Karnataka is all set to develop the startup ecosystem by providing incentives for SMEs and startups. The government is encouraging the tech products developed by the startups. Through the initiative 'Beyond Bangalore', Karnataka is planning to set up more than 6-8 new Centers of Excellence (CoE) in the current financial year for sustainable growth through digital transformation to act as incubators for businesses and emerging technologies.

“Presently, we are focusing on 3 clusters in emerging tech – Mysore (cybersecurity and electronics system design and manufacturing), Mangaluru (fintech and electric vehicles), and the Hubli-Dharwad-Belgaum cluster (Agritech and Industry 4.0),” says Priyank Kharge, Minister for Information Technology and Biotechnology; Rural Development and Panchayati Raj, Government of Karnataka.

Mysore Cluster is the second largest exporter of software in Karnataka. It is home to more than eight incubation centers and 100 technology startups. The Mangaluru cluster has more than 15 incubation centers, 200 startups, and 50 mid-sized companies accounting for more than Rs 3,000 crore in exports.

The government is also focusing on building innovation ecosystems through centers of excellence in various fields. These include deep technology, cyber security, and innovation in agriculture, aerospace, and robotics. The government also leads the Global Innovation Alliance (GIA) initiative. This includes exchanging knowledge and ideas with leading technology centers around the world. Currently, it actively cooperates with more than 30 countries. The program offers opportunities for market expansion into GIA partner countries.

To support these emerging technology hubs, the state, with industry participation, has created an organization called the Karnataka Digital Economy Mission (KDEM) to implement a multi-pronged approach. Additionally, the Elevate – Kalyana Karnataka program, organized in collaboration with the Kalyana Karnataka Region Development Board (KKRDB), aims to fund 25 start-ups from seven districts of the Kalyana Karnataka region. So far, more than 700 start-ups have been funded under this program with a commitment of ₹165 crore.

Hubballi-Dharwad-Belgaum and Mangalore to become the Tech Hubs

By 2030, Mysuru, Hubballi-Dharwad-Belgaum, and Mangalore are expected to contribute more than $10 billion to the technology industry, employing more than 10,000,000 people and becoming home to 10,000 start-ups.

Both the KDEM and the state government have also created the sectoral infrastructure that best suits the regions. Mangaluru, with its strong banking sector, is therefore on track to become a fintech hub, while Mysore, apart from being developed as an ESDM (Electronic Systems Design and Manufacturing) hub, will also become a cyber security cluster. Hubballi-Dharwad-Belgaum, on the other hand, is known for its focus on the foundry and automobile sectors, and this is where we will focus on developing this sector. Ultimately, we expect these cities to be home to some of the big business giants and middleweights outside of the metropolis, similar to Seattle and Davos; and become self-sustaining, global business centers with corporate spin-offs, local talent and business support and administration.

Of the 21,656 start-ups in Karnataka, 17,879 are in Bengaluru, while 3,777 are outside Bengaluru. Today, Mysuru, Hubballi-Dharwad, and Dakshina Kannada have 602, 244, and 237 start-ups, while Belgaum and Udupi have 355 and 213 start-ups, respectively. The BharatNet project will provide last mile connectivity beyond Bengaluru and boost growth in these cities. Since the launch of Beyond Bengaluru in 2020, more companies are looking to set up shop in Karnataka, which in turn has fueled the growth of unicorn startups and attracted nearly USD 7.5 billion in venture capital funds in the first half of 2022. The state is also the first to create artificial intelligence and cyber security services clusters in Hubballi-Dharwad and Mysuru regions. Learnings from these clusters can be incorporated, and the model can be replicated across India.

Karnataka Working on Fintech Startups

Karnataka is working on a fintech startup program that aims to bring together the government, venture capital, and banking sectors to offer seed funding and mentoring support. The government also plans to set up a center of excellence (CoE) for fintech to nurture talent, leadership, and entrepreneurship and foster innovation, the minister said while addressing the three-day Global Fintech Fest (GFF 2023) that began at the Jio World Trade Center in Mumbai.

Karnataka and its policies are aimed at decentralizing development on the principles of "Sab ka Saath, Sab ka Vikas." The Beyond Bengaluru program is one of its kind when it comes to nation-building on the foundation of development for all. I am confident that this initiative will contribute not only to growth across sectors within the state but also to the expansion of the national economy by providing the right infrastructure for industries and businesses to flourish not only domestically but also globally.

Space Sector and the Policy

To tap its potential in the space sector and attract investment, Karnataka will come up with a space policy. The policy focus would be to support production, innovation, and research and development in this area. The policy also proposes to promote innovation and manufacturing with a focus on increased private participation, global collaboration, and partnerships. The policy will take a Beyond Software approach.

"Establishing a manufacturing, assembly, and testing ecosystem for components, systems, and subsystems. It also focuses on the use of space technology to provide governance in critical sectors of government."

The Karnataka policy will be based on India's Space Policy 2023, which formalized Isro's technology transfer to non-governmental entities and allowed private firms to operate independently in end-to-end major space activities. India's space economy could grow to $44 billion by 2033 from the current $8.4 billion. Karnataka's space ecosystem is best positioned to tap into it and eventually hold more than 40 percent market share of India's space economy.

Contribution to Digital India Programs

There is no doubt that the next phase of India's growth, especially in the technology sector, will come from smaller urban environments and locals, even as more and more young people become part of the mainstream of development and nation-building. However, this transition will require robust infrastructure and ecosystems to help create and sustain opportunities.

Working on a mission to go beyond metropolitan centers, the Government of India is bringing together its flagship Start-Up India and Digital India programs to improve infrastructure across sectors, be it connectivity, ease of living, health, education, or skills and upskilling. Digital India's BharatNet project aims to create a highly scalable network infrastructure to provide broadband connectivity to households and institutions in villages and remote areas.