news Monday, July 06, 2015 - 05:30
  The remarks of a foreign company’s threat to pull out of the state are being projected as the death knell of Karnataka as an investment destination, but the reality may be not quite so alarming. In a recent public event, Bosch’s India head Steffen Berns claimed that the bureaucratic red tape caused a delay of 19 months in the schedule of its project. The company is shifting its Adugodi plant in Bengaluru to Bidadi (Ramnagara district) on the outskirts of the city. The Times of India had reported that the Berns had said that a nine month delay had been caused by state government in providing an electricity connection, but Bescom clarified its position, saying that it had done its part and that the ball was now in the court of the Karnataka Power Transmission Corporation Limited (KPTCL). Siddaramaiah has especially been attacked for his industrial policy because of the perception that his socialist background would somehow make it difficult to do business. Sections of the media too, have joined in this chorus. However, the argument is not so simplistic. After Berns’ outburst, heads of industry in the state have said that the government needs to step up. Biocon Chairperson and Managing Director Kiran Mazumdar Shaw told The Times of India: “This is a warning sign. We have been demanding an industry minister for over a year now.” The report also quoted other industry owners as saying that the government was not responding to their demands. This criticism comes some months after e-commerce giant Amazon threatened to pull out of the state over a tax dispute with the government of Karnataka in September. Amazon had taken issue with the government’s VAT policy. The Karnataka government said that Amazon had to pay VAT for the products stored in its warehouse, while the company maintained that it was merely a third party storing the goods but directly selling anything itself. These developments were met with talk of the state’s image as an investment destination taking a beating. The state government had said that it was “suicidal” for the company to effect a complete withdrawal from the state.  Siddaramaiah had dismissed fears that Karnataka was turning investment-unfriendly. He had then said that apart from Hero MotoCorp, no other company had left the state. Although Amazon shifted its warehousing facility to Hyderabad, in April, the firm said that it had no plans to withdraw all its investments from the state. It said it would not invest in warehousing in Karnataka as the state’s laws had not taken into account some aspects of online trading. Even as the stand-off between Amazon and the state government came to the fore in September, the industry was all praise for the Siddaramaiah government, over an amendment to the Karnataka Land Reforms Act 1962. The amendment removed the provision to obtain separate approval for the conversion of agricultural land into industrial land once the government has approved  a project. Chief Secretary Kaushik Mukherjee had said that the move would “open up flood-gates for good industrial development.” Chairman of Manipal Global Education Services TV Mohandas Pai had told The Economic Times that it was a move that would greatly benefit the industry. The website of the Industries and Commerce Department says that the state is home to 80 Fortune 500 companies and more than 700 multi-national companies and in Bengaluru, Mangaluru, Hubballi, Dharwad, Mysuru, Kalaburgi, Shivamogga, Karwar, Tumakur, Belagavi. If the state government’s industrial policy needs to be questioned, there is at least one major issue: the land bank.The land bank is obviously of no issue of concern for the industry, that is peppering the CM with praise.     

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