Professional Documents
Culture Documents
SRI B. S. YEDDYURAPPA
Hon'ble Chief Minister
MESSAGE
Welcome to Karnataka, the Knowledge Hub of Asia. It gives me immense pleasure and pride to
showcase Karnatakas potential at the Global Investors Meet 2010. The States entrepreneurial spirit in
innovations and R&D has given us recognition world over. Our rich natural resources, proactive
Government policies, talented workforce and a strong economy have propelled the State to become a
preferred investment destination.
I have a dream, a vision for this one State with many opportunities. Vision 2020 for Karnataka seeks to
propel a holistic growth by promoting equitable development of sectors and districts, by providing
employment to all sections of people and regions of the State. It will also focus on ensuring excellent
infrastructure, quality education, decent living conditions and life security for all our citizens. This vision,
combined with our passion for excellence will drive the economy to greater heights.
Karnataka is a State of action. We have witnessed rapid and unparalleled growth across our
knowledge-based sectors. Each of our 30 districts is unique in its own right, offering investment
potential like no other State in the country. Over 700 MNCs are already reaping the advantages of
making Karnataka their home. One new global company moves into our State every week and a new
industrial unit is approved every day. Supported by rich natural resources and progressive policies, the
State presents its investors with the right blend of strengths and opportunities.
We would like to assure all investors that the State Government would extend the fullest cooperation
and support for the timely implementation of their projects.
I would like to congratulate the investors for choosing our State and wish them grand success
in their ventures.
With best wishes,
B. S. Yeddyurappa
Chief Minister of Karnataka
CONTENTS
KARNATAKA: LAND OF PLENTY
MESSAGE
On behalf of the Government of Karnataka, I welcome you to The Global Investors Meet 2010. This meet brings
together leading entrepreneurs, investors and experts to showcase the potential of Karnataka. Our Honble
Chief Minister desires that this mega event results in doubling of investments and employment opportunities
with accelerated industrialisation across the State in the next few years. This will get us a step closer to fulfilling
the States Vision 2020 for holistic growth.
I would like to take this opportunity to share with you some of the salient features of the aerospace sector that
would further accelerate growth in the State. Karnataka has over 60 years of experience in this Sector and
attributes to more than a quarter of Indias aircraft - and - spacecraft manufacturing. Bangalore has been the
home of aviation and aerospace manufacturing, and cutting edge R&D in India.
Karnataka has over 100 R&D institutes, including Defence Research and Development Organisation and Indian
Space Research Organisation, Indian Institute of Science, National Aeronautics Limited, Hindustan Aeronautics
Limited, which lends it a coveted space in the sector in the country.
By providing for the countrys first Aerospace SEZ, the government has shown its clear intent in supporting the
growth of this industry. Availability of highly skilled and technically qualified human resource has been the key
force driving the Aerospace manufacturing segment in the State
I invite all of you to explore opportunities of mutual growth and invest in our State. Come lets join hands and
build a prosperous Karnataka.
Snapshot
06
Economic Growth
07
Agriculture
07
Manufacturing
08
Services
08
08
09
Skilled manpower
11
12
AEROSPACE: ON A HIGH
The global scenario
14
16
Advantage Karnataka
18
Investments in aerospace
21
24
The high-fliers
26
LAND BANK
29
APPENDIX
30
Contact us
30
Websites
31
References
31
Industrialise or perish
Sir M Visvesvaraya,
Karnatakas world-famous engineer
Industrial Revolution alone can spur economic growth of India.
This, in turn, will impact literacy rate, lifestyle and income
levels for our future generatrion. The Government of
Karnataka, therefore, has organised the Global Investors Meet
in Bangalore on June 3-4, 2010, showcasing the investment
opportunities in the State.
Kar nataka is one of Indias fastest-growing States, with a vast and
diversified industrial base. Apart from nurturing the globally
recognised Silicon Valley of India Bangalore the State has
emerged a prized destination for not only Information
Technology, but also Aerospace, Biotechnology, Heavy Construction
Machinery and Equipment, Sericulture and Floriculture.
Karnataka: Snapshot
Capital
Area
Population (Census 2001)
Bangalore
191,791 sq. km.
52,850,562
276
Rs. 40,309
35%
Literacy rate
06
66.6%
Number of districts
30
Number of towns
270
Number of villages
27,028
Prominent cities
Prominent airports
Bangalore, Mangalore
Prominent ports
60000
40000
30000
50974
Karnataka
50000
46731
India
32825
42749
41902
36327
37969
33684
29678
20000
10000
0
2005-06
2006-07
2007-08
2008-09
2009-10
Economic growth
One of Indias fastest-growing States, Karnataka has a strong
industrial base and a vibrant service sector.
Software is States star performer; software exports form 35%
plus of countrys software exports.
Secondary sector contributes more than a quarter of GSDP
State contributes 5% of national income.
Since 2003-04, the State growth has pushed the levels of per
capita income higher than the national average.
Agriculture
Sustains about 63% of the population.
The State is pushing to diversify agricultural activity;
horticulture and agro-processing are important activities being
encouraged by State Government.
Karnataka is one of the countrys largest producers of fruits
and vegetables and No. 2 in floriculture.
Karnataka is the second-largest producer of milk in India.
The State has the largest sericulture in the country.
07
Manufacturing
It is well-diversified.
Main industries are engineering, chemicals, electrical,
automobilie, textile, aeronautics and food processing.
Industrial growth up from 6.2% in the Nineties to 8.9% per
annum since 2000.
Sectoral Composition Of Income
38%
56%
25%
1993-1994
28%
2008-2009
36%
16%
Services
The engine of growth in the State.
Bangalore, the State Capital, the powerhouse of IT in
the country.
State was the first in India to set up a Software Technology
Park in 1991.
Karnataka is the first State to bring the private sector into
higher education.
State has the highest number of medical colleges in the
country and is a hub of medical tourism.
Karnataka leads in biotechnology and nanotechnology.
Source: CSO
Share Of Employment
23%
26.3%
1993-1994
2006-2007
10.6%
17.9%
66%
55.9%
Source: NSSO
08
38476.33
Number
of Projects
Value
(Rs. Cr)
Transport logistics
Urban and Municipal Infrastructure
Tourism
Energy
52
6
8
4
35,432
253
1,224
8,400
Industrial Infrastructure
10
41,231
854
88
87,394
Agri-Infrastructure
Total
Power
Karnatakas three areas of concentration are: Energy Sufficiency;
Energy Efficiency; Green and Clean Power. The first hydel power
station in India was set up in Sivasamudram in 1902 and the
longest transmission line at the then highest voltage in the world,
was constructed to meet the needs of Kolar Gold Fields. With a
transmission network of 36,542 CKMs and 1205 stations, the
State distributes power to 1.7 crore consumers. As the demand
for power rises with the groth of the economy, Karnataka intends
to meet the projected demand and make the State power-surplus
by 2014 through a rapid expansion of power schemes.
09
10
Water
Seven river systems Krishna, Godavari, Cauvery and their
tributaries, North Pennar, South Pennar, Palar and the West
flowing rivers in the Western Ghats: Kali, Gangavali (Bedthi),
Aganashini, Sharavathy & Netravati.
River systems together yield on an average 3475 TMC.
About 50% of this water is available to the State.
Hydel constitutes one-third power generation of the State.
Mineral resources
Geological setting for the State from Precambrian to recent
formations provide 40,000 sq.km. of green stone belts.
Minerals found: Gold, silver, copper, iron, manganese, limestone,
dolomite, chromite, magnesite, granite etc.
174 mining leases have been issued by the Government for
iron ore covering 18,670 hectares.
A progressive State with a forward-looking mineral policy since
2000, which was later revamped in 2008.
Policy emphasis on modern technology, transparency in
granting mineral concessions, emphasis on value addition,
sustainable development in eco-sensitive areas, like the
Western Ghats.
Skilled manpower
Third-largest pool of engineering graduates; Karnatakas share
of engineering degree and diploma holders is 10% in the
country after Andhra Pradesh and Maharashtra.
Globally recognised higher-education centres.
Leading hub of research and development institutes.
Low-cost skilled manpower makes value-added manufacturing
almost 60% cheaper than in Western Europe and the USA.
Educational atmosphere in the State enhanced by institutes like
the only 100-year-old Indian Institute of Science (IISc) and the
Indian Space Research Organisation (ISRO).
With 1,162 ITIs, Karnataka has 15% or the largest number of
such institutes in the country.
Karnataka Technical Skill Development
Engineering Colleges
Number of
institutions
172
114
Polytechnics
273
Pharmacy Colleges
Industrial Training Institutes
R&D Centres
69
Universities
Number of
institutions
22
National Institutes
25
International Schools
13
Law Colleges
83
1162
103
9
350
11
12
Yadgir
13
Aerospace: On a high
The Global Scenario
Global aerospace industry enjoys high growth as military
expenditures continue to rise and emerging economies take the
lead in the civil aviation industry. While dominant players are
based in Western Europe and the US, Asia Pacific, including India
is set to gain from outsourcing of manufacturing as well as MRO
activity.
12%
53%
29%
Source: PwC
The global aerospace industry has come a long way since the first
flight was undertaken in 1903; market size of commercial and
defence aircraft was estimated at US$ 97 billion in 2007 .
Defence sales account for more than 80% of the total market
typically dominated by the Government and public sector, while
the growing private sector civil aviation has led to a broad-based
expansion of the industry across the world. In addition there is
sizeable MRO activity -- Maintenance, Repair and Overhaul -which is a major component of operating aircraft. On an average,
the aerospace industry spends more annually on MRO than on
manufacturing or development.
The global aerospace market has five main components, each with
distinct market structures and drivers military aircraft and light
combat aircraft make up the bulk of the market, while jets and
helicopters account for less than 20% share. In the past decade,
military expenditure has been rising with the international war on
terrorism, while civil traffic has seen a spurt due to robust
economic growth, rising incomes, globalisation and falling air fares.
Changing landscape in civil aviation: Though the recession in
2008 in advanced countries has been a setback for the civil sector,
emerging economies have taken charge of leading global growth
by recovering faster China, India and the Middle East are the
most promising drivers of the civil aviation market. According to
research by Boeing, the fastest growing economies in Asia will
lead change in the market space, with Asia-Pacific set to be the
largest air transport market in the world with 45% share of air
travel. Commercial airplane market is estimated to be a huge
$ 3.2 trillion by 2027, with Asia-Pacific accounting for 37% of the
total market.
Moreover, while presently the industry is dominated by US and
EU based companies, there has been an increasing trend in
outsourcing as firms look out for low cost manufacturing
locations. MRO outsourcing is set to rise from 52% in 2006 to
65% by 2016. Here again, the Asia-Pacific is set to gain with its
efficiency, expertise and labour cost advantages. Demand for
14
15
Indian MRO segment has been growing at 11 percent and has not
been affected significantly by the slowdown.This market is expected
to grow at an average of 10% and reach $ 2.6 billion by 2020.
The Government recognises the need for massive investment to
meet these growing needs:
The Ministry of Civil Aviation estimates investment of
$ 200-300 billion over the next 25 years, till 2034.
The Airports Authority of India has planned investment of
$ 3.04 billion to upgrade airports across the country, even as the
sector is open for public-private partnerships (PPPs).
According to Boeing, India needs 856 airplanes worth
$ 72.6 billion over the next 20 years to meet the surging
demand.
Investments in the Indian Space Programme to the tune of
Rs. 39,750 crores during the period 2007-2012, under the
Governments Planning Commission programmes.
Policy initiatives: The Indian Government has liberalised the
framework for operating in the aerospace industry considerably:
Manufacturing and R&D activity is allowed 100% Foreign
Direct Investment on automatic route in all areas, except air
traffic services.
While 100% domestic private investment is allowed in the
defence sector, there is a limit of 26% FDI in the manufacture of
defence equipment, which is also subject to licensing
requirements.
100% FDI permitted under automatic route for MRO, flying
training institutes and technical training institutes.
100% tax exemption for airport projects for a period of 10 years.
Defence Offset Policy, effective from September 2008 has a
mandatory offset requirement of a minimum of 30% for
procurement of defence equipment in excess of Rs. 3 billion, only
direct offsets are allowed, banking of direct offset credits
permitted for up to two years, transfer of technology not
counted towards offset calculation and vendor is free to choose
Indian offset partner.
Tax incentives are given for investing in Special Economic Zones.
16
17
ADVANTAGE KARNATAKA
Karnataka produces more than a quarter of Indias aircraft and
spacecraft, it is the base for all global players in this industry.
Excellent support from the government has come through in the
form of centres, including Hindustan Aeronautics Limited (HAL),
National Aerospace Laboratories (NAL), Aeronautical Development Agency (ADA) and Gas Turbine Research Establishment
(GTRE). The State continues to draw huge investments in this
Sector as it gears up to meet the rising global demand.
The history and background of Indias aerospace industry owes
much to the state of Karnataka; home to Indias aerospace
industry, the state is all set to reap dividends of the potential in
this sector. Starting from 1940, when Indias first private aircraft
factory Hindustan Aircraft Ltd. began its operations in Bangalore,
the state has created a conducive environment that has nurtured
the growth of the aerospace industry. The hub of manufacturing,
research and development, the state produces more than a
quarter of the countrys aircraft and spacecraft.
HAL, has 19 production units and 9 research and development
centres in 7 locations across India, of which, 8 production units
and 4 R&D centres are located in Bangalore. Ranked 40th in
Flight International's list of the Worlds Top 100 aerospace
companies in 2008, HAL has a total turnover of Rs. 10,400 crore.
It has manufactured 12 types of aircraft with in-house R&D and
14 types under licence. While it has built more than 3,550 aircraft
and 3,600 engines, over 8150 aircraft and 27,300 engines have
been overhauled at its facilities.
Bharat Electronics Ltd. is another public sector firm working in
this industry, which has entered into MOUs with international
companies like Lockheed Martin, Boeing, EADs etc.
NAL was set up in 1959 under CSIR in Bangalore. The
aeronautical lab consolidated its position as a major player with
the approval of Indias Light Combat Aircraft project in 1983.
NAL, the only civilian aerospace laboratory in the country, is a
leader in civil aviation design.
18
19
20
Investments in Aerospace
While QuEST Global set up the countrys first aerospace SEZ in
Belgaum in November 2009, the State Government has also
planned an Aerospace SEZ in 250 acres of land at Devanahalli,
near Bangalore International Airport, both these have attracted
significant interest. Udyog Mitra, the governments single window
agency for industrial projects and the apex body for SEZ projects,
has given clearances to majors like US civil and military aviation
companies and the European Aeronautics and Defence Systems
or EADS (Rs. 11,700 crore investment); Sobha Nadathur
Aerospace Pvt Ltd (Rs 200 crore) and hydraulic equipment
manufacturer Dynamatic Technologies (Rs 466 crore). Five
proposals worth Rs. 135.98 crores were cleared by the State
Level Single Window Clearance Committee (SLSWCC) in June
2009: Systems Controls, G.L. Polyurethane Company Private Ltd.,
Micron Engineers, Priyaraj Electronics Limited and Pacific Natura
Biotech Private Limited are ready to invest in aerospace
component units in the aerospace SEZ at Devanahalli.
HALs proposal to set up a Rs. 2,095 crore unit in Devanahalli
to manufacture aero-engines and provide MRO facilities was
approved by the SLSWCC. In January 2010, British engine maker
Rolls-Royce Group Plc announced that it is setting up its first joint
venture (JV) firm in India in a tie-up with HAL to make civil aero
engine components and sub-systems locally for export. The firms
will initially invest $4 million (Rs.18.4 crore) each in a unit in
Bangalore, through which Rolls-Royce will step up sourcing of
components and systems for most of the engines it makes.
New aerospace projects approved by Karnataka Government
Hindustan Aeronautics
Limited
Devanhalli, Bangalore
Dynamatic Technologies
Aerospace components
BEML Limited
Manufacturers of aircraft
components/assemblies
and MRO activites related
to aersopace applications
21
12000
11000
10000
9000
8000
7000
6000
5000
Air traffic was hit by the global slowdown in 2008, though the
subsequent year saw a revival in Asia, trends are still not very
strong for the Western countries. Bangalore and Mangalore
followed these trends in traffic, which have now picked up to
pre-crisis levels once again.
AeroIndia
Many global and large private companies are now building on the
base that public sector units like HAL and NAL have laid in
Karnataka, most notably in the area of design services, but
increasingly also in manufacturing. The state has emerged as a
major global design centre, with international majors like Airbus,
Boeing etc. having set up their India operations and outsourcing
their engineering design requirements either to in-house centres or
to third party engineering services partners like Quest, Infosys etc.
1200
960
720
480
240
0
22
23
the State grid in near future. Solar power projects are also been
planned in Belgaum and Raichur districts. At the same time,
connectivity is being improved upon by expanding airports, road
and rail network and upgrading ports on the coast.
With experience for more than six decades, the state has built up
considerable resources and talent pool that is available to all
companies working in the aerospace sector. At the very base of
the aerospace industry lies research and development and
engineering design, capabilities that are well developed in the
state through its pool of skilled technical manpower, backed by
presence of internationally renowned institutions HAL, DRDO,
ISRO, NAL, IISC all based in Bangalore. More global
manufacturers are comfortable outsourcing to India, particularly
Karnataka, because of the presence of electronic and technical
skills and fluency in the English language.
Add to this the fact that Bangalore, as the IT capital of the
country, brings with it a concentration of the best IT capabilities
Karnataka has the highest number of CMM Level 5 certified
software companies providing solutions to the aerospace industry.
The IT industry brings to aerospace the high technology
capabilities that are vital for cost reduction. As explained by
Infosys, older aircraft in general suffer from a problem of
over-design, done to meet safety and other regulations that result
in extra metal weight, higher fuel consumption etc. Software and
engineering expertise works to innovate to create new tools and
solutions that obviate such over-design and yet ensure the same
levels of safety. Such design changes have been effected by Infosys
for almost all recent commercial aircraft programmes, including
business jets, and all parts of an aircraft, including landing gear,
fuselage, wings, avionics, inflight systems, and electrical systems
(an exception being the engine).
Further, Karnataka is the manufacturing base for all major auto
firms and auto component manufacturers. High end technical
support and suppliers experienced to handle complex orders
matching global standards are therefore easily available in the state.
QuEST Global, the company which has set up the countrys first
aerospace SEZ in Belgaum, points out its capabilities in the
aerospace sector in the flowchart below, characteristics that are
replicated in other firms operating out of the state.
24
25
26
27
ABSTRACT
BIDAR
GULBARGA
2439
GULBARGA
BIJAPUR
HUKKERI
4873
BELGAUM
1351
BIDAR
KHANAPUR
HUBLI
751
YADGIR
BASAVANABAGEVADI
7969
BILGI
RAICHUR
BAGALKOTE
BELGAUM
RAICHUR
Legend
BAILHONGAL
670
KOPPAL
DHARWAR
2862
HAVERI
RANIBENNURU
671
Taluk boundary
NH
KOPPAL
MUNDARGI
BELLARY
HAVERI
407
UTTARA KANNADA
SIRUGUPPA
GADAG
DHARWAR
SHIGGAON
274
District boundary
BELLARY
4995
STATE_RAIL
Land bank status
Lands notified under sec 3(1),1(3),28(1)
HARPANAHALLI
200
CHALLAKERE
500
DAVANGERE
HONNALI
201
SHIMOGA
SHIMOGA
3104
CHITRADURGA
HOLALKERE
HIRIYUR
600
1072
SIRA
KADUR HOSADURGA
3853
1589
DODDABALLAPUR
736
GAURIBIDANUR
496
BAGEPALLI
810
CHIKBALLAPUR
GUBBI
TUMKUR
CHINTHAMANI
863
CHIKMAGALUR
3146
TUMKUR
1385
DEVANHALLI
ARASIKERE
KOLAR918
238
NELAMANGALA BANGALORE RURAL 686
HASSAN
1574
BANGALORE NORTH
1058
TIPTUR
MANGALORE
1898
HASSAN
MULABAGAL
212
BANGALORE URBAN
KUNIGAL
1559
DAKSHINA KANNADA
MAGADI
290
HOSKOTE
RAMANAGARAM
BANGALORE SOUTH
MANDYA
MANDYA
KRISHNARAJPET
424
MADDUR
SRIRANGAPATNA
RAMANAGARAM
HUNSUR
722
COORG
KANAKAPURA
MYSORE
1367
UDUPI
HEGGADADEVANAKOTE
990
CHAMARAJA NAGAR
CHAMARAJA NAGAR
1362
28
29
Appendix
Websites
CONTACT US
The Principal Secretary to Government
Commerce & Industries Department
Government of Karnataka
Vikasa Soudha, Bangalore 560 001, Karnataka, India
Ph: +91 80 2225 2443 / 22203 4340
E-mail: prsofci@gmail.com
Commissioner for Industrial Development and
Director of Industries & Commerce
2nd Floor, Khanija Bhavan
No.49, Race Course Road
Bangalore 560 001
Karnataka Udyog Mitra
Managing Director
Karnataka Udyog Mitra
3rd Floor, Khanija Bhavan (South Wing)
No.49, Race Course Road, Bangalore 560 001
Other agencies supporting investors in Karnataka
Karnataka State Industrial Investment Development Corporation http://www.ksiidc.com/
Karnataka Industrial Areas Development Board http://www.kiadb.kar.nic.in/
Karnataka Small Scale Industries Development Corporation http://www.kssidc.kar.nic.in/index.asp
Technical Consultancy Services Organisation of Karnataka http://www.tecsok.com/
30
31
Government of Karnataka
E-mail: commissioner@karnatakaindustry.gov.in
Website: www.karnatakaindustry.gov.in
Associate partners: