KARNATAKA THE SILICON VALLEY OF INDIA

THE SILICON VALLEY OF INDIA November 2017

Table of Content Executive Summary...3 Advantage State.....5 Karnataka Vision 2020..6 Karnataka An Introduction.....7 Karnataka Budget 2016-2017.. 20 Infrastructure Status...23 Business Opportunities...44 Doing Business in Karnataka...79 State Acts & Policies...80

EXECUTIVE SUMMARY (1/2) Strong growth in GSDP At current prices, the gross state domestic product (GSDP) of Karnataka was about US$ 175.8 billion in 2016-17. The per capita GSDP increased to US$ 2,708.9, growing at a CAGR of 12.11% between 2011-12 & 2016-17. IT hub of India Karnataka is the IT hub of India & home to the 4th largest technology cluster in the world. Karnataka has 19 operational IT/ITeS SEZs, 5 software technology parks & dedicated IT investment regions. Exports of IT & electronic products from the state reached US$ 37.25 billion by the end of December 2016. Exports of IT & electronic products accounted for around 38% share in India's IT & electronic products exports & 52.89% share in Karnataka s overall exports by the end of December 2015. Vibrant industrial base Karnataka has vibrant automobile, agro, aerospace, textile & garment, biotech & heavy engineering industries. The state has sector-specific SEZs for key industries such as IT, biotechnology, engineering, food processing and aerospace. One of the preferred investment destinations The cumulative FDI inflows in the state from April 2000 to June 2017 were recorded at US$ 24.63 billion, the 4th highest in India after Maharashtra, Delhi & Chennai & accounted for a share of 7.2% in India s cumulative FDI inflows. Source: DIPP, Visvesvaraya Trade Promotion Centre, Karnataka Economic Survey 2015-16 Department of Industrial Policy & Promotion 3

EXECUTIVE SUMMARY (2/2) Strong growth in export During 2016-17, up to September, the total exports of the state were recorded at US$ 82.06 billion. During 2016-17, exports contributed about 47% in the state s economy. Sectors such as biotechnology, computer software and electronics are major contributors in the overall exports from the state. Strong knowledge infrastructure Karnataka has 44 universities, 4,519 pre-university colleges, 206 engineering colleges & 293 polytechnics, 47 medical colleges & 38 dental colleges. The state also houses 401 R&D centres; around 400 of the Fortune Global 500 companies outsource their IT services to firms in Bengaluru. Significant agriculture base Sugarcane is the major crop of the state with production of about 36.31 million tonnes in 2015-16. The state s total food grain production is estimated to be 9.64 million tonnes in 2015-16. Karnataka is also the third largest producer of plantation crops in the country. Strong growth in tourism sector Karnataka boasts of a diverse flora & fauna & a 320 km natural coast line, which makes it a nature tourist's paradise. Tourist arrivals in the state increased from 25.2 million in 2005-06 to 133 million in 2016-17. The state has world heritage sites at Hampi & Pattadakal. The sector contributes 14.8% to GSDP of Karnataka; plans are afoot to expand to 26% by 2020. Source: Indian Minerals Yearbook 2014, Economic Survey of Karnataka 2015-16 Karnataka State Budget 2016-17 4

ADVANTAGE: October 2017 Capacity allocated for solar energy- 7,184.95 MW High economic growth GSDP expanded at a CAGR of 13.33% between 2011-12 and 2016-17. Buoyant services (IT, tourism) and industries driving economic growth. Sector specific SEZs and SIRs facilitating growth. Rich talent pool Karnataka is termed as the Knowledge Capital of India. The state has successfully attracted skilled labour, especially, in the knowledge sector. Karnataka is among the states that produce a large number of doctors, engineers and medical technicians in the country. 2022 target Solar energy share in total energy consumption is expected to reach 3% Advantage Karnataka Infrastructure Well-developed social, physical and industrial infrastructure. Good road, rail, water and air connectivity and substantial port infrastructure. Well-developed telecom infrastructure. Excellent healthcare facilities. Policy support Wide range of fiscal and policy incentives for businesses under the Karnataka Industrial Policy, 2014-19. Investor-friendly sector-specific policies to promote industries such as IT, biotechnology, tourism and manufacturing. Simplified procedures for investment. In January 2017, Karnataka department of Commerce and Industries introduced an NRI policy to attract investments from non-resident Kannadigas. Source: Karnataka Udyog Mitra, D&B Cluster State Overview, Karnataka Vision 2020, Department of Industrial Policy and Promotion, Visvesvaraya Trade Promotion Centre. 5

VISION 2020 Build infrastructure to boost productive potential of the economy. Various metro rail and mono rail projects are in progress. Develop the state as a vibrant knowledge society. Focus on job oriented growth through skill development of the workforce. Increase rural incomes through greater viability of agriculture and allied activities. Bridge the gap between socially backward and vulnerable groups and rest of the people. Improve access and availability of quality healthcare for all. Poor and Backward Classes Healthcare/ Social Amenities Infrastructure Tourism Vision 2020 Education/ Skill Development Women Empowerment Governance Industry Better governance through wider participation and deep democratic decentralisation. Encourage transparency and accountability. Build and sustain Bangalore s leadership in science, technology and knowledge based industries. Achieve a sustainable and orderly process of industrialisation and urbanisation. Preserve and promote Karnataka s rich heritage. Karnataka Tourism Vision Group (KTVG) was set up in October 2013 to advise on promoting tourism in state. Enhance opportunities and empower women across economic, social and political spheres. Source: State Planning Department 6

FACT FILE Some of the prominent cities in the state are Ankola, Bengaluru, Bagalkot, Belgaum, Bidar, Bijapur, Chikmagalur, Chitradurga, Dandeli, Hubli-Dharwad, Mangalore, Mysore and Shimoga. Karnataka has a tropical climate with three major seasons: warm and dry from February to May, monsoon from June to October and winter from November to January. Source: Maps of India Parameters Capital Karnataka Bengaluru Karnataka is located in the southern region of India. The state is surrounded by the Arabian Sea in the west, Goa in the northwest, Maharashtra in the north, Andhra Pradesh in the east, Tamil Nadu in the southeast, and Kerala in the southwest. Languages spoken are Kannada, Tulu, Kodava, Hindi and English. Geographical area (sq km) 192,000 Administrative districts (No) 30 Population density (persons per sq km) 319 Total population (million) 61.1 Sex ratio (females per 1,000 males) 973 Literacy rate (%) 75.6 Male literacy rate 82.5 Female literacy rate 68.1 Source: Economic Survey of Karnataka 2015-16, Census 2011 Office of Registrar General, India. 7

IN FIGURES (1/2) Parameter Karnataka All states Source Economy 2016-17 2016-17 GSDP as a percentage of all states GSDP 8.30 100.0 GSDP growth rate (%) 11.4 11.52 Per capita GSDP (US$) 2,708.9 1,611 Directorate of Economics & Statistics of Karnataka, Central Statistics Office Directorate of Economics & Statistics of Karnataka, Central Statistics Office Directorate of Economics & Statistics of Karnataka, Central Statistics Office Physical Infrastructure Installed power capacity (MW) 21,632.09 331,117.58 Central Electricity Authority, as of October 2017 Wireless subscribers (No) 70,194,726 1,186,790,005 Internet subscribers (No) 27,960,000 431,210,000 National Highway length (km) 6,502.29 100,087.08 Telecom Regulatory Authority of India - as of July 2017 Telecom Regulatory Authority of India - as of June 2017 NHAI & Karnataka Roads and Building Department, 2015-16 Major and minor ports (No) 1 + 10 13+187 India Ports Association Airports (No) 5 125 Airports Authority of India 8

IN FIGURES (2/2) Parameter Karnataka All states Source Social Indicators Literacy rate (%) 75.6 73.0 Census, 2011 Birth rate (per 1,000 population) 18.1 21.6 Karnataka Economic Survey 2016-17 Investment FDI equity inflows (US$ billion) 24.63 342.52 Department of Industrial Policy & Promotion, April 2000 to June 2017 Industrial Infrastructure PPP projects completed & operational (No) 129 1,246 Operational SEZs (No) 26 224 Department of Economic Affairs, Ministry of Finance, Government of India, July 2016 Department of Commerce, Ministry of Commerce & Industry, September 2017 PPP: Public-Private Partnership, SEZ: Special Economic Zone, SRS: Sample Registration System 9

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 94.1 107.9 126.8 141.7 157.8 175.8 ECONOMIC SNAPSHOT GSDP At current prices, the gross state domestic product (GSDP*) of Karnataka stood at about US$ 175.8 billion in 2016-17. GSDP of Karnataka at current prices (US$ billion) The GSDP of the state grew at a CAGR of 13.33% between 2011-12 and 2016-17. Growth has been mainly driven by secondary and tertiary sectors. 200.0 180.0 160.0 CAGR 13.33% 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 Source: Directorate of Economics & Statistics of Karnataka, Central Statistics Office NSDP# -Karnataka Socio Economic Survey 2015-16 10

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 86.1 98.7 115.9 128.0 142.4 158.6 ECONOMIC SNAPSHOT NSDP The net state domestic product (NSDP#) of Karnataka was recorded at about US$ 158.6 billion in 2016-17. NSDP of Karnataka at current prices (US$ billion) The NSDP of the state grew at a CAGR of 12.99% between 2011-12 and 2016-17. 180.0 160.0 CAGR 12.99% 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 Source: Directorate of Economics & Statistics of Karnataka, Central Statistics Office NSDP# -Karnataka Socio Economic Survey 2015-16 11

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 1529.9 1736.7 2017.6 2230.4 2458.5 2708.9 ECONOMIC SNAPSHOT PER CAPITA GSDP The state s per capita GSDP^ was US$ 2,708.9 in 2016-17. The per capita GSDP increased at a CAGR of 12.11% between 2011-12 and 2016-17. 3000.0 GSDP per capita of Karnataka at current prices (US$) CAGR 12.11% 2500.0 2000.0 1500.0 1000.0 500.0 0.0 Source: Directorate of Economics & Statistics of Karnataka, Central Statistics Office Per Capita GSDP^ - calculated using GSDP million US$/Population in million 12

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 1401.0 1588.1 1844.4 2015.0 2218.1 2444.2 ECONOMIC SNAPSHOT PER CAPITA NSDP The state s per capita NSDP& in 2016-17 was US$ 2,444.2. The per capita NSDP increased at a CAGR of 11.77% between 2011-12 and 2016-17. 3000.0 NSDP per capita of Karnataka at current prices (US$) CAGR: 11.77% 2500.0 2000.0 1500.0 1000.0 500.0 0.0 Source: Directorate of Economics & Statistics of Karnataka, Central Statistics Office per capita NSDP& -calculated using NSDP million US$/Population in million 13

ECONOMIC SNAPSHOT PERCENTAGE DISTRIBUTION OF GSVA In 2016-17, the tertiary sector µ contributed 65.75% to the state s GSVA at current prices, followed by the secondary sector (22.39%) and the primary sector (11.86%). At a CAGR of 16.24%, the tertiary sector has been the fastest growing among the three sectors from 2011-12 to 2016-17. The growth has been driven by trade, hotels, real estate, finance, insurance, transport, communications and other services. The secondary sector µ grew at a CAGR of 7.46% between 2011-12 and 2016-17. This was driven by manufacturing, construction and electricity, gas & water supply. 100% 90% 80% 70% 60% Visakhapatnam GSVA composition port traffic by (million sector tonnes) 56.84% CAGR 65.75% 16.31% The primary sector µ grew at a CAGR of 8.47% between 2011-12 and 2016-17. 50% 40% 28.67% 11.50% 30% 22.39% 20% 10% 14.50% 9.61% 11.86% 0% 2011-12 2016-17 Source: Directorate of Economics & Statistics of Karnataka, Central Statistics Office, Aranca Research Sector-wise %share of GSDPµ -Karnataka Socio Economic Survey 2015-16 14

ECONOMIC SNAPSHOT AGRICULTURAL PRODUCTION Production of major crops in Karnataka (lakh tonnes) Crop 2015-16 2016-17 Cereals 85.92 77.53 Pulses 10.52 14.01 Total food grains 96.44 91.54 Oilseeds 7.09 7.18 Sugarcane 363.14 361.25 Tobacco 0.49 0.82 Sugarcane is a major crop of the state with production estimates of about 36.13 million tonnes in 2016-17. The state s total food grain production is estimated to be 9.15 million tonnes during 2016-17. During 2016-17, major oilseeds production in the state was 0.718 million tonnes. Production of cereals and pulses in the state is estimated to be 7.75 million tonnes & 1.401 million tonnes, respectively, in 2016-17. In 2016-17, total production of major fruits in the state was 6.91 million tonnes. Source: Department of Agriculture & Corporation, Government of Karnataka 15

25.69 33.97 40.10 45.08 48.93 79.76 82.06 ECONOMIC SNAPSHOT EXPORTS (1/3) During 2016-17, exports from the state contributed about 47% to the state s economy, with biotechnology, computer software and electronics being the major exports. In 2016-17, total exports from the state aggregated to US$ 82.06 billion. Karnataka s exports increased at a CAGR of 21.35% during 2010-11 to 2016-17. Electronics and software exports from the state reached US$ 62.67 billion in FY17. 90.00 80.00 70.00 60.00 50.00 40.00 Exports from Karnataka (in US$ billion) CAGR: 21.35% 30.00 20.00 10.00-2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 Karnataka exports by commodity (US$ million) Commodity 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 (1) Electronics & computer software 28,186.16 28,723.99 29,528.87 32,186.46 31,015.11 31,428 Readymade garments 1,691.88 1,412.26 1,476.44 1,629.23 2,239.27 1,065.3 Petroleum & petroleum products 4,865.57 6,244.71 5,871.27 6,782.02 1,852.32 441.4 Engineering goods 1,716.81 2,314.12 2,982.42 3,476.78 3,177.54 2,268.60 Iron ores & minerals (incl granites) 235.61 319.46 122.59 124.25 124.79 72.64 Note: 1 Up to September 2016 Source: Visvesvaraya Trade Promotion Centre, Government of Karnataka 16

ECONOMIC SNAPSHOT EXPORTS (2/3) Karnataka exports by commodity (US$ million) Commodity 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 (1) Silk products 148.62 139.83 120.42 107.83 91.90 74.19 25.77 Coffee products 478.74 659.26 650.71 596.88 824.98 480.54 270.69 Basic chemicals, pharmaceuticals and cosmetics Agriculture & processed food products 634.15 1,054.85 1,331.80 1,376.91 978.10 1,680.65 830.34 146.87 158.53 211.56 215.66 229.43 803.54 328.15 Gems and jewellery 4,361.46 4,929.98 4,508.01 4,010.45 3,649.30 5,119.41 2,567.23 Cashew and cashew kernels 128.67 183.25 155.96 199.07 249.67 111.60 53.39 Handicrafts 64.23 55.47 68.86 85.60 90.91 194.48 81.49 Leather products 44.28 66.49 83.23 74.65 90.08 55.10 30.42 Chemicals and allied products 74.09 99.73 90.41 93.23 158.43 74.50 40.82 Marine products 115.74 125.70 116.37 177.01 217.82 118.58 63.79 Plastic goods 123.41 125.49 145.09 116.12 62.38 121.53 66.28 Spices 98.64 145.44 166.45 190.78 186.79 50.13 31.20 Wool & woollen products 19.95 26.80 27.62 29.20 31.69 0.93 1.09 Miscellaneous 227.53 1,001.04 881.79 923.19 958.36 3214.48 632.81 Note: 1 Up to September 2016 Source: Visvesvaraya Trade Promotion Centre, Government of Karnataka 17

ECONOMIC SNAPSHOT EXPORTS (3/3) Incentives & concessions for export in Karnataka Exemption from entry tax Refund of certification charges Refund of cost incurred for export consultancy / market Intelligence studies Brand promotion and quality assurance Support for the establishment of CFS and other export infrastructure Compensation of export Credit. Support for development of exports in gherkins, rose onions and floriculture. Market development assistance for trade promotion and overseas trade delegations. Policies for export promotion Industrial Policy 2014-19 Karnataka Tourism Policy 2009 Karnataka State Mineral Policy 2008 Karnataka Semi Conductor Policy 2010 Grape Processing & Wine Policy 2007 Karnataka Solar Policy 2011 Karnataka Renewable Energy Policy 2009 Karnataka Integrated Agribusiness Development policy 2011 Karnataka SEZ Policy 2009 Karnataka Animation Visual Effects & Comic Policy 2012 Karnataka Pharmaceutical Policy 2013 Karnataka New Infrastructure Policy 2013 Source: Economic Survey of Karnataka 2015-16 18

110 89 106 169 163 217 269 285 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 ECONOMIC SNAPSHOT FDI INFLOWS & INVESTMENTS The state has a stable political environment. Successive state governments have recognised the importance of industries in the state and have provided a conducive business environment to attract domestic as well as foreign entities. Karnataka is ranked 5th in terms of attracting private sector investments in India. According to the Department of Industrial Policy & Promotion (DIPP), the cumulative FDI inflows from April 2000 to June 2017 were recorded at US$ 24.63 billion, the 4th highest in India after Maharashtra, Delhi & Chennai & accounted for a share of 7.2% in India s cumulative FDI inflows. With a private equity & venture capital investment of USD2.51 billion from 280 deals, Karnataka stood at the 2nd position, among all other states. 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 FDI equity inflows, 2008-09 to 2017-18 (US$ billion) 2.02 1.09 1.12 1.53 1.02 1.89 3.44 4.12 2.13 2.26 2017-18 1 Investment intentions in terms of IEMs filed, LOIs/DILs issued in Karnataka 300 250 200 150 100 50 0 21.43 14.54 7.33 1.54 3.34 4.84 23.93 22.96 2010 2011 2012 2013 2014 2015 2016 2017 Number of Investment Intentions Proposed Investments (US$ Billion) 2 Note: 1 During April to June 2017, 2 During January to July 2017 Source: Department of Industrial Policy & Promotion Directorate of Economics and Statistics, Government of Karnataka 19

ANNUAL BUDGET 2017-18 (1/3) Total consolidated budget size for 2017-18 was US$ 28.96 billion. Budget highlights: 150 Electric Buses will be introduced in Bengaluru City and 50 Electric Buses in Mysuru. Karnataka State Road Safety Authority will be constituted, to reduce road accidents and to improve road safety. Krishi Bhagya to be implemented for the first time in Horticulture Department US$ 31.04 million. Upgradation of 302 primary veterinary centers to veterinary dispensaries.. Setting up of 25 new Government Polytechnics at a cost of US$ 0.62 million each in rural areas. Development of 4,386 km of roads under Namma Grama Namma Raste - phase 4 US$ 273.95 million. Works amounting to US$ 447.95 million to be implemented under Nagarothana (Municipality) phase-3 project in small and medium towns. Source: Government of Karnataka, Budget 2016-17 20

ANNUAL BUDGET 2017-18 (2/3) Primary & Secondary education : The state government has taken various initiatives such as, Nali Kali, not for profit organization, etc., for enhancement of quality education across all government schools in the state. A comprehensive e-content programme, IT@Schools in Karnataka will be launched by high school teachers for delivering digital literacy to government high school students. Reassurance of yoga education in government schools. Higher education: For accentuating knowledge as well as fiscal necessities in the state, Karnataka Education Policy will be deployed. For presenting the state s educational and cultural legacy, the state government has decided to develop Karnataka Heritage Centre at a cost of US$ 0.30 million in Karnataka Folklore University. The state government has allocated US$ 1.52 million for allowing the government colleges to obtain UGC grant by getting the NAAC recognition. Major sector-wise allocations as per budget 2015-16, 2016-17 and 2017-18 Sector Primary & secondary education Annual allocation (US$ million) 2015-16 Annual allocation (US$ million) 2016-17 Annual allocation (US$ million) 2017-18 2,475.40 2,653.98 2,835.13 Higher education 595.17 710.51 683.10 Energy 2,125.08 1,929.72 1,594.36 Water resources 2,149.30 2,211.57 2,472.4 Urban development 1,891.9 2,269.01 2,131.39 Social welfare 756.4 834.70 987.62 Health and family welfare 1,007.7 768.71 794.38 Agriculture 644.16 663.61 788.49 Horticulture 126.07 115.03 169.34 Sericulture 30.85 56.06 66.59 Fisheries 49.27 46.13 52.3 Forest, environment and Ecology 291.47 245.79 268.83 21

ANNUAL BUDGET 2017-18 (3/3) Agriculture: Krishi Bhagya scheme will be extended to Costal and Malnad areas(excluding command areas) covering all the taluks at a cost of US$ 93.13 million in the year 2017-18. Drip and sprinkler irrigation units will be distributed at 90% subsidy for up to 2 hectares and 50% subsidy for up to 5 hectares covering an area of 1.8 lakh hectares. It is proposed to set up 250 more centres at hoblis under the Krishi Yanthradhare Programme at a cost of US$ 18,94 million. Energy: 40 new sub stations will be established to strengthen the transmission network. It is proposed to add 3,975 MW capacity during the year 2017-18 including 1,600 MW from Yaramaras project, 1,000 MW from Solar Energy Park of Pavagada and 1,375 MW from renewable energy sources. As per state budget 2017-18, US$ 1.59 billion has been allocated for the Energy Department. 5 villages in each MLA constituency will be converted into Model Electricity Villages by taking steps for the efficient usage of electricity. Water Resources: Construction of field irrigation canals for 35,000 hectares of area, construction of field drains for 28,000 hectare area and development of saline and alkaline lands of 12,500 hectare area. As per state budget 2017-18, US$ 2.47 billion has been allocated for the Water Resource Department. 22

PHYSICAL INFRASTRUCTURE ROADS Up to September 2017, under NABARD loan assistance scheme, an amount of Rs 182.32 crore (US$ 28.36 million) has been sanctioned in RIDF-XXIII. Public Works Department (PWD) of the state is using hi-tech vehicles to help in improvement of roads. The vehicles will be used to check the status of 20,000 km of core roads in the state according to the department. Source: Maps of India Road infrastructure in Karnataka (km) The state is well-connected to its five neighbouring states and other parts of India through 15 national highways that run through the state. The Karnataka State Road Transport Corporation (KSRTC), established in August 1961, provides state road transport services. During the last four years (2013-17), a total of 8,288 km roads were constructed under Namma Grama Namma Rasthe scheme by the state government. In May 2017, the state government revealed its plans for widening and redeveloping four roads on the city outskirts to bring down traffic congestion. The Karnataka Road Development Corporation Ltd. has estimated the cost for improving 155Km of roads at US$216.42 million. Road type 2016-17 National highways 6.502.29 State highways 27,163 Major district roads 55,515 Municipal roads 8,366 Other roads 155,545 Source: Ministry of Road Transport & Highways, Government of Karnataka, State Budget, 2016-17 23

PHYSICAL INFRASTRUCTURE RAILWAYS Karnataka is well connected to other parts of the country through the railways. The state has a railway network of 3,250 km. Karnataka Rail Infrastructure Development Corporation (K-RIDE) has been set up with the objective of developing and implementing rail infrastructure projects in Karnataka with private sector participation wherever feasible. K-RIDE has a chief executive officer deputed from the Railways Department and principal secretary, Infrastructure Development Department, as its chairman. As of September 2017, 42.3 km of Karnataka s metro network is operational. Further, the state government granted contracts for two reaches of phase II, which are slated for completion by 2020. In State Budget 2017-18, the government released a grant of US$ 244 million for Rail Over Bridge and Rail Under Bridge works under progress. Karnataka railway network Type of railway South Central Railways South Western Railways BG (km) MG (km) NG (km) Total (km) 268 0 0 268 2,516 97 84 2,697 Southern Railways 37 0 0 37 Konkan Railways 248 0 0 248 Total 3,069 97 84 3,250 Status of major railway projects in Karnataka (2016-17) Railway project Ramanagara-Mysuru doubling track Bidar-Kalaburagi new railway line Bengaluru-Hasana railway line Bagalakote-Kuduchi railway line Ginigera-Rayachuru railway line Gadaga-Wadi railway line TumakuruRayadurga railway line Status Commissioned for transport Completed Commissioned Approved by Government of Karnataka; amount released for land acquisition Source: Economic Survey of Karnataka, 2015-16, State Budget 2016-17 24

PHYSICAL INFRASTRUCTURE AIRPORTS Upgradation works were undertaked for Belagavi airport in 2015. The upgraded Belagavi airport was inaugurated in September 2017. Modernisation of the airport was done at a cost of US$ 18.67 million and it now has capacity to handle over 300 passengers. The state has five domestic airports. These are located in Bengaluru, Mangalore, Hubli, Mysore and Belgaum. International flights operate from the airports at Bengaluru (Kempegowda International Airport) and Mangalore (Mangalore International Airport). During 2015-16, work on planning and preparation of terminal 2 and second parallel runway of Kempegowda International Airport was initiated. This construction will enable the airport to handle around 35 million passengers per year. The construction work is expected to be completed by September 2019. Further, work on development of Kalaburagi airport by PWD is expected to be concluded by December 2017. In March the government gave in principle approval for construction of an airport at Shimoga. Bengaluru International Airport; the country s first greenfield international airport, has been developed at Devanahalli in Bengaluru as a passenger and cargo department hub. This was developed under PPP and started operations in May 2008. Karnataka airport statistics (2016-17) Airport Passenger traffic (No.) Aircraft movement (No.) Freight (tonnes) Bengaluru 22,881,392 177,271 319,344 Mangalore 1,734,810 15,405 1,242 Karnataka airport statistics (2017) 1 Bengaluru 12,393,549 91,329 173,010 Mangalore 1,062,491 9,359 1,404 Note: 1 From April to September 2017 Source: AAI, Global Investors Meet, Budget 2016-17 25

19,549 31,350 32,941 37,036 39,365 36,566 35,590 39,940 PHYSICAL INFRASTRUCTURE PORTS (1/2) Cargo handled by New Mangalore port (in 000 tonnes) Karwar Port New Mangalore Port 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1 There are 13 ports in Karnataka, of which New Mangalore is a major port. New Mangalore Port is the ninth major port in India with the deepest inner harbour on the west coast. Ports Major ports New Mangalore Port The work on development of the second stage of Karwar port has been initiated under the concept of D-BOOST in PPP mode. However, the bid document issue is under consideration by the state government. As per budget 2017-18, in order to promote Import/Export activities in Karwar Port, a detailed project report will be prepared to construct an additional dock measuring 1508 meter for stationing 5 ships of 14 metres depth. Note: 1 From April to September2017 Source: Indian Port Association Minor ports Karwar Belekeri Tadri Honavar Bhatkal Kundapur Hangarkatta Malpe Padubidri Old Mangalore 26

PHYSICAL INFRASTRUCTURE PORTS (2/2) Cargo handled by various minor ports in Karnataka ( 000 MT) Minor Port 2011-12 2012-13 2013-14 2014-15 2015-16 (1) 2016-17 (up to Dec 2016) Old Mangalore 87.83 165.93 120.26 115.89 66.16 48.52 Karwar 497.20 441.19 377.10 525.07 481.40 426.24 Malpe, Belekeri, Hangarkatta & Kundapur 6.81 4.74 3.00 2.31 1.22 1.32 Total 591.84 611.86 500.36 643.27 548.71 476.08 During 2015-16, the state government initiated the work on development of Pavinakurve port, under PPP mode, in the district of Uttar Kannada. However, the draft concessional agreement and pre-feasibility report preparations related to the port are under process. Additionally, the Infrastructure Development Department (IDD) has initiated the development of Tadri sea port at a projected amount of US$ 458.29 million. The state government has also assigned 8,000 sq km of port land at the minor port of Old Mangalore during 2015-16. Source: Karnataka Economic Survey 2015-16;Note: 2015-16 (1) : Till December 2015 27

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1 PHYSICAL INFRASTRUCTURE POWER As of October 2017, the state had an installed power generation capacity of 21,632.09 MW. Out of this, central utilities contributed 3,127.20 MW, private utilities contributed 9,601.84 MW and 8,903.05 MW was under state utilities. 25.0 Installed Power Capacity (GW) Of the total installed power generation capacity, 9,560.82 MW was contributed by thermal power. Capacities of 698.00 MW and 7,773.47 MW were contributed by nuclear & renewable power, respectively, while hydropower contributed 3,599.80 MW. As per the Budget 2017-18, the state plans to add 3,975 MW of power in 2017-18, out of which renewable energy accounts for 2,375 MW. 20.0 15.0 10.0 5.0 0.0 8.5 8.7 11.4 12.1 13.9 14.0 15.1 17.3 21.3 21.6 Karnataka Renewable Energy Development Limited (KREDL) was established in 1996 to promote the development of renewable energy sources in the state. In July 2017, commercial production started from an 800 MW unit at Kudgi plant of NTPC in Karnataka. As of October 2017, the installed capacity for solar power in the state reached 1,492.88 MW. Note: 1 As of September 2017 Source: Central Electricity Authority As per the budget 2017-18, the state government has allocated US$ 1.37 billion for enhancement of the power sector in the state. The establishment work of a gas-based power plant in Yelahanka is estimated to be initiated during 2016-17 by the state government. Further, KPCL is expected to create a 200 MW solar power plant during 2016-17. 28

PHYSICAL INFRASTRUCTURE TELECOM Leading telecom companies operate in the state in the sectors of telecommunication network, basic telephony services (both wire line and wireless) and networking services for telecommunication equipment. According to Telecom Regulatory Authority of India (TRAI), there were 70.19 million wireless subscribers and 2.27 million wire-line subscribers in Karnataka, as of July 2017. The entire state is networked through optical fibre cables (OFCs) of the state-owned company, Bharat Sanchar Nigam Limited (BSNL), as well as private companies such as Bharti, Reliance, VSNL and TATA Tele Services. Last mile access is provided by BSNL as well as Tata Tele Services in various parts of the state. Bharti and Reliance Communications provide the last-mile access directly to the customers in all major cities of Karnataka. By the end of July 2017, 32,032,831 subscribers had submitted requests for mobile number portability in Karnataka. Out of the total allocated amount of US $91.65 million in Bharat Net project, BSNL invested US $61.10 million to increase the speed of gram panchayat connectivity in Karnataka, through high-speed broadband and FTTH (fibre-to-the-home). Telecom Infrastructure (As of July 2017) Wireless subscribers 70,194,726 Wire-line subscribers 2,273,737 Internet subscribers (1) 27,960,000 Post offices (2) 9,663 Teledensity (in %) 114.79 Performance status of NOFN Project (As of September 2017) No. of GPs in Phase-I 6,092 Pipe laid (km) (3) 11,784 Cable laid (km) 12,613 GPs for which cable laid 6,037 No of GPs lit 4,835 By March 2017, the state plans to provide Wi-Fi connectivity to all villages. The project will be jointly implemented by BSNL and Karnataka State Electronics Development Corporation (KEONICS). Note: (1) As of June 2017, (2) As of April 2016, (3) As of July 2017 Source: Telecom Regulatory Authority of India,Economic Survey of Karnataka 29

DEVELOPMENT PROJECTS: URBAN INFRASTRUCTURE (1/2) Karnataka is among the top ten most urbanised states in India. The state is projected to reach an urban population proportion of 50% by 2026. Some of the key areas of development are roads and flyovers, water supply, storm-water drainage, sewerage and urban transport. The Karnataka Urban Water Supply and Drainage Board (KUWSDB) is responsible for providing water supply & sewerage facilities in 218 urban areas of the state, except the areas serviced by the Bruhath Bengaluru Mahanagar Palike (provides services in Bengaluru city & surrounding areas). Karnataka has ten city corporations, 57 city municipal councils, 113 town municipal councils, 90 town panchayats & 4 notified area committees. As per budget 2017-18, an amount of US$ 2.13 billion has been proposed for urban development. For the development of Nagarothana phase-3 project for 10 City Corporations, an amount of US$ 45.52 million was granted by the state government during 2015-16. As of March 2017, Nabard is planning to help the state with technologies at a low cost, for conservation and efficient use of water in the drought-affected districts, with the help of modern technologies such as water management practices, micro irrigation (more crop per drop) & adopting improved packages of agronomic practices. Water supply KUWSDB has implemented surface-based drinking water supply schemes in 187 urban areas to provide assured safe drinking water. KUWSDB is implementing 26 schemes for shifting the source of water from ground water to assured surface water. They are to be completed by 2013. Cauvery Water Supply Scheme (CWSS) Stage IV, Phases I IV are being implemented to supply 810 MLD of water to about 600,000 connections. Sewerage system The Bengaluru Water Supply and Sewerage Board (BWSSB) is responsible for providing water supply, sewerage system & sewage disposal in the Bengaluru Metropolitan area. 42 urban areas have been provided with Underground Drainage (UGD) facilities in the state. During 2015-16, a private operator has been assigned by the state government at Hubli-Dharwad for providing 24X7 water supply under Karnataka Urban Water Supply Modernisation Programme (K.U.W.S.M.P). Moreover, the state government finished 42.3-km network of Metro Rail under phase-1 of the Metro Rail project and two lines have been made operational. Source: JNNURM, Ministry of Urban Development 30

DEVELOPMENT PROJECTS: URBAN INFRASTRUCTURE (2/2) Development projects under Directorate of Municipal Administration: Construction of 22,133 houses (DUs) at a cost of US$ 85.37 million under Rajeev Awas Yojana will be completed by the authority during 2017-18. Infrastructure works for drinking water supply scheme for citizens for small and medium towns will be started during 2017-18 at a cost US$ 447.95 million. Under Housing for all, construction of 60,000 houses at a cost of US$ 405.42 million will be implemented through urban local bodies and Rajeev Gandhi Rural Housing Corporation during 2017-18. During 2017-18, it is targeted to construct 0.33 million personal toilets, 9,104 capacity community toilets, 4,522 capacity public toilets under Solid Waste Management Scheme. As per Budget 2017-18, master plans will be prepared for all of the 274 urban local bodies of the state. To mitigate the scarcity of drinking water in Mangaluru, a desalination plant will be established with public-private-participation (PPP). Source: : Budget 2016-17 31

DEVELOPMENT PROJECTS: KEY PUBLIC-PRIVATE PARTNERSHIP (PPP) PROJECTS (1/2) Under construction PPP projects - Karnataka Project name Sector Status Total cost (US$ million) Road Upgradation (Karnataka) Project Transport Under construction 108.66 Setting up of mechanized iron ore handling facilities at deep draft multi-purpose berth of NMPT Transport Under construction 45.97 Six laning of Belgaum - Dharwad Section Road Transport Under construction 79.63 Sports City cum International Convention Centre cum Star Hotel cum Shopping Complex cum Residential Complex Social and commercial infrastructure Under construction 149.3 Airport (Hassan) Project Transport Under construction 497.68 Waste to Energy Project Mandur Water sanitation Under construction 9.95 Bus Terminal-cum-Commercial complex at Puttur Transport Under construction 1.21 Water Supply Scheme (Mysore) Water sanitation Under construction 32.27 Construction and Maintenance of Public Toilets in Bengaluru Social and commercial infrastructure Under construction 1.99 Water Supply Scheme (Nanjangud) Water sanitation Under construction 4.74 Source: Department of Economic Affairs, Government of India 32

DEVELOPMENT PROJECTS: KEY PUBLIC-PRIVATE PARTNERSHIP (PPP) PROJECTS (2/2) PPP Projects Karnataka Project name Sector Status Total cost (US$ million) Development of integrated solid Waste Treatment (100 TPD) and Landfill Facilities at Belgaum Water sanitation Under construction 0.85 Development of International Convention Centre at Devanahalli Social and commercial infrastructure Under construction 174.19 Integrated Disposal Facility (Mysore) Water sanitation Under construction 4.62 Integrated Municipal solid waste treatment Kannahalli Water sanitation Under construction 4.15 Integrated Municipal solid waste treatment Mavalipura Water sanitation Under construction 6.64 Karnataka Urban Water Sector Improvement Project Water sanitation Under construction 11.61 Kudgi TPS Transmission Line Project Energy Under construction 223.95 Malleshwaram Market - Re-development New Puttanna Theatre and Parking Road Upgradation (Goa/Karnataka Border-Kundapur) Project Social and commercial infrastructure Social and commercial infrastructure Under construction 21.9 Under construction 41.85 Transport Under construction 437.79 Road Upgradation (Hoskote-Dobespet) Project Transport Under construction 191.27 Source: Department of Economic Affairs, Government of India 33

DEVELOPMENT PROJECTS: SEZs AND INDUSTRIAL CLUSTERS (1/4) The state has 26 operational, 51 notified SEZs and 62 formal approval SEZs as of September 2017. The Karnataka Industrial Areas Development Board has developed 141 industrial areas spread across the state. The state plans to develop and upgrade eight clusters around Bengaluru with an investment of US$ 348.4 million in coming years. The Karnataka State Industrial & Infrastructure Development Corporation has promoted more than 135 start-up ventures in the state through equity participation and has provided debt to core industries such as steel, cement, mining and textiles, as well as new sectors such as IT, aerospace and telecom. In October 2017, the government approved the setting up of a new industrial park in Harohalli. The proposed multi-product industrial park will be built by Karnataka Industrial Areas Development Board (KIADB) on an area of about 904.86 hectares. The park is expected to entail an investment of US$ 242.8 million and generate more than 23,500 jobs. Sector-wise Operational SEZs In Karnataka (as of September 2017) 4% 4% 4% 4% 4% 4% 4% 3% 69% IT/ITeS Biotechnology Hi-tech Engineering Products and related services Electronics Hardware and Software/ITES Aerospace and Industry Pharmaceuticals Textile Multi Product Precision Engineering Product Source: : Department of Commerce, Ministry of Commerce & Industry 34

DEVELOPMENT PROJECTS: SEZs AND INDUSTRIAL CLUSTERS (2/4) Some of the operational SEZs in Karnataka Name/Developer Location Primary industry Biocon Special Economic Zone Anekal Taluk, Banglore, Karnataka Biotechnology Shyamaraju and Company (India) Pvt. Ltd. Kundalahalli Village, Karnataka IT/ITES enabled services Manyata Embassy Business park SEZ Bangalore, Karnataka IT/ITeS Wipro Limited (Electronic City) Wipro Limited (Sarjapur) Varthur Hubli, Electronic City, Banglore, Karnataka Varthur Hobli, Sarjapur Road, Karnataka Vrindavan Tech Villages SEZ Devarabeesanahalli Village, Karnataka IT/ITeS IT IT RMZ Ecoworld Infrastructure Pvt. Ltd. Cessna Business Park Pvt. Ltd. Devarabeesanahalli, Karnataka Varthur Hobli, District Banglore, Karnataka IT/ITeS IT/ITeS Tanglin Development Ltd. Pattengere/Mylasandra Villages, Karnataka IT/ITeS Infosys Technologies Limited Hebbal Industrial area, District Mysore, Karnataka IT/ITES Source: Department of Industries and Commerce, Karnataka 35

DEVELOPMENT PROJECTS: SEZs AND INDUSTRIAL CLUSTERS (3/4) Some of the operational SEZs in Karnataka Name/Developer Location Primary industry Information Technology Park Limited Karnataka Industrial Area Development Board (KIADB) Infosys Technologies Limited Sadaramangala and Pattandur Agrahara Village, District Bangalore, Karnataka Village Perumenahally, Karnataka Hebbal Industrial area, District Mysore, Karnataka IT/ITeS Textile IT/ITeS HCL Technologies Ltd. Bangalore Karnataka IT/ITeS Pritech park Sez (Primal Projects Ltd) Bangalore Karnataka IT/ITeS Karnataka Industrial Area Development Board (KIADB) Aspen Infrastructures Limited (formerly Synefra Engineering construction Ltd. (Suzlon Infrastrucutre Ltd.) District Hassan, Karnataka Udupi Taluk, Karnataka Pharmaceuticals Hi-tech engineering, products and related services Karle Infra Pvt. Ltd. Bangalore Karnataka IT/ITeS Mangalore Special Economic Zone Bangalore Karnataka Multi product Bagmane Construction Pvt. Ltd K R Puram, Bangalore North, Karnataka IT/ITES Bagmane Construction Pvt. Ltd K R Puram, Bangalore North, Karnataka IT/ITES Source: Department of Industries and Commerce, Karnataka 36

DEVELOPMENT PROJECTS: SEZs AND INDUSTRIAL CLUSTERS (4/4) Some of the operational SEZs in Karnataka Name/Developer Location Primary industry Quest special Economic Zone Belgaum district, Karnataka Precision engineering Products Gopalan Enterprises (India) Private Limited. Bengaluru, Karnataka IT/ITES Karnataka State Electronics Development Corporation Limited (KEONICS) District Shimoga, Karnataka Electronics Hardware and Software/ ITES Larsen & Toubro Limited District Mysore,Karnataka IT/ITeS Karnataka Industrial Areas Development Board Bengaluru, Karnataka Aerospace and industry Milestone Buildcon Private Limited Village Chokkanahalli, Taluka Yelahanka Hobli Bangalore North, Karnataka IT/ITES Milestone Buildcon Private Limited Village Chokkanahalli, Taluka Yelahanka Hobli Bangalore North, Karnataka IT/ITES Source: Department of Industries and Commerce, Karnataka 37

SOCIAL INFRASTRUCTURE EDUCATION (1/2) The state has a literacy rate of 75.6%, the male literacy rate is 82.8% and the female literacy rate is 68.1%. In terms of the number of universities, Karnataka ranks fifth among all Indian states and union territories, with 44 universities. Of these, 24 are state public universities and 11 are private deemed universities. The state has 4,519 pre-university colleges to impart general education. There are more than 1 million students in the pre-university colleges. There are 293 polytechnics and 206 engineering colleges to provide technical education in the state. For the development of basic facilities such as laboratory, library, new buildings, toilets, drinking water facility in government schools and colleges, an amount worth US$ 18.25 million would be provided. Under Shikshakara Shikshana scheme, DSERT, DIETs and CTE would be upgraded. Under this scheme, Shaikshanika Adhalath and TESS education centers would be opened in the offices of BEOs, DIETs, DDPIs and CTEs in the state. Literacy rates (%) Literacy rate 75.6 Male literacy 82.5 Female literacy 68.1 Educational infrastructure (2016-17) Institute type Number Enrolments Medical colleges 55 8,125 Ayurvedic colleges 66 4,170 Homoeopathic colleges 11 925 Unani colleges 4 230 Naturopathy & Yogic Sciences (BNYS) 4 345 Dental colleges 39 2,770 Pharmacy colleges 61 4,784 Nursing colleges 248 13,840 Source: Economic Survey of Karnataka 2015-16 Census 2011 38

SOCIAL INFRASTRUCTURE EDUCATION (2/2) As per economic survey 2016-17, the state participation in primary education is significant as 81.23% of the lower primary and 63.40% of the higher primary schools are managed by Department of Education. The Karnataka government is expecting investments of US$ 777.72 million in higher education sector which will raise the Gross Enrollment Ratio (GER) to 40% in the state. In November 2017, foundation stone for a new government medical college was laid in Bengaluru. The cost of the project is pegged at US$ 31.11 million and the college is expected to be functional from 2018 itself. Karnataka education statistics (2016-17) Number of schools School dropout rate (in %) Pupil-teacher ratio Lower primary: 26,696 Higher primary: 35,498 Secondary schools: 15,773 Lower primary: 1.03 Higher primary: 2.30 Average: 23.18:1 Private Aided schools: 55.48:1 Unaided schools: 31.61:1 Karnataka is home to several premier institutions: Indian Statistical Institute. Indian Institute of Science. Indian Institute of Management. National Law School of India University. Institute for Social and Economic Change. University of Agricultural Sciences, Bengaluru. Kannada University, Hampi. Source: Economic Survey of Karnataka 2015-16 39

SOCIAL INFRASTRUCTURE HEALTH... (1/2) 3-tier health infrastructure comprising primary health centres, health units, community health centres & sub-centres is available in the state. The policy of the Government is to establish 1 primary health centre for every 30,000 inhabitants, 1 dispensary for every 15,000 20,000 inhabitants & 1 sub-centre for every 5,000 inhabitants. Under Arogya Kavach (108 ) Scheme, 17 million people have availed ambulance services. As per budget 2016-17, implementation of Indira Suraksha scheme would be initiated in the state during 2016-17, to offer integrated healthcare services to the families of those farmers who have committed suicide. As of November 9, 2017, the state has 12,572 active health institutions out of total 12,997 health institutions in the state. Under the assistance of National Health Mission, at a cost of US$ 8.09 million, trauma centres will be established across 5 places, under the scheme of Aapathbandhava for offering emergency treatment to highway accident victims. In June 2017, the state government announced an initiative to install RO systems in 147 taluk & 20 district hospitals across the state. The plants will be jointly set up by the state health & rural development and panchayat raj departments. An amount of US$ 1.49 million has been allocated for the project. Health indicators (2016) Birth rate 17.6 Death rate 6.7 Infant mortality rate 24 Natural Growth Rate 10.9 Life expectancy at birth (years) Male (2015) 63.6 Female (2015) 67.1 No of institutions Total Facilities (November 2017) 3 Subcenters 9,469 Community health centres 317 Primary health centres 2,629 Sub district hospital 539 District hospital 43 Total institutions 12,997 Source: Economic Survey of Karnataka 2015-16,Ministry of Health & Family Welfare Sample Registration System (SRS) Bulletin Sep, 2014, 1 Per thousand persons, 2 Per thousand live births, 3 As of 9 th November 2017 40

SOCIAL INFRASTRUCTURE HEALTH... (2/2) Various other programmes to be included under the National Health Mission during 2017-18 include: Establishment of dialysis centres in 114 taluks of the state. Establishment of Intensive Care Units having 3 bedded capacity with ventilator facility in all taluk hospitals to provide treatment in cases having respiratory problem, serious illness and accidents Commencement of DNB post graduate course in government colleges. Establishment of Ayush Treatment Centres in all taluk hospitals to provide integrated, comprehensive health service. As per Budget 2017-18, RO+UV drinking water facility will be provided in all district hospitals, taluk hospitals and community health centres. Under National Free Diagnosis Programme, free diagnosis facility will be provided in all Government hospitals. Blood Transfusion Units will be established in 10 district hospitals of Bagalkot, Vijayapura, Chamarajnagar, Chickmagaluru, Chitradurga, Haveri, Kodagu, Kolar, Tumkuru and Uttara Kannada at a cost of US$ 0.93 million. Integrated Ayush Hospitals having 50 beds will be established in Chitradurga and Chickmagaluru District hospitals at a total cost of US$ 0.93 million. Source: Economic Survey of Karnataka 2015-16,Ministry of Health & Family Welfare Sample Registration System (SRS) Bulletin Sep, 2014, 1 Per thousand persons, 2 Per thousand live births 41

CULTURAL INFRASTRUCTURE There are several sports complexes in Bengaluru, Mysore, Mangalore & other cities. Cricket, hockey & football are the major sports, although other games are also popular. The main sports arenas are the M. Chinnaswamy Stadium & the Sree Kanteerava Stadium in Bengaluru, Chamundi Vihar Stadium in Mysore & the Mangala Stadium in Mangalore. The Bengaluru Golf Course & the Karnataka Golf Association are well-known golf courses in the state. Karnataka is also home to numerous convention centres used for exhibitions, both indoor & outdoor, such as Palace Grounds & the Bengaluru International Exhibition Centre. Under the Rural Tourism Project, Anegundi, Kokkare Bellur, Attivari Bird Sanctuary, Gokarna & Kodagu have been developed. Schemes are being prepared to develop rural tourism at other places also to showcase the rural life, art & culture and heritage. Ranga Shankara & Karnataka Chitrakala Parishath form the cultural nexus of Bengaluru & are the performing spaces for dance, music & theatre artists. An international mega convention centre, with a seating capacity of 6,000, is being planned near the Bengaluru International Airport. To conserve and popularize the Bayalata artform, a separate Bayalata Academy will be established in North Karnataka. The monuments of Srirangapatna & Hoysalas along with the monuments and forts of Deccan Sultanate have been registered in the provisional list of World Heritage sites during 2015-16. As per the budget 2017-18, US$ 3.104 million will be provided to organize World Kannada Conference to commemorate 60 years of unification of Karnataka State. Also, complete literary works of Sri M.M. Kalaburgi will be published through Fa.Gu. Halakatti Research Centre of Vijayapura. Indian tennis star Rohan Bopanna was honoured by the state government on winning the maiden Grand Slam title of his 14 year career at the French Open in June 2017, becoming the 4th Indian to win a Grand Slam title. In 2017-18, US$ 65.8 million has been allocated to Kannada and culture department. 42

SMART CITIES Seven cities of Karnataka have been selected under the Smart Cities Mission to be developed as smart cities. 27 cities from Karnataka were selected under the central government s Atal Mission for Rejuvenation and Urban Transformation Scheme (AMRUT). In 2017-18, an amount of US$ 29.63 million was released by the central government for implementation of the mission. For the Smart City Mission project, the government is set to release US$ 176.71 million, during 2017-18. Badami Belagavi Hubali-Dharwad Devengere Shivamoga Tumakuru Mangaluru Bengaluru Population, area & literacy rate of identified smart cities in Karnataka Cities Population Area (sq km) Literacy rate Mangaluru 774,785 184.45 94.03% Belgaum 488,292 94 78% Shimoga 322,505 70.1 88.02% Hubli-Dharwad 943,788 200 86.79% Tumakuru 2,678,980 10,597 75.14% Davangere 434,971 72 84.90% Bengaluru 8,499,399 709 89.56% Source: : Census 2011 & TechSci Research 43

KEY INDUSTRIES The natural resources, policy incentives and infrastructure in the state favour investments in the IT/ITeS, biotechnology, engineering, electronics, automotive, textiles, agri- & food-processing sectors. Karnataka s favourable policies have encouraged industries to set up their R&D centres in the state. Bengaluru has about 401 R&D centres, the most in India. Karnataka is making significant investments in industrial infrastructure, such as setting up industrial clusters & SEZs & PPP projects to provide an impetus to further industrial development. During 2015-16, government land of 11,994 acres was passed to the Karnataka Industrial Areas Development Board. The formation of Invest Karnataka 2016 in the state is expected to offer US$ 26.73 million for the enhancement of infrastructure facilities among existing areas of industrialisation. Further, it is also projected to set up a new cashew technology centre in the district of Uttar Kannada of the state. In June 2017, Siemens Industry Software India Pvt. Ltd. has signed an MoU with the state government Tool Room & Training Center & Design Tech Systems Ltd. to establish four Centers of Excellence in Karnataka. The estimated cost of the project is US$ 302.22 million, out of which, US$ 32.62 million will be contributed by the state government & Siemen s share will be US$ 271.08 million. Key industries in Karnataka IT and ITeS Agro and food processing (floriculture) Biotechnology Aerospace Engineering Animation Electronics and telecom Electronic hardware Automotive Tourism Total number of micro, small and medium enterprises in Karnataka Year MSME units Employment Employment per unit 2012-13 24,206 155,551 6.43 2013-14 25,966 167,347 6.44 2014-15 28,742 175,469 6.10 2015-16 25,656 221,706 8.64 2016-17 (up to Dec 2016) 28,784 372,348 12.93 Source: Directorate of Industries and Commerce, Economic Survey of Karnataka, 2015-16 44

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17(¹) KEY INDUSTRIES IT AND IT-ENABLED SERVICES (1/2) Karnataka has emerged as an information technology (IT) hub of India. Bengaluru is the fourth largest technological cluster in the world after Silicon Valley, Boston and London. About 50% of the world's SEI CMM Level 5 certified companies are located in Bengaluru. The state is India s largest software exporter, with electronics and computer software exports totalling to US$ 31.43 billion during 2016-17 (up to September 2016). Karnataka has 47 IT/ITeS SEZs and dedicated IT investment regions. There are 3,500 IT companies in the state. The state houses 550,000 IT professionals or 1/3rd of the total IT professionals in the country. At least 400 Fortune 500 companies have outsourcing operations in Karnataka. As of September 2015, the total enrolments of people in the sector was recorded to be 0.446 million. The state government has formulated a new Karnataka Startup Policy for assessing the progress of startup companies during 2015-16. As per the state budget 2016-17, the state government will set up a technology incubation centre during 2016-17 in Doddaballapura town for the endorsement of startups related to technology in association with Texas University. During 2016-17, the state government aims to establish 10 new incubators in the state s graduate and professional institutes, under the network of New Age Incubation. Electronics and software exports from Karnataka (US$ billion) 35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00 23.1 Some of the key players Wipro Technologies Infosys Genpact Accenture CAGR: 8.66% 28.2 28.7 29.5 32.2 31.0 31.4 National Bureau of Soil and Land Use Planning at the Indian Council of Agriculture Research, Bengaluru conducted GPS-enabled soil sampling and nutrient analysis in Karnataka, Tamil Nadu and Kerala in April 2017. The analysis was done to help coffee growers in checking soil properties and nutrient status via Kshemam app Source: : Visvesvaraya Trade Promotion Centre; Note: 2015-16 (1) : till September 2015 45

KEY INDUSTRIES IT AND IT-ENABLED SERVICES (2/2) Wipro Ltd Wipro Ltd was established in 1945 and recorded revenues of US$ 8.5 billion during 2016-17. The company has presence in areas such as IT services, product engineering, technology infrastructure services, BPO and other consulting solutions. The company provides services such as application development, deployment and maintenance, business intelligence and customer relationship management. Based in Bengaluru, the company has 72 plus global delivery centres and 50 plus industry-specific centres of excellence in more than 54 countries. In September 2009, the company launched its centre of excellence at its Electronic City campus to work with other leading IT firms for developing innovative IT solutions. Infosys Technologies Ltd Infosys Technologies Ltd was set up in 1981 and posted revenues of US$ 10.21 billion in 2016-17. The company operates in areas such as IT consulting, modular global sourcing, process re-engineering and BPO services. Infosys has 73 offices and 94 development centres in the US, India, China, Australia, Japan, the UK, Germany, France and many other countries and has marketing and technological alliances with companies such as IBM, HP, Microsoft and Oracle. The company has operations at multiple locations in Bengaluru, Mangalore and Mysore. Genpact Genpact was set up in 1997 in India. Formerly known as GE Capital International Services, the company s net revenues in 2016 stood at US$ 2.57 billion. The company provides a wide range of business process, technology and knowledge services including finance and accounting, collections and customer relations, insurance, procurement and supply chain, analytics, software and IT infrastructure. Genpact employs around 60,200 employees. The company has one office in Bengaluru in Karnataka. Accenture Accenture is a global management consulting, technology services and outsourcing company with approximately 275,000 people serving clients in more than 120 countries. In 2015-16, Accenture generated revenues of US$ 8.97 billion. The company has one consulting office and seven delivery centres in Bengaluru. 46

KEY INDUSTRIES BIOTECHNOLOGY (1/2) Karnataka has played a key role in India s emergence as a significant player in the global biotechnology industry. Karnataka is home to nearly 60.0% of the country s biotech units. The state consists of over 300 Biotech companies and has more than 6,800 scientists involved in biotech research. Premier life sciences institutions such as Indian Institute of Science, National Centre for Biological Science and Jawaharlal Nehru Centre for Advanced Scientific Research are present in the state. Sector-focused SEZs have been set up in Mysore, Mangalore, Hubli- Dharwar, Belgaum, Shimoga, Gulbarga, Kolar & Mandya. Twelve biotechnology finishing schools are scheduled for development under the Millennium Biotech Policy. An 86-acre biotechnology park, Bengaluru Helix, comprising the 52- acre Alexandria Knowledge Park operates in the capital city. More than 60% of the biotechnology companies in India have a base in Bangalore and the state drives 50% of the total revenues in India s biotechnology sector. India s biotechnology industry is expected to reach US$ 100 billion by 2025, with Bangalore forming a significant part of it. As per state budget 2016-17, the state government established Bengaluru Bio-innovation Centre with an investment of US$ 8.55 million for enabling MSMEs to access high-end laboratory and instrumentation facilities. Sub-regional science centres at Vijayapura, Tumakuru, Davangere, Udupi, Chikkodi, Chittapur and Chikmagalur would be established in 2015-16 with an investment of US$ 0.66 million. The state government announced its plans to introduce 100% reservation for Kannadigas in all private sector industries, including biotechnology firms. Some of the key players Biocon AstraZeneca India Jubilant Life Sciences Ltd GlaxoSmithKline Pharmaceuticals Ltd Source: : Economic Survey of Karnataka 2015-16 47

KEY INDUSTRIES BIOTECHNOLOGY (2/2) Biocon Biocon India was incorporated in 1978 as a joint venture between Biocon Biochemicals Ltd of Ireland and an Indian entrepreneur, Kiran Mazumdar-Shaw. The company is among the leaders in biopharmaceuticals and bioservices. Biocon has its corporate headquarter in Bengaluru. In 2016-17, the company recorded revenues of about US$ 633.11 million. AstraZeneca India was established in 1979. The company is involved in the areas of manufacturing/marketing of bulk drug chemicals, liquid formulations, tablets and capsules, injectibles and ointments for various disease segments such as cardiovascular, respiratory and maternal healthcare. AstraZeneca India The company s manufacturing plant is located at Yelhanka and R&D centre is located in Bengaluru. Jubilant Life Sciences Limited (formerly Jubilant Organosys Ltd) is an integrated pharmaceuticals and life sciences company. The company is the largest Custom Research and Manufacturing Services (CRAMS) company and provides leading drug discovery & development solutions outside India. Jubilant Life Sciences Ltd The company s revenue was about US$ 932.21 million during FY 2017. Jubilant has a manufacturing facility in Nanjangud, with around 625 employees. GlaxoSmithKline Pharmaceuticals Ltd was established in 1924 and is one of the oldest pharmaceutical companies in India. GlaxoSmithKline Pharmaceuticals Ltd During 2016-17, the company recorded a revenue of US$ 457.57 million. GSK India product portfolio includes prescription medicines and vaccines. The company has a clinical development centre in Bengaluru. 48

KEY INDUSTRIES ENGINEERING (1/2) The engineering industry in Karnataka has positive prospects, given its performance. Exports of engineering products have increased from US$ 1,605 million in 2010-11 to US$ 3,130.25 million in 2015-16, The engineering segment is the fastest growing sector of the state, which grew at a CAGR of 14.22% between 2010-11 and 2015-16. The state is exporting engineering products to Germany, China, South Korea, Brazil, USA, Malaysia, Thailand, South Africa and Singapore. A majority of the exporters in state are based in Bengaluru, Hubli, Mysore, Belgaum, Mangalore, and Shimoga. The state exported engineering products worth US$ 2.26 billion in 2016-17 (up to September 2016). 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Engineering products exports (US$ billion) CAGR: 14.22% 3.42 3.09 3.13 2.31 2.26 1.61 1.72 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17* Exports include machine tools, industrial machinery, cutting tools, castings, automotive components, electrodes, welding equipment, construction and earthmoving equipment, and helicopter spares. A 300-acre SEZ has been created in Belgaum to develop a precision engineering and manufacturing supply chain ecosystem, which would be a great driver for manufacturing industries. Bharat Earth Movers Limited, Hindustan Machine Tools Limited and Bharat Heavy Electricals Limited are among the leading companies in this sector in the state. Note: 2016-17* up to September 2016 Some of the key players Bharat Earth Movers Limited (BEML) Hindustan Machine Tools Limited (HMT) Bharat Heavy Electricals Limited (BHEL) Saint-Gobain India Source: : Visvesvaraya Trade Promotion Centre, Government of Karnataka 49

KEY INDUSTRIES ENGINEERING (2/2) BEML Limited (formerly Bharat Earth Movers Limited) was established in 1964. BEML manufactures a wide range of earth moving and other heavy industrial equipment for the mining and civil engineering industries. BEML Limited BEML has a registered office in Bengaluru and units in Kolar Gold Fields, Mysore and Bengaluru. During 2016-17, the company recorded revenues of US$ 448.8 million. HMT was established in 1953. The company manufactures various types of machine tools including watches, tractors, printing machinery, metal forming presses, die casting & plastic processing machinery, CNC systems & bearings. HMT Ltd During the third quarter of 2015-16, the company earned revenues of US$ 1.67 million. HMT has a manufacturing plant in Bengaluru. Bharat Heavy Electricals Ltd (BHEL) is the largest engineering and manufacturing enterprise in India in the energy-related/infrastructure sector. The company has 16 manufacturing divisions, two repair units, four regional offices, eight service centres, eight overseas offices and 15 regional centres. BHEL BHEL has an electronics division at Bengaluru. The company recorded revenues of US$ 4.69 billion in 2016-17. Saint-Gobain India was established in India in 1996. The group comprises eight manufacturing companies in India for various products ranging from glass to engineering products. Saint-Gobain India In the second quarter of 2015, the company recorded revenues of US$ 6.51 million. The company has a manufacturing plant in Bengaluru. 50

KEY INDUSTRIES TELECOMMUNICATIONS AND ELECTRONICS (1/2) Karnataka is a leading state of the country in electronics and telecommunication. The state has high-end research and development organisations such as Indian Institute of Science, Cosmic Industrial Laboratories Ltd, Indian Space Research Organisation (ISRO), CSIR Centre for Mathematical Modelling and Computer Simulation (CMMACS), National Aerospace Laboratories, Centre for Soft Matter Research and John F. Welch Technology Centre. Karnataka has excellent telecom infrastructure with 140 of 170 towns connected by Optic Fibre Cables (OFC) network. Bengaluru district is the major hub of the electronics and telecommunications industries. The other districts of Hassan, Tumkur, Mysore, Mangalore and Shimoga are the new destinations for promotion of electronics and hardware industries. The state houses global giants such as Sanyo, AT&T, Siemens, GE, Motorola, Sony and Alcatel as well as national heavyweights such as BPL Limited and Indian Telephone Industries Limited. In 2015, the state government of Karnataka announced plans to set up an Information Technology Investment Region (ITIR) near the Kempegowda International Airport (KIA) and proposed an investment of US$ 2.35 billion. The construction will be completed in two phases and the Karnataka Industrial Areas Development Board (KIADB) is in the process of acquiring 2,072 acres land for the first phase. The ITIR is first of its kind and is projected to be developed over 20 years. The first phase is expected to be completed by 2020 while the second phase will be developed in following 15 years. The start-ups warehouse set up by the state government in association with Nasscom has attracted 170 start-ups. However, during 2015-16, the functioning of second start-up warehouse in collaboration with NASSCOM with was initiated in the state. In order to provide venture capital to semiconductor companies, the state government has formed Karnataka Semiconductor Venture Fund with a total fund size of US$ 15.27 million. Some of the key players Bharat Electronics Ltd Nokia Siemens Philips Electronics India Ltd Source: : Department of Industries and Commerce 51

KEY INDUSTRIES TELECOMMUNICATIONS AND ELECTRONICS (2/2) Bharat Electronics Limited (BEL) was incorporated in 1954 and is a multi-product, multi-unit, multi-technology company. Products manufactured by BEL are mainly categorised as systems/turnkey solutions, defence and nondefence products. Bharat Electronics Ltd The company has a manufacturing unit in Bengaluru and achieved revenues of US$ 1.19 billion during 206-17. Nokia is among the world leaders in mobile technology. The company started its India operations in 1995. India holds the distinction of being the second largest market for the company globally. Nokia The company has an R&D facility and a design studio in Bengaluru. Siemens Siemens set up operations in India in 1957. The Siemens Group in India is a unique player in the field of electrical and electronics engineering. The Group employs approximately 10,933 people and has 23 manufacturing facilities in India. Siemens has several offices in Bengaluru. During the second quarter ending March 2016, the company recorded revenues of US$ 425.25 million Philips has been operating in India for more than 75 years. The company is a leader in consumer electronics, healthcare and lighting systems. Philips employs more than 4,500 people in India. Philips Electronics India Ltd The company has an R&D facility Philips Innovation Campus in Bengaluru. 52

KEY INDUSTRIES AUTOMOTIVE (1/2) Karnataka has a vibrant auto industry with investments of around US$ 713 million and annual revenues of US$ 604 million. The state is the fourth largest state in India in terms of automotive production. The main locations for automobile industries are Bengaluru, Ramanagara, Kolar, Shimoga, Dharwad & Belgaum. General Motors Technical Centre, located in Bengaluru, is actively involved in research, design, analysis and development of vehicles and power trains for foreign destinations as well as the domestic market. The state has 3 auto clusters, one industrial valve cluster and one auto component cluster. 2 manufacturing hubs are coming up in Narsapur & Vemagal Industrial Areas in Kolar District. In 2016-17 (up to December 2016), total transport and non-transport vehicles recorded in Karnataka were 17.44 million, out of which, transport vehicles were 1.62 million whereas non-transport vehicles were 15.79 million. As per the final draft of Karnataka Industrial Policy 2014-19, the state will study the feasibility of setting up major auto parks at Dharwad, Kolar and Bidadi in Ramanagara district; and smaller auto parks in Belgaum, Shimoga, Mysore and Gulbarga. In September 2017, the Government of Karnataka passed the Karnataka Electric Vehicle and Energy Storage Policy 2017. Electric vehicles manufacturing in Karnataka is expected to attract investments worth US$ 4.82 billion and create 55,000 jobs. The Government is in the process of announcing a Dedicated Automobile Policy. Automotive industry of Karnataka grew at a CAGR of 15% during 2009 to 2014. The state is considered to be the 4th largest in manufacturing and developing automobiles in the country. On the back of this, the state contributes 8.5% to the overall automobile sector of the country. In February 2017, Taiwan based - JHY Group, opened a factory in Malur taluk, near Bengaluru. Some of the key players Toyota Kirloskar Volvo India TVS Motor Company Delphi Automotive Systems Pvt Ltd Source: : Economic Survey of Karnataka 2015-16 53

KEY INDUSTRIES AUTOMOTIVE (2/2) Toyota Kirloskar Toyota Kirloskar is a joint venture between Kirloskar group and Toyota Motor Corporation. The company has manufacturing facilities at Bidadi. Volvo India has a state-of-the-art bus manufacturing unit near Bengaluru. Globally, the Volvo Group has about 115,000 employees, production facilities in 19 countries & sales activities in more than 190 countries. Volvo India The company has increased its capacity to around 1,500-1,700 buses per annum in 2013-14 from 1,100 buses per annum earlier. Volvo India plans to invest US$ 115.6 billion to set up a truck & bus manufacturing facility in Malur, Kolar. TVS Motor Company is one of the largest 2-wheeler manufacturers in India. The company is the flagship company of the TVS Group. TVS Motor has 4 manufacturing plants across India including Mysore. TVS Motor Company The company achieved a turnover of US$ 2.13 billion during 2016-17. Delphi India was incorporated in 1995 as a wholly owned subsidiary of Delphi. The company is a leading global supplier of electronics & technologies for automotive, commercial vehicles and other market segments. Delphi Automotive Systems Pvt Ltd Delphi India has a technical centre in Bengaluru, which is the largest technical centre outside the US. 54

KEY INDUSTRIES TEXTILES AND APPAREL (1/4) Karnataka is one of the leading producers of cotton, silk and wool, which are the key raw materials required for textile manufacturing units. The production of cotton during 2016-17 was recorded to be 2.1 million bales. The state produces 31.62% of India s silk. Raw silk production in the state was recorded at 9.57 thousand MT 2016-17. Karnataka is a major apparel sourcing destination for the global market. The state accounts for 20% of the national garment production. During 2015-16, the state contributed around 65%, 12% and 6% of silk, wool and cotton production, respectively to the country. Moreover, the state recorded 144 skill development centres and 168 private training centres during 2016-17. There are approximately 0.38 million manufacturing units engaged in the textiles and garments sector at the organised and unorganised level. Under the New Textile Policy 2013-18, the state government is planning to invest US$ 1,650 million in the textile sector. The Textile Policy offers various incentives for investments in the textile sector; these include credit-linked capital subsidy, entry tax reimbursement and power subsidy. The Textile Policy offers various incentives for investments in the textile sector; these include credit linked capital subsidy, entry tax reimbursement and power subsidy. As of September 2017, the state had one operational SEZ (KIADB SEZ Hassan - Textiles) for the textile sector at Hasan, Karnataka. In 2016-17 (up to September 2016) 32.50 million meters of handloom textiles was produced in Karnataka providing employment to 0.09 million persons. Karnataka has an apparel park at Dodaballapur near Bengaluru and other mega textile parks in the other parts of the state. During 2016-17, Karnataka s textile sector received FDI worth US$ 9.08 million. The state offers financial assistance to the tune of 40% to textile industries for infrastructure facilities in greenfield & brownfield zones. Some of the key players Gokaldas Exports Limited Karnataka Silk Industries Corporation (KSIC) Himatsingka Seide Shahi Exports Private Limited Source: : Karnataka Economic Survey 2015-16, Directorate of Industries and Commerce 55

KEY INDUSTRIES TEXTILES AND APPAREL (2/4) Financial assistance to handloom weavers (in US$ million) 0.450 0.400 0.411 0.350 0.300 0.250 0.200 0.270 0.254 0.150 0.100 0.050 0.000 2012-13 2013-14 2014-15 2015-16 0.014 Source: Economic Survey of Karnataka, 2015-16, Department of Industries, Handloom, Government of Karnataka 56

KEY INDUSTRIES TEXTILES AND APPAREL (3/4) Spun yarn production ( 000 kg) Power loom weavers and power looms in Karnataka 2013-14 37,750 2014-15 34,269 2015-16 (up to September 2015) 15,580 No. of weaver households No. of weavers No. of looms 30,988 127,535 88,566 Production and employment in handloom and power-loom industries in Karnataka Description Units 2013-14 2012-13 2014-15 2015-16 2016-17 Handloom production Million metres 46.09 47.63 43.58 25.79 32.50 Handloom employment Lakh 0.82 1.12 0.85 0.71 0.90 Power loom production Million metres 328.99 353.59 304.02 290.35 - Power loom employment Lakh 2.56 2.60 2.96 4.42 - Handloom weavers and looms in Karnataka Description Rural Urban Total Total weaver households 33,854 3,826 37,680 Weaver population 121,688 12,650 134,338 Weaving workforce 69,686 7,163 76,849 Looms 35,662 4,826 40,486 Source: Ministry of Textiles 57

KEY INDUSTRIES TEXTILES AND APPAREL (4/4) Gokaldas is one of the largest garment exporters in the country. The company commenced operations in 1979. During the 2016-17, the company generated revenues of US$ 144.42 million. Gokaldas Exports Ltd Headquartered in Bengaluru, the company has 30 factories across India. Gokaldas employs around 28,000 people and has a manufacturing capacity of 2.45 million garments per month as of 2014-15. Karnataka Silk Industries Corporation (KSIC) is a Government of Karnataka enterprise and is a leading manufacturer of silk. KSIC The company has two modern factories in T. Narasipura & Mysore, which are engaged in manufacturing silk goods from raw silk yarn to silk fabrics. Himatsingka Seide, incorporated in 1985, is a Bengaluru-based company dealing in natural silk fabric. In 2016-17, the company generated revenue of US$ 331.91 million. Himatsingka Seide The company s focus area is textile designing and manufacturing. Himatsingka Seide has a spinning division as well as a weaving division. The company s brand atmosphere is India s first luxury home textile brand, with an exclusive collection of more than 2,500 products and an installed capacity of 25 million metres per annum. Shahi Exports Pvt Ltd Shahi Exports is among the top home furnishing exporters in the country. The company began operations in 1974 in Delhi and started manufacturing in Bengaluru in 1988. Shahi Exports has manufacturing facilities in Delhi, Bengaluru, Salem and Tirupur 58

KEY INDUSTRIES AGRO AND FOOD PROCESSING (1/3) Karnataka, with a good agricultural base including various food crops, offers immense scope for the development of food processing industries. Karnataka is the largest producer of coffee & cocoa in the country. The state accounts for around 71.3% of the country s total coffee production. Coffee production in the state stood at 233,230 MT in 2014-15, 251,520 MT in 2015-16 and 226,300 MT in 2016-17. During 2015-16, the state government implemented the scheme - Krishi Bhagya across 129 talukas of 25 districts. Moreover, under the program of Bhoochethana-2, which is being executed across 66.88 lakh hectares of area, a total of about 11 lakh farmers have been profited. In Budget 2017-18, US$ 93.12 has been granted for implementation of this scheme. As per budget 2016-17, the state government decided to provide incentives for endorsement of agro-processing units in the state for which the government allocated a total amount of US$ 3.81 million. With more than three-fourths of the state facing severe drought and drinking water crisis, Karnataka government released a US$ 39.41 million input subsidy directly to bank accounts of 4.47 lakh farmers in April 2017. Karnataka s coffee production Location Elevation (m MSL) Rainfall (mm) Main coffee types Total area under coffee (hectares) Average production (MT) Bababudangiris 1,000-1,500 1,750-2,200 Arabica 15,000 10,500 Chikmagalur 700-1,200 1,000-4,500 Arabica, Robusta Coorg 750-1,100 1,000-2,500 Arabica, Robusta Manjarabad 900-1,100 1,000-2,500 Arabica, Robusta Arabica - 37,000 Robusta - 23,000 Arabica - 26,000 Robusta - 56,000 Arabica - 31,700 Robusta - 9,400 Arabica - 29,000 Robusta - 30,000 Arabica - 24,000 Robusta - 69,000 Arabica - 21,000 Robusta - 9,500 Main intercrops Pepper, cardamom, arecanut Pepper, cardamom, arecanut, orange, vanilla Pepper, cardamom, orange, banana, arecanut Pepper, cardamom, orange, arecanut, banana Source: Coffee Board, Government of India 59

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17* KEY INDUSTRIES AGRO AND FOOD PROCESSING (2/3) As per budget 2016-17, the state government has also decided to provide agri start-ups with an amount of US$ 1.52 million setting up the new industries by deploying advanced techniques. The state is one of the leading producer of flowers, spices, fruits and vegetables. Government of Karnataka had approved the establishment of food parks in 6 districts: Bengaluru rural, Tumkur, Shimoga, Davangere, Bijapur & Belgaum. These parks are in advanced stages of implementation. Most of the civil infrastructure work has been completed in Malur, Hiriyur, Bagalkot & Jewargi food parks, which had been approved by Ministry of Food Processing Industries, Government of India. 900 800 700 600 500 400 300 200 100 0 Coffee exports from Karnataka (US$ million) CAGR: 13.99% 813 659 651 620 479 473 325 342 300 271 The export of agriculture and processed food in the state grew at a CAGR of 22.96% between 2010-11 & 2015-16. The export value has increased from US$ 146.9 million in 2010-11 to US$ 412.92 million in 2015-16. Agricultural exports from the state were US$ 204.72 million in 2016-17. Final estimate of coffee production (2016-17) in MT District Arabica Robusta Total Chikmagalur 36,150 34,860 71,010 Kodagu 17,035 102,825 119,860 Source: 2016-17* - up to September 2016 Some of the key players Hindustan Unilever Limited Nestle India Britannia Industries Limited United Breweries Group Hassan 17,325 13,550 30,875 Sub total 70,510 151,235 221,745 Source: : Economic Survey of Karnataka 2015-16, Coffee Board 60

KEY INDUSTRIES AGRO AND FOOD PROCESSING (3/3) Hindustan Unilever Limited (HUL) is India's largest fast-moving consumer goods (FMCG) company, with leadership in home & personal care products and foods & beverages. The company recorded revenues of US$ 4.2 billion during 2015-16. HUL employs more than 16,000 people nationwide. During 2016-17, the company recorded revenues of US$ 5.6 billion. Hindustan Unilever Ltd The company has a manufacturing plant and an R&D centre at Bengaluru. Nestle India Nestle has been in India for almost a century, with seven production facilities across the country, including one at Nanjangud, Karnataka. The company produces chocolates and confectionaries, prepared dishes and cooking aids, beverages and milk products and nutritional supplements. During 2016, the company recorded revenues of US$ 1.43 billion. Britannia Industries Ltd Britannia is a leading food processing company in India. The company manufactures food products such as biscuits, cheese and bread. Based in Bengaluru, the company recorded revenues of US$ 1.47 billion in 2016-17. United Breweries Limited (UBL) is a flagship company of the UB Group. The company is also referred to as the beer division of the UB Group and is based in Bengaluru. UBL recorded a net turnover of US$ 778.41 million in 2014-15. In the second quarter of 2015, the company recorded revenues of US$ 187.89 million. United Breweries Ltd The company has around 2,489 employees and manufactures products primarily under the Kingfisher, London Pilsner and UB Premium Ice brands. 61

KEY INDUSTRIES AEROSPACE (1/2) Karnataka is known as the pioneer in the Indian aerospace industry after the establishment of Hindustan Aeronautics Limited (HAL) in Bangalore in 1940. Karnataka produces more than a quarter of India s aircrafts and spacecrafts. Around 984 acres of land is earmarked for an exclusive industrial area and sector-specific SEZ for aerospace industries near Bengaluru International Airport. In February 2015, the aerospace park started its operations. India s first aerospace SEZ of 300 acres is operational at Belgaum. Karnataka is the first state which announced the aerospace policy in the country. Karnataka Aerospace Policy has identified an investment potential of US$ 12.5 billion in this sector during 2013 23 and plans to develop aerospace clusters in different regions of the state. Companies such as Air India, Boeing and Jupiter Aerospace have selected Karnataka for the development of MRO facilities. The state government plans to develop an aerospace park spread over 1,000 acres near the Bengaluru International Airport (BIAL) with an investment of US$ 1.7 billion, with the intention of attracting global and domestic players in the Indian aerospace industry. The park is expected to be operational by 2017. In 2016, Karnataka approved amendments to the Karnataka Aerospace Policy 2013-23 to provide special incentives for development of Maintenance, Repair and Overhaul (MRO) sector. The state is exporting aerospace products to US, UK, Germany, Russia Mauritius, Malaysia, Nepal, Oman and Ecuador. In order to boost aerospace industry in the state, the Government of Karnataka has proposed to reduce the VAT imposed on articles made from nickel, titanium, etc. under the heading of HSN 7505, 7506 and 8108, from 14.5% to 5.5% during 2016-17. Aerospace Technology Centre (ATC) in Bengaluru would be established under the PPP model. Some of the key players Boeing Hindustan Aeronautics Limited Airbus Engineering Centre BEML Ltd Gokaldas Exports Limited Source: : Global Investors Meet 2012, MRO India, NRI Forum Karnataka, Karnataka Aerospace Policy 2012 62

KEY INDUSTRIES AEROSPACE (2/2) In India, Boeing is represented through its wholly owned subsidiary, Boeing International Corporation India Private Limited (BICIPL). Boeing Boeing established its first R&D centre in India the Boeing Research & Technology Centre in Bengaluru in 2009. The centre develops high-end technology solutions, particularly in the areas of aero structures and avionics. Hindustan Aeronautics Limited (HAL) is ranked 40th in Flight International's list of the World s Top 100 aerospace companies in 2008. HAL HAL has 19 production units and nine research and development centres in seven locations across India; of which, eight production units and four R&D centres are located in Bengaluru. Airbus industrial cooperation with India began in 1988 when an agreement was reached with Hindustan Aeronautics Limited (HAL) to manufacture passenger doors for the A320 aircraft. Airbus Specialising in high-tech aeronautical engineering, the Airbus Engineering Centre works hand-in-hand with other Airbus engineering offices around the world, as well as with the Indian aviation industry. Bharat Earth Movers Limited (BEML), a Miniratna-Category-1, plays a pivotal role and serves India s core sectors such as defence, rail, power, mining and infrastructure. BEML Ltd BEML is involved in the manufacturing of aircraft components/assemblies and MRO activities related to aerospace applications. Source: : Global Investors Meet 2012, KUM Karnataka, Airbus, BEML Ltd 63

KEY INDUSTRIES ANIMATION (1/2) Major suppliers to the industry such as HP, AMD, NVIDIA and Microsoft are located in Bengaluru. There has been a considerable increase in AVGC business outsourcing to Bengaluru. A great deal of content for global blockbuster animation movies such as Life of Pi, Harry Potter, Kung Fu Panda, Prometheus and Pirates of the Caribbean was developed in Karnataka. The state government is in process of establishing digital art training centres across willing colleges, in collaboration with Association of Bangalore Animation Industries (ABAI) for imparting new skills to people under the program designed by the experts of ABAI. In 2015, the Government of Karnataka invested about US$ 0.41 million for boosting the animation sector and to make Karnataka a hub for the AVGC sector in the country. As per economic survey 2016-17, four projects are being implemented under Karnataka Animation Visual Gaming & Comic Policy (KAVGC). Some of the key players Boeing Hindustan Aeronautics Limited Airbus Engineering Centre BEML Ltd Gokaldas Exports Limited Source: PwC Report estimates, Karnataka AVGC Policy In July 2017, the government approved the Karnataka Animation, Visual Effects and Comics Policy (AVGC) 2017-22. The policy is expected to generate 15,000 jobs and propel Karnataka as a global leader in AVGC. Also, setting up of a Centre of Excellence for Animation in Bengaluru was announced by the Government. As per State Budget 2017-18, an AVGC venture fund of US$ 3.1 million is being set up to provide venture capital to companies in the AVGC sector. 64

KEY INDUSTRIES ANIMATION (2/2) Technicolor is a worldwide technology leader in the media and entertainment sector. Technicolor India offers world-class design and production services in animation and visual effects for motion pictures and television broadcast productions. Boeing Technicolor has been operating in India since 2007 and employs about 1,238 people. Tata Elxsi is a listed company and is headquartered in Bengaluru. The company is a global design company and offers key services including embedded product design, industrial design, animation & visual effects and systems integration. Tata ELXSI The company recorded revenues of US$ 191.37 million in FY17. Zynga Inc is the world's leading provider of social gaming services with more than 240 million monthly active users playing its games, which include CityVille, Zynga Poker and Scramble with Friends. Zynga Inc Zynga's Bengaluru centre, started in 2010, has rapidly expanded to become the company's second largest operation in the world after its San Francisco centre. DreamWorks Animation creates high-quality entertainment, including CG animated feature films, television specials and series and live entertainment properties. DreamWorks Animation has been named one of the 100 Best Companies to Work For by FORTUNE Magazine for four consecutive years. DreamWorks The company has theatrically released a total of 25 animated feature films, including the franchise properties of Shrek, Madagascar, Kung Fu Panda and How to Train Your Dragon. Source: : Technicolor, TATA Elxsi, Zynga, DreamWorks 65

KEY INDUSTRIES ELECTRONIC HARDWARE (1/2) Karnataka is among the top chip designing hubs in the country. Around 70% of chip designers in India are found in Bengaluru city. The state has the advantage of having low-cost skilled/technical manpower compared with other states. Bengaluru is a global hub for R&D activity in the software industry, which will greatly aid the electronic hardware industry. The ESDM (Electronic System Design & Manufacturing) Policy is expected to provide for development of three ESDM innovation centres that will provide complete infrastructure with the requisite design tools. ESDM Policy also plans to set up seven high-class ESDM Manufacturing Clusters (EMCs) to provide infrastructure support including electronic manufacturing services and component manufacturing by 2020. As per the policy, by 2020, ESDM sector is expected to generate turnover of US$ 400 billion, including exports to the tune of US$ 80 billion, with an investment of US$ 100 billion. As per budget 2016-17, the state government has proposed to establish four incubators based on technology, in phases, across the areas of electronics systems designing & manufacturing, IoT, Robotics, 3D printing, etc. In budget 2017-18, the state government proposed to establish VLSI Incubator and Brown Field ESDM Cluster in Hubballi in collaboration with Entrepreneurs to create new conceptual innovative environment system and vibrant technology in 2/3rd phase cities. In August 2017, the state government picked 27 ESDM startups for its ELEVATE 100 programme under which selected 100 startups will receive a combined US$ 62.5 million in funding. Some of the key players Intel AMD Qualcomm Inc Nvidia Source: : Department of Electronics and Information Technology, GoI, Department of IT, BT and S&T, Karnataka,ESDM Policy 2013, Karnataka 66

KEY INDUSTRIES ELECTRONIC HARDWARE (2/2) Intel, headquartered in Santa Clara, is the world s largest and highest valued semiconductor chip maker based on revenue. Intel The Intel India Development Centre is a critical engineering design and development centre for key Intel products across CPUs, graphics, platforms and software with strong IT expertise and factory automation. AMD India plays a significant role in the design of microprocessors, AMD s family of Accelerated Processing Units (APU), SoCs, graphics and media solutions. AMD AMD has two design centres in India located in Hyderabad and Bengaluru. Qualcomm Incorporated is an America-based global semiconductor company that designs, manufactures and markets digital wireless telecommunications products and services. Qualcomm Inc Qualcomm India Private Limited established its India operations in 1996 and has R&D centres in Bengaluru and Hyderabad. Nvidia manufactures Graphics Processing Units (GPUs) as well as System-on-a-Chip units (SOCs) for the mobile computing market. DreamWorks Nvidia established its design centre in Bengaluru in 2005. The centre includes a state-of-the-art facility and data centre that facilitates top-to-bottom designing of advanced graphics and digital media processors for a wide range of platforms. Source: : Company websites 67

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 25.2 36.7 38.4 37.5 33.0 38.5 84.1 94.7 98.6 118.8 120.5 130.3 KEY INDUSTRIES TOURISM... (1/2) Karnataka boasts of a diverse flora and fauna and a 320-km natural coast line, which makes it a nature tourist's paradise. The state is ranked fourth in terms of the number of tourist arrivals in India. The Palace on Wheels of South India the Golden Chariot Train tour has been rated by Vanity Fair, UK, as among the top seven train journeys in the world. Karnataka has World Heritage Sites at Hampi and Pattadakal. Good infrastructure in the form of better road and rail connectivity as well as improving hospitality is also aiding tourism. 140.0 120.0 100.0 80.0 60.0 Tourist Visits to Karnataka (million) The state attracted 129.8 million domestic tourists and 0.46 million international tourists in 2016. During 2005 2016, tourist arrivals in the state increased at a CAGR of 16.11%. 40.0 20.0 0.0 The sector contributes 14.8% to the GSDP of Karnataka; plans are afoot to expand to 26% by 2020. In budget 2016-17, the state government announced the launch of new policy on tourism for the period 2015-2020 for strengthening and boosting private investments across the tourism sector. In April 2017, the state government has decided to convert the backwaters of four dams - Kabini, Gorur, Bhadra and Hidkal - into adventure tourism hubs. This decision was taken to tap into the scenic beauty of these reservoirs as well as promote adventure sports and entertainment facilities. As per Budget 2017-18, the state government has decided to develop 16 tourist centres into world class tourist destinations. Further, integrated development of heritage tourist infrastructure will be undertaken. As per the budget 2017-18, an amount of US$ 88.78 million has been allocated to the tourism department. Source: : Socio Economic Survey 2014-15, Government of Karnataka 68

KEY INDUSTRIES TOURISM... (2/2) Major attractions Medical tourism Karnataka is India s most preferred destination for advanced medical care, and is referred to as the medical tourism hub of India. The state has the highest number of approved health systems, multi-specialty health centres and alternative health therapies in India. Eco tourism Karnataka represents wide variations in topography high mountains, hills and long coastal stretches. The state has five national parks, 26 wild life sanctuaries, pelicanries, heronries and elephant camps. Adventure tourism Karnataka s geography provide a vast spectrum of diverse attractions, making it a heaven for adventure sports and outdoor activities. Major attractions include white water rafting on the Kali river and aero sports at the Nandi hills. Source: Visvesvarya Industrial Trade Centre, Global Investors Meet 2012 69

KEY INDUSTRIES RENEWABLE ENERGY (1/4) As of October 2017, renewable energy was recorded at 7,773.47 MW out of the total installed capacity of 21,632.09 MW. Therefore, it contributed a total of 35.9% into the state s total installed power capacity. Karnataka is endowed with high renewable energy potential such as wind, hydro, solar, tidal & geothermal energy resources. The renewable energy potential for the state is estimated at 30.2 GW, primarily from wind, solar, small hydro, co-generation and biomass sectors. The government has allotted projects of 19,284.16 MW, amounting to nearly 64% of the total potential. Through the Renewable Energy Policy, the state plans to set up renewable energy economic zones by procuring 10% of the land of SEZs and dedicating it for renewable energy. The policy also mandates to keep aside 10.0% of barren Government land for renewable energy. In September 2017, renewable energy developer Siemens Gamesa secured a contract to set up a Wind-Solar hybri renewable energy project in Karnataka. During 2016-17, various projects totalling 1,900.18 MW of renewable energy were commissioned in Karnataka. Out of this total, 882.3 MW belonged to wind projects, 869.88 MW to solar projects, 134 MW to Co-Gen projects, 8 MW to Small Hydro projects and 6 MW to Biomass projects. In March 2017, ABB India modernised & restored the 1,035 MW Sharavathi seamless integration hydropower plant in the state, which generates 25% of Karnataka Power Corporation s output. The project is a perfect example for future ready renewable technology which enables the Industrial Internet of Things (IIOT) & synchronises with the government s strategy for round the clock reliable power. Source: Economic Survey Karnataka 2014-15, Tea Board of India 70

KEY INDUSTRIES RENEWABLE ENERGY (2/4) Progress in renewable energy as of October 2017 No Renewable energy source Available potential (MW) Capacity allotted (MW) Installed capacity (MW) 1 Wind 55,857 16,308.42 3,840.36 2 Hydro 3,000 2,996.898 851.968 3 Biomass 1,000 391.18 134.03 4 Co-generation 2,000 2,043.85 1,385.55 5 Solar 24,700 7,184.95 1,492.88 Grand total 86,557 28,950.8 7,704.788 Source: KREDL, Central Electricity Authority, Karnataka Renewable Energy Policy 71

KEY INDUSTRIES RENEWABLE ENERGY (3/4) Wind energy Karnataka wind energy density map During 2015-16, Karnataka had a total wind energy potential of approximately 55,857 MW*. By the end of August 2017, the installed capacity for wind energy in public and private sector, both, was recorded to be 3,840.36 MW. Wind energy accounted for 17.87% of the total installed capacity recorded by the end of August 2017. During 2017-18 (up to October), 41.7 MW of wind power projects were commissioned in the state. Wind velocity in the state ranges from 0.85 m/s to 8.27 m/s. Potential areas for wind power plants in the state include Chitradurga, Gadag, C`hikmaglur, Bellary, Davangere, Koppal, Bijapur, Bagalkot and Belgaum. Karnataka is counted among the top five destinations for wind energy in India. Wind power density W/Sq m 0 100 100 200 200 250 250 300 300 400 400 500 Note: *100 metres above ground level Source: Centre for Wind Energy, Chennai 72

KEY INDUSTRIES RENEWABLE ENERGY (4/4) Solar energy Karnataka solar resource map The state has a solar energy potential of 10,000 MW. Karnataka Solar Policy 2014-2021 plans to add solar generation of minimum 2,000 MW by 2021. The total capacity installed for solar energy in August 2017 was recorded to be 1,257.88 MW. Many districts, especially coastal areas, receive solar radiation in the range of 5.1-6.4 kwh/m2 during summer, which is best suited for solar PV projects. The central government s policy mandates that solar energy consumption should increase to 3.0% of the total consumption by 2022, up from the present consumption of 1.5%. Karnataka is the only state to have supported solar projects under the REC (Renewable Energy Certificate) mechanism. A 2,000 MW Solar Park is being set up in Pavagada taluk of Karnataka with an investment of Rs 14,425 crore (US$ 2.2 billion).the first phase of the project will generate 600 MW and is expected to be ready by December 2017. Source: Karnataka Solar Policy 2014-21, News articles 73

KEY INVESTMENT PROMOTION OFFICES (1/2) Agency Description Contact information Department of Industries and Commerce (DIC) Anchor department for development/establishment of industries in Karnataka. Responsible for formulating and implementing industrial policies in the state. No 49, South Block, Khanija Bhavan Race Course Road Bengaluru - 560 001 Phone: 91-80 2238 9901-08 Fax: 91-80-2238 9909 E-mail: commissioner@karnatakaindustry.gov.in Website: www.karnatakaindustry.gov.in Karnataka Udyog Mitra (KUM) Single contact point for investors in the state Considers/forwards proposals to concerned agencies and communicates status to investors. Monitors implementation of approved projects. Single point of contact for information on various aspects including land availability, statutory approvals and coordination. No 49, South Block, Khanija Bhavan East Entrance, Race Course Road Bengaluru - 560 001 Phone: 91-80-2228 2392/5659, Fax: 91-80-2226 6063 E-mail: md@kumbangalore.com Website: kum.karnatak.gov.in 74

KEY INVESTMENT PROMOTION OFFICES (2/2) Agency Description District Level Single Window Clearance Committee (DLSWCC) Functions under the chairmanship of respective Deputy Commissioners for industrial projects for investments less than US$ 0.65 million. State Level Single Window Clearance Committee (SLSWCC) Functions under the chairmanship of Minister for Large and Medium Industries for investments that range between US$ 0.65 10.9 million. State High Level Clearance Committee (SHLCC) Functions under the chairmanship of the Chief Minister for projects involving investment of more than US$ 10.9 million. District Industries Centres Other departments Nodal agencies for approval of projects at the district level. Primary focus is to promote small scale, village and cottage industries. Various sector specific departments such as Department of Tourism, Department of Information Technology and Biotechnology, Department of Food Processing, Department of Textiles and Department of Mines and Geology. 75

KEY APPROVALS REQUIRED (1/2) List of approvals and clearances required Departments to be consulted Prior to setting up the unit Registration Allotment of land/shed Department of Industries and Commerce Department, Karnataka Udyog Mitra (Single Window Agency) Karnataka Industrial Areas Development Board Permission for land use State Department of Industries, Department of Town and Country Planning Site environmental approval State Pollution Control Board and Ministry of Environment and Forests No objection certificate under Water and Air Act Karnataka State Pollution Control Board Approval for construction activity and building plan Development Authority/Urban Local Body Sanction of power State Electricity Board No objection certificate Fire Department and Directorate of Factories and Boilers Provisional trade tax registrations Central and State Excise Departments Registration under Central Sales Tax Act Central and State Excise Departments 76

KEY APPROVALS REQUIRED (2/2) List of approvals and clearances required Departments to be consulted Before commencement of production No objection certificate under Water and Air Act No objection certificate Permanent Trade Tax registration Registration under Central Sales Tax Act, 1956 State Pollution Control Board Fire Department and Directorate of Factories and Boiler Central and State Excise Departments Central and State Excise Departments After commencement of production/activity Registration Department of Industries and Commerce and respective sector departments such as IT/BT/Tourism etc. 77

COST OF DOING BUSINESS IN Cost parameter Cost estimate Industrial land (US$ per hectare) 129,191.51 Power cost (US cents per kwh) Metropolitan area: 12.13 Non metro area: 8.7 Labour (US$/man year) 1,522 Occupation costs (US$/sq ft/year) 16.44 Employee cost (US$/ man year) Software developers 6,383 Team leads 14,893 Architects 21,276.5 Project managers 31,915 78

ELECTRONICS SYSTEMS DESIGN AND MANUFACTURING POLICY 2013 Electronic Systems Design and Manufacturing (ESDM) is the fastest growing segment of the Information and Communications Technology (ICT) sector. As per the National Electronics Policy 2012 (NEP-2012), ESDM is expected to grow to US$ 400 billion by the year 2020 and will generate a total employment of over 28 million. The objective of the Karnataka ESDM Policy is to facilitate, promote and develop the ESDM sector in the State of Karnataka and make Karnataka a preferred destination for investment in Telecommunications, Defense, Medical, Industrial, Automotive, Consumer Products, applications and components, parts, and accessories required for the aforesaid products and applications. The following targets are set for Karnataka ESDM Policy: Emerge as the leading contributor to India's ESDM sector by accounting for at least 10% of the US$ 400 billion by 2020 Generate over 20% of the country's total ESDM exports target of US$ $80 billion by 2020. Develop core competencies in specific ESDM verticals such as telecom, defence electronics, avionics and energy. Make Karnataka the country's preferred destination for investments in ESDM. Generate at least 240,000 new jobs, 25% of India's PhDs and 5000 patent filings in ESDM sector in Karnataka by 2020. 79

STARTUP POLICY 2015 20 A Karnataka Startup Cell has been set up to address the needs and demands of the rapidly expanding Startup Community and promote Karnataka's Startup Ecosystem. Following are the highlights of the startup policy: Capacity Building through New Age Incubation Network Technology Based Incubators: Fostering links between R&D and Commercialization of Technologies. IDEA2PoC Fund: Taking ideas to Proof of Concept. Startup Fund of Funds. Incentives and Concessions: VAT/CST and ST, Patent and Marketing Reimbursements 80

STATE ACTS & POLICIES (1/5) Objectives To encourage the growth of 20,000 technology based start-ups in the state by 2020. Karnataka Start-up Policy 2015-20 To enable the establishment of around 25 innovative technology solutions in the state. To create around 0.6 million direct as well as 1.2 million indirect employment opportunities in technology sector. Read more To boost private investments across the tourism sector. Karnataka Tourism Policy 2015-20 To develop Karnataka as a dynamic, sustainable and most-favoured tourism destination by increasing domestic & international visitations, offering high quality experience to visitors, facilitating and accelerating investments and improving livelihood opportunities at the local level. Read more To add solar generation of at least 2,000 MW by 2021 in a phased manner. Solar Policy 2014-21 To encourage PPP model and R&D and innovation in the sector. To promote Roof Top Generation and Technologies. To transform Karnataka into an investor friendly state. Read more Karnataka Industrial Policy 2014-19 To make Karnataka the most preferred investment destination through inclusive, sustainable and balanced growth. Read more 81

STATE ACTS & POLICIES (2/5) Objectives ESDM Policy 2013 To facilitate, promote and develop the ESDM sector in Karnataka and make Karnataka a preferred destination for investment in this sector. Read more Aerospace Policy 2013-23 To position Karnataka as a vibrant aerospace hub of Asia and a globally recognized aerospace destination by enabling the environment for holistic and sustained growth of the aerospace sector. Increase the contribution of the aerospace sector towards enhancing the share of industry in the state s GSDP from 28.0% to 32.0% by 2022. Read more AVGC Policy 2017-22 Encourage and support appropriate manpower development, infrastructure development and business development in the AVGC sector. Read more To maintain Karnataka s leadership in outsourced IT services. Information and Communication Technology Policy 2011 To retain Karnataka s position as the state with the largest skilled workforce in India for IT services, products and R&D. To enable Karnataka to be the most preferred destination for MSMEs (micro, small and medium enterprises). Read more 82

STATE ACTS & POLICIES (3/5) Objectives Integrated Agribusiness Development Policy 2011 To position Karnataka on a sustained growth path in the field of agricultural and allied sectors through global technologies and innovative tools by creating enabling frameworks and state-of-the-art infrastructure facilities, thereby generating higher returns for farming communities. Read more Renewable Energy Policy 2009-14 Development, propagation and promotion of renewable energy resources and technologies. Creation of a suitable environment for private sector participation in renewable energy power generation. Read more State Policy for Special Economic Zones 2009 To facilitate and expedite establishment of SEZs, at the same time safeguarding the environment and the interests of land owners. Read more Millennium Biotech Policy II 2009 To increase the quality of human resources by supporting education and research institutions like the Institute of Agri-Biotechnology (IABT), the Institute of Bioinformatics and Applied Biotechnology (IBAB), the Centre for Human Genetics (CHG) and BT finishing schools; to create specific infrastructure such as focused biotech parks in the areas of agriculture, marine biotech and animal husbandry; to provide specific fiscal incentives. Read more 83

STATE ACTS & POLICIES (4/5) Objectives Karnataka Mineral Policy 2008 To optimise the state s geological potential by scientific and detailed prospecting. State-of-the-art techniques will be encouraged by combining the resources of the private and public sectors. To resolutely pursue the policy of preserving flora, fauna, and bio-diversity and ensure that the invaluable forest wealth is safeguarded while granting mineral concessions. To promote transparency in granting mining concessions. The applicants who propose establishment of industries for value addition within the vicinity of the mineral bearing areas will be given priority. Read more Infrastructure Policy 2007 To provide a fair and transparent policy framework for facilitating economic growth and encouraging Public Private Partnerships (PPP) in infrastructure. Read more NRI Policy 2017 The policy was introduced in January 2017, to attract investments from non-resident Kannadigas. The policy aims at helping improve the privileges and speedy services to NRKs, through a card. Read more Karnataka State Electric Vehicle and Energy Storage Policy 2017 To make Karnataka a preferred investment destination for manufacturing of electric vehicles, promote a conducive manufacturing ecosystem in the industry and develop human capital required by the industry. Read more 84

STATE ACTS & POLICIES (5/5) Policy Semiconductor policy 2010 I4 (IT, ITeS, Innovation, Incentives) policy Karnataka Pharmaceutical policy 2012 Department Department of IT /BT and Science & Technology, Government of Karnataka Department of Information Technology, Biotechnology and Science & Technology, Government of Karnataka Health and Family Welfare Department, Government of Karnataka New textiles policy 2013-18 Department of Handlooms and Textiles, Government of Karnataka 85

EXCHANGE RATES Exchange Rates (Fiscal Year) Year INR equivalent of one US$ 2004-05 44.81 2005-06 44.14 2006-07 45.14 2007-08 40.27 2008-09 46.14 2009-10 47.42 2010-11 45.62 2011-12 46.88 2012-13 54.31 2013-14 60.28 2014-15 60.28 2015-16 65.46 2016-17 67.09 Q1 2017-18 64.46 Q2 2017-18 64.29 Source: Reserve Bank of India 86

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