STRATEGIES - Karnataka · These strategies basically evolve from the Product-Market Development...

STRATEGIES for Promotion of Exports

from Karnataka

TABLE OF CONTENTSStrategies for Promotion of Exports from Karnataka - Summary

Chapter No. - 1

1 Preamble, Objectives, Scope & Methodology 17

Chapter No. - 2

2 Overview of Export Performance of Karnataka 18

2.1 Karnataka Economy & Sectoral Shares of GSDP at Current Prices 18

2.2 Natural Resources of Karnataka 19

2.3 Exports of Karnataka 21

2.4 Products having Export Potential from Karnataka 26

2.5 Projection in the Growth of Value of Exports of Karnataka by 2019 28

Chapter No. - 2

3 Current Status of Infrastructure & Bottlenecks 29

3.1 Roads 29

3.2 Railways 31

3.3 Seaports 32

3.4 Airports 35

3.5 Inland Container Depot (ICD) 36

3.6 Container Freight Stations (CFS) 37

3.7 Special Economic Zone (SEZ) 37

3.8 Foreign Direct Investment in Karnataka 40

Chapter No. - 4

4 Sectoral Strategies for Exports 41

4.1 Core Market Strategy 41

4.2 Sector / Product Specic Strategy 41

Chapter No. - 5

5 Strategies for Export Promotion 63

A Export Promotion measures 67

B Incentives and Concessions under Industrial Policy 2014-19 71

C Review and Monitoring Mechanism 74

D Appointment of Export Commissioner for the State 75

E Strategies Proposed 78

F Shelf of Projects identied for the growth and development of 83

Exports during the 12th plan period

G Areas and Goods for Anti Dumping and Tariff Protection 86

Exhibit

Illustrative view of the export process in India 87

Study on Strategies for Promotion of Exports from Karnataka

1. EXECUTIVE SUMMARY

The Foreign Trade Policy of Government of India 2009-2014 sets out a goal of doubling

India's export of goods & services to achieve the objective of doubling India's share in global

trade by the end of 2020. To achieve this goal, all States, including Karnataka are required to

play a signicant role to contribute to the growth of exports.

Analysis of Karnataka's basket of exports in 9 product groups provides a background for

projecting exports. Such projections made with reference to growth rates and potential for

the various products groups. The average value of exports for three year period covering

2011-12, 2012-13 and 2013-14 was Rs. 2.56 lakh crores. The sector-wise variations in the

growth patterns was observed at a low of 4% (iron ore & minerals) and a high of 18% (in

the case of electronics and computer software) in the corresponding period. Accordingly,

projections need to be levelled with reference to the growth patterns between commodities.

The projections of exports from Karnataka with reference to Rs. 2.56 lakh crores (past three

years average) for period 2015 to 2019 have been made. The export is projected to reach

Rs. 5.92 lakh crores in 2019 from the present level of Rs. 2.56 lakh crores. These gures have

been stacked up taking in to account expected growth in each of the product groups in the

coming 5 years.

Karnataka's Gross State Domestic Product (GSDP) at constant prices (2004-05) which was

Rs 2,86,410 crores in 2011-12 has increased to Rs. 2,96,658 crores in 2012-13 and stood at

Rs. 3,11,628 crores in 2013-14. The level of per capita GSDP at constant prices which was

Rs. 42,218 in 2011-12 has increased to Rs.43,075 crores in 2012-13 and stood at Rs.44,857

in 2013-14

Karnataka's Gross State Domestic Product (GSDP) at current prices which was Rs 4,63,243

crores in 2011-12 has increased to Rs. 5,24,502 crores in 2012-13 and stood at Rs. 5,93,811

crores in 2013-14. The level of per capita GSDP at current prices which was Rs. 77,491 in

2011-12 has increased to Rs. 86,864 crores in 2012-13 and stood at Rs. 97,386 in 2013-14

Service Sector constitutes a major share in the State GSDP at 61.40 %, Industry contributes

24.50% & Agriculture contributes 14.10%.

Karnataka is endowed with rich agricultural, horticultural and mineral sources viz. iron ore,

limestone, gold, granite & manganese etc.

To achieve the growth of exports from Karnataka, strategies and interventions would be required

from the stakeholders including Government.

Fig 1.1: Commodity wise current exports

01 02


1. Approach to build competitive and effective strategies

Product-Market approach is being applied to estimate growth rates for exports of each of the

product groups. The existing and potential markets for each of the product groups have been

identied and estimated import scenarios have been forecasted for these countries, based on

secondary data available across many sources.

For each of the product groups, separate strategies have been built for existing and new markets.

The approach used is to clearly identify in which of the markets the State is required to

aggressively harvest the advantages and market linkages and where pioneering efforts are

needed to develop the trade. (Refer Fig 1.2)

Fig 1.2: Product-Market grid approach to build growth strategies

Figure 1.3 illustrates the building block approach used to stack up incremental exports for each

of the product group through Product-Market matrix

Fig 1.3: Illustration of stack up of exports in a product group

03

Pro

du

ct G

rou

ps

Diversifica�on: Enter new markets with new products (Ex: Product Innova�on Centres for Europe and Emerging markets)

Product Development: Improving exports by crea�ng new products forexis�ng markets (Ex: Gaming Apps for Russia)

Market Development: Improving exports by venturing into new markets with current export commodi�es (Ex: So�ware exports to Ghana and Chile)

Penetra�on: Improving exports in exis�ng markets with current exportcommodi�es (Ex: So�ware products in USA)

These strategies are supported by effective action plans to address aggressively by building

on existing strengths and mitigating weaknesses in the State's infrastructure and trade

promotion. Soft and hard interventions are also planned to keep the State equipped to tap

emerging opportunities and effectively face forecasted threats.

These strategies basically evolve from the Product-Market Development Plan suggested by

Department of Industries & Commerce. (Refer Fig 1.4)

Fig 1.4: Product-Market grid suggested by Department of Industry and Commerce

04


Based on this strategic approach the projections for exports of each of the key and important

product groups are made. (Refer Table 1.1)

Table 1.1 : Projections of exports by Product groups

(in Rs. crores) Incremental Exports from each of the strategy

Sl No.

Sector-wise Commodities2018-19

Projections

3 Years Average of

actual exports (2011-12

till 2013-14)

IncrementalExportsPlanned

PenetrationNew MarketDevelopment

New ProductDevelopment

Diversification

1

2

3

4

5

6

Electronics, Computer Software

Gems & Jewellery

Petroleum & Petroleum Products

Readymade Garments

Engineering Products

Basic Chemicals, Pharmaceuticals & Plastic goods

380857

50889

63173

17357

34170

16949

156553

24129

30908

8238

12936

8078

224304

26760

32264

9120

21233

8871

156553

14477

21636

6178

12936

6463

23483

4826

4636

1236

3234

1616

23483

4826

4636

1236

3234

796

20782

2630

1345

465

1824

0

7 Agri. & Processed food productsincluding coffee products,

cashew, spices, gherkins, rose,onions, marine products

15804 7168 8636 5734 1434 717 745

8 Iron Ore & Minerals (Incl. granites)

1344 1203 141 84 58 0 0

9 Misc and Others

Total

11497

592039

6661

255874

4836

336164

0

224062

0

40522

0

38927

0

27792

The incremental exports coming from each product group are projected in relation to certain

market indicators such as growth rates projected by trade bodies, reports on key indices of

performance of the emerging markets, projected GDP growth rates of key countries and

contribution of their imports to their GDP. The base exports considered for growth are taken as

average of three years exports, from 2011 till 2014. The year 2013-14 is not taken as base year for

the projections considering Rupee depreciation in this period.

The basis of the projections, duly indicating the sector wise growth rates and the attendant

assumptions are elaborated in detail in Table 1.2. The approach is to project growth rates on a

valid basis for each sector and to factor in increments on account of measures to boost exports.

Table 1.2

Sector Growth Rate

18%

5%

13%

13%

Basis

46%

21%

22%

0%

6%


Gems & Jewellery


Readymade Garments


Basic Chemicals, Pharma and Plastic Goods

Agri and Processed Food Products

Iron ore etc

Misc and others

Overall 18%

NASSCOM projections for the industry

Gems & Jewellery Export Promotion Council (all India)

Trends in Petroleum imports of target countries for Indian exports

Average Growth rates of exports of readymade garments from Karnataka of 11% and a small incremental of 2% to provide for penetration of new markets

Karnataka's YoY growth rate has exceeded 36% in the last 3 years. New initiatives as envisaged in the Strategy Paper are conservatively expected to take this figure to 46%

Export growth on YoY basis has been around 12%. New initiatives like Ayurvedic medicine exports contribute to incremental exports

The YoY growth has been between 15 - 18%. Emphasis on Geographical Indicators and additional measures like Coffee processing hub contribute to an additional 4 - 7%

No growth is projected in this area since the regulatory framework is unclear

The rate of growth is presently around 5%. With the impetus provided a small increment of 1% has been factored

The overall growth derived is around 17 - 18%

Mapping of incremental growth to specic strategies

The differential between the 3 years actual exports (11-12 to 13-14) is Rs. 336,165 crores (i.e.

592039-255874). The contribution of each strategic initiative is as follows:

Penetration strategy: This strategy focuses on increasing the export penetration of existing

products in existing markets. The YoY growth should be achieved if the sector wise trends are

maintained without any special interventions. This amount is projected at Rs. 224,062 crores.

New Market Development: The focus of this initiative is to develop new markets for existing

products e.g. South America, Africa etc. These markets have been identied based on the

analysis of exports of competing countries for different products e.g. Bangladesh for garments.

The net incremental exports due to this strategy is projected at Rs. 40522 crores.

New Product Development: The focus of this strategy is on developing new exportable

products for existing/new markets. An example is that of gaming software, mobile applications

etc. The net incremental exports due to this strategy is projected at Rs. 38927 crores.

Diversication: The focus of this strategy is on diversifying into new areas hitherto unexplored

for both existing/new markets, e.g. alternate energy, electric cars, medicinal plants etc. The net

incremental exports due to this strategy is projected at Rs. 27792 crores.

05 06

Year wise projections are given in the Table 1.2

Table 1.2 : Year wise Export Projections

Sl No. Sector-wise Commodities 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

1

2

3

4

5

6


Gems & Jewellery


Readymade Garments



156000

24483

33915

7670

12568

8512

380857

50889

63173

17357

34170

16949



7066 15804

8 Iron Ore & minerals (Incl. granites)

1735 1344

9 Misc and others

Total

6419

258,368

178000

24175

35392

8900

17978

9562

8315

739

7357

290,418

185223

25377

34890

9342

18872

9775

8728

742

7051

300000

220415

30198

40472

10884

21891

11193

10125

861

7968

354007

262294

35936

46948

12680

25394

12816

11745

998

9004

417813

316064

42754

54459

14835

29457

14738

13624

1158

10174

497273

11497

592039

A. Soft Interventions

i. Govt. of India's Foreign Trade Policy, annual supplement 2013-14 provides for the

following features: 3 % interest subvention scheme towards export credit

Harmonizing of Zero Duty EPCG and 3% EPCG Scheme into one scheme which will be a

Zero Duty EPCG Scheme covering all sectors. The total number of countries under Focus Market Scheme and Special Focus Market

Scheme becomes 125 and 50 respectively. Market linked Focus Product Scheme extended beyond March 2014 for exports to USA

and EU in respect of items falling under Chapter 61 and Chapter 62 of ITC (HS). New guidelines to promote SEZs.

Focus on market diversication to continue.

Steps to be initiated for reducing transaction cost of exports.

It is noted that Policy is being announced Year-on-Year. It would be preferable that it is

announced for a Five-Year period and provisions for intervention for improvements during the

period. Such a system would be useful from the point of view of the stability as also enabling

improvements.

The features of the Foreign Trade Policy would provide the framework for the State Government

to evolve strategies for enhancement of exports.

07 08


ii. Key initiatives and interventions required to promote exports and meet projections

for next 5 years (Refer Fig 1.4)

Fig 1.4 : Key initiatives and interventions

ALTERNATE ENERGY HUB Capitalising on increasing global demand for alternate energy Solar / Windmill / Electric cars product crea�on centres

JEWELLERY DESIGN HUB Jewellery and Gems Fashion House Promo�ng organised and branded jewellery and precious stones

AEROSPACE HUB Leveraging on current strengths in aerospace engineering

AVIATION HUB Elimina�ng current hurdles to make Bangalore as Avia�on Hub on the lines of Dubai Leveraging on Industry's interests pinned on Bangalore

GI and IPR SPACE Aggressively provide impetus to GI and IPR products

KNOWLEDGE HUB Knowledge Reten�on and

Innova�on Centres IT/ITES, Electronics Hub

COFFEE PROCESSING HUB Leveraging on highest contributor to Na�onal exports Global Roas�ng Hub under PPP

MEDICINAL PLANT SCIENCESCENTRE U�lisa�on of strengths in rich medicinal plants and knowledge resources R&D Hub for medicinal plant science

The city of Bangalore is relatively well equipped and capable of turning itself in to an

Aviation Hub to cater to the needs of the industries and hence resulting in a positive impact

on exports. The Aviation Industry is keenly looking at the city becoming an aviation hub and

State would take all possible steps to eliminate any hurdles and build this as a very

competitive resource for the State

The State continues to play its role as a key player in promoting electronics and software

exports for the country. It is planned to create innovation centres to retain and utilize

knowledge resources in creating innovative products and services to meet global

requirements. This infrastructure is extremely essential in retaining the knowledge resources

(knowledge workers) who are currently being lured to competitive Nations for better work

environment and perceived benets

The State is planning to leverage the rising global demand for alternate energy in most of the

sectors from automobiles to power generation. Interventions are suggested to build

Karnataka State as a hub for research and creating products in the space of alternate energy

like solar panels and products, wind mills, brake energy, power transmission products,

electric vehicles manufacturing, hybrid vehicles manufacturing etc.

The key initiative is to capitalize on existing resources and capabilities in Jewellery and

Gems manufacturing. Jewellery Fashion House is being suggested to create a forum and

infrastructure to promote branding of the jewellery and precious stones in the global market.

The product creation centre focusing on design needs and innovation in jewellery and gems

would provide impetus to this action plan

iii. Summary of key initiatives and strategies built on strengths and weaknesses of the

State of Karnataka and taking into account perceived opportunities and threats in

global markets. S-O (Strength-Opportunity) strategies aim to utilize existing strengths

to tap identied opportunities in the market place.

To leverage strengths in natural resources in ores, limestone, agri products and marine to

grab opportunities in emerging African markets.

Leveraging on dominant position in coffee cultivation in India, grab the opportunity to

become Coffee Roasting Hub for global markets.

To meet jewellery requirements in rapid growth markets, establish a Jewellery Designing

Centre or a Jewellery Fashion House in the State.

To grab increasing opportunities in the global markets towards hybrid vehicles, create

a hub for innovation and Product Creation Centre specializing in electric and solar

vehicles.

To leverage on existing strengths of global HCV players present in the State, promote

creation of transmission or other critical parts hub in the State.

To promote 'Mysore Silk' as a brand and establish it as fashion essential in Western and

Middle-East markets.

To build on existing garments exports and expansion across rapid growth markets,

especially African countries like Ghana, South Africa, Egypt and Nigeria.

To promote IT/ITES and Electronics exports in new rapid growth markets.

To execute a Knowledge Hub (for retention and innovation) in the State to grab

opportunities in product innovation and creation across the globe.

iv. W-O (Weakness-Opportunity) Strategies aim to minimize existing weaknesses that are

acting as hurdles to tap identied opportunities in the market place

To eliminate hurdles like high tariffs, incompetent airports and fewer iers resulting in

grabbing the opportunity of making Bangalore as the Aviation Hub.

To eliminate hurdles in connectivity and infrastructure related areas to bring in

competitive advantages relating to transportation costs of exports.

To encourage and equip all stakeholders to meet EU, HACCP and FDA standards

resulting in consistent and value added exports to focus on new markets.

To design and implement certain effective policies to retain knowledge and create

resources to remain in the State yielding in product innovations and new process

developments.

To re-catapult the iron ore exports by taking appropriate measures.

09 10


Adapting branding of several unique products like silk, ayurveda, coffee, several agri

products to create value while competing with other exporting Nations / States in global

markets.

v. S-T (Strengths-Threats) Strategies aim to utilize existing strengths enabling to avoid

identied threats in the market place

i. To eliminate threat of increasing competition from various Nations/States in the sector of

electronics, IT/ITES, sector specic SEZs need to be created resulting in economies of

scale and differentiation in the services.

ii. Threat of increasing competition in ready made garments from Sri Lanka, Bangladesh

and Thailand needs to be eliminated with the strength of being consistent garments

exporter by establishing Textile Parks and Fashion Houses promoting low cost and

differentiated garments to existing and new markets.

vi. W-T (Weaknesses-Threats) Strategies aim to eliminate existing weaknesses that would

help avoid identied threats in the market place

i. To eliminate all weaknesses regarding non-adherence to international standards on agri

or marine products to avoid threat of not clinching export orders from focus markets.

ii. To provide pre-inspection facilities at custom bounded warehouses to avoid loss of

export orders .

iii. Currently the 4th leading State in attracting FDI, Karnataka could leverage through the

conduct of sector specic investment forums or expo to attract investments and avoid

opportunity losses.

vii. Incentives and Concessions which are offered to exporters under the Industrial Policy

2014-19 of the Govt. of Karnataka are detailed in Chapter - 5.

The Trade bodies have indicated that these incentives and concessions have been helpful to

exporters. However, they have also expressed the need for more initiatives for encouraging

exporters.

viii. Other soft interventions from the State Government suggested are as follow:

Export Awareness Programmes.

Export Training Programmes.

Export Management Training Programmes.

Seminars, Workshops & Conferences.

Interaction and Open House Meetings.

Participation in National/International Exhibitions & Trade Fairs for Promotion

of Trade

Financial support to the all Artisans, SC, ST, Women Entrepreneurs of Micro and

Small enterprises, who participate in the Trade Fair and Exhibitions.

Conferring State Export Awards for Export Excellence.

VTPC, Nodal Agency for promoting exports, is playing its mandated role

of conducting programmes & events at different levels. Considering the

limitations of VTPC, it would be a useful strategy to strengthen VTPC to

play a proactive role in facilitating exports across Karnataka.

B. Hard Interventions

i. Infrastructure

Export infrastructure is a key to support exporters for movement of goods and logistics of

shipment. Infrastructure development needs hard interventions from the Government. Most

infrastructure projects require a longer time horizon and therefore, strategies for

development could be categorized as follows:

Short & Medium term strategies

Long term strategies

Such an approach would be useful in according the right priorities for bridging infrastructure

gaps, which are doable in a shorter period horizon of 3 to 5 years and planning larger projects

which require relatively a longer period and in different phases.

ii. Short & Medium term strategies

Identication of infrastructural gaps and taking up projects in the short & medium term

would be required for drawing up the order of priorities. An identied shelf of projects for

lling infrastructure gaps are as follow:

Expediting completion of projects approved under ASIDE Scheme.

Promoting at least 10 sector specic SEZs across the State.

Development of Chennai-Bangalore Industrial corridor.

Development of Bangalore Mumbai Economic corridor.

Gems & Jewellery SEZ at Bangalore.

Upgradation of Seaports and Airports.

Development of minor ports across the coastal region.

Jewellery Designing Centre at Mangalore.

Improving connectivity from industrial areas to State highways, National highways

and Sea / Airports.

Proposed Textile parks at Mysore and Chamarajanagar.

Establishment of Granite Park at Chamarajanagar.

Development of Food Parks at Jevargi, Malur, Bagalkot and Hiriyur.

NIMZ at Bidar, Gulbarga, Kolar and Tumkur.

Promoting industrial investments by exporting units in SEZs.

Promoting private investments on rakes for rail transportation of containers, on similar

lines as Box trains on the Bangalore-Chennai, Bangalore-Mumbai and Bangalore-

Mangalore routes.

Promoting cargo complexes and container freight stations at large industrial areas and

along the export corridors.

Establishment of Spice Parks at Shakaleshpur, Chamarajanagar, Bydagi, and

Kushalnagar.

Improving facilities for screening of export cargo at air cargo complexes, ICDs and

seaports for speeding up the process.

Providing facilities for pre-inspection shipments at the custom bonded godowns.

Promotion of sector specic clusters.

Promotion of industrial and logistic parks.

VTPC and Exporters’ Association in Karnataka may consider joining hands for the

following:

a) Create warehousing facilities overseas for exporters near transit ports at Colombo,

Singapore, Dubai and one at Netherlands / Belgium. These transit ports would help

transshipment of goods on main line vessels and serve as gateways for foreign trade.

b) Explore the potential new and emerging markets in South Asian Association for

Regional Co-operation (SAARC) region, Asian, African and European countries.

The Market Access Initiative (MAI) scheme of the Ministry of Commerce, Govt. of

India could be utilized for partial funding to carry out studies.

c) Introduce new schemes in consultation with the Exporters’ Association.

d) Leverage ASIDE scheme for bridging infrastructure gaps and viability gap funding

for projects in PPP mode.

e) Sensitize C&F agents of the exporters to mention correct State Code of Karnataka in

all the documents to get a true picture of exports.

11 12


Market Development Assistance (MDA) Scheme for Overseas Visits / Trade Fair for

business promotion.

Reverse Buyer-Seller Meet through Market Access Initiatives and Market

Development Assistance of Govt. of India.

Disseminating Overseas Live Trade Enquiries.

ASIDE Scheme.

WTO and IPR Relay Cell has been established at VTPC.

Incubation Centre, Facilitation Cell, R&D Cell, Entry strategies.

Assisting the traders/exporters in certication for the export/ import of commodities.

VTPC is authorized to issue Certicate of Origin (Non Preferential).

Conducting of Short Term Courses in association with IIFT New Delhi.

Trade Point to provide live trade enquiries, Global Directory Services & Online

Trading facility.

In addition to the above, trade facilitation measures have also been initiated by VTPC for the

benet of the exporters.

iii. Long Term Strategies

Road Connectivity

The Hassan - Mangalore (NH48) needs to be doubled for providing speedy connectivity

to New Mangalore Port. Doubling would smoothen the movement of trafc and possibly

ease congestion.

Expediting implementation of Suvarna Karnataka Development Corridor Programme

and developing industrial export pockets at locations on corridor highways.

Periodic maintainenace and upgradation of National highways viz., NH4, NH7, NH48

and important State highways.

Handing over of State highways to National highway authorities for development and

maintenance which are facilitating the movement of export / import cargo.

Railway Connectivity

Speeding up of railway network between Hubli and Karwar to provide the impetus for

developing Karwar port as an alternate gateway for exports from Northern and Central

part of Karnataka.

Strengthening and development of Railway connectivity to Seaports from Northern

Karnataka and Southern Region.

Doubling of railway lines between Mumbai-Bangalore-Chennai under ‘PRIDE’ Corridor

Doubling of railway lines between Bangalore-Mangalore

Karnataka supports rail connectivity projects through interventions and participation.

Inland Container Depots (ICDs)

Enhancing the capacity of ICD at Belgaum for facilitating exports from North and

Central Karnataka.

Establishment / development of ICD/CFS in 10 potential locations such as Dakshina

Kannada, Bangalore, Mysore, Udupi, Belgaum, Dharwad, Hassan, Uttara Kannada,

Kodagu and Bellary.

Enhancing the capacity of ICD at Hassan for facilitating exports from the Textile, Food

Processing and Pharma SEZs at Hassan as also coffee, spices and other commodities

from Kodagu and Malnad region.

ICD at Whiteeld is congested and scope for expansion is limited due to land availability

issues. In the circumstances, it would be appropriate to plan for additional capacity of

ICD at Malur, which has rail link.

A Study instituted by VTPC to select optimal location for development of ICD / CFS has

identied ten districts viz., Dakshina Kannada, Bangalore, Mysore, Udupi, Belgaum,

Dharwad, Hassan, Uttara Kannada, Kodagu and Bellary.

Seaports

Developing Mega Port at Tadri considering the vast land available, potential rail link and

road connectivity. SPV has already been created in this regard.

NMPT Vision 2020 has referred to creating Mega Container Terminal in the long run.

Creating a Mega terminal will be useful to render NMPT as a potential port for main line

vessels enabling direct exports.

Expansion of Karwar port by addition of berths and deepening the draft for receiving

larger size vessels.

Use PPP models for generating investments in seaport projects (greeneld and

browneld).

Airports

Expansion of the BIAL along with facilities for rendering it as export hub for air borne

cargo.

The possibility of utilizing the old terminal building at Mangalore Airport for converting

to an air cargo complex should be seriously taken up with the Customs Dept., and the

Mangalore Airport Authorities. VTPC or MSIL may be designated as the custodian of the

Customs Dept., for operating the air cargo complex in view of their experience related to

exports. This would render effective utilization of the space and creation of the required

facilities for air borne cargo from the coastal region.

Expansion of facilities at Belgaum or Hubli for facilitating air borne cargo from the North

and Central region of Karnataka.

Special Economic Zones (SEZs) / Parks / Regions

Promote investments for expansion of existing sector specic SEZs for the

manufacturing sector for enhancing growth by leveraging the current status.

Promote investments in new sector specic SEZs / Parks, Aerospace, Hardware, NANO

technology, Biotechnology, Pharma etc., where Karnataka has potential strengths.

Develop industrial pockets in Special Investment Regions (SIRs), ITIRs, NMIZ in line

with the guidelines of the Govt. of India.

The 60 approved SEZs projects include 47 IT / ITES, 3 Biotech SEZs, 1 airport based SEZ and

9 sector specic SEZs. The 61 approved SEZs will have an investment of Rs. 37,178 crores

providing employment for 11,64,645 persons.

Presently, 25 SEZs are operational with an investment of Rs. 29,530 crores providing an

employment for 1,93,743 persons.

The exports from SEZs in Karnataka, which was Rs. 25,000 crores during 2011-12 has increased

to Rs. 34,534 crores in 2012-13 and stood at Rs. 51,200 crores during 2013-14.

Correspondingly, the investment has increased from Rs. 4,591 crore, Rs. 17,862 crores and Rs.

29,531 crores respectively.

13 14

Geographical Indications in Karnataka

Karnataka tops the charts with the highest number of Registered GIs in the country (Refer

Table 1.3) and the State plans to aggressively promote and market these through well

planned promotion and facilitation policies.

Table 1.3

Abstract:

Goods Type

Agricultural

Handicra�

Manufactured

Foodstuff

Total Gls

No of Gls

15

13

3

1

32

% Contribu�on

47 %

41 %

9 %

3 %

100 %

Way Forward

The growth of exports from Karnataka requires full involvement and commitment from

various sectoral departments viz., Agriculture, Horticulture, Mines & Geology,

Industries & Commerce, Infrastructure Development Department, Public Works

Department etc. It is suggested that, each Department may be asked to consider

allocating at least 5% of its budgetary allocation year-on-year for participating in export

infrastructure related projects.

Creation of a Special Fund / Viability Gap fund through budgetary support for

participating in export infrastructure projects in the PPP models. The fund could be used

for participation in development of infrastructure such as roads, seaports, airports, Inland

Container Depots (ICDS) / Cargo Freight Station (CFS), road connectivity etc.

A Committee chaired by Chief Secretary, Govt. of Karnataka may be constituted with

Additional Chief Secretaries / Principal Secretaries of key departments as members for

prioritizing and approval of export infrastructure projects. The funding support for such

projects could be through pooling of the proposed budgetary allocation of 5% and

Special Fund.

15 16


Shelf of Projects identied under ASIDE Scheme for implementation during

12th Plan period

In total 62 projects are identied with an investment of Rs. 2738.68 crores for development of

critical infrastructure which are essential to support exports with ASIDE share of

Rs. 1562.21 crores. The projects are being pursued for sanction and approval under ASIDE in a

phased manner in a span of 5 years.

Karnataka stands 4th in attracting FDI in the country. The cumulative inows from April 2000 to

March 2014 stood at US $ 12.67 billion (6% of total FDI inows in the country). The sectors

receiving highest FDI inows are minerals, tourism, information, biotechnology, power, health,

education, food processing and textiles.

Products

Mysore Silk

Mysore Agarbathi

Bidriware

Channapatna Toys & Dolls

Mysore Rosewood inlay

Mysore Sandalwood Oil

Mysore Sandal Soap

Kasu� Embroidery

Mysore Tradi�onal Pain�ngs

Coorg Orange

Mysore Betel leaf

Nanjanagud Banana

Mysore Jasmine

Udupi Jasmine

Hadagali Jasmine

Kinhal Toys

Goods

Handicra�

Manufactured

Handicra�

Handicra�

Handicra�

Manufactured

Manufactured

Handicra�

Handicra�

Agricultural

Agricultural

Agricultural

Agricultural

Agricultural

Agricultural

Handicra�s

Products

Ilkal Sarees

Ganjifa cards of Mysore (Karnataka)

Navalgund Durries

Karnataka Bronze ware

Molakalamuru Sarees

Monsooned Malabar Arabia Coffee

Monsooned Malabar Robusta Coffee

Coorg Green Cardamom

Dharwad Pedha

Devanahalli Pomello

Kamalapur Red Banana

Appemidi Mango

Sandur Lambani Embroidery

Byadagi Chilli

Udupi Ma�u Gulla Brinjal

Bangalore Blue grapes

Goods

Handicra�s

Handicra�s

Handicra�s

Handicra�s

Handicra�s

Agricultural

Agricultural

Agricultural

Foodstuff

Agricultural

Agricultural

Agricultural

Handicra�

Agricultural

Agricultural

Agricultural

Sl No. Sl No.

1 17

2 18

3 19

4 20

5 21

6 22

7 23

8 24

9 25

10 26

11 27

12 28

13 29

14 30

15 31

16 32

CH

AP

TE

R

1PREAMBLE, OBJECTIVES, SCOPE & METHODOLOGY

1.1 PreambleThe World has faced an unprecedented economic slow-down since 2008. In the wake of the

nancial crisis, economies and markets worldwide were in turmoil, international trade

contracted sharply, as did global investment ows. Unemployment rose, rendering over 50

million people jobless. The crisis which erupted from the heart of the capitalist world spread like

a contagion, affecting all countries big and small. Most of all, it created a crisis of condence,

forcing many developed countries to resort to protectionist measures, adversely impacting the

vulnerable and developing economies.

State Government's efforts to strengthen infrastructure and taking several initiatives for

promotion of exports, has not been adequate to signicantly increase the volume of exports of

manufactured goods. Based on the studies conducted by Organizations like FIEO and FICCI and

the strategies proposed in the Foreign Trade Policies 2009-14, a need has been felt to conduct a

Study in the State to identify the critical factors affecting the exports with specic reference to

infrastructure & other bottlenecks and suggest strategies for increasing exports in the coming

years. Hence, this Study.

1.2 Objectives and Scope Overview of exports from Karnataka.

Identify infrastructural gaps such as road networks, rail, airports & seaports, cargo

handling and storage facilities etc., which need strengthening for facilitating exports. To suggest rationalization & simplication of procedure for exports.

To review present export basket from the State and identify potential products and

the market. To identify bottlenecks / issues affecting exports.

To suggest suitable measures to enhance exports from the State.

Methodology Interaction with various Trade Bodies, Government & Private Institutions involved in

promotion of exports including port authorities, customs, container service providers,

container freight stations, etc. Opinion of the exporters; Comparative Study from Export Driving States; Data outsourced through internet and secondary sources; Representations and issues raised by various trade bodies for promoting exports

from Karnataka.

17 18


OVERVIEW OF EXPORT PERFORMANCE OF KARNATAKA

2.1 Karnataka Economy & Sectoral Shares of GSDP

Karnataka's Gross State Domestic Product (GSDP) at constant prices (2004-05) which was Rs

2,86,410 crores in 2011-12 has increased to Rs. 2,96,658 crores in 2012-13 and stood at Rs.

3,11,628 Crores in 2013-14. The level of per capita GSDP at constant prices which was Rs.

42,218 in 2011-12 has increased to Rs. 43,075 crores in 2012-13 and stood at

Rs. 44,857 in 2013-14

Karnataka's Gross State Domestic Product (GSDP) at current prices which was Rs 4,63,243

crores in 2011-12 has increased to Rs. 5,24,502 crores in 2012-13 and stood at Rs. 5,93,811

Crores in 2013-14. The level of per capita GSDP at current prices which was Rs. 77,491 in 2011-

12 has increased to Rs. 86,864 crores in 2012-13 and stood at Rs. 97,386 in 2013-14

Sectoral Shares of GSDP

Service Sector constitutes major share in the State GSDP at 61.40%, Industry contributes

24.50% & Agriculture contributes 14.10%. Commercial Prole of the State containing sectoral

composition in the State GDP is shown below:

CH

AP

TE

R

2

Sectoral Shares of GSDP at Current Prices

Sl No.

1

2

3

4

5

6

7

8

9

10

11

12

Sector 2011-12

13.40

2.15

0.59

0.78

11.78

3.71

8.70

2.03

0.45

4.79

0.02

1.63

27.01

16.13

2012-13

12.40

1.932

0.56

0.78

10.56

3.09

9.53

2.20

0.39

5.43

0.02

1.52

26.16

14.90

2013-14

11.55

2.01

0.55

0.72

9.61

2.82

9.14

2.21

0.38

5.52

0.02

1.67

Agriculture

Forestry and Logging

Fishing

Mining and Quarrying

Registered Manufacturing

Un-registered Manufacturing

Construc�on

Electricity Gas and Water supply

Railways

Transport by other means

Storage

Communica�on

Industry Sector

Agriculture & Allied Sectors

24.50

14.10

19


2.2 Natural Resources of Karnataka:

a) Agriculture:

Agriculture is one of the most essential attribute of Karnataka’s economy. The topography of

Karnataka such as the city's relief, soil, and climate immensely supports the agricultural

activities in Karnataka.

Karnataka's relief, soil conditions, and climate jointly contribute in growing crops in the city.

Agriculture is considered to be one of the primary occupations for the inhabitants of Karnataka.

Majority of the people in Karnataka are involved in growing crops especially in the rural area.

The major crops are millets, paddy (rice), maize, moong (pulses), groundnut, red chillies, cotton,

soyabean, sugarcane, rice, turmeric, wheat, barley, mustard, sesame, and peas. Other cash crops

sown in Karnataka apart from sugarcane are cashews, cardamom, betel (areca) nut, and grapes.

Karnataka is also highly potential for its horticultural production and ranks second in this aspect

in India. Horticulture generates 40 percent of the total income of the State. Karnataka's

agricultural products also include raw silk which has the highest production range among all

other States in India.

Karnataka with its ten different agro-climatic zones and other bounteous natural advantages

offers immense opportunities for high growth in agriculture and allied sectors. It is imperative

that Karnataka takes advantage of the modern practices, technologies and develops strategies to

leverage the growing demand in both domestic and international market.

b) Mineral & mineral products:

Karnataka holds premier position in the country with regard to resources of Gold, Manganese

ore, Bauxite, Iron ore and Limestone.

Iron Ore

80% of magnetite ore is available.

Karnataka has the second largest deposits of iron ore.

The State has over 9,000 million tonnes of iron ore resources, the bulk of which is magnetite.

The average production is 47 million tonnes.

The production is mainly concentrated in Bellary/Hospet area Chitradurga, Tumkur and

Bagalkot districts.

The Iron Ore exports of Karnataka amounts to Rs. 739 crores.

The State is the third largest producer of Steel in the country.

Limestone

30% of India’s total Limestone reserves is available in the State.

Estimated resource of 51,000 million tonnes spread across the districts of Gulbarga,

Bagalkot, Belgaum, Chitradurga, Tumkur, Shimoga and Uttara Kannada.

Average production is14 million tonnes.

Gold Total reserves contributed by the State is 64%. Karnataka is the only State producing primary gold in the country through the State owned

Hutti Gold Mines Ltd. The State has produced nearly 900 tonnes of gold during last 150 years from KGF & Hutti -

Maski schist belts. There is great potential for exploration with the state-of-the-art technology for gold,

platinum, precious and semi- precious minerals.

Manganese Total reserves accounts to 36.5%. Karnataka hosts the largest recoverable reserves of manganese ore in the country. The deposits of manganese ore are mainly found in Sandur schist belt (Bellary district),

Shimoga schist belt (Shimoga district), Chitradurga schist belt (Chitradurga and Tumkur

districts) and North Canara schist belt (Uttara Kannada district). The estimated resource is 107.36 million tonnes. The average production is 1.83 lakhs metric tonnes.

Granites Karnataka State is bestowed with vast resources of granite deposits. 500 granite units in Karnataka constitute 50% of the granite units of India. The Average production of granites of the State stands at 1.96 lakhs cu.m Granite Exports from Karnataka stood at Rs. 4,200 crs in 2013-14. Granites are exported to Turkey, Netherlands, Albania, Colombia, Philippines, UAE,

Austria, Iran, Bahrain, Algeria, Malaysia, Singapore, Poland, Russia, Kuwait, Tanzania etc.

20

13

14

15

14.13

6.02

17.63

13.41

5.96

19.08

12.69

6.10

16

17

Trade Hotels and Restaurants

Banking and Insurance

Real estate, Ownership of Dwellings and Business services

Public Administra�on

Other services

Services Sector

Total GSDP

3.74

8.45

56.86

100.00

3.76

9.37

58.94

100.00

3.74

10.60

61.40

100.00

20.68

Sl No. Sector 2011-12 2012-13 2013-14


2.3 Exports of Karnataka

Karnataka has a long tradition of overseas trade. Historically, Karnataka has been a major

exporter of commodities like Coffee, Spices, Silk, Cashew nuts, Handicrafts and Agarbathies. In

the last two decades, the State has emerged as a major player in the export of Engineering goods,

Readymade garments, Leather goods, Chemicals, Minerals & Ores etc. Since the second half of

the 1990's, Karnataka has carved out a niche for itself in the global market place as the

knowledge and technology capital of the Country. The State has made rapid and spectacular

strides in the new economy. Information technology, Biotechnology and Research &

Development institutions have enhanced Karnataka's achievements at National and global

levels. Karnataka accounts for more than one third of electronics & computer software exports

from the country. It is one among the top States in export of high-tech engineering goods.

Visvesvaraya Trade promotion Centre (VTPC), under the aegis of the Department of Industries

& Commerce, Government of Karnataka is the ofcial institution for compilation and

publication of export data of 19 commodities from Director General of Commercial Intelligence

and Statistics, various Export Promotion Councils (EPCs), Commodity Boards, Export Houses

and Director General of Foreign Trade. However, the database from these organizations is not

adequate for analyzing the export patterns & strengths in regional pockets of the State. There are

several exporters in the categories of merchant exporters and manufacturer exporters and a

complete export and import database is being built and updated regularly at the State level with

the assistance of Department of Commercial Tax, Director General Foreign Trade, New Delhi,

Director General of Commercial Intelligence and Statistics and Commissionerate of Customs,

Bengaluru, Export Promotion Councils, Development Commissioner, Cochin SEZ and directly

from units. The data presented here is indicative of overall export patterns of commodities from

the State.

Karnataka's exports in terms of value from 2011-12 to 2013-14 are shown in Table 2.1. In

2013-14, Karnataka's exports amounted to about Rs. 2.90 lakh crores, which constituted about

14% of the Country's exports. Karnataka's exports as a percentage of GSDP have a fairly large

share and has also increased signicantly over time. The share of exports in GSDP, which was

7.36% in 1993-94, has grown to 49% in 2013-14.

Karnataka’s export of manufactured goods and commodities is relatively lower as the gures of

software are more dominant. Strategies for increasing the exports of commodities & goods

leveraging the strengths in the State will need to be evolved for increasing the share of exports.

Table 2.3.1 : Export Performance of Karnataka State

Sl No.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

Commodity2011-12

135,660

8,143

23,418

8,263

1,134

673

3,173

5,077

763

23,728

882

267

320

480

605

604

700

129

4,819

218,837

2012-13

156,000

7,670

33,915

12,568

1,735

654

3,534

7,233

1,149

24,483

847

374

452

491

632

788

904

150

4,789

2,58,368

2013-14

178,000

8,900

35,392

17,978

739

650

3,598

8,300

1300

24,175

1,200

516

450

562

1067

700

1,150

176

5,565

290,418

Electronics, Computer So�ware & BT

Readymade Garments



Iron Ore & Minerals (incl. Granite)

Silk Products

Coffee Products

Basic Chemicals, Pharmaceu�cals & Cosme�cs

Agri. & Processed Food Products

Gems & Jewellery

Cashew and Cashew Kernels

Handicra�s

Leather Products

Chemicals and Allied Products

Marine Products

Plas�c Goods

Spices

Wool & Woollen Products

Miscellaneous and Others

Total

Value of exports (Rs. crore at current prices)

Table 2.3.2: Export Growth of Previous 3 Years

Sl No.

1

2

3

4

5

7

8

6

9

% of Share

(2013-14)

61.29

12.19

8.32

6.19

3.06

0.41

0.40

2011-12

% of Growth Over

previous year

2012-13

% of Growth Over

previous year

2013-14

% of Growth Over

previous year

14%

4%

-1%

43%

16%

135660

23418

23728

8263

8143

29%

60%

19%

13%

19%

156000

33915

24483

12568

7670

15%

45%

3%

52%

-6%

178000

35392

24175

17978

8900

1.92

1.24

16%

2%

4818

3173

364%

45%

4789

3534

-1%

11%

5565

3598

2.8615%5077 75% 7233 42% 8300

0.45763 14% 1149 51% 1300 13%

882

700

50%

56%

847

904

-4%

29%

1200

1150

42%

27%

10

11

Commodity

Electronics & Computer Software

Readymade Garments

Petroleum & Petroleum products

Engineering

Coffee Products

Basic Chemicals, Pharamaceuticals & Cosmetics

Agriculture & Processed Food Products

Gems & Jewellery

Cashew and Cashew Kernels

Spices

Miscellaneous and Others

21 22

Sl No. Districts

1 Bagalkote

Products

Agricultural and Hor�cultural commodi�es (Grapes, Pomegranate, Mango, Banana, Maize Groundnut Green grams, sugar, Bengal grams, Bajra), Minerals and Mineral based products & Engineering products.

Expor�ng Countries

UAE, Pakistan, Yemen, Iran, Srilanka, Nepal, Vietnam, Burma, Bangladesh, Srilanka, Malaysia

2 Bangalore Rural

3 Bangalore Urban

Agricultural and Hor�cultural commodi�es (Onion, Rose onion, Flowers, Gherkins, Vegetables), Minerals and mineral based products, Leather Products, Automobile, Engineering goods, Electronics and Computer So�ware, Readymade garments, Electricals, Silk, Handicra�s, Gems & Jewellery, Pharmaceu�cals, Chemicals and Plas�cs, Processed Foods & Handlooms.

Agricultural and Hor�cultural commodi�es (Flowers), Leather Products, Engineering goods, Electronics and Computer So�ware, Readymade Garments, Electricals, Service sector, Gems & Jewellery, Handicra�s, Automobile, Precision Tools, Tex�les, Aerospace, Pharmaceu�cals, Chemicals & Plas�cs) Processed Foods & Handlooms

Germany, USA, Japan, Italy, Brazil, Malaysia, UK, Belgium

USA, Germany, Japan, Italy, Brazil, Malaysia, UK, Belgium, Thailand, Ukraine, Mexico, China, South Africa

4 Belgaum

5 Bellary

6 Bidar

7 Bijapur

8 Chamarajanagar

9

10 Chikkballapur

Chickmagalur

11 Chitradurga

Engineering, Aerospace, Drugs & Pharmaceu�cals, Chemicals and Plas�cs, Electronics, Mineral based products, Tex�le, Automobiles, Agro Products (Maize, Co�on, Jaggery, Sugar, Wheat, Sun Flower), Foundry Products

Engineering, Tex�les, Electricals, Agriculture (Maize, Dry Chilli, Onion, etc.) Processed Food, Minerals and Minerals based products & Automobiles.

Handicra�s, Engineering, Agriculture and Hor�culture (Green Gram, Soya bean, Sunflower, Bengal Gram) Processed Food.

Engineering ,Tex�le, Agriculture and Hor�culture (Pomegranate, Grapes etc) Automobiles

Minerals and minerals based products , Engineering, Food Products

Engineering, Agriculture and Hor�culture (Coffee, Spices, etc)

Agriculture and Hor�culture Products, Silk, Floriculture, Agro Food Products

Agricultural and Hor�cultural commodi�es (Maize, Groundnut, Sunflower, Gherkins), Engineering, Chemicals and allied products, Mineral and Mineral based products.

UAE, UK, France, Germany, Belgium, Sweden, USA, Italy, Hong Kong, Switzerland and Saudi Arabia.

UAE, Europe, Africa, Turkey, Belgium, Germany, Canada, Mexico.

USA,Japan, Spain, Portugal, France, UAE, UK,European Countries, Brazil, Argen�na, China

Netherlands, UK, China, USA, Canada, South Africa, UAE

USA, UK, Pakistan, Poland, Morocco, Turkey

Germany, Netherland, Italy, UK, Spain, Australia

China, Thailand, UAE

Indonesia, Malaysia, Philippines, Vietnam


0.37

0.25

0.24

0.22

0.19

0.18

0.15

0.06

100.00

605

1134

604

673

480

267

320

129

218837

15%

17%

7%

-1%

42%

-9%

58%

42%

32%

632

1735

788

654

491

374

452

150

258368

4%

53%

30%

-3%

2%

40%

41%

16%

18%

1067

739

700

650

562

516

450

176

290418

69%

-57%

-11%

-1

14%

38%

0

17%

12%

12

13

14

15

16

17

18

19

Handicrafts

Leather Products

Chemicals and Allied Products

Marine Products

Plastic Goods

Wool & Woollen Products

Total

Iron Ore & Minerals (incl. granites)

Silk Products

Sl No.

% of Share

(2013-14)2011-12

% of Growth Over

previous year

2012-13

% of Growth Over

previous year

2013-14

% of Growth Over

previous year

Commodity

Table 2.3.3 : District Wise Export Statistics

Sl No.2011-12

(Rs. in crores)

2012-13 (Rs. in crores)

2013-14(Rs. in crores)

No. of Units

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Districts

Bagalkot

Bangalore Urban

Bangalore Rural

Belgaum

Bellary

Bidar

Bijapur

Chamarajanagar

Chikkballapur

Chickmagalur

Chitradurga

Dakshina Kannada

Dharwad

Davangere

Hassan

Haveri

Kodagu

Kolar

Koppal

Mandya

Mysore

Ramanagar

Raichur

Shimoga

Tumkur

4

156317

919

1663

861

65

6

20

198

130

106

47524

72

40

348

166

193

24

20

4

4582

1225

255

40

146

5

184546

1087

1970

1016

76

6

23

233

154

125

56109

85

47

411

196

227

28

24

5

5410

1447

301

48

173

6

207000

1220

2207

1100

84

7

26

241

174

139

63078

92

52

450

200

250

29

25

6

6000

1694

310

52

190

18

1859

35

93

40

14

20

14

8

18

10

162

50

23

16

8

6

16

31

17

180

11

59

14

40

26

27

28

29

Gadag

Gulbarga

Udupi

U�ara Kannada

TOTAL

3

4

3854

47

218837

3

4

4551

56

258368

4

5

5700

78

290418

3

7

79

10

2861

Sl No.2011-12

(Rs. in crores)

2012-13 (Rs. in crores)

2013-14(Rs. in crores)

No. of Units Districts

Table 2.3.4 : Details of Products & Exporting Countries

23 24


25 26

12 Dakshina Kannada

13 Davangere

14 Dharwad

Agricultural and Hor�cultural commodi�es (Cashew, Spices), Handicra�s, Engineering, Marine products, Minerals and minerals based products, Readymade garments, Electronics and Computer So�ware, processed foods, Petroleum and Petroleum products.

Agricultural and Hor�cultural Commodi�es (Rice Maize, Gherkins, Sunflower, Co�on , Groundnut, Onion) Drugs and Pharmaceu�cals, Engineering,

Engineering, Automobiles, Agriculture and Hor�culture (Mango, Banana, Maize, Spices etc) Processed Foods, Electricals, Engineering, Chemicals and Plas�cs, Ready made garments, Electronics and Engineering Valves.

South Africa, Europe, USA, UAE, Middle East,

Indonesia, Malaysia

Belgium, France, USA, Australia, Canada, Spain, Srilanka, Russia, Turkey

Sl No. Districts Products Expor�ng Countries

15 Gadag

16 Gulbarga

17 Hassan

18 Haveri

19 Kodagu

20 Kolar

21 Koppal

22 Mandya

23 Mysore

Agricultural and Hor�cultural commodi�es (Groundnut, Co�on, Maize, Soyabean, Safflower), Automobiles, Engineering & Tex�les

Agricultural and Hor�cultural commodi�es (Turdal), Minerals and mineral based products (Fullers Earth & Allied Products)

Agriculture and Processed Foods, (Gherkins, Coffee, Spices etc) Minerals and mineral based products, Tex�les, Readymade Garments, Engineering, Chemicals and Plas�cs, Pharma

Agricultural and Hor�cultural commodi�es (Groundnut, Co�on, Maize, Soya bean, Sun flower, Chilly Betel leaves)

Agricultural and Hor�cultural (Coffee, Spices, Vegetables) Processed Foods.

Agricultural and Hor�cultural (Onion, Rose Onion, Tomatoes etc) Processed Food, Minerals and minerals based products, Engineering, Chemicals and Plas�cs.

Agricultural and Hor�cultural (Maize, Paddy, Jowar, Sunflower) Processed Food, Minerals and mineral based products, Engineering.

Agriculture and Hor�culture Products (Rice, Sugar, Paddy etc.), Engineering, Pharma

Automobiles, Engineering, Electricals and Electronics, Computer So�ware, Drugs and Pharmaceu�cals, Chemicals and Plas�cs, Processed Foods, Agricultural and Hor�cultural Commodi�es, Gems & Jewellery, Handicra�s, Agarbathi, Silk, Biotechnology, Paints, Paper Products, Readymade Garments, Granites, Flavours and Essence.

USA, Germany, Korea, New Zealand, Israel, Bangladesh, Vietnam, Indonesia, Malaysia, Canada, Philippines, UAE, Belgium, Italy, France, Canada, Malaysia.

South East Asian coun�res, Viz. Vietnam, Indonesia, Malayasia, USA, Singapore, Australia

France, Spain, Germany, Ukraine, Netherlands, Belgium, Russia

USA, Germany, Korea, New Zealand, Israel, Bangladesh, Vietnam, Indonesia, Malaysia, Canada, Philipines, UAE

Italy, Germnay, Spain, Belgium

Korea, Singapore, Switzerland, Argen�na

China, Hong Kong, Switzerland, Holland, Indonesia, Spain, France, Italy

Indonesia, Malaysia

Asian Countries, Australia, UAE & Gulf Countries, La�n American Countries, Canada, South Africa, USA, UK, African Countries, Europe, Singapore, Middle East countries, Oman & Bahrain, China.

24 Raichur

25 Ramanagar

26 Shimoga

Agricultural Commodi�es (Rice, Co�on, Sunflower, Tur, Maize, etc.) Processed Food Products, Precision Engineering.

Agricultural and Hor�cultural commodi�es, (Fresh Vegetables, Fresh Fruits), Engineering & Automobiles, Tex�le, Pharmaceu�cals, Chemicals and Plas�cs

Engineering, Tex�les, Readymade Garments, Agricultural and Hor�cultural Commodi�es

Australia, Belgium, Canada, USA, Russia, Vietnam, China, Singapore

Argen�na, Brazil, Indonesia, Japan, UK, Netherlands, Thailand, Singapore, UAE

Germany, Spain, USA, Holland, China, Korea, Japan, Singapore, Australia, Canada, Saudi Arabia, Netherlands

27 Tumkur

28 Udupi

29 U�ara Kannada

Agricultural and Hor�cultural products, (Arecanut, Groundnut, Coconut etc), Minerals & mineral based products, Basic Chemicals, Pharmaceu�cals & Cosme�cs, Engineering, Readymade Garments, Processed Foods, Electricals.

Electronics and Computer So�ware, Engineering, Agricultural and Hor�cultural commodi�es (Incl. cashews, Coconut, arecanut, Pineapple, Pepper, spices), Marine products, Chemicals and Plas�cs.

Agricultural and Hor�cultural commodi�es, Handicra�s, Marine Products etc.

USA, China, Japan, Singapore, Australia, Saudi Arabia, Netherlands, Srilanka, Europe

UAE, USA, UK, Japan, Singapore, France, Egypt, Saudi Arabia, Syria, Israel, South Africa, Turkey, Jordan, Ukraine

USA, Poland, France, Brazil, Middle East, Germany, Nepal, Spain, South Africa, Australia.

Sl No. Districts Products Expor�ng Countries

Exports of electronics and computer software, basic chemicals, pharmaceuticals and cosmetics,

readymade garments, petroleum & petroleum products, gems & jewellery, marine products

and, plastic goods have increased signicantly in 2013-14 as compared to their exports in

2011-12. The exports of silk products, handicraft products have revealed a marginal decline in

2013-14 as compared to 2011-12. Export of cashew and cashew kernels, engineering products,

iron ore and minerals (including granites), wool & woollen products have increased sharply in

2013-14 as compared to 2011-12. The exports of traditional export commodities such as

readymade garments, coffee products, petroleum & petroleum products, engineering

commodities have increased signicantly in 2013-14 compared to their exports in 2011-12. The

exports of agriculture & processed food products, handicrafts, leather products, chemicals and

allied products and plastic goods increased marginally in 2013-14. In addition, the exports of

marine products have substantially increased in 2013-14 compared to their exports in 2011-12.

Karnataka's contribution to India's exports has varied between 11% and 15%. Further,

Karnataka's share in India's total exports of information and communication technology

products has remained higher than 25% since 2005-06. Higher export performance is an

important determinant of increasing degree of openness to export trade. Degree of openness is

measured by the ratio of value of exports to GDP at National level and by the ratio of value of

exports to GSDP at the State level. Karnataka's degree of openness to export trade has been about

47%, which is remarkably higher than that of All India (at about 27%). Increasing degree of

openness to trade is an indicator of economic globalization. From this viewpoint, the levels of

Karnataka's economic globalization have been higher than at All India level.

2.4 Products having Export Potential from Karnataka

Trend in value of exports of 19 commodities for the three years period covering 2011-12 to

2013-14 has been analyzed. These 19 products have been re-categorized into 9 broad groups

based on the average value of exports for the three years period, a list of products having export

potential is presented in Table-2.2 along with item-wise share of exports and potential

destination.

Electronic and Computer software constitutes a major chunk of exports with 61% of total export

value followed by petroleum & petroleum products (12.19%), gems & jewellery (8.32),

engineering (6.20), basic chemical & pharmaceutical (2.80%), agriculture and processed food

(1.23%),readymade garments (3.35%), Coffee (1.24%).

Following pie-chart illustrates percentage of product-wise average

2.5 Projection in the Growth of Value of Exports of Karnataka by 2019

In light of the mandate given by the Department of Commerce, Government of India, the long

term vision envisages to make India a major player in the World Trade by 2020. The Foreign

Trade Policy of Government of India 2009-2014 sets out a goal of doubling India's export of

goods & services to realise the objective of doubling India's share in global trade by the end of

2020. To achieve this goal, all States, including Karnataka have to play a signicant role to

contribute to the growth of exports.

Karnataka’s basket of exports in 9 product groups has been examined with reference to growth

rate and potential for projections of exports based on average growth of previous three years.

This has been particularly in view of the variations in the growth patterns between the

commodities. The projected Growth of exports is shown in Table - 2.3.

Table 2.5.1: Projection of Exports (2015-2019)

25

(in Rs. Crores) Incremental Exports from each of the strategy

Sl No.

Sector-wise Commodities2018-19

Projections

3 Years Average of

actual exports (2011-12

till 2013-14)

IncrementalExportsPlanned

PenetrationNew MarketDevelopment

New ProductDevelopment

Diversification

1

2

3

4

5

6


Gems & Jewellery


Readymade Garments



380857

50889

63173

17357

34170

16949

156553

24129

30908

8238

12936

8078

224304

26760

32264

9120

21233

8871

156553

14477

21636

6178

12936

6463

23483

4826

4636

1236

3234

1616

23483

4826

4636

1236

3234

796

20782

2630

1345

465

1824

0



15804 7168 8636 5734 1434 717 745

8 Iron Ore & minerals (Incl. granites)

1344 1203 141 84 58 0 0

9 Misc and Others

Total

11497

592039

6661

255874

4836

336164

0

224062

0

40522

0

38927

0

27792


Table 2.4.1 : Sector-wise Export Performance

Sl No.

1

2

3

4

5

6

7

8

9

10

Products

Electronics & Computer So�ware

Petroleum Products

Gems & Jewellery

Engineering

Readymade garments incl. Woollen & Silk products

Basic Chemical & Pharmaceu�cals

Agro and Processed Food.

Coffee

Spices

Iron ore & Minerals

Expor�ng Countries

USA, UK, Taiwan, Singapore, France

Mauri�us, Netherlands, Yemen, Japan UAE, China, etc.,

Singapore, Dubai, Sharja, Kuwait, USA

Germany, USA, Thailand, Taiwan, Mexico, Japan

USA, UK, Italy, Germany, Hong Kong, Turkey, Canada, Australia

USA, UK, Brazil, Argen�na, China, Canada, Egypt, Malaysia.

USA, Dubai, Brazil, Taiwan, UK, Japan, Denmark, Srilanka, Netherlands, Europe, Spain France.

Jordon, UAE, Israel, Spain, Sweden, Germany, Geneva, Bremen etc.,

USA, UAE, Japan, England, Australia, South Africa.

Saudi Arabia, UAE, Nepal, Bahrain etc.,

% of Share in Exports

61.00

12.19

8.32

6.20

3.35

2.80

1.23

1.24

0.40

0.25

27 28

CURRENT STATUS OF INFRASTRUCTURE AND BOTTLENECKS

Export is considered an engine of economic growth in the wake of liberalization and structural

reforms in the economy. A sustained growth in exports is dependent on adequate and reliable

infrastructure. Proper infrastructure will ensure reduction in the transaction cost of exports,

thereby making exports internationally competitive. It is reported that transaction costs in India

are much higher compared to global standards and a part of the reason is attributed to bottlenecks

in infrastructure for exports.

Following are the basic infrastructure facilities required for facilitating export of goods &

commodities:

Roads

Railways

Sea Ports

Inland Container Depot (ICD)

Container Freight Stations

Airports

The current status of the above are described below:

3.1 Roads

The State's road network consists of National Highways (NH), State Highways (SH), Major

District Roads (MDR), Municipal roads and other roads as well as village connectivity roads.

The total length of various categories of roads as on December, 2011 is shown in the Table

3.1 below:

Category of Road Length in kms.

Na�onal Highways 4,490

State Highways 20,770

Major District Roads 49,959

Municipal Roads 8,366

Other Roads 1,48,412

Source : Public Works Ports and Inland Water Transport Department

Table 3.1 : Category-wise Road Lengths (in kms.) as on Dec. 2011

CH

AP

TE

R

3Study on Strategies for Promotion of Exports from Karnataka

National Highways Nos. 4, 7, 13, 48, are the most important roads for transportation of goods &

commodities to gateway ports. These highways broadened to six lanes through PPP and toll

models have denitely improved the movement of goods. However, there are bottlenecks in

certain pockets, which constraint smooth movement. The current status of NH 48 leading to

Mangalore Port is in poor condition in the ghat section. Currently, this stretch is in damaged

condition and almost closed for trafc. Further, this stretch is not currently broad enough for

signicant improvement, given the increasing trafc.

The exporters from Karnataka mainly depend on the major ports at Chennai, Tuticorin, JNPT,

New Mangalore Port Trust (NMPT) and Cochin for shipment of containerized cargo.

Containerised cargo is the order of the day for shipment of most of the goods and commodities

except bulk cargo such as iron ore, manganese and other minerals & liquids.

The movement of containers from Karnataka is by movement of containerized trucks to the

respective ports. The roads particularly NHs and SHs from the export pockets of the State are

signicant and need continuous maintenance and upgradation towards seamless movement.

The exporters from North & Central Karnataka mainly use Mumbai and Goa ports. The

connectivity to Mumbai and Goa ports through proper road network from main business centres

of North Karnataka viz., Hubli, Belgaum, Bellary and Gulbarga will help faster movement

of goods.

The carriage width details of the roads show that about 19% of National Highways, 1% of State

Highways and 2% of Major District Roads have four lane width.The current status of roads in the

State needs upgradation and broadening for achieving the objective of smooth transport. Most of

the roads in the export pockets need to be linked to the nearest National highway.

The Government has envisaged Suvarna Karnataka Development Corridor (SKDC)

Programme following major industrial corridors which provide for development of 8 lane

roads as follows:

Bidar-Bangalore via Chitradurga,

Tumkur-Honnavar via Shimoga,

Chitradurga-Mangalore via Shimoga-Udupi

Bangalore-Belgaum via Davanagere-Hubli.

Additional corridors have also been proposed to provide connectivity to Bidar, Bijapur and

other potential locations.

This major initiative, once implemented, would provide sufcient scope for development of

potential export pockets as well as providing connectivity not only to the major ports but also to

other potential minor ports proposed to be developed in PPP mode.

29 30

3.2 Railways

The rail network in Karnataka has about 2761 kms of broad gauge lines. About 410.65 kms. of the rail network is meter gauge. Conversion of this meter gauge will strengthen rail connectivity. Most of the broad gauge lines are single track and pose a constraint for smooth movement of passenger & goods trafc. The rail network provides connectivity to the sea ports at Chennai, Tuticorin, Mumbai, Mangalore, Cochin and Goa. Of these, the most signicant rail networks connecting to export pockets of Karnataka are Chennai, Tuticorin, NMPT and JNPT. The current status of the rail network is not adequate for smooth movement of rakes to the sea ports. The time required for reaching containers and cargo rakes to sea ports is relatively long and the trade has expressed this as one of the major constraint increasing transaction cost. Tracking of cargo movement and timely shipments are the areas of concern for exporters.

Inland Container Depots (ICD) are an important part of the rail network for movement of containers. The ICD at Whiteeld is constrained by capacity. The movement is also constrained by the high trafc density in the rail network.

The status of new initiatives taken up in the State for developing railway network is as follows:

Kotturu - Harihara new railway line: has been completed and is pending clearance from Railway Safety Commissioner. This project is being executed under 2/3 & 1/3 sharing by State Government (GoK) and Ministry of Railways (MoR) respectively.

Munirabad - Mehabubnagar new railway line: Except for the route passing through Gangavathi, land has already been acquired and handed over to the railways and work is under progress. This project is being executed with cost sharing of 50:50 between GoK and MoR.

Doubling of Bangalore-Ramanagaram railway line: has been completed up to Channapatna. This project has been executed under cost sharing programme between GoK and MoR in the ratio of 2/3 & 1/3 respectively. Work on the Channapatna-Mysore line is also under progress.

Land at Bidar for Bidar - Gulbarga new railway line: has been acquired and handed over to South Central Railway and the work is under progress. However, land is yet to be acquired and handed over on Gulbarga side. The expenditure for this project is being shared by GoK and MoR on 50:50 basis. The State Government has so far released Rs. 155 crore for this project.

Tumkur - Rayadurga new railway line: is being undertaken with cost-sharing in the ratio of 50:50 between GoK & MoR. GoK has so far released Rs. 20 crore for this project and land acquisition is under progress.

The Government has approached MoR for taking up the following projects on PPP basis: Hubli - Ankola, Talguppa - Shahabad, Bijapur - Shahabad, Dharwad - Belgaum. Apart from these, projects being taken up on cost-sharing basis between GoK and MoR are: Hassan - Bangalore, Kadur - Chikmagalur, Kolar - Chikballapur, Kudachi - Bagalkot, Tumkur - Davangere, Shimoga - Harihar and Whiteeld - Kolar. The development of these rail network corridors will provide an impetus to industrial growth across various pockets of Karnataka as also exports in the long run.

31 32


The importance of rail connectivity to the major seaports as well as to the potential minor ports would be signicant in providing alternate options to the trade for shipment of goods. The trade is currently facing problems of congestions in major ports causing delays in shipments.

Development of minor ports at Karwar, Tadri, Haldipur, would be useful for creating capacities

for handling variety of commodities for imports and exports. There would be potential new

gateways. However, development of these ports and attracting commodities would be

dependent to a great extent on availability of network. In particular, the rail connectivity between

Hubli to Karwar would be useful in meeting the requirements of Northern and Central part of

Karnataka and hinterland of the port.

K-RIDE initiated by Government has resulted in formation of HMRCL, which enabled

completion of the rail link between Hassan and Mangalore. This experience could possibly be

explored for expediting development of rail link between Hubli and Ankola.

3.3 Seaports

Karnataka, situated on the Western Coast of India, is endowed with a maritime coastline of

around 300 kms between Karwar (in the North) and Mangalore (in the South) anked by Uttara

Kannada and Dakshina Kannada districts, with favourable and strategic port locations.

At present, in Karnataka there is only one major port viz., The New Mangalore Port. This is

located at the southern end of the coastline and serving part of the hinterland of North and South

Karnataka. NMPT cargo prole is more focused on crude and petroleum products (60%) of

MRPL and 28% bulk cargo (iron ore & coal). Containers and break bulk cargo form the

remaining 12%. Although, containerized cargo is limited, the trend reveals that this has

increased gradually and stood at 48,409 TEUs during 2012-13. The port has projected that this

would increase to 3.60 lakh TEUs by 2020 and plans are afoot to create more facilities for

handling of containers.

The current volume of containers is limited and it is not feasible to attract mainline vessels to

NMPT. However, there may be potential to attract more feeder vessels as well as main line

33 34


Sl No. Port Exis�ng Facili�es Proposed Facili�es Connec�vity

1

2

3

New Mangalore Port Trust

Karwar Port

Belekeri Port

The Port is well equipped to handle bulk, liquid chemicals, hazardous cargoes, crude and POL products, heavy li�s, machinery, containers with cargo handling facility of 37.04 million tonnes

Storage tank terminals with an installed capacity of 75000 MT of liquid cargo about 30,000 MT warehousing facili�es, Gantry crane & other facili�es. Cargo handling capacity of 24.88 lakhs MT

This port has got a vast stacking area and can be developed to handle about 3 to 5 million tonnes of cargo

Container Terminal at the Western Dock Arm

Deep dra� general cargo berth SPM by MRPL Deepening of lagoon Procurement of mobile cranes Port based SEZ

Being upgraded under Port Development Project and will offer be�er and increased berthing and docking facili�es on comple�on

Land has been allo�ed to Private Investors to develop this port by upgrading facili�es to handle foreign bound cargo. Development work is under progress

Railway: Conversion of Hassan - Mangalore line into broadgauge for carrying more tonnage of cargo Konkan Railway has given a great fillip to the port / rail interface and direct connec�vity to Goa & Mumbai

Road:Port is connected with 3 Na�onal Highways viz., NH 17, NH 48 and NH 13 and is accessible to Kochi to Mumbai; Mangalore to Bangalore and Mangalore to Sholapur

Connected by Konkan Railway and road connec�vity with hinterland which include Davanagere, Hubli and Northern part of Karnataka

Konkan Railway Broadguage line, NH 17, NH 63 is passing very close and linkage of Ankola - Hubli railway line is under progress. Good network of roads

Further, Haldipur near Honnavar, Uttar Kannada District has been identied as a potential

location for development of a green eld sea port. Rail connectivity from Shimoga, Talaguppa to

Haldipur would be useful for exploiting the potential of the hinterland.

Government of Karnataka has formulated Port Policy for the development of minor ports in the

State. Implementation of the strategies stipulated in the Port Policy will help the State to develop

the ports in the State and provide gateways for export and import trade. The Karnataka Maritime

Board Act 2011 provides for constitution and functioning of Maritime Board in the State. The

Government of Gujarat constituted Gujarat Maritime Board which has successfully developed

minor ports in PPP mode. Pipav and Mundra ports are success stories in PPP mode. These ports

have provided alternate gateways of exports of containers from Northern, Central and Western

India. This has also created a competitive environment for the major ports at Mumbai.

The formation of Karnataka Maritime Board needs to be expedited for providing an impetus to

development of minor ports under the Port Policy.

Ports should be developed keeping in mind the broader picture giving due credit to trade patterns

and wider issues which could enhance the chances of success of not only the ports that are

developed, but also uplift the region.

vessels in the long run on achieving 3 lakh TEUs. Currently, the feeder vessels call on the port for

picking up containers for shipment through transit ports at Colombo and JNPT, which receive

foreign going main line vessels.

NMPT also has over 75 reefer points through which marine commodities are exported in reefer

containers. The number of reefer points have been gradually enhanced and further increase will

enable handling of more quantities of perishables.

NMPT has recently started receiving vessels from Africa for import of raw cashew. The raw

cashew is listed as an import commodity for re-export. Mangalore is one of the key destinations

for export of graded cashew kernels from India.

There are 9 harbour / minor ports viz., Karwar, Belekeri, Tadri, Honnavar, Bhatkal, Kundapur,

Hangarakatta, Malpe and Old Mangalore. Of these, Karwar is the only minor port handling

limited quantities of cargo. Development of additional jetties and deepening the draft at Karwar

port would provide alternate options for export and import of goods. This could be a part of the

mid-term strategy for augmenting infrastructure to some extent.

Though one major port and seven minor ports exist in Karnataka, only three ports viz.,

New Mangalore Port Trust, Karwar Port and Belekeri Port are active. The existing and

proposed facilities and the connectivity for the ports are tabulated as follows:

4 Tadri About 1419 acres of land at Tadri, U�ara Kannada District is available for development of a port.

Govt. has proposed to develop this mul�-purpose all weather Greenfield Port under PPP. KSIIDC is the Nodal Agency and a SPV in the name of Tadri Port Ltd. has been incorporated. The following facili�es will be created: 8 berths would be u�lized for iron ore coal, general cargo and LNG (KPCL).Ul�mate Port capacity 62.36 mtpa.

Konkan Railway line, NH 17, NH 63, NH 206 passing very close Linkage of Ankola - Hubli Railway line is under progress. On comple�on this will provide good hinterland connec�vity.

Sl No. Port Exis�ng Facili�es Proposed Facili�es Connec�vity

3.4 Airports

The Country's rst green eld International airport has been developed at Devanahalli,

Bangalore at a cost of Rs. 2470 Crore as a passenger and cargo hub under the Public Private

Partnership (PPP) mode. The airport has begun its operations in May 2008. The airport started by

handling 9.8 million passengers per year and currently 12 million passengers annually. It has a

4000 meter runway and a terminal building of around 70000 square meters, the capacity of

which is being enhanced. With the aim of establishing Bangalore International airport as India's

leading airport in terms of quality and efciency and to set a benchmark for the future amongst

Indian airports, it is built and operated to the best international standards and is a new start in

Indian aviation with regard to the passenger experience on ground. The airport is growing at a

phenomenal pace of 18% per annum which is higher than the National average of 16%. The

facilities are proposed to be expanded to meet the requirements of increasing growth in trafc.

The existing airport at Mysore has been operationalised. However, no ights are being operated

from this airport for commercial reasons. In Bellary, the Government is developing a new airport

on PPP basis and the project development agreement has been signed with the developer.

Acquisition of 900 acres of land is in process.

The existing airport at Hubli is being upgraded to International standards and the earlier

requirement of land for the expansion and upgradation of Hubli airport was 710 acres. The nal

requirement of land by Airports Authority of India (AAI) is 615 acres. 520 acres has been

acquired on consent basis and about 450 acres has been handed over to AAI. Additional land of

370 acres for Belgaum airport has been acquired and is being handed over to AAI. Memorandum

of Understanding will be signed by the end of this year. The airport at Mangalore is AAI-owned

and maintained by them. The second runway and new terminal building complex have been

constructed.

Minor airports at Shimoga, Gulbarga, Bijapur and Hassan are being developed on PPP basis

through private operators. In- principle approval of Ministry of Civil Aviation, Government of

India has been obtained. Necessary land for the Gulbarga and Shimoga airports has been

acquired and lease agreements have been signed with the developer. Preliminary project works

have been undertaken. Project development agreement for development of Bijapur airport has

been signed with the concessionaire. The land lease agreement has to be signed with the

developer for handing over of the land. The development of Hassan airport is being taken up on

PPP basis. Out of the total land of 960 acres required for the airport, 536.24 acres of land was

acquired and transferred to the developer. Project development agreement was signed with the

developers and in-principle approval has been obtained from the Ministry of Civil Aviation.

Environmental clearance has been obtained from the Ministry of Environment and Forests.

The existing defence airports at Bidar and Karwar are also being developed for civil operations.

The Government is pursuing the matter of starting the civilian operations with AAI and Ministry

of Defence.

35 36


The construction of airstrips in the districts where there are no airports within 150 kms. is being

examined and a minor Airport Policy for the same is being framed.

3.5 Inland Container Depot (ICD)

Indian Railway's strategic initiative to containerize cargo transport put India on the multi-modal

map for the rst time in 1966. Rail transport could be the cheaper option for all cargo over

medium and long distances, especially if the cost of inter-modal transfers could be reduced.

Containerized multi-modal door-to-door transport provided the ideal solution to this problem.

Rail is the mainstay of Container Corporation of India (CONCOR) for its transportation plans &

strategy. Majority of CONCOR terminals are rail-linked, with rail as the main carrier for

haulage. The rail link also plays a major role in decongesting ports and the road corridors that

lead to these ports.

CONCOR is committed to providing responsive, cost effective, efcient and reliable logistics

solution to its customers. There are two Inland Container Depots (ICD) at White Field,

Bangalore and Belgaum.

3.5.1 Inland Container Depot at Whiteeld, Bangalore:

Commissioned on April 01, 1993, the ICD is located at the centre of Bangalore’s fastest growing

industrial area in Whiteeld. It is conveniently connected to NH4 and NH7 by Road and is well

connected by Road and Rail to all the major gateway ports in South India. Spread over 125.06

acres, the ICD has a CFS and ten warehouses along with three full length rail sidings, catering to

EXIM and Domestic trafc, both by Rail and Road.

The ICD at White Field, Bangalore has all the basic infrastructure which include 1,93,000 Sq.

Mt. of paved area, warehouse of 2625 sq.mtrs. for export and 1750 sq.mtrs. for import, 21650

sq.mtrs. of bonding; two rail siding for 45 wagons each for export and import, Reach Stackers

and fork lift of various capacities, trailer with cab, etc.

The Department of Customs has proposed to replace the scanning equipment with modern ones

for increasing the efciency of its scanning activities. Putting modern equipment will be helpful

in efcient scanning as well as reducing the delays in clearing containers.

3.5.2 Inland Container Depot at Desur, Belgaum

This ICD is located near Belgaum in North Karnataka and caters to the industries located in this

belt. ICD is adjacent to Desur railway station and 2 kms away from NH-4A. This terminal is

designed to handle both EXIM & domestic trafc. The yard is clearly demarked for this purpose.

The Infrastructure facility at Belgaum ICD include 500 sq.mtrs. of warehouse, paved area of

18000 sq.mtrs. with stockyard capacity of 1000 TEUs, rail siding of 45 wagons, handling

equipment, etc.

However, the ICD and CFS facilities in Karnataka need to be provided to boost exports from the

Ports within the State. The dependence of our exporters to export their goods from ports viz.,

Chennai, Goa, Mumbai and Cochin has increased the transaction costs. Apart from promoting

container facility for cargoes, there is need to promote freezer containers for export of fresh

owers, fruits and vegetables.

3.5.3 Inland Container Depot at Hassan

ICD at Hassan is operational and currently limited volumes are being moved from here to

Chennai and Mangalore. Most of the commodities through ICD at Hassan are coffee and spices.

The ICD at Hassan has potential considering the requirements of SEZs for textiles, food

processing and chemicals & pharma. While the Textile SEZ is fully operational, the other two are

in the process of occupancy. Thus, this would be useful for all the three SEZs.

3.6 Container Freight Stations (CFS)

Currently, Container Freight Station facilities are not available in Karnataka as per the trade

sources. Container Freight Stations are particularly useful for aggregation of cargo in containers

before shipment. The INDEV container freight station near Chennai is operated by Gokuldas

Group for aggregation and stufng & de-stufng of garments for shipment. No detailed studies

have been carried out on the potential for container freight stations. Considering that substantial

quantities of goods & commodities are exported from Bangalore and the potential for other

locations, container freight stations would be a good facility for exporters. In particular,

exporters in MSME segment who ship small quantities and cannot utilize a full container load

will nd CFS useful. CFS comprises warehousing facilities for de-stufng and stufng of

containers for shipment to respective destinations.

3.7 Special Economic Zone (SEZ)

1. Special Economic Zone (SEZ) is a demarcated area with good infrastructure and exempted

from all taxes and duties to enable manufacturing and trade in a hassle free environment for

export production.

2. Government of India announced the concept of SEZs in 2000.

3. Any Company (private / public / Joint sector) or State Government or its agencies can

set up SEZ.

4. Foreign Companies can also set up SEZs.

5. Govt. of India enacted SEZ Act 2005 and notied SEZ Rules on 10.2.2006.

6. 100% of land has to be acquired on consent basis only and there should be no compulsory

acquisition of land.

7. Rehabilitation & Resettlement Policy has to be implemented as per Govt. of India guidelines.

8. Objectives of Central SEZ Act:

Generation of economic activity

Promotion of exports of goods and services

Promotion of investment (FDI & domestic)

Creation of employment opportunities

Development of infrastructure facilities

9. Minimum area required for setting up a SEZ (As amended on 13-9-2013)

37 38

Type of SEZ Hectares

Mul� Product

Product Sector Specific / Port / Airport / Mul� Services

Agro - based / BT / Gems & Jewellery / Non conven�onal Energy.

Informa�on Technology (IT)

500 (Processing area - Min. 50% of the no�fied area, Non Processing area - cannot exceed 50% of the total no�fied area)

50 (Processing area - Min. 50% of the no�fied area, Non Processing area - cannot exceed 50% of the total no�fied area)

10 [Built up area is 50,000 sq. mtr for Gems & Jewellery, 40,000 sq. mtr for BT / Agro - based / Non conven�onal Energy) Non Processing area - cannot exceed 50% of the total no�fied area

Built up area (sq.mtrs)

1.00 Lakh (Bangalore),

50,000 (Tier-II ci�es) and

25,000 (other ci�es)

Non Processing area - cannot exceed 50% of the total no�fied area

10. Incentives & Concessions as per Central SEZ Act

100% FDI is allowed

Income Tax benets - (100% exemption for rst 5 years, 50% for next 5 years and 50% on

plough back prot for next 5 years for units and 10 years exemption in the block period of

15 years for developer)

Duty free import of goods for development, operation, implementation and maintenance

of SEZs

Exemption from Excise Duty, CST & Service Tax

Generation, transmission and distribution of power in SEZ allowed

Full freedom in allocation of space and built up area to approved SEZ units on

commercial basis

Exemption from public hearing under Environmental Impact Assessment notication.

11. Subsequently, due to the withdrawal of following incentives in the Central SEZ Act, the

SEZs have become less attractive.

Minimum Alternate Tax (MAT) Exemption

Dividend Distribution Tax (DDT) Exemption

12. Incentives & Concessions as per State SEZ Policy

Refund of VAT for purchase of goods excluding petroleum products.

100 % Exemption from Stamp Duty and registration charges for developers, co-

developers and 50% for units.

Electricity Duty Exemption

Entry Tax Exemption.

Capital Investment Subsidy for CETP. (Max Rs 1.00 Crore)

Status of SEZs in Karnataka:

Karnataka occupies the fourth place in terms of number of approved SEZs in the Country. The

State with dynamic Industrial Policy & SEZ Policy and exclusive Policies for Sectors like

Information Technology, Biotechnology, Renewable Energy, Tourism, Textiles, Hardware,

Semiconductors, is one of the most preferred destination for investments. The State Government

is planning for development of exclusive sector specic zones for Automobiles, Textiles,

Aerospace, Food, Jewellery, etc., some of which could be developed as SEZs.

Constantly on the path to making the ambience more conducive for investments and trade,

Karnataka has been proactive in spearheading initiatives on the SEZ front. The Government of

Karnataka has been instrumental in driving growth through SEZ's at various locations across the

State.

Sector Specic SEZ for Pharma & Biotechnology at Hassan

Sector Specic SEZ for Food Processing & Agro-based industries at Hassan

Sector specic textile SEZ at Hassan

IT SEZ at Mangalore

Coastal SEZ at Mangalore

The proactive steps taken by the Government have resulted in encouraging the establishment of

SEZ's in IT & ITES, Hardware, Apparel, Petrochemicals, etc, through both public / private

initiatives, with many more on the anvil at different locations in Bangalore, Mysore, Mangalore,

Hassan and other places in Karnataka.

Total number of approved SEZs - 60 nos.

Proposed investment is Rs. 37,178 crores

Total employment is 11,64,645 persons.

Functional SEZs : 266 units

Sl No. Name of the DistrictNo of SEZs approved

Land in Hectares

Opera�onal SEZs

Land in Hectares (Opera�onal SEZs)

Employment in Opera�onal SEZs

1

2

3

4

5

6

7

8

9

10

Bangalore Urban

Bangalore Rural

Dakshina Kannada

Belgaum

Mysore

Mandya

Hassan

Dharwad

Udupi

Shimoga

Total

32

5

6

1

6

2

4

1

2

1

60

513.32

254.49

844.76

106.33

75.47

74.11

557.08

12.51

300.84

14.50

2753.41

14

1

2

1

2

0

0

3

1

1

25

247.40

102.00

779.11

106.33

32.04

0

0

457.08

259.64

14.50

1998.1

177460

60

3611

633

5646

0

0

4186

2029

121

193746

District wise details :

39 40

The sector wise approved SEZs are:

IT / ITES - 47 nos.

Biotech SEZ - 3 nos.

Sector specic SEZs - 9 nos.

Airport based SEZ - 1 no.

Operational SEZs - 25 nos.

Investment is Rs. 29,530 crores.

Employment provided is 1,93,743 persons.

Year Exports in Crores

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

Total

1,673.00

7,608.00

10,248.00

18,500.00

25,000.00

34,534.00

51,200.00

1,48,763.00

Total Exports from these

SEZs are as follows:

All the matters pertaining to SEZs in the State are being co-ordinated by the Commissioner for

Industrial Development and Director of Industries and Commerce. Visvesvaraya Trade

Promotion Centre is extending secretarial services to Commissioner for Industries for

establishment of SEZs in the State and also extending various incentives and concessions as per

the State SEZ policy 2009.

3.8 Foreign Direct Investment in Karnataka

Karnataka is a pioneer in introducing many reform initiatives adopted in India and has been

highly proactive in attracting private investment. Lucrative policies incentivizing private

domestic and foreign investments are framed from time to time. These policies along with an

investment friendly climate have helped the State attract large-scale private investment.

Karnataka stands 4th in attracting FDI in the country. The cumulative inows from April 2000 to

March 2014 are US $ 12.67 billion (6% of total FDI inows in the country). The sectors

receiving highest FDI inows are minerals, tourism, information, biotechnology, power, health,

education, food processing and textiles.

41 42


CH

AP

TE

R

4SECTORAL STRATEGIES FOR EXPORTS

Government of India has come out with a strategy document for doubling the exports in the next

three years covering the period from 2011-12 to 2013-14. Taking a clue from the strategy

document, an attempt has been made to evolve sectoral strategies for products which have export

potential from Karnataka for boosting exports.

4.1 Core Market Strategy

The core of the market strategy for boosting exports needs to concentrate on the following:

a) Retain present market share in the existing export market;

b) Move up the value chain in providing products in the existing export market

c) Open up new vistas, both in terms of markets and new products in these new markets.

4.2 Sector / Product Specic Strategy

Sector / Product-wise strategy required to be evolved for major products exported from

Karnataka. The product / sector groups identied are :

a) Agriculture & Processed Food Products

Coffee

Spices

Cashew

Rose Onion

Floriculture

Gherkins

b) Chemicals, Drugs & Pharma and Plastics.

c) Minerals

d) Electrical & Electronics

e) Software and other Services

f) Silk products.

g) Gems & Jewellery

h) Textiles & Apparels

i) Handicrafts & Leather Products

j) Engineering

k) Marine Products

4.2.1 Agriculture & Allied Sector

State is a major producer of spices, owers, fruits and vegetables. The Government of Karnataka

considers high growth of agriculture and allied sectors (including horticulture, sheries, animal

husbandry, sericulture and food processing) as a means to accelerate the State’s GDP growth,

enable farmers to earn higher income and ensure food security.

Vision of the State is ‘to position Karnataka in a sustained growth path in the eld of agricultural

and allied sectors through global technologies and innovative tools, by creating enabling

frameworks and state-of-art infrastructure facilities, thereby generating higher returns to

farming communities’.

Karnataka has taken a lead initiative in developing sustainable agri and allied sectors. For the

rst time in India, the State Government presented a separate agri-budget thus placing special

thrust to the sector. The rst of its kind policy, ‘The Integrated Agribusiness Development

Policy-2011’ has been formulated to promote development of sustainable agriculture so as to

benet marginal land owners, farmers, SHGs, shermen and rural workforce. The policy aims to

improve the competitiveness of SMEs leading to better unit value realization, besides

facilitating large investments and opening avenues for export markets.

Though Karnataka is predominant for growing coffee, the State also has the potential for

growing rubber as a plantation crop. The State also would like to support the rubber cultivation in

the areas which are conducive for rubber plantation.

Global Agri-Business Development Meet-2011 held in December 2011 is an important initiative

in developing sustainable agri & allied sectors in the State. Huge emphasis is laid on sustainable

agricultural activity, enhanced productivity & better realization to farming community,

research, skill development and employment generation besides agro-exports of the State.

Karnataka with its ten different agro-climatic zones and other bounteous natural advantages

offers immense opportunities for high growth in agriculture and allied sectors. It is imperative

that Karnataka takes advantage of the modern practices, technologies and develop strategies to

leverage the growing demand in both domestic and international markets. Thrust areas that

require priority attention include improving production and productivity, reducing production

cost and wastage, increasing value addition, price stabilization, use of high-tech agricultural

technologies, genetically modied varieties, micro propagation, micro irrigation / fertigation,

integrated nutrient management, organic farming, integrated pest management, protected

cultivation / greenhouse technology, post-harvest management, conservation & development of

native livestock, hygiene and modern sh handling facilities, modernization of slaughter

houses, adoption of state-of-the-art food processing technologies, focusing on high unit value

realization in export markets etc.

4443


For boosting the agro exports, following are the strategies proposed:

a) Create brand image for unique agro food products of Karnataka and develop ‘key products’

to gain market dominance.

b) Create new markets and new product lines and develop alternate marketing channels

including through PPP projects.

c) Encourage high realization and value added exports, meeting EU, Hazard Analysis Critical

Control Point (HACCP), Food & Drug Administration (FDA) and other international

standards.

d) Special emphasis to make small scale agro based units in the State to remain competitive in

global markets.

The Government of Karnataka has promoted Karnataka State Agricultural Produce & Export

Corporation Ltd. (KAPPEC) in the year 1986 under Companies Act 1956. KAPPEC was

established with the objective of developing and promoting production, processing and export

of agricultural, horticultural and oricultural products.

The KAPPEC is involved in exporting grapes, pomegranate, mangoes, potato, onion, garlic,

turmeric, cauliower, watermelon and Niger seeds to different countries like Singapore, Sri

Lanka, Malaysia, Australia, Netherlands, Mexico, Mauritius & Maldives. In addition, the

domestic business of fruits and vegetables has also been taken up. Further, KAPPEC is also

involved in the construction of integrated cold storage for helping farmers and exporters to

export to different countries. In addition to the above, KAPPEC is also involved in

conducting workshops, seminars for increasing exports of agri and allied products.

The Integrated Agribusiness Development Policy-2011 envisages creation of a Special

Purpose Vehicle - 'Karnataka Agri-Business Development Corporation’ for implementing the

vision of agri business of the State.

More specically the strategy of Integrated approach would encompass production, storage,

cold chain and transport links across the State. The Schemes of the Ministry of Food Processing

would be effectively utilized for promoting industries in this segment. Decentralization of the

schemes to the State will need strategies to be worked out by the States for creation of Food

Mission Directorate and the supporting mechanism.

In case of exports, the supporting eco-system comprising Phyto Sanitation Certication,

Organic Certication, Testing for meeting stringent requirements of pesticide free produce,

packaging, labelling and branding will need to be created. Such support mechanisms will have

denite impact on increased entry of Karnataka products in the global markets. Scheme support

from the Ministry of Food Processing , Govt. of India and easing of process through State

Mission Directorate also are importent.

Food Processing SEZ at Hassan.

Karnataka contributes 7% of Agricultural production of the country.

Presence of 7 National level Research Institutes in Agriculture & Horticulture sectors.

Presence of 4 dedicated Food Parks and one Food Processing SEZ.

Agro & Food Processing exports of Karnataka stood at Rs. 8315 crs in 2013-14.

Agro and Processed Food Products are exported to USA, Dubai, Brazil, Taiwan, UK, Japan,

Denmark, Srilanka, Netherlands, Europe, Spain France.

(i) Coffee ProductsIndia accounts for about 4.5% of World coffee production and provides employment to 6 lakh

people. Among the coffee growing States, Karnataka accounts for 70% of country's total coffee

production, followed by Kerala (22%) and Tamil Nadu (8%).

Coffee grown in India is entirely handpicked and completely sun-dried, and strict quality control

measures are adopted for all varieties of coffee earmarked for exports. There are approximately

13 regional variations of coffee grown across various locations in India. These include varieties

from traditional coffee producing regions of Karnataka, Kerala & Tamil Nadu as well as newer

locations in Andhra Pradesh, Odisha & North East.

Karnataka Exports Coffee production in India is dominated by Southern States with Karnataka leading with a 70%

share of the total production in the Country. Coffee production in Karnataka is concentrated in

Hassan, Chickmagalur, Kodagu & Mysore districts and covers approximately 1.26 lakh ha.

of land.

Coffee exports from Karnataka which stood at Rs. 3,173 crores in 2011-12 increased to

Rs. 3,598 crores by 2013-14.

The destination countries of coffee exports from Karnataka include Italy, Germany,

Belgium, etc.

For improving the export of coffee, support is needed for upward movement in the value chain in

roasting, grinding, brewing, drying and packaging segment by subsidy support to prospective

entrepreneurs. Good quality bagging and packaging material and aesthetic packaging will have

to be encouraged to place coffee at the best of places, where it can fetch better price and

recognition.Brand promotion / necessary linkages to other critical programmes like product development

and research should be encouraged. Market study to explore new markets for sustaining the

existing market needs to be undertaken.

(ii) Spices Spices comprise Tamarind, Ginger, Pepper, Cardamom, Clove, Chilli, etc.. India is known as

the home of spices and produces a wide variety of spices like black pepper, cardamom (small and

large), ginger, garlic, turmeric, chilli, etc.. It is the largest producer, consumer and exporter of

spices and spice products. India accounts for approximately 48% of the global export volume of

spices.

45 46


Owing to their geographic advantages most States and Union Territories in India are conducive

to the growth of suitable spices. Some of the prominent spice producing States in India include

Kerala, Karnataka, Tamil Nadu, Uttar Pradesh, Uttaranchal, Andhra Pradesh, Maharashtra, etc.

Some of the popular spices produced and exported from India include pepper, cardamom

(small), cardamom (large), ginger, turmeric, chilli, coriander, cumin, fennel, fenugreek, vanilla,

garlic, mustard, nutmeg, mace, etc.

Karnataka Exports

Karnataka plays a major role in spice production and exports. With over 64% of its geographic

area under agricultural cultivation, Karnataka is one of the leading producers of spices in India.

For spices like vanilla, cinnamon, tamarind, chilli and ginger, the State is a major contributor in

total Indian production. The primary spice growing regions in the State include Mangalore and

Madikeri. The State accounts for 8.6% of the National production and is one of the major

exporting States in the country. Spice exports from Karnataka grew from Rs. 700 crores in 2011-

12 to Rs. 1,150 crores in 2013-14.

Encouraging setting up of spice parks to provide basic infrastructure facilities and to ensure

uninterrupted / adequate supply of spices needs to be given priority. Other facilities like

warehousing, cleaning, grinding, packaging and testing lab will help in value addition and

generate sizeable volume for exports.

(iii) Cashew and Cashew KernelsAfter Kerala and Goa, Karnataka is the third largest producer of raw cashew nut in the Country.

Cashew is primarily grown in Dakshina Kannada, Udupi, Kodagu and Chikkaballapura districts

in the State. Cashew exports from Karnataka have grown from Rs. 882 crores in 2011-12 to Rs. 1,200 crores

in 2013-14.

The destination countries of cashew exports from Karnataka include US, UAE, Netherlands, etc. Cashew processing industry mainly depends on imported raw-material specially from South

Africa. There is need to encourage increase in the acreage to improve quality of raw-cashew and

provision needs to be made for re-planting senile trees with new high-yield varieties. Waste

lands can be utilized for cashew cultivation.

Modernization of cashew processing units with the nancial support from the Government /

nancial institutions need to be encouraged.

(iv) Rose OnionKarnataka is the only State in India growing Rose Onion. Crop is grown in about 1100 acres

mainly in Kolar, Tumkur, Hassan, Davanagere and Bagalkote districts. Bangalore rose onion

exports accounts for a substantial share in the total exports of Karnataka.

APEDA and KAPPEC have been promoting the crop in Far East (Malaysia, Singapore,

Indonesia and Brunei) and a few countries in west Asia such as Bahrain, Dubai. After the

APEDA set up Agri Export Zone (AEZ) for rose onion in Karnataka, the exports of rose onion

have shown signicant growth.

Rose onions which are exclusively grown by the small and marginal farmers of the State are

meant for exports and their local consumption is meager. Whenever there is a ban on the export

of onions, this particular variety is also banned. This is causing great hardship to farmers who

are growing rose onion. Hence, it is suggested that, at the time of introducing ban on onion

exports, the rose onion may kindly be exempted.

(v) FloricultureKarnataka is one of the leading exporter of oriculture from India. Export of oriculture from

Karnataka has been around Rs. 50 crore per annum.

The setting up of international air cargo services and cold storage at the Bangalore Airport has

resulted in boosting the oriculture sector. This Sector needs to be given further boost as it helps

to increase employment opportunities to the marginal farmers and workers from unorganized

sector. International Flower Auction Bangalore (IFAB) has also helped growth of oriculture

sector.

Government has to encourage entrepreneurs to take up oricultural activity by introducing

subsidy scheme. Government also has to support infrastructure facility in terms of storage and

transportation to maintain freshness of the owers for exports.

(vi) GherkinsIndia has today emerged as the origin of the nest gherkin cultivation, processing and exports to

the ever-growing world requirement.

Gherkin cultivation, processing and exports in India dates back to the early 1990s with a modest

beginning in Karnataka State in South India. It later extended to the neighbouring States of Tamil

Nadu and Andhra Pradesh and now has reached an impressive tonnage of 2,25,000 MTs, valued

at around Rs. 700 crores. The export of processed gherkin is done by about 51 companies located

in Karnataka, Tamil Nadu and Andhra Pradesh. Gherkins are grown in contract with small and

marginal farmers. Currently there are more than one lakh small and marginal farmers who are

engaged in the production of gherkins. The contracted farmers receive all inputs and technical

support from the companies and are assured guaranteed buyback of produce at pre-declared

prices. Initially processed gherkins were exported in bulk packing and since 2001 gherkins are

being exported in "Ready-to-eat Jars".

Gherkin industry in India is very well established with exports reaching 2,25,000 MTs per

annum. Export markets include all major countries like USA, France, Germany, Australia,

Spain, South Korea, Canada, Japan, Belgium, Russia, China, Srilanka and Israel.

Gherkins are grown only in South India where the ideal soil type and the desirable temperatures

47 48


o oof not less than 15 C and not more than 35 C are found mainly in Karnataka State, Tamil Nadu

and Andhra Pradesh in South India.

Gherkins are cultivated exclusively on "contract farming'' basis. The entire gamut of activities

in the cultivation practices, followed by the farmers, processing standards, etc., are adhered to by

the Indian gherkin manufacturers to produce very high quality gherkins for the world markets.

Being an export oriented industry, both the Central & State Governments have extended

considerable support and encouragement to the gherkin industry.

A major initiative in the sector was the setting up of a separate "Agri Export Zone" for gherkins in

Karnataka with a nancial implication of USD 2.33 millions.

Agricultural and Processed Food Products Export Development Authority (APEDA), under the

Ministry of Commerce and Industry, Government of India and Karnataka State Agricultural

Produce Processing & Export Corporation Limited (KAPPEC) are the nodal agencies at the

Central and State levels respectively for implementing the concept of Agri Export Zone.

At present in Karnataka, gherkins are being grown in an area of about 50,000 acres involving

about one lakh small & marginal farmers.

Government needs to encourage setting up of more number of Agri Export Zones for Gherkins.

Good packaging and branding for the purpose of marketing gherkins need to be supported

through Government intervention.

4.2.2 Chemicals & Pharmaceuticals

The components of chemical product include dyes, intermediates, pigments, organic &

inorganic chemicals, agro chemicals, cosmetics, essential oils, etc.. Indian Pharmaceutical

Sector also exports substantial quantity of bulk drugs and formulations including herbal

medicines.

Karnataka is one of the fastest growing States of the country in pharmaceutical sector and

currently ranks fth in pharmaceutical exports. State contributes around 10% to the Indian

pharmaceutical export revenues. Presently, over 230 Pharma and Biotech companies are housed

in the State. A host of reputed and globally known pharmaceutical companies functioning in the

State have brought name and fame to Karnataka.

Today, Karnataka is recognized world over for its manufacturing capabilities and acknowledged

as a source of high quality and affordable generic medicines. State has several modern plants

with international regulatory certications.

The Indian Pharma Industry is expected to grow at a CAGR of 15-20% and achieve a turnover of

US$ 50 billion by 2020. The Active Pharmaceutical Ingredients (API) market is expanding at a

rapid pace and formulation manufacturers have vast opportunities due to the upcoming patent

cliff.

Karnataka intends to maintain its leadership position in biopharmaceutical manufacturing

which accounts for 60% share of the total biotech sector in India.

At present, Karnataka has only a few dedicated bio-pharmaceutical companies manufacturing

Monoclonal Antibodies (MAbs) which primarily include drugs targeted against cancer, as well

as insulin and vaccines that are produced using cell culture. A strong strategy is necessary for

Karnataka to maintain its leadership position in this highly specialized area. As

biopharmaceutical products are set to capture a quarter of the global pharmaceutical market by

2016, the State needs to strengthen its prime position by taking proactive steps.

Internationally many top selling drugs are on the verge of losing patent protection in the near

future. This will throw a huge potential for the State to enhance its manufacturing base.

The National Manufacturing Policy announced by Government of India on 4.11.2011

acknowledges that India’s large domestic market coupled with a strong engineering base has

created indigenous expertise and cost effective manufacturing in pharmaceuticals apart from

other sectors. The Policy emphasizes the necessity of formulating special programmes to

consolidate strong industry base to retain the global leadership position.

Karnataka ranks 10th in the number of pharma manufacturing units in the country. The State has

221 formulation units and 74 bulk drug units, contributing 3% to the total manufacturing units in

the country.

Karnataka generates US $ 1.46 billion or 8% on the country's pharma revenue and exports 40%

of its pharma produce.The exports of basic chemicals and pharmaceuticals in 2013-14 was Rs

8,300 crores against Rs 7233 crores in 2012-13. USA, UK, Brazil, Argentina, China, Canada,

Egypt, Malaysia are the potential destinations for State pharma products.

The newly launched Karnataka Pharma Policy intends to provide ready-to-use infrastructure for

establishing pharmaceutical enterprises on cluster concept through pharma parks at potential

locations of the State. The Policy covers major segments of pharma sector i.e., bulk drugs, drugs

intermediate, bio-pharmaceuticals and formulations.

Following strategies are required to boost this Sector:

Establish a centralized database of chemicals, their hazard, exposure scenario, risk

assessment and risk mitigation & management, etc.

Government can be the data holder which can be made available to public selectively

creating transparency.

This activity may be undertaken with the help of Chemexcil, Ministry of Environment &

Forests, various research institutes, and experts in this eld across the globe.

Today the SME sector especially in chemical industry needs to upgrade their knowledge, skill

about the product, export and upcoming legislations.

Provide a training institute (graduate level) which will create

i. Human resources,

ii. Upgrade the skills of existing resources for better understanding in building national

competence of global level.

iii. Provide platform for consultative support on various technical issues related to human

health and environment

Create public awareness and thus create a platform for sound chemical management

Expertise need to be developed in Product safety & Regulatory affairs.

Provide various short and long duration courses to employees of the chemical industry on

chemical regulation, exports and imports.

Chemical industry will be beneted by getting common testing facility for physical-

chemical, toxicological, eco toxicological testing under one roof at reasonable costs.

Setting up of Centre of Excellence in the chemical cluster. Wherever it has already been set

up, continuous upgradation of the facilities are required.

i. By imparting trainers training.

ii. The common facility for upgrading skill development especially for the already

developed cluster facilities.

Enhancing market share of pharmaceutical products in regions

Efforts should be made to maintain and where possible enhance market share in markets

where India / Karnataka’s presence is already robust such as the North America, European

Union and Africa. Secondly, even within groups of countries such as European Union and

Africa, identify those countries where the rate of growth and market share have been

substantially low. Therefore, focus must be provided to those countries. Latin America,

Mexico and Brazil offer huge potential. Canada has seen a slow growth. Canada by itself is a

generic producer. Therefore, special efforts need to be made to increase rate of growth of

exports to Canada.

Special emphasis on CIS countries, South East Asia, Japan and countries like Egypt and other

West Asian territories. In CIS among top twenty ve destinations (globally) only Ukraine

and Russia have less than 10 % CAGR. They offer huge potential besides other CIS countries

where substantial amount of work needs to be done to facilitate registration processes and

removal of non-tariff barriers. South East Asia is a relatively less explored market for Indian

pharma. Japan is a fast ageing society. Japanese requirement for medicines are increasing

rapidly. In order to reduce their cost of healthcare, Japanese have shown interest in accepting

Indian generic pharma.

In the recently concluded CEPA, Japan has agreed to offer National treatment to Indian

generic pharma. This is a huge opportunity waiting for us. Industry would have to

aggressively pursue Japanese market. It is reported that generic pharma has about 12% share

in the Japanese market.

Herbals/traditional medicine is another signicant area requiring substantial policy

interventions. Attention needs to be focused on twenty ve more important traditional

medicine products selected purely on the consideration of their acceptance in the export

markets and then work around those products for pharmacopeia development, marketing

tie-ups and regulatory facilitation. It is also important to Institutionalize cooperation

agreements with territories where traditional medicine has strong roots such as South Asia,

South East Asia (ASEAN) some CIS countries and some African countries. We also need to

work towards getting traditional medicine practitioner access to these markets as they will

carry with them traditional medicine.

49 50

Suggested Initiatives

a. Target of 20% growth in European Union for which two important issues to be addressed

include breaking the knowledge barrier and high bio equivalence cost for product

registration. Extensive training programmes, free/online training on EU regulations should

be offered to Indian companies aggressively.

b. The need for special nancial package for Pharma Sector has been highlighted in various

foras. Pharma sector is a capital intensive sector. Besides R&D expenditure, regulatory

requirements require large funds. Setting up of large number of Bioequivalence centres

through soft funding would lower the costs of Bioequivalence tests and more

registrations/exports can happen from our country. All quality investments should be treated

on par with R&D to provide incentive to the industry as cost of quality investments is very

high in EU. It would be hence be appropriate to maintain the leadership of Indian pharma

research through a government supported R&D programme to boost innovation and

enterprise especially in the MSME sector.

c. The way ahead is to attract more contract manufacturing business, developing capability in

existing clusters and providing concessional nance for large scale advanced testing centres,

stability testing centres, efuent treatment infrastructure, bioequivalence centres, etc. to

enable the individual entrepreneur build relevant manufacturing capacities and success

stories in CRAMS space.

d. Herbal industrial parks in line with model concept of JNPC should be developed where on

National priority 25 herbals are processed into GMP facilities and infrastructure for

necessary conversion into end use formulations is provided. Most herbal dealers do not enjoy

this infrastructure and the value addition is unnecessarily lost.

e. It is imperative to have an aggressive approach that a Brand India / Karnataka should be

evolved and campaigned. A comprehensive proposal for launching a Brand India / Karnataka

Pharma globally has been prepared. Initially, it was proposed to be funded through a

partnership between MAI, Indian industry and IBEF. However, it is felt that while

involvement of industry is critical and IBEF could be used to develop the initiative, the scale

of operations for a proper brand creation for next ve years would require substantial

funding. Thus the source of funding needs to be under a special scheme during the XII Plan

rather than be dependent on the limited resources under MAI.

Policy initiatives as above would require total commitment by the industry to address strict

compliance with WHO GMP requirement as also adhering to quality parameters at all stages of

manufacturing. Government can only create an environment for faster growth. However, the

real implementation and commitment has to come from the industry.

51 52


Plastic Goods:

Owing to its origins as a downstream product of the petrochemical industry, the plastic and

plastic goods industry in India is oriented around the Petrochemical Sector in the Country.

Karnataka boasts of an established chemical and petrochemical sector and hence has a role to

play in the plastic goods manufacturing and exports sector of the country. The plastic goods

industry in the State is concentrated in and around Mangalore and Bangalore.

Plastic goods exports from Karnataka stood at Rs. 178 crores in 2007-08 and witnessed an

increase of 239% to Rs. 604 crores in 2011-12. In 2013-14, plastic exports stood at Rs 700 crores.

The destination countries of plastic goods exports from Karnataka include China, US, UAE

and UK, etc..

4.2.3 Minerals

Karnataka is a major producer of Gold, Felsite, Iron ore, Chromites, Manganese ore, limestone

and Dunite in the country which account for approximately 98.92% of the total value of mineral

production in the State. The mineral resources are concentrated in Bellary, Chitradurga and

Tumkur Districts.

In 2010 a blanket ban was imposed on the mining and export of certain minerals. As a result, the

State's iron ore and mineral exports which were Rs. 1,134 crores in 2011-12 witnessed a drop of

13% to Rs. 739 crores in 2013-14. The increase in illegal mining and the intervention from the

High Court / Supreme Court, the export of minerals specially, iron ore has been adversely

affected from 2011-12.

The major destination countries of iron ore and mineral exports from Karnataka include Saudi

Arabia, UAE, Nepal, Bahrain, China, Japan, Netherlands, Korea, etc.

4.2.4 Electrical and Electronics

Electronic Goods Sector is characterized by large variety of products. Exports of electronics

hardware can increase faster with the introduction of high value items design and system

integration. The major destination countries of electronic goods from Karnataka are USA, UK,

Taiwan, Singapore, France .Strategy required to boost exports of electronic items are as follow:

Setting up Manufacturing Clusters or Industrial Parks

Electronic goods that are manufactured for exports require infrastructure facilities, a large

number of imported components and skilled labour. Mass production of these items can be

competitive if components are available on time and the ecosystem ensures that transaction costs

are low and inventory carrying costs are borne by the component manufacturers. The clusters

should also have employee hostels and other facilities like clinics and sports facilities to enable

employees to stay on site, be more productive and put in extra time if required by production

schedules. In addition, logistics, warehousing and testing facilities need to be provided on site.

Each such cluster needs to be anchored by one or more dominant international brands. To attract

such mother units for manufacture of computers, tablets, cell phones, medical electronic

equipments, telecom equipment etc industrial parks need to be promoted with the ‘Made in India

/ Karnataka’ tag.

Diversication by Promoting Repair / Reconditioning / Refurbishment of

Electronic Goods

The American market for repair/reconditioning/refurbishing of electronic goods is estimated to

be US$ 10 billion annually. The EU market size is of the same order. The major countries

servicing the American market are China, Vietnam, Philippines & Thailand. India has a few

large emerging companies which are beginning to provide these services but the combined

turnover is of the order of just US $ 5 million. Indian workers are recognized as having better

diagnostic skills and thus enjoy a core competence in the area of repair and re-export and this

should be used as a major opportunity. Further, due to excellence in the software sector, Indian

industry has very good brand equity in the US. An export volume of US$ 1 billion can be

targetted in the US market over the next three years (creating 5 lakh jobs) by merely simplifying

the procedure for one-to-one co-relation of units like laptops, mobile phones, mother boards,

memory cards, etc. (both having unique identication numbers and others) at the time of import

and re-export. Since repair and refurbishment service are related to warranties/ guarantees and

require time-bound delivery, the maximum time for inward and outward custom clearance needs

to be specied (say 48 hours). Units under this category may be asked to provide monthly

declarations of imported and exported quantities for each type of hardware to customs subject to

periodic audit and deterrent penal provisions for wrong declarations. Also the maximum time for

export of any imported item after repair or being scrapped needs to be xed as six months.

Promoting ‘Intelligent Manufacturing’

In the evolution stage advanced technology products require huge engineering support and a

53 54


combination of hardware, software and system integration skills. This niche area is called

intelligent manufacturing. These are usually high tech products which provide high value

addition but low volumes in highly quality conscious capital goods sector. Karnataka has a

competitive advantage in this sector where a large proportion of value addition is through

software and system integration. Such electronic items are widely used as part of telecom and

power equipment. Establishing joint ventures with Chinese companies like Huawei, Zte etc.

which have manufacturing strengths and substantial market share in third world countries, can

help in increasing high tech exports in the short term to Africa and the Middle East. Such joint

ventures can either be independent or part of industrial parks set up with Chinese investment as

proposed by China during the visit of the Chinese Premier.

Reform by Simplication of Customs Procedures

The Industry is of the view that customs procedures are cumbersome and need simplication to

render them friendly for exporters. The customs procedures should move from a refund regime

to a self-declaratory regime on similar lines as excise duties for export goods. This will reduce a

major non-tariff disability currently faced by exporters of electronic goods.

R&D support for generating IPRs and development of high technology products

Each line of mobile phone capacity that is added results in an outow of

US$ 15 on account of royalty payments for IPRs held abroad. Viable manufacture and export of

value added electronic goods require domestic companies to possess their own IPRs for such

products. Government may support research and development registration to IPRs through

suitable programmes for boosting innovation in the industry.

Venture capital funds for supporting innovation in electronics and semi-conductors would be

useful. Government of Karnataka has already initiated Rs. 100 crores venture capital fund for

semiconductors with a budgetary support of Rs. 26 crores. This may be extended to create a fund

for nanotechnology and electronics.

Nurturing Skill Development

For doubling exports of the electrical & electronics goods, the manufacturing base of the

industry will have to increase manifold. However the shortage of skilled workers is likely to

impact this unless urgent efforts are made to augment skill development for this sector. The

capacity of ITIs for producing skilled workers suitable for employment in the electronic

hardware sector needs to be increased. In the short run, the scheme of adoption of ITIs by private

companies needs to be made more focussed. The challenge of making available adequate and

better skilled manpower to Indian companies to enable them to make products for the export

market needs to be tackled urgently.

Setting up a Semiconductor Wafer Fabrication Facility

This has a great potential of expanding downstream manufacturing related to assembly, testing,

packaging and marketing of products that use semi-conductor chips. This decision needs to be

expedited as a fabrication facility will act as a magnet for attracting a vast array of export-

oriented units. Once the location of this facility is decided, an industrial park / SEZ / cluster /

nano park with state-of-the-art infrastructure needs to be established for downstream units.

Creation of electronic cluster through CLIK will possibly enable an eco-system for attracting

reputed original equipment manufacturing units to set up base for exports of electronic

components specially to Asia and Africa.

Infrastructure Improvement

A major constraint faced by electronic goods exporters is the difculty in getting containers for

transporting goods. This results in delays for movement of containers from ICDs / CFS to the

ports for shipment. Expansion of capacity for containers on trunk routes will enable overcome

the constraints. If volumes are feasible, then, a CFS exclusively for electronic goods and

components at Bangalore, with required facilities, may serve the purpose.

Better coordination between the Container Corporation of India (CCI), the Railways and the port

authorities will improve the quality of services resulting in minimizing transport delays.

55 56


4.2.5 Software & Other Services

Software exports contributes about 21.4% to State’s GSDP. Bangalore is the magnet for

investors in IT & Software Sector and is the fourth best technology hub in the world after Silicon

Valley. Almost all the Fortune 500 companies have their operations outsourced in Bangalore.

Karnataka is also encouraging investment in IT / ITeS related industries in second tier-II cities

viz., Mysore, Mangalore and Hubli. Due to availability of large technical pool, the State has very

good potential for increasing the exports of software.

Education : Karnataka is in the forefront of Educational endowments be it institutional or human resources

and has signicant achievements to its credits. With 44 Universities and about 5000 higher

educational institutions and more than 100 R&D institutions in the State, Karnataka is rightly

described as the Knowledge Hub of India and a leader of Knowledge Economy. Important

industrial / service sectors like, IT, BT, Nano, manufacturing, medical and animation are

ourishing in the State, reaping greater benets from quality output from the professional

colleges, Universities and R&D institutions. The term 'Bangalored' indicates the brand name of

Karnataka owing to its gravitational pull for the best of the talent in the country, besides the

generation of brainy and competent human resources within the State.

Karnataka houses 1407 industrial training institutes with an enrollment of 1,25,328 trainees, 291

polytechnic with an intake of 69,624 students and 195 engineering colleges with an intake of

56,235 student intake capacity. In addition, Bangalore has prestigious institutions like Indian

Institute of Management and Indian Institute of Science which is globally known for excellent

quality, management and technical education respectively. The State is already attracting

students across the globe for technical and management education.

Tourism :

Tourism is one of the prime sectors helping the country to earn foreign exchange by attracting

foreign tourists.

The World Travel and Tourism Council 2010 report ranked India's growth forecast in the tourism

sector amongst the top ve in the world. Having attracted cumulative FDI inows of USD

3,112.67 million in the tourism and hospitality sectors between April, 2000 and November,

2011, the country's travel and tourism industry is forecasted to grow at a rate of 7.6% in 2012.

Karnataka ranks fourth among all Indian States as a popular tourist destination.

The tourist prole of Karnataka comprises of religious tourism (41%), heritage tourism (34%),

eco-tourism, leisure tourism and coastal tourism each attracts 8% of all tourists visiting

Karnataka. Adventure tourism draws 6%, wellness tourism accounts for 4% while medical

tourism attracts 1% of tourists.

The hospitality sector added over 3,000 quality rooms in the State in the last three years, with

1,200 more rooms to be completed by 2013. With Average Room Rate exceeding USD 187.5 per

night, the highest nationwide, Karnataka's hotel industry commands India's premier and luxury

hotel sectors.

Foreign Direct Investment (FDI) of 100% is permitted on automatic route in the hospitality and

tourism sectors and India has attracted FDI of USD 3.23 billion in the hotel and tourism sectors

between April, 2000 and January, 2012, comprising 2.02% of total FDI inows in the country.

Some noteworthy milestones of Karnataka as a tourist destination include:

Bangalore being rated third on the The Lonely Planet "Best City to Travel in 2012" list

Conde Nast Traveller ranking Karnataka fourth on the "Where You Should Go in 2011" list

Mysore rated the "4th Best Place to Travel in 2010" by The New York Times

MSN Green ranking Coorg among India's Top 8 Eco-destinations

Trip Advisor ranking Hampi and Bangalore among the 25 Top Holiday Destinations in

Asia 2010.

The Golden Chariot rated by Vanity Fair as "one of the top 7 luxury trains in the world"

It is imperative that Government of Karnataka attracts investment in potential tourism related

projects viz., amusement parks, adventure sports complexes, water sports, corporate hospitality

centres, golf courses, eco-lodges and oatels, cruise ship terminals, etc. in various arms of

tourism including Health & Wellness Tourism, Culture Tourism, Recreational Tourism and

Hospitality and Coastal Tourism.

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4.2.6 Silk Products

Karnataka is the largest producer and exporter of silk & silk products in India. The State accounts

for 65% of total raw-silk production of the country (7,336 MT 2010-11) and employs

approximately 432,000 people in the State. Mysore, Mandya, Hassan, Chamarajanagar and

Bangalore are the primary silk producing districts and have an aggregate capacity of 8,241 MT.

The State's silk and silk product exports constitute 24% of the total silk exports from India. Silk

product exports from Karnataka stood at Rs. 673 crores in 2011-12, however, the same

witnessed a decline and stood at Rs. 650 crores in 2013-14.

The destination countries of silk product exports from Karnataka include UK, US, Hongkong,

UAE, etc..

The silk industry In Karnataka in Powerloom Sector as well as export oriented units in organized

sector are importing silk from China for production activity due to its good quality and

competitive rates.

The Government should take steps to encourage more and more farmers to produce quality

cocoon suitable for weaving on powerloom / high-speed modern looms.

4.2.7 Gems & Jewellery

India contributes 16.27% share in total world exports.

India holds world's most competitive Gems & Jewellery market due to its low cost

production and availability of skilled labour.

India has a large pool of skilled artisans with vast traditional knowledge and expertise in

jewellery making.

Gems & Jewellery Design Centre at Bangalore.

Gems & Jewellery contributes 22% to the State commodity exports. The exports stood at

Rs 24,175 crores in 2013-14 against Rs 24,482 crores in 2012-13.

Gems & Jewellery are exported to Singapore, Dubai, Sharja, Kuwait, USA, UK, etc.

Sourcing and Supply of Rough Diamonds / Coloured Gemstones

Rough diamonds are mostly imported. They are imported for polishing and re-export. Gems and

Jewellery are also in the basket of export goods and need imported rough diamonds. Facilitation

mechanism for sourcing of rough diamonds for exporters will be useful. Rough Diamonds are

being sourced from Russia, Namibia and Zimbabwe and bilateral tie-ups with diamond mining

companies will possibly ensure continuous supply. The World’s Diamond Exchange at Antwerp,

Belgium and the way business is transacted there need to be exposed to emerging jewellery

manufacturers and exporters as a part of capacity building. The matter may be discussed by the

trade with the Belgium Trade Promotion ofce at Bangalore. VTPC may facilitate such

interactions of the trade with the Trade Promotion Ofces.

Credit Availability

The Gems & Jewellery industry is an import based industry which requires foreign currency i.e

US Dollars/Euro. To ensure easy and continuous availability of roughs from overseas mining

companies and for its marketing and infrastructure requirements, there is a need to ensure bank

nance in foreign currency at international interest rates and costs. It has been reported by the

Industry that current rates being charged are much higher than the international rates putting

them at a disadvantage. The matter may be taken up with Reserve Bank of India for creation of a

special fund for meeting the requirements of exporters of Gems & Jewellery and hedging risks of

uctuations to some extent.

Consignment import of rough diamonds

It is necessary to allow consignment import of rough diamonds for conducting the following

operations/activities:

Assortment & re-export of the same;

Purchase or return;

Sale of rough diamonds, rough coloured gemstones, cut & polished diamonds and coloured

gemstones by a foreign miner without IEC number;

Establishment of a diamond sale operation in India.

Under this system both the cut and polished and rough diamonds are imported on consignment

basis from across the world and are assorted in different lots according to the cut & polished size

and displayed for auction. After the bidding, diamonds are taken by the bidder and the unsold

diamonds are re-exported back.

Skill Development

In order to address the issue of skill development of manpower, the Government of India has a

scheme implemented by the National Skill Development Corporation (NSDC). The newly

established Karnataka Skill Development Commission may be provided adequate support to

strengthen the infrastructure of training institutes and upgrade training methodology in

consultation with the Gems & Jewellery industry / association.

Specialized training institute on similar lines as the one at Surat and another at Jaipur may go a

long way in meeting the requirements of skill upgradation among the local industry.

The Government of Karnataka has supported JSS initiative of setting up a design and training

facility at Bangalore. An assessment of the performance will be useful in upgrading this facility.

4.2.9 Handicrafts (including leather)

Karnataka's historical heritage has contributed signicantly to the development of indigenous

handicrafts across the State. Karnataka today is well known for its Mysore silk, metal ware,

Mysore paintings, ivory carving, stone carving, sandalwood craft, doll making, etc..

Handicraft exports from Karnataka contribute approximately 3% to India's handicraft exports.

The export of handicrafts, which stood at Rs. 267 crores in 2011-12 increased to Rs. 516 crores

in 2013-14.

The major destination countries for handicraft exports from Karnataka include US, UK,

Australia, etc.

Leather Products The leather industry in Karnataka is primarily concentrated in and around Bangalore. The sector

is dominated by small and micro units and is focussed towards leather footwear and garments.

The State exports contribute to less than 2% of the country's total leather product exports.

Leather product exports from Karnataka stood at Rs. 320 crores in 2011-12 and increased to Rs.

450 crores in 2013-14. The destination countries for leather product exports from Karnataka

include Australia, Belgium, Canada, Italy, Germany, China etc.

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4.2.10 Engineering

Engineering goods comprise aerospace, automobile, precision tools, aluminum sheets, non-

ferrous metal, machine tools, machinery & instruments, transport equipments, residual

engineering items, iron steel bar / rod etc.

The engineering industry is the largest segment of the overall Indian industry. The engineering

industry can be divided into electrical and non-electrical segments. The electrical segment

depends upon the investments in power industry, while the prospects of the non-electrical

segment are driven by industrial investment.

India continues to be one of the fastest growing exporters of engineering goods, growing at a

CAGR of 30.1%, trailing only China among major engineering exporters, but well above the

global engineering average export growth of 13%. Signicantly, the country's engineering

export growth rate has been higher than its overall exports. In 2012-13, the country's engineering

exports stood at Rs. 3.08 lakh crores and increased to Rs. 3.76 lakh crores, indicating a growth of

21.7% in 2013-14.

Karnataka ExportsKarnataka has traditionally been a hub for engineering service industries in the country. Many

PSUs such as Bharat Electronics Ltd., Bharat Earth Movers, Hindustan Machine Tools (HMT),

Bharat Heavy Electricals as wel as large MNCs such as SKF, Ingersoll Rand, Waltex, Durco,

Wrigten, Goulds, Moog Control, Yuken have manufacturing facilities in the State. Of the same, a

number of exporters are based in Bangalore, Hubli, Mysore, Belgaum, Mangalore,

Shimoga, etc.

Engineering exports from Karnataka include machine tools, industrial machinery, small &

cutting tools, castings, automotive components, electrodes, welding equipments, construction

and earthmoving equipments, helicopter spares, etc. Engineering exports in 2011-12 stood at Rs.

8,263 crores and increased to Rs. 17,978 crores in 2013-14. Engineering products are exported to

Germany, USA, Thailand, Taiwan, Mexico, Japan etc.

Karnataka is one of the leading States in India in the manufacture & exports of engineering

goods. Karnataka's Aerospace Policy 2013-2023 has a mission to attract investments of Rs.

60000 crore over a period of ten years. The Policy also aims at enhancing the share of industry in

the State GDP from 28% to 32%.

Some of the strategies in promoting the export of engineering sector include

the following:

Formulate a Technology Upgradation Fund Scheme for the MSME Engineering

Industry

The main constraint inhibiting the growth of engineering sector is attributed to severe

technological obsolescence and lack of economies of scale. Major chunk of engineering exports

comes from the MSME sector which is exporting low value added products. There is need to

concentrate on exports of higher value-added items so that the contribution of value added items

in engineering exports increases from current level to about 20% to 25% in the near future.

For this purpose it is important for the MSME sector to upgrade its technology to enable it to

move up the value chain. Thus, a Technological Upgradation Scheme for the Engineering

Industry catering to the Low Value Added MSME sector needs to be formulated to provide

the necessary policy wherewithal for modernization of the MSME units to match global

standards.

It is suggested that a modernization fund be created in a phased manner with contributions from

both industry and Government for supporting modernization initiatives in the engineering

sector.

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Skill Development Fund for Engineering Industry

At present Engineering industry and particularly manufacturer-exporters in engineering sector

are facing serious problem of skilled manpower. The plant and machinery are becoming more

and more high-tech and the required level of skill are lacking.

Supporting quality institutions such as GTTC, NITIE, CMTI, etc. to undertake skill

development programmes through short term and medium term industries sponsored courses

will be useful in bridging the gap. Strengthening ITIs and these institutions to acquire modern

plant & machinery for training will be another step for training and upgradation of skills for the

engineering industry.

A Skill Development Fund with contribution from Government and sponsor industries may be

considered for this purpose. Projects approved in the large and mega sectors may be requested to

contribute to the fund as a part of CSR activity. This would enable them to build capacities

among potential workers and source them for employment.

The Karnataka Skill Development Corporation needs to be strengthened to play a greater role in

development of vocational skills.

4.2.11 Marine Products / Fisheries

During 2011-12, marine product export earnings have crossed USD 3.5 billion. Exports

aggregated to 862021 tonnes, valued at Rs. 16597.23 crores and USD 3508.45 million.

Compared to the previous year, seafood exports recorded a growth of 6.02% in quantity, 28.65%

in rupee and 22.81% in US$ earnings respectively.

The increased production of Vannamei shrimp, increased productivity of Black tiger shrimp and

better price realization of major items like Shrimp, Squid and Cuttlesh helped us to gain such a

higher export turnover.

Karnataka has a coastline of approximately 300 kms. (Mangalore to Karwar) and has an

established marine products industry. The industry is primarily concentrated in Dakshina

Kannada and Udupi districts namely in Mangalore, Malpe and Gangolli. The State exports of

marine products surged from Rs. 605 crores in 2011-12, to Rs. 1,067 crores in 2013-14. The

major category of marine products being exported from Karnataka includes shrimps, frozen

shrimp, prawns, cuttle sh, squid dried, etc. The following strategies need to be adopted for

encouraging growth of exports of marine products :

Promote export of live items like crabs, lobsters and chilled items like tuna by increasing

their production as these items have good demand.

Promote value addition of marine products

Promote market diversication to increase the exports to new blocks like east European

countries, Africa.

Promote product diversication by introduction of new sh species for aquaculture and

mericulture in India.

Encourage setting up of cold chains, quality testing labs, transportation & preservation and

processing infrastructure near the centre of production to reduce harvest & post

harvest losses.

Promote R&D for export oriented aquaculture and by funding Agriculture Universities,

ICAR, MPEDA, etc.

Bring more area under aquaculture through State Fisheries and Revenue Department to

improve and streamline the process of leasing land and oceanic areas.

The destination countries of marine product exports from Karnataka include China, Japan, US,

countries in the Middle East, etc.

4.2.12 Handicrafts and Others

It includes Handicrafts, Leather, Sports Goods, etc. Overall exports of these goods from

Karnataka stood at Rs. 4,819 crores in 2011-12 and increased to Rs. 5,565 crores in 2013-14.

CH

AP

TE

R

5STRATEGIES FOR INCREASING EXPORTS FROM KARNATAKA

Karnataka has a long tradition of overseas trade. Historically, Karnataka has been a major

exporter of commodities like Coffee, Spices, Silk, Cashew nuts, Handicrafts and Agarbathies. In

the last two decades, the State has emerged as a major player in the export of Engineering goods,

Readymade garments, Leather goods, Chemicals, Minerals & Ores etc.

In 2013-14, Karnataka's exports amounted to about Rs. 2.90 lakh crores which constituted about

14% of the Country's exports in that year.

Exports of electronics and computer software constitute the largest and increasing share in the

State's exports as Karnataka has immense strengths in this segment. Its share was 61% in

2013-14.

Karnataka’s export of manufactured goods and commodities is relatively lower as the gures of

software are more dominant. Strategies for increasing the exports of commodities & goods

leveraging the strengths in the State will need to be evolved for increasing the share of exports.

In light of the mandate given by the Department of Commerce, Government of India, the long

term vision envisages to make India a major player in the World Trade by 2020. The Foreign

Trade Policy of Government of India 2009-2014 sets out a goal of doubling India's export of

goods & services to achieve the objective of doubling India's share in global trade by the end of

2020. To achieve this goal, all States, including Karnataka have to play a signicant role to

contribute to the growth of exports.

Karnataka's Gross State Domestic Product (GSDP) at current prices for 2013-14 was Rs.

5,93,811 Crores from Rs. 5,24,502 Crores in 2012-13 revealing a growth of 13.21%. The level of

per capita GSDP at current prices for the year 2013-14 is estimated to Rs. 97,386 as compared to

Rs. 86,864 achieved in 2012-13 indicating a growth of 12.1%. Service Sector constitutes major

share in the State GSDP at 61.40%, Industry: 24.50% & Agriculture: 14.10%.

Karnataka’s basket of exports in 9 product groups has been examined with reference to growth

rate and potential for projections of exports. This has been particularly in view of the variations

in the growth patterns between the commodities. The average value of exports for the three year

period covering 2011-12 to 2013-14 is Rs. 2.56 lakh crores. Hence, for projecting the growth of

value of exports of Karnataka by 2019, different growth patterns have been considered for each

sector. The growth of value of exports which is estimated at Rs. 2.56 lakh crores in 2014 will

reach Rs. 5.92 lakh crores by 2019.

63

Commerce & Industries SecretariatProceedings of the Government of Karnataka

Sub: Karnataka Industrial Policy 2014-19 - reg.Ref: Government Order No.CI 233 SPI 2008, dated: 28.02.2009

Preamble:

The State Government considers industrial growth as a means to mitigate poverty and

unemployment. Development of industry, trade and service sector promotes higher capital

formation, improves per capita income level, absorbs surplus work force. To realize these

benets and expedite socio economic changes, the State accords top priority for industrial

development. In this process, it is aimed at advancing the cause of inclusivity, balanced

industrialization and creating employment opportunities across different classes and categories

of populace.

The State Government had announced Karnataka Industrial Policy 2009-14 vide G.O. No. CI

223 SPI 2008, Bangalore, dated 28.02.2009 for promoting manufacturing and selected service

industries in the State. This Policy came into effect from 01.04.2009 and had validity up to

31.03.2014. Further the validity of Industrial Policy 2009-2014 was extended till the

introduction of new Industrial Policy 2014-19.

Government of India has come out with the National Manufacturing Policy in 2011 with an

objective of accelerated development, inclusive growth and provision of gainful employment.

The policy aims to enhance share of manufacturing in GDP to 25% by 2025 and create 100

million jobs with appropriate skill sets, increase the depth in manufacturing and enhance global

competitiveness.

The Karnataka Manufacturing Taskforce (MTF) constituted by the Government to study the

manufacturing sector in Karnataka and suggest interventions to drive growth in the sector in a

sustainable and holistic manner, taking into account global trends and existing challenges in the

manufacturing sector has given its valuable recommendations and suggestions.

It is in this context that the State Government is desirous of formulating a new Industrial Policy

to be in alignment with the objectives and goals of the National Manufacturing Policy 2011 and

the recommendations of Karnataka Manufacturing Taskforce (MTF) which would enable

smooth transition of policy measures for the benet of investors in the State.


64

65 66

The policy has been drafted through an extensive consultation process with all the stake holders

i.e. Trade Bodies / Associations, related Government Departments and deliberations on various

components of the policy such as Infrastructure, facilitation mechanism, HRD, incentives and

concessions, MSEM development, focused sector etc and Government appreciate the valuable

suggestions of the Karnataka Manufacturing Taskforce (MTF) and all other stake holders. The

views and suggestions offered by all the stakeholders have been incorporated suitably in the

policy with the objective of making Karnataka a preferred destination for Industry.

In the light of the above, a decision has been taken by the Government to formulate and adopt a

New Industrial Policy for the period 2014-19.

Hence the following order:

Government Order No: CI 58 SPI 2013, Bangalore, Dated: 01.10.2014

In the circumstances explained in the preamble, Government is pleased to announce the

Karnataka Industrial Policy 2014-19 as detailed in Annexe to this order supported by the

following annexures:

Annexure 1 - List of Service Enterprises eligible for package of Incentives and Concessions

Annexure 2 - List of Industrial Activities / Enterprises not eligible for Incentives

and Concessions

Annexure 3A - Terms and Conditions for extending Incentives and Concessions

Annexure 3B - Terms and Conditions for Private Industrial Areas / Estates

Annexure 4 - Initiative for Export Promotion

Annexure 5 - Denitions

The vision of Karnataka Industrial Policy 2014-19 is to build a prosperous Karnataka

through inclusive, sustainable and balanced industrial development thereby creating

large employment opportunities. The objectives of the policy are as follows:

i) To maintain an industrial growth rate of 12% per annum.

ii) To enhance the contribution of manufacturing sector to the State

iii) GDP from present level of 16.87% to 020% by end of policy period

iv) To attract investment of ̀ 5.00 lakh crore

v) To create employment opportunities for 15 lakh persons

vi) To create an environment to enhance ease of doing business in the State.

Government desires to achieve these objectives through the following policy measures:

i) Creation of quality infrastructure with comprehensive facilities.

ii) Human resource development through capacity building and skill up gradation.

iii) Simplication of facilitation mechanism and procedural reforms.

iv) Thrust for Hyderabad Karnataka area.

v) Special thrust for encouraging SC.ST entrepreneurs, Women entrepreneurs, Non

Resident Kannadigas (NRKs) etc.

vi) Encouragement for export promotion.

vii) Support for R&D and Digital Direct Manufacturing.

viii) Encouragement for Anchor Industries.

ix) Attractive incentives and concessions.

The above industrial policy and package of incentives and concessions shall come in to effect

from 01.10.2014 and will be valid for a period of ve years or till a new policy is announced.

This order issues with the concurrence of Finance Department vide U.O. Note FD/726/Exp-

1/2014 dated 16.07.2014 and 06.08.2014, Water Resources Department vide U.O. Note IDD /

28/I-TC/2014 dated 05.06.2014, Labour Department received vide Ka E/170/LET/2014

dated.29.04.2014, Forest Ecology and Environment Department vide letter dated 08.04.14,

Energy Department vide their UO note EN2/VSC/2014/P1 dated 30.06.2014 and dated

31.07.2014, Planning Department vide their UO Note PD/26/FRO/2014 dated 16.06.2014,

Urban Development Department received vide UDD/45/UMS/2014 dated 21.07.2014,

Revenue Department vide UO Note No:RD/230/LGB/2014 dated.21.07.2014 and UO Note

No: KA E/25/MU NO MU/2014 dated.22.07.2014, Department of Women and Child Welfare

received vide UO Note No.WCD/4397/PRS/2014 dated.21.07.2014, Rural Development and

Panchayath Raj vide UO Note: KSRLPS/Kai Nee 2014-19/2014-15 dated 23.07.2014 and

Cabinet approval dated 11.09.2014.

By Order and in the name of theGovernor of Karnataka,

(K. Ratna Prabha, IAS)Additional Chief Secretary to Government,

Commerce & Industries Department

A. Export Promotion Measures

1. Creating Export Infrastructure:

Provide Viability Gap Funding (VGF) for projects to be implemented on PPP mode.

Government Departments / Organisations which are mandated for development of

infrastructure are to reserve certain percentage of their annual budget to support critical

infrastructure to encourage exports.

Private participation would be encouraged for the development of Inland Container Depots,

Container Freight Stations, Logistics Parks, pre & post harvest technology centres, ware

housing and other infrastructure facilities through PPP mode.

Trade bodies and industry associations would be encouraged to promote development of

infrastructure, R&D Centre, Training Centre and Testing Centre to augment the development

and growth of exports.

Private participation, Export Promotion Councils, Trade bodies/Industry Associations

would be encouraged to create warehousing facilities overseas for exporters near transit

ports to help trans-shipment of goods on main line vessels.

Existing sea ports would be strengthened to enhance the capacity for facilitating exports

Development of minor ports would taken up on top priority for creating capacities for

handling varieties of commodities for imports and exports

The Bangalore Air Cargo Complex and Mangalore Air Cargo Complex would be supported

to strengthen and upgrade facilities to meet the demand exporters.

The rail network in Karnataka would be strengthened to facilitate speedy movement of goods

to ports.

The State would prevail upon the Central Government for new railway projects on PPP basis

for increased connectivity between major business centres of the States to ports.

2. Encouraging SEZs:

Development of SEZs both multi product and sector specic, would be encouraged in the

State by dovetailing the provisions available in the Central / State SEZ Policy.

3. Encouraging Development of ICDs & CFSs:

Existing ICDs and CFSs would be supported for upgradation with necessary infrastructure

facilities to ensure smooth exports.

ICDs / CFSs and logistic parks would be developed in the clusters and in the major industrial

areas of potential districts to facilitate exports.

Establishment of ICDs and CFSs would be encouraged on PPP mode with Viability

Gap Fund.

CFS facilities would be encouraged at potential locations to help exporters especially in

MSME segments, which generally ship small quantities as they cannot utilize a full container

load.

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4. Development of infrastructure for specic sectors:

a. Agro & Food Processing Sector:

Food parks / Agri special zones / Agri Logistic Parks / Corridors would be encouraged for

establishment at different locations across the State. These parks will have all the required

infrastructure facilities like pre-harvest & post-harvest technology, cold chain,

temperature controlled warehouses and refrigerated transport / reefer trucks to minimize

the loss in storage and transit.

It is proposed to support the establishment of better connectivity from fruits and

vegetables growing areas to ports and to the National / State highways to facilitate easy

movement of goods.

Market intelligence reports would be provided for dissemination of information to

farmers on a real time basis.

Modern packaging technology would be encouraged to reduce the packaging cost. The

State would support the establishment of a branch of Indian Institute of Packaging in this

regard.

As the State is known for exports in gherkins, oriculture and rose onions & necessary

support will be provided to this sector for quality production for exports.

Establishment of Spice Park at potential locations would be supported with technical /

nancial support of Spice Board, Govt. of India.

b. Textiles &Readymade Garments Sector:

State has announced a separate Textiles Policy 2013.

c. Chemical Industry Sector:

Establishment of Warehouse facilities for storage of hazardous chemicals and testing

facilities would be encouraged at Bangalore and Mangalore.

d. Pharmaceuticals Sector:

Establishment of separate Pharma Zone would be encouraged at potential places with the

infrastructure facilities and common efuent treatment plant / common users facilities for

development of pharma sector in the State and to promote exports.

Pharma SEZ located at Hassan and Yadgir / Bidar would be strengthened/ promoted

on priority.

Establishment of separate storage facilities and cold chain facilities would be encouraged

for handling pharma products at the Ports.

e. Engineering Sector (Automobile, aerospace & Precision Tools):

Establishment of R & D testing facilities would be encouraged at Bangalore, Mysore,

Hubli, Dharwad and Belgaum.

Free Trade Warehousing Zone (FTWZ) for the engineering sector including Automobile,

aerospace & Precision Tools would be encouraged through PPP mode.

f. Electronics Sector:

State has announced a separate Karnataka ESDM policy 2013.

g. Gems & Jewellery Sector:

As the State is a leading hub for the export of gems and jewellery articles, the State would

extend support to artisan centric locations, with design and development facilities for

manufacture of innovative articles to explore the overseas market.

Facilities for testing and capacity building would be created at potential locations.

The State would encourage the establishment of Gems and Jewellery Park in Bangalore.

h. Plastic Sector :

Establishment of Plastic Parks in Bangalore, Dharwad and other potential locations

would be supported.

Facilities such as design and prototyping centres, testing and tool room facilities etc.,

required by the industry would be supported.

CIPET would be encouraged to set up its Branch Ofce in Bangalore.

i. Leather Sector:

State will support mega leather park under Mega Leather Cluster Scheme of Government

of India.

j. Handicrafts Sector:

R & D Centres and training facilities would be supported for development of handicraft

products at specic locations.

Creation of Crafts Parks, Agarbathi Park etc., and improved infrastructure facilities

would be encouraged in the existing Crafts Clusters.

Facilitation of Crafts Tourism by linking Craft Clusters and Craft Parks to Tourism spots

will be supported.

Artisans are encouraged and assisted with nancial support to participate in the craft

melas, trade fairs / exhibitions to sell their products directly to the consumers.

Support would be extended to associations, trade bodies / department / agencies to

organize handicraft exhibitions in the potential cities for network development and to

explore overseas market for their products.

VTPC will work with artisans to improve quality so as to market their products to large

retail entities for global sourcing operations.

k. Marine Products:

Development of infrastructure like cold storage, warehousing, refer vans and

upgradation of shing harbours would be encouraged.

Export and quality management programs would be supported for the associations.

5. Focus on MSME Sector:

Exports from the MSME sector over a period of time have acquired great signicance in

India’s foreign trade. This sector accounts for over 40 per cent of the total exports from

the Country.

The State would lay high priority to MSME sector for venturing into export activities and

also enhance their competitiveness in international trade.

6. Other Strategies proposed for the development and growth of Exports:

Trade Information Centres / Kiosks would be established at divisional headquarters with

participation of leading industry associations and trade bodies.

Certain industries are declared as Publicity Utility Services (PUS) under the Industrial

Disputes Act, 1947 Act by the Government. In case of strike or lockout in respect of

industries declared as Essential Services, prior notice is compulsory either by employees or

by management, respectively. In all, 39 industries are declared as PUS and included in the

First Schedule to the Act. Hence, EOUs are to be declared as PUS to have a conducive

environment for exporters.

Exporters with good track record will be issued the Green Card to enable smooth movement

of goods without any delay at check posts / verication of documents.

Banks will be prevailed upon to issue Gold Cards for exporters with proven transaction

record. Gold Card will enable the exporters to avail nancial assistance on easy terms and

fast track mode.

The State will support studies and surveys for identifying potential export markets for State’s

products. Market research and entry strategies through various organizations would be

encouraged by way of scal support.

Study tours, business delegation to foreign countries and participation in International Trade

Fairs to explore the potential markets would be supported by dovetailing MDA and other

similar schemes of the State.

The State will continue to confer the Annual Export Awards for export excellence in the State

and encourage existing and new exporters.

Trade Point, as an extended wing of World Trade Point Federation, Geneva which has been

established at VTPC, would continue to provide the commercial services for exporters with a

special focus on SMEs.

A WTO Relay & IPR Cell would be strengthened to enhance capabilities of MSME sector

and other stakeholders in order to keep them updated on the happenings across the globe.

The International Desk-Liaison Ofce would be strengthened for facilitating in

establishment of International Desks in identied countries and that would function as an

interface for the promotion of trade and investment.

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B. Incentives and Concessions:

As a commitment to provide a level playing environment and competitive edge to exporters, the

State would endeavour to provide attractive package of incentives and concessions. The package

of incentives and concessions for Export promotion is detailed below:

1. Exemption from Entry Tax:

For 100% EOUs and other EOUs with minimum export obligation of 50% of their total turnover,

it is proposed to provide 100% exemption from payment of Entry Tax on purchase of ‘Plant &

Machinery and Capital Goods’ for an initial period of 3 years from the date of commencement of

project implementation irrespective of zones.

It is proposed to have 100% exemption from payment of Entry Tax on purchase of raw materials,

inputs, component parts & consumables (excluding petroleum products) for an initial period of 5

years from the date of commencement of commercial production irrespective of zones.

2. Refund of Certication Charges:

Refund of expenses incurred for obtaining statutory certications like Conformity Europeenne

(CE), China Compulsory Certicate (CCC), GMP, Phytosanitary, Radiation etc., to the extent of

50% of expenses subject to a maximum of Rs. 1.00 lakh per unit.

3. Refund of Cost incurred for Export Consultancy/Market Intelligence Studies:

Financial Assistance shall be provided to exporters whose annual turnover is less than Rs.5.00

crores for availing export consultancy by the units towards market intelligence, market studies /

surveys and documentation through recognized consultancy organizations. The assistance shall

be reimbursed to the extent of 50% of the cost subject to a maximum of Rs.2.00 lakh.

4. Brand Promotion and Quality Assurance:

Financial Assistance shall be provided to the exporters whose annual turnover is less than

Rs.5.00 crores for setting up of showrooms, warehouse, displays in international department

stores, publicity campaign, testing charges, registration charges, brand promotion and assistance

for contesting anti dumping litigations. The expenditure towards the above shall be reimbursed

to the extent of 50% of the cost subject to a maximum of Rs.5.00 lakhs.

5. Refund of fees for individual entrepreneurs incurred for certication courses on

Export-Import Management:

Course fees paid by individual entrepreneurs for acquiring certication courses on Export -

Import Management conducted by IIFT, New Delhi and FIEO and other recognized institutions

for a minimum duration of four months shall be reimbursed to the extent of 50% of the fees,

subject to a ceiling of Rs. 25,000 per candidate per course. This incentive shall be available only

for one time and for one course in the Policy period.

6. Support for Establishment of CFSs and other export infrastructure:

Financial support towards establishment of Container Freight Stations (CFSs) and other export

infrastructure like logistic park, pre harvest and post harvest technology centres at the potential

locations in the State would be provided as Viability Gap Fund. This would entail 25 % of the

cost of the project subject to a ceiling of Rs.200 lakhs. The setting up of necessary infrastructure

would be encouraged through public private partnership to support exports.

KIADB shall reserve 10 / 15 acres of land in all the industrial areas for allotment to the

prospective entrepreneurs for establishment of CFS and other export infrastructure to encourage

exports. The promoter shall bear the land cost and meet the required funds in the project cost

towards establishment of CFS.

APMCs of the State would also be provided with nancial assistance towards the export

infrastructure to promote exports in agro and food processing sector. The assistance will not be

provided for the land cost. However, APMC shall possess the required land and bear the gap

towards development of infrastructure.

7. Support for creation of Export facilitation facilities, R&D and testing services:

One time support to Trade bodies / Associations for creation of Export facilitation, incubation

facilities, R&D and Testing Services etc., would be extended upto Rs.50 lakhs or 50 percent of

cost whichever is less. The assistance will not be provided for the land cost.

8. Market Development Assistance:

Under the scheme, nancial assistance would be extended as follows:

South American Countries

Assistance upto Rs.1.75 lakhs with the following component-wise cap:

75% of the economy Air Fare subject to a maximum limit of Rs. 1.00 lakh.

50% of stall rentals subject to a maximum of Rs. 50,000/- (for women & SC/ST

entrepreneurs 100% of stall rentals shall be reimbursed subject to maximum

Rs.50,000/-), 50% of freight charges subject to a maximum of Rs. 10,000/-.

DA of $ 100 per day for three working days.

Other Countries

Assistance upto Rs.1.50 lakhs with the following component-wise cap:

75% of the economy Air Fare subject to a maximum limit of Rs. 75,000/-

50% of stall rentals subject to a maximum of Rs. 50,000/- (for women & SC/ST

entrepreneurs 100% of stall rentals shall be reimbursed subject to maximum Rs.50,000/-)

50% of freight charges subject to a maximum of Rs. 10,000/-.

DA of $ 100 per day for three working days.

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C. Review and Monitoring Mechanism:

The State Export Promotion Council which has been constituted under the Chairmanship of

Hon. Chief Minister vide G O No. CI 290 SPC 94 (P) Bangalore, dated 28th Feb, 2005 to

address Policy issues, formulation of suitable policy guidelines and action plan for

promotion of exports from the State would be broad based to suggest various initiatives, to

address the bottlenecks that are hindering the growth of exports, to address the gaps in the

infrastructure and facilitate ease of doing business to encourage exports.

The State Level Export Promotion Committee (SLEPC) for ASIDE scheme which has been

constituted under chairmanship of Chief Secretary, Government of Karnataka vide G. O. No.

CI 290 SPC 94 (P) Bangalore, dated 28th Feb, 2005 would also regularly monitor the

implementation of policy initiatives in addition to monitoring of ASIDE scheme in the State.

The Committee would be reconstituted with enhanced the terms of reference by involving

key Departments / Agencies of Central and State Governments, representatives of exporters

associations, leading export houses and other stakeholders for smooth coordination and for

the resolution of critical inter departmental issues to facilitate exports.

The District Level Export Promotion Committee (DLEPC) which has been constituted under

the Chairmanship of Deputy Commissioner of the Districts vide G. O. No. CI 290 SPC 94 (P)

Bangalore, dated 28th Feb, 2005 would draw up comprehensive action plan for growth and

development of exports from the districts. The Committee would also extend necessary

guidance for District Industry Centre to prepare a exporters database, identication of

industries / traders with potential products for exports, address the grievances of exporters

and assist in the development and strengthening of the infrastructure in the Districts for the

promotion of exports.

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9. Reimbursement of Export Credit Guarantee Insurance:

Financial Assistance shall be provided to the exporters whose annual turnover is less than

Rs.5.00 crores towards premium paid for Export Credit Guarantee Insurance for exporting the

products to risk prone countries like African, Latin American and CIS. The assistance would be

reimbursed to exporters to extent of 10% premium paid subject to maximum of Rs.50,000/- per

annum.

10. Financial Assistance for MSME, SC/ST, Artisans and Women Entrepreneurs:

Financial Assistance to MSME, SC/ST, Artisans and Women Entrepreneurs would be

extended for their participation in exhibitions (including Dilli Haat and other Urban

Haats) within the State and outside the State, as follows:

Reimbursement of stall rentals upto Rs. 5,000/- within the State and Rs.10,000/- outside

the State.

DA of Rs. 100/- (within the State) or Rs. 150/- (outside the State) for two persons per stall

for an exhibition period of maximum 15 days.

Second class Railway Ticket for two persons per stall.

11. Support for development of exports in Gherkins, Rose Onions and Floriculture:

It is proposed to provide 10% of the nancial assistance for procurement of imported seeds by

the exporters and towards training expenses for the farmers for the adoption of scientic

methods in the growth of quality Gherkins, Rose Onions and Floriculture for exports.

D. Appointment of Commissioner for Industrial Development and Director of Industries and

Commerce as Export Commissioner for the State:

Proceedings of the Government of KarnatakaSub: Appointment of Export Commissioner for the State of Karnataka.

Preamble:Export is considered as an important means for the development of the economy of the Country /

State. After the formation of WTO, the World has become a Global Village. Liberalization,

Privatization and Globalization have created many opportunities and challenges. It is very

imperative that the Industries, in particular the MSME sector have to incorporate innovative and

new technologies for production of quality products to withstand the global competition.

Further, there is a need to enhance the capabilities of MSME sector to sustain and penetrate new

markets to augment their business development.

Government of India which is mandated for promotion of Foreign Trade, desired to bring the

States into the main stream for boosting the exports. Accordingly, Commerce Secretary,

Government of India has requested the Government of Karnataka to appoint one of the Senior

Ofcers in the rank of Secretary as Export Commissioner of the State as a Nodal Ofcer to co-

ordinate the implementation of programmes / schemes which are relevant to the development

and growth of exports from the State.

In this regard, it is felt that the Commissioner for Industrial Development & Director of

Industries & Commerce who is in the rank of Secretary to Government spearheads the entire

gamut of activities related to Industrial Development and he is also a nodal ofcer for promotion

of investment and development of SEZs in the State, would be the appropriate authority to be

nominated as Export Commissioner to look after the Export Promotion activities in the State.

Further, Commissioner of Industries is also the Chairman of Visvesvaraya Trade Promotion

Centre, which is the nodal agency for the promotion of exports from the State and rendering

Secretarial services for the development of SEZs.

Hence the following order.GOVERNMENT ORDER NO. CI 213 SPI 2014, BANGALORE DATED 6.9.2014In the circumstances explained above, Commissioner for Industrial Development & Director of

Industries and Commerce has been hereby nominated as Export Commissioner of the State in

addition to discharging of his duties as Commissioner of Industries to spearhead the

implementation of export promotion programmes / activities in the State. The Role and

Responsibilities of the Export Commissioner of the State are highlighted in Annexure - I.

By order and in the name ofGovernor of Karnataka

(S. Umadevi)Desk Ofcer (Technical Cell),

Commerce & Industries Department

Role and Responsibilities of the Export Commissioner of the State

To implement programmes / schemes which are relevant to enhance the capabilities and

competiveness of MSME sector for development and growth of exports from the State.

To prepare annual action plan for implementation of the programmes / schemes in a time

bound manner.

To review the implementation of the programmes / schemes and to take corrective measures.

To conduct studies and surveys which are relevant to exports of the potential products and

overseas markets.

To review and coordinate all export led efforts by different agencies of Centre / State

Government and trade bodies / associations.

To organise capacity building programme to enlarge the exporters base in Karnataka.

To develop the strategies which would support the development and growth exports from

the State.

To develop the strategies to enhance the skill sets of human resource to meet the industry

demand.

To address the gap in infrastructure such as land, water, power, roads, railways and ports,

which are essential to support the export oriented units.

To suggest the policy measures to State Government for preparation and implementation of

short & long term measures / plan for enhancing the growth of exports in the light of

emerging national and international economic scenario.

To review export performance of various sectors, identify constraints / bottlenecks that are

hindering the growth of exports and suggest industry specic measures for optimization

of exports.

To review the existing institutional framework for imports and exports and suggest remedial

measures for further streamlining to achieve the desired objectives.

To implement / undertake the policy initiatives which are approved by State Government and

suggest steps to rationalize and channelize such schemes for optimisation.

To suggest the Centre / State Government for simplication of regulatory procedures and

reforms for ease of doing business in facilitating exports.

To suggest the Government to evolve facilitation mechanism for approvals / clearances from

various departments / agencies.

To co-ordinate for formulation of sector specic policies, Export Promotion Policy and IPR

Policy to encourage growth and development of exports.

To encourage the MSME to adopt best practices available across the globe to enhance their

capabilities and competitiveness.

To support for development of R&D centres, testing centres, training centres to encourage

exports.

Implementation of the incentives and concessions which are available under industrial

policies and sector specic policies to encourage exports.

75 76

To encourage local entrepreneurship and start up venture with focus on knowledge sector.

To prepare the road map on WTO / IPR activities to encourage research and development,

innovations and facilitating in Patenting.

To develop the strategies for commercializing, standardizing and branding the geographical

indications globally.

Identication of new/potential GIs and its ling with the GI Registry

To recommend & address the issues which are considered relevant / essential for promotion

of international trade.

To suggest steps to strengthen the institutional mechanism to enhance the competitiveness

of products & services of Karnataka and to increase the market share globally.

Identication, scrutiny, appraisal, monitoring, review and evaluation of projects / critical

infrastructure which are implemented under ASIDE scheme.

Organizing / participation in National/International Exhibitions & Trade Fairs, Overseas

Trade Delegation, Networking for B2B, B2G, B2C meetings for promotion of Trade.

Implementation of Market Development Scheme for overseas market research, study, B2B

meet, participation in overseas exhibitions / trade fair and trade delegations.

Financial support to the all artisans, SC, ST, women entrepreneurs of Micro and Small

Enterprises, who participate in the Trade Fair and Exhibitions.

Compilation of Export Statistics of the State.

Conferring of State Export Awards for their Excellency in Exports.

Coordinating with foreign Trade bodies, Consulates, Trade Commissioner to facilitate

international trade from the State.

Rendering secretariat services for Development of SEZs / EOUs in the State and extending of

various incentives as per State SEZ Policy.

To co-ordinate with the Development Commissioner, SEZ in establishment of SEZ / EOU

units in the State.

Establishment of Incubation Cell to nurture the budding exporters.

To formulate the strategy for development of product specic clusters in the State and

its implementation.

To co-ordinate for development of industrial parks / industrial areas / estate in the State for

growth of exports.

To co-ordinate for establishment of ICD/CFS in potential destinations of the State

Establishment of International Desks of Germany, Japan, Taiwan, USA and UAE and other

potential countries for attracting FDI and for trade promotion.

To provide an effective mechanism against cyber crime with regards to piracy, leakage of

trade secrets, copy rights, trademarks to protect Intellectual Property Rights.

Implementation of Cross Border Entrepreneurs scheme and Angel Funding to support the

start up companies in the State.

To promote brand Karnataka globally.

7877


E. Strategies proposed:

Central and State Governments have been taking various measures and initiatives in terms of

both soft and hard interventions towards increasing exports. Major initiatives and strategies,

which will help exports from Karnataka both in terms of soft and medium strategies and long

term strategies suggested are as follows:

1. Soft Intervention

i. Govt. of India’s Foreign Trade Policy 2013-14 has the following features:

3 % interest subvention scheme towards export credit

Harmonizing of Zero Duty EPCG and 3% EPCG Scheme into one scheme which will be a

Zero Duty EPCG Scheme covering all sectors.

The total number of countries under Focus Market Scheme and Special Focus Market

Scheme becomes 125 and 50 respectively.

Market linked focus product scheme extended till March 2014 for exports to USA and EU

in respect of items falling in Chapter 61 and Chapter 62 of ITC(HS).

Government to come out with new guidelines to promote SEZs.

Focus on market diversication to continue.

Steps to be initiated for reducing transaction cost of exports

It is noted that Policy is being announced year-on-year. It would be preferable it is announced for

a ve-year period and provisions for interventions for improvements during the period. Such a

system would be useful from the point of view of the stability as also enabling improvements.

The features of the Foreign Trade Policy would provide the framework for the State Government

to evolve strategies for enhancement of exports.

The Trade Bodies have indicated that these have been helpful to exporters. However, they have

also expressed the need for more initiatives for encouraging exporters.

ii. The soft interventions from the State Government suggested are as follows:

Export Awareness Programmes.

Export Training Programmes.

Export Management Training Programmes.

Seminars, Workshops & Conferences.

Interaction and Open Houses Meetings.

Participation in National/International Exhibitions & Trade Fairs for Promotion of Trade

Financial Support to the all Artisans, SC, ST, women Entrepreneurs of Micro and Small

enterprises, who participate in the Trade Fair and Exhibitions.

Conferring State Export Awards for Export Excellence.

Market Development Assistance (MDA) Scheme for Foreign Visits for business

promotion.

Disseminating Overseas Live Trade Enquiries.

ASIDE Scheme.

WTO and IPR relay cell is established at VTPC.

Incubation centre, Facilitation cell, R & D cell, Entry strategies

Assisting the traders/exporters in certication for the export/ import of commodities.

VTPC is authorize to issue certicate of origin (non preferential )

Conducting of Short term courses in association with IIFT New Delhi.

Trade point to provide live trade enquiry, Global directory services & online trading

facility.

Government of Karnataka is promoting sector specic SEZs / Park in the potential sectors

like Aerospace, Nano Technology, Bio Technology, Pharma etc., to promote investment.

iii. Trade Facilitation Measures

VTPC has established facilitation cell to facilitate trade in the state by addressing the

grievances of the exporters. The Trade facilitation centres have been established at

Bangalore, Hubli, Dharwad and Mysore.

WTO and IPR cell has been established to create awareness on the WTO provisions and

to promote innovations from the state.

State Level Single Window Clearance Committee (SLSWCC) and High Level Clearance

Committee (HLCC) facilitates for the approvals of investment proposals for the State in a

speedy manner. Karnataka Udyog Mitra is extending secretariat services for SLSWCC

and HLCC.

The State Export Promotion Council has been constituted under the Chairmanship of

Hon. Chief Minister vide GO No. CI 290 SPC 94 (P) Bangalore, dated 28th Feb, 2005 to

address Policy issues, formulation of suitable policy guidelines, action plan for

promotion of exports from the State, to suggest various initiatives and to address the gaps

in the infrastructure and facilitate for ease of doing business to encourage exports.

The State Level Export Promotion Committee (SLEPC) for ASIDE scheme has been

constituted under chairmanship of Chief Secretary, Government of Karnataka vide

G. O. No. CI 290 SPC 94 (P) Bangalore, dated 28th Feb, 2005 would also regularly

monitor the implementation of policy initiatives in addition to monitoring of ASIDE

scheme in the State.

The Export Facilitation Coordination Committee would be constituted under the

Chairmanship of Additional Chief Secretary, C&I Department, Govt. of Karnataka. This

Committee will ensure for issual of necessary Government orders by various

departments in relation to the Export Promotion initiatives and also recommend for mid

course corrections/ measures for smooth implementation of the policy initiatives.

The District Level Export Promotion Committee (DLEPC) has been constituted under

the Chairmanship of Deputy Commissioner of the Districts vide G. O. No. CI 290 SPC 94

(P) Bangalore, dated 28th Feb, 2005 would draw up comprehensive action plan for

growth and development of exports from the districts. The Committee would also

extends necessary guidance for District Industry Centre to prepare a exporters database,

identication of industries / traders with potential products for exp.

2. Hard Interventions

i. Infrastructure

Export infrastructure is a key to support exporters for movement of goods and logistics of

shipment. Infrastructure development needs hard interventions from the Government. Most

infrastructure projects need a longer time horizon and therefore, strategies for development

could be categorized as follows:

Short & medium term strategies

Long term strategies

Such an approach would be useful in according the right priorities for bridging infrastructure

gaps, which are doable in a shorter period horizon of 3 to 5 years and planning larger projects

which require relatively a longer period and in different phases.

ii. Short & medium term strategies

Identication of infrastructure gaps and taking up projects in the short & medium term would be

required for drawing up the order of priorities. An identied shelf of projects for lling

infrastructure gaps are as follows:

Expediting completion of projects approved under ASIDE Scheme.

Promoting at least 10 sector specic SEZs across the State.

Development of Chennai-Bangalore Industrial corridor.

Development of Bangalore Mumbai Economic corridor.

Gems and jewellery SEZ at Bangalore.

Upgradation of Seaports and Airports.

Development of minor ports across the coastal region.

Jewellery designing centre at Mangalore.

Improving of connectivity from industrial areas to State highways, National highways

and Sea /airports.

Proposed Textile parks at Mysore and Chamarajanagar.

Establishment of Granite Park at Chamarajanagar.

Development of Food parks at Jevargi, Malur, Bagalkot and Hiriyur.

NIMZ at Bidar, Gulbarga, Kolar and Tumkur.

Promoting industrial investments by exporting units in SEZs.

Promoting private investments on rakes for rail transportation of containers, on similar

lines as Box trains on the Bangalore-Chennai, Bangalore-Mumbai and Bangalore-

Mangalore routes.

Promoting cargo complexes and container freight stations at large industrial areas and

along the export corridors.

79 80

ICD at Whiteeld is congested and scope for expansion is limited due to land availability

issues. In the circumstances, it would be appropriate to plan for additional capacity of ICD at

Malur, which has rail link.

Seaports

Developing Mega Port at Tadri considering the vast land available, potential rail link and

road connectivity. SPV has already been created in this regard.

NMPT vision 2020 has referred to creating Mega Container Terminal in the long run.

Creating a Mega terminal will be useful to render NMPT as a potential port for main line

vessels enabling direct exports.

Expansion of Karwar port by addition of berths and deepening the draft for receiving larger

size vessels.

Use PPP models for generating investments in seaport projects (greeneld and browneld).

Airports

Expansion of the BIAL along with facilities for rendering it an export hub for air borne cargo

Mangalore International Airport has introduced ights to the gulf region. The number of

ights will possibly increase over a period of time. The presence of Customs Department at

Mangalore Airport will be useful for enabling clearances of air borne export cargo from the

coastal region. The existing old terminal building at Mangalore Airport offers possibility of

setting up an air cargo complex. The space would be adequate and providing screening &

handling facilities would be possible for operationalizing the air cargo complex in quick

time. The matter needs to be taken up with the Customs Dept., as well as the Mangalore

Airport Authorities in this regard.

Expansion of facilities at Belgaum or Hubli for facilitating air borne cargo from the north and

central region of Karnataka.

Special Economic Zones (SEZs) / Parks / Regions

Promote investments for expansion of existing sector specic SEZs for the manufacturing

sector for enhancing growth by leveraging the current status.

Promote investments in new sector specic SEZs / Parks, Aerospace, Hardware, NANO

technology, Biotechnology, Pharma and export hubs, where Karnataka has potential

strengths.

Develop industrial pockets in Special Investment Regions (SIRs), ITIRs, NMIZ in line with

the guidelines of the Govt. of India.

The 61 approved SEZs projects include 48 IT / ITES, 3 Biotech SEZ, one airport based SEZ and

9 sector specic SEZs. The 61 approved SEZs will have an investment of Rs. 37,178 crores

providing employment for 11,64,645 persons.

Presently, 25 SEZs are operational with an investment of Rs. 29,530 crores providing an

employment for 1,93,743 persons.

81 82


Establishment of Spice Parks at Shakaleshpur, Chamarajanagar, Bydagi, and

Kushalnagar.

Improving facilities for screening of export cargo at air cargo complexes, ICDs and

seaports for speeding up the process.

Providing facilities for pre-inspection shipments at the custom bonded godowns.

Promotion of sector specic clusters.

Promotion of industrial and logistic parks.

VTPC and Exporters’ Association in Karnataka may consider joining hands for the

following:

a) Create warehousing facilities overseas for exporters near transit ports at Colombo,

Singapore, Dubai and one at Netherlands / Belgium. These transit ports would help

transship of goods on main line vessels and serve as gateways for foreign trade.

b) Explore the potential new and emerging markets in South Asian Association for

Regional Co-operation (SAARC) region, Asian, African and European countries.

The Market Access Initiative (MAI) scheme of the Ministry of Commerce, Govt. of

India could be utilized for partial funding to carry out studies.

c) Introduce new schemes in consultation with the Exporters’ Association.

d) Leverage ASIDE scheme for bridging infrastructure gaps and viability gap funding

for projects in PPP mode.

e) Sensitize C&F agents of the exporters to mention correct State Code of Karnataka in

all the documents to get a true picture of exports.

iii. Long Term Strategy

Road Connectivity

The Hassan - Mangalore (NH48) needs to be doubled for providing speedy connectivity to

New Mangalore Port. Doubling would smoothen the movement of trafc and possibly ease

congestion.

Expediting implementation of Suvarna Karnataka Development Corridor Programme and

develop industrial export pockets at locations on corridor highways.

Railway Connectivity

Speeding up of railway network between Hubli and Karwar to provide the impetus for

developing Karwar port as an alternate gateway for exports from Northern and Central part

of Karnataka.

Doubling of railway lines between Mumbai-Bangalore-Chennai under ‘PRIDE’ Corridor

Doubling of railway lines between Bangalore-Mangalore Inland Container Depots (ICDs)

Enhancing the capacity of ICD at Belgaum for facilitating exports from north and

central Karnataka.

Enhancing the capacity of ICD at Hassan for facilitating exports from the Textile, Food

Processing and Pharma SEZs at Hassan as also coffee, spices and other commodities from

Kodagu and Malnad region.

F. Shelf of Projects identied for the growth and development of Exports during the 12th plan period:

Identication of projects for improving export infrastructure is an ongoing process and a part of the strategy for supporting export initiatives. The proposals are identied to be taken up by various agencies / stakeholders for implementation to support the growth and development of exports from the State. The proposals which are to be taken up under ASIDE scheme would be scrutinized by a sub-committee of the SLEPC for conformity with the guidelines before placing to SLEPC for consideration. In respect of other infrastructural project would be forwarded to the concerned agencies to take up with the budgetary support of the State and Central Schemes.

24.0024.0048.00KHDCEstablishment of Readymade Export Garment unit cum incuba�on centre, training centre and design studio.

18

The Shelf projects identied are given below:

Impl. Agency share

Implemen�ng AgencyName of the projectSl No.

125.00

10.00

10.00

5.00

7.00

5.00

27.57

18.61

2.00

64.20

41.00

6.62

3.00

12.00

15.00

24.00

10.00

ASIDEshare

30.00

10.00

30.00

15.00

10.00

12.00

26.00

18.61

6.00

23.92

19.00

19.88

20.00

15.00

25.00

70.00

15.00

Project Cost

155.00

20.00

40.00

20.00

17.00

17.00

53.57

37.22

8.00

88.12

60.00

26.50

23.00

27.00

40.00

94.00

25.00

Bangalore Airport Rail Link Ltd.

D. Devaraj Urs Truck Terminals Ltd.

NMPT

NMPT

KSIC

IFAB

MSEZ

MSEZ

MIA

Hu� Gold Mines Ltd.

Mysore Minerals Ltd.

KIADB

KILT

APMC

APMC

APMC

APMC

Truck Terminal at Bangalore

Truck Terminal at Mangalore

Export Promo�on Zone - Crea�on of Inland Container Depot (ICD) and Container Freight Sta�on (CFS) at Mangalore Sea Port.

Infrastructure for Business Devpt. Park for Export & Tes�ng Centre at Mangalore.

Produc�on centre for Silk fabrics

Automa�on of Electronic Auc�on System (EAS) & upgrada�on of exis�ng facili�es at IFAB

Establishment of CETP by MSEZ

Construc�on of two lane flyover near Jokkate junc�on at MSEZ

Establishment of Export Centre at Mysore

Establishment of Gems & Jewellery Park / SEZ in Devanahalli, Bangalore.

Establishment of Granite Park in Badankoppe - Kellamballi village near Chamarajnagar.

Water Supply scheme of KIADB to Industrial area, Hebbal 2nd stage, Mysore from Cauvery River

Establishment of Mul� Dimensional tes�ng centre for Leather

Providing Infrastructure facili�es in the main market yard at Bijapur.

Improvements to main market yard at Davangere

Development works in the main market yard at Ranebennur

Improvements to main market yard at Bagalkote

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

(Rs. in crores)

Impl. Agency share

Implemen�ng AgencyName of the projectSl No.ASIDEshare

Project Cost

27.50

24.00

15.00

30.00

15.00

15.00

17.00

8.00

60.00

15.00

10.00

5.00

5.00

6.00

3.00

11.00

0.50

3.00

3.00

3.00

3.00

0.00

5.00

27.50

25.00

15.00

30.00

15.00

15.00

40.00

20.00

150.00

60.00

30.00

20.00

20.00

24.00

12.00

34.00

3.00

12.00

12.00

12.00

12.00

1.00

5.00

45.00

49.00

30.00

60.00

30.00

30.00

57.00

28.00

210.00

75.00

40.00

25.00

25.00

30.00

15.00

45.00

3.50

15.00

15.00

15.00

15.00

1.00

10.00

KAPPEC

PWD

PWD

PWD

PWD

PWD

PPP

Air India SATS airport services Pvt. Ltd.

Central Ware - housing Corpora�on

SPV

SPV

SPV

The Kudchi Agriculture and Small Scale Industries

APMC

APMC

APMC

Belgaum Material tes�ng centre

APMC

APMC

APMC

KIADB

KIADB

KIADB

Processing and Cold chain facility in Davangere, Haveri & Belagi District.

Improvement of road from Rabakavi - Mahalingapur - Handigund Terdal of length of 26 Km in Jamkhandi, Mudhol Taluk at Bagalkot District.

Development of road from Karwar Railway sta�on to Karwar port

Development of road from Gakarna Railway sta�on to Tadadi harbour.

Development of road from Hannavar Railway sta�on to Hannavar harbour.

Development of road from Bhatkal Railway sta�on to Bhatkal harbour.

Inland Container Depot ( ICD) for Agro and Food Products at Davagere

Pharmaceu�cal and Biotechnology product handling facility at Bangalore Interna�onal Airport.

Establishment of warehousing / CFS infrastructure at Bangalore, Belgaum and Mysore.

Establishment of Engineering and CNC cluster.

Establishment of sheet metal and metal treatment cluster

Packaging & Plas�c manufacturing cluster

Establishment of Advanced technology based jaggery processing unit to encourage exports

Improvement of roads at main market yard at APMC, Badami

Improvement of roads at main market yard at APMC, Shikaripura

Improvement of roads at main market yard at APMC, Hubli

Upgrada�on & moderniza�on of Belgaum Material tes�ng centre

Spice park at Hassan

Spice park at Haveri (Chilli)

Spice park at Chamarajanagar (Turmeric)

Sub-sta�on at Aerospace SEZ, Devanahalli

Telecommunica�on facility at Aerospace SEZ, Devanahalli

CETP at Hassan SEZ Tex�le park

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

(Rs. in crores)

83 84


Impl. Agency share

Implemen�ng AgencyName of the projectSl No.ASIDEshare

Project Cost

1.00

0.20

20.00

20.00

40.00

8.00

10.00

47.00

5.00

5.00

14.77

6.00

3.00

30.00

30.00

5.00

27.50

150.00

70.00

1196.47

4.00

1.80

5.00

5.00

20.00

18.00

25.00

18.00

5.00

15.00

10.00

12.00

7.00

30.00

30.00

10.00

27.50

300.00

25.00

1562.21

5.00

2.00

25.00

25.00

60.00

26.00

35.00

65.00

10.00

20.00

24.77

18.00

10.00

60.00

60.00

15.00

45.00

450.00

95.00

2738.68

VTPC

VTPC

PPP

PPP

PPP

SPV

MML

Karnataka Tex�le InfrastructureDevelopment Corpora�on.

KIADB

PPP

CWC

Air India SATS

Channa-patna Cra�s Park

KIADB

KIADB

Dept of fisheries

KAPPEC

CWC / CONCOR

KMF

Moderniza�on of Hubli - Dharwad Exhibi�on complex

WTO & IPR Cell

Establishment of CFS at Kushalnagar

Establishment of CFS at Davanagere

Establishment of CFS at Nanjanagud

Providing infrastructure facili�es for Floriculture & Rose products

Common facility for Granite industries at Ilkal

Tex�les Park at Chamarajanagar

CETP Pharma at Hassan

GEMS & Jewellery Designing Centre at Mangalore

Establishment of Warehousing / CFS Infrastructure at Mangalore

Infrastructure Facility at Bangalore Interna�onal Airport to facilitate exports of perishable cargo & cold chain

Infrastructure facili�es at Channapatna Cra�s park at Channapatna

Establishment of engineering SEZ at Hubli and Belgaum

Establishment ofAutomobile SEZ at kolar

Cold chain facili�es for marine products at Mangalore

Post harvest technology centers at Gadag, Kolar, Kodagu.

Establishment of ICD/CFS at Dakshina Kannada, Bangalore, Mysore, Udupi, Dharwad, U�ara Kannada, Kodagu and Bellary.

Dairy Project (UHD Milk) at Chamarajanagar

Total

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

(Rs. in crores)

The 62 identied projects envisages an investment of Rs. 2738.68 crores with a proposed

contribution under ASIDE scheme to the extent of Rs. 1562.21 crores during the 12th plan

period. The projects are being pursued for sanction and approval under ASIDE.

All the identied projects would be placed before the State Level Export Promotion Committee

(SLEPC) meetings by prioritizing for approvals.

G. Areas and Goods for Anti Dumping and Tariff Protection

The following are the products identied for anti dumping and tariff protection:

1. CFL lamps - Imported from Taiwan,

2. Caustic soda - Imported from China

3. Phenol - Imported from China

4. Nitrile Rubber - Imported from China and Taiwan

5. Acetone - Imported from EU, South Africa, Singapore, USA

6. Fiber board above 6mm thick - Imported from China, Malaysia

7. Red phosphorous - Imported from China

8. Sodium Nitrate - Imported from EU, China, Korea

9. Cast alluminium wheels - Imported from China, Korea and Thailand

10. Vitamin C and E tablets - Imported from China

11. Flax fabric - Imported from China

12. sin drawn yarn / polyesters - Imported from China, Vietnam, Thailand

13. Glass bres - Imported from China

14. Cold rolled stainless steel - Imported from China, Korea, EU

15. Persulphates - Imported from Taiwan, Turkey, USA

16. Methylene chloride - Imported from EU, USA, Korea

17. Pre sensitized positive offset alluminium plates - Imported from China

18. Injection moulding machines - Imported from China

19. Steel and berglass plates - Imported from China

20. Axle beam and steering knuckles - Imported from China

21. Carbon black used in Rubber - Imported from China, Russia, Thailand

22. Phosphoric acid - Imported from China

23. Potassium carbonate - Imported from EU, China

24. Rubber chemicals (MBT/CBS/TDQ) - Imported from China

25. Electric insulators-ceramic and porcelain - Imported from China

26. Sulphur black - Imported from China

27. Flexible slabstack polyol - Imported from China

Way Forward

The growth of exports from Karnataka requires full involvement and commitment from

various sectoral departments viz., Agriculture, Horticulture, Mines & Geology, Industries &

Commerce, Infrastructure Development Department, Energy Department, Sericulture,

Textiles, Public Works Department, Tourism, Fisheries, IT/BT, Labour, Irrigation

Department, Ecology and Environment etc. It is suggested that, each Department may be

asked to consider allocating at least 2% of its budgetary allocation year-on-year for

participating in export infrastructure related projects.

Creation of a Special Fund / viability gap fund through budgetary support for participating in

export infrastructure projects in the PPP models. The fund could be used for participation in

85 86


5.00

5.00

5.00

5.00

10.00

10.00

KIADB

KIADB

CETP at Hassan SEZ Food park

CETP at Dharwad SEZ

42

43

87 88

development of infrastructure such as industrial areas, roads, power, seaports, airports,

Inland Container Depots (ICDS) / Cargo Freight Station (CFS), road and railway

connectivity etc.

A Committee chaired by Chief Secretary, Govt. of Karnataka may be constituted with

Additional Chief Secretaries / Principal Secretaries of key departments as members for

prioritizing and approval of export infrastructure projects. The funding support for such

projects could be through pooling of the proposed budgetary allocation of 2% and

Special Fund.

VTPC, Nodal Agency for promoting exports, is playing its mandated role of conducting

capacity building programmes & events at different levels. Considering the limitations of

VTPC, it would be a useful strategy to strengthen VTPC to play a proactive role in facilitating

exports from across Karnataka.

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