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India By State - Karnataka - Business Opportunities

Business Opportunities



Karnataka has always been at the forefront of industrial growth in India. With its inherent capabilities coupled with its enterprising citizens, Karnataka provides the ideal choice for investment opportunities. Karnataka is well known for producing some of the country's foremost statesmen, scholars and sportspersons, and is one of the major revenue takers through its strong tourism industry. Majority of IT activity in Karnataka is concentrated in Bangalore. The state possesses six percent of the total water resources in the country as there are many rivers flowing through it

The government of Karnataka has given many concessions, which has prompted many IT majors, both domestic like Infosys and Wipro as well as multinationals like Oracle and Hewlett-Packard to set up software development operations in Karnataka. Karnataka's rich bio-diversity spurred the growth of biotech industry in the state. High literacy rates, the presence of good research organisations and some of the best academic institutions ensure that the state has well qualified manpower. This has been a major factor enabling the success of Karnataka in sectors like engineering, IT/ITES and biotech. Given its strong base of technical work force, knowledge-intensive industries are gradually taking a lead position in the state

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Key Industries

Agro and Food Processing Industry

Karnataka is home to some of the leading multinational food companies, such as Britannia, Coco-Cola, Heinz ITC, Nestle, Nissin, Pepsi, Unilever. These companies have established their manufacturing facilities in the sate. Karnataka promoted a special purpose vehicle (SPV), Food Karnataka Ltd (FKL) in 2004 to attract private investments in six proposed food parks across the state. Karnataka accounts for 70 per cent of the country's coffee production. The total production of coffee in 2006-07 was 206 million tonnes. Karnataka ranks second in the production of flowers. Horticulture accounts for more than 40 per cent of the state's agricultural income. This sector contributes 17 per cent to GSDP.

Automobile & Auto Components

There is a lucrative auto-industry with investments of over US $713 million and annual turnover of US $489 million.

In total, 10 out of the 201 listed auto-ancillary firms in India are based in Karnataka.

In 2003-04, State revenues from the auto-sector stood at approximately US $604 million, and the State government has set up a large number of Auto Parks at Bidadi, Bengaluru and Shimoga.

General Motors has invested US $21 million to set up a technical centre in Bengaluru.

Toyota, Volvo, TVS Motors have set up vehicle manufacturing units in Karnataka, which has led to the growth of ancillary units involved in tyre manufacturing, bearing and other auto spare parts in the Bengaluru-Hosur region.


Karnataka is home to 55 percent of biotechnology related companies in India. Bengalaru has the largest biocluster in India with total revenues of US $341 million and 158 of the 320 odd companies working on biotechnology in India.

The State has a headcount of 6800 scientists involved in biotech research, and India's largest biotech company Biocon is based in Bengalaru.

The presence of premier Life Sciences institutions such as the Indian Institute of Science, National Centre for Biological Science, Jawaharlal Nehru Centre for Advanced Scientific Research.


Karnataka is a State leader in the electronic and communications industry, boasting of as many as 300 leading international companies. There are several public sector electronics companies and defence research institutions based in Bengaluru.

The State is known for its excellent telecom infrastructure with 140 out of 170 towns connected by the OFC Network

The construction of a 'Hardware Technology Park' of 1,200 acres has been proposed at Devenhalli and at Mysore.


Karnataka has a strong engineering base with several PSUs, Large and Medium privately owned units and widely dispersed small scale units. The State's engineering export increased from over US $243 million in 2002 to over US $500 million in 2005 and constitutes about 4 percent of exports from the State.

The leading companies within the State who operate within this sector are Bharat Earth Movers Ltd, Hindustan machine tools Ltd and Bharat Heavy Electricals Ltd. The combined turnover of these three companies amounts to over US $5 billion.

Hardware exports have increased by 40 percent to US $605 million in 2005-06 from US $432 million the year before.

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The State of Karnataka has been the forerunner in the IT/ITeS sector due to an appropriate eco system for knowledge driven industries including a proactive government, sector friendly policies and a large pool of skilled manpower.

Bengalaru is among the five largest technology hubs in the world.

Karnataka's share in national exports is more than 35 percent, and the export growth rate is around 30 percent.

The IT industry is thriving in Karnataka with over 1200 operational companies employing over 0.4 million professionals. The presence of all world leaders in IT such as Microsoft and Dell can be found within this State.

Karnataka software Exports

Major upcoming projects

  • An SEZ spread over 700 acres for pharma and biotechnology at Hassan (presently at concept stage of development).
  • Bengaluru Helix, a world-class Biotech Park, involving an investment of over USD24.4 million is being developed under a PPP framework.
  • Three SEZs for Biotechnology - two in Bengaluru and one in Mysore

Textile & Apparel

Karnataka has a credit-worthy presence in the garments and textiles sector. Some of the leading garment brands manufactured in the state include Allen Solly, Arrow, Crocodile, Lee, Lacoste, Levi Strauss, Tommy Hilfiger and Van Heusen to name a few. Textile exports stood at US $1.6 billion, which accounts for 20 per cent of the country's exports.

Key Points

  • With exports of over US $860 million in 2003-04, the state was the second largest garments exporter in India.
  • There are about 1,800-2,000 textile and garment units in Bengaluru and nearby centres and textile clusters.
  • The Apparel Park at Dodaballapur near Bengaluru and mega Textile Parks in other parts of the state herald a promising future for the sector.

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Key Players


Set up in 1981, Infosys operates in the areas of IT consulting, modular global sourcing, process re-engineering and BPO services. Infosys has operations at Bengaluru and Mysore. The company has operations in Australia, China and the US and has marketing and technological alliances with FileNet, IBM, Intel, Microsoft and Oracle. Its 2006 revenues were about $2.3 billion.


Established in 1945, Wipro operates in IT services, product engineering, technology infrastructure services, BPO and other consulting solutions. It provides application development, deployment and maintenance and business intelligence services. The company has it base at Bengaluru. It has 54 development centres and 30 offices in India, North America, the Middle East and Europe. The USD 1 billion Wipro Technologies has over two decades of experience in the IT business and was the world's first PCM M Level 5 and SEI CMM Level 5 certified IT services company. Wipro provides IT solutions and services to global corporations worldwide. It is listed on the New York Stock Exchange. Wipro has been ranked as India's Most Valuable Company by India's business magazine Business Today and the seventh software services company in the world by Business Week magazine. Wipro also has a presence in ITES, consumer care, lighting and healthcare.


Set up in 1997, Genpact was formerly known as GE Capital International Services. Genpact operates in the domains, such as business process, analytics, collections and customer relations, including finance and accounting, insurance, IT infrastructure. procurement and supply chain, software and knowledge services.


A subsidiary of IBM Inc., IBM India Ltd is in India since 1992. The company offers end-to-end solutions to the customers from consulting, hardware to software and service sectors. India, Bangalore is an important market for IBM. The company has been making significant investment in India. IBM Solution Partnership Centre (one among 10 facilities worldwide), Linux Solution Centre (one among seven facilities worldwide), IBM Linux Competency Centre (one among four facilities in Asia), India Software Labs, Centre for Advanced Studies, Engineering and Technology Service Centre, Global Delivery Centre and Business. Transformation Outsourcing Centre.

Sun Microsystems

Sun Microsystems India Pvt Ltd is a subsidiary of US$ 1 1.2 billion Sun Microsystems Inc. In India, Sun Microsystems has a presence in hardware (servers and workstations); software (operating systems, application development); data storage solutions and services (assess, plan, design and implement IT architecture).

Texas Instruments (TI)

Texas Instruments India, a subsidiary of Texas Instruments, USA, started its operations in India in 1985. It was the first MNC to set up a facility in India, and the first to set up an R & D lab outside the US. It later set up its System-On-Chip Centre of Excellence in Bangalore. TI is one of the leading suppliers of DSP-based semiconductor solutions globally. In India it has over 1,200 employees and revenues of over USD 100 million. The Bangalore centre is instrumental in developing various solutions for the company's products globally. TI India has been awarded the highest number of patents (225) for any R&D centre in the country.

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UB Group

The UB Group is the worlds second largest and India's largest spirits manufacturer. It enjoys over60 per cent market share in the country and has a portfolio of 130 brands. Its flagship brands are Bagpiper whisky, Honeybee brandy, Romanov vodka and Kingfisher beer, among others. The Group's business interests also extend to other sectors including pharmaceuticals (Aventis) agro-business (Bayer), fertiliser sector (Mangalore Chemicals and Fertilisers) and more recently the airline industry.


Biocon is a leader in bio-pharmaceuticals and bio-services. The company manufactures Active Pharmaceutical Ingredients (API) and branded formulations under biologics like Insulin and non-biologics segment like Acarbose. Incorporated in 1978, the company produces industrial enzymes and has a healthy pipeline of R&D in bio-generics and proprietary molecules. Biocon has an integrated biotechnology hub, and plans to set up an SEZ at Annekal in Bengaluru. Its 2006 revenues were to the tune of about USD 200 million.

Himalaya Drug Company

Himalaya Drug Company is the first Ayurvedic facility to get Good Manufacturing Practices (GMP) certification in India. The company was founded in 1930. Its health and personal care products are available in 60 countries. The company had a turnover of about USD 35 million in 2006-07. The company has its manufacturing plant at Makali in Bengaluru.


Avesthagen, established in 1998, is a discovery-based life sciences company focusing on achieving convergence between food, pharmacy and population genetics, leading to preventive personalised medicine. It has around 200 employees in Bengaluru and has established a world-class, state-of-the-art laboratory at the International Tech Park in Bengaluru.

Bharat Electronics Ltd (BEL)

Bharat Electronics Ltd (BEL), a multi-product, multi-unit and multi-technology company was incorporated in 1954. The government has an over 75 per cent stake in the company. It had revenues of about $1 billion in 2006-07. The company, which manufactures defence and non-defence products, has its registered office in Bengaluru. BEL plants are located in different parts of Karnataka and other states. The units in Karnataka are primarily focused on professional grade electronics equipment.

Bharat Heavy Electricals Ltd (BHEL)

Incorporated in 1964, Bharat Heavy Electricals Ltd (BHEL) is a central government undertaking. It is one of the largest engineering and manufacturing enterprises in India in the power and industrial machinery segment. The company registered revenues of around USD 4.8 billion in 2006- 07. BHEL manufactures electric metres and power devices at Bengaluru. It has 14 manufacturing divisions, four power sector regional centres, eight service centres and 18 regional offices.

ABB-Asea Brown Boveri

Incorporated in 1949, the company offers a wide range of products and services within the power and automation technologies segment including Control Systems. Its registered office is in Bengaluru and plants are located in Bengaluru, Faridabad, Mumbai, Nashik, and Vadodara. ABB manufactures switchgears, turbochargers, motors and transformers in Bengaluru. The revenues added up to USD 1.12 billion in 2006

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Export Profile

Typical Export Segments

Electronics and Computer Software 52%
Readymade Garments 7%
Petroleum and Petroleum Products 10%
Engineering 4%
Iron-ore and Minerals 7%
Plastic Goods 5%
Agriculture and Processed Food 1%
Silk Products 1%
Others (Coffee, handicraft, leather, marine, cashew, spices. 14%

Karnataka's total exports were US$ 23.4 billion in 2006-07. Exports increased at a CAGR of almost 30.0 per cent between 2004-05 and 2006-07.

Investment in Karnataka

Karnataka is one of the important investment destinations for numerous industrial and infrastructure projects.

  • 66,092 small and medium projects with investments of about USD$5.2 billion were approved during 2001-09.
  • About 148 mega projects with investments of USD28 billion have been approved during 2001-06.
  • An outstanding investment of USD38.52 billion in 1,308 projects under various stages of planning and implementation, towards end of 2006.
  • Karnataka an implementation ratio of 43.3 per cent, which is comparable to the national average of 44 per cent.
  • Karnataka is ranked fourth in terms of total projects investment in India.
  • Major investments have been made in sectors, such as IT/ ITeS, steel, petrochemicals, engineering, electronics, textiles and apparels, transport and urban infrastructure.

Foreign Direct Investment (FDI) scenario in Karnataka

  • USD $6.4 billion of FDI that accounts for 17.5 per cent of FDI in India has been approved for Karnataka in 2006-07.
  • Healthy FDI inflow over the years in sectors related to IT/ITeS, automobile and auto-components, engineering and electronics.
  • 2,726 proposals with investments of over USD 6.2 billion estimated to be approved by the state. This accounts for 8.7 per cent the total FDI.

Karnataka software Exports

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More Information on Karnataka

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