The State’s industrial profile, in terms of growth in production, investment approvals et al is well-charted, from manufacturing units in various sectors, to district-wise distribution of industrial activity.

Karnataka is one of India’s leading industrial States, contributing almost 8% to the national manufacturing income. It has a long tradition for supporting industrial entrepreneurs and encouraging innovation and research and its strong and vibrant industrial base combines the intrinsic strengths of large industrial public sector undertakings, large and medium privately owned industries and a wide range of small-scale units. While on one hand, the State is the aerospace hub of the country operating on cutting edge engineering and IT capabilities, on the other, its garment sector dominated by small units contributes 20% to the national garment output.

Karnataka’s industrial sector, as measured by the Index of Industrial Production IIP, rose by 4.72% in 2008-09, lower than the previous two years due to the global slowdown. The IIP comprises mining, manufacturing and electricity production and these three sectors grew at 7.4%, 5.51% and 0.08% respectively.

The low growth in electricity generation has been a cause for concern, given the demand stemming from the rapid growing economy. The State government has therefore planned power projects that will enable the State to be energy sufficient by 2013-14.

Looking at the sub-sectors in the IIP, 8 of the 22 sub-sectors recorded high growth of more than 20% in production in 2008-09, a year in which the economy had been hit by the global slowdown.

Investment intentions slowed down considerably in 2008-09 as the global financial crisis followed by the recession around the world hit investment plans. However, by March 2010, there were clear signals of a firm recovery in the Indian economy and capital investment plans shelved during the crisis have since picked up steam once again. Karnataka will therefore see a revival in investment in the current year 2010-11 as the basic fundamental strengths of the economy – rich resources, progressive policies, stable State, supportive ecosystem
for entrepreneurship and investment- continue to stay in place.

The compound annual growth rate of investment proposals above the value of Rs. 3 crore has been 25% over the period 2001-02 to 2007-08 and with the renewed vigour of the State policies and support, this growth is set to rise further in the next five years.