrial Research) jointly developed C- NM5 aircraft, a 5-seat light utility aircraft which has had it successful flight on 1st of September last year. The programme is India’s first public-private partnership in the development of aircraft. Describing the many significant approaches being undertaken in this niche spectrum, Mr. Luthra had underlined the Group’s commitment to Karnataka.
Tata Group has significant presence in Karnataka across various sectors. The Group’s association started with the setting-up of Indian Institute of Science almost 100 years ago in 1911. The Group Company Tata Motors had set up their construction equipment division in Karnataka and plans to set up a light commercial vehicle manufacturing unit in the state. Tata Power has a plant in Belgaum and has set up over 50 megawatts of wind renewable energy. TATA BP Solar, the solar power joint venture of the company has its operation base in Karnataka. Tata Coffee is also having base in this state. S Ramakrishnan, Executive Director at Tata Power said, “Tata Steel is about to set up a steel plant with a 3.3 million tonnes capacity for an investment of Rs. 15,000 crore. As of now the group has about Rs. 6,000 crore of investment in Karnataka”. The software giant Tata Consultancy Services (TCS) has 5 centres in Karnataka.
The Government of Karnataka is committed to play the role of a catalyst and facilitator to maintain the state as one of the preferred investment destination in India. It has given high priority to invite private capital and efficiency in the infrastructure sector intending to create more meaningful partnerships with private sector. Further these kinds of initiatives will serve as a platform for creating visibility for the state. As a sincere attempt to attract more investment in various sectors of Karnataka, the state government is making several efforts that could be a boon to the state as one sector helps another and at the same time, they are all independent.
Talking about the group’s experience in doing business in India, Mr. Ramakrishnan said, “It’s all about constructive facilitation and problem solving approach (from the Government’s end) that makes Karnataka a favourable destination for setting-up business and our experience is to give a serious thought to Karnataka”. Scope of DevelopmentLand is a primary infrastructure required for industrial development. In the recent past, the state has faced certain difficulties in terms of land acquisition. Commenting on the same M Maheshwar Rao, Commissioner for Industrial Development & Director for Industries & Commerce, Government of Karnataka said, “Land acquisition in many cases has been very successful in Karnataka. Generally the negative aspects tend to be highlighted. Today almost 25,000 acres of land has been acquired by the state. Moreover land has also been allotted for the industries and that has been done with no virtual trouble at all. Secondly, the idea of a unique land bank in which about 1.19 lakh acres of land suitable for industries has been identified”. The Karnataka Industrial Areas Development (KIADB) has already initiated acquisition of most of this land and is also ready to offer it to investors. “KIADB follows a unique consent-based approach for land acquisition which reduces the time required for acquisition and gets the support of all stake holders. This is another plus point and advantage”, Mr. Maheshwar assures.At present Karnataka is doing well industrially compared to many other states. Commenting on the chief minister’s approach to attract investors, Mr. Maheshwar said, “Pro-active approach is necessary. From the industrial point of view, the experience has been good for us however a benchmark needs to be set. On that aspect the state requires to do a little more so that the investors feel comfortable because development requires industrialisation and in order to increase the share of manufacturing we want more and more people to come to our state”.
Power is another sector in the state that needs some kind of improvement. The state is facing a deficit in terms of power. As the number of industries is on the rise, the state is gearing up to see how it can generate maximum power for different sectors.
Availability of adequate water for livelihood and industrial use is another aspect the state is trying to identify. It is trying to reduce the consumption of water used by individual cities etc. The respective industry departments and irrigation department is working to see how it can provide water for industries. “We are trying to tie up with industries for water which involves investment in water treatment. High quality water can be generated from the water which is discharged from cities after being used. We just have to treat them to tertiary quality standards, use membrane bio-filters; it can also be treated up to drinking water standards. This can be made available for industries which has huge potential. This is something we have tried to do”, said Mr. Maheshwar.
All Eyes on GIMFrom the government’s perspective, it must take into consideration the outcome in terms of geographic location and employment generation. According to Mr. Maheshwar, “Rather than setting a target of investment, the idea should be to ascertain ways to double the GDP and generate employment in large numbers”. To tackle with that, investment plays a crucial role. Determining sectors that generate investment is one of the methods as it generates a huge eco-system around them and lot of other companies join them, creating a feel good factor for the state. From the investors’ point of view, the GIM plays an essential role to understand the opportunities in Karnataka. Investors also get a bird’s eye view of other investors experience through this platform.
‘Quality’ AssuranceAssuring the quality governance within the state, Murugesh R Nirani, Minister for Large & Medium Scale Industries of Karnataka said, “We have been continuously making efforts to introduce new and industrial friendly policies, simplified government procedures and speed-up approval processes within the government’s system”.
It’s all about constructive facilitation and problem solving approach (from the Government’s end) that makes Karnataka a favourable destination-S Ramakrishnan, ED, Tata Power
We recently acquired interest in Mahindra Reva and are leveraging the manufacturing and IT strengths of Bangalore in delivering green vehicle-Hemant Luthra, Member, Mahindra Group Executive Board and President – Systech
We are expanding steel production capacities from 10 million tonne to 16 million tonne and also setting up another 660 MW of power plants-Seshagiri Rao, Joint MD & CFO, JSW
KIADB follows a unique consent-based approach for land acquisition which reduces the time required for acquisition and gets the support of all stake holders-M Maheshwar Rao, Commissioner for Industrial Development & Director for Industries & Commerce