Infrastructure

Government of Karnataka provides a fair and transparent policy framework to enable the process of economic growth and encourages Public-Private Partnership (PPP) in upgrading, expanding and developing infrastructure in the State. The State Government wants an increasing role for PPP both in creating new infrastructure assets as well as in managing assets already created. The Government has set up a PPP cell, which will co-ordinate and facilitate the identification, development, and implementation of infrastructure projects, including facilitation for obtaining clearances and approvals on a PPP route. It will act as a Single Nodal Agency for PPP projects in the State.

Key drivers for growth in the segment:

The State Government has created twelve focus sectors for Infrastructure Development in Karnataka. The sectors are agri-infrastructure and irrigation, education, energy, healthcare, industrial infrastructure, rural development, sports and youth services, telecommunication, tourism, transport and logistics, housing, urban and rural infrastructure. The allocation for infrastructure projects has increased by 45% in the period 2012-16 over 2008-12. New infrastructure projects offering an opportunity of USD17, 250 million has been proposed by the Government of Karnataka.

Karnataka has been a PPP friendly state. A shining example of such of an effort is Kempegowda International Airport, a PPP with Government of India, Government of Karnataka and Private sector. It is now 3rd largest airport in India and awarded “Best regional airport in Central Asia”. Karnataka has KSHIP- First of its kind co-financing projects under PPP with construction grant. Projects with positive Value for Money alone are developed to ensure “Value Delivery” from PPPs. Due to this effort PPP philosophy shifts from financing focus to performance focus leading to projects successfully achieving financial close and construction is in progress.

Karnataka nurtures one of the five prominent identified foundry clusters in the country and has initiated capacity addition plans for rapid expansion and growth in the sector. Connectivity to the biggest national and international markets via air and sea, owing to its two international airports and one major port as well as ten minor ports, makes Karnataka an ideal manufacturing hub. Availability of industrial infrastructure along with existing engineering clusters is an added advantage.

Track Record:

Karnataka has the 2nd highest road density among top 10 largest states in India. The Government has already laid more than 1100 km of multi-lane roads connecting important locations in the State. Karnataka’s port traffic is growing well at 17.8% CAGR of Container Traffic in New Mangalore port during 2007-15. Karnataka has 1551 kms of rail lines currently under construction. High Rail density indicates better accessibility through the state. Karnataka ranks third in airport density among India’s largest economies.

Karnataka also has first structured initiative in India with World Bank to fund water supply project has been undertaken by KUIDFC. A project is on serve 24X7 water supply to the entire cities of Hubballi-Dharwad, Belgavi and Kalburgi as well as in the other cities with the cost of USD 38 million.

The Government of Karnataka had come out with its first Infrastructure Policy in 1997. This policy has specific incentives and concessions for infrastructure projects. The Government provides support in obtaining clearances and approvals and also in providing basic and linkage infrastructural needs like roads, power and water. Infrastructure Projects would be allowed to charge user fees during the gestation period and consideration would be given for infrastructure projects having long gestation periods.

The infrastructure policy of Government of Karnataka offers exemptions from entry tax and contract tax. The Government will also facilitate the investor in acquiring the required land through KIADB for use of the project. It also has provisions for awarding the contract on “Swiss Challenge” method, including consultancy services.

Some of the important investment opportunities on the anvil are:

Roads - 23 road projects with more than 1500 km opportunity under KSHIP and more than USD 1273 million with KRDCL.
Urban - 23 projects aggregating to about USD 232 million, Integrated Water supply Projects aggregating to more than INR USD 25.5 million
Light Rail - Two corridors in Bengaluru for a total length of 41.3 km with 37 stations
Industrial corridors- Two Industrial corridor projects with one in Tumakuru to be developed at USD 2286 million and NIMZ regions development estimated to be USD 10159 million
Ports - Development of Tadadi Port at USD 633 million
Expansion plan on Karwar port and 2 Greenfield ports at Belekere and Pavankurve at USD 987 million
Airports - 5 minor airport and 6 airstrip opportunities for development on PPP
Development of airstrips to promote non-scheduled Air Taxi services/Non-scheduled Operations

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