Karnataka Driving India’S Push To Become Global Manufacturing Hub

As the China plus one theme gains momentum post Covid, global companies are scouting for geographies to set up manufacturing facilities for making their supply chain resilient. Sensing opportunity, India is pushing aggressively to emerge as a manufacturing hub. With a slew of measures like PLI (production linked incentive scheme), tax concessions and investment-friendly measures, India is welcoming global companies to set up manufacturing units in the country. In India, states like Karnataka, which has traditionally been a key industrial State, are driving this movement.

In a conversation with the Bizz Buzz, Gunjan Krishna, Commissioner for Industrial Development and Director, Department of Industries & Commerce, Government of Karnataka said that India has the capacity to emerge as manufacturing hub of the world, given its huge landmass, market and young population.

She said that Karnataka, which has always been at the top three destinations in terms of attracting FDI, is witnessing a great traction in the manufacturing sector. From traditional manufacturing to new age sectors like EV, semiconductor, renewable energy and others; companies are setting up facilities in the State. Krishna also said that the State is assiduously developing every region of the State taking into account the raw material availability, talent base and other factors

In the post Covid world, China plus one is playing out as countries are looking for diversifying their manufacturing bases. Do you think India has the capability to emerge as a manufacturing hub?

After the Covid, we have seen a great traction in the number of companies, which are either setting up manufacturing capacities here or looking at setting up manufacturing capacities. Most of these companies are definitely looking at China plus one because of three forces working in that direction. One is many of the companies realise that their supply chain is limited to one geography. So, they are looking at diversifying the supply chain and secure the supply chain, because if something happens there, the supply chain is totally disrupted. So, they intend to create a resilient supply chain.

The second part is what is playing out between the US and China also has also an impact. That is another reason many companies are looking at India as a viable option. Not only India, companies are also looking at Mexico, Malaysia, Vietnam, and UAE among others. In India, we have an added advantage. We are a large country; we have a young population and we are also a large market.

Karnataka has always been among the top three states in terms of FDI inflow. Two years back, we got 38 per cent of the total investment. This year, we are in the third position. We are always at the top three. In terms size, Karnataka has one of the highest per capita income. That shows our economy is doing pretty well. As far as GCCs (Global Capability Centres) are concerned, we have 500 global companies having their GCCs here. Karnataka has a 30 per cent share in terms of GCC share, which is huge. Everyday, we are witnessing interest from manufacturers. We are getting a lot of interest from the eastern part of the world and also from the west.

Therefore, India is going in the right direction (as far as emerging as a manufacturing hub is concerned). Also, we are not looking at OEMs (Original Equipment Manufacturers) doing their end assembly here, we are looking at how to create a whole supply chain. The government of India’s PLI (Production Linked Incentive) and State government’s various incentives are enabling this process. For example, if you look at electronics sector, we are not looking at end assembly. We are rather looking at how every component can be made in India. Moreover, we are looking at how our companies can build some of the components.

Karnataka has always been at the forefront of leading India’s IT revolution. Similarly, the State has a leading role in the biotechnology space. Similarly, the State has a sound share in the traditional manufacturing sector like steel. Is the focus now slowly shifting to emerging segments in manufacturing space like EV (electric vehicle), semiconductor, renewable energy and others?

Karnataka is not only an IT-BT story. There is no denial of the fact that Karnataka has the largest technology cluster in the world, which is also the fastest growing. We are an undisputed leader in artificial intelligence (AI), machine learning (ML), IoT (Internet of Things) and related technologies. Even traditionally, when the first machine tool revolution happened in India, it happened in Karnataka. We are still the number one. Around 50 per cent of the precision engineering work, machine tool work happen in Karnataka. In aerospace and defence, we are number one in the country. That is another industry, we are doing very well. Similarly, biotech is another space, wherein Karnataka is doing pretty well. A lot of drug discovery, and biosimilar work happen in Karnataka. Of course, we have a strong presence of traditional sectors like steel and cement.

In the emerging technology areas, around 63 per cent of our installed capacity comes from the renewables. Talking about batteries, the first factory has come up in Karnataka by Exide Industries. If you look at EV, Ola & Ather have their R&D centre here. In manufacturing, companies like River, Tata, Mahindra, Toyota and others are producing their EV and hybrid vehicles from plants in Karnataka. In electronics, from Wistron to Tata Electronics, all have chosen Karnataka. Tata Electronics has chosen Karnataka to do their proof of concept of semiconductor packaging, testing and related things here.

How do you see the geographical distribution of manufacturing in Karnataka? Do you think, development has come across all the regions of the state?

Manufacturing has gone deeper (into various regions of the State). In Mysuru, Ramanagara, Kolar, Tumakuru. In Tumakuru, we have a dedicated Japanese industrial park and a lot of Japanese companies are coming at that place. Kolar has emerged as an electronic and automotive hub. From Volvo, Mahindra to Honda are there. Wistron, and Tata Electronics have facilities in Kolar. Several aerospace and defence companies in Devanahalli. In Ramanagara, there is presence of companies like Toyota, Coca Cola, Bosch and several others.

In Karnataka, we have a sound ecosystem of MSMEs. This provides a strong base (to manufacturing). Also, the Hubballi-Dharwad region has developed in a major way with a lot of Japanese companies having present there. In Belagavi, many companies have set up units in the aerospace and defence park. We have a consumer goods park in Dharwad.

In Kalaburagi (previously Gulbarga), it has cement industry in a big way. Raichur also has pharmaceutical and cement industries. In Koppal, a toy cluster is coming up. In Chitradurga, public sector defence and space units like ISRO, and DRDO are setting up their base there. Every part of Karnataka has something unique to offer and the idea is to develop every part of the state depending upon the availability of raw material, and skill-set.