How Karnataka govt is planning to make the state the ‘factory of the future’

The policy focuses largely on promoting MSMEs, creating large industrial townships and manufacturing hubs.
How Karnataka govt is planning to make the state the ‘factory of the future’
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Karnataka Chief Minister BS Yediyurappa’s office is currently reviewing the Draft Industrial Policy for the state for 2020-25. The policy document has multiple proposals, with the focus on making the state the ‘factory of the future’. 

How will this be achieved? The draft policy focuses on boosting 13 major sectors: automobiles and auto Components; pharmaceuticals and medical devices; engineering and machine tools; knowledge-based industries; cement; steel; sugar; logistics; renewable energy; aerospace and defence; electric vehicles; healthcare and wellness; higher education; and biofuels. 

The policy envisions generating investments to the tune of Rs 5 lakh crore and creating employment for 20 lakh people. Here are the major points in the draft police. 

‘Land bank’ for industrial development

One of the biggest recommendations of the draft policy is large scale land acquisition by the government, to then be sold for industrial development. 

On April 27 this year, the state government amended the Karnataka Land Reforms Act of 1961, and made it possible for industries to buy land, less than 216 acres, directly from the Karnataka Industrial Area Development Board (KIADB). This includes land that was previously prohibited to be sold for industrial purposes. 

It proposes that the KIADB acquire 20,000 acres of land in a phased manner over the next few years, and create a “land bank”, from which land can be sold for development of industrial areas quickly.  A price fixation committee will be consulted to determine the land prices. 

Industrial parks and industrial townships

The draft proposes the development of industrial areas in Mummigatti-Dharwad; Narasapura phase 2 in Gadag; Kanagala in Belagavi; Mulavad in Vijayapura; Kushtagi in Koppal; Kudatini and Mundargi phase 4 in Ballari; Chittapur in Kalaburagi; and Kolhar phase 2 in Bidar. It also proposes utilisation of vacant land of Bharat Gold Mines Limited in the development of the Chennai-Bengaluru Industrial Corridor. 

It proposes construction of Industrial Parks on PPP model, and those that are privately owned. 10-15% of the land in industrial areas is proposed to be earmarked for supporting infrastructure like housing, service apartments, hospitals, and shopping complexes within industrial areas over 1,000 acres. 

The proposed policy suggests that the Karnataka Industrial Township Area Development Act be passed, for the industrial areas that will be notified in the future.

“When a government sets up industrial parks, its maintenance is generally given to the local bodies. In some townships like in Maharashtra, an Industrial Authority is appointed to oversee the maintenance of the industrial township. Local bodies do not maintain infrastructure properly. The draft proposes that the industrialists be in charge of maintaining the civic amenities within the township,” a senior official with the Department of Commerce and Industries said. 

He further stated that the Industrial Authority would comprise representatives of industrialists and bureaucrats and that the Industrial Authority have powers to collect property taxes, advertisement tax, development cess, sanction of building permits, removal of encroachments, management and maintenance of civic services in said areas. The draft also proposes that these Industrial Authorities monitor the compliance of laws related to manufacturing processes in the said areas.  

“There are a lot of issues which intersect here like maintaining law and order, the property tax or any cess collected by the IA will go to KIADB. But there are still a lot of issues that need to be addressed, which is why a comprehensive legislation like the Karnataka Industrial Township Area Development Act is required. This does not mean that governance is privatised,” the official said. 

The policy proposes bringing in amendments to the Karnataka Corporations Act, 1964 and the Karnataka Panchayat Raj Act, 1993 to allow Industrial Authorities to maintain the townships. 

Dharwad Special Investment Region

The policy proposes that a Special Investment Region be established in Dharwad. This will be an Industrial Township with an area of 100-150 sq km, which aims to become a global economic hub, which will also have necessary infrastructure and civic amenities. It proposes enactment of the Special Investment Regions Act to regulate SIRs. 

It also proposes SIRs in Shivamogga Davangere, Chitradurga, Chikkamagaluru and Kalaburagi districts. Sources in the Department of Industries and Commerce say that the thrust for north Karnataka in the industrial policy is largely a political move by the BJP to retain its vote bank in the northern districts. Hubballi-Dharwad Central is also the home constituency of Industries Minister Jagadish Shettar. 

Labour reforms

The draft has proposed the increase of overtime working hours to 125 hours per quarter. Currently, according to section 64 of the Factories Act, 1948, the total number of overtime hours must not exceed 50 hours per quarter. According to section 65 of the Factories Act, the total number of overtime hours must not exceed 75 hours if the factory has higher workload. However, the draft policy does not mention the pay scale for the proposed revised overtime work. 

The policy also mentions periodical revision of minimum wages keeping in mind inflation and consumer price index. However, the cycle of pay revision is not suggested in the draft policy. 

The policy proposes an increase in shift timings and number of shifts for women employees. The existing shift is between 6 am to 7 pm, while the draft proposes that women can be put on shifts between 6 am and 10 pm on multiple shifts. 

“MSMEs employing up to 50 employees shall be exempt from maintaining cumbersome records, furnishing returns and maintaining registers,” the draft says.

The draft, however, does not mention specifics related to the labour reforms it seeks. It, however, mentions that a detailed study needs to be conducted before making further recommendations regarding minimum wages, shift timings for women employees and also relaxations it can offer businesses. 

Promotion of MSMEs 

> Sarthak Scheme to boost micro, small and medium enterprises. 

> A new online platform will have various resources for MSMEs like connecting enterprises with suppliers of raw materials, platform to access retail and wholesale markets, information about global quality control standards, access to credit 

> Support related to data analytics, market research, intelligence, skill development, technology, knowledge and branding and advertising. 

> A separate Centre of Excellence to identify the strengths of MSMEs to provide them with “strategic guidance” and required technological options. 

> KIADB to provide 30% of allottable land in industrial areas to MSMEs. 

> 22.65% of land reserved for SC/ST entrepreneurs, 10% for Minorities and persons with disabilities, Backward Classes (Category1 and 2A only), ex-servicemen entrepreneurs and 5% for women. 

> 70% of land acquired by KIADB will be allotted to large, mega, ultra mega and super mega manufacturing enterprises

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