Karnataka, a state located in the Southern West of India, is famous for its rich architectural, natural and cultural heritage. Do you know Karnataka is the largest state in Southern India? Earlier it was known as the state of Mysore. In the year 1973, it was renamed Karnataka. Bangalore is the largest city of the state and even its capital. The economy of Karnataka is approximately Rs 1,699 trillion which makes it the fourth largest state. The Government of Karnataka aspire to reach first rank in terms of GDP contribution for this many schemes have been introduced by micro small and medium enterprises they are as under:-
- Investment Promotion Subsidy on Fixed Capital:- The new Industrial Policy of Karnataka aims at holistic development of the state and also to promote Tier II and Tier III cities. The Policy envisions emerging as a global leader in advanced manufacturing, research and development, innovation and creating an ecosystem for an inclusive, balanced and sustainable development of Karnataka. Numerous changes have been made to the existing laws as well as in the concession for the MSME sector. The main objectives of policy are:-
- To create at least 2 million jobs in the state.
- To facilitate investments in advanced research and development, manufacturing and innovation.
- To maintain an annual industrial growth rate of 10%.
- To attract investments of a minimum of Rs 5 lakh crore.
- Climb up to the 3rd rank amongst Indian states for merchandise exports within five years.
The following sectors would get benefit of the scheme:-
- Automobiles and auto components
- Electric vehicles
- Pharmaceuticals and medical devices
- Knowledge-based industries
- Engineering and machine tools
- Renewable energy
The key highlights of the policy are:-
a. The new industrial policy of Karnataka would categorize the district of the state into different zones. This initiative would help to develop industrially backward areas. The zone would be categorized as:-
Industrially backward districts would be included in Zone 1 and 2 whereas Zone 3 and 4 would include industrially developed districts like Bengaluru and Mysore etc.
b. To create, operate and regulate investment regions, the Special Investment Region (SIR) Act would be enacted. Each SIR would be categorized into an industrial township and would cover an area of 100 sq. km. The first SIR will include the Dharwad, Belagavi, Gadag and Haveri districts. The second SIR would comprise the Davanagere, Shivamogga, Chitradurga, Chikmagalur and Kalaburagi districts.
c. Micro, Small, and Medium Enterprises would be entitled to subsidies based on production turnover to encourage and flourish MSMEs. The value of subsidy would be 10% of the turnover for five years and a maximum of 20 to 30% of the value of the fixed assets based on the zone.
d. MSMEs would get an exemption from stamp duty and concessional registration charges
e. Tax exemption on electricity tariff would also be given
f. The subsidy would be given on the interest of loans taken for technology up-gradation from public service banks.
g. The land conversion fee would be reimbursed.
h. Subsidies for sustainable operations strategies would also be offered.
i. Subsidy on power would also be given under this scheme.
j. The new policy encourages employing the locals. Ideally, a minimum of 70% of the employees should comprise the locals. Whereas in the case of non-technical staff, drivers, housekeeping staff, etc. 100% of the employees should be hired locally.
k. MSMEs will also be offered a 100% exemption from tax on electricity tariff for a tenure of 7 years in zone 1, 6 years in zone 2 and 5 years in zone 3.
l. Reimbursement on power tariff at the rate of Rs 1 per unit can be availed by small and medium enterprises.
m. Subsidy for setting up rainwater harvesting systems, waste water recycling would be given to MSMEs.
n. Expenses for water audit and also recycling of electronic and plastic waste would be reimbursed.
- Exemption from Stamp Duty:- MSMEs would be exempted from paying stamp duty on the registration of land but depending on the zone where the enterprise would be established. The scheme waives 100% stamp duty for enterprises in zones 1 and 2, and in the case of zone 3, 75% of the stamp would be exempted. Enterprises that are run by persons under a special category would be entitled to 100% concession on the stamp duty in all the zones except zone 4. 75% concession can be availed in zone 4. Reimbursement of land conversion fee up to 100% for enterprises in zone 1 and 2 and 75% for enterprises in zones 3.
- Reimbursement of Non-Agricultural Conversion Fee:- Lands that have been declared as agricultural therefore such land cannot be utilized for residential, commercial or industrial purposes until you get them converted into non-agricultural land. This process of converting is called a land conversion. You need to send an application for the same. It should include a statement conveying the purpose of conversion. Further details about the extent of land, names of the present and former owners, type of soil and crops nurtured in the land, mortgages etc should be included in the application.
The documents required for land conversion are as follows:-
- ID proof of Khata certificate
- Mutation letter
- Original sale deed or gift partition deed
- Property Title Deed
- No Objection Certificate of the village accountant
- Latest receipt of tax deposit
- Certified survey map
- Records of Rights and Tenancy Certificate Certified copy of the Land Tribunal Order
- Zonal certificate from Urban Development Authority
- Photocopy of the atlas of the land
- Photocopy of the revenue survey map of the village
After submission of all documents and application, the consent authorities will check if the application meets the specified conditions, and the property is devoid of any outstanding dues or litigation. Then the authorities will issue the order of conversion and provide a certificate declaring the same. The fee for land conversion has to be paid. Under this scheme, MSMEs would get reimbursement for the fees paid by them. The main aim of this scheme is to increase startups in Karnataka which would help to provide employment to many and raise the standard of living too.
- MSME Sarthak Scheme:- This scheme of Karnataka aims to provide better employment opportunities by encouraging small and medium industries. Undeveloped areas of the state would surely be benefited from the implementation of this scheme. The government will provide financial assistance for the development of new industries of up to one crore. Under this scheme, the new industrial investment policy would attract emerging industrial technologies so as to generate additional job vacancies. The eligibility criteria for this scheme is:-
- Applicant should be a domicile of Karnataka.
- Only MSMEs will benefit from this scheme.
- Large scale Enterprises are not eligible to apply for this scheme.
The main objectives and benefits of this scheme are as follows:-
- This scheme would help in the development of the industries and would also maintain the industrial growth, mostly in backward areas of Tier 2 and Tier 3.
- To enhance employment opportunities.
- The industries will be provided with raw materials, goods and services at economical prices.
- To remove the hinder aces faced by the MSME sector.
- To encourage youth to dwell in business activities.
- The Self-help group would work along with the coir processing and production industries as they would receive a subsidy of 10% on the procurement of raw material.
- Coir manufacturers would get a subsidy of 90% for the overall development process.
To avail the benefit of this scheme you just need the listed documents:-
- Trade license and various related documents.
- Personal documents like PAN Card, Aadhar Card, Driving License, Voter ID Card, etc.
- Details of bank account
- Registration documents of self-help group.
These are the various schemes offered by the government of Karnataka. If you are an MSME owner these schemes would surely act as a godsend for your business.
Read more about the Schemes levied by other states for MSMEs here.