K'taka wants pvt cos to build industrial parks

BENGALURU: Karnataka’s industries department is in talks with private developers such as Mahindra Lifespaces, ESR, DP World, IndoSpace and the Embassy Group to build large industrial parks, in an effort to replicate models that have worked well in Southeast Asian countries like Vietnam and the Philippines.

Only companies with expertise in developing estates of 200-300 acres are being tapped, as Karnataka looks to raise stakes to attract big-ticket investments into the manufacturing sector. The state accounts for a third of India’s software exports and is pursuing to script a similar story in manufacturing too.

The new approach would break the monopoly that the Karnataka Industrial Areas Development Board (KIADB) has established over the decades. Industries have often complained that the KIADB has not been in sync with the times, and its industrial estates reek of poor maintenance and lack of innovation. The industries department has identified suitable plots near the Bengaluru international airport as well as near Bidadi to locate modern plug-and-play parks.

Entrepreneur Aravind Melligeri’s Aequs Group is building India’s first toy manufacturing cluster on a 400-acre plot in Koppal, North Karnataka, and a consumer electronics park in Hubli, the native district of industries minister Jagadish Shettar.

“The 358-acre (consumer electronics) park will have 80-100 units and Aequs is confident some of them will start within a year’s time,” Shettar told ET.

The Koppal cluster has already received six proposals and is expected to go on stream in a year’s time. These parks, Shettar said, will add thousands of jobs in north Karnataka, and boost the local economy.

The state government is open to trying out different models, including the KIADB partnering with private developers with land as its share of equity like it did earlier with Singapore’s Ascendas, which had built the Information Technology Park-Bengaluru (ITPB), a landmark facility for tech companies at Whitefield.

Recent amendments to the land reform laws have made it possible for private industrial real estate developers to buy vast swathes of farmland and build manufacturing clusters. They can raise bank loans and exit at a later stage as the government has removed all legal hurdles.

Gunjan Krishna, the state’s commissioner for industrial development, said private developers will bring expertise into building next-generation facilities and play their part in reaching out to potential investors.

These parks will have a mix of special economic zones for export-oriented units and a domestic-tariff area for those catering to the local market.

The new industrial policy, she added, provides a few sops to developers, like stamp duty exemption and an investment promotion subsidy. Micro and small units coming up at these parks will get some extra benefits like subsidy on land and water charges.

Investors will find a lot of flexibility with private parks, as some prefer outright purchase, others wish to lease, or a rent. Some would expect ready-made structure.

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