Karnataka i4 Policy: IT, ITES, Innovation Incentives Policy

IT has grown so big that it is a horizontal sector that spans across verticals like BFSI, healthcare, pharma, retail education, and every other sector that contributes to development of the country. It was inevitable for the government to consider potential growth and improve the IT scene in the state. The Karnataka government yesterday unveiled the i4 policy to strengthen its thriving IT industry. The policy is directed to convert Bangalore from one of the top ten IT hubs to the largest IT cluster globally by 2020. The policy offers concessional power tariff, employment-linked incentivisation of land allotment (E-LILA) and treatment of essential service. By 2020, it will overtake Silicon Valley to become the single largest IT cluster anywhere on the planet with 20 lakh direct and 60 lakh indirect jobs.

At the policy launch at ITE.Biz, most speakers observed that startups are the buzz word and the next boom will come from that sector. And when you consider aspects that are key for a vibrant startup ecosystem, like mindset of people, risk apetite, availability of skills etc. Bangalore is a leader. Speaking at the conference inauguration, Kris Gopalakrishnan Infosys executive vice-chairman added, "Bangalore has an unusual mix of mature IT organizations and MNCs as well as startups. This enables a transition of the city from an IT capital to innovation capital to startup capital."

Where Bangalore can improve as an IT hub

The exponential growth in IT, however, has not been met with required growth in urban infrastructure.  Planning Deputy Chairman Montek Singh Ahluwalia revealed, "Infrastructure has been left far behind. The city must ensure that everything is being done to provide urban infrastructure."

Besides, with the IT burst, we have only begun to scratch the surface of the potential. Ahuwalia added, "We have a lot of catching up to do. Indian productivity levels are way below global norms. This has to improve. Secondly, we havev't demonstarted our competitive advantage oin electronics. New policies may help Bangalore not only retain its position in the IT market, but move ahead to the #1 position."

Policy highlights

According to the i4 policy, the state government will exempt IT/ITeS/Start-ups/knowledge based industries from the applicability of Karnataka Industrial Employment (Standing Orders) Rules, 1946, for a period of five years with effect from November one this year, with appropriate clause for protection of women employees and prevention of sexual harassment in work place.

IT, ITeS, Innovation, Incentives policy, treates IT/ITeS/BPO/KPO/Knowledge industries on par with public utilities to exempt them from disruptive effects of general strikes and bandhs.

Industrial power tariff (instead of commercial power tariff) will be applicable to all IT/ITeS, BPO, telecom, start-ups and knowledge-based industries in the state, after due consultation and approval of Karnataka Electricity Regulatory Commission and Government of Karnataka.

IT/ITeS/Start-ups/knowledge based industries would be entitled to stamp duty exemption of 75 per cent in Mysore and Mangalore, in addition to other locations as per the industrial policy.

Start-up companies would be eligible for plug and play space with internet at concessional rates of Rs. 5-15 per sq ft, depending on the location.

Brand Bangalore 3.0 society and a "Bangalore First" fund would be set up to promote Bangalore along the lines of India Brand Equity Fund set up by the Government of India, in association with CII.