Karnataka Govt Wants Startups to Think Beyond Bengaluru, Action Plan Proposes Incentives in Other Districts

Apart from Bengaluru, the state government wants startups in other districts.

The state government wants startups to think beyond the capital to redirect investments to other parts of Karnataka and ease traffic congestion in Bengaluru.

Tech clusters outside Bangalore are proposed to be in Mysore, Mangalore, Tumakuru, Hubballi, Dharwad, Shivamoga, Belagavi, Mandya, Chamrajnagar, Udupi, Manipal and Kalaburagi.

The state government wants to increase the number of startups outside Bengaluru to 10,000 by 2032 from 2,955. An action plan developed by the State Department of State Planning, Project Monitoring and Statistics and the Federation of Indian Chambers of Commerce and Industry reveals this to make Karnataka a $1 trillion economy by 2032.

For early-stage startups set up outside Bengaluru, it proposes reimbursement of state Goods and Services Tax (GST), marketing and patent application fees, and quality certification fees.

The government may also allow and facilitate startups to self-certify under the Factories Act, Wages Act, etc., to improve the ease of doing business.

The action plan also proposes a Rs 1,000 crore ‘Beyond Bengaluru Growth Fund’ to drive startups towards these emerging technology clusters.

Sanjeev Kumar Gupta, CEO of Karnataka Digital Economy Mission (KDEM), told the media: “Karnataka’s entrepreneurship and innovation ecosystem is leading among states in the country. Bangalore has a unique entrepreneurship system, so Scalability to emerging clusters is required, especially in cities like Mysore, Mangaluru and Huballi-Dharwad.”

He added: “The government is now working with academic institutions in these clusters to fund and prototype ideas and support entrepreneurs/startups by establishing innovation and incubation centres. We also encourage Angel investors to come forward to work with startups and provide mentorship.”

Gupta said the government had launched an “Elevate” scheme to provide up to Rs 50 lakh to startups to convert ideas into prototypes.

“We have also launched the ‘Beyond Bengaluru Blue’ initiative to boost startups outside of Bengaluru. Various government ministries will analyse the $1 trillion economy report by 2031. We are also planning to relaunch the entrepreneurship policy to strengthen the entrepreneurial ecosystem and (Other countries), especially the UK, South Korea and Singapore,” he said.

One of the reasons the scheme was conceived was to alleviate Bangalore’s notorious road congestion. Location technology company Tom Tom ranks the city as the second most congested in the world, after London, regarding how long commuters drive 10 km.

Other proposals in the action plan to promote startups outside Bengaluru include rural innovation hubs, university innovation labs/centres, small factory labs, specialised research centres to support circular economy-focused startups, and state support in the form of incentives and concessions Karnataka government incubating startups.

The government will also develop world-class infrastructure in Mysuru, Mandya, Chamrajnagar, Mangaluru, Udupi, Manipal, Hubballi, Belagavi and Dharwad for technology clusters of at least 5,000 seats covering an area of ​​at least 4 lakh square feet.

“It also proposes to work with industry partners to establish an ‘acceleration network’ in a hub-and-spoke model, with existing accelerators acting as hubs to extend benefits to startup opportunities in the form of strategic support, mentorship and networking, especially outside the Bengaluru metropolitan area,” the report said.

The state government plans to set up an accelerator in each region. Currently, three accelerators are being established: one in Mysuru, one in Mangaluru and one in Hubballi – Dharwad.

Other proposals are for government centres to provide subsidised seats in each district of Karnataka up to Rs 3,000 per seat per month, a one-time capital grant (50% of the cost of Rs 50 lakh) to support the establishment of the state. Rs 1,000 crore to develop state-of-the-art private incubation centres outside Bengaluru urban district and 10 technology clusters in Mysuru, Mandya, Chamarajanagar, Mangaluru, Udupi, Manipal, Hubli, Belagavi and Dharwad.

The government is also expected to allocate Rs 500 crore to advance Rs 100 crore in skills and training facilities across the state over the next five years. This will upskill around 25,000 people per year.

It has also proposed an allocation of Rs 300 crore for establishing Centres of Excellence (CoE) for development in three emerging technology clusters and Rs 200 crore for a skills and entrepreneurship university in Mysore. The Karnataka state government expects startups to grow to 9.1% of state GDP by 2031 from 2.8%.

An exclusive early-stage seed fund of Rs 5 crore is also planned to boost female entrepreneurship in the state. The state government has also proposed allocating 25% of the Rs 100 crore venture capital fund, reserving 20% ​​seats in government-backed incubators, and direct loans of up to Rs 10 lakh through the Karnataka State Women Development Corporation for women-led startups.

Separately, financial assistance of up to Rs 50 lakh will be provided to support Scheduled Castes and Scheduled Tribes entrepreneurs and dedicated programmes to support startups established by entrepreneurs from other backward classes and minority groups and for startups in aspirational districts of Kalyan-Karnataka northeast part of the state.

The report said the government would also establish a Centre of Excellence in Assistive Technology with grant/funding support of Rs 150 crore to develop innovative products and solutions for differently abled people and senior citizens outside Bengaluru.

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