Karnataka, a state in India, has recently launched a pioneering Engineering Research & Development (ER&D) Policy. This statewide initiative aims to foster growth in key industrial sectors, strengthen collaborations between academia and industry, encourage the creation of Intellectual properties(IPs), and provide financial support to multi-national corporations(MNCs).
The Focal Sectors
This policy focuses on five key sectors: aerospace and defence; auto, auto components and EV; biotechnology, pharma and medical devices; semiconductors, telecom, and software products. These sectors have been identified as vital areas that can benefit from consistent investment, innovation, and development. Their combined potential for economic growth and job creation are believed to be significant.
Emphasizing Skilling and Collaboration
The Karnataka government recognizes the need for an adequately skilled workforce to ensure sustainable development. With this policy, it pledges to invest in enhancing skill sets, fostering collaboration between industry and academia and encouraging local IPs creation. The government believes that strategically nurturing these areas will yield long-term benefits to the state.
Subsidy Provisions
The ER&D policy includes impressive subsidy provisions specifically tailored for MNCs. These entities are entitled to reimbursement of up to 50% of rentals up to Rs 2 crore if they are situated beyond the Bengaluru Urban district. Additionally, there will be recruitment assistance and a subsidy up to 20% capped at Rs. 2 crore for those investing in locations outside of Bengaluru. The subsidies will be determined on a case to case basis, giving due consideration to the company’s investment and employment generation prospects.
Encouraging Innovation
Fostering innovation is another core element of the policy. The government commits to funding projects in colleges and bearing the cost of developing industry-oriented courses in colleges and universities. The ultimate goal is to align talent with real-time industry demands, thereby ensuring competitive advantage.
The Objectives of the Policy
There are four main objectives that underpin this ER&D policy. Firstly, preparing the state to seize future opportunities in these sectors. Secondly, increasing Karnataka’s contribution to national development. Thirdly, transforming the state into a hub of knowledge and skills. Lastly, enticing MNCs to set up new ER&D centres in the state or expand their existing facilities through beneficial subsidies.
The Need for ER&D Policy
The ER&D sector has emerged as India’s fastest-growing industry, with a Compound Annual Growth Rate (CAGR) of 12.8%. The worldwide engineering research and development industry is anticipated to touch a remarkable USD 2 trillion by 2025. With approximately 900 global capability centres for ER&D in India, a significant chunk of them based in Karnataka, this policy can potentially create over 50,000 jobs in the state over the next five years. Beside job creation, the government also hopes to build a robust Digital Engineering and Industry 4.0 ecosystem. This would see a rise in digitized manufacturing operations, adoption of the Product-as-a-Service Business Model and ramp up Additive Manufacturing, leading to productive and streamlined operations.
