Investing in Karnataka, India: State Profile, Infrastructure, and Enabling Policies

Posted by Written by Melissa Cyrill Reading Time: 11 minutes

We discuss why foreign investors favor Karnataka as a location for their IT and manufacturing businesses. We highlight Karnataka’s streamlined business environment, manufacturing clusters, investment promotion subsidies, a dynamic talent pool, and its rich natural resource profile.

Unpacking the state’s performance on investments

In March 2023, the Karnataka government approved 18 industrial projects totaling INR 750 billion (US$9.13 billion), marking a successful fiscal year for the state. Among these projects are Foxconn’s plans to expand their manufacturing presence in India, part of Apple’s strategy to diversify its supply chains outside China.

Karnataka has consistently attracted foreign manufacturers due to its advanced industrial ecosystem, quality infrastructure, and investment promotion subsidies for sunrise sectors under industrial policies. The state’s appeal is contributing to the overall attractiveness of southern India for foreign investments.

Proximity to the coastline, robust connectivity, warehousing infrastructure, special economic zones, and access to raw materials, skilled workforce, and downstream industries – all make Karnataka a highly favorable location for manufacturing investments.

Foxconn spotlight: Taiwan company’s investments in Karnataka in 2023

Foxconn, a prominent Taiwanese company, has demonstrated a strong investment preference for Karnataka, India.

The Karnataka government extended a 100-acre plot offer to Foxconn Industrial Internet (Fii), a subsidiary of Foxconn, on July 17, 2023, situated in the Japanese Industrial Township in Tumakuru district. Fii, specializing in electronic device production, cloud service equipment, and industrial robots, is set to invest INR 88 billion, generating 14,000 jobs. In addition to this, Foxconn is establishing an iPhone assembly unit in Devanahalli’s IT investment region (ITIR). The finalization of a 300-acre plot transfer signals the imminent commencement of construction for this advanced facility.

A Bloomberg report highlights Foxconn Technology Group’s plan to invest approximately INR 4.1 billion (US$500 million) in building two component factories in Karnataka. The chosen location suggests a focus on manufacturing Apple components, including those used in iPhones.

Formalizing their collaboration, the Karnataka government and Foxconn signed a Letter of Intent (LoI) on August 2 for two additional projects, with an estimated combined investment of INR 50 billion, expected to create employment for around 13,000 individuals.

These projects supplement Foxconn’s previously announced INR 140-billion iPhone assembly plant. The first proposed project involves mechanical iPhone enclosures, with Fii investing INR 30 billion, creating an estimated 12,000 jobs. Simultaneously, a semiconductor equipment project, with an investment of INR 20 billion in collaboration with Applied Materials, is expected to generate around 1,000 jobs.

Infrastructure, logistics, and talent base

Karnataka boasts excellent connectivity to major markets with two international airports and five regional airports, 47 national highways, and 145 state highways. The state has a robust rail network spanning 3,818 km. Moreover, with a coastline of 320 km, Karnataka features 9 minor ports and a major port in Mangaluru. Major ports at Chennai and Krishnapatnam are 300-400 km away, while the JNPT at Mumbai is 980km away.

The state is intersected by both the Bengaluru-Mumbai Economic Corridor and the Chennai-Bengaluru Industrial Corridor, further bolstering its transportation infrastructure.

As of May 2022, there were 21 operational SEZs, of which 11 are located in and around Bengaluru. Top SEZs in terms of employment are Manyata Embassy Business Park, Pritech Park, and the Information Technology Park Ltd. Other prominent SEZs are in Udupi, Hassan, Mangaluru, Shivamogga, Mysuru (L&T), and Dharwad and Dakshina Kannada (Infosys).

Additionally, Karnataka’s education system provides a steady supply of technical and engineering graduates, researchers, and scientists, which benefits manufacturing industries. As of 2020, there were 234 engineering colleges, 57 medical colleges, 44 universities, and 16 international schools in the state. Bengaluru accounts for a 24-25 percent of India’s digital talent as per a report by IT industry body Nasscom. This includes skills like artificial intelligence, machine learning, low code development, and cybersecurity. Job creation is a primary objective for the Karnataka government, and subsidies are also offered to enterprises to promote local hiring.

Business reforms and streamlined bureaucracy

The improved ease-of-doing-business environment, featuring affidavit-based clearance with strict timelines, has played a key role in Karnataka attracting investments. This has enabled approved projects to commence operations without any delay for downstream approvals.

Additionally, Karnataka provides special incentives for investments in electronics, semiconductors, and solar cells, amounting to 25-30 percent of the investment. The state’s efforts to establish product-specific industrial clusters, such as the FMCG cluster in Dharwad, toys cluster in Koppal, bulk drugs park in Yadgir, and electric vehicles cluster in Ramanagara, are also expected to drive growth. 

Further, the urban agglomeration around capital Bangalore (now known as Bengaluru) is the fourth-largest technology hub in the world and largest technology base in Asia. Located in the southeastern part of Karnataka, Bengaluru Urban has over 315 large scale industries and 211 medium scale industries across sectors like information technology (IT), biotechnology, aerospace, and food processing. 

The Spoke-Shore initiative by the government aims to expedite the development of global capability centers (GCCs) within the state and establish a substantial talent pool outside of Bengaluru. The objective is to generate one million indirect and direct employment opportunities by 2026, focusing on the Mysuru, Hubbali, and Mangaluru clusters.

Labor management

The Karnataka state administration has consistently sought to balance corporate interests with larger socioeconomic considerations. For instance, the Karnataka government recently introduced flexibility for manufacturing firms in terms of raised limits of work hours and allowing women to work night shifts. There are conditions attached but the labor reforms seek to bring the state at par with other competitor investment destinations in China, Vietnam, and Taiwan.

Some recent regulatory changes facilitate the following:

  • Provision to avail ‘Fixed term employment’ to optimize labor capacity to cater to seasonality
  • Recent amendments made to facilitate women’s work timings in night shifts, between 7 PM to 6 AM
  • Overtime limit per quarter increased from 75 to 125 hours with the amendments to the Factories Act
  • Exemption limit for Industrial Disputes Act increased from 100 to 300 workers
  • Exemption limit for Contract Labor Act (seeking licenses) increased from 20 to 50 workers

Location and climate

Located in southern India, Karnataka shares borders with several states and the Lakshadweep Sea to the west. It is bordered by Goa to the northwest, Maharashtra to the north, Telangana to the northeast, Andhra Pradesh to the east, Tamil Nadu to the southeast, and Kerala to the southwest. Notably, it is the only southern state to share land borders with all four of its southern Indian sister states. Covering an area of 191,791 sq km (74,051 sq mi), Karnataka constitutes 5.83 percent of India’s total geographical area, making it the sixth-largest state in the country.

The climate of Karnataka is subtropical, with winter (January-February), summer (March-May), southwest monsoon (June-September), and post-monsoon (October-December) seasons.

Major foreign investors and MNCs in the state

Leading multinational companies investing in Karnataka include Boeing, HAL, Essilor, Foxconn, 3M, IBM, Microsoft, Texas Instruments, Dell, Bosch, Philips, Infosys, Intel, Goldman Sachs, GE, Wipro, Sun Pharmaceuticals, Pepsi, Reliance Industries Ltd., Schneider Electric, Tata Power Renewable Energy, to name a few.

Major Districts in Karnataka and Their Investment Viability


Key resources / sector

Prominent companies


  • Natural resources like limestone, granite, pink granite, dolomite
  • Agriculture
  • Ilkal sarees
  • JK Cement Works
  • Bagalkot Cement & Industries Ltd


  • Mineral resources like iron ore, manganese ore, quartz, granite
  • Steel industry
  • Agriculture and allied activities
  • Jeans capital of India
  • Tourism
  • Jindal
  • JSW Cement Limited
  • Karnataka Power Corporation Limited
  • HG Steels

Bengaluru Rural

  • Natural resources like granite and feldspar
  • Sericulture
  • Textile
  • Trade
  • Food processing
  • Auto
  • Volvo India Pvt. Ltd.
  • Bell Ceramics
  • Tata Tea Ltd.
  • Cadbury India Pvt. Ltd.
  • KirloskarElectric Co. Ltd.
  • Gemini Steel Tubes Ltd.
  • Essilor Manufacturing India Pvt. Ltd.
  • Gokaldas Exports (P) Ltd.
  • Himatsingka Seide Ltd.
  • Bombay Rayon Fashions
  • Chrisails Silk Pvt. Ltd.
  • G.E. India Industries (P) Ltd.

Bengaluru Urban

  • Natural reserves of feldspar and migmatites
  • Fertile soil of red laterite and red fine loamy to clay
  • Education hub
  • IT and allied industries
  • IBM
  • 3M
  • Infosys
  • Texas Instruments
  • Yahoo
  • Wipro
  • Bosch
  • Boeing
  • GMR
  • Sun Pharmaceuticals
  • Philips
  • Microsoft
  • Essilor
  • Pepsi
  • United Beverages
  • Reliance Industries Ltd.
  • Advanta
  • Dell
  • Biocon
  • ABB
  • HAL
  • Motorola


  • Agriculture and allied activity – pulses, cereals, fruits and vegetable cultivation – including staples onion, tomato, and potato
  • Aerospace precision engineering and manufacturing
  • Storage and cold storage infrastructure
  • Mineral resources like limestone reserves, bauxite, uranium, silica sand, aluminum, laterite, dolomite, quartzite, and china clay
  • Aluminum industry and foundry hub
  • Hindalco
  • Hindustan Latex Limited
  • AKP Foundries
  • Dalmia Cement
  • Polyhydron Pvt. Ltd.
  • Forbes Campbell Knitwear
  • Gokak Textiles Ltd.
  • Shree Renuka Sugars Ltd.


  • Agriculture and allied activity – pulses, sugarcane, jawar, bajra, gnger, sunflower, and soybean
  • Food processing
  • Natural resources that include bauxite, kaolin, red ochre, laterite stone, building stone and quartz
  • Handicraft products
  • Reliance Gas Transportation
  • Sai Life Sciences
  • Sathadeeptha Pharmaceutical
  • Nectar Crop Sciences
  • Karanja Papers
  • Vivimed Pharma
  • Talampally Rubbers Ovt. Ltd.
  • Gemini Graphics
  • Gampa Alcoats Limited
  • NSSK Sugar Industry
  • Bhalkeshwar Sugars
  • BSSK Sugar Industries

Bijapur (Vijayapura)

  • Food and beverage sector; upcoming Food Park of 80 acres at Ittangihal Taluk
  • Agriculture and allied activities – cereals and pulses, vegetable, sugarcane, and cotton cultivation
  • Fertile soil, including black soil, red sandy soil, and mixed soil
  • Natural resources that include limestone, building stone and dolomite
  • ETCO Denim
  • Dyanayogi Shri Shivkumar Swamiji Sugars Limited
  • Indian Sugars Limited
  • Basaveshwara Agro Food Processing Limited



Dakshina Kannada

  • Agriculture-based activities – areca nut, coconut, cashew, paddy, black gram, green gram, sugarcane, cocoa, pepper, and vanilla
  • Chemicals and petrochemicals
  • Natural resources like silica sand, bauxite, lime shell, ornamental stone, building stone, and ordinary clay
  • MCF – Mangalore Chemicals & Fertilizers Limited
  • BASF India Ltd.
  • Hindustan Unilever Limited
  • New Mangaluru Port Trust
  • Campco
  • Lamina Foundries
  • Goan Fresh Marine Exports Private Ltd.


  • Textile and apparel
  • Food processing
  • Agriculture – paddy, maize and pulses like red gram, green gram and black gram, groundnut, sunflower, sugarcane, and cotton
  • Horticulture – jasmine and marigold
  • Mineral reserves include iron, manganese, white quartz, and limestone
  • Steel industry
  • Indian Cane Pvt. Ltd
  • Davangere Sugar Company Limited
  • Anjaneya Agro Tech
  • Aradhya Group
  • Shamanu Sugars
  • Davangere Cotton Mills
  • Katra Phytochem Pvt. Ltd.
  • Shah Infrastructure
  • Cargill India Pvt. Ltd
  • Synthite Industries Ltd.


  • Agriculture – maize and jowar, cotton, Devanoor and Byadagi chilli varieties, sunflower, and onion
  • Floriculture
  • Animal husbandry
  • Trade
  • IT and biotechnology
  • Automobile
  • Readymade garment
  • Food processing
  • Sericulture
  • Mineral reserves of  building stone, clay, black cotton soil, and jelly stones
  • Tata Marcopolo Motors Ltd.
  • Spicer India Ltd.
  • Hindustan Petroleum Corporation
  • ADM Agro Industries Pvt. Ltd.
  • Telco Construction Equipment Company Ltd.
  • Telcon
  • Airtech
  • Uni Abex Alloy Products Limited


  • Power – 4555 MW wind power project and 700 MW gas-based unit
  • Steel
  • Horticulture and fruit cultivation
  • Agriculture – medicinal and aromatic plants like amla, ashwagandha, citronella and lemongrass
  • Textile
  • Sugar and other agro-based industries
  • Machine tools
  • Furniture
  • Paper products
  • Natural resources like quartz, iron ore, sand, clay and stone
  • Enercon India Pvt. Ltd.
  • Vijayanagar Sugars Pvt Ltd.
  • Pointec Pens(P)Ltd.
  • Suzlon Wind Power Resources Pvt Ltd.
  • The Gadag Co-operative Textile Mill Ltd.
  • The Farmer Co-operative Spinning Mill Ltd.
  • The Farmer Co-operative Oil Mill Ltd.
  • The Karnataka OEM Nut Bolt & Spare Parts
  • Hombali Brothers and Shambadi Printing Press


  • Export-oriented food processing
  • Agriculture and allied activities – cardamom, coconut, coffee
  • Agritech and R&D
  • Space research
  • Natural resources of molding sand, quartz, feldspar, copper ore, and chromite ore deposit
  • Thrust areas – food processing, pharmaceuticals, hardware, textiles
  • MCF of ISRO
  • Opto Circuits (India) Ltd.
  • Nov Max
  • Jupiter Aviation Logistics
  • Hindustan Infrastructure
  • Himatsingka Linens
  • Go Go International Pvt. Ltd
  • Petronet MHB Ltd.
  • HPCL
  • Allana Coffee Curing Works


  • A node on the Bengaluru – Mumbai Economic Corridor
  • Export hub
  • Chilli market at Byadagi
  • Agriculture – maize, paddy, jowar, ragi
  • Agro-food – spice park
  • Natural resources include china clay, sand and building stone
  • Grasim Industries Limited
  • Synthite Industrial Chemicals Limited
  • Venkateshwar Hatcheries
  • Kancor Colour
  • Ramco IndustriesPvt Ltd.
  • Gujarat Ambuja Export


  • Textile
  • Food processing
  • Cement
  • Biofuel
  • Agriculture – tur, jowar, bajra, and paddy, fruits
  • Natural resources include limestone, granite and quartz
  • Thrust areas – floriculture, aromatic and medicinal herbs
  • ACC Limited
  • Chettinad Cements
  • India Cements
  • Gulbarga Cements
  • Lafarge Cements
  • Ashok Polymers
  • Rajshree Cements
  • Zawar Cement Pvt. Ltd.


  • Eco-tourism, golf
  • Agriculture and allied activities – coffee, tea, rubber, teak, areca nut, tapioca, pepper, cardamom, and orange cultivation
  • Natural reserves of reddish-brown soil and yellowish-grey to greyish sandy loam
  • Tata Coffee Limited


  • Agriculture and allied activities – potato, tomato, onions, chillies, coconut, cashew
  • Sericulture
  • Dairy
  • Textile – handloom, readymade garment
  • Poultry – broiler chicken production
  • Agro-based and food processing
  • Pharmaceutical
  • Auto
  • Natural resources – limestone, laterite, and dolerite
  • Bharath Earth Movers Limited
  • Honda Motor Cycles & Scooters
  • Tata Power Co. Ltd
  • Glaxo Smith Kline (G.S.K)
  • Scania Commercial Vehicles
  • Associate Decor Limited
  • Mahindra Aerospace
  • Mitsubishi Electric Company
  • Badve Engineering


  • Agriculture and allied industries – second-largest production in the state; paddy, maize, jowar and bajra, fruits like pomegranate and grapes, plantation crops like beetle vine and coconut
  • Steel ancillary
  • Tourism
  • Natural resources include syenite brittle, coronado stone, green quartz, and building stone
  • Bhoruka Power Corporation
  • Kirloskar Ferrous Industries
  • Kalyani Steels Limited
  • Ultra Tech Cement
  • Xindia Steels Limited
  • Praxair India Pvt. Ltd
  • MSPL Ltd


  • Hydroelectric project
  • Food processing and sugar zone
  • Sericulture and research
  • Textile – handloom cluster, RMG park
  • Pharmaceuticals
  • Mineral reserves include granite, building stone, sand, quartz, felsite, and ornamental stone



  • IT – second-largest software exports after Bengaluru
  • Agriculture and allied activities – sugarcane, cotton, and tobacco
  • Tourism
  • Milk and ice cream
  • Textile, silk, artisanal products
  • Natural resources – quartz, magnesite, graphite, limestone, and dolomite
  • Balaji Malts Pvt. Ltd
  • Mysore Sugar Co. Ltd.
  • Graphite India Ltd.
  • Chamundeshwari Sugars Ltd.
  • Welspun Corp. Ltd.
  • Klean Pack Ltd.
  • Shahi Exports
  • Gokaldas Exports Ltd.
  • ICL Sugars


  • Rice mills
  • Gold manufacturing, Hatti gold mines
  • Thermal power plant
  • Solar photovoltaic power plant
  • Agriculture and allied activities
  • Textile trade – cotton and leather products
  • Mineral reserves include gold, copper, feldspar, granite, quartz, sandstone, and limestone
  • Hutti Gold Mine Co. Ltd.
  • Vishal Cotspin Ltd.
  • Surana Group
  • Koganti Power Ltd.
  • Raichur Thermal Powerplant Corporation Ltd.
  • Shilpa Medicare Limited


  • Urban infrastructure
  • Textiles – Asia’s second largest cocoon market, integrated textile park, textile research
  • Food processing
  • Tourism development
  • Natural resources are granite and building stone
  • Wood-based industry
  • Toyota Kirloskar Motor Pvt. Ltd.
  • Saint Gobain Gyproc India Ltd.
  • ForgePro India Ltd.
  • Bosch Ltd.
  • Hindustan Coca-Cola Beverages Private Limited
  • A.T. India Auto parts
  • Senapathy Whiteley Private Limited
  • Maiyas Beverages And Foods Private Limited
  • Paramount Nutritions
  • Featherlite Office Systems Pvt Ltd.


  • Agriculture – paddy and maize, cashew, ginger, pepper, cardamom, and vanilla
  • Iron and steel
  • Paper mills
  • Dairy units
  • Soaps and detergents
  • Agro-based industry
  • Auto components manufacturing
  • Handicrafts
  • Natural resources include limestone, manganese, china clay, building stone, laterite, and alluvial soil
  • Mysore Paper Mills Ltd.
  • Visvasvaraya Iron & Steel Ltd.
  • Shahi Exports Pvt. Ltd.
  • English India Clay Ltd.
  • Malnad Alloy Castings Pvt. Ltd.
  • Paper Packaging Private Limited
  • Perfect Alloy Components Ltd.
  • M N Pickles Industries
  • Xchanging Technology Services India Pvt Ltd
  • Pearlite Liners Private Limited


  • Textile
  • Floriculture – aster, crossandra, jasmine, and chrysanthemum
  • Agro-based industries
  • Coir industries
  • Rice mills
  • Oil extraction mills
  • Natural resources like manganese, limestone, iron ore, dolomite, granite, and silver sand
  • New thrust sectors – telecommunication and industrial infrastructure, machine tool
  • Heidel Berg Cement India Ltd.
  • System Consultant Information India(P) Ltd.
  • Sunvik Steels Pvt. Ltd.
  • Mann & Hummel Filter Private Limited
  • TTP Technologies
  • Visaka Industries
  • KAR Mobiles Ltd.
  • STI Granite India Pvt. Ltd.
  • Murudeshwar Ceramics Limited


  • Financial sector
  • Food processing
  • Agriculture – cultivation of cashew nut, paddy, and pulses like black gram, horse gram, green gram, cowpeas, and groundnut
  • Agro-based industries
  • IT, engineering, shipbuilding – new thrust sectors
  • Natural deposits of silica sand, bauxite, lime shell, building stone, and clay
  • Education
  • Robosoft Technologies
  • Suzlon Energy Limited
  • Lamina Foundries Ltd.
  • CS India Steel Pvt. Ltd.
  • Tebma Shipyards Limited
  • Manipal Education and Medical Group

Uttara Kannada

  • Atomic plant
  • Karwar port – capacity of 75000 million tons liquid storage and 30000 MT warehousing
  • Agriculture and horticulture – areca nut, coconut, cashew, kokum
  • Herbal processing industry
  • Tile
  • Coir
  • Engineering and construction
  • Fisheries
  • Natural deposits of silica sand, quartz, lime shell, building stone, and clay
  • Nuclear Power Corporation of India Limited
  • Seabird Project
  • East India Distilleries Parry Limited
  • Grasim Industries
  • West Coast Paper Mills Limited
  • Solaris ChemTech Industries Limited


  • Agriculture – cereals, pulses, jowar, paddy, red gram, sunflower, groundnut
  • Natural resources are building stone, copper, gold, feldspar, quartz, limestone, uranium
  • Handloom and traditional crafts
  • Core Green Sugars Yadgir

Investments announced in 2022-23

Some of the latest investments approved in the state for the financial year 2022-23:

  1. A third electronics manufacturing cluster (EMC) coming up in Hubli, Dharwad district – covering an area of 224.5 acres. The new greenfield EMC aims to catalyze investments of over INR 15 billion and generate over 18,000 jobs. Nine companies and start-ups have already committed investments of INR 3.4 billion and employment potential of 2,500 people.
  2. Mega textile parks planned in Raichur, Kalaburagi, Vijayapura, and Chikkamagaluru districts and 25 mini textile parks across Karnataka on a public-private-partnership (PPP) model.
  3. Over INR 2 trillion worth investment proposals in the green energy sector.
  4. The State Industries and Commerce Department cleared 78 investment proposals in March 2023 worth INR 52.98 billion (US$647.36 million) promising 13,917 jobs. Approvals were given to 17 important large and medium size industrial projects (that is, each project investment is above INR 500 million / approx. US$6.10 million), 59 new projects with investments of more than INR 150 million (US$1.83 million) and less than INR 500 million, and 2 projects of additional investment at about INR 2.03 billion (US$24.81 million).

Quick Glance: Karnataka’s Economic Profile and Industrial Ecosystem

  • State GDP of US$260 billion in 2021-22 and per capita GDP of US$3800.
  • Exports from Karnataka stood at almost US$115 billion in 2021-22 – 18.9% of India’s total exports.
  • FDI inflows between October 2019 and December 2022 amounted to US$42.8 billion.
  • Rise in investments from INR 165 billion in 2018-19 to INR 3.23 trillion in 2022-23.
  • Karnataka was the top state attracting FDI during April 2021-March 2022 with INR 1.76 trillion worth investments. Total investments in Karnataka from FY 2018-19 to FY 2022-23 stood at INR 4.67 trillion.
  • Key sectors in the state are aerospace and defense, food processing, auto, auto components and electric vehicles, biotech, pharmaceuticals, medical devices, electronic system design and manufacturing, clean energy, start-ups, steel, capital goods, toys, textiles and apparel, and tourism and wellness.
  • A thriving technology industry.
  • Karnataka’s digital economy is worth around US$130 billion.
  • 700,000 fresh graduates annually and 400,000 engineering graduates annually.
  • Home to over 400 Fortune 500 companies with their production, services, and global research and development centers located in the state.
  • Bangalore, the state’s capital city, alone contributes to 60 percent of the total value of machine tools manufactured in India.
  • Second highest producer of special purpose and heavy electrical machinery in India.
  • The second largest chip design hub in the country.
  • The largest software exporter in India.
  • 2050 MW solar park set up at Pavagada, one of five biggest photovoltaic solar power parks in the world.
  • Accounts for about 70% of coffee production and 33% of silk production in India. Leading producer of cashew nut, millets, marine products, rose onion, gherkin, green chilli, tamarind, sunflower and Byadgi Chilli.
  • Generous investment promotion subsidies and higher incentives for tier-2 and tier-3 cities to expand investments beyond the capital.

This article was originally published April 13, 2023. It was last updated November 28, 2023.

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